ACC 556 – Midterm part 1 · Question 1 Source documents can provide evidence that a transaction has occurred · Question 2 Expense recognition is tied to revenue recognition. · Question 3 To obtain maximum benefit from a bank reconciliation, the reconciliation should be prepared by the employee authorized to sign checks. · Question 4 An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected. · Question 5 A concentration of credit risk is a threat of nonpayment from a single customer or class of customers that could adversely affect the financial health of the company. · Question 6 Which of the following is not a common way that managers use the balance sheet? · Question 7 Financing activities include the purchase or sale of long-lived assets or the purchase or sale of investment securities. · Question 8 Bathlinks Corporation has a debt to assets ratio of 73%. This tells the user of Bathlinks’s financial statements that · Question 9 Owners of business firms are the only people who need accounting information. · Question 10 Marvin Services Corporation had the following accounts and balances: If the balance of the Buildings account was $45,000 and the equipment was sold for $21,000, what would be the total of stockholders’ equity? · Question 11 Consistent use of the same accounting principles and methods is necessary for meaningful analysis of trends within a company. · Question 12 Requiring employees to take vacations is a weakness in the system of internal controls because it does not promote operational efficiency. · Question 13 Solvency ratios measure the short-term ability of the company to pay its maturing obligations. · Question 14 The best definition of assets is the · Question 15 The partnership form of business organization · Question 16 Goods that have been purchased FOB destination but are in transit, should be excluded from a physical count of goods by the buyer. · Question 17 Management may choose any inventory costing method it desires as long as the cost flow assumption chosen is consistent with the physical movement of goods in the company. · Question 18 Which of the following would not be classified as a long-term liability? · Question 19 The economic resources that are owned by a business are called stockholders’ equity. · Question 20 An advantage of using the periodic inventory system is that it requires less record keeping than the perpetual inventory system. · Question 21 The revenue recognition principle dictates that revenue be recognized in the accounting period in which the performance obligation is satisfied. · Question 22 Lankston Company began the year by issuing $90,000 of common stock for cash. The company recorded revenues of $825,000, expenses of $720,000, and paid dividends of $45,000. What was Lankston’s net income for the year? · Question 23 The multiple-step income statement is considered more useful than the single-step income statement because it highlights the components of net income. · Question 24 Use the following data to calculate the current ratio. Carne Auto Supplies Balance Sheet December 31, 2014 Cash � � � � � � � � $ 35,000 � �Accounts payable � � � � � $ 65,000 Accounts receivable � � � � �50,000 � �Salaries and wages payable � � � 10,000 Inventory � � � � � � � �70,000 � �Mortgage payable � � � � � �90,000 Prepaid insurance � � � � � 40,000 � �Total liabilities � � � � � � �$165,000 Stock investments � � � � � 80,000 � � Land � � � � � � � � � 95,000 � � � � � � � � � � � � � � � � Buildings � � � $100,000 � � � � � � Common stock � � � � � �$120,000 Less: Accumulated � � � � � � � � � Retained earnings � � � � � 250,000 � depreciation � (30,000) � 85,000 � � �Total stockholders’ equity � �$370,000 Trademarks � � � � � � � 70,000 � � � Total liabilities and Total assets � � � � � � $535,000 � � � �stockholders’ equity � � � $535 · Question 25 Which of the following is the least likely consideration that management uses when deciding whether to pay a dividend?
Previous answers to this question
This is a preview of an assignment submitted on our website by a student. If you need help with this question or any assignment help, click on the order button below and get started. We guarantee authentic, quality, 100% plagiarism free work or your money back.
Get The Answer