MODULE 4 HOMEWORK

Topics: Balance sheet, Revenue, Generally Accepted Accounting Principles Pages: 3 (431 words) Published: June 12, 2014
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 information...
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