Acct Final Exam

If bonds have been issued at a discount, the ________ over the life of the bonds. Select one: A. carrying value of the bonds will decrease B. interest expense will decrease C. interest payment will increase D. interest expense will increase

The correct answer is: interest expense will increase

A company borrows $10,200 from the bank at 13% interest for thirty days. $10,200 is the ________ of the note. The maturity value of the note is ________. Select one: A. present value; $10,200 B. maturity value; $10,309 C. principal; $10,309 D. future value; $10,200

10,200 + (10,200 × 13% × 30/365) = 10,309 The correct answer is: principal; $10,309

A business sold equipment for $44,200 cash. They purchased the equipment one day earlier for $44,200 but changed their plans. Select one: A. Debit Cash for $44,200 and credit Equipment for $44,200. B. Debit Retained Earnings for $44,200 and credit Equipment for $44,200. C. Debit Equipment for $44,200 and credit Cash for $44,200. D. Debit Equipment for $44,200 and credit Retained Earnings for $44,200.

Debit Cash for $44,200 and credit Equipment for $44,200.

Net income is computed as: Select one: A. revenues + expenses. B. revenues - expenses. C. revenues - expenses + dividends. D. revenues - expenses - dividends.

revenues - expenses.

On December 1, 2015, Carrie's Day Care receives $3000 in advance for an agreement to care for Susan's children for the months of December, January, and February. Carrie's Day Care will make an adjusting entry on December 31, 2015 to: Select one: A. credit Revenue for $3000. B. debit Unearned Revenue for $1000. C. credit Revenue for $2000. D. credit Prepaid Revenue for $2000.

$3000 ÷ 3 = $1000 revenue per month × 1 month = $1000 revenue earned $3000 ÷ 3 = $1000 revenue per month × 1 month = $1000 revenue earned The correct answer is: debit Unearned Revenue for $1000.

On January 2, 2013, Saminski, Inc., acquired equipment for $600,000. The estimated life of the equipment is 5 years. The estimated residual value is $20,000. What is the Accumulated Depreciation of the equipment on December 31, 2014, if Saminski uses the double-declining-balance method of depreciation? Select one: A. $240,000 B. $232,000 C. $580,000 D. $384,000

$600,000 × 40% = $240,000 ($600,000 - $240,000) × 40% = $144,000 $240,000 + $144,000 = $384,000 The correct answer is: $384,000

NBC Corporation issued $640,000, 11%, 5-year bonds on January 1, 2014 for $608,930 when the market interest rate was 9%. Interest is paid semiannually on January 1 and July 1. The corporation uses the effective-interest method to amortize bond discount. The total amount of bond interest expense recognized on July 1, 2014 is: Select one: A. $33,491. B. $35,200. C. $27,402. D. $28,800.

$608,930 × 4.5% = $27,402 The correct answer is: $27,402.

On January 1, 2015, a machine has a remaining book value of $7000. The residual value of the machine is $1200. The company uses the double-declining-balance method of depreciation. If 2015 is the last year for depreciation, what is Depreciation Expense for the year ending December 31, 2015? Select one: A. $0 B. $5800 C. $7000 D. $1200

$7000 - $1200 Residual Value = $5800 $7000 - $1200 Residual Value = $5800 The correct answer is: $5800

Wisconsin Bank lends Local Furniture Company $80,000 on November 1. Local Furniture Company signs a $80,000, 10%, 4-month note. The fiscal year end of Local Furniture Company is December 31. The journal entry made by Local Furniture Company on December 31 is: Select one: A. debit Interest Expense and credit Cash for $1333. B. debit Interest Payable and credit Interest Expense for $1333. C. debit Interest Payable and credit Cash for $1333. D. debit Interest Expense and credit Interest Payable for $1333.

$80,000 × 10% × 2/12 = $1333 The correct answer is: debit Interest Expense and credit Interest Payable for $1333.

On January 4, 2012, Margaret's Cafe acquired equipment for $147,500. The estimated life of the equipment is 4 years or 42,500 hours. The estimated residual value is $20,000. What is the depreciation for 2012, if Margaret's Cafe uses the asset 14,100 hours and uses the units-of-production method of depreciation? Select one: A. $42,300 B. $36,875 C. $31,875 D. $20,000

($147,500 - $20,000) ÷ 42,500 = $$3 per hour $3 × 14,100 = $42,300 The correct answer is: $42,300

On January 2, 2015, Kaiman Corporation acquired equipment for $300,000. The estimated life of the equipment is 5 years or 40,000 hours. The estimated residual value is $30,000. What is the balance in Accumulated Depreciation on December 31, 2016, if Kaiman Corporation uses the straight-line method of depreciation? Select one: A. $13.5 B. $54,000 C. $6.75 D. $108,000

($270,000 ÷ 5) = $54,000 $54,000 × 2 = $108,000 ($270,000 ÷ 5) = $54,000 $54,000 × 2 = $108,000 The correct answer is: $108,000

Marjorie Corporation acquired a building on January 1, 2015, for $500,000. The building had an estimated useful life of 20 years and an estimated salvage value of $27,000. On January 1, 2017, Marjorie Corporation determined that the building could only be used for another 10 years and there would be no salvage value. Compute depreciation expense for the year ending December 31, 2017, if Marjorie Corporation uses straight-line depreciation. Select one: A. $70,950 B. $45,270 C. $23,650 D. $47,300

($500,000 - $27,000) ÷ 20 = $23,650 × 2 = $47,300 ($500,000 - $47,300) ÷ 10 = $45,270 ($500,000 - $27,000) ÷ 20 = $23,650 × 2 = $47,300 ($500,000 - $47,300) ÷ 10 = $45,270 The correct answer is: $45,270

Jumpin Corporation uses the percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $2,000,000, and management estimates 2% will be uncollectible. The Allowance for Uncollectible Accounts prior to adjustment has a debit balance of $1,000. The amount of Uncollectible-Account Expense reported on the income statement will be: Select one: A. $41,000. B. $40,000. C. $39,000. D. $1,000.

2,000,000 × 0.02 = 40,000 The correct answer is: $40,000.

Michael Company purchased a trading investment that had a carrying amount of $35,300 when they decided to sell it. Michael Company purchased the investment for $31,600. If Michael Company sold this investment for $45,200, Michael will have a(n): Select one: A. Gain on Sale of Trading Security for $13,600. B. Gain on Sale of Trading Security for $9900. C. Unrealized Gain on Trading Security of $13,600. D. Unrealized Loss on Trading Security of $3700.

45,200 - 35,300 = 9900 gain The correct answer is: Gain on Sale of Trading Security for $9900.

Tony Company sells a piece of equipment for $20,000 cash. The equipment has a historical cost of $60,000 and accumulated depreciation of $55,000. What is the gain or loss on sale of the equipment? Select one: A. $20,000 Loss B. $20,000 Gain C. $15,000 Loss D. $15,000 Gain

Book Value = $60,000 - $55,000 = $5000 Cash Received = $20,000 Gain = Cash Received $20,000 - Book Value $5000 = $15,000 The correct answer is: $15,000 Gain

Franco Company sold office furniture for $2500 cash. The furniture cost $70,000 and had accumulated depreciation through the date of sale totaling $32,000. The company will recognize: Select one: A. a gain of $35,500. B. a loss of $38,000. C. a gain of $38,000. D. a loss of $35,500.

