Category: Uncategorized

The purchase of stock in another company is classified as a financing activity.

Use the following information about the current year’s operations of a company to calculate the cash paid for merchandise.           Cost of goods sold $ 226,000   Merchandise inventory, January 1   54,800   Merchandise inventory, December 31   57,400   Accounts payable, January 1   54,400   Accounts payable, December 31   59,800  

The evaluation of company performance and financial condition includes evaluation of (1) past and current performance, (2) current financial position, and (3) future performance and risk.

It is acceptable to record prepayment of expenses as debits to expense accounts if an adjusting entry is made at the end of the period to bring the asset account balance to the correct unused or unexpired amount.

The statement of cash flows reports all but which of the following:

Vertical analysis is the comparison of a company’s financial condition and performance across time.

An expense account is normally closed by debiting Income Summary and crediting the expense account.

Profit margin can also be called return on sales.

The adjusting entry to record an accrued expense is:

The return on total assets can be calculated as profit margin times total asset turnover.