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Ex. 229 You are provide with the following information for Trent Company, effective as of its April 30, 2012, year-end. Accounts payable$    834 Accounts receivable810 Buildings, net of accumulated depreciation3,537 Cash770 Common stock900 Cost of goods sold1,500 Current portion of long-term debt450 Depreciation expense335 Dividends paid during the year475 Equipment, net of accumulated depreciation1,220 Income tax expense265 Income taxes payable265 Interest expense400 Inventory967 Land1,600 Long-term debt3,500 Prepaid expenses12 Retained.
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MATCHING 239.Match the items below by entering the appropriate code letter in the space provided. A.RelevanceG.Working capital B.Liquidity ratiosH.Current ratio C.ComparabilityI.Earnings per share D.ConsistencyJ.Solvency ratios E.Intangible assetsK.Economic entity assumption F.Free cash flowL.Materiality ____              1.Measures of the ability of the company to survive over a long period of time. ____              2.Current assets divided by current liabilities. ____              3.Information that has a.
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126.The ability of a business to pay obligations that are expected to become due within the next year or operating cycle is a.leverage. b.liquidity. c.profitability. d.wealth. 127.Based on the following data, what is the amount of current assets? Accounts payable………………………………………………………..$62,000 Accounts receivable……………………………………………………..  100,000 Cash……………………………………………………………………….  30,000 Intangible assets…………………………………………………………  100,000 Inventory………………………………………………………………….  138,000 Long-term investments………………………………………………….  160,000 Long-term liabilities………………………………………………………200,000 Short-term investments………………………………………………….  80,000 Notes payable…………………………………………………………….  56,000 Plant assets………………………………………………………………1,340,000 Prepaid expenses………………………………………………………..    2,000 a.$192,000 b.$350,000 c.$212,000 d.$210,000              .
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              41.A general ledger should be arranged in financial statement order beginning with the balance sheet accounts.               42.The entire group of accounts maintained by a company is referred to collectively as the journal.               43.Prepaid expenses are assets.               44.Wages payable is a type of expense.               45.Dividends are classified as an expense.              .
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Ex. 227 For each of the ratios listed below, indicate by the appropriate code letter, whether it is a liquidity ratio, a profitability ratio, or a solvency ratio. Code: L=Liquidity ratio P=Profitability ratio S=Solvency ratio ____1.Price-earnings ratio ____2.Free cash flow ____3.Debt to total assets ratio ____4.Earnings per share ____5.Current ratio Ex. 228 The following information is available from the annual reports.
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106.Most companies use a(n)  _________ rather than a retained earnings statement. a.balance sheet b.income statement c.statement of cash flows d.statement of stockholders’ equity               107.Dividends appear on a.the retained earnings statement only. b.the income statement only. c.both the retained earnings statement and the balance sheet. d.the balance sheet only.               108.Issuing new shares of common stock will a.increase retained earnings. b.decrease retained.
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  SHORT-ANSWER ESSAY QUESTIONS S-A E 240 Identify the two parts of stockholders' equity in a corporation and indicate the purpose of each. S-A E 241 What do these classes of ratios measure? (a)Liquidity ratios. (b)Profitability ratios. (c)Solvency ratios. S-A E 242 Give the definition of current assets, current liabilities and the current ratio. S-A E 243 Are short-term creditors, long-term creditors,.
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146.Mitchell Corporation has current assets of $1,200,000 million and current liabilities of $750,000. If they pay $250,000 of their accounts payable what will their new current ratio be? a.1.9:1 b.2.4:1 c.1.27:1 d.1.33:1               147.Mitchell Corporation has current assets of $1,200,000 and current liabilities of $750,000. If they issue $100,000 of new stock what will their.
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              21.The normal balance of the dividend account is a credit.               22.Assets are decreased with a credit.               23.A debit means that an account has been decreased.               24.A decrease in a liability is recorded by a debit.               25.An increase in an asset is recorded by a debit.               26.Liabilities are established with.
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116.Which of the following is a measure of liquidity? a.Working capital b.Profit margin c.Earnings per share d.Debt to equity ratio 117.Current assets divided by current liabilities is known as the a.working capital. b.current ratio. c.profit margin. d.capital structure.               118.The most important information needed to determine if companies can pay their current obligations is the a.net income for this year. b.projected net.
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              93.Which statement about an account is true? a.In its simplest form, an account consists of two parts. b.An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders’ equity items. c.There are separate account for specific assets and liabilities but only one account for stockholders’ equity.
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163.After transaction information has been recorded in the journal, it is transferred to the a.trial balance. b.income statement. c.general journal. d.ledger. 164.The usual sequence of steps in the recording process is to a.analyze each transaction, enter the transaction in the journal, and transfer the information to the ledger accounts. b.analyze each transaction, enter the transaction in the.
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BRIEF Exercises BE. 205 A list of financial statement items for Maloney Company includes the following: Accounts receivable              $14,500Prepaid insurance              $5,400 Cash              $22,400              Supplies$1,800 Short-term investments$  6,200 Prepare the current assets section of the balance sheet listing the items in the proper sequence. BE. 206 The following information (in millions of dollars) is available for Kline Sportswear for.
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              73.A payment of a portion of Accounts Payable will a.not affect total assets. b.increase liabilities. c.not affect stockholders’ equity. d.decrease net income.               74.Powers Corporation received a cash advance of $500 from a customer. As a result of this event, a.assets increased by $500. b.equity increased by $500. c.liabilities decreased by $500. d.Both a and b.               75.Courtney Company.
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BE. 210 The following terms relate to the characteristics of useful information. Match the key letter of the correct term with the descriptive statement below. Provide feedback Neutral Predict Relevant Faithful representation Timely Verifiability _____1.  Accounting information cannot be selected, prepared, or presented to favor one set of interested users over another. _____2.  Providing information before the decision is made. _____3. .
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Be. 223 Journalize the following business transactions in general journal form. Identify each transaction by number. You may omit explanations of the transaction.               1.Owner invested $50,000 in exchange for common stock of the corporation.               2.Hires an employee to be paid $400 per week, starting tomorrow.               3.Paid two years’ rent in advance,.
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196.Which of the following is not an accounting assumption? a.Integrity b.Going concern c.Periodicity d.Economic entity 197.The periodicity assumption states a.the business will remain in operation for the foreseeable future. b.the life of a business can be divided into artificial time periods and that useful reports covering those periods can be prepared. c.every economic entity can be separately.
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IFRS Questions               1.Under International Financial Reporting Standards (IFRS) a.The cash-basis method of accounting is accepted. b.Events are recorded in the period in which the event occurs. c.Interim period financial statements are either a calendar year or a fiscal year. d.A fiscal year is an accounting time period encompassing less than 12 months.               2.Revenue recognition.
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Ex. 220 These financial statement items are for Snyder Corporation at year-end, July 31, 2012. Salaries and wages payable$   2,580 Salaries and wages expense48,700 Utilities expense22,600 Equipment21,000 Accounts payable4,100 Service revenue64,100 Rent revenue8,500 Notes payable (due 2014)1,800 Common stock16,000 Cash24,200 Accounts receivable12,780 Accumulated depreciation6,000 Dividends5,000 Depreciation expense4,000 Retained earnings (beginning of the year)35,200 Instructions (a)Prepare an income statement and a retained earnings statement for the year. Snyder corporation.
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S-A E 249(Ethics) Many bonus plans are based upon the attainment of some specified short-term goal. For example, sales personnel at Metal Crafters are given a bonus of 5% of the amount by which their sales exceed $100,000. Sometimes the attainment of these goals is achieved by methods  detrimental to the.
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183.An accounting record that includes a list of accounts and their balances at a given time is called a a.trial balance. b.general journal. c.general ledger. d.chart of accounts.               184.Typically the chart of accounts begins with a.asset accounts. b.liability accounts. c.revenue accounts. d.expense accounts. 185.The purpose of the ledger is to a.record chronologically the day’s transactions. b.keep a record of documentation to.
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173.A complete journal entry does not show a.the date of the transaction. b.the new balance in the accounts affected by the transaction. c.a brief explanation of the transaction. d.the accounts and amounts to be debited and credited.               174.The name given to entering transaction data in the journal is a.chronicling. b.listing. c.posting. d.journalizing. 175.The basic form of a journal entry.
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              63.The purchase of an asset on credit a.increases assets and stockholders’ equity. b.increases assets and liabilities. c.decreases assets and increases liabilities. d.leaves total assets unchanged.               64.The payment of a liability a.decreases assets and stockholders’ equity. b.increases assets and decreases liabilities. c.decreases assets and increases liabilities. d.decreases assets and liabilities.               65.The sale of an asset on credit for.
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153.At January 31, 2012, the balance in Goebel Inc.'s supplies account was $500. During February. Goebel purchased supplies of $600 and used supplies of $800. At the end of February, the balance in the Supplies account should be a.$500 debit. b.$700 credit. c.$1,900 debit. d.$300 debit 154.At December 1, 2012, Orear Company's Accounts Receivable balance.
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Ex. 222 The Dobson Company gathered the following condensed data for the year ended December 31, 2012: Cost of goods sold$   720,000 Net sales1,269,000 Administrative expenses239,000 Interest expense68,000 Dividends paid38,000 Selling expenses45,000 Instructions Prepare an income statement for the year ended December 31, 2012. Ex. 223 The following data are taken from the financial statements of Rosen, Inc. as of the.
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176.Qualitative characteristics associated with faithfully representative accounting information are a.verifiable and timely. b.materiality and neutral. c.neutral and verifiable. d.relevance and verifiable.               177.Which of the following statements is not true? a.Comparability means using the same accounting principles from year to year within a company. b.Faithful representation is the quality of information that gives assurance that it is.
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123.Which pair of the listed accounts follows the rules of debits and credits in relation to increases and decreases in the opposite manner? a.Salaries and Wages Expense and Notes Payable b.Common Stock and Unearned Rent Revenue c.Prepaid Rent and Advertising Expense d.Service Revenue and Notes Payable               124.A company that receives money in advance of.
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186.To determine the materiality of an account, an accountant would compare it with any of the following except a.total assets. b.total liabilities. c.total employees. d.net income. 187.A common application of the conservatism constraint is the use of the 1.straight-line depreciation method for plant assets. 2.lower of cost or market method for inventories. 3.FIFO method for inventory valuation. a.1 b.2 c.3 d.1 and.
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156.The following information is available for Cooke Corporation: (in million) Cash receipts from operating activities $920 Cash payments from operating activities $240 Net cash used by investing $210 Net cash provided by financing $750 Net increase in cash and equivalents       ? Cash and equivalents at start of year $550 Cash and equivalents at year-end       ? What is the cash and equivalents amount at year-end? a.$1,230 b.$670 c.$1,770 d.$2,670              .
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193.The usual ordering of accounts in the general ledger is a.assets, liabilities, stockholders’ equity, revenues, and expenses. b.assets, liabilities, stockholders’ equity, expenses, and revenues. c.liabilities, assets, stockholders’ equity, revenues, and expenses. d.stockholders’ equity, assets, liabilities, expenses, and revenues. 194.Management could determine the amounts due from customers by examining which ledger account? a.Service Revenue b.Accounts Payable c.Accounts Receivable d.Supplies 195.The ledger.
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113.An accountant has debited an asset account for $900 and credited a liability account for $500. What can be done to complete the recording of the transaction? aDebit a stockholders’ equity account for $400. b.Debit another asset account for $400. c.Credit a different asset account for $400. d.Nothing further must be done.               114.Which of.