Book value = $70,000 - $32,000 = $38,000 Cash proceeds $2500 Loss on sale = $38,000 - $2500 = $35,500 Loss on sale = Book value - Cash proceeds The correct answer is: a loss of $35,500.

On May 10, a business collected $2400 on account. What journal entry is needed on May 10? Select one: A. Debit Accounts Payable for $2400 and credit Accounts Receivable for $2400. B. Debit Accounts Payable for $2400 and credit Revenue for $2400. C. Debit Cash for $2400 and credit Accounts Receivable for $2400. D. Debit Accounts Receivable for $2400 and credit Revenue for $2400.

Debit Cash for $2400 and credit Accounts Receivable for $2400.

Corbin Company was charged $25 for a check printing fee associated with their checking account. What journal entry is required? Select one: A. No journal entry is required. B. Debit Miscellaneous Expense for $25 and credit Accounts Payable for $25. C. Debit Miscellaneous Expense for $25 and credit Cash for $25. D. Debit Miscellaneous Expense for $25 and credit Accounts Receivable for $25.

Debit Miscellaneous Expense for $25 and credit Cash for $25.

On December 31, 2014, salaries owed to employees total $4050. These will be paid on January 4, 2015. An adjusted trial balance prepared on December 31, 2014, includes which of the following? Select one: A. Salaries Payable, $4050 and Unearned Salaries Revenue, $4050 B. Unearned Salaries, $4050 C. Unearned Salaries, $4050 and Salaries Payable, $4050 D. Salaries Expense, $4050 and Salaries Payable, $4050

Salaries Expense, $4050 and Salaries Payable, $4050

The entry made to close Service Revenue would include a debit to: Select one: A. Service Revenue and a credit to Dividends. B. Service Revenue and a credit to Retained Earnings. C. Retained Earnings and a credit to Service Revenue. D. Service Revenue and a credit to Net Income.

Service Revenue and a credit to Retained Earnings.

At the end of the year, a company has a short-term note payable outstanding that was entered into earlier in the current year. What accounts relating to the note payable will be reported on the financial statements at the end of the year? Select one: A. Short-term notes payable and interest payable will be reported on the balance sheet. B. Short-term notes payable, interest payable and interest expense will be reported on the balance sheet. C. Interest receivable will be reported on the balance sheet. D. Short-term notes payable will be reported on the balance sheet and interest payable will be reported on the income statement.

Short-term notes payable and interest payable will be reported on the balance sheet.

On December 31, 2014, a note payable of $220,000 has installments of $55,000 due yearly, beginning on December 31, 2015. On December 31, 2014, how will the note payable be reported on the balance sheet? Select one: A. $220,000 current liability B. $55,000 current liability and $110,000 long-term liability C. $55,000 current liability and $165,000 long-term liability D. $220,000 long-term liability

The correct answer is: $55,000 current liability and $165,000 long-term liability

In the balance sheet, the account, Premium on Bonds Payable, is: Select one: A. added to bonds payable. B. deducted from bonds payable. C. classified as a liability account. D. A and C

The correct answer is: A and C

Bonds with a 7% stated interest rate were issued when the market rate of interest was 6%. This bond was issued at: Select one: A. a premium. B. a discount. C. face value. D. par value.

The correct answer is: a premium.

Land Improvements include: Select one: A. fences. B. neon signs on property. C. lights in parking lot. D. all of the above.

The correct answer is: all of the above.

Under the effective-interest method, the amount of bond discount amortized each interest period is equal to the: Select one: A. amount of interest expense less the cash paid for interest. B. face value of the bond times the stated interest rate. C. face value of the bond times the market interest rate at the date of issue. D. amount of interest expense plus the cash paid for interest.

The correct answer is: amount of interest expense less the cash paid for interest.

If the market interest rate is greater than the stated interest rate on bonds, bonds will sell: Select one: A. at a discount. B. at face value. C. at a premium. D. at market value.

The correct answer is: at a discount.

Pat's Pets recently paid to have the engine in its delivery van overhauled. The estimated useful life of the van was originally estimated to be 4 years. The overhaul is expected to extend the useful life of the van to 10 years. The overhaul is regarded as a(n): Select one: A. revenue expenditure. B. equity expenditure. C. capital expenditure. D. matching expenditure.

The correct answer is: capital expenditure.

If bonds have been issued at a premium, over the life of the bonds, the: Select one: A. carrying value of the bonds will increase. B. interest expense will increase. C. interest payment will increase. D. carrying value of the bonds will decrease.

The correct answer is: carrying value of the bonds will decrease.

Unsecured bonds are called ________. Secured bonds are called ________. Select one: A. term bonds; serial bonds B. regular bonds; special bonds C. convertible bonds; callable bonds D. debentures; mortgage bonds

The correct answer is: debentures; mortgage bonds

Kathy's Corner Store has total cash sales for the month of $40,000 excluding sales taxes. If the sales tax rate is 5%, what journal entry is needed? (Ignore Cost of Goods Sold.) Select one: A. debit Cash $40,000 and credit Sales $40,000 B. debit Cash $42,000, credit Sales $42,000 C. debit Cash $42,000, credit Sales $40,000 and credit Sales Tax Payable $2000 D. debit Cash $38,000, debit Sales Tax Receivable for $2000 and credit Sales for $40,000

The correct answer is: debit Cash $42,000, credit Sales $40,000 and credit Sales Tax Payable $2000

Madison Bank lends Neenah Paper Company $120,000 on January 1, 2014. Neenah Paper Company signs a $120,000, 8%, 6-month note. The journal entry made by Neenah Paper Company on January 1, 2014 is: Select one: A. debit Cash for $120,000 and credit Notes Payable for $120,000. B. debit Cash for $110,400 and credit Note Payable for $110,400. C. debit Interest Expense for $9600 and credit Cash for $9600. D. debit Interest Expense for $9600 and credit Interest Payable for $9600.

The correct answer is: debit Cash for $120,000 and credit Notes Payable for $120,000.

The journal entry to record depreciation expense is: Select one: A. debit Depreciation Expense, credit Accumulated Depreciation. B. debit Depreciation Expense, credit the asset account. C. debit Accumulated Depreciation, credit the asset account. D. debit the asset account, credit Accumulated Depreciation.

The correct answer is: debit Depreciation Expense, credit Accumulated Depreciation.

The journal entry to record depreciation expense is: Select one: A. debit Depreciation Expense, credit Accumulated Depreciation. B. debit the asset account, credit Accumulated Depreciation. C. debit Accumulated Depreciation, credit the asset account. D. debit Depreciation Expense, credit the asset account.

The correct answer is: debit Depreciation Expense, credit Accumulated Depreciation.

A company has a lawsuit pending with regard to patent infringement. The amount of the loss can be estimated and has a probable chance of occurrence. What journal entry is required? Select one: A. debit Lawsuit Loss and credit Cash B. debit Estimated Lawsuit Loss and credit Estimated Lawsuit Liability C. debit Cash and credit Estimated Lawsuit Liability D. debit Estimated Lawsuit Loss and credit Cash

The correct answer is: debit Estimated Lawsuit Loss and credit Estimated Lawsuit Liability

The journal entry to record accrued interest on a note receivable at year end is: Select one: A. debit Interest Receivable and credit Interest Revenue. B. debit Interest Receivable and credit Note Receivable. C. debit Cash and credit Interest Receivable. D. debit Note Receivable and credit Interest Revenue.

