Financial Accounting An Introduction to Concepts, Methods and Uses Weil 14th Edition Test Bank

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Financial Accounting An Introduction to
Concepts, Methods and Uses Weil 14th Edition
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Chapter 2: The Basics of Record Keeping and Financial
Statement Preparation: Balance Sheet
Student:
1. The T-account looks like the letter T, with a horizontal line bisected by a vertical line. Increases in
shareholders’ equity appear on the right side, and decreases in shareholders’ equity appear on the left side of
T-accounts.
True False
2. The T-account looks like the letter T, with a horizontal line bisected by a vertical line. Increases in liabilities
appear on the right side, and decreases in liabilities appear on the left side of T-accounts.
True False
3. The T-account looks like the letter T, with a horizontal line bisected by a vertical line. Increases in assets
appear on the left side, and decreases in assets appear on the right side of T-accounts.
True False
4. A T-account is a device or convention for organizing and accumulating the accounting entries of transactions
that affect an individual account, such as cash, accounts receivable, bonds payable, or additional paid-in
capital.
True False
5. The balance sheet equation maintains equality by reporting the financial statement effects of each event and
transaction in a dual manner, or what are termed the dual effects of transactions.
True False

6. The balance sheet equation shows the equality of assets with liabilities plus shareholders’ equity. This
equation requires that an entity’s assets exactly balance, or offset, an equal amount of financing provided by
creditors and owners of the corporation.
True False

7. The balance sheet equation underlies the recording of transactions and events. It captures the financial
statement effects of operating, investing, and financing transactions—three key activities of business firms.
True False
8. The balance sheet equation provides the analytical framework to understand the effects of transactions and
events on the financial statements.
True False
9. The balance sheet groups individual accounts by type (asset, liability, or shareholders’ equity) and lists these
accounts with their balances as of the balance sheet date.
True False
10. The date of the balance sheet appears at the bottom of the balance sheet.
True False
11. The asset and liability categories group individual accounts by the expected timing of cash receipts (for
assets) or cash payments (for liabilities).
True False
12. If the firm expects to collect or pay more than one year after the balance sheet date, the balance sheet
classifies these as noncurrent assets and noncurrent liabilities, respectively.
True False
13. The balance sheet begins with a list of assets and then lists liabilities and shareholders’ equity.
True False
14. Both U.S. GAAP and IFRS require firms to report balance sheet accounts for the prior year in addition to
the current year.
True False
15. Under U.S. GAAP, assets and liabilities in the balance sheet appear in order of increasing
closeness-to-cash.
True False

16. Common terminology describes items whose cash receipts or payments the firm expects will occur within
one year as current assets or current liabilities, respectively.
True False
17. Under IFRS, assets and liabilities appear in the statement of financial position in order of decreasing
closeness-to-cash.
True False
18. Total liabilities plus shareholders’ equity shows the sources of all the firm’s financing, and the assets show
how the firm holds or has invested those funds.
True False
19. The beginning balance of the shareholders’ equity account Retained Earnings plus net income from the
income statement less dividends equals the ending balance of Retained Earnings.
True False
20. The equation that describes the relationship between the balance sheet and the income statement through the
Retained Earnings account is as follows:
Retained Earnings (beginning) + Net Income - Dividends = Retained Earnings (ending)
True False
21. Retained earnings measures the cumulative excess of net income over dividends for the life of a firm.
Cumulative means that retained earnings aggregates all undistributed earnings.
True False
22. Income statement accounts are temporary accounts and, as such, will have beginning and ending balances of
zero.
True False
23. The closing process involves reducing to zero the balance in each income statement account by debiting the
revenue accounts and crediting the expense accounts, and transferring to Retained Earnings the differences
between total revenues and total expenses.
True False

24. A balance sheet account with a debit balance requires a closing entry that credits that account, because a
credit closing entry will result in a zero ending balance in the account.
True False
25. A balance sheet account with a credit balance requires a closing entry that debits that account, because a
debit closing entry will result in a zero ending balance in the account.
True False
26. The first step in the accounting record-keeping process is recording each transaction in a file or other record
in the form of a journal entry.
True False
27. A balance sheet prepared according to U.S. GAAP lists assets from most liquid to least liquid, where liquid
refers to the ease of converting the asset into cash.
True False
28. A balance sheet prepared according to U.S. GAAP lists liabilities starting with those that the firm will
discharge soonest (the most current or closest to maturity liabilities) and ending with those that it will pay latest
(the most noncurrent or distant to maturity liabilities).
True False
29. Firms that use International Financial Reporting Standards (IFRS) may, but need not, list their assets from
least liquid to most liquid, with the same ordering used to list liabilities.
True False
30. Depreciation allocates the asset’s cost to the periods of benefit in some systematic and rational way, and it
attempts to track changes in the asset’s fair value.
True False
31. Shareholders’ equity is a residual interest or claim—that is, the owners (shareholders) of a firm have a claim
on assets not required to meet the claims of creditors.
True False

32. The amounts that firms report as received from owners are equal to the amounts the firm received when it
originally issued the shares of stock.
True False
33. The balance sheet amount of shareholders’ equity does not, and is not intended to, provide the user of the
financial reports with a measure of the market value of common equity.
True False
34. A potential investor can easily ascertain market value of common equity for a given publicly traded firm by
looking up the most recent share price (as reported in various online services) and then multiplying this share
price times the number of common shares outstanding, as reported on the balance sheet.
True False
35. The balance sheet provides all the information an analyst wants or needs about a firm’s resources and the
claims on those resources.
True False
36. Accounting does not normally recognize mutually unexecuted contracts as assets or liabilities.
True False
37. Both U.S. GAAP and IFRS require the disclosure, in the notes to the financial statements, of selected
information about business segments.
True False
38. In computerized systems, posting occurs instantly and automatically after journalizing.
True False
39. Accounting is governed by the balance sheet equation, which shows the equality of
A. assets with liabilities plus shareholders’ equity.
B. assets plus liabilities with shareholders’ equity.
C. assets plus shareholders’ equity with liabilities.
D. assets with liabilities minus shareholders’ equity.
E. assets with shareholders’ equity minus liabilities.

40. To maintain the balance sheet equality, it is necessary to report every event and transaction in a dual
manner. If a transaction results in an increase in the left hand side of the balance sheet, dual transactions
recording requires that which of the following must occur, to maintain the balance sheet equation?
A. decrease another asset
B. increase a liability
C. increase shareholders equity
D. all of the above will maintain the balance sheet equation
E. none of the above
41. A detailed system of accounts allows the preparer of financial statements to decompose,
or , each transaction to convey information about the effects of the transaction.
A. mixup
B. disaggregate
C. aggregate
D. share
E. combine
42. To maintain balance sheet equality, it is necessary to report every event and transaction in a dual manner. If
a transaction results in an increase in a Liability account, then which of the following must occur, to maintain
the balance sheet equation?
A. decrease another liability.
B. decrease shareholders’ equity.
C. increase an asset.
D. all of the above will maintain the balance sheet equation
43. T-accounts
A. summarize the effects of transactions on specific accounts.
B. show all the accounts affected by a single event or transaction.
C. provide a record of transactions.
D. all of the above
44. A T-account is a device or convention for organizing and accumulating the accounting entries of
transactions that affect an individual account. Which of the following is/are true?
A. Increases in assets appear on the left side, and decreases in assets appear on the right side of T-accounts.
B. Increases in liabilities appear on the right side, and decreases in liabilities appear on the left side of
T-accounts.
C. Increases in shareholders’ equity appear on the right side, and decreases in shareholders’ equity appear on
the left side of T-accounts
D. all of the above are true
E. none of the above are true

45. Brice Foods Group, a European food retailer that operates supermarkets in seven countries, engaged in the
following transaction during 2013: purchased and received inventory costing €500 million on account from
various suppliers. Indicate the effects of the transaction on the balance sheet equation. Brice Foods Group
applies IFRS, and reports its results in millions of euros.
A. Assets + €500 million; Liabilities + €500 million
B. Assets + €500 million; Shareholders’ Equity + €500 million
C. Liabilities + €500 million; Shareholders’ Equity + €500 million
D. Liabilities + €500 million; Shareholders’ Equity - €500 million
E. Assets + €500 million; Shareholders’ Equity - €500 million
46. Composite, Inc., a firm specializing in building materials, engaged in the following transaction during
2013: issued 2,000 shares of common stock for $7,500 million in cash. Indicate the effects of the transaction
on the balance sheet equation. (Composite Inc. applies U.S. GAAP financial reporting standards, and reports its
results in millions of dollars.)
A. Liabilities +$7,500 million; Shareholders’ Equity -$7,500 million
B. Liabilities +$7,500 million; Shareholders’ Equity +$7,500 million
C. Assets +$7,500 million ; Liabilities +$7,500 million
D. Assets +$7,500 million ; Shareholders’ Equity +$7,500 million
E. Assets -$7,500 million ; Liabilities -$7,500 million
47. The equation that describes the relationship between the balance sheet and the income statement through the
Retained Earnings account is as follows:
A. Retained Earnings (beginning) - Net Income = Retained Earnings (ending)
B. Retained Earnings (beginning) + Net Income + Dividends = Retained Earnings (ending)
C. Retained Earnings (beginning) - Net Income - Dividends = Retained Earnings (ending)
D. Retained Earnings (beginning) - Net Income + Dividends = Retained Earnings (ending)
E. Retained Earnings (beginning) + Net Income - Dividends = Retained Earnings (ending)
48. Any single event or transaction will have which of the following effect(s) on the balance sheet?
A. It increases an asset and increases either a liability or shareholders’ equity.
B. It decreases an asset and decreases either a liability or shareholders’ equity.
C. It increases one asset and decreases another asset.
D. It increases one liability or shareholders’ equity and decreases another liability or shareholders’ equity.
E. all of the above
49. Which of the following is/are true regarding the T-account?
A. Actual practice does not use this form of the account, except perhaps for memoranda or preliminary analyses
B. looks like the letter T, with a horizontal line bisected by a vertical line.
C. satisfies the requirement of an account and is easy to use.
D. all of the above

