The following trial balance of Reese Corp. at December 31, 2012 has been properly adjusted except for the income tax expense adjustment.
December 31, 2012
Cash $ 975,000
Accounts receivable (net) 2,695,000
Property, plant, and equipment (net) 7,366,000
Accounts payable and accrued liabilities $ 1,801,000
Income taxes payable 654,000
Deferred income tax liability 85,000
Common stock 2,350,000
Additional paid-in capital 3,680,000
Retained earnings, 1/1/10 3,450,000
Net sales and other revenues 13,460,000
Costs and expenses 11,180,000
Income tax expenses 1,179,000
$ 25,480,000 $ 25,480,000
Other financial data for the year ended December 31, 2012:
1. Included in accounts receivable is $1,200,000 due from a customer and payable in quarterly installments of $150,000. The last payment is due December 29, 2014.
2. The balance in the Deferred Income Tax Liability account pertains to a temporary difference that arose in a prior year, of which $20,000 is classified as a current liability.
3. During the year, estimated tax payments of $525,000 were charged to income tax expense. The current and future tax rate on all types of income is 30%.
In Reese's December 31, 2012 balance sheet, the current liabilities total is
Which of the following is not an acceptable major asset classification?
Property, plant, and equipment
Which of the following is a current asset?
Investment in equity securities for the purpose of controlling the issuing company.
Cash surrender value of a life insurance policy of which the company is the bene-ficiary.
Trade installment receivables normally collectible in 18 months.
Cash designated for the purchase of tangible fixed assets.
Which of the following is not a long-term investment?
Cash surrender value of life insurance
Land held for speculation
A sinking fund
Long-term liabilities include
obligations not expected to be liquidated within the operating cycle.
obligations payable at some date beyond the operating cycle.
deferred income taxes and most lease obligations.
All of these.
Which of the following should be reported for capital stock?
The shares authorized
The shares issued
The shares outstanding
All of these.
A limitation of the balance sheet that is not also a limitation of the income statement is
valuation of items at historical cost.
the numbers are affected by the accounting methods employed.
the use of judgments and estimates.
On January 4, 2012, Kiley Co. leased a building to Dodd Corp. for a ten-year term at an annual rental of $100,000. At inception of the lease, Dodd received $400,000 covering the first two years' rent of $200,000 and a security deposit of $200,000. This deposit will not be returned to Dodd upon expiration of the lease but will be applied to payment of rent for the last two years of the lease. What portion of the $400,000 should be shown as a current and long-term liability in Kiley's December 31, 2012 balance sheet?
Current Liability Long-term Liability
Which of the following should be excluded from long-term liabilities?
Obligations payable at some date beyond the operating cycle.
Most pension obligations.
Long-term liabilities that mature within the operating cycle and will be paid from a sinking fund.
None of these.
Which item below is not a current liability?
Trade accounts payable
Stock dividends distributable
The currently maturing portion of long-term debt
One criticism not normally aimed at a balance sheet prepared using current accounting and reporting standards is
failure to include items of financial value that cannot be recorded objectively.
failure to reflect current value information.
the extensive use of separate classifications.
an extensive use of estimates.
Balance sheet information is useful for all of the following except to
analyze cash inflows and outflows for the period.
evaluate capital structure.
assess future cash flows.
compute rates of return.
The net assets of a business are equal to
current assets minus current liabilities.
total assets plus total liabilities.
total assets minus total stockholders' equity.
None of these.
The basis for classifying assets as current or noncurrent is the period of time normally required by the accounting entity to convert cash invested in
inventory back into cash, or 12 months, whichever is longer.
inventory back into cash, or 12 months, whichever is shorter.
receivables back into cash, or 12 months, whichever is longer.
tangible fixed assets back into cash, or 12 months, whichever is longer.