The correct answer is: debit Interest Receivable and credit Interest Revenue.

A company purchased a machine for $600,000 many years earlier. The accumulated depreciation on the machine is $100,000. The machine is scrapped. Which journal entry is prepared to record the disposal? Select one: A. debit Loss on Disposal of Machine for $500,000, debit Accumulated Depreciation for $100,000 and credit Machine for $600,000 B. debit Accumulated Depreciation for $100,000 and credit Machine for $100,000 C. debit Accumulated Depreciation for $600,000, credit Machine for $100,000 and credit Gain on Disposal of Machine for $500,000 D. debit Loss on Disposal of Machine for $500,000, debit Accumulated Depreciation $500,000 and credit Machine for $1,000,000

The correct answer is: debit Loss on Disposal of Machine for $500,000, debit Accumulated Depreciation for $100,000 and credit Machine for $600,000

The journal entry to record salaries earned by 10 employees will: Select one: A. debit Salary Expense for the net pay, debit FICA Tax Payable, debit Employee Income Tax Payable, and credit Salary Payable for the gross pay. B. debit Salary Expense and credit Salary Payable for the gross pay. C. debit Salary Expense and credit Salary Payable for the net pay. D. debit Salary Expense for the gross pay, credit FICA Tax Payable, credit Employee Income Tax Payable and credit Salary Payable for the net pay.

The correct answer is: debit Salary Expense for the gross pay, credit FICA Tax Payable, credit Employee Income Tax Payable and credit Salary Payable for the net pay.

Under the allowance method, the entry to write off a $6600 uncollectible account includes a: Select one: A. debit to Uncollectible Account Expense for $6600 and credit to Allowance for Uncollectible Accounts for $6600. B. debit to Accounts Receivable for $6600 and credit to Uncollectible-Account Expense for $6600. C. debit to Allowance for Uncollectible Accounts for $6600 and credit to Accounts Receivable for $6600. D. debit to Accounts Receivable for $6600 and credit to Allowance for Uncollectible Accounts for $6600.

The correct answer is: debit to Allowance for Uncollectible Accounts for $6600 and credit to Accounts Receivable for $6600.

A bond was issued at a discount. The journal entry to record payment of this bond payable at maturity will include a: Select one: A. debit to Cash and a credit to Bonds Payable. B. debit to Bonds Payable, credit to Discount on Bonds Payable and a credit to Cash. C. debit to Bonds Payable, debit to Discount on Bonds Payable and a credit to Cash. D. debit to Bonds Payable and a credit to Cash.

The correct answer is: debit to Bonds Payable and a credit to Cash.

The journal entry to record a semiannual interest payment on a bond payable issued at par: Select one: A. debits Interest Expense and credits Cash. B. debits Cash and credits Interest Expense. C. debits Interest Expense and credits Bonds Payable. D. debits Cash and credits Interest Payable.

The correct answer is: debits Interest Expense and credits Cash.

Costs that do not extend a plant asset's capacity or its useful life, but merely maintain the asset or restore it to working order are recorded as: Select one: A. capital expenditures. B. extraordinary repairs. C. expenses. D. modification of assets.

The correct answer is: expenses.

Under the effective-interest method of amortization, the bond cash payment on each interest date is calculated by multiplying the: Select one: A. carrying value of the bonds times the stated interest rate for the appropriate time period. B. face value of the bonds times the effective-interest rate for the appropriate time period. C. carrying value of the bonds times the effective-interest rate for the appropriate time period. D. face value of the bonds times the stated interest rate for the appropriate time period.

The correct answer is: face value of the bonds times the stated interest rate for the appropriate time period.

If the market interest rate is 6%, a $10,000, 7%, 5-year bond, that pays interest semiannually would sell at an amount: Select one: A. less than the maturity value. B. less than face value. C. greater than face value. D. equal to face value.

The correct answer is: greater than face value.

The book value of a plant asset is defined as: Select one: A. historical cost minus annual maintenance expense. B. historical cost minus residual value. C. current sales value minus historical cost. D. historical cost minus accumulated deprecation.

The correct answer is: historical cost minus accumulated deprecation.

Lisle Corporation issued $200,000 of 10% bonds on January 1, 2014. The bonds pay interest semiannually on January 1 and July 1. The company has a fiscal year end of May 31. On May 31, 2014, the Lisle Corporation will: Select one: A. make a journal entry to accrue interest expense from January 1 through May 31. B. make a journal entry to record cash interest paid on May 31. C. make a journal entry to accrue interest expense from July 1 through December 31. D. make a journal entry to accrue interest expense from January 1 through July 1

The correct answer is: make a journal entry to accrue interest expense from January 1 through May 31.

If bonds are issued at a discount, it means that the: Select one: A. market interest rate is lower than the stated interest rate. B. market interest rate is higher than the stated interest rate. C. financial strength of the issuer is weak. D. bond is convertible.

The correct answer is: market interest rate is higher than the stated interest rate.

A depreciation method in which an equal amount of depreciation expense is assigned to each year of the asset's use is the: Select one: A. units-of-production method. B. accelerated depreciation method. C. straight-line method. D. estimated residual value method.

The correct answer is: straight-line method.

The carrying amount of bonds issued at a discount is calculated by: Select one: A. subtracting Interest Expense from Bonds Payable. B. subtracting Discount on Bonds Payable from Bonds Payable. C. subtracting the sum of Discount on Bonds Payable and Interest Payable from Bonds Payable. D. subtracting Interest Payable from Bonds Payable.

The correct answer is: subtracting Discount on Bonds Payable from Bonds Payable.

All of the following are reported as current liabilities EXCEPT: Select one: A. bonds payable due in 6 months. B. accounts payable. C. unearned revenues for services to be provided in 16 months. D. sales tax payable.

The correct answer is: unearned revenues for services to be provided in 16 months.

Decision makers who use accounting information include: A. the Internal Revenue Service. B. the Securities and Exchange Commission. C. creditors. D. all of the above.

all of the above.

The stable monetary unit assumption: A. holds that the entity will remain in operation for the foreseeable future. B. ensures that accounting records and statements are based on the most reliable data available. C. maintains that each organization or section of an organization stands apart from other organizations and individuals. D. enables accountants to ignore the effect of inflation on the accounting records.

enables accountants to ignore the effect of inflation on the accounting records.

The two types of accounting are: A. internal and external. B. profit and nonprofit. C. financial and managerial. D. bookkeeping and decision-oriented.

financial and managerial.

The CORRECT data flow from one financial statement to the next is: Select one: A. statement of retained earnings, income statement, balance sheet, statement of cash flows. B. income statement, statement of retained earnings, balance sheet, statement of cash flows. C. balance sheet, statement of retained earnings, income statement, statement of cash flows. D. statement of retained earnings, income statement, statement of cash flows, balance sheet.

income statement, statement of retained earnings, balance sheet, statement of cash flows.

