ACC 300 Chapter 5

Question 1

Debt investment

Answer 1

Ready to sell is current asset

Available for sale are either asset depending on circumstances

Question 2

Treasury stock

Answer 2

Reduction of stockholders equity

Question 3

Common stock

Answer 3

Stockholders equity

Question 4

Dividends payable

Answer 4

Current liability

Question 5

Accumulated dep equipment

Answer 5

P,p and e

Question 6

Construction in process

Answer 6

If constructed by outside company it is inventory for them. If you are constructing it it is ppe

Question 7

Petty cash

Answer 7

Current asset

Question 8

Interst payable

Answer 8

Current liability

Question 9

Deficit

Answer 9

Retained earnings

Question 10

Equity investment

Answer 10

Current asset if expexted to trade within one year

Question 11

Income tax payable

Answer 11

Current liability

Question 12

Unearned subscriptions revenue

Answer 12

Current liability

Question 13

Work in process

Answer 13

Current asset

Question 14

Salaried and wages payable

Answer 14

Current liability

Question 15

Preferred stock

Answer 15

Capitail stock

Question 16

Goodwill

Answer 16

Intanglible assets

Question 17

Accounts payable

Answer 17

Current liability

Question 18

Buildings

Answer 18

Ppe

Question 19

Current maturity of long term debt

Answer 19

Current liability

Question 20

Premium on bonds payable

Answer 20

Noncurrent liability

Question 21

Allowance for doubtful accounts

Answer 21

Current assets

Question 22

Accounts recievable

Answer 22

Current assets

Question 23

Cash surrender value of life insurance

Answer 23

Investment

Question 24

Notes payable

Answer 24

Current liability

Question 25

Supplies

Answer 25

Current asset

Question 26

Bond sinking fund

Answer 26

Investments

Question 27

Bonds payable

Answer 27

Noncurrent liabily

Question 28

Similarities for GAAP and IFRS

Answer 28

Both can title balance sheet or statement of financial position, both require comparitice prior period info and prepared annually, require presentation of non controlling interest in equity section

Question 29

Differences for GAAP and IFRS

Answer 29

Ifrs has current assets listed in reverse order of liquidity, many differences in terminology, reserve isnt used in gaap

Question 30

Current cash debt coverage ratio

Answer 30

Net cash provided by operating/average current liabilies

Question 31

Cash debt coverage ratio

Answer 31

Net cash provided by operating activities/average total liabilities

Question 32

Free cash flows

Answer 32

Cash provided by operating-capital expenditures-dividends

Question 33

Working capital

Answer 33

Current assets-current liabilities

Question 34

EPS

Answer 34

Net income-perferred dividends/weighted average of common shares outstanding

Question 35

Usefulness of the balance sheet

Answer 35

Provides info about assets liabilites and equity, aids in assesting risk and predicting future cash flows, evaluation of liquidity solvency and financial flexibility

Question 36

Limiations of balance sheets

Answer 36

Most assets and liabilities are reported at historical cost not fair value, judgements must be utilized in determining collectibility, useful life, and returns

Question 37

Current assets

Answer 37

Cash and other assets a company expects to covert into cash, sell, or consume either in one year or operating cycle

Question 38

Current liabilities

Answer 38

Obligations that are reasonablu expected to be liquidated though the use of current assets or the creation of other current liabilites

Question 39

Long term liabilities

Answer 39

Obligations that are not reasonaly expected to be liquited within the normal operating cycle

Question 40

Purpose of the statement of cash flows

Answer 40

Is to provide relevent info about the cash receipts and cash payments of a company during a period

Question 41

Significant noncash activites

Answer 41

Reported in either a separate schedule at the bottom or in a note

Question 42

Current cash debt coverage

Answer 42

Used to determine whether a company can pay off its current liabilities from its operating activities. Evaluates financial liquidity

Question 43

Cash debt coverage

Answer 43

Used to determine whether a company can repay its liabilities from its operating activities. It evaluates financial flexibility

Question 44

Free cash flows

Answer 44

Used to determine the discretionary cash flow a company has to purchase additional investments retire debt purchase treasury stock or ass to its liquidity