Q&A Hero

Q: The journal entry for the payment of a discounted note is a. debit Notes Payable and Interest Expense; credit Cash b. debit Notes Payable; credit Cash c. debit Cash; credit Notes Payable d. debit Accounts Payable; credit Cash

Q: winsor clothing store had a balance in the accounts receivable account of $760,000 at the beginning of the year and a balance of $840,000 at the end of the year. net credit sales during the year amounted to $6,800,000. the receivables turnover ratio was a.8.0 times b.8.3 times c.8.5 times d.7.9 times

Q: a high receivables turnover ratio indicates a.customers are making payments quickly b.a large portion of the companys sales are on credit c.many customers are not paying their receivables d.the companys sales have increased

Q: Blast Company sells portable CD players, and each unit carries a one-year replacement warranty. The cost to repair defects under the warranty is estimated at 10% of the sales price. During May, Blast sells 650 portable CD players for $50 each. For what amount in May would Blast debit Product Warranty Expense? a. $3,250 b. $1,625 c. $650 d. $1,300

Q: pine hardware store had net credit sales of $4,225,000 and cost of goods sold of $3,000,000 for the year. the accounts receivable balances at the beginning and end of the year were $600,000 and $700,000, respectively. the receivables turnover ratio was a.5.6 times b.6.5 times c.4.6 times d.6 times

Q: Assuming a 360-day year, proceeds of $48,750 were received from discounting a $50,000, 90-day note at a bank. The discount rate used by the bank in computing the proceeds was a. 6.25% b. 10% c. 10.26% d. 9.75%

Q: Which of the following will have no effect on an employee’s take-home pay? a. social security tax b. unemployment tax c. marital status d. number of exemptions claimed

Q: goll clothing store had a balance in the accounts receivable account of $820,000 at the beginning of the year and a balance of $880,000 at the end of the year. net credit sales during the year amounted to $7,310,000. the receivables turnover ratio was a.8.6 times b.8.3 times c.8.2 times d.8.9 times

Q: goll clothing store had a balance in the accounts receivable account of $820,000 at the beginning of the year and a balance of $880,000 at the end of the year. net credit sales during the year amounted to $7,310,000. the average collection period of the receivables in terms of days was a.44 days b.42.4 days c.365 days d.41 days

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Q: On July 8, Jones Inc. issued an $80,000, 6%, 120-day note payable to Miller Company. Assume that the fiscal year of Jones ends on July 31. Using the 360-day year, what is the amount of interest expense recognized by Jones in the current fiscal year, rounded to the nearest dollar? a. $700 b. $4,200 c. $307 d. $1,400

Q: ford hardware store had net credit sales of $3,920,000 and cost of goods sold of $3,000,000 for the year. the accounts receivable balances at the beginning and end of the year were $650,000 and $750,000, respectively. the receivables turnover ratio was a.6.5 times b.6.0 times c.5.6 times d.6.2 times

Q: crestwood department store had net credit sales of $13,000,000 and cost of goods sold of $9,000,000 for the year. the average inventory for the year amounted to $2,500,000. the inventory turnover ratio for the year is a.3.6 times b.5.2 times c.3.0 times d.1.4 times

Q: Payroll taxes levied against employees become liabilities a. the first of the following month b. when the payroll is paid to employees c. when data are entered in a payroll register d. at the end of an accounting period

Q: On June 8, Smith Technologies issued a $75,000, 6%, 140-day note payable to Johnson Company. What are the proceeds of the note on June 8? a. 0 b. $70,500 c. $75,000 d. $76,750

Q: crestwood department store had net credit sales of $13,000,000 and cost of goods sold of $9,000,000 for the year. the average inventory for the year amounted to $2,500,000. the average days in inventory during the year was approximately a.261 days b.122 days c.101 days d.70 days

Q: roberts department store had net credit sales of $9,000,000 and cost of goods sold of $6,000,000 for the year. the average inventory for the year amounted to $2,500,000. the inventory turnover ratio for the year is a.3.6 times b.3.2 times c.3.0 times d.2.4 times

Q: Lee Company has the following information for the pay period of December 15–31: Gross payroll $16,000 Federal income tax withheld $4,000Social security rate 6.0% Federal unemployment tax rate 0.8%Medicare rate 1.5% State unemployment tax rate 5.4%Assuming that for the year to date no employees have reached the maximum earnings subject to FICA or unemployment taxes, salaries payable would be recorded for a. $16,000 b. $9,808 c. $10,800 d. $11,040