Purchasing supplies on account would: Select one: A. increase total assets and decrease total liabilities. B. increase total liabilities and increase stockholders' equity. C. increase total assets and increase total liabilities. D. increase total liabilities and decrease total assets.

increase total assets and increase total liabilities.

There are three parties to a check. The person or company to whom the check is paid is the: Select one: A. draftee. B. payee. C. maker. D. promissee.

payee.

A journal entry that debits Cash and credits Accounts Receivable indicates that: Select one: A. payment was made on account. B. payment was received on account. C. revenue increased. D. revenue decreased.

payment was received on account.

An employee states that he steals office supplies for his wife and children because "Everyone is doing it." This is an example of: A. understanding. B. motive. C. rationalization. D. opportunity.

rationalization.

The assets of a company: A. include short-term investments and notes payable. B. represent economic resources that are expected to produce a future benefit. C. must equal the liabilities of the company. D. include property, plant, and equipment and accounts payable.

represent economic resources that are expected to produce a future benefit.

The major types of transactions that affect retained earnings are: A. paid-in capital and common stock. B. revenues and liabilities. C. revenues, expenses, and dividends. D. assets and liabilities.

revenues, expenses, and dividends.

Accounts that relate to a limited period of time are called: Select one: A. asset and liability accounts. B. real accounts. C. temporary accounts. D. permanent accounts.

temporary accounts.

Monthly sales are $530,000. Warranty costs are estimated at 5% of monthly sales. Warranties are honored with replacement products. No defective products are returned during the month. At the end of the month, the company should record a journal entry with a credit to: Select one: A. Sales for $26,500. B. Estimated Warranty Payable for $26,500. C. Warranty Expense for $26,500. D. Inventory for $26,500.

$530,000 × 5% = $26,500 The correct answer is: Estimated Warranty Payable for $26,500.

Dorman Company purchased new machinery for its production process. The following costs were incurred for the new machine: Training costs for workers for initial operation of the machine $18,000 Wages paid to workers who operate machine during production 108,000 Ordinary repairs to the machine before the first production ran 2000 Cost of platform used for machine because it moves 20,000 Cost of trial run before the first production run 12,000 Which costs should be added to the cost of the machine? Select one: A. $52,000 B. $160,000 C. $38,000 D. $18,000

All of the costs should be added except for wages paid to workers who operate the machine during production. The correct answer is: $52,000

A machine is purchased for $70,000. The transportation costs were $1000, installation costs were $2000 and taxes on the purchase price were $400. Testing runs of the new machine cost $4000. What is the cost of the machine? Select one: A. $70,000 B. $73,400 C. $73,000 D. $77,400

All the costs are added to the cost of the machine. The correct answer is: $77,400

The accounts of Yardy Company are as follows on November 30, 2015: Account Balance Accounts Payable $23,500 Accounts Receivable $17,600 Cash $69,000 Common Stock $37,000 Dividends $8000 Insurance Expense $2100 Retained Earnings $26,800 Salary Expense $10,000 Sales Revenue $14,000 Supplies $3500 What is the total of the debit column in the trial balance at November 30, 2015? A. $211,500 B. $110,200 C. $102,200 D. $95,300

Cash $69,000 + Accounts Receivable $17,600 + Supplies $3500 + Dividends $8000 + Insurance Expense $2100 + Salary Expense $10,000 = $110,200 Cash $69,000 + Accounts Receivable $17,600 + Supplies $3500 + Dividends $8000 + Insurance Expense $2100 + Salary Expense $10,000 = $110,200 The correct answer is: $110,200

A company has the following adjusted trial balance: Account Debit Credit Cash $900 Accounts Receivable 1100 Inventory 2100 Supplies 1800 Prepaid Rent 700 Land 5500 Building 40,200 Accumulated Depreciation $8700 Accounts Payable 7200 Unearned Revenue 4300 Notes Payable, due 2020 2000 Common Stock 6500 Retained Earnings 3000 Dividends 900 Service Revenue 33,400 Rent Expense 1400 Supplies Expense 1200 Salaries Expense 6300 Depreciation Expense 1600 Utilities Expense 1400 ____________________________ Totals $65,100 $65,100 What closing entries are needed? Select one: A. Debit Service Revenue for $33,400 and credit Retained Earnings for $33,400 B. Debit Rent Expense for $1400 and credit Retained Earnings for $1400 C. Credit Retained Earnings for $2100 and debit Cash for $2100 D. Debit Dividends for $900 and credit Retained Earnings for $900

Debit Service Revenue for $33,400 and credit Retained Earnings for $33,400

A company incurred the following costs: Purchase price of land $210,000 Survey fees 7000 Payment for demolition of old building on land 40,000 Back property taxes on land 3000 Paving costs for parking lot 60,000 Fence around perimeter of land 15,000 Lights in parking lot 90,000 Signs for new business 5,000 What is the cost of the land? Select one: A. $320,000 B. $210,000 C. $257,000 D. $260,000

Purchase price $210,000 + Survey fees $7000 + Demolition $40,000 + Back taxes $3000 = $260,000 The correct answer is: $260,000

Potter Company reports the following line items: Long-Term Notes Payable $50,000 Accounts Receivable $28,000 Accounts Payable $37,000 Building $55,000 Cash and Cash Equivalents $80,000 Salaries Expense $24,500 Common Stock $23,000 Interest Payable $1,500 Land $40,000 Short-term Investments $5,000 Income Taxes Payable $10,000 Equipment $59,500 Supplies $5,000 Service Revenue $105,000 Supplies Expense $21,000 Utilities Expense $13,500 Income Tax Expense $15,000 What is net income? Select one: A. $55,500 B. $105,000 C. $23,000 D. $31,000

Service Revenue $105,000 - Supplies Expense $21,000 - Utilities Expense $13,500 - Income Tax Expense $15,000 - Salaries Expense $24,500 = $31,000 Service Revenue $105,000 - Supplies Expense $21,000 - Utilities Expense $13,500 - Income Tax Expense $15,000 - Salaries Expense $24,500 = $31,000 The correct answer is: $31,000

Deposits that have been recorded on the books, but have not yet been recorded by the bank are: Select one: A. deposits in transit. B. electronic funds deposits. C. outstanding deposits. D. nonsufficient funds deposits.

deposits in transit.

The Allowance for Uncollectible Accounts is classified as: Select one: A. a contra-asset account. B. a contra-expense account. C. a contra-revenue account. D. an asset account.

a contra-asset account.

The purchase of equipment involving a cash down payment and a promise to pay the balance in the future would include: Select one: A. a debit to Cash and a debit to Note Payable. B. a debit to Note Payable and a credit to Cash. C. a debit to Cash and a credit to Equipment. D. a credit to Cash and a credit to Accounts Payable.

a credit to Cash and a credit to Accounts Payable.

When a company receives a cash dividend from a trading security, the journal entry includes: Select one: A. a debit to Investment in Trading Securities and credit to Cash. B. a debit to Cash and credit to Investment in Trading Securities. C. a debit to Dividend Revenue and credit to Cash. D. a debit to Cash and credit to Dividend Revenue.

a debit to Cash and credit to Dividend Revenue.

If the bank records a deposit of $700 as $70 the error should be shown on a bank reconciliation as a(n): Select one: A. deduction from the book balance of $770. B. addition to the bank balance of $630. C. addition to the book balance of $630. D. addition from the bank balance of $630.

addition to the bank balance of $630.

