25 Accounting Study Questions General Accounting Study Questions . 1. If a company fails to record estimated bad debts expense, A) cash realizable value is understated. B) expenses are understated. C) revenues are understated. D) receivables are understated. . 2. The method of
1. Financing activities for corporations include borrowing money and selling shares of their own stock. A.) True B.) False 2. Income will always be greater under the cash basis of accounting than under the accrual basis of accounting. A.) True B.) False 4. The statement of cash flows discloses significant events
1. Which of the following is not a piece of qualitative information in a decision? A) The effect of the decision on employees' morale. B) The effect of the decision on customer perception of service quality. C) The effect of the decision on the quality of the product produced. D) The total cost savings to be gained
Describe what prepaid health care plans are and some of the related accounting issues. Note: Please cite the sources
Describe the treatment of a not-for-profit, nongovernmental foundation that is related to a public university under GASBS 39 "Determining Whether Certain Organizations Are Component Units" (2002). Note: Please cite the sources
Describe the process for becoming a tax-exempt organization. Why is it important for an accountant to understand this process? Note: Please cite the sources
Tulsa Corporation purchased 15 percent of the common stock of Holden Company on January 1, 2002, for $525,900, the stock's underlying book value. During 2002 and 2003, Holden reported net income of $70,000 and $84,000, respectively, and paid dividends of $20,000 for each of the 2 years. On January 2, 2004, Tulsa purchased addi
Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural area for the company to consider is the production of winter lotions and creams to prevent dry and chapped skin. After consider
What is the balance in Heinreich's investment account at December 31, 2002? Salem Co. had the following account balances as of February 1, 2002: See attached file for full problem description. On January 2, 2002, Heinreich Co. paid $500,000 for 25% of the voting common stock of Jones Corp. At the time of the investmen
Which types of transactions, exchanges, or events would indicate that an investor has the ability to exercise significant influence over the operations of an investee?
P20-1 (2 year reconciliation schedule) On January 1, 2008, Diana Peter Company has the following defined benefit pension plan balances. Projected benefit obligation $4,200,000 Fair Value of plan assets 4,200,000 The interest (Settlement) rate applicable to the plan is 10% . On January 1, 2009, the c
Herbert, Inc., buys all of the outstanding stock of Rambis Company on January 1, 2003, for $574,000. Annual excess amortization of $12,000 results from this purchase transaction. On the date of the takeover, Herbert reported retained earnings of $400,000 while Rambis reported a $200,000 balance. Herbert reported internal income
Two recent graduates open a compute shop and incorporate in several states. Eight prospects for retail outlets have already been identified in these states. They are ready for business, all that is lacking is adequate financing to continue the project. A small group of private investors are interested in financing the company.
1. Define the term revenue and distinguish between that term and other financing sources. 2. Distinguish between the Encumbrances account and the Reserve for Encumbrances account. 3. Define the term expenditure and distinguish between that term and each of the following terms: 1) Expense 2) Disbursement 3) Encu
True/False 7. Budgetary accounts used in the General Fund include Estimated Revenues, Revenues, Appropriations, Encumbrances, and Expenditures. 8. An encumbrance represents the estimated liability for goods placed on order. 9. Government-wide financial statements do not include funds. 10. Revenues and expenditu
True/False 1. Program revenues and general revenues are not distinguished on the government-wide statement of activities under GASBS 34. 2. Fund equity of the General Fund at the end of the fiscal year is defined as the difference between its assets and its liabilities. 3. Interfund transfers and debt issue proceeds
Computing Income Tax Expense Swan Products Inc. owns 25 percent of Computech Computer Company's common stock, purchased December 28, 20X3, at book value. During the three years, subsequent to the acquisition of its stock by Swan Products, Computech reported the following net income and dividends:
Please view the attached file. Equity Entries with Differential: On January 1, 20X0, Hunter Corporation issued 6,000 of its $10 par value shares to acquire 45 percent of the shares of Arrow Manufacturing Arrow Manufacturing's balance sheet immediately before the acquisition contained the following items (Arrow Manufactur
Analysis Investment in Joint Venture Tye Corporation invested in an unincorporated joint venture and elected to use pro rata consolidation in preparing its financial statements. For the year ended December 31, 20X3, Tye reported income of $52,000 from its separate operations and net income of $60,000. The joint venture repor
Easy Chair Company purchased 40 percent ownership of Stuffy Sofa Corporation on January 1, 20X1, for $150,000. Stuffy Sofa's balance sheet at the time of acquisition was as follows: (see balanced sheet attached) Analysis Computation of Account Balances During 20X1 Stuffy Sofa Corporation reported net income of $30,000 and
Equity Method Accounting Shoehorn Corp. owns 40 percent of the stock of Amalgamated leather Tanneries and is debating the proper procedures to use in reporting its ownership. Shoehorn Corporation produces high-quality leather products and purchases approximately 85 percent of Amalgamated Leather's annual production. Because
Analysis: Comprehensive Business Combination Problem Integrated Industries Inc. entered into a business combination agreement with Hydrolized Chemical Corporation (HCC) to ensure an uninterrupted supply of key raw materials and to realize certain economies from combining the operating process and the marketing efforts of the t
See attached for Balance Sheets Analysis: In preparation for a possible business combination, a team of experts from Boogie Musical made a thorough examination and audit of Toot-Toot Tuba. They found that Toot-Toot's assets and liabilities were correctly stated except that they estimated uncollectible accounts at $1,400.
I need to advise someone about contributing to an employer's 401(k) plan to save money for retirement. She wonders how much she would save on her income taxes by contributing to the plan. She can invest up to 7% of her income into the plan. Her current income is US$45,000 per year, and she is in the 15% tax bracket. I want to
Ludlam Company and Kassandra Company both make school desks. They have the same production capacity, but Ludlam is more automated than Kassandra. At an output of 2,500 desks per year, the two companies have the following costs: Ludlam Kassandra Fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Creation of New Subsidiary Krantz Company and Dull Corporation decided to form a partnership. Krantz agreed to transfer the following assets and accounts payable to K&D Partnership in exchange for 60 percent ownership: Cost Book Value Cash $ 10,000 $ 10,000 Inventory 30,000 30,000 Land
Creation of New Subsidiary Eagle Corporation established a subsidiary to enter into a new line of business considered to be substantially more risky than Eagle's current business. Eagle transferred the following assets and accounts payable to Sand Corporation in exchange for 5,000 share of $10 par value stock of Sand:
Business Combinations A merger boom comparable to those of the 1960s and mid-1980s occurred in the 1900s and into the new century. The merger activity of the 1960s was associated with increasing stock prices and heavy use of pooling of interests accounting. The mid-1980s activity was associated with a number of leverage buyou
How can having more work-in-process (WIP) inventory improve the efficiency of a process? Conversely, how can it decrease the efficiency of a process?
Budgetary accounting for regular serial bond debt service funds differs somewhat from that for deferred serial bond or term bond debt service funds. Explain these differences. Note: Cite the sources