Q: roberts department store had net credit sales of $9,000,000 and cost of goods sold of $6,000,000 for the year. the average inventory for the year amounted to $2,500,000. the average days in inventory during the year was approximately a.101 days b.114 days c.122 days d.152 days

Q: Crafter Company has the following assets and liabilities:Assets Cash $28,000Accounts receivable 15,000Inventory 20,000Equipment 50,000 Liabilities Current portion of long-term debt $10,000Accounts payable 2,000Long-term debt 25,000Determine the quick ratio (rounded to one decimal place). a. 5.3 b. 3.6 c. 3.3 d. 2.3

Q: which one of the following would not be considered a liquidity ratio? a.current ratio b.inventory turnover ratio c.current cash debt coverage ratio d.return on assets ratio

Q: Excom sells radios, and each unit carries a two-year replacement warranty. The cost to repair defects under the warranty is estimated at 5% of the sales price. During September, Excom sells 100 radios for $50 each. One radio is actually replaced during September. For what amount in September would Excom debit Product Warranty Expense? a. $50 b. $250 c. $30 d. $120

Q: the asset turnover ratio is a.net sales divided by net income b.average total assets divided by net income c.net sales divided by average total assets d.average total assets divided by net sales

Q: The journal entry for the accrual of the employer’s payroll taxes would include a a. debit to Payroll Tax Expense for $2,500 b. debit to FICA Taxes Payable for $1,800 c. credit to Payroll Tax Expense for $248 d. debit to Payroll Tax Expense for $1,148

Q: the assets turnover ratio measures a.how often a company replaces its assets b.how efficiently a company uses its assets to generate sales c.the portion of the assets that have been financed by creditors d.the overall rate of return on assets

Q: Assuming a 360-day year, when a $50,000, 90-day, 9% interest-bearing note payable matures, the total payment will be a. $51,125 b. $54,500 c. $1,125 d. $4,500Use this information for Magnum Company to answer the following questions.The following totals for the month of April were compiled from the payroll data of Magnum Company: Salaries $12,000FICA taxes withheld 900Income taxes withheld 2,500Medical insurance deductions 450Federal unemployment taxes 32State unemployment taxes 216

Q: the profit margin ratio is calculated by dividing a.sales by cost of goods sold b.gross profit by net sales c.net income by stockholders' equity d.net income by net sales

Q: The journal entry for the issuance of an interest-bearing note for the purpose of borrowing funds for the business is a. debit Accounts Payable; credit Notes Payable b. debit Cash; credit Notes Payable c. debit Notes Payable; credit Cash d. debit Cash and Interest Expense; credit Notes Payable

Q: hermann corporation had net income of $200,000 and paid dividends to common stockholders of $50,000 in 2012. the weighted average number of shares outstanding in 2012 was 50,000 shares. hermann corporation's common stock is selling for $50 per share on the new york stock exchange. hermann corporation's price-earnings ratio is a.3 times b.10 times c.12.5 times d.4 times

Q: A pension plan that requires the employer to make annual pension contributions, with no promise to employees regarding future pension payments, is termed a. funded b. unfunded c. defined benefit d. defined contribution

Q: hermann corporation had net income of $200,000 and paid dividends to common stockholders of $50,000 in 2012. the weighted average number of shares outstanding in 2012 was 50,000 shares. hermann corporation's common stock is selling for $50 per share on the new york stock exchange. hermann corporation's payout ratio for 2012 is a.$5 per share b.20% c.25% d.10%

Q: Which of the following forms is typically given to employees at the end of the calendar year so that employees can file their individual income tax forms? a. Employee’s Withholding Allowance Certificate (Form W-4) b. Wage and Tax Statement (Form W-2) c. Employer's Quarterly Federal Tax Return (Form 941) d. 401k plans

Q: foster corporation had net income of $160,000 and paid dividends to common stockholders of $40,000 in 2012. the weighted average number of shares outstanding in 2012 was 50,000 shares. foster corporation's common stock is selling for $50 per share on the new york stock exchange. foster corporation's price-earnings ratio is a.3.2 times b.15.6 times c.10 times d.5 times

Q: A pension plan that promises employees a fixed annual pension benefit, based on years of service and compensation, is called a(n) a. defined contribution plan b. defined benefit plan c. unfunded plan d. compensation plan

Q: Anderson Co. issued a $50,000, 60-day, discounted note to National Bank. The discount rate is 6%. At maturity, assuming a 360-day year, the borrower will pay a. $53,000 b. $50,500 c. $50,000 d. $49,500