The income statement: Select one: A. must cover only a month in time. B. is not dated. C. covers a defined period of time. D. reports the results of operations since the inception of the business.

covers a defined period of time.

The normal balance of a revenue account is a ________ because revenues increase ________. Select one: A. debit, Retained Earnings B. debit, expenses C. credit, assets D. credit, Retained Earnings

credit, Retained Earnings

Notes payable (due in 60 days) would appear on the balance sheet as a: Select one: A. long-term liability. B. long-term asset. C. current asset. D. current liability.

current liability.

The left side of a T-account is always the: Select one: A. increase side. B. decrease side. C. credit side. D. debit side.

debit side.

The balance sheet contains the: Select one: A. ending balance in retained earnings. B. beginning balance in retained earnings. C. amount of cash dividends paid to stockholders. D. amount of net income or net loss.

ending balance in retained earnings.

A doctor performed surgery in April and did not receive cash payment from the patient until August. Under cash-basis accounting, the doctor recognizes revenue: Select one: A. in April or August. B. in April. C. in August. D. at a time that cannot be determined from the facts.

in August.

The expense recognition principle requires: Select one: A. the recognition of expenses in the period they are paid. B. the recognition of expenses in the same period as the related revenues are earned. C. the recognition of expenses in the period the benefits are received. D. the recognition of expenses using depreciation theories and methods.

the recognition of expenses in the same period as the related revenues are earned.

The balance in Accounts Receivable at the beginning of the year was $540,000. The balance in Accounts Receivable at the end of the year was $750,000. Customer accounts of $410,000 were written off. The company collected $4,020,000 from credit customers and $1,010,000 from cash customers. What are credit sales for the year? Select one: A. $4,430,000 B. $410,000 C. $4,020,000 D. $4,640,000

540,000 + x -410,000 - 4,020,000 = 750,000 x = 4,640,000 The correct answer is: $4,640,000

A company received $30,000 cash and issued common stock in exchange. In transaction analysis, how does this transaction affect the accounting equation? Select one: A. Add $30,000 to Dividends account and subtract $30,000 to Retained Earnings account. B. Add $30,000 to Cash account and add $30,000 to Revenue account. C. Add $30,000 to Cash account and add $30,000 to Common Stock account. D. Add $30,000 to Cash account and add $30,000 to Retained Earnings account.

Add $30,000 to Cash account and add $30,000 to Common Stock account.

A company performed tax services for a client on account. The amount billed to the client was $6000. In transaction analysis, how does this transaction affect the accounting equation? Select one: A. Add $6000 to Accounts Payable account and add $6000 to Service Revenue account. B. Add $6000 to Cash account and add $6000 to Service Revenue account. C. Add $6000 to Accounts Receivable account and add $6000 to Retained Earnings account. D. Add $6000 to Cash account and add $6000 to Retained Earnings account.

Add $6000 to Accounts Receivable account and add $6000 to Retained Earnings account.

The accounting equation can be stated as: A. Assets -Liabilities = Stockholders' Equity. B. Assets - Stockholders' Equity + Liabilities = Zero. C. Assets = Liabilities - Stockholders' Equity. D. Assets + Stockholders' Equity = Liabilities.

Assets -Liabilities = Stockholders' Equity.

In 1960, Johnson Company purchased a building for $110,000. In 2013, a real estate professional says the building has a fair value of $1,800,000. In 2013, a similar building down the street recently sold for $900,000. What value is reported for the building on the balance sheet at December 31, 2013? A. $110,000 B. $955,000 C. $1,800,000 D. $900,000

B. $110,000

Which financial statement is dated at the moment in time when the accounting period ends? Select one: A. Statement of retained earnings and income statement B. Balance sheet C. Income statement D. Statement of cash flows

Balance sheet

When preparing a bank reconciliation, which of the following items should be added to the book balance? Select one: A. EFT receipts B. Deposits in transit C. Both EFT receipts and collection of note receivable D. Collection of note receivable by bank

Both EFT receipts and collection of note receivable

Jaye Company purchased a new building by signing a note for $20,000. The entry to record the transaction is: Select one: A. Note Payable 20,000 Cash 20,000 B. Building 20,000 Notes Payable 20,000 C. Cash 20,000 Note Payable 20,000 D. Building 20,000 Cash 20,000

Building 20,000 Notes Payable 20,000

On December 1, Macy Company sold merchandise with a selling price of $1000 on account to Mrs. Jorgensen, with terms 2/10, n/30. Ignoring Cost of Goods Sold, what journal entry did Macy Company prepare on December 1? Select one: A. Debit Accounts Receivable for $1000 and credit Cash for $1000. B. Debit Accounts Receivable for $1000 and credit Sales Revenue for $1000. C. Debit Cash for $1000 and credit Accounts Receivable for $1000. D. Debit Sales Revenue for $1000 and credit Accounts Receivable for $1000.

Debit Accounts Receivable for $1000 and credit Sales Revenue for $1000.

Beck Company had the following accounts and balances at the end of the year. What is net income or net loss for the year? Cash $74,000 Accounts Payable $12,000 Common Stock $21,000 Cost of Goods Sold $85,000 Dividends Declared and Paid $12,000 Operating Expenses $17,000 Accounts Receivable $50,000 Inventory $40,000 Long-term Notes Payable $33,000 Revenues $90,000 Salaries Payable $24,000 Select one: A. Net income of $90,000. B. Net loss of $12,000. C. Net income of $73,000. D. Net income of $5000.

Revenues $90,000 - Cost of Goods Sold $85,000 - Operating Expenses $17,000 = Net Loss $12,000 Revenues $90,000 - Cost of Goods Sold $85,000 - Operating Expenses $17,000 = Net Loss $12,000 The correct answer is: Net loss of $12,000.

When a note matures: Select one: A. the debtor must pay the creditor only the interest on the note. B. the creditor must pay the debtor the maturity value of the note. C. the creditor must pay the debtor only the interest on the note. D. the debtor must pay the creditor the maturity value of the note.

The correct answer is: the debtor must pay the creditor the maturity value of the note.

Investments in trading securities: Select one: A. are more liquid than cash. B. are reported after accounts receivable on the balance sheet. C. are reported at historical cost on the balance sheet. D. are reported at fair value on the balance sheet.

are reported at fair value on the balance sheet.

In a bank reconciliation, items recorded by the bank, but not yet recorded by the company, include: Select one: A. bank collections of accounts receivable. B. both deposits in transit and outstanding checks. C. outstanding checks. D. deposits in transit.

bank collections of accounts receivable.

A bank statement included a NSF check from customer Kim Fields for $2,100. The journal entry to record this reconciling item should: Select one: A. debit NSF and credit Cash for $2,100. B. debit Cash and credit Accounts Receivable for $2,100. C. debit Cash and credit NSF for $2,100. D. debit Accounts Receivable and credit Cash for $2,100.

debit Accounts Receivable and credit Cash for $2,100.

Matthew Company purchases a trading security for $12,000 cash. The journal entry to record this transaction will include a: Select one: A. debit to Cash and a credit to the Investment in Trading Securities account. Inc B. debit to Long-term Investment and credit Cash. C. debit to the Investment in Trading Securities account and a credit to Cash. D. debit to Dividend Revenue and credit to Cash.

debit to the Investment in Trading Securities account and a credit to Cash.

The two most common types of fraud impacting the financial statements are: Select one: A. fraudulent financial reporting and e-commerce fraud. B. misappropriation of assets and embezzlement. C. fraudulent financial reporting and misappropriation of assets. D. cooking the books and fraudulent financial reporting.

fraudulent financial reporting and misappropriation of assets.

If a company prepares its financial statements three years after the end of their accounting period, they have violated the qualitative characteristic of: A. verifiability. B. materiality. C. understandability. D. timeliness.

timeliness.

Under accrual-basis accounting, revenue is recorded: Select one: A. only if the cash is received at the same time the services are performed. B. when the cash is collected, regardless of when the services are performed. C. at the end of every month. D. when the services are performed, regardless of when the cash is received.

when the services are performed, regardless of when the cash is received.

On January 1, Hanley Corporation issued $2,200,000, 10-year, 6% bonds at 102. The journal entry to record this transaction would include a: Select one: A. debit to Cash $2,200,000. B. credit to Bonds Payable $2,244,000. C. debit to Discount on Bonds Payable $44,000. D. credit to Premium on Bonds Payable $44,000.

$2,200,000 × 2% = $44,000 The correct answer is: credit to Premium on Bonds Payable $44,000.

Smith Corporation issues $2,300,000, 10-year, 6% bonds payable at a price of 97. The journal entry to record the issuance will include a: Select one: A. credit to Discount on Bonds Payable for $69,000. B. debit to Cash for $2,231,000. C. credit to Bonds Payable for $2,231,000. D. debit to Cash of $2,300,000.

$2,300,000 × 0.97 = $2,231,000 $2,300,000 × 0.97 = $2,231,000 The correct answer is: debit to Cash for $2,231,000.

If a bookkeeper mistakenly records a disbursement as $47 instead of the correct amount of $74 the error should be shown on the bank reconciliation as a: Select one: A. $27 addition to the balance per books. B. $121 addition to the balance per books. C. $27 deduction from the balance per books. D. $121 deduction from the balance per books.

$27 deduction from the balance per books.

Barbarino Corporation purchased land and a building for $60,000. An appraisal indicates that the land's market value is $400,000 and the building's market value is $600,000. When recording this transaction Barbarino should debit: Select one: A. Land for $400,000. B. Building for $600,000. C. Land for $24,000. D. Building for $60,000.

$400,000 ÷ ($400,000 + $600,000) = 40% 40% × $60,000 = $24,000 The correct answer is: Land for $24,000.

Solderman Company issued $510,000, 6%, 10-year bonds for$402,800 with a market rate of 8%. The effective-interest method of amortization is to be used and interest is paid annually. The journal entry on the first interest payment date would include a: Select one: A. credit to Interest Expense of $30,600. B. credit to Interest Expense of $1624. C. credit to Discount on Bonds Payable of $1624. D. credit to Cash of $32,224.

$402,800 × 8% = $32,224 Cash interest: $510,000 × 6% = $30,600 Discount amortization: $32,224 - $30,600 = $1624 $402,800 × 8% = $32,224 Cash interest: $510,000 × 6% = $30,600 Discount amortization: $32,224 - $30,600 = $1624 The correct answer is: credit to Discount on Bonds Payable of $1624.

Solderman Company issued $490,000, 5%, 10-year bonds for$462,800 with a market rate of 7%. The effective-interest method of amortization is to be used and interest is paid annually. The journal entry on the first interest payment date would include a: Select one: A. credit to Interest Expense of $24,500. B. credit to Discount on Bonds Payable of $7896. C. credit to Interest Expense of $7896. D. credit to Cash of $32,396.

$462,800 × 7% = $32,396 Cash interest: $490,000 × 5% = $24,500 Discount amortization: $32,396 - $24,500 = $7896 The correct answer is: credit to Discount on Bonds Payable of $7896.

Marjorie Company's cash balance per the books at the end of the month was $7400. After comparing the company's records with the monthly bank statement, Marjorie's accountant identified the following reconciling items: outstanding checks, $800; deposits in transit, $700; bank service charge, $30; and NSF check, $100. The bank collection of a note receivable was $1200 plus interest of $170. There also was an EFT payment of $150. What is the adjusted book balance at the end of the month? Select one: A. $8470 B. $8640 C. $7270 D. $8490

$7400 - Service Charge $30 - NSF Check $100 + Note $1200 + Interest $170 - EFT payment $150 = $8490 The correct answer is: $8490

A construction company paid $80,000 cash for equipment used in the business. At the time of purchase, the equipment had a list price of $88,000. When the balance sheet was prepared, the fair value of the equipment was $83,000. At what amount should the equipment be reported on the balance sheet of the company? A. $80,000 B. $83,000 C. $84,000 D. $88,000

$80,000

Jensen Corporation uses the percentage-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $2,000,000 and management estimates 2% will be uncollectible. The Allowance for Doubtful Accounts prior to adjustment has a debit balance of $16,000. After all necessary adjusting entries are made, the balance in Allowance for Uncollectible Accounts will be: Select one: A. $16,000. B. $24,000. C. $16,320. D. $40,000.

(2,000,000 × 0.02) = 40,000 40,000 - 16,000 = 24,000 The correct answer is: $24,000.

A year-end review of Accounts Receivable and estimated uncollectible percentages revealed the following: Days Outstanding Accounts Receivable Percent Uncollectible 1-30 days $60,000 2% 31-60 days $40,000 4% 61-90 days $20,000 10% Over 90 days $5,000 50% At the end of the year, the credit balance in Allowance for Uncollectible Accounts was $700. Under the aging-of-receivables method, the balance in the Allowance for Uncollectible Accounts will be ________ after the adjusting entry is made. Select one: A. $500 B. $8,000 C. $7,300 D. $6,600

(60,000 × 0.02) + (40,000 × 0.04) + (20,000 × 0.10) + (5,000 × 0.50) = 7,300 (60,000 × 0.02) + (40,000 × 0.04) + (20,000 × 0.10) + (5,000 × 0.50) = 7,300 The correct answer is: $7,300

Fenway Corporation issued a $15,000, 10-year, 8% bond dated January 1, at 102. The journal entry to record the issuance of the bond will include a: Select one: A. debit to Discount on Bonds Payable for $300. B. credit to Bonds Payable for $15,300. C. debit to Cash for $15,300. D. debit to Cash for $15,000.

15,000 × 1.02 = 15,300 15,000 × 1.02 = 15,300 The correct answer is: debit to Cash for $15,300.

A company has gross revenue of $505,000; sales discounts of $2700; and sales returns and allowances of $3000. Net revenue is: Select one: A. $502,300. B. $505,000. C. $499,300. D. $502,000.

505,000 - 2700 - 3000 = 499,300 The correct answer is: $499,300.

The process of verifying accounting information in financial statements is undertaken by: A. external auditors only. B. internal auditors only. C. internal and external auditors. D. the Securities and Exchange Commission.

A. internal and external auditors.

Verifiability means that the information: A. is understandable. B. is material and relevant. C. must be capable of being checked for accuracy, completeness and reliability. D. is timely and understandable.

