MODULE 4 HOMEWORK
Module 4 Homework + Answers Total Points: 40
Chapter 5
1) The Securities & Exchange Commission requires publically traded companies to have their financial statements audited by their internal auditors.
True or False
Answer: The Securities & Exchange Commission requires publically traded companies to have their financial statements audited by an independent registered public accounting firm.
2) Which of the following would not be classified as a current asset?
A. Accounts receivable
B. Patents
C. Merchandise inventory
D. Cash
Answer: A patent is an intangible asset.
3) Which of the following journal entries is correct when common stock is sold for cash at a price greater than par value? A. Option A
B. Option B
C. Option C
D. Option D
4) The Callie Company has provided the following information:
Operating expenses were $231,000;
Cost of goods sold was $376,000;
Net sales were $940,000;
Interest expense was $32,000;
Gain on sale of a building was $76,000;
Income tax expense was $151,000.
What was Callie's income before taxes?
A. $564,000
B. $188,000
C. $377,000
D. $232,000
Answer: Income before taxes ($377,000) equals net sales ($940,000) minus cost of goods sold ($376,000), minus operating expenses ($231,000), minus interest expense ($32,000), plus gain on sale ($76,000).
5) A company issued 1,000 shares of $10 par value common stock in exchange for $15,000. Which of the following correctly describes the impact of this transaction on the financial statements?
A. A $15,000 gain is reported on the income statement.
B. Contributed capital in the amount of $10,000 is reported on the balance sheet.
C. Common stock is reported on the balance sheet at $15,000.
D. Additional paid-in capital of $5,000 is reported on the balance sheet.
Answer: Additional paid-in capital ($5,000) represents the excess of the selling price ($15,000) above the stock's par value ($10,000).
6) Superior has provided the following
Chapter 5
1) The Securities & Exchange Commission requires publically traded companies to have their financial statements audited by their internal auditors.
True or False
Answer: The Securities & Exchange Commission requires publically traded companies to have their financial statements audited by an independent registered public accounting firm.
2) Which of the following would not be classified as a current asset?
A. Accounts receivable
B. Patents
C. Merchandise inventory
D. Cash
Answer: A patent is an intangible asset.
3) Which of the following journal entries is correct when common stock is sold for cash at a price greater than par value? A. Option A
B. Option B
C. Option C
D. Option D
4) The Callie Company has provided the following information:
Operating expenses were $231,000;
Cost of goods sold was $376,000;
Net sales were $940,000;
Interest expense was $32,000;
Gain on sale of a building was $76,000;
Income tax expense was $151,000.
What was Callie's income before taxes?
A. $564,000
B. $188,000
C. $377,000
D. $232,000
Answer: Income before taxes ($377,000) equals net sales ($940,000) minus cost of goods sold ($376,000), minus operating expenses ($231,000), minus interest expense ($32,000), plus gain on sale ($76,000).
5) A company issued 1,000 shares of $10 par value common stock in exchange for $15,000. Which of the following correctly describes the impact of this transaction on the financial statements?
A. A $15,000 gain is reported on the income statement.
B. Contributed capital in the amount of $10,000 is reported on the balance sheet.
C. Common stock is reported on the balance sheet at $15,000.
D. Additional paid-in capital of $5,000 is reported on the balance sheet.
Answer: Additional paid-in capital ($5,000) represents the excess of the selling price ($15,000) above the stock's par value ($10,000).
6) Superior has provided the following