50. Which of the following is/are true regarding the T-account?
A. the name or title of the account appears on the horizontal line.
B. dates and other information can appear in T-accounts.
C. one side of the space formed by the vertical line records increases in the item and the other side records
decreases.
D. all of the above
51. Which of the following is/are true regarding T-accounts?
A. for each transaction, the amount entered on the left side of (or debited to) the accounts for each transaction
equals the amount entered on the right side of (or credited to) the accounts.
B. recording equal amounts of debits and credits for each transaction ensures that the balance sheet equation
will always balance.
C. one side of the space formed by the vertical line records increases in the item and the other side records
decreases.
D. all of the above
52. Horton Company reports the following:
Contributed Capital $ 200
Total Revenues $ 800
Total Liabilities $1,200
Beginning Retained Earnings ($ 100)
Total Expenses $ 500
Dividends $ 0
What are Total Assets?
A. $2,600
B. $1,600
C. $1,400
D. $1,000
E. $800
53. Conrad Company reports the following:
Total Assets $800
Contributed Capital $300
Total Revenues $600
Beginning Retained Earnings $200
Total Expenses $700
Dividends $100

What are Total liabilities?
A. $600
B. $500
C. $400
D. $300
E. $200
54. The accounting system uses a device called an account. An account
A. is created each time a transaction takes place.
B. accumulates the increases and decreases that occur during the period for a single item.
C. is created only for income statement items.
D. is created only for balance sheet items.
E. is created only for statement of cash flows items.
55. Marianne Company reports the following:
Total Assets $1,200
Total Revenues $ 800
Total Liabilities $ 500
Beginning Retained Earnings $ 200
Total Expenses $ 400
Dividends $ 0
What is Contributed Capital?
A. $300
B. $200
C. $100
D. $0
E. $400
56. Journal entries
A. show all the accounts affected by a single event or transaction.
B. provide a record of transactions.
C. have the characteristics presented in choices a and b.
D. summarize the effects of transactions on specific accounts.
57. Temporary accounts are for recording
A. revenues and expenses.
B. assets.
C. liabilities.
D. shareholders’ equity.
E. assets, liabilities, and shareholders’ equity.

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58. Current assets are expected to be converted to cash within
A. a week.
B. a month.
C. a quarter.
D. a year.
E. two years.
59. Noncurrent assets are expected to be converted to cash over
A. a month.
B. a quarter.
C. a half of a year.
D. a year.
E. a period of time greater than a year.
60. Retained Earnings measures the cumulative excess of for the life of a firm
A. dividends over net income
B. net income over dividends
C. assets over liabilities
D. liabilities over shareholders’ equity
E. shareholders’ equity over liabilities
61. accounts provide disaggregated information concerning the net amount of an asset, liability, or
shareholders' equity item. Note that the use of such accounts does not affect the total of assets, liabilities,
shareholders' equity, revenues, or expenses, but only the balances in various accounts that comprise the totals
for these items.
A. Reversing
B. Temporary
C. Contra
D. Closing
E. None of the above
62. Benezra S.A., a large Brazilian petrochemical company, reported a balance of R$1,600 million in Accounts
Receivable at the beginning of 2013 and R$1,500 million at the end of 2013. Its income statement reported total
Sales Revenue of R$12,000 million for 2013. Assuming that Benezra makes all sales on account, compute the
amount of cash collected from customers during 2013. Benezra applies Brazilian accounting standards, and
reports its results in thousands of reals (R$), the Brazilian currency. (In answering this question, assume that
Benezra uses either U.S. GAAP or IFRS; for purposes of this problem, this choice will not matter.)
A. 12,000
B. 11,900
C. 12,100
D. 13,600
E. 13,500

63. Skyway Company, a U.S. airplane manufacturer, reported a balance of $8,100 million in Inventory at the
beginning of 2013 and $9,600 million at the end of 2013. Its income statement reported Cost of Products Sold
of $45,400 million for 2013. Compute the cost of inventory either purchased or manufactured during 2013.
(Skyway Company applies U.S. GAAP, and reports its results in millions of U.S. dollars.)
A. $49,500 million
B. $39,900 million
C. $46,900 million
D. $39,900 million
64. C-Swiss, a Swedish firm specializing in communication networks, reported a balance in Inventories of
SEK21,500 million at the beginning of 2013 and SEK22,500 million at the end of 2013. During 2013, C-Swiss
reported SEK114,100 million in Cost of Sales. How much was C-Swisss’ inventory purchases during
2013? [Assume that all of C-Swisss’ inventory purchases are made on account and C-Swiss applies IFRS, as
well as reports its results in millions of Swedish kronor (SEK).]
A. SEK115,300 million
B. SEK115,200 million
C. SEK115,100 million
D. SEK113,100 million
65. Ying Corporation, a Japanese construction firm, reported a balance in Income Taxes Payable of ¥3,700
million at the beginning of 2013 and ¥14,300 million at the end of 2013. Net income before income taxes for
2013 totaled ¥73,000 million. Assume that the firm is subject to an income tax rate of 43%. Compute the
amount of cash payments made for income taxes during 2013. (Ying Corporation applies Japanese accounting
standards, and reports its results in millions of yen (¥). In answering this question, assume that Ying
Corporation uses either U.S. GAAP or IFRS; for purposes of this problem, this choice will not matter.)
A. ¥10,600 million
B. ¥17,090 million
C. ¥20,790 million
D. ¥73,000 million
66. Energy Corporation, a U.S. diversified power management company, reported a balance in Retained
Earnings of $2,800 million at the beginning of 2013 and $3,300 million at the end of 2013. Based on Energy
Corporation’s financial reports for fiscal 2013, it reported dividends declared and paid of $250 million for 2013.
Compute the amount of net income for 2013. (Energy Corporation applies U.S. GAAP, and reports its results in
millions of U.S. dollars.)
A. -$250 million
B. $250 million
C. $550 million
D. $750 million

67. On December 31, 2013, the Merchandise Inventories account of the Japanese electronics firm Flower
Limited (Flower) had a balance of ¥408,700 million, based on Flower’s financial reports for fiscal 2013.
Assume that during 2014, Flower purchased merchandise inventories on account for ¥1,456,400 million. On
December 31, 2014, it finds that merchandise inventory on hand is ¥412,400 million. Select the correct journal
entries to account for all changes in the Inventories during 2014. (Flower applies Japanese accounting
standards, and reports its results in millions of yen (¥). In answering this question, assume that Flower uses
either U.S. GAAP or IFRS; for purposes of this problem, this choice will not matter.)
A. Cost of Goods Sold ¥1,452,700 million
Merchandise Inventories ¥1,452,700 million
B. Merchandise Inventories ¥1,452,700 million
Cost of Goods Sold ¥1,452,700 million
C. Cost of Goods Sold ¥1,449,000 million
Merchandise Inventories ¥1,449,000 million
D. Merchandise Inventories ¥1,449,000 million
Cost of Goods Sold ¥1,449,000 million
68. Klothing Company, a U.S. clothing designer, manufacturer, and retailer, reported a balance in prepaid
insurance of $90.7 million, based on its financial reports dated March 31, 2013, the end of its fiscal year.
Assume that of this balance, $24 million relates to an insurance policy with two remaining months of coverage.
Select the correct journal entries that Klothing would make on April 30, 2013 (Assume that the firm closes its
books monthly. Klothing applies U.S. GAAP, and reports its results in millions of U.S. dollars.)
A. Insurance Expense $ 24 million
Prepaid Insurance $24 million
B. Prepaid Insurance $24 million
Insurance Expense $24 million
C. Insurance Expense $12 million
Prepaid Insurance $12 million
D. Prepaid Insurance $12 million
Insurance Expense $12 million

