ACCT CH. 8-9 – Flashcards
Unlock all answers in this set
Unlock answersquestion
quick ratio
answer
the ratio of the sum of cash and other current assets that can be easily converted to cash to current liabilities
question
as interest is recorded on an interest-bearing note, the Interest Expense account is
answer
increased; the Interest Payable account is increased
question
the ability of a business to pay its debts as they come due and to earn a reasonable amount of income is referred to as
answer
solvency and profitability
question
profitability refers to the ability of the business to
answer
earn a reasonable amount of income
question
working capital
answer
the excess of the current assets of a business over its current liabilities
question
if bonds are issued at a premium, the stated interest rate is
answer
higher than the market rate of interest
question
an analysis in which all the components of an income statement are expressed as a percentage of net sales is called
answer
vertical analysis
question
most employers are required to withhold from employees
answer
only federal income tax
question
the cost of a product warranty should be included as an expense in the
answer
period of the sale of the product
question
which of the following is included in the computation of the quick ratio
answer
accounts receivable
question
inventory turnover
answer
computed by dividing the cost of goods sold by the average inventory
question
which of the following is a characteristic of deferred income tax payable
answer
all of these
question
which of the following is necessary for a corporation to pay cash dividends
answer
sufficient retained earnings
question
which of the following will be classified as a current liability
answer
unearned rent
question
On March 15, Silver Co. issued a $80,000, 5%, 90-day note payable to Gold Co. How much will Silver Co. have to pay at maturity? (Assume 360 days in a year)
answer
$81,000
question
The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding?
answer
55,000
question
gross earnings for a payroll period less payroll deductions are referred to as
answer
net pay
question
payroll taxes levied against employees become liabilities
answer
at the time the liability for the employees' wages is paid
question
how is treasury stock shown on the balance sheet?
answer
as a reduction of stockholders' equity
question
the ability to convert assets into cash is called
answer
liquidity
