Accounting 201

On January 1, 2012, Plymouth Company purchases $100,000, 6% bonds at a price of 90.4 and a maturity date of January 1, 2016. Interest is paid semiannually, on January 1 and July 1. Plymouth Company has a calendar year end. The entry to record the purchase of the bond investment on January 1, 2012, includes a

The balance in the Unrealized Gains and Losses on Available-for-sale Securities account appear in which financial statement?

Under the equity method, the Long-Term Investment account is debited when the

On January 1, 2012, Winston Company purchased 6% bonds for $50,000 cash. Interest is payable semiannually on July 1 and January 1. The entry to record the July 1 semiannual interest payment includes a

Dole Company, the subsidiary company, borrowed $80,000 from Anderson Company, the parent company, on a note payable during the year. Before the consolidation entries were made, the balances in Anderson Company's Notes Receivable and Notes Payable accounts were $180,000 and $275,000, respectively. A consolidated balance sheet shows

The market value of an available-for-sale security has decreased from the last carrying value. The journal entry to record this decrease includes

Nantucket Company owns a 30% interest in the stock of Franklin Corporation. During the year, Nantucket debited the Investment account for $22,500 and credited the account for $15,000. Based on this information, Franklin must have paid dividends of

Unrealized gains and losses from available-for-sale investments arise from

The Allowance to Adjust Investment to Market has a debit balance. Therefore the Allowance account is

On January 1, 2012, Cashew Corporation purchased 70,000 of the 210,000 shares of outstanding stock of Peanut Company for $550,000. Net income reported by Peanut Company for 2012 was $450,000. Dividends paid by Peanut Company during 2012 were $150,000. The amount of the long-term investment will appear on Cashew Corporation's December 31, 2012 balance sheet as

If one company owns more than 50% of the common stock of another company

If an investor owns less than 20% of the common stock of another company as a long-term investment

Davis Company purchased 30% of the outstanding shares of Ocean Corporation on January 1 at a cost of $580,000. Ocean Corporation reported net income of $95,000 and paid total dividends of $25,000 for the year. At the end of the year, Ocean shares had a current market value of $590,000. After all necessary adjusting entries are made for the year, what will be the balance in Davis Company's Long-Term Investment account?

Receiving a stock dividend from an available-for-sale investment requires the following journal entry

Acme Company owns 35% of Superior Company. Superior Company paid $35,000 cash dividends for the year. Acme Company's journal entry to record the dividends includes a credit to

The Unrealized Gain or the Unrealized Loss Account appears in other

Kelsey Company owns 30% interest in the stock of David Corporation. During the year, David pays $25,000 in dividends, and reports $100,000 in net income. What is the increase of Kelsey Company's investment in David?

Perdue Company had the following transactions pertaining to stock investments:
- February 1, Purchased 3,000 shares of Hudson Company (10% ownership) at the market price of $17 per share.
- June 1, Received cash dividends of $6,000 on Hudson Company stock.
- October 1, Sold 3,000 shares of Hudson stock for $54,000.
The entry to record the sale of the stock includes a

On the balance sheet, available-for-sale investments in stock are reported as

Carmel Corporation purchased 5% bonds for $42,000 on January 1, 2012. On July 1, 2012, Carmel received cash interest of $1,050. The journal entry to record the receipt of interest on July 1 includes a

Ace Company purchased 1,000 shares of Nott Company at $40 per share. Ace received an additional 250 shares from Nott Company as a stock dividend. After receiving the stock dividend, the total value of the investment in Nott and cost per share of Nott, respectively, is

The Allowance to Adjust Investment to Market account has a current credit balance of $892. Available-for-sale investments with a cost of $17,000 have a current market value of $18,500. The adjusting entry will require a:

On January 1, 2012, Plymouth Company purchases $100,000, 6% bonds at a price of 90.4 and a maturity date of January 1, 2016. Interest is paid semiannually, on January 1 and July 1. Plymouth Company has a calendar year end. The entry to record the purchase of the bond investment on January 1, 2012, includes a

Big League Corporation owns 500 shares of Small Time Company's common stock. Small Time has 100,000 shares of common stock outstanding. Big League Corporation will show the investment on their books as

On the balance sheet, Available-for-sale investments in stock are reported at

Trudy Corporation has $10 par value Common Stock with 1,000,000 shares authorized, and a value of $7,000,000 before purchasing 3,000 shares of common stock. The resulting number of common shares issued and outstanding is

A corporation purchased 10,000 shares of its own $20 par value common stock for $30 per share. What is the effect on total stockholders’ equity?

The entry to record the declaration and distribution of a stock dividend includes a

Gertrudis Corporation has $10 par value Common Stock and has 1,000,000 shares authorized, 750,000 shares issued. What is the entry to record Gertrudis’ purchase of 10,000 shares of common stock at $15 per share?

The number of shares of stocks outstanding is the same as the number of stock that is

A corporation’s own stock that it has issued and later reacquired is called

The entry to record the issuance of 1,000 shares of $1 par value common stock at $10 per share includes a

Which of the following is a disadvantage of the corporate form of business organization?

What is the amount of owners' equity attributable to each share of stock known as?

Which of the following is not an advantage of forming a corporation as compared to organizing as a partnership or proprietorship?