69. ABC Group (ABC), headquartered in Switzerland, is one of the world’s largest engineering companies.
ABC applies U.S. GAAP, and reports its results in millions of U.S. dollars. Based on ABC’s financial reports
for fiscal 2013, at January 1, 2013, ABC reported a balance in its Prepaid Rent account of $247 million; assume
that this amount reflects its prepayments of rent on factory and office space for the next month. Assume also
that on January 31, 2013, ABC paid $3,200 million as the annual rent for the period from February 1, 2013, to
January 31, 2014. ABC has a calendar year reporting period. Select the correct journal entries that ABC Group
would make during January 2013 that affect the Prepaid Rent account.
A. Rent Expense $3,200 million
Cash $3,200 million
Prepaid Rent $247 million
Rent Expense $247 million
B. Rent Expense $3,200 million
Prepaid Rent $3,200 million
Cash $247 million
C. Rent Expense $3,200 million
Cash $247 million
D. Rent Expense $247 million
Cash $3,200 million

70. Tokyo Motor Company (Tokyo), a Japanese car manufacturer, reported Sales of Products of ¥22,670 billion
for the year ended March 31, 2014. The Cost of Products Sold was ¥18,356 billion. Assume that Tokyo made
all sales on credit. Select the correct journal entries that Tokyo made during the fiscal year ended March 31,
2014, related to these transactions. [Tokyo applies U.S. GAAP, and reports its results in millions of yen (¥).]
A. Accounts Receivable ¥22,670 billion
Inventories ¥22,670 billion
Cost of Goods Sold ¥18,356 billion
Revenues ¥18,356 billion
B. Accounts Receivable ¥18,356 billion
C. Accounts Receivable ¥18,356 billion
D. Accounts Receivable ¥22,670 billion
71. Under U.S. GAAP, assets and liabilities in the balance sheet appear in order of
A. decreasing closeness-to-cash.
B. increasing closeness-to-cash.
C. alphabetical order.
D. numerical order.
E. all of the above.
72. Under IFRS, assets and liabilities in the statement of financial position appear in order of
A. decreasing closeness-to-cash.
B. increasing closeness-to-cash.
C. alphabetical order.
D. numerical order.
E. all of the above.
73. The first step in the accounting record-keeping process is:
A. recording each transaction in a file or other record in the form of a journal entry.
B. posting the amounts from the journal entries to individual balance sheet and income statement accounts in a
general ledger.
C. making adjusting journal entries to the accounts to correct errors and to reflect the financial statement
impacts of items that occur because of usage or the passage of time.
D. preparing the income statement for the period from amounts in the income statement accounts.
E. preparing the balance sheet from amounts in the balance sheet accounts.

74. Assets are classified as current for reporting purposes when
A. shares of common stock in a company's important supplier are acquired to ensure continued availability of
raw materials.
B. shares of common stock in another company are acquired to diversify operations.
C. expenditures are made in developing new technologies or advertising products.
D. they are reasonably expected to be turned into cash or to be sold or consumed during the normal operating
cycle of the business.
E. they are reasonably expected to be turned into cash or to be sold or consumed within the next three years.
75. Before preparing the balance sheet and income statement, an accountant would use what accounting record
to first record the firm's transactions?
A. the trial balance
B. the adjusting entry
C. the general ledger
D. the subsidiary ledger
E. the journal
76. Current liabilities
A. are obligations that a firm expects to pay or discharge during the normal operating cycle of the firm, usually
one year.
B. include liabilities to merchandise suppliers, employees, and governmental units.
C. include notes and bonds payable to the extent that they will require the use of current assets within the next
year.
D. include all of the above.
E. None of the above answers is correct.
77. If a corporation issues 1,000 shares of $1 par value common stock at $5 per share, how should the
transaction be accounted for?
A. debit cash for $5,000 and credit common stock for $5,000
B. debit cash for $5,000 and credit common stock for $1,000 and credit additional paid-in capital for $4,000
C. debit cash for $5,000 and credit common stock for $1,000 and credit retained earnings for $4,000
D. credit cash for $5,000 and debit common stock for $5,000
E. debit common stock for $1,000 and debit retained earnings for $4,000 and credit cash for $5,000

78. T-accounts are frequently used in textbooks, demonstration problems, and examinations to accumulate
information about the effects of business transactions on individual balance sheet accounts and to prepare the
balance sheet. Alternatively, to accomplish the same objectives, some instructors and students might prefer to
use
A. a computer spreadsheet program.
B. P-accounts, only.
C. a single-entry bookkeeping system.
D. P&L-accounts.
E. L-accounts, only.
79. Prepaid assets are valued on the balance sheet at
A. cost paid to acquire the asset.
B. acquisition cost less accumulated depreciation.
C. cost less expired portion.
D. replacement cost.
E. present value of future cash flows.
80. On April 1, Year 1, Colonial Bookstore bought an insurance policy costing $24,000 that would insure the
retail building for two years against fire loss. What asset account and what amount are recorded on the balance
sheet at December 31, Year 1?
A. Prepaid Insurance, $15,000
B. Insurance Expense, $15,000
C. Prepaid Insurance, $9,000
D. Insurance Expense, $9,000
E. Prepaid Insurance, $12,000
81. What (other than a transactions spreadsheet ) serves the function of accumulating information about the
effect of business transactions on each balance sheet and income statement account?
A. Journals
B. P&L-accounts
C. T-accounts
D. Subsidiary Ledgers
E. Library
82. What does the word “marketable” imply as far as “marketable securities”?
A. It implies that the securities should be classified as a temporary account.
B. It implies that a firm owes money on the securities.
C. It implies that the securities are considered to be goodwill.
D. It implies that the firm can readily buy and sell the securities on an exchange.
E. It implies that the firm has signed a formal written contract called an indenture.

83. Which of the following is false regarding a merchandising firm?
A. A merchandising firm purchases inventory for resale.
B. A merchandising firm does not change the physical form of the inventory.
C. A merchandising firm performs no incremental work on the inventory.
D. A merchandising firm adds nothing to the acquisition cost of the inventory after it is purchased.
E. None of the above are false regarding a merchandising firm.
84. Which of the following is/are not true regarding a merchandising firm?
A. Inventory appears on the merchandiser’s balance sheet initially as an asset.
B. Inventory for a merchandiser is measured at acquisition cost.
C. When a sale takes place, the merchandising firm recognizes the cost of the inventory as an expense (cost of
goods sold) on the income statement.
D. When a sale takes place, the merchandising firm recognizes the inventory reduction on the statement of cash
flows.
E. All of the above are false regarding a merchandising firm.
85. For manufacturing firms, the balance sheet reports the costs of incomplete items as
A. Raw Materials Inventory.
B. Work-in-Process Inventory.
C. Finished Goods Inventory.
D. Cost of goods ready for sale.
86. Solve for the unknown item for each of the following independent situations.
Total assets
CASE A
A
CASE B
400
CASE C
600
Contributed capital 100 150 C
Total revenues 400 300 400
Total liabilities 600 B 250
Beginning retained earnings (50) 100 100
Total expenses 250 350 200
Dividends 0 50 0

87. The transactions listed below relate to Mountain Corporation. Indicate whether or not each transaction
immediately gives rise to an asset or liability of Mountain Corporation under generally accepted accounting
principles. If accounting recognizes an asset or a liability, give the account title and amount.
a. Mountain Corporation signs a 3-year employment contract with Robert Lindsey, the chief financial officer, for $375,000.
b. Mountain Corporation sends a check for $2,400 for two years' property insurance coverage beginning next month that would normally cost
$2,000 for a one-year policy.
c. The firm paid $250 for one-year subscriptions to ski magazines. None of the magazines have been received to date. In addition, it will cost
the publisher $100 to fulfill the subscription commitment.
d. The firm acquires inventory with a list price of $2,000, at a 3% discount for cash payment. The firm treats cash discounts as a reduction of
acquisition cost.
e. The firm agrees to purchase 25,000 units of inventory from a supplier over the next 3 years at an agreed cost of $4/unit.
88. Culinary Delites, a European food retailer engaged in the following three transactions during 2013: (1)
purchased and received inventory costing €978 million on account from various suppliers; (2) returned
inventory costing €57 million because of damage that occurred during shipment; (3) paid the various suppliers
the total amount due. Indicate the effects of each of these three transactions on the balance sheet equation.
Culinary Delites applies IFRS and reports its results in millions of euros (€).

