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Multiple Choice: (3 points each) Select the best answer for

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Multiple Choice: (3 points each) Select the best answer for each of the following.

1. The Retained Earnings account is comprised of
a. Cash retained in the business
b. Cash reinvested in the business by shareholders
c. The cumulative earnings less dividends since the inception of the corporation
d. The earnings of the corporation for the current year

2. A company’s long-term ability to generate cash internally or from external sources in order to satisfy plant capacity needs, fuel growth, and repay debt when due is
a. Solvency
b. Liquidity
c. Profitability
d. Credit risk

Use the following information provided in the Sanchez Company’s annual report to answer question 3.
2004__ 2003__ 2002__
Sales $178,400 $162,500 $155,500
Cost of Goods Sold 115,000 102,500 100,000
Operating Expenses 50,000 50,000 45,000
Net income 13,400 10,000 10,500

3. In a trend income statement (horizontal analysis) for 2004, where 2002 is the base year, Sanchez Company’s sales is expressed as

a. 87.2%
b. 100.0%
c. 114.7%
d. 148.7%

Use the following information taken from Wenzel Corporation’s condensed balance sheets to answer questions 4.

Assets 2004__ 2003__ 2002__
Current Assets $ 55,000 $ 56,500 $ 70,000
Plant and Equipment (net) 495,000 410,000 440,000
Intangible Assets (net) 20,000 27,500 40,000
Total Assets $570,000 $494,000 $550,000

Liabilities & Stockholders’ Equity
Current Liabilities $ 40,000 $ 35,000 $ 32,500
Long-Term Liabilities 395,000 310,000 375,000
Stockholders’ Equity 135,000 149,000 142,500
Total Liabilities & Stockholders’ Equity $570,000 $494,000 $550,000

4. In a common size balance sheet (vertical analysis) for 2003, Wenzel Corporation’s Plant and Equipment (net) is expressed as

a. 83.0%
b. 83.6%
c. 91.1%
d. 100.0%

5. Under the matching principle, the apportionment of the cost of a copyright to future periods is called
a. Depletion
b. Amortization
c. Depreciation
d. Allocation

6. When a company has an operating lease for its primary premises, it would report a lease asset on the balance sheet equal to

a. zero
b. the present value of the future lease payments
c. the sum of the future lease payments
d. the lesser of the fair market value of the asset or the present value of the future lease payments

7. If a corporation signs a 15 year lease for a building and the present value of the lease payments is $350,000, the lease is a capital lease if the

a. fair value of the building is $400,000
b. remaining useful life of the building on the date the lease is signed is 19 years
c. lessee can purchase the building for $575,000 at the end of the lease
d. building reverts back to the lessor at the end of the lease

8. When accounting for a capital lease, which of the following expenses would be reported in the income statement?
a. Depreciation expense
b. Depletion expense
c. Rent expense
d. Lease operating expense

9. When a specific accounts receivable is written off against allowance for doubtful accounts
a. Net accounts receivable decreases
b. The current ratio decreases
c. Gross accounts receivable decreases
d. The current ratio increases

10. All the following are principles of internal control except:
a. Having a yearly audit by an independent auditing firm
b. Segregation of duties
c. Documentation procedures
d. Establishment of responsibility
e. Physical, mechanical and electronic controls

11. The expense for cost of goods sold is equal to
a. Cost of beginning inventory plus net purchases
b. Cost of goods available for sale less beginning inventory
c. Cost of goods available for sale less ending inventory
d. Net purchases less cost of ending inventory

12. Current assets are those assets that are expected to be converted into cash within

a. One year
b. The operating cycle
c. The operating cycle or one year, whichever is longer
d. The operating cycle or one year, whichever is shorter

13. The quick ratio is equal to
a. Current assets divided by current liabilities
b. Current assets minus inventory divided by current liabilities
c. Current assets plus inventory divided by current liabilities
d. Cash, short term investments and receivables divided by current liabilities

14. Poulo Company reports the following account balances on its balance sheet:

Cash $100
Accounts Receivable 500
Allowance for Doubtful Accounts 25
Inventory 700
Machinery 900
Patents 80

How much is Poulo's total current assets?

a. $2,255
b. $1,325
c. $1,275
d. $575

15. Which of the following should not be included in cash balances?

a. Certified checks
b. Demand deposits
c. Post-dated checks
d. Petty cash

16. Which of the following items is not a liability?

a. Accrued estimated warranty costs
b. Dividends payable in a company’s own stock
c. Advances from customers on contracts
d. The portion of long-term debt due within one year

17. If a discount on bonds payable is amortized by the effective interest method, the reported interest expense will

a. Increase over the term of the bonds
b. Decrease over the term of the bonds
c. Remain the same, while the amount of amortization decreases each period
d. Decrease for several years and then increase

18. STU made the following journal entry at the end of the first lease year:

CASH 1,500

STU must have a(n):

a. sales-type lease
b. direct financing lease
c. capital lease
d. operating lease

19. On February 1, 20x1, Hogue Corp., a newly formed company, had the following stock issued and outstanding:
• Common stock, no par, $1 stated value, 10,000 shares originally issued for $15 per share
• Preferred stock, $10 par value, 3,000 shares originally issued for $25 per share

Hogue's February 1, 20x1 statement of stockholders' equity should report

Common Preferred Paid-in
Stock Stock Capital
a. $ 10,000 $ 75,000 $ 140,000
b. $ 10,000 $ 30,000 $ 185,000
c. $ 150,000 $ 30,000 $ 45,000
d. $ 150,000 $ 75,000 $ -0-

True/False (2 points each): Circle T for true and F for false

20. T F Rent received in advance is an example of an asset.

21. T F Liabilities arise from past transactions or events

22. T F A balance sheet reflects the resources, obligations, and equity of an enterprise over a period of one year or one operating cycle, whichever is longer
23. T F Aging accounts receivable emphasizes the balance sheet valuation of accounts receivable over the amount of bad debt expense reported in the income statement.

