Question 1

Which of the following is not true regarding reserves that appear in the equity section of the balance sheet of foreign companies?

Accepted Answer

A) Reserves represent cash set aside to fund capital projects. 
B) Reserves are different categories found in the equity section of the balance sheet. 
C) The balances in reserve accounts can affect an entity's legal ability to pay cash dividends. 
D) An extensive description of each reserve shown on the balance sheet is provided. 
A) Reserves represent cash set aside to fund capital projects. 
B) Reserves are different categories found in the equity section of the balance sheet. 
C) The balances in reserve accounts can affect an entity's legal ability to pay cash dividends. 
D) An extensive description of each reserve shown on the balance sheet is provided.

Question 2

The disclosure of accounting policies

Accepted Answer

A) may describe policies that are peculiar to the reporting company's industry. 
B) should not appear in the notes to the financial statements. 
C) should not describe unusual or innovative applications of GAAP. 
D) is encouraged but not required. 
A) may describe policies that are peculiar to the reporting company's industry. 
B) should not appear in the notes to the financial statements. 
C) should not describe unusual or innovative applications of GAAP. 
D) is encouraged but not required.

Question 3

Goddard Corporation's trial balance contained the following account balances at December 31,2014:
 
On Goddard's December 31,2014,balance sheet,the current assets total should be

Accepted Answer

A) $189,000. 
B) $201,000. 
C) $219,000. 
D) $243,000. 
A) $189,000. 
B) $201,000. 
C) $219,000. 
D) $243,000.

Question 4

The accounts and balances shown below were gathered from Pastel Corporation's trial balance on December 31, 2014. All adjusting entries have been made.
  
-See information for Pastel Corporation above.Pastel Corporation's working capital is

Accepted Answer

A) $77,700. 
B) $73,100. 
C) $62,500. 
D) $125,700. 
A) $77,700. 
B) $73,100. 
C) $62,500. 
D) $125,700.

Question 5

Heartland Company reported liabilities totaling $1,230,000 as of December 31,2014.The following information relates to those liabilities:
(a)Heartland reported a $100,000 bank loan payable.However,Heartland intends to repay this loan on January 10,2015.
(b)Heartland has reported a $40,000 liability for the estimated cost of future warranty repairs based on product sales for the past year.
(c)Heartland is being sued for $350,000 by a disgruntled employee.Heartland's attorney thinks that it is possible that Heartland will lose the case.Heartland has not yet recorded any liability for this potential loss.
(d)Heartland receives consulting services from a local CPA.Expected services by the CPA for the coming year will cost $35,000.No liability has been recorded.
(e)Heartland has reached an agreement with a major customer.Heartland expects to provide services totaling $400,000 over the coming three years.The customer has already paid Heartland $100,000.No liability has been recorded.
After considering these items,what should be the total of Heartland' reported liabilities?

Accepted Answer

The answer of Heartland Company reported liabilities totaling $1,230,000 as...

Question 6

Helena Co.began operations on January 1,2014,with $100,000 from the issuance of stock and borrowed funds of $15,000.Net income for 2014 was $5,000 and Helena paid a $400 cash dividend on December 15.No additional activities affected owners' equity in 2014.At December 31,2014,Helena's liabilities had increased to $18,800.In Helena's December 31,2014,balance sheet,total assets should be reported at

Accepted Answer

A) $119,600. 
B) $120,000. 
C) $123,400. 
D) $138,400. 
A) $119,600. 
B) $120,000. 
C) $123,400. 
D) $138,400.

Question 7

A contingent liability should be recorded when

Accepted Answer

A) any lawsuit is actually filed against a company. 
B) it is certain that funds are available to pay the amount of the claim. 
C) it is probable that a liability has been incurred even though the amount of the loss cannot be reasonably estimated. 
D) the amount of the loss can be reasonably estimated and it is probable prior to issuance of financial statements that a liability has been incurred. 
A) any lawsuit is actually filed against a company. 
B) it is certain that funds are available to pay the amount of the claim. 
C) it is probable that a liability has been incurred even though the amount of the loss cannot be reasonably estimated. 
D) the amount of the loss can be reasonably estimated and it is probable prior to issuance of financial statements that a liability has been incurred.

Question 8

The balance sheet provides information concerning liquidity,financial flexibility,and information for calculating various financial ratios.The balance sheet serves as a major indicator of an enterprise's ability to survive.Nevertheless,the analysis of the balance sheet should be approached with a clear understanding of the limitations of the statement.
What are the major limitations of the balance sheet that should be recognized in analyzing the statement?

Accepted Answer

Values reported in the balance sheet may

Question 9

Which of the following best describes contributed capital?

