Fill in the Blank Questions  13.The SEC has authority to define accounting terms and to prescribe accounting procedures used by all ____________________ held corporations.          14.Financial accounting rules affect the recording of data used to prepare financial reports that go to ____________________ and creditors.          15.Revenue should not be recorded until it is ____________________; that is, until new assets are created in the form of money or claims against others.          16.The ____________________ assumption, which assumes that a firm will continue to operate indefinitely, permits carrying forward a portion of the cost of […]

19) Western Corporation has taxable income of $390,000 and pretax accounting income of $363,000. The company's income tax rate is 35%. The entry to record the income tax includes a: A) debit to Income Tax Expense $136,500. B) debit to Deferred Tax Asset $127,050. C) debit to Deferred Tax Asset $9,450. D) credit to Income Tax Payable $127,050. 20) The estimated value of a company's stock is less than the current market value of the company. The appropriate investment decision should be to: A) buy the company's stock. B) hold the company's stock. C) sell the company's stock. D) purchase […]

26) New Street Corporation had accounts receivable of $110,000 at the beginning of the year and $125,000 at the end of the year. Sales on account for the year amounted to $575,000. The amount to be reported on the statement of cash flows under the operating activities is: A) $575,000. B) $15,000. C) $560,000. D) $465,000. 27) Plymouth Corporation reported an increase in inventory of $75,000. The cost of goods sold for the year was $180,000. There was also a $7,000 decrease in accounts payable from the beginning of the year to the end of the year. What were Plymouth's […]

5) A high inventory turnover may indicate that a company is experiencing difficulty selling its inventory. 6) A ratio can be expressed as a proportion, a rate, or a percent. 7) A profitability ratio measures the income or operating success of a company for a given period of time. 8) The larger the working capital, the better the ability to pay debts. 9) Cash, short-term investments and net current receivables are all components of the acid-test ratio. 10) Inventory turnover is calculated by dividing the cost of goods sold by the average receivables. 11) Ratios that test liquidity include all […]

6) The audit report is signed-off by the corporation's management, confirming the audit was completed properly. 7) The combined audit report on financial statements and internal control over financial reporting typically contains five paragraphs. 8) An unqualified opinion by independent auditors indicates the fairness of the company's financial statements and the effectiveness of its internal controls. 9) A statement of responsibility, issued along with a company's financial statements, indicates that the financial statements are the responsibility of: A) the independent auditors. B) the shareholders. C) management. D) the board of directors. 10) The statement of management's responsibility, issued along with […]