Questions and Answers of Financial Accounting Tools For Business

Nona Curry started her own consulting firm, Curry Consulting Inc., on May 1, 2025. The following transactions occurred during the month of May.May 1 Stockholders invested $\$ 15,000$ cash in the
Bindy Crawford created a corporation providing legal services, Bindy Crawford Inc., on July 1,2025 . On July 31 the balance sheet showed Cash $\$ 4,000$, Accounts Receivable $\$ 2,500$, Supplies
Ayala Architects incorporated as licensed architects on April 1, 2025. During the first month of the operation of the business, these events and transactions occurred:Apr. 1 Stockholders invested
This is the trial balance of Lacey Company on September 30.The October transactions were as follows.Oct. 5 Received $\$ 1,300$ in cash from customers for accounts receivable due.10 Billed customers
The Triquel Theater Inc. was recently formed. It began operations in March 2025. The Triquel is unique in that it will show only triple features of sequential theme movies. On March 1, the ledger of
On July 31, 2025, the general ledger of Hills Legal Services Inc. showed the following balances: Cash $\$ 4,000$, Accounts Receivable $\$ 1,500$, Supplies $\$ 500$, Equipment $\$ 5,000$,
Pamper Me Salon Inc.'s general ledger at April 30, 2025, included the following: Cash $\$ 5,000$, Supplies $\$ 500$, Equipment $\$ 24,000$, Accounts Payable $\$ 2,100$, Notes Payable \(\$
The August 5, 2020, issue of the Wall Street Journal includes an article by Tomio Geron entitled "Former Trustify CEO's Indictment Highlights Due Diligence Dilemma."InstructionsRead the article and
Which principle dictates that efforts (expenses) be recorded with accomplishments (revenues)?a. Expense recognition principle.b. Historical cost principle.c. Periodicity principle.d. Revenue
What are the first step and the final step in the revenue recognition process?a. The first step is identify the contract with customers, and the final step is allocate the transaction price to the
Adjustments for accrued revenues:a. increase assets and increase liabilities.b. increase assets and increase revenues.c. decrease assets and decrease revenues.d. decrease liabilities and increase
Colleen Mooney earned a salary of $\$ 400$ for the last week of September. She will be paid on October 1. The adjusting entry for Colleen's employer at September 30 is: a. No entry is required. b.
The ledger of Dey Company includes the following accounts. Explain why each account may need adjustment.a. Supplies.c. Salaries and Wages Payable.b. Unearned Service Revenue.d. Interest Payable.
At the end of its first year, the trial balance of Denton Company shows Equipment of $\$ 40,000$ and zero balances in Accumulated Depreciation-Equipment and Depreciation Expense. Depreciation for
You are asked to prepare the following accrual adjusting entries at December 31.1. Services performed but not recorded are $\$ 4,200$.2. Utility expenses incurred but not paid are $\$ 660$.3.
The trial balance for Blair Company includes the following balance sheet accounts. Identify the accounts that may require adjustment. For each account that requires adjustment, indicate(a) the type
The adjusted trial balance of Harmony Company includes the following accounts at December 31, 2025: Cash $\$ 12,000$, Retained Earnings $\$ 22,000$, Dividends $\$ 3,000$, Service Revenue \(\$
The ledger of Quintana Company contains the following balances: Retained Earnings $\$ 40,000$, Dividends $\$ 3,000$, Service Revenue $\$ 65,000$, Salaries and Wages Expense $\$ 39,000$, and
The income statement of Bragg Co. for the month of July shows net income of $\$ 1,400$ based on Service Revenue $\$ 5,500$, Salaries and Wages Expense $\$ 2,300$, Supplies Expense $\$ 1,200$,
Arapaho Company ended its fiscal year on July 31, 2025. The company's adjusted trial balance as of the end of its fiscal year is as follows.Instructionsa. Prepare the closing entries.b. Post to
Abe Technologies provides maintenance service for computers and office equipment for companies throughout the Northeast. The sales manager is elated because she closed a $\$ 300,000$, 3-year
The ledger of Umatilla, Inc. on March 31, 2025, includes the following selected accounts before adjusting entries.An analysis of the accounts shows the following.1. Insurance expires at the rate of
Jean Karns is the new owner of Jean's Computer Services. At the end of July 2025 , her first month of ownership, Jean is trying to prepare monthly financial statements. She has the following