24. T F Investments in stocks that are expected to be held for the long term are listed in the stockholder's equity section of the balance sheet.

25. T F. Federal income taxes withheld from employees is not a current liability of the employer because under federal income tax law the employer is required to withhold the tax.

26. T F The total amount of interest expense over the life of a bond that was issued at a discount is equal to the total amount of the interest payments plus the amount of the discount.

27. T F All long-term leases should be capitalized in the accounts of the lessee.

28. T F When comparing two companies of different sizes, the current ratio is a better measure to determine one company’s liquidity than is working capital.

29. Selected data of the Rau Company follows (7 points) :
2002 2003 2004__
Sales $250,000 $300,000
Cost of goods sold 100,000 125,000
Inventory $ 30,000 35,000 45,000
Inventory Turnover Ratio
(Industry Average) 6.0 times 5.8 times

A. For Rau Co., the Inventory Turnover Ratio is ________ ________
Calculate answers to 3 decimal places.

B. The numbers in (A) identify a ‘red flag’
that merits further investigation Yes / No

C. Why or why not?

Classify the following ratios in the appropriate category (L, P or S):
(1 point each)

L Short-term Liquidity
P Profitability
S Long-term Solvency Risk

_____ 30. Accounts Receivable Turnover

_____ 31. Quick Ratio

_____ 32. Return on Assets

_____ 33. Interest Coverage Ratio

_____ 34. Profit Margin Ratio

_____ 35. Inventory Turnover

_____ 36. Return on Equity

37. (7 points)

Mavis Company purchased a truck for $100,000 on January 2, 2004. The truck has an expected salvage value of $5,000 at the end of its five year useful life. For double declining balance depreciation, assume the company switches to the straight-line method after 3 years.
A. Depreciation Expense in 2008 under straight line depreciation is


B. Depreciation Expense in 2004 under double-declining balance depreciation is


38. (1 point each) A retail store has completed certain transactions that management believes may have caused current liabilities. Indicate by check mark whether the following items should be classified as current liabilities at December 31.

Classified as a Current Liability?
Yes No Unknown

(a) Accrued interest on a bond. Interest is payable
on March 31, next year

(b) Unremitted (unpaid) amounts withheld from
employees for hospital insurance

(c) Obligation on gift certificates
redeemable during next year

(d) Unremitted (i.e. unpaid) sales tax collected
Thanks for requesting me. Please let me know your deadline.
Customer: replied 4 years ago.

My dead line is at 3 hours now... I am traveling and I am working on the question as well. But I am struggling as my focus is on this as well as trying to get home. I need help ... are you able to complete in a couple of hours at the earliest?

I am working on it and should be done before your deadline.
Customer: replied 4 years ago.

Thank you so much Linda.. and I will do.

You are welcome.

Please click here for solution

Please review and let me know if you have any questions and for future timed assignments please do setup time in advance.

For requesting me please do write "FOR LINDA" at start of your post.
Please click here for solution

Please review and let me know if you have any questions and for future timed assignments please do setup time in advance.

For requesting me please do write "FOR LINDA" at start of your post.
linda_us and other Multiple Problems Specialists are ready to help you
Customer: replied 4 years ago.

Thank you, I am still working on everything and looking over. I will rate shortly... Thanks so much again

Customer: replied 4 years ago.

Hi Linda,


I am not sure if you could help me with this Delimma but I am now in FIN 419 course and the Team that I am a part of fail to provide me all of the contents on time. This is the assignment it is a paper in which I will need it to be original. I will try to place some of my contents in the paper as well as some of the other team members. But I am at work right now and will not be able to sit down and look over everything to complete and turn in until after 7pm CST it is due at 11:59 CST. Please see the assignment below and the team members chose Apple,Inc.



Select a financial initiative from the management’s message to the shareholders using its most recent annual report and other financial statements submitted to the Securities and Exchange Commission.

Write a 1,400- to 1,750-word paper in which you compare and contrast three potential financial outcomes your Learning Team envisions for the initiative. Complete the following in your paper:

  • Evaluate your findings to determine the most likely outcome.

  • Include calculations that support your analysis of various financial outcomes and discuss the financial effect on the organization.

Format your paper consistent with APA guidelines.


ARE YOU ABLE TO HELP? Please let me know.



Hi Demi


Thanks for asking me but I won't be able to help you with this question.


In your new post you can remove my name and post your new question so that other experts can help you.


Hopefully I can help you with your future question.

Customer: replied 4 years ago.

Ok thanks...