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An advantage of using the periodic inventory system is that it requires
less record keeping than the perpetual inventory system.
· Question 21
The revenue recognition principle dictates that revenue be recognized in
the accounting period in which the performance obligation is satisfied.
· Question 22
Lankston Company began the year by issuing $90,000 of common stock
for cash. The company recorded revenues of $825,000, expenses of
$720,000, and paid dividends of $45,000. What was Lankston’s net
income for the year?
· Question 23
The multiple-step income statement is considered more useful than the
single-step income statement because it highlights the components of net
income.
· Question 24
Use the following data to calculate the current ratio.
Carne Auto Supplies
Balance Sheet
December 31, 2014
Cash
$ 35,000
payable
$ 65,000
Accounts receivable
50,000
payable
10,000
Inventory
70,000
payable
90,000
Prepaid insurance
40,000
liabilities
$165,000
Stock investments
80,000
Land
95,000
Accounts
Salaries and wages
Mortgage
Total