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Study Resources (Accounting)

13) How are "purchase discounts lost" reported in the financial statements? A) As a reduction of sales. B) As an increase in liability. C) As an increase in inventory. D) As an expense item. 14) Which statement is correct? A) Trade payables are supported by a written promise to pay. B) Trade payables with no stated interest.
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12.2   Learning Objective 2 1) Why do bonds often include covenants? A) To reduce information asymmetry. B) To reduce moral hazard. C) To compensate for value-added services. D) To ensure repayment of the bond. 2) What is a "covenant"? A) Guarantee of the price to the borrower. B) Contract that outlines the terms of the borrowing agreement. C) Promise.
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29) Responsibility accounting performance reports are prepared by which types of business units? A) Cost centers only B) Investment centers and revenue centers only C) Cost centers, revenue centers, and profit centers D) Investment centers only 30) Zhongfang Consumer Products has a small car division that operates as a profit center. Below is a partially.
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6) Profit margin is defined as operating income divided by sales. 7) Asset turnover is defined as the average total assets divided by the sales revenue. 8) The formula for ROI can be broken down as follows:  ROI = profit margin x asset turnover. 9) Huntswell Corporation has two major division?Agricultural Products and.
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3) For each independent situation: 1. Moosehead Pool and Skeet Com.'s debt to equity ratio is 1.6: 1 based on its draft financial statements for the year ended December 31, 2016. This leverage ratio exceeds the 1.5:1 maximum stipulated in Moosehead's loan agreement pertaining to a $5,000,000 loan maturing on March.
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7) Explain the difference between "probable," "possible," and "remote" under IFRS. 8) Which statement about contingencies is correct? A) If the future outcome is remote but reliably measurable, a provision is recorded. B) If the future outcome is remote, but not reliably measurable, disclosure is required. C) If the future outcome is remote, but.
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13) Based on the characteristics provided below, what kind of bond is being discussed? 1.________ are a set of bonds issued at the same time but that mature at regular scheduled dates rather than all on the same date. 2.________ are bonds that never mature. 3.________ allow the holder to exchange the bond.
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46) Huntswell Corporation has two major divisions: Agricultural Products and Industrial Products.  Data for the year just finished is as follows:   Agriculture Division Industrial Division Sales revenue $140,000 $1,040,000 Operating income $16,400 $220,000 Average assets $300,000 $5,540,000 Target rate of return 4.0% 4.0% For the Industrial Division, how much is the residual income? A) $2,400 B) $1,650 C) ($200) D) ($1,600) 47) Which of.
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11.5   Comprehensive 1) For each independent situation: 1. A former employee of Melvin Minimarket Inc. sued the company for $900,000, alleging that the company owner sexually harassed her. Melvin's lawyers suggest that the lawsuit has a 30-40% probability of success and that, if successful, the plaintiff will be awarded between $400,000 and.
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34) Select transactions and other information pertaining to the Best Place in the World Inc. (BPW) are detailed below. Facts: a. BPW is domiciled in Vancouver, British Columbia and all purchases and sales are made in BC. b. The HST rate in British Columbia is 12%. c. The balances in BPWs HST recoverable account.
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24) A company purchases inventory on credit for $80,000. Inventory costing $30,000 is sold on credit for $40,000. The applicable HST rate is 10%. Sales taxes are remitted on a monthly basis. Prepare the necessary journal entries for this transaction. 25) A company purchases inventory on credit for $40,000. Inventory costing.
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13) Blue Corp is in the process of acquiring another business. In light of the acquisition, shareholders are currently re-evaluating the appropriateness of the firm's capital structure (the types of and relative levels of debt and equity). The two proposals being contemplated are detailed below: Proposal 1 Proposal 2 Estimated earnings before income.
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42) LMZ Computer Systems Inc. maintains office equipment under contract. The contracts are for labour only; customers must reimburse LMZ for parts. LMZ's rate schedule follows: One year Two years Three years Photocopies $220 400 620 Fax machine $175 340 440 LMZ's 2018 sales of maintenance agreements is set out below: One year Two years Three years Photocopies 20 12 30 Fax machine 24 20 30 Requirements: Assuming that sales occurred evenly through the year: a..
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11.3   Learning Objective 3 1) Which statement about contingencies is correct? A) It involves only potential economic outflows of resources. B) It is a possible condition that depends upon the outcome of a future event. C) It involves uncertainty about either the timing or amount of payment. D) It is an existing condition that depends.
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40) RJ Magazines sells two-year magazine subscriptions for $108 cash each. The cost of producing and delivering each magazine is $2.75 paid in cash at the time of delivery. RJ's sales activity for the year follows: Sales activity •On January 1, 2017, RJ sells 22,000 subscriptions. •On April 1, 2017, RJ sells 5,000.
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17) For the following transaction, provide all of the required journal entries from inception to liquidation. Assume a December 31 year end and that the company does not prepare interim statements. Round all amounts to nearest dollar. Face value of note payable$200,000 Date of issue for noteMarch 1, 2012 Due date for noteMarch.
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11) Explain the meaning of financial leverage and leveraged buyout. 12) Bank Buy Inc. is in the process of acquiring another business. In light of the acquisition, shareholders are currently re-evaluating the appropriateness of the firm's capital structure (the types of and relative levels of debt and equity). The two proposals.
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32) Tavares Manufactured Homes Company has a sales division which submits a monthly performance report as a revenue center.  Please complete the report using the format and data below. Revenue Center Performance Report - $K 33) Union Company's corporate payroll department is a cost center, and submits monthly performance reports.  In the.
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15) Explain how non-current liabilities are measured after initial recognition. 16) On May 1, 2012, Sea Escape Ltd. purchases a new automobile for $18,000 from the dealer who provides the financing. The three-year, interest-free loan is repayable at $500 per month. The market rate of interest for similar transactions is 0.25%.
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19) Which statement about sales taxes is correct? A) The consumer is responsible for remitting the tax to the government. B) Taxes are uniformly applied to all sale transactions. C) Businesses can deduct the GST paid from GST collected. D) The same products that are exempt from GST are exempt from PST. 20) Which statement.
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22) Fill in the following chart. Initial measurement of the liability Subsequent measurement of the liability Non-financial liability Financial liability held for trading 23) Fill in the following chart. Initial measurement of the liability Subsequent measurement of the liability Non-financial liability Financial liability not held for trading .
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12.1   Learning Objective 1 1) Which statement best explains the concept of "leverage"? A) A measure of the efficiency of the company. B) A measure of solvency of the company. C) A measure of the company's operations. D) A measure of the company's debt-paying ability. 2) What are "non-current liabilities"? A) Obligations that are expected to be.
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7) Explain the meaning of the following terms: current assets, trade payables, expected value, deferred revenue and warranty. 8) Which statement is correct? A) Contingencies arise from future events. B) Financial guarantees arise from contracts previously entered into. C) Current liabilities arise from future events. D) The amount to be paid for financial guarantees is.
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11.2   Learning Objective 2 1) Which statement is correct? A) Contingencies arise from future events. B) The amount to be paid for contingencies is known or reasonably estimable. C) Current liabilities arise from future events. D) The amount to be paid for current liabilities is known or reasonably estimable. 2) Which statement is correct? A) Supplier discounts.
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15) Consider the following independent situations. The underlined entity is the reporting entity. 1. Call Cattle Inc. sued Nutrient Feed Ltd. for $10 million alleging breach of contract. Nutrient's legal counsel estimates that Call's likelihood of success is about 80%. Based on its experience with cases of this nature, the law.
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26) Which statement about warranties is correct? A) Warranties sold separately are accounted for under IAS37. B) Warranties sold separately are accounted for under IAS18. C) Warranties are financial liabilities and accounted for at fair value. D) Expected value uses a weighted average of possible outcomes. 27) Which statement about warranties is correct? A) Warranties are.
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19) Which is a non-current liability? A) HST payable. B) 45 day accounts payable. C) Five year loan that matures four months after year end reporting date. D) The creditor has granted a 15-month grace period on a loan in default. 20) Which of the following is not correct? A) Financial liabilities held for trading are.
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21) Canadian Sea Rides Ltd. issues $8,000,000 of four-year, 4% bonds dated January 1,2011. Interest is payable on January 1 and July 1 each year. The proceeds realized from the issue were the $8,529,082 sales price less the $50,000 fee charged by Sea's lawyers. Sea's year-end is December 31. Requirement: Prepare entries.
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11.1   Learning Objective 1 1) Which of the following characteristic is required for a "liability" under IFRS Framework? A) A past obligation. B) A present obligation. C) An unknown obligation. D) A future obligation. 2) Which of the following characteristic is required for a "liability" under IFRS Framework? A) Arises from a past transaction. B) Arises from a.
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12.3   Learning Objective 3 1) How should non-current financial liabilities be recorded initially? A) At face value. B) At fair value. C) At fair value less transactions costs. D) At face value less transactions costs. 2) Non-current debt instruments exchanged for assets are recognized at: A) book value. B) fair value. C) cash paid. D) cash equivalents paid. 3) What is.
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16) The EVA calculation and the ROI calculation both use operating income before income tax because the income tax expense is NOT relevant to either the EVA or the ROI measures. 17) Marcia Consumer Products has several divisions, including the Education Division and the Recreation Division.  Data on the two divisions.
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36) Which of the following statements MOST accurately describes asset turnover? A) How efficiently a division uses its average assets to generate sales B) How much operating income the division earns on every dollar of sales C) How much return a division generates on average assets D) How much extra income does a division.
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56) Assume Division 1 of the XYZ Company had the following results last year. Sales $5,000,000 Operating income 1,000,000 Total assets (average) 10,000,000 Current liabilities 500,000 Management's required rate of return is 8% and the weighted average cost of capital is 6%.  Its effective tax rate is 30%.What is the division's return on investment? A) 5% B) 10% C) 20% D) 50% 57) Assume.
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26) The formula for ROI (return on investment) is: A) operating income divided by average total assets. B) operating income minus minimum acceptable operating income. C) after-tax operating income minus the weighted average cost of capital times average total assets excluding current liabilities. D) operating income divided by sales revenue. 27) The formula for EVA.
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11.4   Learning Objective 4 1) Which statement is not correct about commitments? A) A commitment to buy equipment must be disclosed if the contract is partially executed. B) A commitment to buy equipment must be disclosed even if the contract is unexecuted. C) Onerous contracts must be disclosed if they can be reliably measured. D).
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34) Westhaven Company has a warehousing unit which operates as a cost center.  They prepare monthly performance reports.  Actual and budget data for February are shown here: Cost Center   Flexible Performance Report Actual Budget Salary & benefits $119,000 $120,000 Rent expense 94,500 90,000 Depreciation expense 23,200 24,000 Supply expense 11,890 12,000 Miscellaneous expense 8,120 8,000 $256,710 $254,000 Using the report format.
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17) Cynthia Dixie Accounting Inc. takes advantage of a well-known office furnishings store's low-interest-rate financing. Cynthia buys furniture on the first day of its fiscal year, signing a $19,000, five-year note. The note is payable in full at maturity. Interest is payable annually at 2%. The market rate of interest.
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