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Questions
Q:
Quantity of LaborHourly Wage RateTotal Marginal Wage Bill Factor Cost0-- -1$10 212 314 416 518 620 In the above table, what is the marginal factor cost of the 2nd worker?A) $24 B) $14 C) $64 D) $12
Q:
According to the Flow of Funds Accounts of the United States, the largest financial asset of U.S. households is ____.
A. mutual fund shares
B. corporate equity
C. pension reserves
D. deposits
Q:
Penguin Corporation acquired a 60% interest in Squid Corporation on January 1, 2012, at a cost equal to 60% of the book value of Squid's net assets. At the time of the acquisition, the book values of Squid's assets and liabilities were equal to the fair values. Squid reports net income of $880,000 for 2012. Penguin regularly sells merchandise to Squid at 120% of Penguin's cost. The intercompany sales information for 2012 is as follows:
Intercompany sales at selling price $672,000
Sales value of merchandise unsold by Squid $132,000
Required:
1. Determine the unrealized profit in Squid's inventory at December 31, 2012.
2. Compute Penquin's income from Squid for 2012.
Q:
____ is not a derivative security.
A. A share of common stock
B. A call option
C. A futures contract
D. None of the options (All of the answers are derivative securities.)
Q:
Shalles Corporation, a 80%-owned subsidiary of Pani Corporation, sold inventory items to its parent at a $48,000 profit in 2012. Pani resold one-third of this inventory to outside entities. Shalles reported net income of $200,000 for 2012. Noncontrolling interest share of consolidated net income that will appear in the income statement for 2012 is
A) $30,400.
B) $32,000.
C) $33,600.
D) $40,000.
Q:
For the past several decades, union membership in the United States has been declining. What has been happening in the rest of the world?A) Union membership has been increasing in almost every other country. B) In almost every other nation, union membership has held constant.C) In most cases, union membership in other nations has also been falling. D) We do not know because other nations do not keep these statistics.
Q:
A parent company regularly sells merchandise to its 70%-owned subsidiary. Which of the following statements describes the computation of noncontrolling interest share?
A) The subsidiary's net income times 30%
B) (The subsidiary's net income 30%) + unrealized profits in the beginning inventory - unrealized profits in the ending inventory
C) (The subsidiary's net income + unrealized profits in the beginning inventory - unrealized profits in the ending inventory) 30%
D) (The subsidiary's net income + unrealized profits in the ending inventory - unrealized profits in the beginning inventory) 30%
Q:
Number of WorkersTotal OutputNumber of WorkersTotal Output0065401100760022208650332096904400107005475 According to the above table, if the price of the good produced is $5 and the wage rate is $400, then the marginal revenue product of the 7th worker isA) $300. B) $60. C) $12. D) $400.
Q:
Use the following information to answer the question(s) below..Pelga Company routinely receives goods from its 80%-owned subsidiary, Swede Corporation. In 2011, Swede sold merchandise that cost $80,000 to Pelga for $100,000. Half of this merchandise remained in Pelga's December 31, 2011 inventory. This inventory was sold in 2012. During 2012, Swede sold merchandise that cost $160,000 to Pelga for $200,000. $62,500 of the 2012 merchandise inventory remained in Pelga's December 31, 2012 inventory. Selected income statement information for the two affiliates for the year 2012 was as follows:Pelga SwedeSales Revenue $500,000 $400,000Cost of Goods Sold 400,000 320,000Gross profit $100,000 $80,000What amount of unrealized profit did Pelga Company have at the end of 2012?A) $10,000B) $12,500C) $50,000D) $62,500
Q:
Explain the capture hypothesis.
Q:
Net worth represents _____ of the liabilities and net worth of commercial banks.
A. about 51%
B. about 91%
C. about 11%
D. about 31%
Q:
Which of the following would NOT be an adequate description of the relationship between Blu-Ray discs and Blu-Ray disc players?A) They are compatible. B) They are complementary.C) They involve network effects. D) They are substitutable.
Q:
Real assets in the economy include all but which one of the following?