89. Supplies and More, a firm specializing in building materials, engaged in the following four transactions
during 2014:
(1) purchased and received inventory costing $18,600 million, of which $12,000 million was on account with
the rest paid in cash;
(2) purchased a machine for $4,800 million with cash;
(3) issued 2,000 shares of common stock for $6,000 million in cash;
(4) issued shares of common stock to its suppliers for the remaining amount due on purchases of inventory.
REQUIRED:
Indicate the effects of each of these four transactions on the balance sheet equation. Supplies and More applies
U.S. GAAP financial reporting standards and reports its results in millions of U.S. dollars ($).
90. Complete the shareholders' equity section for each of the following independent situations.
Common stock, 10,000 shares
CASE A
A
CASE B
C
CASE C
E
Additional paid-in capital 25,000 D 30,000
Retained earnings 45,000 25,000 20,000
Total shareholders' equity 80,000 100,000 F
Par value per share B 1.50 2.50
91. Indicate the effects of the following transactions on the balance sheet equation, using the format:
Transaction letter Assets = Liabilities + Shareholders' equity

a. Issued 20,000 shares of $0.10 par value common stock for $100,000.
b. Issued 5,000 shares of $0.10 par value common stock in full payment for land worth $25,000 to be used as a future building site.
c. Acquired equipment costing $7,500 for a cash payment of $700 with the balance payable over the next five years.
d. Paid $1,000 for rent for the next two months.
e. Completed a consulting job and invoiced the client for $5,000, payable in 30 days.
f. Ordered office supplies for the office, totaling $225.
g. Purchased a three-year fire insurance policy and pays in advance $3,000.
h. Received payment from the client for services rendered in (e) above.
i. Received the office supplies. The invoice indicates payment is due within 10 days.
j. Issued a check for the office supplies purchased in (i) above.
92. In European countries, terminology on financial statements sometimes differs from terminology commonly
used in the United States. Match the European terms to commonly used United States counterparts.
Common European Term Common U.S. Term
a. Tangible Fixed Asset 1. Property, Plant, and Equipment
b. Financial Assets 2. Common Stock
c. Trade Receivables 3. Additional Paid-in Capital
d. Liquid Funds 4. Investment in Securities
e. Subscribed Capital 5. Retained Earnings
f. Capital Reserve 6. Accounts Payable
g. Profit Reserves, Net Income 7. Accounts Receivable
Available for Distributions 8. Notes Payable to Banks
h. Bonds 9. Bonds Payable
i. Due to Banks 10. Cash
j. Trade Payables

93. The transactions listed below relate to the JB Corporation. Indicate whether or not each transaction
immediately gives rise to an asset or liability of JB Corporation under generally accepted accounting principles.
If accounting recognizes an asset or a liability, give the account title and amount.
a. JB Corporation issues $1 par value common stock for $10,000,000, its market value.
b. JB Corporation purchases a machine for $20,000, freight of $675, and installation costs of $1,500.
c. JB Corporation owes $5,000 for utilities at the end of the year. The firm has 10 days before payment is due without paying a late fee.
d. JB Corporation receives a 30-day, 10% loan of $10,000 from a local bank.
e. JB Corporation acquires property with an appraised value of $2,000,000 for its stock.
f. JB Corporation receives an order for merchandise totaling $5,000 from a customer. The merchandise will be shipped next week.
94. Collette and Cohen incorporate as CC Designs, Inc. on January 1, Year 1. CC Designs creates custom wall
finishes and sells painting products. The following transactions occur during January.
a. Cohen contributes cash of $75,000 and receives 15,000 shares of $1 par value stock.
b. Collette contributes $35,000 cash, office furniture with a value of $5,000, and computer equipment with a value of $10,000 and receives
15,000 shares of $1 par value stock. The furniture and equipment is expected to last 5 years and has no salvage value.
c. On January 2, $10,000 of painting products are purchased. CC paid $8,000 cash with the remaining amount on account.
d. During January, painting products are sold for $8,000 cash. The cost of the products is $2,000.
e. Additional painting products with a value of $5,000 are sold, with a cost of $1,500, but the cash is not collected as of January 31st. It is
expected that the $5,000 will be collected in full by February 15th.
f. Cohen is paid a salary of $2,000.
g. CC paid $1,200 for January and February rent.
Required:
Prepare appropriate accrual basis journal entries.

95. Monmath Corp. started operations in March of Year 3. The following transactions occur during March.
a. On March 1, Year 3, Monty contributes $20,000 for 10,000 shares of $1 par value stock.
b. On March 1, Year 3, Monmath borrows $50,000 on a note from the bank to finance the purchase of a building.
c. Monmath buys $15,000 of inventory on account (this is the gross price before any possible discounts).
d. Monmath pays a $12,000 account payable with cash.
e. Monmath paid the annual rent of $11,760.
f. Monmath pays for one half of the inventory purchased in (c) above. There are no discounts given.
g. Issued 300 shares of $1 par value stock in settlement of $300 accounts payable.
h. Received $400 from a customer for merchandise to be delivered on April 15, Year 3.
Required:
Prepare the journal entries for transactions a through h, assuming Monmath uses the accrual basis of accounting.
96. Assets are usually classified in one of following ways:
CA -current assets
PPE -property, plant, and equipment
IA -intangible asset
Using the abbreviations above, indicate the appropriate classification of each of the following items.
a. merchandise inventory
b. goodwill
c. land
d. patent
e. work-in-process inventory
f. marketable equity securities
g. trademark
h. furniture and fixtures
i. cash
j. prepaid insurance

97. A friend of yours has prepared the following balance sheet for his bicycle shop but it has a problem. He
thought his total assets did not reflect the assets available to the firm. He has asked you to take a look at this
balance sheet and help him out.
Eric's Bike Shop, Inc.
Balance Sheet
As of December 31, Year 1
Assets
Current Assets:
Cash $15,000
Merchandise Inventory 30,000
Merchandise Sold, at cost 37,500
Prepaid Insurance 1,000
Advance from Customer (1,000)
Total Current Assets $82,500
Property, Plant, and Equipment:
Equipment 8,000
Less Note Payable (5,000)
Total Assets $85,500
Liabilities and Shareholders' Equity
Current Liabilities:
Bike Sales $55,000
Accounts Payable 2,000
Accumulated Depreciation 700
Rent Payable 1,000
Total Current Liabilities $58,700
Shareholders' Equity:
Common Stock 1,000 shares at $10 par value $10,000
Additional Paid-in Capital 7,500
Retained Earnings 9,300
Total Shareholders' Equity $26,800
Total Liabilities and Shareholders' Equity $85,500
Required:
a. Prepare a corrected balance sheet for Eric's Bike Shop, Inc.
b. Draft a memo to Eric explaining the errors you corrected. Include your reasons.

98. Prepare journal entries for each of the following unrelated transactions. You may omit explanations for the
journal entries.
a. A firm issues 5,000 shares of $2 par value common stock in exchange for $20,000 cash.
b. A firm acquires a building with $30,000 cash and signs a 15-year note for $60,000.
c. A firm buys inventory for $980 cash.
d. A firm pays $8,000 to its landlord for annual rent.
e. A publisher sells $3,000 in magazine subscriptions that will be filled over the next 12 months.
99. You've been asked to review the following balance sheet which has been prepared by a new staff member.
Calvin Springs Outfitters
Balance Sheet
As of December 31, Year 1
Assets
Current Assets:
Cash $ 7,500
Accounts Receivable 14,000
Merchandise Inventory 25,000
Land 9,000
Total Current Assets $ 46,500
Property, Plant, and Equipment:
Building $125,000
Total Assets $180,500
Liabilities and Shareholders' Equity
Current Liabilities:
Advance from Customer $ 500
Accounts Payable 21,000
Rent Payable 3,600
Utilities Payable 1,200
Salaries Payable 1,800
Total Current Liabilities $ 28,100
Shareholders' Equity:
Common Stock 2,000 shares at $2.50 par value $ 5,000
Additional Paid-in Capital 85,000
Retained Earnings 62,400
Total Shareholders' Equity $152,400
Total Liabilities and Shareholders' Equity $180,500

a. Prepare
the
journal
entries
for the
followi
ng
transact
ions:
1. Merchandise purchased on account and costing $5,000 was received but not recorded.
2. Payments by clients for previously billed invoices were found in the receptionist's desk drawer. The checks totaled $2,100.
3. Written checks totaling $2,700 for payment of accounts payable, were found in the treasurer's desk drawer. He was going to mail
them out next Monday.
4. It was discovered that the company president had hired a new secretary for an annual salary of $18,250.
5. Upon further investigation, you found that the company had paid but incorrectly recorded next year's fire insurance policy,
totaling $3,600. The payment was recorded as an expense.
b. Prepare
a
correct
ed
balance
sheet.

