. The Day Company has a 35% tax rate and a December 31 year-end. During 2008, th
ID: 2381930 • Letter: #
Question
. The Day Company has a 35% tax rate and a December 31 year-end. During 2008, their CPA discovered that in 2007 depreciation expense for some 2007 purchases was not recorded. The amount of missed depreciation was $18,360. The prior period adjustment to beginning retained earnings will equal:
a. $(18,360)
b. $(6,426)
c. $(11,934)
d. There is no prior period adjustment required.
35. A law suit filed against a company, the outcome of which is probable but cannot be reasonably estimated is:
a. reported as a liability on the balance sheet.
b. recorded as an unearned legal reserve in long term assets.
c. only discussed at annual shareholder meetings.
d. recorded by the attorney hired to defend the suits until the suit is settled in cash.
e. mentioned in the footnotes to the financial statements as a contingent liability.
36. What is the value of current liabilities?
a. $72,500
b. $81,500
c. $111,500
d. $119,500
e. $121,500
37. Which of these is most likely to increase return on assets, assuming everything else stays the same?
a. decrease COGS as a percent of sales.
b. switch to a just in time inventory system.
c. give customers an extra two weeks to pay you.
d. pay vendors electronically
e. close down the store for two straight weeks.
38. The journal entry to record a payment on an installment note (for example, a car loan) would include all of the following except:
a. Decrease to Cash
b. Increase to Interest Expense
c. Decrease to Discount on Notes Payable
d. Decrease to Notes Payable
e. Cannot determine from information given
39. When decision-makers want to know how well a firm manages the amounts owed to them by customers as compared to other firms, they should use
a. Average collection period
b. Return on Equity
c. Cash flow per share
d. Debt to equity ratio
e. Gross margin percent
40. Current assets are listed on the balance sheet:
a. alphabetically
b. based upon their age
c. based on relative size
d. in chronological order
e. based on liquidity
41. Lorenzetti
Explanation / Answer
question 40.
answer. (e)
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