The following independent situations require professional judgment for determining when to recognize revenue from transactions. Assume the companies make monthly adjusting entries.a. Google sells an
Franken Company, a ski tuning and repair shop, opened on November 1, 2024. The company carefully kept track of all its cash receipts and cash payments. The following information is available at the
A partial adjusted trial balance for Ramon Company is given in E4.17InstructionsPrepare the closing entries at January 31, 2025.Data from E4.17This is a partial adjusted trial balance of Ramon
Len Kumar started his own consulting firm, Kumar Consulting, on June 1, 2025. The trial balance at June 30 is as follows.In addition to those accounts listed on the trial balance, the chart of
The following is Wolastoq Tours Inc.'s unadjusted trial balance at its year-end, November 30, 2025. The company adjusts its accounts annually.Additional information:1. The insurance policy has a
The Moto Hotel opened for business on May 1, 2025. Here is its trial balance before adjustment on May 31.Other data:1. Insurance expires at the rate of $450$450 per month.2. A count of supplies shows
Salt Creek Golf Inc. was organized on July 1, 2025. Quarterly financial statements are prepared. The trial balance and adjusted trial balance on September 30 are shown as follows.Instructionsa.
A review of the ledger of Lewis Company at December 31, 2025, produces these data pertaining to the preparation of annual adjusting entries.1. Prepaid Insurance $\$ 15,200$. The company has
Roadside Travel Court was organized on July 1, 2024, by Betty Johnson. Betty is a good manager but a poor accountant. From the trial balance prepared by a part-time bookkeeper, Betty prepared the
On November 1, 2025, the following were the account balances of Soho Equipment Repair.During November, the following summary transactions were completed.Nov. 8 Paid $\$ 1,220$ for salaries due
Mike Greenberg opened Kleene Window Washing Inc. on July 1, 2025. During July, the following transactions were completed.July 1 Issued 12,000 shares of common stock for $\$ 12,000$ cash.1 Purchased
AP Lars Linken opened Lars Cleaners on March 1, 2025. During March, the following transactions were completed.Paid $1,500 cash to cover rent from March 1 through May 31.Paid $\$ 2,400$ cash on a
(LO 2, 3, 4), AP On August 1, 2025, the following were the account balances of B\&B Repair Services.During August, the following summary transactions were completed.Aug. 1 Paid $\$ 400$ cash
The financial statements of Apple Inc. are presented in Appendix A.Instructionsa. Using the consolidated income statement and balance sheet, identify items that may result in adjusting entries for
Abbey Park was organized on April 1, 2024, by Trudy Crawford. Trudy is a good manager but a poor accountant. From the trial balance prepared by a part-time bookkeeper, Trudy prepared the following
Which of the following statements about a periodic inventory system is true?a. Companies determine cost of goods sold only at the end of the accounting period.b. Companies continuously maintain
Which sales accounts normally have a debit balance?a. Sales Discounts.b. Sales Returns and Allowances.c. Both Sales Discounts and Sales Returns and Allowances.d. Neither Sales Discounts nor Sales
Bufford Corporation had reported the following amounts at December 31, 2025: sales revenue $\$ 184,000$, ending inventory 11,600\), beginning inventory $\$ 17,200$, purchases $\$ 60,400$,
Which of the following would affect the gross profit rate? (Assume sales remains constant.)a. An increase in advertising expense.b. A decrease in depreciation expense.c. An increase in cost of goods
The gross profit rate is equal to:a. net income divided by sales.b. cost of goods sold divided by sales.c. net sales minus cost of goods sold, divided by net sales.d. sales minus cost of goods sold,
During the year ended December 31, 2025, Bjornstad Corporation had the following results: net sales $\$ 267,000$, cost of goods sold $\$ 107,000$, net income $\$ 92,400$, operating expenses
A quality of earnings ratio:a. is computed as net income divided by net cash provided by operating activities.b. that is less than 1 indicates that a company might be using aggressive accounting
Which is not one of the three forms of business organization?a. Sole proprietorshipb. Creditorship.c. Partnership.d. Corporation.