100. Express the following transactions of Forman's Store, Inc., in journal entry form. If an entry is not
required, indicate the reason. You may omit explanations for the journal entries.
The store:
(1) Receives $35,000 from John Forman in return for 1,000 shares of the firm’s $35 par
value common stock.
(2) Gives a 60-day, 8% note to a bank and receives $8,000 cash from the bank.
(3) Rents a building and pays the annual rental of $11,000 in advance.
(4) Acquires display equipment costing $7,000 and issues a check in full payment.
(5) Acquires merchandise inventory costing $22,000. The firm issues a check for $12,000,
with the remainder payable in 30 days.
(6) Signs a contract with a nearby restaurant under which the restaurant agrees to purchase
$1,500 of groceries each week. The firm receives a check for the first two weeks’
orders in advance.
(7) Obtains a fire insurance policy providing $50,000 coverage beginning next month. It
pays the one-year premium of $1,440.
(8) Pays $625 for advertisements that will appear in newspapers next month.
(9) Places an order with suppliers for $43,500 of merchandise to be delivered next month.
101. Assume that a firm uses the accrual basis of accounting. Indicate the amount of expense the firm
recognizes during the month of November for each independent transaction.
a. Rent of $3,600 is paid on November 1 for the months November through January.
b. Inventory costing $2,500 is ordered on account. The invoice is received on November 25 and the goods are
received on December 5.
c. Insurance premium of $900 is paid for a full year of coverage starting November 1.
d. On December 3, an invoice for November utilities of $325 is received.
e. On November 1, supplies costing $2,200 are purchased. At November 30, $500 of supplies remained on
hand.

102. Describe T-accounts and how they are used.
103. Explain the terms debit and credit. In your discussion, also present the debit and credit rules that are
critical for maintaining T-accounts, as well as the equality of the balance sheet.
104. Why does every accounting transaction have two effects?
105. What is the relationship between a T-account and a journal entry?

106. Describe the balance sheet equation and the dual effects of transactions.
107. Describe a typical balance sheet.
108. What is the purpose of using contra accounts? What is the alternative to using them?
109. What distinguishes noncurrent assets from current assets?

110. Explain the difference between inventories for a retailer versus a manufacturer.
111. What is goodwill and how is it classified in terms of the accounting equation?
112. Explain the order of assets and liabilities in the balance sheet under U.S. GAAP and IFRS.
113. Explain how tenants record rent paid in advance for an office building and how a landlord or owner of the
property rented records the receipt of the advance payment. Show journal entries as part of your answer.

Exploring the Variety of Random
Documents with Different Content

villages of the Cape, given me by a Corsican the evening before.
Such is the beautiful and praiseworthy custom in Corsica; the
hospitable entertainer gives his departing guest a letter,
commending him to his relations or friends, who in their turn receive
him hospitably, and send him away with another letter. For days thus
you travel as guest, and are everywhere made much of; as inns in
these districts are almost unknown, travelling would otherwise be an
impossibility.
Sisco has a church sacred to Saint Catherine, which is of great
antiquity, and much resorted to by pilgrims. It lies high up on the
shore. Once a foreign ship had been driven upon these coasts, and
had vowed relics to the church for its rescue; which relics the
mariners really did consecrate to the holy Saint Catherine. They are
highly singular relics, and the folk of Sisco may justly be proud of
possessing such remarkable articles, as, for example, a piece of the
clod of earth from which Adam was modelled, a few almonds from
the garden of Eden, Aaron's rod that blossomed, a piece of manna,
a piece of the hairy garment of John the Baptist, a piece of Christ's
cradle, a piece of the rod on which the sponge dipped in vinegar was
raised to Christ's lips, and the celebrated rod with which Moses
smote the Red Sea.
Picturesque views abound in the hills of Sisco, and the country
becomes more and more beautiful as we advance northwards. I
passed through a great number of villages—Crosciano, Pietra,
Corbara, Cagnano—on the slopes of Monte Alticcione, but I found
some of them utterly poverty-stricken; even their wine was
exhausted. As I had refused breakfast in the house of my late
entertainer, in order not to send the good people into the kitchen by
sunrise, and as it was now mid-day, I began to feel unpleasantly
hungry. There were neither figs nor walnuts by the wayside, and I
determined that, happen what might, I would satisfy my craving in
the next paese. In three houses they had nothing—not wine, not
bread—all their stores were expended. In the fourth, I heard the
sound of a guitar. I entered. Two gray-haired men in ragged blouses

were sitting, the one on the bed, the other on a stool. He who sat on
the bed held his cetera, or cithern, in his arm, and played, while he
seemed lost in thought. Perhaps he was dreaming of his vanished
youth. He rose, and opening a wooden chest, brought out a half-loaf
carefully wrapped in a cloth, and handed me the bread that I might
cut some of it for myself. Then he sat down again on the bed, played
his cithern, and sang a vocero, or dirge. As he sang, I ate the bread
of the bitterest poverty, and it seemed to me as if I had found the
old harper of Wilhelm Meister, and that he sung to me the song—
"Who ne'er his bread with tears did eat,
Who ne'er the weary midnight hours
Weeping upon his bed hath sate,
He knows you not, ye heavenly powers!"
Heaven knows how Goethe has got to Corsica, but this is the second
of his characters I have fallen in with on this wild cape.
Having here had my hunger stilled, and something more, I
wandered onwards. As I descended into the vale of Luri, the region
around me, I found, had become a paradise. Luri is the loveliest
valley in Cape Corso, and also the largest, though it is only ten
kilometres long, and five broad.[G] Inland it is terminated by
beautiful hills, on the highest of which stands a black tower. This is
the tower of Seneca, so called because, according to the popular
tradition, it was here that Seneca spent his eight years of Corsican
exile. Towards the sea, the valley slopes gently down to the marina
of Luri. A copious stream waters the whole dale, and is led in canals
through the gardens. Here lie the communes which form the pieve
of Luri, rich, and comfortable-looking, with their tall churches,
cloisters, and towers, in the midst of a vegetation of tropical
luxuriance. I have seen many a beautiful valley in Italy, but I
remember none that wore a look so laughing and winsome as that
fair vale of Luri. It is full of vineyards, covered with oranges and

lemons, rich in fruit-trees of every kind, in melons, and all sorts of
garden produce, and the higher you ascend, the denser become the
groves of chestnuts, walnuts, figs, almonds, and olives.
CHAPTER III.
PINO.
A good road leads upwards from the marina of Luri. You move in
one continual garden—in an atmosphere of balsamic fragrance.
Cottages approaching the elegant style of Italian villas indicate
wealth. How happy must the people be here, if their own passions
deal as gently with them as the elements. A man who was dressing
his vineyard saw me passing along, and beckoned me to come in,
and I needed no second bidding. Here is the place for swinging the
thyrsus-staff; no grape disease here—everywhere luscious maturity
and joyous plenty. The wine of Luri is beautiful, and the citrons of
this valley are said to be the finest produced in the countries of the
Mediterranean. It is the thick-skinned species of citrons called cedri
which is here cultivated; they are also produced in abundance all
along the west coast, but more especially in Centuri. The tree, which
is extremely tender, demands the utmost attention. It thrives only in
the warmest exposures, and in the valleys which are sheltered from
the Libeccio. Cape Corso is the very Elysium of this precious tree of
the Hesperides.
I now began to cross the Serra towards Pino, which lies at its base
on the western side. My path lay for a long time through woods of
walnut-trees, the fruit of which was already ripe; and I must here
confirm what I had heard, that the nut-trees of Corsica will not
readily find their equals. Fig-trees, olives, chestnuts, afford variety at
intervals. It is pleasant to wander through the deep shades of a
northern forest of beeches, oaks, or firs, but the forests of the south

are no less glorious; walking beneath these trees one feels himself in
noble company. I ascended towards the Tower of Fondali, which lies
near the little village of the same name, quite overshadowed with
trees, and finely relieving their rich deep green. From its battlements
you look down over the beautiful valley to the blue sea, and above
you rise the green hills, summit over summit, with forsaken black
cloisters on them; on the highest rock of the Serra is seen the Tower
of Seneca, which, like a stoic standing wrapt in deep thought, looks
darkly down over land and sea. The many towers that stand here—
for I counted numbers of them—indicate that this valley of Luri was
richly cultivated, even in earlier times; they were doubtless built for
its protection. Even Ptolemy is acquainted with the Vale of Luri, and
in his Geography calls it Lurinon.
I climbed through a shady wood and blooming wilderness of trailing
plants to the ridge of the Serra, close beneath the foot of the cone
on which the Tower of Seneca stands. From this point both seas are
visible, to the right and to the left. I now descended towards Pino,
where I was expected by some Carrarese statuaries. The view of the
western coast with its red reefs and little rocky zig-zag coves, and of
the richly wooded pieve of Pino, came upon me with a most
agreeable surprise. Pino has some large turreted mansions lying in
beautiful parks; they might well serve for the residence of any
Roman Duca:—for Corsica has its millionnaires. On the Cape live
about two hundred families of large means—some of these
possessed of quite enormous wealth, gained either by themselves or
by relations, in the Antilles, Mexico, and Brazil.
One fortunate Crœsus of Pino inherited from an uncle of his in St.
Thomas a fortune of ten millions of francs. Uncles are most excellent
individuals. To have an uncle is to have a constant stake in the
lottery. Uncles can make anything of their nephews—millionnaires,
immortal historical personages. The nephew of Pino has rewarded
his meritorious relative with a mausoleum of Corsican marble—a
pretty Moorish family tomb on a hill by the sea. It was on this
building my Carrarese friends were engaged.