A. land
B. buildings
C. consumer durables
D. common stock
Q:
On January 1, 2011, Plastam Industries acquired an 80% interest in Sparta Company to assure a steady supply of Sparta's inventory that Plastam uses in its own manufacturing businesses. Sparta sold 100% of its output to Plastam during 2011 and 2012 at a markup of 125% of Sparta's cost. Plastam had $12,000 of these items remaining in its inventory at December 31, 2012. If Plastam neglected to eliminate unrealized profits from all intercompany sales from Sparta, the inventory on the consolidated balance sheet at December 31, 2012 was
A) overstated by $1,920.
B) understated by $1,920.
C) overstated by $2,400.
D) understated by $2,400.
Q:
The most common reason for the existence of oligopolies isA) ease of entry. B) economies of scale. C) diseconomies of scale. D) advertising.
Q:
Financial assets represent _____ of total assets of U.S. households.
A. over 70%
B. over 90%
C. under 10%
D. about 30%
Q:
Use the following information to answer the question(s) below.Pew Corporation acquired 80% ownership of Sordid Incorporated, at a time when Pew's investment cost was equal to 80% of Sordid's book value. At the time of acquisition, the book values and fair values of Sordid's assets and liabilities were equal. Pew uses the equity method. During 2011, Pew sold goods to Sordid for $160,000 making a gross profit percentage of 20%. Half of these goods remained unsold in Sordid's inventory at the end of the year. Income statement information for Pew and Sordid for 2011 were as follows:Pew SordidSales Revenue $800,000 $300,000Cost of Goods Sold 500,000 160,000Operating Expenses 200,000 80,000Separate incomes $100,000 $60,000The 2011 consolidated income statement showed noncontrolling interest share ofA) $3,200.B) $6,400.C) $8,800.D) $12,000.
Q:
The demand curve for the product of a monopolistically competitive firm slopes downward becauseA) products are perceived by consumers as different. B) products are homogeneous.C) people only care about price when they buy a good. D) the firmʹs goal is to maximize profits.
Q:
PQMRMC$720$12$2$621$14$5$522$16$10$423$18$15$324$20$20$225$22$26Refer to the above table. Given the demand and cost schedules, what is the profit maximizing quantity for this monopolist?A) 23 B) 21 C) 20 D) 24
Q:
If the costs of production do not increase as output increases in the long run in a perfectly competitive industry, then this is aA) constant-return-to-scale industry. B) constant-competitive industry. C) constant-cost industry. D) constant-price industry.
Q:
Use the following information to answer the question(s) below.Pouch Corporation acquired an 80% interest in Shenley Corporation on January 1, 2012, when the book values of Shenley's assets and liabilities were equal to their fair values. The cost of the 80% interest was equal to 80% of the book value of Shenley's net assets. During 2012, Pouch sold merchandise that cost $70,000 to Shenley for $86,000. On December 31, 2012, three-fourths of the merchandise acquired from Pouch remained in Shenley's inventory. Separate incomes (investment income not included) of the two companies are as follows:Pouch ShenleySales Revenue $180,000 $160,000Cost of Goods Sold 120,000 90,000Operating Expenses 17,000 21,000Separate incomes $ 43,000 $ 49,000Swamp Co., a 55%-owned subsidiary of Pond Inc., made the following entry to record a sale of merchandise to Pond:Accounts Receivable 40,000Sales Revenue 40,000All Swamp sales are at 125% of cost. One-fourth of this merchandise remained in the Pond's inventory at year-end. A working paper entry to eliminate unrealized profits from consolidated inventory would include a credit to Inventory in the amount ofA) $2,000.B) $2,500.C) $8,000.D) $10,000.
Q:
When MR < MC for a firm, the firm shouldA) reduce its level of output. B) stay at the same level of output.C) stop producing. D) increase output, unless P < AVC.
Q:
The marginal cost curve always intersects the average total cost curve at the point at which the average total cost curveA) is zero. B) is at its minimum. C) is at its maximum. D) has a vertical slope.