Which is an advantage of corporations relative to partnerships and sole proprietorships?a. Lower taxes.b. Harder to transfer ownership.c. Reduced legal liability for investors.d. Most common form of
Which of the following did not result from the SarbanesOxley Act?a. Top management must now certify the accuracy of financial information.b. Penalties for fraudulent activity increased.c.
Which is not one of the three primary business activities?a. Financing.b. Operating.c. Advertising.d. Investing.
Which of the following is an example of a financing activity?a. Issuing shares of common stock.b. Selling goods on account.c. Buying delivery equipment.d. Buying inventory.
The financial statements for Macias Corporation contained the following information.What was Macias Corporation's net income?a. $60,000.b. $15,000.c. $65,000.d. $45,000. Accounts receivable Sales
What section of a statement of cash flows indicates the cash spent on new equipment during the past accounting period?a. The investing activities section.b. The operating activities section.c. The
Which statement presents information as of a specific point in time?a. Income statement.b. Balance sheet.c. Statement of cash flows.d. Retained earnings statement.
Stockholders' equity represents:a. claims of creditors.b. claims of employees.c. the difference between revenues and expenses.d. claims of owners.
As of December 31, 2025, Rockford Corporation has assets of $3,500 and stockholders' equity of $1,500. What are the liabilities for Rockford as of December 31,
The element of a corporation's annual report that describes the corporation's accounting methods is/are the:a. notes to the financial statements.b. management discussion and analysis.c. auditor's
The element of the annual report that presents an opinion regarding the fairness of the presentation of the financial position and results of operations is/are the:a. income statement.b. auditor's
At the beginning of the year, Ortiz Company had total assets of $900,000 and total liabilities of $440,000. Answer the following questions.a. If total assets decreased $100,000 during the year and
Indicate whether the following items would appear on the income statement (IS), balance sheet (BS), or retained earnings statement (RES).a. _________ Common stock.b. _________Cash.c. _________
Presented below in alphabetical order are balance sheet items for Feagler Company at December 31, 2025. Prepare a balance sheet following the format of Illustration 1.8.Data from Illustration 1.8
Identify whether the following items would appear on the balance sheet (BS) or income statement (IS) of a corporation.a. _________ Income taxes payable.b. _________ Cost of goods sold.c. _________
The following items and amounts were taken from Ricardo Inc.'s 2025 income statement and balance sheet.InstructionsPrepare an income statement for Ricardo Inc. for the year ended December 31, 2025.
Cozy Bear is a private camping ground near the Mountain Home Recreation Arca. It has compiled the following financial information as of December 31, 2025.Instructionsa. Determine net income from Cozy
Jeff Andringa, a former college hockey player, quit his job and started Ice Camp, a hockey camp for kids ages 8 to 18. Eventually, he would like to open hockey camps nationwide. Jeff has asked you to
What arc the four most common types of data analytics, and what basic question does each address?
In alphabetical order below are balance sheet items for Karol Company at December 31, 2025. Prepare a balance sheet following the format of Illustration 1.8.Accounts payable
a) Gray Corporation began operations on January 1, 2025. The following information is available for Gray on December 31, 2025.b) Prepare an income statement, a retained earnings statement, and a
The following information is available for Randall Inc.InstructionsUsing the information above, prepare a balance sheet as of December 31, 2025. Accounts receivable Accounts payable Interest payable
Otay Lakes Park is a private camping ground near the Mount Miguel Recreation Area. It has compiled the following financial information as of December 31, 2025.Instructionsa. Determine Otay Lakes
Kellogg Company is the world's leading producer of ready-to-eat cereal and a leading producer of grain-based convenience foods such as frozen waffles and cereal bars. Suppose the following items were
AP Suppose the following data are derived from the 2025 financial statements of Southwest Airlines. (All dollars are in millions.) Southwest has a December 31 year-end.Instructionsa. After analyzing
The following list of accounts, in alphabetical order, is for Aventura Inc. at November 30, 2025.Instructions a. For each of the above accounts, identify whether it is an asset (A), liability (L),
On June 1, 2025, Elite Service Co. was started with an initial investment in the company of $22,100 cash. Here are the assets, liabilities, and common stock of the company at June 30, 2025, and the