In the evening we paid a visit to the Curato. We found him walking
before his beautifully-situated parsonage, in the common brown
Corsican jacket, and with the Phrygian cap of liberty on his head.
The hospitable gentleman led us into his parlour. He seated himself
in his arm-chair, ordered the Donna to bring wine, and, when the
glasses came in, reached his cithern from the wall. Then he began
with all the heartiness in the world to play and sing the Paoli march.
The Corsican clergy were always patriotic men, and in many battles
fought in the ranks with their parishioners. The parson of Pino now
put his Mithras-cap to rights, and began a serenade to the beautiful
Marie. I shook him heartily by the hand, thanked him for wine and
song, and went away to the paese where I was to lodge for the
night. Next morning we proposed wandering a while longer in Pino,
and then to visit Seneca in his tower.
On this western coast of Cape Corso, below Pino, lies the fifth and
last pieve of the Cape, called Nonza. Near Nonza stands the tower
which I mentioned in the History of the Corsicans, when recording
an act of heroic patriotism. There is another intrepid deed connected
with it. In the year 1768 it was garrisoned by a handful of militia,
under the command of an old captain, named Casella. The French
were already in possession of the Cape, all the other captains having
capitulated. Casella refused to follow their example. The tower
mounted one cannon; they had plenty of ammunition, and the militia
had their muskets. This was sufficient, said the old captain, to
defend the place against a whole army; and if matters came to the
worst, then you could blow yourself up. The militia knew their man,
and that he was in the habit of doing what he said. They accordingly
took themselves off during the night, leaving their muskets, and the
old captain found himself alone. He concluded, therefore, to defend
the tower himself. The cannon was already loaded; he charged all
the pieces, distributed them over the various shot-holes, and
awaited the French. They came, under the command of General
Grand-Maison. As soon as they were within range, Casella first
discharged the cannon at them, and then made a diabolical din with
the muskets. The French sent a flag of truce to the tower, with the

information that the entire Cape had surrendered, and summoning
the commandant to do the same with all his garrison, and save
needless bloodshed. Hereupon Casella replied that he would hold a
council of war, and retired. After some time he reappeared and
announced that the garrison of Nonza would capitulate under
condition that it should be allowed to retire with the honours of war,
and with all its baggage and artillery, for which the French were to
furnish conveyances. The conditions were agreed to. The French had
drawn up before the tower, and were now ready to receive the
garrison, when old Casella issued, with his firelock, his pistols, and
his sabre. The French waited for the garrison, and, surprised that
the men did not make their appearance, the officer in command
asked why they were so long in coming out. "They have come out,"
answered the Corsican; "for I am the garrison of the Tower of
Nonza." The duped officer became furious, and rushed upon Casella.
The old man drew his sword, and stood on the defensive. In the
meantime, Grand-Maison himself hastened up, and, having heard
the story, was sufficiently astonished. He instantly put his officer
under strict arrest, and not only fulfilled every stipulation of Casella's
to the letter, but sent him with a guard of honour, and a letter
expressive of his admiration, to Paoli's head-quarters.
Above Pino extends the canton of Rogliano, with Ersa and Centuri—a
district of remarkable fertility in wine, oil, and lemons, and rivalling
Luri in cultivation. The five pievi of the entire Cape—Brando,
Martino, Luri, Rogliano, and Nonza—contain twenty-one communes,
and about 19,000 inhabitants; almost as many, therefore, as the
island of Elba. Going northwards, from Rogliano over Ersa, you reach
the extreme northern point of Corsica, opposite to which, with a
lighthouse on it, lies the little island of Girolata.
CHAPTER IV.

THE TOWER OF SENECA.
"Melius latebam procul ab invidiæ malis
Remotus inter Corsici rupes maris."
Roman Tragedy of Octavia.
The Tower of Seneca can be seen at sea, and from a distance of
many miles. It stands on a gigantic, quite naked mass of granite,
which rises isolated from the mountain-ridge, and bears on its
summit the black weather-beaten pile. The ruin consists of a single
round tower—lonely and melancholy it stands there, hung with
hovering mists, all around bleak heath-covered hills, the sea on both
sides deep below.
If, as imaginative tradition affirms, the banished stoic spent eight
years of exile here, throning among the clouds, in the silent rocky
wilds—then he had found a place not ill adapted for a philosopher
disposed to make wise reflections on the world and fate; and to
contemplate with wonder and reverence the workings of the eternal
elements of nature. The genius of Solitude is the wise man's best
instructor; in still night hours he may have given Seneca insight into
the world's transitoriness, and shown him the vanity of great Rome,
when the exile was inclined to bewail his lot. After Seneca returned
from his banishment to Rome, he sometimes, perhaps, among the
abominations of the court of Nero, longed for the solitary days of
Corsica. There is an old Roman tragedy called Octavia, the subject of
which is the tragic fate of Nero's first empress.[H] In this tragedy
Seneca appears as the moralizing figure, and on one occasion
delivers himself as follows:—

"O Lady Fortune, with the flattering smile
On thy deceitful face, why hast thou raised
One so contented with his humble lot
To height so giddy? Wheresoe'er I look,
Terrors around me threaten, and at last
The deeper fall is sure. Ah, happier far—
Safe from the ills of envy once I hid—
Among the rocks of sea-girt Corsica.
I was my own; my soul was free from care,
In studious leisure lightly sped the hours.
Oh, it was joy,—for in the mighty round
Of Nature's works is nothing more divine,—
To look upon the heavens, the sacred sun,
With all the motions of the universe,
The seasonable change of morn and eve,
The orb of Phœbe and the attendant stars,
Filling the night with splendour far and wide.
All this, when it grows old, shall rush again
Back to blind chaos; yea, even now the day,
The last dread day is near, and the world's wreck
Shall crush this impious race."
A rude sheep-track led us up the mountain over shattered rocks.
Half-way up to the tower, completely hidden among crags and
bushes, lies a forsaken Franciscan cloister. The shepherds and the
wild fig-tree now dwell in its halls, and the raven croaks the de
profundis. But the morning and the evening still come there to hold
their silent devotions, and kindle incense of myrtle, mint, and
cytisus. What a fragrant breath of herbs is about us! what morning
stillness on the mountains and the sea!
We stood on the Tower of Seneca. We had clambered on hands and
feet to reach its walls. By holding fast to projecting ledges and
hanging perilously over the abyss, you can gain a window. There is

no other entrance into the tower; its outer works are destroyed, but
the remains show that a castle, either of the seigniors of Cape Corso
or of the Genoese, stood here. The tower is built of astonishingly
firm material; its battlements, however, are rent and dilapidated. It is
unlikely that Seneca lived on this Aornos, this height forsaken by the
very birds, and certainly too lofty a flight for moral philosophers—a
race that love the levels. Seneca probably lived in one of the Roman
colonies, Aleria or Mariana, where the stoic, accustomed to the
conveniences of Roman city life, may have established himself
comfortably in some house near the sea; so that the favourite mullet
and tunny had not far to travel from the strand to his table.
A picture from the fearfully beautiful world of imperial Rome passed
before me as I sat on Seneca's tower. Who can say he rightly and
altogether comprehends this world? It often seems to me as if it
were Hades, and as if the whole human race of the period were
holding in its obscure twilight a great diabolic carnival of fools,
dancing a gigantic, universal ballet before the Emperor's throne,
while the Emperor sits there gloomy as Pluto, only breaking out now
and then into insane laughter; for it is the maddest carnival this; old
Seneca plays in it too, among the Pulcinellos, and appears in
character with his bathing-tub.
Even a Seneca may have something tragi-comic about him, if we
think of him, for example, in the pitiably ludicrous shape in which he
is represented in the old statue that bears his name. He stands there
naked, a cloth about his loins, in the bath in which he means to die,
a sight heart-rending to behold, with his meagre form so tremulous
about the knees, and his face so unutterably wo-begone. He
resembles one of the old pictures of St. Jerome, or some starveling
devotee attenuated by penance; he is tragi-comic, provocative of
laughter no less than pity, as many of the representations of the old
martyrs are, the form of their suffering being usually so whimsical.
Seneca was born, B.C. 3, at Cordova, in Spain, of equestrian family.
His mother, Helvia, was a woman of unusual ability; his father, Lucius
Annæus, a rhetorician of note, who removed with his family to

