Which of the following is a current liability?
Answer(s): D
Only accounts payable would be a current liability. Current liabilities must be settled over the longer of one year or a firm's operating cycle; thus, the maximum time frame for settlement is one year. Preferred stock is generally not repaid, bonds are repaid over many years and depreciation is an expense not a liability.
Which of the following is/are revenue recognition methods?
Answer(s): B
II and IV refer to the methods under which costs in drilling oil wells can be capitalized. There is no such thing as III.
When using transactional analysis, the following changes in the balance sheet account and the corresponding cash flow description would be correct except,
The cash flow of rent payable would be cash expenses.
Over a given year, a firm's total assets increased by $7,000 and total liabilities decreased by $4,000. If the firm did not issue any new equity and paid out $1,500 in dividends, then its net income during the year was ________.
Total assets - Total liabilities = Equity. Hence,Change in Assets - Change in Liabilities = Change in Equity.Thus, change in equity = 7,000-(-4,000) = $11,000All of the net income not paid out as dividends goes into increasing the equity. Since no new shares were issued, Net Income = change in equity + dividends paid. This gives net income = $11,000+$1,500 = $12,500.
An EPS amount is always shown for:
Answer(s): A
All of these responses are true.
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