Reese Inc., a provider of consulting services, was founded on October 1, 2025. At the end of the first month of operations, the company decided to prepare an income statement, retained earnings
Presented below is selected financial information for Rojo Corporation for December 31, 2025.Instructionsa. Prepare the statement of cash flows for Rojo Corporation.b. Comment on the adequacy of net
Micado Corporation was formed on January 1, 2025. At December 31, 2025, Miko Liu, the president and sole stockholder, decided to prepare a balance sheet, which appeared as follows.Miko willingly
The financial statements of Apple Inc. are presented in Appendix A. Instructions Refer to Apple's financial statements and answer the following questions.a. What were Apple's total assets at
Columbia Sportswear Company's financial statements are presented in Appendix B. Financial statements of Under Armour, Inc. are presented in Appendix C. Instructionsa. Based on the information in
Amazon.com, Inc.'s financial statements are presented in Appendix D. Financial statements of Walmart Inc. are presented in Appendix E. Instructionsa. Based on the information contained in these
Sylvia Ayala recently accepted a job in the production department at Johnson & Johnson. Before she starts work, she decides to review the company's annual report to better understand its
Ethical behavior is fundamental to communications between investors and companies. However, it is difficult for company founders to control their enthusiasm in discussions related to their company,
The balance in retained earnings is not affected by:a. net income.b. net loss.c. issuance of common stock.d. dividends.
Which is an indicator of profitability?a. Current ratio.b. Earnings per share.c. Debt to assets ratio.d. Total assets.
For 2025, Spanos Corporation reported net income $26,000, net sales $400,000, and weighted-average common shares outstanding 4,000. There were preferred dividends of $2,000. What was the 2025
Which of these measures is an evaluation of a company's ability to pay current liabilities?a. Earnings per share.b. Current ratio.c. Both earnings per share and current ratio.d. None of the answer
The following ratios are available for Reilly Inc. and O'Hare Inc.Compared to O'Hare Inc., Reilly Inc. has:a. higher liquidity, higher solvency, and higher profitability.b. lower liquidity, higher
Companies that can support higher debt to assets ratios are characterized by having:a. stable earnings.b. fluctuating earnings.c. few plant assets.d. low amounts of receivables.
Generally accepted accounting principles are:a. a set of standards and rules that are recognized as a general guide for financial reporting.b. usually established by the Internal Revenue Service.c.
What organization issues U.S. accounting standards?a. Financial Accounting Standards Board.b. International Accounting Standards Committee.c. International Auditing Standards Committee.d. None of the
What is the primary criterion by which accounting information can be judged?a. Consistency.b. Predictive value.c. Usefulness for decision-making.d. Comparability.
The characteristic of information that evaluates whether omitting or misstating an item could influence the decision of a financial statement user.a. Comparability.b. Materiality.c. Cost.d.
A list of financial statement items for Miguel Company includes the following: Accounts Receivable $25,000, Prepaid Insurance $7,000, Cash $8,000, Supplies $11,000, and Stock Investments (short-term)
Maison Inc. reported the following selected information at December 31.Calculate(a) the current ratio(b) the debt to assets ratio for December 31, 2025. Total current assets Total assets Total
Suppose the following information (in thousands of dollars) is available for H. J. Heinz Company-famous for ketchup and other fine food products-for the year ended April 30,
Listed here are items taken from the income statement and balance sheet of Bargain Electronics, Inc. for the year ended December 31, 2025. Certain items have been combined for simplification.
What was Apple's largest current asset, largest current liability, and largest item under "Assets" at September 26, 2020?
A list of financial statement items for Chin Company includes the following: accounts receivable $14,000, prepaid insurance $2,600, cash $10,400, supplies $3,800, and debt investments (short-term)
Ross Music Inc. reported the following selected information at March 31.Calculate (a) the current ratio and (b) the debt to assets ratio for March 31, 2025. Total current assets Total assets Total
Mylar Corporation has collected the following information related to its December 31, 2025, balance sheet.Prepare the assets section of Mylar Corporation's balance sheet.The following financial
The following information is available for Nguoi Corporation. a. Compute earnings per share for 2025 and 2024 for Nguoi, and comment on the change. Nguoi's primary competitor, Matisse Corporation,

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