Wall Corporation issued 5,000 shares of its $1 par value common stock as a stock dividend when the shares were selling for $10 per share. At the time of the dividend, Wall had 100,000 shares of common stock outstanding. These shares were originally issued for $5 per share. The entry to record the stock dividend includes a debit to Retained Earnings for

The arbitrary amount assigned by a company to a share of its stock is the

Hergert Company declared a 2-for-1 stock split on its 200,000 shares of $10 par value common stock. As a result of this transaction

The amount of stockholders’ equity that the corporation has earned through profitable operation of the business and has not given back to stockholders is

If treasury stock is sold at a price greater than its reacquisition costs, the difference is

Frost Corporation issues 100 shares of no-par common stock for $10 per share. The stock has a stated value of $1 per share. This transaction includes a credit to Common Stock for

When a company issues its stock, it

Shareholder rights may include

What is an increase in the number of authorized, issued and outstanding shares of stock coupled with a proportionate reduction in the stock’s par value known as?

When 100 shares of $10 par value Common Stock are issued at $53 per share, Paid-in Capital in Excess of Par value - Common will

Limited liability of a corporation means

The group elected by the stockholders to set policy for a corporation and to appoint its officers is the

The entry to record common stock issued at its par value includes a

Paid-in capital is the amount of stockholders’ equity that the

A company’s balance in its land account, which represented one piece of land, was $100,000. During the year, the piece of land was sold for $165,000. The amount reported in the investing activities section of the Statement of Cash Flows is

Under the indirect method of preparing a Statement of Cash Flows, dividends paid during the year are

Acquisitions of treasury stock are reported on a Statement of Cash Flows as

A company sold an unused building for $177,000. The building's book value on the date of sale was $172,000. This transaction will appear in a Statement of Cash Flows prepared using the indirect method as a

Increases and decreases in the long-term liability accounts are reported on the Statement of Cash Flows as

Which statement is false?

Rocky Company uses the indirect method to prepare its Statement of Cash Flows. Rocky's Accumulated Depreciation - Equipment account increased during the period. Rocky did not purchase or sell equipment during the period. The increase in Accumulated Depreciation - Equipment is

The purchase of bonds is reported on a Statement of Cash Flows as a(an)

On a Statement of Cash Flows prepared using the indirect method, an increase in Accounts Receivable during the period is

Under the indirect method of preparing the Statement of Cash Flows, the starting point to determine net cash from operating activities is

Creditors analyze the Statement of Cash Flows to determine

Cash receipts from interest and dividends are classified in the Statement of Cash Flows as

Where would cash paid for income taxes appear on the Statement of Cash Flows?

Tech Support, Inc. issued common stock for $470,000 cash in 2012. The company paid cash dividends of $50,000 and purchased treasury stock at a cost of $20,000. The financing section of the Statement of Cash Flows will report net cash inflows of

When preparing the Statement of Cash Flows using the indirect method, which of the following is false?

Under the indirect method of preparing a Statement of Cash Flows, amortization expense for the current period is

Activities that obtain cash to launch and sustain a company are reported on which of the following sections in the Statement of Cash Flows?

During the year, New Liberty Corporation's treasury stock increased $30,000 from a cash purchase, cash dividends paid totaled $44,000 and the company reported net income of $220.000. Net cash used by financing activities is

If $350,000 of bonds are issued during the year, but $150,000 of old bonds are retired during the year, the Statement of Cash Flows will show a(n)

Under the indirect method of preparing a Statement of Cash Flows, cash disbursed for the acquisition of a plant asset is

Leo Textiles sold used weaving equipment with a book value of $60,000 for $56,000. The indirect method used to prepare the Statement of Cash Flows will reflect an addition of

The receipt of interest on loans is reported on a Statement of Cash Flows under

Increases and decreases in the long-term assets available to a company are reported on the Statement of Cash Flows as

On a Statement of Cash Flows prepared using the indirect method, an increase in Accounts Payable during the period is

Cash received from customers is reported on the Statement of Cash Flows

Depots Clothing Store had an accounts receivable balance of $420,000 at the beginning of the year and a year-end balance of $510,000. Net sales for the year totaled $2,100,000. What was the average collection period of the receivables?

To compute the operating income (profit) percentage, divide

If economic value added (EVA) is negative, stockholders’

If ABC Corporation's debt ratio is higher than its major competitors, ABC may

Expressing cash and cash equivalents as a percentage of total assets is an example of

Which of the following statements is true?

The ratio that tells whether the entity can pay all its current liabilities if they come due immediately is the

Cost of goods sold for the current year was $170,000. Last year's cost of goods sold was $190,000. What was the percentage change and direction of change for the current year?

The ratio that measures a company’s success in using its assets to earn income for the entities that finance the business is the

Which of the following is used as the base in a vertical analysis of an income statement?

Horizontal analysis focuses on

Beginning inventory was $28,000 and ending inventory was $22,000. Cost of goods sold was $190,000 and net sales were $360,000. Inventory turnover for the year was closest to

Which of the following ratios do not directly relate to the analysis of a given stock as an investment?

Calculations:     Current ratio = 190,000 (Current assets)/110,000 (Current liabilities)
        Current ratio = 1.73

Of the items listed below, the one most helpful in the comparison of different size companies is

Total revenues and net income for 2011 for Clam Corporation is $3,500,000 and $280,000, respectively. Clam Corporation has had 400,000 common shares of stock outstanding for all of 2011. The selling price of a share of Clampton common stock on December 31, 2011 is $18. Earnings per share for 2011 are

A company wishing to improve its acid-test or quick ratio should

A financial statement showing each item on the statement as a percentage of one key item on the statement, called the base, is referred to as

Analyzing the statement of cash flows may help analysts determine the financial health of a company. Which of the following signs is an indicator of a financially unhealthy company?

Which of the following groups of ratios measure a company’s ability to pay its current liabilities?

Horizontal analysis evaluates financial data

Red flags in financial statement analysis can include

A vertical analysis is primarily concerned with

A measure of a company’s ability to collect cash from credit customers is the

Calculations:  115,000 (Cash)/1,650,000 (Total assets) = 6.9% rounded to 7%