Q: foster corporation had net income of $160,000 and paid dividends to common stockholders of $40,000 in 2012. the weighted average number of shares outstanding in 2012 was 50,000 shares. foster corporation's common stock is selling for $50 per share on the new york stock exchange. faster corporation's payout ratio for 2012 is a.$5 per share b.25% c.20% d.12.5%

Q: Which of the following taxes are employers required to withhold from employees? a. FICA tax b. FICA tax and state and federal unemployment tax c. state unemployment tax d. federal unemployment tax

Q: the debt to total assets ratio measures a.the company's profitability b.whether interest can be paid on debt in the current year c.the proportion of interest paid relative to dividends paid d.the percentage of the total assets provided by creditors

Q: The journal entry for the conversion of a $6,300 account payable to a note payable would be a. Cash 6,300 Notes Payable 6,300 b. Notes Receivable 6,300 Notes Payable 6,300 c. Notes Payable 6,300 Cash 6,300 d. Accounts Payable 6,300 Notes Payable 6,300

Q: adams company reported the following on its income statement:an analysis of the income statement revealed that interest expense was $60,000. adams company's times interest earned wasa.6 timesb.7 timesc.8 timesd.5 times

Q: On June 1, Davis Inc. issued an $84,000, 5%, 120-day note payable to Garcia Company. Assume that the fiscal year of Garcia ends June 30. Using the 360-day year, what is the amount of interest revenue recognized by Garcia in the following year, rounded to the nearest dollar? a. $700 b. $1,600 c. $1,062 d. $4,200

Q: trading on the equity (leverage) refers to the a.amount of working capital b.amount of capital provided by owners c.use of borrowed money to increase the return to owners d.number of times interest is earned

Q: rice company reported the following on its income statement:an analysis of the income statement revealed that interest expense was $80,000. rice company's times interest earned wasa.8 timesb.7.25 timesc.6.25 timesd.4.4 times

Q: Sadie White receives an hourly wage rate of $30, with time-and-a-half pay for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 48; federal income tax withheld, $300; social security tax rate, 6.0%; and Medicare tax rate, 1.5%. What is the net amount to be paid to White? a. $1,443 b. $1,143 c. $1,260 d. $1,000

Q: a company that is leveraged is one that a.has a high earnings per share b.contains debt financing c.contains equity financing d.has a high current ratio

Q: Hall Company sells merchandise with a one-year warranty. In the current year, sales consist of 4,500 units. It is estimated that warranty repairs will average $10 per unit sold and 30% of the repairs will be made in the current year and 70% in the next year. On the current year's income statement, Hall should show warranty expense of a. $45,000 b. $13,500 c. $31,500 d. $0

Q: analysts are interested in sustainable income, which is equal to the past years net income.

Q: Which of the following would most likely be classified as a current liability? a. two-year note payable b. bond payable c. mortgage payable d. unearned rent

Q: comprehensive income includes all revenues, expenses, gains, losses, and dividends.

Q: An employee receives an hourly wage rate of $15, with time-and-a-half for all hours worked in excess of 40 during the week. Payroll data for the current week are as follows: hours worked, 48; federal income tax withheld, $120; social security tax rate, 6.0%; Medicare tax rate, 1.5%; state unemployment compensation tax, 3.4% on the first $7,000; and federal unemployment compensation tax, 0.8% on the first $7,000. What is the net amount to be paid to the employee? a. $568.74 b. $601.50 c. $660.00 d. $574.90

Q: comprehensive income includes all changes in stockholders equity during a period except those resulting from investments by stockholders and distributions to stockholders.

Q: The cost of a product warranty should be included as an expense in the a. period the cash is collected for a product sold on account b. future period when the cost of repairing the product is paid c. period of the sale of the product d. future period when the product is repaired or replaced

Q: horizontal, vertical, and circular analyses are the basic tools of financial statement analysis.

Q: The journal entry a company uses for the estimated product warranty expense is a. debit Product Warranty Expense; credit Product Warranty Payable b. debit Product Warranty Payable; credit Cash c. debit Product Warranty Expense; credit Cash d. debit Product Warranty Payable; credit Product Warranty Expense

Q: comparisons of company data with industry averages provide information about a company's relative position within the industry.

Q: The journal entry for the monthly payroll on April 30 would include a a. credit to Salaries Payable for $8,150 b. debit to Salaries Expense for $7,902 c. debit to Salaries Payable for $8,150 d. debit to Salaries Payable for $7,902

Q: intracompany comparisons of the same financial statement items are often useful to detect changes in financial relationships and significant trends.

