Financial Accounting

A liability is classified as a current liability if it is to be paid within the coming year.

• True

• False

On a classified balance sheet, marketable securities are classified as

• an intangible asset.

• property, plant, and equipment.

• a current asset.

• a long-term investment

The statement of cash flows is divided into two sections corresponding to investing activities and financing activities.

• True

• False

N3 Corporation has assets of $2.7 million, common stock of $702,000, and retained earnings of $428,000. What are the creditors’ claims on their assets?

(a)  

Collection of a $600 Accounts Receivable

• increases an asset $600; decreases an asset $600.

• increases an asset $600; decreases a liability $600.

• decreases a liability $600; increases stockholders’ equity $600.

• decreases an asset $600; decreases a liability $600.

The purchase of an asset for cash

• increases assets and stockholders’ equity.

• increases assets and liabilities.

• decreases assets and increases liabilities.

• leaves total assets unchanged.

If a company issues common stock for $25,000 and uses $20,000 of the cash to purchase a truck,

• Assets will be increased by $5,000.

• Equity will be reduced by $25,000.

• Assets will be increased by $25,000.

• Assets will be unchanged.

A credit sale of $800 is made on April 25, terms 2/10, net/30, on which a return of $50 is granted on April 28. The amount paid in May 4 is

(a)  

Beginning inventory was $400,000 with purchases of $1,600,000 during the year. At the end of the year, the ending inventory was $600,000. The COGS was

(a)  

Outstanding stock of the West Corporation included 20,000 shares of $5 par common stock and 5,000 shares of 6%, $10 par cumulative preferred stock. In 2022, West declared and paid dividends of $2,000. In 2023, West declared and paid dividends of $6,000. How much of the 2023 dividend was distributed to preferred shareholders?

(a)