A. must be capable of being checked for accuracy, completeness and reliability.

Information must be sufficiently transparent so that it makes sense to reasonably informed users of the financial statements, such as creditors. This qualitative characteristic of information is called: A. faithful representative. B. verifiability. C. understandability. D. relevant.

C. understandability.

A bond with a face value of $120,000 and a quoted price of 107 has a selling price of: Select one: A. $120,000. B. $132,000. C. $112,150. D. $128,400.

Feedback $120,000 × 1.07 = $128,400 $120,000 × 1.07 = $128,400 The correct answer is: $128,400.

On December 15, 2015, a company receives an order from a customer for services to be performed on December 28, 2015. Due to a backlog of orders, the company does not perform the services until January 3, 2016. The customer pays for the services on January 6, 2016. The revenue principle requires the revenue to be recorded by the company on: Select one: A. January 3, 2016. B. January 6, 2016. C. December 15, 2015. D. December 28, 2015.

January 3, 2016.

The purchase of office computers for cash would include a debit to: Select one: A. Accounts Receivable and credit to Office Equipment. B. Office Equipment and a credit to Accounts Payable. C. Cash and a credit to Office Equipment. D. Office Equipment and a credit to Cash.

Office Equipment and a credit to Cash.

On June 1, 2014, Starbucks paid the rent of $60,000 for 30 different stores in Washington and California. The rent covers the period, June 1, 2014 through November 30, 2014. On June 1, Starbucks will record ________. On June 30, Starbucks will record ________. Select one: A. nothing; Rent Expense of $60,000 B. Prepaid Rent of $60,000; Rent Expense of $10,000 C. nothing; Rent Expense of $10,000 D. Rent Expense of $60,000; nothing

Prepaid Rent of $60,000; Rent Expense of $10,000

Which statement about internal controls is FALSE? Select one: A. Public companies must issue a report on internal control with their financial statements. B. Public companies do not have to evaluate the effectiveness of internal controls. C. Outside auditors much evaluate and report on the soundness of a company's internal controls. D. The Sarbanes-Oxley Act requires public companies to issue a report on internal control.

Public companies do not have to evaluate the effectiveness of internal controls.

Under the effective-interest method, if bonds are issued at a discount, the amount of interest expense: Select one: A. increases each period as the bonds move towards maturity. B. is less than the cash interest payment. C. decreases each period as the bonds move towards maturity. D. remains the same over the term of the bonds.

The correct answer is: increases each period as the bonds move towards maturity.

The following account balances were extracted from the accounting records of Thomas Corporation at the end of the year: Accounts Receivable $1,100,000 Allowance for Uncollectible Accounts (Credit) $37,000 Uncollectible-Account Expense $63,000 What is the net realizable value of the accounts receivable? Select one: A. $1,137,000 B. $1,100,000 C. $1,163,000 D. $1,063,000

$1,100,000 - $37,000 = 1,063,000 The correct answer is: $1,063,000

New Store has the following information at August 31: • Two deposits made on August 31 were not on the bank statement, totaling $5700. • The bank collected an EFT payment on a note receivable for $2,750. Of this amount, $150 represented interest on the note. • August 31 balance in Cash was $12,107. • The bookkeeper forgot to record check #1578 for $843 which was cashed by the bank on August 15th. • The balance on the bank statement as of August 31 was $10,500. • A check printing fee of $40 was shown on the bank statement. NSF check $100. • Checks #1572, 1606, and 1548, totaling $2326, were not shown on the bank statement, even though the company had sent the checks. What is the adjusted bank balance at August 31? Select one: A. $13,874 B. $8174 C. $16,200 D. $3374

$10,500 + Deposits $5700 - Outstanding Checks $2326 = $13,874 The correct answer is: $13,874

Andy Company had a Cash balance on May 1 of $31,000. At the end of May, the Cash balance had increased to $28,000. During the month of May, Andy received cash of $48,000 from various sources. Based on this information, cash payments for the month of May were: Select one: A. $31,000. B. $51,000. C. $28,000. D. $79,000.

$31,000 + $48,000 - $28,000 = $51,000 $31,000 + $48,000 - $28,000 = $51,000 The correct answer is: $51,000.

Yellow Company had a balance of $32,000 in Accounts Payable at the beginning of June, and purchased $102,000 of merchandise on account during the month. At the end of June, Yellow's Account Payable balance was $29,000. What amount did Yellow pay on account during June? Select one: A. $73,000 B. $102,000 C. $41,000 D. $105,000

$32,000 + $102,000 - $29,000 = $105,000 The correct answer is: $105,000

A year-end review of Accounts Receivable and estimated uncollectible percentages revealed the following: Days Outstanding Accounts Receivable Percent Uncollectible 1-30 days $60,000 2% 31-60 days $40,000 4% 61-90 days $20,000 10% Over 90 days $5,000 50% At the end of the year, the credit balance in Allowance for Uncollectible Accounts was $1,000. Under the aging-of-receivables method, the Uncollectible-Account Expense at year-end is: Select one: A. $6,300. B. $1,200. C. $7,300. D. $8,300.

(60,000 × 0.02) + (40,000 × 0.04) + (20,000 × 0.10) + (5,000 × 0.50) = 7,300 7,300 - 1,000 = 6,300 The correct answer is: $6,300.

To be useful, accounting information must have the fundamental qualitative characteristics of: A. materiality and understandability. B. faithful representation and timeliness. C. relevance and faithful representation. D. comparability and relevance.

B. relevance and faithful representation.

Census Company had the following accounts and balances at the end of the year. What are total liabilities at the end of the year? Cash $74,000 Accounts Payable $16,000 Common Stock $21,000 Cost of Goods Sold $85,000 Dividends Declared and Paid $12,000 Operating Expenses $12,000 Accounts Receivable $50,000 Inventory $40,000 Long-term Notes Payable $33,000 Revenues $90,000 Salaries Payable $24,000 Select one: A. $49,000. B. $40,000. C. $73,000. D. $16,000.

Accounts Payable $16,000 + Long-term Notes Payable $33,000 + Salaries Payable $24,000 = $73,000 Accounts Payable $16,000 + Long-term Notes Payable $33,000 + Salaries Payable $24,000 = $73,000 The correct answer is: $73,000.

Which accounts are increased by debits? Select one: A. Cash and Accounts Payable B. Accounts Receivable and Utilities Expense C. Accounts Payable and Service Revenue D. Salaries Expense and Common Stock.

Accounts Receivable and Utilities Expense

Connar Company reports the following accounts and balances at year end: Long-Term Notes Payable $150,000 Accounts Receivable $32,000 Accounts Payable $37,000 Building $55,000 Cash and Cash Equivalents $82,000 Salaries Expense $20,500 Common Stock $22,000 Interest Payable $1,500 Land $40,000 Short-term Investments $7000 Income Taxes Payable $15,000 Equipment $59,500 Supplies $5000 Service Revenue $99,000 Supplies Expense $18,000 Utilities Expense $8,500 Income Tax Expense $10,000 What is the total amount of current assets at the end of the year? Select one: A. $114,000 B. $82,000 C. $141,000 D. $126,000

Cash and Cash Equivalents $82,000 + Short-term Investments $7000 + Accounts Receivable $32,000 + Supplies $5000 = $126,000 Cash and Cash Equivalents $82,000 + Short-term Investments $7000 + Accounts Receivable $32,000 + Supplies $5000 = $126,000 The correct answer is: $126,000

Company A received cash and issued stock to a new stockholder. In recording this transaction: Select one: A. Cash would be credited. B. Common Stock would be debited. C. Retained Earnings would be credited. D. Cash would be debited.