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              11.A debit to an account always indicates an increase in that account.               12.If a revenue account is credited, the revenue account is increased.               13.The normal balance of all accounts is a debit.               14.Debit and credit can be interpreted to mean “bad” and “good”, respectively.               15.A credit means that an.
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TRUE-FALSE STATEMENTS               1.Economic events that require recording in the financial statements are called accounting transactions.               2.Revenue increases stockholders’ equity and should be recorded whenever cash is received from customers.               3.Collection on an account receivable will increase both cash and accounts receivable.               4.The payment of a liability decreases both cash and.
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143.During January 2012, its first month of operation, Osborn Enterprises earned net income of $1,900 and paid dividends to the owners of $500. At January 31, the balance in Retained Earnings will be a.$0 b.$1,900 credit c.$1,400 credit d.$500 debit 144.On June 1, 2012, England Inc. reported a cash balance of $18,000. During June, England.
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166.The characteristic of consistency relates most closely to a.relevance. b.materiality. c.comparability. d.faithful representation.               167.Information that is presented in a clear fashion, so that reasonably informed users of that information can interpret it is an example of a.relevance. b.faithful representation. c.understandability. d.comparability. 168.In order for accounting information to be relevant, it must a.have very little cost. b.help predict future events or.
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Ex. 216 The following lettered items represent a classification scheme for a balance sheet, and the numbered items represent data found on balance sheets.  In the blank next to each account, write the letter indicating to which category it belongs. A.Current assets B.Investments C.Property, plant, and equipment D.Intangible assets E.Current liabilities F.Long-term liabilities G.Stockholders’ equity H.Not on the.
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Ex. 225 The following data are taken from the financial statements of Edington Company. The data are in alphabetical order. Accounts payable$  28,000Net sales500,000 Accounts receivable76,000Other current liabilities20,000 Average common shares O/S20,000Salaries payable7,000 Cash56,000Stockholders’ equity165,000 Gross profit190,000Total assets300,000 Net income$  50,000 Instructions Compute the following: (a)Current ratio.(d)Debt to total assets ratio. (b)Working capital. (c)Earnings per share. Ex. 226 Comparative financial statement data for Arthur.
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Ex. 219 The following items are taken from the financial statements of Grove Company for 2012: Accounts Payable$18,500 Accounts Receivable4,000 Accumulated Depreciation4,800 Bonds Payable18,000 Cash24,000 Common Stock25,000 Cost of Goods Sold17,000 Depreciation Expense4,800 Dividends5,300 Equipment44,000 Interest Expense2,500 Patents7,500 Retained Earnings, January 116,000 Salaries Expense5,200 Sales Revenue36,500 Supplies4,500 Instructions (a)Prepare an income statement and a classified balance sheet for Grove Company. (b)Compute the following ratios and values: 1.Current ratio 2.Debt to total.
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136.Using the following balance sheet and income statement data, what is the debt to total assets? Current assets$  9,000Net income$  12,000 Current liabilities4,000Stockholders’ equity24,000 Average assets 44,000Total liabilities6,000 Total assets 30,000 Average common shares outstanding was 10,000 a.13.6 percent b.20 percent c.75 percent d.27.3 percent 137.The debt to total assets ratio is computed by dividing a.long-term liabilities by total assets. b.long-term liabilities.
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EXERCISES Ex. 215 The following information is available for Mullen Company for the year ended December 31, 2012: Accounts payable2,700 Building not currently used8,000 Accumulated depreciation, equipment4,000 Retained earnings16,000 Common stock4,800 Intangible assets2,500 Notes payable (due in 5 years)6,000 Accounts receivable1,500 Cash                  2,600 Short-term investments1,000 Land                10,000 Equipment7,500 Long-term investments400 Instructions Use the above information to prepare a classified balance sheet for the year ended December.