Q:
ʺInside informationʺ is the use of informationA) by those who read the companiesʹ annual reports.B) by those who write the companiesʹ annual reports. C) by stockbrokers at the largest brokerage firms.D) that is not available to the public.
Q:
If the intercompany sale was an upstream sale, the total amount of consolidated cost of goods sold for 2012 will be
A) $300,000.
B) $430,000.
C) $470,000.
D) $477,000.
Q:
In a partnership, debts accumulated by one partner areA) the responsibility of that partner only.B) the responsibility of that partner plus any partners who are actively involved in running the partnership.C) the responsibility of all of the other partners for the full amount of the debt. D) the responsibility of all of the other partners, up to the total value of the firm.
Q:
Use the following information to answer the question(s) below.Paggle Corporation owns 80% of Spillway Inc.'s common stock that was purchased at its underlying book value. At the time of purchase, the book value and fair value of Spillway's net assets were equal. The two companies report the following information for 2011 and 2012.During 2011, one company sold inventory to the other company for $50,000 which cost the transferor $40,000. As of the end of 2011, 30% of the inventory was unsold. In 2012, the remaining inventory was resold outside the consolidated entity.2011 Selected Data: Paggle SpillwaySales Revenue $600,000 $320,000Cost of Goods Sold 320,000 155,000Other Expenses 100,000 89,000Net Income $180,000 $76,000Dividends Paid 19,000 02012 Selected Data: Paggle SpillwaySales Revenue $580,000 $445,000Cost of Goods Sold 300,000 180,000Other Expenses 130,000 171,000Net Income $150,000 $94,000Dividends Paid 16,000 5,000If the intercompany sale mentioned above was an upstream sale, what will be the reported amount of total consolidated sales revenue for 2012?A) $1,025,000B) $1,900,000C) $1,950,000D) $2,000,000
Q:
If an individualʹs total utility from consuming two goods increases, then there must beA) a downward rotation of the individualʹs indifference curve. B) an inward rotation of the individualʹs indifference curve.C) an outward shift of the individualʹs indifference curve. D) an inward shift of the individualʹs indifference curve.
Q:
Which economic principle accounts for the fact that all-you-can-eat buffet restaurants can be profitable?A) The law of demandB) The principle of diminishing marginal utility C) The principle of diminishing marginal product D) The law of supply
Q:
The cross price elasticity of demand is measured by theA) percentage change in the quantity demanded of one good divided by the percentage change in quantity demanded of another good.B) percentage change in the price of one good divided by the percentage change in price of another good.C) percentage change in the demand for one good divided by the percentage change in price of another good.D) percentage change in the price of one good divided by the percentage change in the demand for another good.
Q:
The price elasticity of demand is measured by theA) percentage change in quantity demanded divided by the percentage change in price.B) percentage change in price divided by the percentage change in quantity demanded. C) change in quantity demanded divided by the change in price.D) change in price divided by the change in quantity demanded.
Q:
A(n) ________ sale is a sale by a parent company to a subsidiary. A(n) ________ sale is a sale by a subsidiary to a parent company.
A) deferred; realized.
B) realized; deferred.
C) upstream; downstream
D) downstream; upstream
Q:
PollutionA) creates a negative externality.B) is increased when property rights are defined. C) is the result of capitalism.D) exists because air and water are privately owned resources.
Q:
Assume there are routine inventory sales between parent companies and subsidiaries. When preparing the consolidated financial statements, which of the following line items is indifferent to the sales being either upstream or downstream?
A) Consolidated retained earnings
B) Consolidated gross profit
C) Noncontrolling interest share
D) Controlling interest share of consolidated net income
Q:
The program was created in 1975 to provide rebates of Social Security taxes to low-income workers.A) food stamp B) SSI C) TANF D) EITC
Q:
Phast Corporation owns a 80% interest in Stechno Company, acquired several years ago at a cost equal to book value and fair value. Stechno sells merchandise to Phast for the first time in 2011, and some is unsold at December 31, 2011. In computing income from the investee for 2011 under the equity method, Phast uses which equation?
A) 80% of Stechno's income less 100% of the unrealized profit in Phast's ending inventory
B) 80% of Stechno's income plus 100% of the unrealized profit in Phast's ending inventory
C) 80% of Stechno's income less 80% of the unrealized profit in Phast's ending inventory
D) 80% of Stechno's income plus 80% of the unrealized profit in Phast's ending inventory
Q:
Quantity of LaborHourly Wage RateTotal Marginal Wage Bill Factor Cost0-- -1$10 212 314 416 518 620 In the above table, what is the marginal factor cost of the 4th worker?A) $16 B) $30 C) $64 D) $22
Q:
The material sale of inventory items by a parent company to an affiliated company
A) enters the consolidated revenue computation only if the transfer was the result of arm's length bargaining.
B) affects consolidated net income under a periodic inventory system but not under a perpetual inventory system.
C) does not result in consolidated income until the merchandise is sold to outside parties.
D) does not require a working paper adjustment if the merchandise was transferred at cost.
Q:
Which of these nations has the highest rate of union membership (as a share of total employment)?A) India B) The United StatesC) Japan D) Sweden
Q:
Number of WorkersTotal OutputNumber of WorkersTotal Output0065401100760022208650332096904400107005475 Refer to the above table. If the price of the good produced is $10 and the wage rate is $500, then the marginal revenue product of the 5th worker is .A) $10 B) $50 C) $750 D) $4,750
Q:
On January 1, 2011, Persona Company acquired 80% of Sule Tooling for $332,000. At that time, Sule reported their Common stock at $150,000, Additional paid in capital at $45,000, and Retained earnings at $105,000. Sule also had equipment on their books that had a remaining life of 10 years and were undervalued on the books by $40,000, but any additional fair value/book value differential is assumed to be goodwill. During the next three years, Sule reported the following:
Year Net Income Dividends Paid
2011 $35,000 $5,000
2012 45,000 7,500
2013 50,000 10,000
Required: Calculate the following.
a. How much excess depreciation or amortization would be recognized in the consolidated financial statements in each of these three years?
b. How much goodwill would be recognized on the balance sheet at the date of acquisition, and at the end of each year listed?
c. How much investment income would be reported by Persona under the equity method for each of the three years?
d. What would be the balance in the Investment in Sule account at January 1, 2011, and at the end of each of the three years listed?
Q:
Pull Incorporated and Shove Company reported summarized balance sheets as shown below, on December 31, 2011.
Pull Shove
Current assets $420,000 $210,000
Noncurrent assets 670,000 430,000
Total assets $1,090,000 $640,000
Current liabilities $230,000 $50,000
Long-term debt 350,000 150 000
Stockholders' equity 510,000 440,000
Total liabilities and equities $1,090,000 $640,000
On January 1, 2012, Pull purchased 70% of the outstanding capital stock of Shove for $392,000, of which $92,000 was paid in cash, and $300,000 was borrowed from their bank. The debt is to be repaid in 10 annual installments beginning on December 31, 2012, with each payment consisting of $30,000 principal, plus accrued interest.
The excess fair value of Shove Company over the underlying book value is allocated to inventory (60 percent) and to goodwill (40 percent).
Required: Calculate the balance in each of the following accounts, on the consolidated balance sheet, immediately following the acquisition.
a. Current assets
b. Noncurrent assets
c. Current liabilities
d. Long-term debt
e. Stockholders' equity
Q:
Explain the share-the-gains, share-the-pains theory. How does it differ from the capture hypothesis?
Q:
Refer to the above payoff matrix for the profits (in $ millions) of two firms (X and Y) and two product formats (A and B) in an industry. The game with the dominant strategy is also called:A) the prisonersʹ dilemma. B) Tweedle Dee-Tweedle Dum. C) Battle of the Sexes. D) Tit-for-Tat.
Q:
On December 31, 2010, Patenne Incorporated purchased 60% of Smolin Manufacturing for $300,000. The book value and fair value of Smolin's assets and liabilities were equal with the exception of plant assets which were undervalued by $60,000 and had a remaining life of 10 years, and a patent which was undervalued by $40,000 and had a remaining life of 5 years. At December 31, 2012, the companies showed the following balances on their respective adjusted trial balances:
Patenne Smolin Smolin
Book Value Book Value Fair Value
Assets (includes
Investment in Smolin) $950,000 300,000 320,000
Plant assets - net 590,000 150,000 150,000
Patent 310,000 200,000 280,000
Expenses 800,000 300,000
Liabilities 480,000 120,000 120,000
Common Stock 300,000 100,000
Retained Earnings 890,000 330,000
Revenue 980,000 400,000
Requirement 1: Calculate the balance in the Plant assets - net and the Patent accounts on the consolidated balance sheet as of December 31, 2012.
Requirement 2: Calculate consolidated net income for 2012, and the amount allocated to the controlling and noncontrolling interests.
Requirement 3: Calculate the balance of the noncontrolling interest in Smolin to be reported on the consolidated balance sheet at December 31, 2012.
Q:
_________________ identify and describe transactions and events and provide objective evidence and amounts for recording.
Q:
If a firm is an oligopolist, which is NOT true?A) It must pay attention to other firmsʹ prices.B) It is one of a relatively small number of firms dominating its industry. C) It can sell all the units it wants at the going market price.D) It is engaged in a strategic game.
Q:
On January 2, 2011, PBL Enterprises purchased 90% of Santos Incorporated outstanding common stock for $1,687,500 cash. Santos' net assets had a book value of $1,300,000 at the time. A building with a 15-year remaining life and a book value of $100,000 had a fair value of $175,000. Any other excess amount was attributed to goodwill. PBL reported net income for the first year of $350,000 (without regard for its ownership in Santos), while Santos had $175,000 in earnings.
Required:
1. Calculate the amount of goodwill related to this acquisition as reported on the consolidated balance sheet at January 2, 2011.
2. Calculate the amount of consolidated net income for the year ended December 31, 2011.
3. What is the amount that will be assigned to the building on the consolidated balance sheet at the date of acquisition?
Q:
The third step in the analyzing and recording process is to post the information to _________________________.
Q:
Because there are low barriers to entry in a monopolistically competitive market,A) there are many firms in the industry. B) they produce a homogeneous product.C) the firms are price takers. D) there is no non-price competition.
Q:
On January 1, 2011, Paisley Incorporated paid $300,000 for 60% of Smarnia Company's outstanding capital stock. Smarnia reported common stock on that date of $250,000 and retained earnings of $100,000. Plant assets, which had a five-year remaining life, were undervalued in Smarnia's financial records by $10,000. Smarnia also had a patent that was not on the books, but had a market value of $60,000. The patent has a remaining useful life of 10 years. Any remaining fair value/book value differential is allocated to goodwill. Smarnia's net income and dividends paid the first three years that Paisley owned them are shown below.
Net Dividends
Income Paid
2011 80,000 30,000
2012 90,000 10,000
2013 60,000 20,000
Requirement 1: Calculate the noncontrolling interest share in Smarnia's income for each of the three years.
Requirement 2: Calculate the noncontrolling interest that should be reported on the consolidated balance sheet at the end of each of the three years.
Requirement 3: Assuming that Paisley uses the equity method to record their investment in Smarnia, calculate the ending balance in the Investment in Smarnia account for each of the three years.
Q:
The second step in the analyzing and recording process is to record the transactions and events in the _____________________________.
Q:
PQTC$1310$8$1215$30$1120$68$1025$128$930$208$835$308Refer to the above table. Given the demand and cost schedules, what are the maximized economic profits for this monopolist?A) $122 B) $152 C) $220 D) $150
Q:
Pennack Corporation purchased 75% of the outstanding stock of Shing Corporation on January 1, 2011 for $300,000 cash. At the time of the purchase, the book value and fair value of Shing's assets and liabilities were equal. Shing's balance sheet at the time of acquisition and December 31, 2011 are shown below.
Jan 1, 2011 Dec 31, 2011
Cash $75,000 80,000
Other current assets 175,000 160,000
Plant Assets net 250,000 240,000
Total assets 500,000 480,000
Liabilities 100,000 50,000
Capital stock 100,000 100,000
Retained earnings 300,000 330,000
Total liabilities and equity 500,000 480,000
Shing earned $60,000 in income during the year, and paid out $30,000 in dividends. Pennack uses the equity method to account for its investment in Shing.
Requirement 1: Calculate Pennack's net income from Shing in 2011.
Requirement 2: Calculate the noncontrolling interest share in Shing's income for 2011.
Requirement 3: Calculate the balance in the Investment in Shing account reported on Pennack's separate general ledger at December 31, 2011.
Requirement 4: Calculate the noncontrolling interest that will be reported on the consolidated balance sheet at December 31, 2011.
Q:
____________________________ and _____________________ are the starting points for the analyzing and recording process.
Q:
Which of the following is the best example of a decreasing-cost industry?
A) the health care industry B) the personal computer industry
C) the college-education industry D) the oil industry
Q:
Based on the following trial balance for Sal's Beauty Shop, prepare an income statement, statement of owner's equity, and a balance sheet. Sal made no additional investments in the company during the year.
Q:
Pommu Corporation paid $78,000 for a 60% interest in Schtick Inc. on January 1, 2011, when Schtick's Capital Stock was $80,000 and its Retained Earnings $20,000. The fair values of Schtick's identifiable assets and liabilities were the same as the recorded book values on the acquisition date. Trial balances at the end of the year on December 31, 2011 are given below:
Pommu Schtick
Cash $4,500 $20,000
Accounts Receivable 24,000 30,000
Inventory 100,000 70,000
Investment in Schtick 78,000
Cost of Goods Sold 71,500 50,000
Operating Expenses 22,000 37,000
Dividends 15,000 10,000
$315,000 $217,000
Liabilities $47,000 $27,000
Capital stock, $10 par value 100,000 80,000
Additional Paid-in Capital 11,000
Retained Earnings 31,000 20,000
Sales Revenue 120,000 90,000
Dividend Income 6,000
$315,000 $217,000
During 2011, Pommu made only two journal entries with respect to its investment in Schtick. On January 1, 2011, it debited the Investment in Schtick account for $78,000 and on November 1, 2011, it credited Dividend Income for $6,000.
Required:
1. Prepare a consolidated income statement and a statement of retained earnings for Pommu and Subsidiary for the year ended December 31, 2011.
2. Prepare a consolidated balance sheet for Pommu and Subsidiary as of December 31, 2011.
Q:
The profit-maximizing output for the perfectly competitive firm occurs at the point at whichA) TR - MR is at a maximum.B) TR - TC is at a minimum.C) MR = MC. D) TR - ATC is at a maximum.
Q:
Platt Corporation paid $87,500 for a 70% interest in Suve Corporation on January 1, 2011, when Suve's Capital Stock was $70,000 and its Retained Earnings $30,000. The fair values of Suve's identifiable assets and liabilities were the same as the recorded book values on the acquisition date. Trial balances at the end of the year on December 31, 2011 are given below:
Platt Suve
Cash $4,500 $20,000
Accounts Receivable 26,000 30,000
Inventory 100,000 80,000
Investment in Suve 87,500
Cost of Goods Sold 60,000 40,000
Operating Expenses 22,000 37,000
Dividends 15,000 10,000
$315,000 $217,000
Liabilities $47,000 $27,000
Capital stock, $10 par value 100,000 70,000
Additional Paid-in Capital 10,000
Retained Earnings 31,000 30,000
Sales Revenue 120,000 90,000
Dividend Income 7,000 0
$315,000 $217,000
During 2011, Platt made only two journal entries with respect to its investment in Suve. On January 1, 2011, it debited the Investment in Suve account for $87,500 and on November 1, 2011, it credited Dividend Income for $7,000.
Required:
1. Prepare a consolidated income statement and a statement of retained earnings for Platt and Subsidiary for the year ended December 31, 2011.
2. Prepare a consolidated balance sheet for Platt and Subsidiary as of December 31, 2011.
Q:
The following are all of the accounts of Flaherty Company that have a balance at the end of August. All accounts have normal balances:a. Calculate net income.b. Determine the amount of owner's equity to be shown on the August 31 balance sheet.
Q:
The addition to total costs associated with the production of one more unit of output is referred to asA) average cost. B) marginal cost. C) opportunity cost. D) overhead cost.
Q:
Flagship Company has the following information collected in order to prepare a cash flow statement and uses the indirect method for Cash Flow from Operations. The annual report year end is December 31, 2011.
Noncontrolling Interest Dividends Paid $17,000
Undistributed Income of Equity Investees 7,000
Depreciation Expense 80,000
Controlling Interest Share of Consolidated Net Income 325,000
Increase in Accounts Payable 26,000
Amortization of Patent 10,000
Decrease in Accounts Receivable 57,000
Increase in Inventories 72,000
Gain on sale of equipment 45,000
Noncontrolling Interest Share 27,000
Required:
1. Prepare the Cash Flow for Operations part of the cash flow statement for Flagship for the year ended December 31, 2011.
Q:
The balances for the accounts of Mike's Maintenance Co. for the year ended December 31 are shown below. Each account shown had a normal balance.Calculate the correct balance for Cash and prepare a trial balance.
Q:
The theory that there are no predictable trends in securities prices that can be used to ʺget rich quickʺ is theA) dartboard theory. B) random walk theory.C) Wall Street theory. D) inefficient market hypothesis.
Q:
After preparing an (unadjusted) trial balance at year-end, G. Chu of Chu Design Company discovered the following errors:1. Cash payment of the $225 telephone bill for December was recorded twice.2. Cash payment of a note payable was recorded as a debit to Cash and a debit to Notes Payable for $1,000.3. A $900 cash withdrawal by the owner was recorded to the correct accounts as $90.4. An additional investment of $5,000 cash by the owner was recorded as a debit to G. Chu, Capital and a credit to Cash.5. A credit purchase of office equipment for $1,800 was recorded as a debit to the Office Equipment account with no offsetting credit entry.Using the form below, indicate whether the error would cause the trial balance to be out of balance by placing an X in either the yes or no column.Would the error cause the trial balance to be out of balance?Would the error cause the trial balance to be out of balance?
Q:
Parakeet Company has the following information collected in order to prepare a cash flow statement and uses the direct method for Cash Flow from Operations. The annual report year end is December 31, 2011.
Noncontrolling Interest Dividends Paid $20,000
Dividends Received from Equity Investees 17,000
Cash Paid to Employees 37,000
Cash Paid for Other Operating Activities 34,000
Cash Paid for Interest Expense 22,300
Cash Proceeds from the Sale of Equipment 70,000
Cash Paid to Suppliers 192,700
Cash Received from Customers 412,600
Required:
1. Prepare the Cash Flow for Operations part of the cash flow statement for Parakeet for the year ended December 31, 2011.
Q:
A business owned by two or more joint owners, or partners, who share the responsibilities and the profits of the firm and are individually liable for all the debts is a(n)A) corporation. B) entrepreneur. C) proprietorship. D) partnership.
Q:
Pecan Incorporated acquired 80% of the voting stock of Shew Manufacturing for $800,000 on January 2, 2011 when Shew had outstanding common stock of $600,000 and Retained Earnings of $300,000. The book value and fair value of Shew's assets and liabilities were equal except for equipment. The entire fair value/book value differential is allocated to equipment and is fully depreciated on a straight-line basis over a 5-year period.During 2011, Shew borrowed $80,000 on a short-term non-interest-bearing note from Pecan, and on December 31, 2011, Shew mailed a check for $20,000 to Pecan in partial payment of the note. Pecan deposited the check on January 4, 2012, and recorded the entry to reduce the note balance at that time.Required:Complete the consolidation working papers for the year ended December 31, 2011.
Q:
For each of the following errors, indicate on the table below the amount by which the trial balance will be out of balance and which trial balance column (debit or credit) will have the larger total as a result of the error.a. $100 debit to Cash was debited to the Cash account twice.b. $1,900 credit to Sales was posted as a $190 credit.c. $5,000 debit to Office Equipment was debited to Office Supplies.d. $625 debit to Prepaid Insurance was posted as a $62.50 debit.e. $520 credit to Accounts Payable was not posted.
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List the steps in recording transactions.
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An indifference map showsA) that money income is constant, but product prices may change.B) that utility is at a maximum at the origin.C) that curves closer to the origin represent higher levels of utility.D) that curves further from the origin represent higher levels of utility.
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Puddle Corporation acquired all the voting stock of Soggi Company for $500,000 on January 1, 2011 when Soggi had Capital Stock of $300,000 and Retained Earnings of $150,000. The book value of Soggi's assets and liabilities were equal to the fair value except for the plant assets. The entire cost-book value differential is allocated to plant assets and is fully depreciated on a straight-line basis over a 10-year period.During 2011, Puddle borrowed $25,000 on a short-term non-interest-bearing note from Soggi, and on December 31, 2011, Puddle mailed a check to Soggi to settle the note. Soggi deposited the check on January 5, 2012, but receipt of payment of the note was not reflected in Soggi's December 31, 2011 balance sheet.Required:Complete the consolidation working papers for the year ended December 31, 2011.
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Montgomery Marketing Co. had assets of $475,000; liabilities of $275,500; and equity of $199,500. Calculate its debt ratio.
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As an individual consumes more of a particular commodity, the total level of utility derived from that consumption usuallyA) increases at a constant rate. B) increases at an increasing rate. C) increases at a decreasing rate. D) decreases at an increasing rate.
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Powell Corporation acquired 90% of the voting stock of Santer Corporation on January 1, 2010 for $11,700 when Santer had Capital Stock of $5,000 and Retained Earnings of $4,000. The amounts reported on the financial statements approximated fair value, with the exception of inventories, which were understated on the books by $500 and were sold in 2010, land which was undervalued by $1,000, and equipment with a remaining useful life of 5 years under the straight-line method which was undervalued by $1,500. Any remainder was assigned to goodwill.Financial statements for Powell and Santer Corporations at the end of the fiscal year ended December 31, 2011 appear in the first two columns of the partially completed consolidation working papers. Powell has accounted for its investment in Santer using the equity method of accounting. Powell Corporation owed Santer Corporation $100 on open account at the end of the year. Dividends receivable in the amount of $450 payable from Santer to Powell is included in Powell's net receivables.Required:Complete the consolidation working papers for Powell Corporation and Subsidiary for the year ended December 31, 2011.
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Packo Company acquired all the voting stock of Sennett Corporation on January 1, 2010 for $90,000 when Sennett had Capital Stock of $50,000 and Retained Earnings of $8,000. The excess of fair value over book value was allocated as follows: (1) $5,000 to inventories(sold in 2010), (2) $16,000 to equipment with a 4-year remaining useful life(straight-line method of depreciation) and (3) the remainder to goodwill.Financial statements for Packo and Sennett at the end of the fiscal year ended December 31, 2011 (two years after acquisition), appear in the first two columns of the partially completed consolidation working papers. Packo has accounted for its investment in Sennett using the equity method of accounting.Required:Complete the consolidation working papers for Packo Company and Subsidiary for the year ending December 31, 2011.
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A company had total assets of $350,000 and total liabilities of $101,500 and total equity of $248,500. Calculate its debt ratio.
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When the price of chicken is $2.00 per pound, consumers buy 50 pounds of hamburger. When the price of chicken rises to $3.00 per pound, 60 pounds of hamburger are purchased. The cross price elasticity of demand between chicken and hamburger is approximately equal toA) +0.04. B) -0.45. C) +2.20. D) +0.45.
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Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year:If Josephine invested an additional $12,000 in the business and withdrew $5,000 during the year, what was the amount of net income earned by Josephine's Bakery?