Cash would be debited.

Which transaction decreases stockholders' equity? Select one: A. provided services and received cash from the customer immediately B. provided services on account C. purchase inventory on account D. Employees worked one week and were paid at the end of the week.

Employees worked one week and were paid at the end of the week.

Which of the following items can be added to or subtracted from the bank balance when preparing the bank reconciliation? Select one: A. EFT payments by bank B. book errors C. bank errors D. EFT receipts by bank

bank errors

Revenues were $150,000, expenses were $144,000, and cash dividends declared and paid were $4000. What was the net income and the change in retained earnings for the period? A. Net income was $6000; the change in retained earnings was $6000. B. Net income was $150,000; the change in retained earnings was $10,000. C. Net income was $6000; the change in retained earnings was $2000. D. Net income was $150,000; the change in retained earnings was $146,000.

Net income = $150,000 - $144,000 = $6000 Retained earnings increased by $6000 for net income, and decreased by $4000 for dividends declared for a net change of $2000. Net income = $150,000 - $144,000 = $6000 Retained earnings increased by $6000 for net income, and decreased by $4000 for dividends declared for a net change of $2000. The correct answer is: Net income was $6000; the change in retained earnings was $2000.

The closing entry for the Salaries Expense account would include a debit to: Select one: A. Retained Earnings and a credit to Salaries Expense. B. Salaries Expense and a credit to Net Income. C. Salaries Expense and a credit to Retained Earnings. D. Net Income and a credit to Salaries Expense.

Retained Earnings and a credit to Salaries Expense.

Which of the following statements about the rules of debits and credits is CORRECT? Select one: A. Dividends are decreased by debits. B. A liability is increased by a debit. C. An asset is increased by a credit. D. Revenue is increased by a credit.

Revenue is increased by a credit.

The following accounts and balances are taken from Jenny Company's adjusted trial balance: Accounts Payable $10,000 Accounts Receivable 3,000 Accumulated Depreciation 1,400 Depreciation Expense 1,500 Dividends 2,400 Insurance Expense 2,300 Interest Revenue 1,240 Prepaid Insurance 2,320 Retained Earnings 10,500 Salary Expense 24,100 Service Revenue 37,800 In the closing process, which accounts are debited? Select one: A. Depreciation Expense, Insurance Expense, Salary Expense B. Accounts Payable, Retained Earnings C. Service Revenue, Interest Revenue D. Depreciation Expense, Insurance Expense, Salary Expense, Dividends

Service Revenue, Interest Revenue

The aging-of-receivables method of estimating uncollectible accounts is: Select one: A. not concerned with the balance in the Allowance for Doubtful Accounts. B. not an acceptable method of estimating bad debts. C. an income statement approach, since it focuses on the amount of expense to be reported on the income statement. D. a balance sheet approach, since it focuses on accounts receivable.

The correct answer is: a balance sheet approach, since it focuses on accounts receivable.

A business offers credit terms of 2/15, n/30. These terms indicate that: Select one: A. the total amount of the invoice must be paid within 15 days of the invoice date. B. a discount of 2% can be taken if the invoice is paid within 15 days of the invoice date. C. no discount is offered for early payment. D. the buyer can take a 2% discount if the bill is paid within 30 days of the invoice date.

The correct answer is: a discount of 2% can be taken if the invoice is paid within 15 days of the invoice date.

Emporium Bank lends money to a customer on a six month note. What journal entry does the bank prepare? Select one: A. debit Cash and credit Note Payable B. debit Note Receivable and credit Service Revenue C. debit Note Receivable and credit Cash D. debit Cash and credit Note Receivable

The correct answer is: debit Note Receivable and credit Cash

Fourth Company receives a note from a customer for a $13,000 sale. On the date of sale, what journal entry did Fourth Company prepare? Select one: A. debit Accounts Receivable for $13,000 and credit Sales Revenue for $13,000 B. debit Notes Receivable for $13,000 and credit Cash for $13,000 C. debit Notes Receivable for $13,000 and credit Sales Revenue for $13,000 D. debit Cash for $13,000 and credit Notes Receivable for $13,000

The correct answer is: debit Notes Receivable for $13,000 and credit Sales Revenue for $13,000

On October 1, 2015, the Early Bank lends money to a customer on a six month note. The bank accrues interest on the note at December 31, 2015. The journal entry on December 31, 2015 by the bank would include a: Select one: A. debit to Cash and a credit to Interest Revenue for three months of interest. B. debit to Interest Revenue and a credit to Interest Receivable for three months of interest. C. debit to Cash and a credit to Interest Payable for three months of interest. D. debit to Interest Receivable and a credit to Interest Revenue for three months of interest.

The correct answer is: debit to Interest Receivable and a credit to Interest Revenue for three months of interest.

Adjusting entries: Select one: A. are made before the financial statements can be prepared. B. are needed for all balance sheet accounts. C. must be made on a daily basis to record supplies used during that day. D. are needed because errors have been made in previous journal entries.

are made before the financial statements can be prepared.

Prepaid expenses will: Select one: A. become assets when their future benefits expire. B. become expenses when their future benefits expire. C. become liabilities when their future benefits expire. D. become revenues when their future benefits expire.

become expenses when their future benefits expire.

The payment for advertising costs for a monthly advertising campaign in the current month would include a: Select one: A. debit to Prepaid Advertising. B. credit to Advertising Revenue. C. debit to Cash. D. debit to Advertising Expense.

debit to Advertising Expense.

Stockholders' equity as reported on the Balance Sheet does NOT include: Select one: A. additional paid-in capital. B. retained earnings. C. short-term investments. D. common stock.

short-term investments.

An expense occurred in 2013, but it is not paid until 2014. Using the accrual basis of accounting, the expense should appear on: Select one: A. the 2013 income statement. B. the 2014 income statement. C. neither the 2013 nor the 2014 income statement. D. both the 2013 and 2014 income statements.

the 2013 income statement.

A company's trading security has a fair value which exceeds its cost. When recording the journal entry: Select one: A. the Gain on Treasury Securities will be credited. B. the Unrealized Loss on Trading Securities account will be debited. C. the Unrealized Gain on Trading Securities account will be credited. D. the Investment in Trading Securities account will be credited.

the Unrealized Gain on Trading Securities account will be credited.

An account will have a debit balance if: Select one: A. it is a liability account. B. the amount of the credits exceeds the amount of the debits. C. the amount of the debits exceeds the amount of the credits. D. the account has more debit entries than credit entries.

the amount of the debits exceeds the amount of the credits.

The income statement approach to estimating uncollectible accounts is called the ________ method. The balance sheet approach to estimating uncollectible accounts is called the ________ method. Select one: A. allowance; direct write-off B. percent-of-sales; aging-of-receivables C. direct write-off; allowance D. aging-of-receivables; percent-of-sales

The correct answer is: percent-of-sales; aging-of-receivables