Q: a primary purpose of vertical analysis is to observe trends over a three-year period.

Q: in horizontal analysis, if an item has a negative amount in the base year, and a positive amount in the following year, no percentage change for that item can be computed.

Q: The journal entry a company uses for accrued vacation privileges for its employees at the end of the year is a. debit Vacation Pay Expense; credit Vacation Pay Payable b. debit Vacation Pay Payable; credit Vacation Pay Expense c. debit Salaries Expense; credit Cash d. debit Salaries Expense; credit Salaries Payable

Q: if a company has sales of $130 in 2012 and $182 in 2011, the percentage decrease in sales from 2011 to 2012 is 140%.

Q: The following totals for the month of June were compiled from the payroll data of Young Company: Salaries expense $15,000Social security and Medicare taxes withheld 1,125Income taxes withheld 3,000Retirement savings 500Salaries subject to federal and state unemployment taxes of 6.2% 4,000 The journal entry for the accrual of the employer’s payroll taxes would include a debit to a. Payroll Tax Expense for $2,498 b. Social Security and Medicare Tax Payable for $2,250 c. Payroll Tax Expense for $1,373 d. Payroll Tax Expense for $3,000

Q: The following totals for the month of June were taken from the payroll register of Arcon Company: Salaries expense $14,000Social security and Medicare taxes withheld 1,050Income taxes withheld 2,600Retirement savings 1,000 The journal entry for the payment of net pay would include a a. debit to Salaries Payable for $14,000 b. debit to Salaries Payable for $9,350 c. credit to Salaries Expense for $9,350 d. credit to Salaries Payable for $9,350

Q: another name for horizontal analysis is trend analysis.

Q: An aid in internal control over payrolls that indicates employee attendance is the a. time card b. voucher system c. payroll register d. employee's earnings record

Q: horizontal analysis is a technique for evaluating a financial statement item in the current year with other items in the current year.

Q: The journal entry for the payment of an interest-bearing note is a. debit Cash; credit Notes Payable b. debit Accounts Payable; credit Cash c. debit Notes Payable and Interest Expense; credit Cash d. debit Notes Payable and Interest Receivable; credit Cash

Q: in horizontal analysis, the base year is the most current year being examined.

Q: The current portion of long-term debt should a. be classified as a long-term liability b. not be separated from the long-term portion of debt c. be paid immediately d. be reclassified as a current liability

Q: in a common size income statement, net sales are represented by 100%.

Q: common size analysis expresses each item in a financial statement as a percent of a base amount.

Q: Assume that social security taxes are payable at a 6.0% rate and Medicare taxes are payable at a 1.5% rate with no maximum earnings, and federal and state unemployment compensation taxes total 4.6% on the first $7,000 of earnings. If an employee earns $2,500 for the current week and the employee's year-to-date earnings before this week were $6,800, what is the total payroll tax related to the current week? a. $187.50 b. $196.70 c. $344.50 d. $9.20

Q: Which of the following is included in the employer's payroll taxes? a. SUTA tax b. FUTA tax c. social security tax d. All of these choices

Q: vertical analysis is a technique for evaluating a series of financial statement data over a period of time to determine the increase (decrease) that has taken place.

Q: McKay Company sells merchandise with a one-year warranty. In Year 1, sales consisted of 1,200 units. It is estimated that warranty repairs will average $10 per unit sold and 30% of the repairs will be made in Year 1 and 70% in Year 2. On the Year 1 income statement, McKay should show warranty expense of a. $3,600 b. $8,400 c. $12,000 d. $0

Q: in a common size balance sheet, total assets are represented by 100%.

Q: Wright Company sells merchandise with a one-year warranty. In the current year, sales consisted of 2,000 units. It is estimated that warranty repairs will average $15 per unit sold and 30% of the repairs will be made in the current year and 70% in the next year. On the current year's income statement, Wright should show warranty expense of a. $9,000 b. $21,000 c. $30,000 d. $0

Q: in a common size income statement, each item is expressed as a percentage of net income.

Q: A current liability is a debt that is reasonably expected to be paid a. between 6 and 18 months b. out of currently recognized revenues c. within one year d. out of cash currently on hand

Q: using vertical analysis of the income statement, a company's net income as a percentage of net sales is 15%; therefore, the cost of goods sold as a percentage of sales must be 85%.