Rome. In the time of Caligula, Seneca the younger distinguished
himself as an orator, and Stoic philosopher of extraordinary learning.
A remarkably good memory had been of service to him. He himself
relates that after hearing two thousand names once repeated, he
could repeat them again in the same order, and that he had no
difficulty in doing the same with two hundred verses.
In favour at the court of Claudius, he owed his fall to Messalina. She
accused him of an intrigue with the notorious Julia, the daughter of
Germanicus, and the most profligate woman in Rome. The
imputation is doubly comical, as coming from a Messalina, and
because it makes us think of Seneca the moralist as a Don Juan. It is
hard to say how much truth there is in the scandalous story, but
Rome was a strange place, and nothing can be more bizarre than
some of the characters it produced. Julia was got out of the way,
and Don Juan Seneca sent into banishment among the barbarians of
Corsica. The philosopher now therefore became, without straining
the word, a Corsican bandit.
There was in those days no more terrible punishment than that of
exile, because expulsion from Rome was banishment from the world.
Eight long years Seneca lived on the wild island. I cannot forgive my
old friend, therefore, for recording nothing about its nature, about
the history and condition of its inhabitants, at that period. A single
chapter from the pen of Seneca on these subjects, would now be of
great value to us. But to have said nothing about the barbarous
country of his exile, was very consistent with his character as
Roman. Haughty, limited, void of sympathetic feeling for his kind,
was the man of those times. How different is the relation in which
we now stand to nature and history!
For the banished Seneca the island was merely a prison that he
detested. The little that he says about it in his book De Consolatione
ad Matrem Helviam, shows how little he knew of it. For though it
was no doubt still more rude and uncultivated than at present, its
natural grandeur was the same. He composed the following
epigrams on Corsica, which are to be found in his poetical works:—

"Corsican isle, where his town the Phocæan colonist planted,
Corsica, called by the Greeks Cyrnus in earlier days,
Corsica, less than thy sister Sardinia, longer than Elba,
Corsica, traversed by streams—streams that the fisherman loves,
Corsica, dreadful land! when thy summer's suns are returning,
Scorch'd more cruelly still, when the fierce Sirius shines;
Spare the sad exile—spare, I mean, the hopelessly buried—
Over his living remains, Corsica, light lie thy dust."
The second has been said to be spurious, but I do not see why our
heart-broken exile should not have been its author, as well as any of
his contemporaries or successors in Corsican banishment.
"Rugged the steeps that enclose the barbarous Corsican island,
Savage on every side stretches the solitude vast;
Autumn ripens no fruits, nor summer prepares here a harvest.
Winter, hoary and chill, wants the Palladian gift;[I]
Never rejoices the spring in the coolness of shadowy verdure,
Here not a blade of grass pierces the desolate plain,
Water is none, nor bread, nor a funeral-pile for the stranger—
Two are there here, and no more—the Exile alone with his Wo."[J]
The Corsicans have not failed to take revenge on Seneca. Since he
gives them and their country such a disgraceful character, they have
connected a scandalous story with his name. Popular tradition has
preserved only a single incident from the period of his residence in
Corsica, and it is as follows:—As Seneca sat in his tower and looked
down into the frightful island, he saw the Corsican virgins, that they
were fair. Thereupon the philosopher descended, and he dallied with
the daughters of the land. One comely shepherdess did he honour

with his embrace; but the kinsfolk of the maiden came upon him
suddenly, and took him, and scourged the philosopher with nettles.
Ever since, the nettle grows profusely and ineradicably round the
Tower of Seneca, as a warning to moral philosophers. The Corsicans
call it Ortica de Seneca.
Unhappy Seneca! He is always getting into tragi-comic situations. A
Corsican said to me: "You have read what Seneca says of us? ma era
un birbone—but he was a great rascal." Seneca morale, says Dante,
—Seneca birbone, says the Corsican—another instance of his love
for his country.
Other sighs of exile did the unfortunate philosopher breathe out in
verse—some epigrams to his friends, one on his native city of
Cordova. If Seneca wrote any of the tragedies which bear his name
in Corsica, it must certainly have been the Medea. Where could he
have found a locality more likely to have inspired him to write on a
subject connected with the Argonauts, than this sea-girt island? Here
he might well make his chorus sing those remarkable verses which
predict Columbus:—
"A time shall come
In the late ages,
When Ocean shall loosen
The bonds of things;
Open and vast
Then lies the earth;
Then shall Tiphys
New worlds disclose.
And Thule no more
Be the farthest land."
Now the great navigator Columbus was born in the Genoese
territory, not far from Corsica. The Corsicans will have it that he was

born in Calvi, in Corsica itself, and they maintain this till the present
day.
CHAPTER V.
SENECA MORALE.
——"e vidi Orfeo
Tullio, e Livio, e Seneca morale."—Dante.
Fair fruits grew for Seneca in his exile; and perhaps he owed some
of his exalted philosophy rather to his Corsican solitude than to the
teachings of an Attalus or a Socio. In the Letter of Consolation to his
mother, he writes thus at the close:—You must believe me happy
and cheerful, as when in prosperity. That is true prosperity when the
mind devotes itself to its pursuits without disturbing thoughts, and,
now pleasing itself with lighter studies, now thirsting after truth,
elevates itself to the contemplation of its own nature and of that of
the universe. First, it investigates the countries and their situations,
then the nature of the circumfluent sea, and its changes of ebb and
flow; then it contemplates the terrible powers that lie between
heaven and earth—the thunder, lightnings, winds, rain, snow and
hail, that disquiet this space; at last, when it has wandered through
the lower regions, it takes its flight to the highest, and enjoys the
beautiful spectacle of celestial things, and, mindful of its own
eternity, enters into all which has been and shall be to all eternity.
When I took up Seneca's Letter of Consolation to his mother, I was
not a little curious to see how he would console her. How would one
of the thousand cultivated exiles scattered over the world at the
present time console his mother? Seneca's letter is a quite

methodically arranged treatise, consisting of seventeen chapters. It
is a more than usually instructive contribution to the psychology of
these old Stoics. The son is not so particularly anxious to console his
mother as to write an excellent and elegant treatise, the logic and
style of which shall procure him admiration. He is quite proud that
his treatise will be a species of composition hitherto unknown in the
world of letters. The vain man writes to his mother like an author to
a critic with whom he is coolly discussing the pros and cons of his
subject. I have, says he, consulted all the works of the great
geniuses who have written upon the methods of moderating grief,
but I have found no example of any one's consoling his friends when
it was himself they were lamenting. In this new case, therefore, in
which I found myself, I was embarrassed, and feared lest I might
open the wounds instead of healing them. Must not a man who
raises his head from the funeral-pile itself to comfort his relatives,
need new words, such as the common language of daily life does
not supply him with? Every great and unusual sorrow must make its
own selection of words, if it does not refuse itself language
altogether. I shall venture to write to you, therefore, not in
confidence on my talent, but because I myself, the consoler, am here
to serve as the most effectual consolation. For your son's sake, to
whom you can deny nothing, you will not, as I trust (though all grief
is stubborn), refuse to permit bounds to be set to your grief.
He now begins to console after his new fashion, reckoning up to his
mother all that she has already suffered, and drawing the conclusion
that she must by this time have become callous. Throughout the
whole treatise you hear the skeleton of the arrangement rattling.
Firstly, his mother is not to grieve on his account; secondly, his
mother is not to grieve on her own account. The letter is full of the
most beautiful stoical contempt of the world.
"Yet it is a terrible thing to be deprived of one's country." What is to
be said to this?—Mother, consider the vast multitude of people in
Rome; the greater number of them have congregated there from all
parts of the world. One is driven from home by ambition, another by

business of state, by an embassy, by the quest of luxury, by vice, by
the wish to study, by the desire of seeing the spectacles, by
friendship, by speculation, by eloquence, by beauty. Then, leaving
Rome out of view, which indeed is to be considered the mother-city
of them all, go to other cities, go to islands, come here to Corsica—
everywhere are more strangers than natives. "For to man is given a
desire of movement and of change, because he is moved by the
celestial Spirit; consider the heavenly luminaries that give light to the
world—none of them remains fixed—they wander ceaselessly on
their path, and change perpetually their place." His poetic vein gave
Seneca this fine thought. Our well-known wanderer's song has the
words—
"Fix'd in the heavens the sun does not stand,
He travels o'er sea, he travels o'er land."[K]
"Varro, the most learned of the Romans," continues Seneca,
"considers it the best compensation for the change of dwelling-
place, that the nature of things is everywhere the same. Marcus
Brutus finds sufficient consolation in the fact that he who goes into
exile can take all that he has of truly good with him. Is not what we
lose a mere trifle? Wherever we turn, two glorious things go with us
—Nature that is everywhere, and Virtue that is our own. Let us
travel through all possible countries, and we shall find no part of the
earth which man cannot make his home. Everywhere the eye can
rise to heaven, and all the divine worlds are at an equal distance
from all the earthly. So long, therefore, as my eyes are not debarred
that spectacle, with seeing which they are never satisfied; so long as
I can behold moon and sun; so long as my gaze can rest on the
other celestial luminaries; so long as I can inquire into their rising
and setting, their courses, and the causes of their moving faster or
slower; so long as I can contemplate the countless stars of night,
and mark how some are immoveable—how others, not hastening
through large spaces, circle in their own path, how many beam forth

