61. The accounting concept or principle that is perhaps the greatest single culprit in distorting the results of financial statement analysis is the:
A. Historical cost concept.
B. Matching principle.
C. Conservatism principle.
D. Time value of money concept.
62.On January 1, 2015 Gatewood issued common stock for $20,000 cash. Which of the following statement is true?
A. Gatewood’s current ratio will increase.
B. Gatewood’s current ratio will decrease and Gatewood’s quick ratio will increase.
C. Gatewood’s quick ratio will decrease.
D. Gatewood’s working capital will decrease.
63. On January 1, 2015 Gatewood sold inventory on account for $8,000 and recorded cost of goods sold of $6,100. Which of the following statement is incorrect?
A. Gatewood’s current ratio will decrease.
B. Gatewood’s quick ratio will increase.
C. Gatewood’s working capital will decrease.
D. Gatewood’s current ratio and working capital will decrease are both incorrect statements
64. On January 1, 2015, Gatewood collected $8,200 of accounts receivable. As a result of this transaction, Gatewood’s working capital will:
A. Increase.
B. Decrease.
C. Remain the same.
D. Cannot be determined.
65. On January 1, 2015, Gatewood purchased merchandise on account for $6,000. Which of the following statements is true?
A. Gatewood’s current ratio will increase and its quick ratio will decrease.
B. Gatewood’s quick ratio will increase.
C. Gatewood’s current ratio will decrease.
D. Gatewood’s current ratio will increase and its quick ratio will increase.
66. On January 1, 2015, Gatewood paid $4,600 on accounts payable. Which of the following statements is incorrect?
A. Gatewood’s current ratio will increase.
B. Gatewood’s quick ratio will increase.
C. Gatewood’s quick ratio will increase and its current ratio will decrease.
D. Gatewood’s working capital will not change.
67. On January 1, 2015, Gatewood paid $200 for transportation costs on merchandise it had received. Which of the following statements is incorrect?
A.Gatewood’s quick ratio will decrease
B. Gatewood’s current ratio will decrease
C. Gatewood’s working capital will remain the same
D. Gatewood’s quick ratio will decrease and its current ratio will remain the same.
68. Blumenthal Company declared and paid a cash dividend totaling $50,000 on its common stock. As a result of this transaction, the company’s debt to assets ratio will:
A. Decrease.
B. Increase.
C. Remain the same.
D. Cannot be determined.
69. Blumenthal Company received cash of $600,000 from issuing common stock. As a result of this transaction, the company’s debt to equity ratio will:
A. Decrease.
B. Increase.
C. Remain the same.
D. Cannot be determined.
70. Blumenthal Company received cash of $2,000,000 by issuing 20-year bonds payable. As a result of this transaction, the company’s current ratio will:
A. Decrease.
B. Increase.
C. Remain the same.
D. Cannot be determined.