Accepted Answer

A) The amount of capital provided by stockholders' investments 
B) The amount that would be distributed to the stockholders in a liquidation of the corporation 
C) The amount of capital provided by stockholders' investments and undistributed earnings 
D) The value of the common and preferred stock 
A) The amount of capital provided by stockholders' investments 
B) The amount that would be distributed to the stockholders in a liquidation of the corporation 
C) The amount of capital provided by stockholders' investments and undistributed earnings 
D) The value of the common and preferred stock

Question 10

Southeast Company's adjusted trial balance at December 31,2015,includes the following account balances:
 
What amount should Southeast report as total owners' equity in its December 31,2015,balance sheet?

Accepted Answer

A) $840,000 
B) $860,000 
C) $890,000 
D) $910,000 
A) $840,000 
B) $860,000 
C) $890,000 
D) $910,000

Question 11

Which of the following would NOT be classified as a current liability on a classified balance sheet?

Accepted Answer

A) Unearned revenue 
B) Mandatory redeemable preferred stock 
C) The currently maturing portion of long-term debt 
D) Accrued salaries payable to management 
A) Unearned revenue 
B) Mandatory redeemable preferred stock 
C) The currently maturing portion of long-term debt 
D) Accrued salaries payable to management

Question 12

McCallister,Inc.,a nonpublic enterprise,is negotiating a loan for expansion purposes and the bank requires audited financial statements.Before closing the accounting records for the year ended December 31,2015,McCallister' controller prepared the following comparative financial statements for 2015 and 2014:

During the audit,the following additional information was obtained:
(a)The investment portfolio consists of investments in trading securities with a total market value of $156,000 at December 31,2015.The securities were purchased February 3,2015,at a cost of $142,000.
(b)As a result of errors in physical count,inventories were overstated by $30,000 at December 31,2015.
(c)On January 2,2015,the cost of equipment purchased for $80,000 was mistakenly charged to repairs and maintenance.McCallister depreciates this type of equipment over a 5-year life using the straight-line method,with no residual or salvage value.
(d)McCallister was named as a defendant in a lawsuit in October 2015.McCallister' counsel is of the opinion that McCallister has a good defense and does not anticipate any impairment of McCallister' assets or that any significant liability will be incurred.However,McCallister' counsel admits that loss of the suit is "possible." McCallister' management wished to be conservative and established a loss contingency of $200,000 at December 31,2015.
(e)On January 24,2016,before the 2015 financial statements were issued,McCallister was notified that one of its largest customers had filed for bankruptcy as the result of a flood that destroyed a substantial portion of the company's assets on January 16,2016.The customer's accounts receivable balance at December 31,2015,was $144,000.
(f)$100,000 of 5-year notes payable will mature September 30,2016.In view of McCallister' plans for expansion,management is seriously considering refinancing the notes when they become due.
(1)Prepare a properly classified balance sheet for McCallister,Inc.,as of December 31,2015.(Income tax considerations should be ignored.)(2)Identify the events and other information that should be disclosed in the notes to McCallister' financial statements.(Do not prepare the notes.)

Accepted Answer

(1) @#IMG-DLM& Note: Letters correspond to letters

Question 13

Below are selected accounts and their balances for the Beehive Company as of December 31,2015:
   
Based on the above information,determine the amount of working capital at December 31,2015.

Accepted Answer

The answer of Below are selected accounts and their balances...

Question 14

Certain assets currently are omitted from the balance sheet.For example,the value of the human resources of the firm are not reported.Nevertheless,investors and others might greatly benefit from a knowledge of the extent to which human assets have increased or decreased during a given period.Values certainly may be attributed to individuals or groups based on their ability to render future economic services.A major issue is the method that should be employed in measuring human assets.
Identify some possible ways of measuring human resources.

Accepted Answer

Possible methods for measuring human ass

Question 15

Which of the following would NOT be reported for capital stock in the contributed capital section of a classified balance sheet?

Accepted Answer

A) Dividends per share 
B) Shares authorized 
C) Shares issued 
D) Shares outstanding 
A) Dividends per share 
B) Shares authorized 
C) Shares issued 
D) Shares outstanding

Question 16

Which of the following would NOT be considered an element of working capital?

Accepted Answer

A) Investment securities (current) 
B) Work in process inventories 
C) Accrued interest on notes payable 
D) Organization costs 
A) Investment securities (current) 
B) Work in process inventories 
C) Accrued interest on notes payable 
D) Organization costs

Question 17

The following data were taken from the financial statements of Howard Corporation for the year ended December 31,2014:
 
What was Howard's rate of return on assets for 2014?