with a sudden brightness, many blind the eye with a stream of fire
as if they fell, others pass along the sky in a long train of light; so
long as I am with these, and dwell, as much as it is allowed to
mortals, in heaven; so long as I can maintain my soul, which strives
after the contemplation of natures related to it, in the pure ether, of
what importance to me is the soil on which my foot treads? This
island bears no fruitful nor pleasant trees; it is not watered by broad
and navigable streams; it produces nothing that other nations can
desire; it is hardly fertile enough to supply the necessities of the
inhabitants; no precious stone is here hewn (non pretiosus lapis hic
cæditur); no veins of gold or silver are here brought to light; but the
soul is narrow that delights itself with what is earthly. It must be
guided to that which is everywhere the same, and nowhere loses its
splendour."
Had I Humboldt's Cosmos at hand, I should look whether the great
natural philosopher has taken notice of these lofty periods of
Seneca, where he treats of the sense of the ancients for natural
beauty.
This, too, is a spirited passage:—"The longer they build their
colonnades, the higher they raise their towers, the broader they
stretch their streets, the deeper they dig their summer grottos, the
more massively they pile their banqueting-halls—all the more
effectually they cover themselves from the sky.—Brutus relates in his
book on virtue, that he saw Marcellus in exile in Mitylene, and that
he lived, as far as it was possible for human nature, in the
enjoyment of the greatest happiness, and never was more devoted
to literature than then. Hence, adds he, as he was to return without
him, it seemed to him that he was rather himself going into exile
than leaving the other in banishment behind him."
Now follows a panegyric on poverty and moderation, as contrasted
with the luxurious gluttony of the rich, who ransack heaven and
earth to tickle their palates, bring game from Phasis, and fowls from
Parthia, who vomit in order to eat, and eat in order to vomit. "The
Emperor Caligula," says Seneca, "whom Nature seems to me to have

produced to show what the most degrading vice could do in the
highest station, ate a dinner one day, that cost ten million sesterces;
and although I have had the aid of the most ingenious men, still I
have hardly been able to make out how the tribute of three
provinces could be transformed into a single meal." Like Rousseau,
Seneca preaches the return of men to the state of nature. The times
of the two moralists were alike; they themselves resemble each
other in weakness of character, though Seneca, as compared with
Rousseau, was a Roman and a hero.
Scipio's daughters received their dowries from the public treasury,
because their father left nothing behind him. "O happy husbands of
such maidens," cries Seneca; "husbands to whom the Roman people
was father-in-law! Are they to be held happier whose ballet-dancers
bring with them a million sesterces as dowry?"
After Seneca has comforted his mother in regard to his own
sufferings, he proceeds to comfort her with reference to herself.
"You must not imitate the example," he writes to her, "of women
whose grief, when it had once mastered them, ended only with
death. You know many, who, after the loss of their sons, never more
laid off the robe of mourning that they had put on. But your nature
has ever been stronger than this, and imposes upon you a nobler
course. The excuse of the weakness of the sex cannot avail for her
who is far removed from all female frailties. The most prevailing evil
of the present time—unchastity, has not ranked you with the
common crowd; neither precious stones nor pearls have had power
over you, and wealth, accounted the highest of human blessings,
has not dazzled you. The example of the bad, which is dangerous
even to the virtuous, has not contaminated you—the strictly
educated daughter of an ancient and severe house. You were never
ashamed of the number of your children, as if they made you old
before your time; you never—like some whose beautiful form is their
only recommendation—concealed your fruitfulness, as if the burden
were unseemly; nor did you ever destroy the hope of children that
had been conceived in your bosom. You never disfigured your face

with spangles or with paint; and never did a garment please you,
that had been made only to show nakedness. Modesty appeared to
you the alone ornament—the highest and never-fading beauty!" So
writes the son to his mother, and it seems to me there is a most
philosophical want of affectation in his style.
He alludes to Cornelia, the mother of the Gracchi; but he does not
conceal from himself that grief is a disobedient thing. Traitorous
tears, he knows, will appear on the face of assumed serenity.
"Sometimes," says Seneca, "we entangle the soul in games and
gladiator-shows; but even in the midst of such spectacles, the
remembrance of its loss steals softly upon it. Therefore is it better to
overcome than to deceive. For when the heart has either been
cheated by pleasure, or diverted by business, it rebels again, and
derives from repose itself the force for new disquiet; but it is
lastingly still if it has yielded to reason." A wise man's voice
enunciates here simply and beautifully the alone right, but the
bitterly difficult rules for the art of life. Seneca, accordingly, counsels
his mother not to use the ordinary means for overcoming her grief—
a picturesque tour, or employment in household affairs; he advises
mental occupation, lamenting, at the same time, that his father—an
excellent man, but too much attached to the customs of the ancients
—never could prevail upon himself to give her philosophical
cultivation. Here we have an amusing glimpse of the old Seneca, I
mean of the father. We know now how he looked. When the
fashionable literary ladies and gentlemen in Cordova, who had
picked up ideas about the rights of woman, and the elevation of her
social position, from the Republic of Plato, represented to the old
gentleman, that it were well if his young wife attended the lectures
of some philosophers, he growled out: "Absurd nonsense; my wife
shall not have her head turned with your high-flying notions, nor be
one of your silly blue-stockings; cook shall she, bear children, and
bring up children!" So said the worthy gentleman, and added, in
excellent Spanish, "Basta!"

Seneca now speaks at considerable length of the magnanimity of
which woman is capable, having no idea then that he was yet, when
dying, to experience the truth of what he said, in the case of his own
wife, Paulina. A noble man, therefore, a stoic of exalted virtue, has
addressed this Letter of Consolation to Helvia. Is it possible that
precisely the same man can think and write like a crawling parasite—
like the basest flatterer?
CHAPTER VI.
SENECA BIRBONE.
"Magni pectoris est inter secunda moderatio."—Seneca.
Here is a second Letter of Consolation, which Seneca wrote in the
second or third year of his Corsican exile, to Polybius, the freedman
of Claudius, a courtier of the ordinary stamp. Polybius served the
over-learned Claudius as literary adviser, and tormented himself with
a Latin translation of Homer and a Greek one of Virgil. The loss of
his talented brother occasioned Seneca's consolatory epistle to the
courtier. He wrote the treatise with the full consciousness that
Polybius would read it to the Emperor, and, not to miss the
opportunity of appeasing the wrath of Claudius, he made it a model
of low flattery of princes and their influential favourites. When we
read it, we must not forget what sort of men Claudius and Polybius
were.
"O destiny," cries the flatterer, "how cunningly hast thou sought out
the vulnerable spot! What was there to rob such a man of? Money?
He has always despised it. Life? His genius makes him immortal. He
has himself provided that his better part shall endure, for his
glorious rhetorical works cannot fail to rescue him from the ordinary
lot of mortals. So long as literature is held in honour, so long as the

Latin language retains its vigour, or the Greek its grace, so long shall
he live with the greatest men, whose genius his own equals, or, if his
modesty would object to that, at least approaches.—Unworthy
outrage! Polybius mourns, Polybius has an affliction, and the
Emperor is gracious to him! By this, inexorable destiny, thou
wouldst, without doubt, show that none can be shielded from thee,
no, not even by the Emperor! Yet, why does Polybius weep? Has he
not his beloved Emperor, who is dearer to him than life? So long as it
is well with him, then is it well with all who are yours, then have you
lost nothing, then must your eyes be not only dry, but bright with
joy. The Emperor is everything to you, in him you have all that you
can desire. To him, your divinity, you must therefore raise your
glance, and grief will have no power over your soul.
"Destiny, withhold thy hand from the Emperor, and show thy power
only in blessing, letting him remain as a physician to mankind, who
have suffered now so long, that he may again order and adjust what
the madness of his predecessor destroyed. May this star, which has
arisen in its brightness on a world plunged into abysses of darkness,
shine evermore! May he subdue Germany, open up Britain, and
celebrate ancestral victories and new triumphs, of which his
clemency, which takes the first place among his virtues, makes me
hope that I too shall be a witness. For he did not so cast me down,
that he shall not again raise me up: no, it was not even he who
overthrew me; but when destiny gave me the thrust, and I was
falling, he broke my fall, and, gently intervening with godlike hand,
bore me to a place of safety. He raised his voice for me in the
senate, and not only gave me, but petitioned for, my life. He will
himself see how he has to judge my cause; either his justice will
recognise it as good, or his clemency will make it so. The benefit will
still be the same, whether he perceives, or whether he wills, that I
am innocent. Meanwhile, it is a great consolation to me, in my
wretchedness, to see how his compassion travels through the whole
world; and as he has again brought back to the light, from this
corner in which I am buried, many who lay sunk in the oblivion of a
long banishment, I do not fear that he will forget me. But he himself

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