Reference no: EM1313578
Short question on fundamentals of accounting in stock analysis.
1. On November 10, Kendra, Inc., a U.S. Company, sold merchandise on credit to Nakakura Company of Japan at a price of 1,500,000 yen. The exchange rate was $0.00837 per yen on the date of sale. On December 31, when Kendra prepared its financial statements, the exchange rate was $0.00843. Nakakura Company paid hi full on January 12, when the exchange rate was $0.00861. Kendra should prepare the following journal entry:
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a
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Sales
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90
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Foreign Exchange Gain
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90
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b
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Foreign Exchange Loss
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90
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Sales
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90
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c
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Accounts Receivable
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90
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Foreign Exchange Gain
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90
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d
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Foreign Exchange Loss
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90
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Accounts Receivable
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90
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e
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No journal entry is required until the amount is collected.
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2. For investments in TRADING SECURITIES, which of the following market value changes are recognized in earnings?
a. Realized gains only.
b. Unrealized gains only.
c. Realized losses only.
d. Unrealized losses only.
e. Unrealized and realized gains and losses.
3. Unrealized holding gains and losses are recorded directly in an owners' equity account for investments in:
a. Trading securities.
b. Securities available for sale.
c. Common stock for which the holder has significant influence.
d. Bonds to be held to maturity.
4. York, Inc., owns 40 percent of the outstanding stock of Bay Company. During 20X5, York received a $4,000 cash dividend from Bay. What effect did this have on York's 20X5 financial statements?
a. Increased total assets.
b. Decreased investment account.
c. Increased income.
d. Decreased total assets.
e. Decreased income.
5. A company had net income of $43,000, net sales of $380,500, and total assets of $220,000. Its profit margin and total asset turnover were, respectively:
a. 11.3%; 1.73.
b. 11.3%; 19.5.
c. 1.7%; 19.5.
d. 11.3%; 19.5.
e. 19.5%; 11.3.
6. The purchase of long-term assets by issuing a note payable for the entire amount is reported on the Statement of Cash Flows in the:
a. Operating section.
b. Financing section.
c. Investing section.
d. Schedule of noncash financing and investing activities.
e. Both (b) and (c).
7. How is depreciation expense treated in the statement of cash flows and related disclosures (indirect method)?
a. Added to net income.
b. Subtracted from net income.
c. Placed into the investing section.
d. Does not appear because it is not a cash flow.
8. This is the first year of business for a company. At the end of the year, total assets equal $100,000, total liabilities equal $50,000, and common stock has a $23,000 balance. The only account missing is retained earnings. If dividends declared and paid were $28,000 for the year, what was net income for the year?
a. $78,000
b. $55,000
c. $25,000
d. $37,000
e. None of the above.
9. Small City, Inc. had merchandise inventory of $20,000 at the end of Year 1 and $28,000 at the end of Year 2. Sales for Years 1 and 2 were $500,000 and $600,000, respectively; cost of goods sold was $300,000 in Year 1 and $360,000 in Year 2. How much is Year 2 inventory turnover, rounded to two decimal places?
a. 25.00
b. 12.85
c. 13.75
d. 15.00
e. None of the above.
10. J Lo, Inc. had accounts receivable of 510,000 at the end of Year 1 and $18,000 at the end of Year 2. Sales for Years 1 and 2 are $182,000 and $210,000, respectively; cost of goods sold is $150,000 in Year 1 and $195,000 in Year 2. How much is Year 2 accounts receivable turnover, rounded to two decimal places?
a. 11.67
b. 14.00
c. 16.25
d. 12.32
e. None of the above.