Accepted Answer

A) 5 percent 
B) 6 percent 
C) 20 percent 
D) 24 percent 
A) 5 percent 
B) 6 percent 
C) 20 percent 
D) 24 percent

Question 18

Which of the following would NOT be reported in the stockholders' equity section of the balance sheet?

Accepted Answer

A) Retained earnings appropriated for future plant expansion 
B) Dividends declared on preferred stock 
C) Paid-in capital in excess of par value 
D) Deficit in retained earnings 
A) Retained earnings appropriated for future plant expansion 
B) Dividends declared on preferred stock 
C) Paid-in capital in excess of par value 
D) Deficit in retained earnings

Question 19

Which of the following circumstances would require recording an accrual for a loss contingency under current generally accepted accounting principles?

Accepted Answer

A) Event is unusual in nature and occurrence of event is probable 
B) Event is unusual in nature and event occurs infrequently 
C) Amount of loss is reasonably estimable and occurrence of event is probable 
D) Amount of loss is reasonably estimable and event occurs infrequently 
A) Event is unusual in nature and occurrence of event is probable 
B) Event is unusual in nature and event occurs infrequently 
C) Amount of loss is reasonably estimable and occurrence of event is probable 
D) Amount of loss is reasonably estimable and event occurs infrequently

Question 20

Hawk Corp.prepared a draft of its 2014 balance sheet.The draft statement reported current liabilities totaling $200,000.However,none of the following items were included in this preliminary total at December 31,2014:
 
At which amount should Hawk's current liabilities be correctly reported in the December 31,2014,balance sheet?

Accepted Answer

A) $230,000 
B) $290,000 
C) $296,000 
D) $302,000 
A) $230,000 
B) $290,000 
C) $296,000 
D) $302,000

Which of the following is not true regarding reserves that appear in the equity section of the balance sheet of foreign companies?

The disclosure of accounting policies

Goddard Corporation's trial balance contained the following account balances at December 31,2014: On Goddard's December 31,2014,balance sheet,the current assets total should be

The accounts and balances shown below were gathered from Pastel Corporation's trial balance on December 31, 2014. All adjusting entries have been made. -See information for Pastel Corporation above.Pastel Corporation's working capital is

A contingent liability should be recorded when

Which of the following best describes contributed capital?

Southeast Company's adjusted trial balance at December 31,2015,includes the following account balances: What amount should Southeast report as total owners' equity in its December 31,2015,balance sheet?

Which of the following would NOT be classified as a current liability on a classified balance sheet?

Below are selected accounts and their balances for the Beehive Company as of December 31,2015: Based on the above information,determine the amount of working capital at December 31,2015.

Which of the following would NOT be reported for capital stock in the contributed capital section of a classified balance sheet?

Which of the following would NOT be considered an element of working capital?

The following data were taken from the financial statements of Howard Corporation for the year ended December 31,2014: What was Howard's rate of return on assets for 2014?

Which of the following would NOT be reported in the stockholders' equity section of the balance sheet?

Which of the following circumstances would require recording an accrual for a loss contingency under current generally accepted accounting principles?

Financial Reporting

A Review of the Accounting Cycle

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll,pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters

Exam 3: The Balance Sheet and Notes to the Financial Statements

Which of the following is not true regarding reserves that appear in the equity section of the balance sheet of foreign companies?

The disclosure of accounting policies

Goddard Corporation's trial balance contained the following account balances at December 31,2014: On Goddard's December 31,2014,balance sheet,the current assets total should be

The accounts and balances shown below were gathered from Pastel Corporation's trial balance on December 31, 2014. All adjusting entries have been made. -See information for Pastel Corporation above.Pastel Corporation's working capital is

A contingent liability should be recorded when

Which of the following best describes contributed capital?

Southeast Company's adjusted trial balance at December 31,2015,includes the following account balances: What amount should Southeast report as total owners' equity in its December 31,2015,balance sheet?

Which of the following would NOT be classified as a current liability on a classified balance sheet?

Below are selected accounts and their balances for the Beehive Company as of December 31,2015: Based on the above information,determine the amount of working capital at December 31,2015.

Which of the following would NOT be reported for capital stock in the contributed capital section of a classified balance sheet?

Which of the following would NOT be considered an element of working capital?

The following data were taken from the financial statements of Howard Corporation for the year ended December 31,2014: What was Howard's rate of return on assets for 2014?

Which of the following would NOT be reported in the stockholders' equity section of the balance sheet?

Which of the following circumstances would require recording an accrual for a loss contingency under current generally accepted accounting principles?

Financial Reporting

A Review of the Accounting Cycle

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll,pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters