Author: Anonymous

 A company sold $12,000 worth of bicycles with an extended warranty. The company’s experience is that warranty expense averages 2% of sales. The current period’s entry to record the warranty expense is:

 An income statement is also called an earnings statement, a statement of operations or a profit and loss statement. 

On January 1, a company issues 8%, 5-year, $300,000 bonds that pay interest semiannually. On the issue date, the annual market rate of interest is 6%. The following information is taken from present value tables:       Present value of an annuity for 10 periods at 3% 8.5302 Present value of an annuity for 10 periods at 4% 8.1109 Present value of 1 due in 10 periods at 3% 0.7441 Present value of 1 due in 10 periods at 4% 0.6756 What is the issue (selling) price of the bond?

A statement of cash flows explains the differences between the beginning and ending balances of:

The financial statement that shows the beginning balance of retained earnings; the changes in equity that resulted from net income (or net loss); dividends; and the ending retained earnings balance, is the:

Refer to the following selected financial information from Zanzibar Incorporated. Compute the company’s return on total assets for Year 2.    Year 2 Year 1 Net sales $ 478,500   $ 426,250   Cost of goods sold   276,300     250,120   Interest expense   9,700     10,700   Net income before tax   67,250     52,680   Net income after tax   46,050     39,900   Total assets   317,100     288,000   Total liabilities   181,400     167,300   Total equity   135,700     120,700  

When a voucher system is used, an invoice approval is not needed as long as the purchase is evidenced by an invoice and purchase order.

The greater the times interest earned ratio, the greater the risk a company is exposed to.

The accrual basis of accounting requires adjustments to recognize revenues in the periods they are earned and to match expenses with revenues.

Which of the following statements is not  true: