Multiple Choice questions based on balance sheet data.
Use the following information to answer questions 2-3:
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Benton Office Supplies
Balance Sheet
December 31, 2007
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Cash
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$ 65,000
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Accounts Payable
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$ 70,000
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|
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Prepaid Insurance
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30,000
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Salaries Payable
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10,000
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Accounts Receivable
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50,000
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Mortgage Payable
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90,000
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Inventory
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70,000
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Total Liabilities
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$160,000
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Land held for investment
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75,000
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|
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Land
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90,000
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Building
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$100,000
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Common Stock
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$120,000
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Less Accumulated
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Retained Earnings
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250,000
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Depreciation
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(20,000)
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80,000
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Total stockholders' equity
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$370,000
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Trademark
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70,000
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Total Liabilities and
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|
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Total Assets
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$530,000
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Stockholders' Equity
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$530,000
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1. The total dollar amount of assets to be classified as current assets is
a. $290,000.
b. $215,000.
c. $180,000.
d. $145,000.
2. The total dollar amount of assets to be classified as property, plant, and equipment is
a. $320,000.
b. $170,000.
c. $245,000.
d. $190,000.
3. Current assets divided by current liabilities is known as the
a. working capital.
b. current ratio.
c. profit margin.
d. capital structure.
4. Working capital is calculated by taking
a. current assets plus current liabilities.
b. current assets minus current liabilities.
c. current assets divided by current liabilities.
d. current assets times current liabilities.
5. The ability of a business to pay obligations that are expected to become due within the next year or operating cycle is
a. leverage.
b. liquidity.
c. profitability.
d. wealth.
6. Based on the following data, what is the amount of current assets?
Accounts payable................................................................. $31,000
Accounts receivable.............................................................. 50,000
Cash.................................................................................. 15,000
Intangible assets.................................................................. 50,000
Inventory............................................................................ 69,000
Long-term investments.......................................................... 80,000
Long-term liabilities...................................................................... 100,000
Marketable securities............................................................. 40,000
Notes payable...................................................................... 28,000
Plant assets........................................................................ 670,000
Prepaid expenses................................................................. 1,000
a. $ 96,000
b. $175,000
c. $106,000
d. $105,000
7. Based on the following data, what is the amount of working capital?
Accounts payable................................................................. $32,000
Accounts receivable.............................................................. 57,000
Cash.................................................................................. 20,000
Intangible assets.................................................................. 50,000
Inventory............................................................................ 69,000
Long-term investments.......................................................... 80,000
Long-term liabilities...................................................................... 100,000
Marketable securities............................................................. 40,000
Notes payable (short-term)...................................................... 28,000
Plant assets........................................................................ 670,000
Prepaid expenses................................................................. 1,000
a. $127,000
b. $151,000
c. $170,000
d. $148,000
8. The time period assumption states that
a. a transaction can only affect one period of time.
b. estimates should not be made if a transaction affects more than one time period.
c. adjustments to the enterprise's accounts can only be made in the time period when the business terminates its operations.
d. the economic life of a business can be divided into artificial time periods.
9. One of the accounting concepts upon which adjustments for prepayments and accruals are based is
a. matching.
b. cost.
c. monetary unit.
d. economic entity.
10. An accounting time period that is one year in length is called
a. a fiscal year.
b. an interim period.
c. the time period assumption.
d. a reporting period.