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Ex. 218 The following items are taken from the financial statements of Tracy Company for 2012: Accounts Payable$  15,000 Accounts Receivable11,000 Accumulated Depreciation—Equipment38,000 Advertising Expense21,000 Cash24,000 Common Stock90,000 Depreciation Expense12,000 Dividends15,000 Equipment210,000 Insurance Expense3,000 Note Payable (due 2015)70,000 Prepaid Insurance6,000 Rent Expense17,000 Retained Earnings (beginning)12,000 Salaries Expense34,000 Salaries Payable3,000 Service Revenue135,000 Supplies4,000 Supplies Expense6,000 Ex. 218(Cont.) Instructions (a)Calculate the net income. (b)Calculate the balance of Retained Earnings that would appear on a balance sheet.
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203.Posting a.transfers ledger transaction data to the journal. b.normally occurs before journalizing. c.accumulates the effects of journalized transactions in the individual accounts. d.enters transaction data in the journal. 204.A list of accounts and their balances at a given time is called a(n) a.journal. b.posting. c.trial balance. d.income statement. 205.On January 14, Decker industries purchased supplies of $500 on account. The.
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MULTIPLE CHOICE QUESTIONS               53.Stockholders’ equity is increased by a.dividends. b.revenues. c.expenses. d.liabilities.               54.If total liabilities increased by $5,000, then a.assets must have decreased by $5,000. b.stockholders’ equity must have increased by $5,000. c.assets must have increased by $5,000, or stockholders’ equity must have decreased by $5,000. d.assets and stockholders’ equity each increased by $2,500.               55.If total liabilities decreased.
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BRIEF Exercises Be. 219 Presented here are five economic events. For each item, indicate whether the event increased (+), decreased (–), or had no effect (NE) on assets, liabilities, and stockholders’ equity. Stockholders’ Assets=Liabilities+      Equity                 1.Received cash for services rendered.____                                                                                    2.Purchased supplies on account.______                                                        3.Paid employees'.
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              83.Howard Company had a transaction that caused a $5,000 increase in both assets and total liabilities. This transaction could have been a(n): a.Purchase of office equipment for $12,000, paying $7,000 cash and issuing a note payable for the balance. b.Investment of $5,000 cash in the business by the stockholders. c.Purchase of office.
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Ex. 221 These items are taken from the financial statements of Drew Corporation for 2012. Retained earnings (beginning of year)$33,000 Utilities expense2,000 Equipment56,000 Accounts payable15,300 Cash11,900 Salaries and wages payable3,000 Common stock13,000 Dividends14,000 Service revenue74,000 Prepaid insurance3,500 Repair expense1,800 Depreciation expense3,300 Accounts receivable14,200 Insurance expense2,200 Salaries and wages expense47,000 Accumulated depreciation17,600 Ex. 221(Cont.) Instructions Prepare an income statement, a retained earnings statement, and a classified balance sheet as of December.
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COMPLETION STATEMENTS               231.The rules and practices that are recognized as general guides for financial reporting are called ______________ _____________ _______________.               232.In accounting, ____________ results when different companies use the same accounting principles.               233.The constraint of _______________ refers to items in financial statements that are likely to influence the decision of.
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              31.Source documents can provide evidence that a transaction has occurred.               32.Each transaction must be analyzed in terms of its effect on the accounts before it can be recorded in a journal.               33.Transactions are entered in the ledger accounts and then transferred to journals.               34.All business transactions must be entered.
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133.Which of the following statements is not true? a.Expenses increase stockholders’ equity. b.Expenses have normal debit balances. c.Expenses decrease stockholders’ equity. d.Expenses are a negative factor in the computation of net income. 134.A credit to a liability account a.indicates an increase in the amount owed to creditors. b.indicates a decrease in the amount owed to creditors. c.is an.
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103.A revenue account a.is increased by debits. b. is decreased by credits. c.has a normal balance of a debit. d.is increased by credits. 104.Which one of the following represents the expanded basic accounting equation? a.Assets = Liabilities + Common Stock + Dividends – Revenue – Expenses b.Assets + Dividends + Expenses = Liabilities + Common Stock +.
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