Financial Accounting Final Exam- sample questions from quizzes

Grays Company has inventory of 10 units at a cost of $10 each on August 1. On August 3, it purchased 20 units at $12 each. 12 units are sold on August 6. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 12 units that were sold? 1. $124. 2. $128. 3. $120. 4. $140. 5. $130.

1. $124

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the book value of the asset at the end of the first year of its useful life using the double-declining-balance method? 1. $2,720 2. $300. 3. $680. 4. $600. 5. $2,320.

1. $2,720

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the first year of its useful life using the double-declining-balance method? 1. $680 2. $300. 3. $600. 4. $2,720. 5. $2,320.

1. $680

A company's board of directors votes to declare a cash dividend of $0.75 per share of common stock. The company has 15,000 shares authorized, 10,000 issued, and 9,500 shares outstanding. The total amount of the cash dividend is: 1. $7,125. 2. $14,625. 3. $7,500.

1. $7,125

A company has earnings per share of $9.60. Its dividend per share is $0.50, its market price per share is $110, and its book value per share is $96. Its price-earnings ratio equals: 1. 11.46. 2. 0.87. 3. 19.2. 4. 10.0. 5. 1.15.

1. 11.46

Carducci Corporation reported Net sales of $3.6 million and average Total assets of $1.1 million. The Total asset turnover is: 1. 3.27 times. 2. 2.27 times. 3. 0.77 times. 4. 0.31 times. 5. 4.30 times.

1. 3.27 times

The market price of Horokhiv Corporation's common stock at the start of 2014 was $47.50 and it declared and paid cash dividends of $3.28 per share. The Dividend yield ratio is: 1. 6.9%. 2. 7.4%. 3. 14.5%. 4. 144.8%. 5. 6.5%.

1. 6.9%

Merchandise inventory includes: 1. All goods owned by a company and held for sale. 2. All goods in transit. 3. Only damaged goods. 4. Only non-damaged goods. 5. All goods on consignment.

1. All goods owned by a company and held for sale.

A credit memorandum on a bank statement indicates: 1. An increase in the bank's liability account. 2. An increase in the bank's asset account. 3. A decrease in the bank's liability account.

1. An increase in bank's liability account

Alpha Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It buys office equipment on credit for $75,000. What would be the effects of this transaction on the accounting equation? 1. Assets increase by $75,000 and liabilities increase by $75,000. 2. Liabilities increase by $75,000 and expenses decrease by $75,000. 3. Assets increase by $75,000 and expenses increase by $75,000. 4. Assets decrease by $75,000 and expenses decrease by $75,000. 5. Assets increase by $75,000 and expenses decrease by $75,000.

1. Assets increase by $75,000 and liabilities increase by $75,000.

Costs included in the Merchandise Inventory account can include all of the following except: 1. Damaged inventory that cannot be sold. 2. Transportation-in. 3. Storage. 4. Invoice price minus any discount. 5. Insurance

1. Damaged inventory that can't be sold

A company purchased a tract of land for its natural resources at a cost of $1,500,000. It expects to mine 2,000,000 tons of ore from this land. The salvage value of the land is expected to be $250,000. If 150,000 tons of ore are mined during the first year, the journal entry to record the depletion is: 1. Debit Depletion Expense $93,750; credit Accumulated Depletion $93,750. 2. Debit Depletion Expense $93,750; credit Natural Resources $93,750. 3. Debit Cash $93,750; credit Accumulated Depletion $93,750. 4. Debit Cash $112,500; credit Natural Resources $112,500.

1. Debit Depletion Expense $93,750; credit Accumulated Depletion $93,750.

Which of the following items is reported on the statement of cash flows under financing activities? 1. Payment of a cash dividend. 2. Declaration of a stock dividend. 3. Payment of a stock dividend. 4. Declaration of a cash dividend. 5. Stock split.

1. Payment of a cash dividend.

To compute trend percentages the analyst should: 1. Select a base period, assign each item in the base period statement a weight of 100%, and then express financial numbers from other periods as a percent of their base period number. 2. Compare amounts across industries using Dun and Bradstreet. 3. Subtract the base period amount from the analysis period amount, divide the result by the analysis period amount, then multiply that amount by 100. 4. Compare amounts to a competitor. 5. Subtract the analysis period number from the base period number.

1. Select a base period, assign each item in the base period statement a weight of 100%, and then express financial numbers from other periods as a percent of their base period number.

All of the following statements regarding stock dividends are true except: 1. Stock dividends decrease the number of shares outstanding. 2. Stock dividends transfer a portion of equity from retained earnings to contributed capital. 3. Directors can use stock dividends to keep the market price of the stock affordable. 4. Stock dividends do not reduce assets or equity. 5. Stock dividends provide evidence of management's confidence that the company is doing well.

1. Stock dividends decrease the number of shares outstanding.

The statement of cash flows reports all but which of the following: 1. The financial position of the company at the end of the accounting period. 2. Significant noncash financing and investing activities. 3. Cash flows from investing activities. 4. Cash flows from operating activities. 5. Cash flows from financing activities.

1. The financial position of the company at the end of the accounting period.

The 3 parties involved with a check are: 1. The maker, the payee, and the bank. 2. The bookkeeper, the payee, and the bank. 3. The writer, the cashier, and the bank. 4. The maker, the manager, and the payee. 5. The signer, the cashier, and the company.

1. The maker, the payee, and the bank.

A bondholder that owns a $1,000, 10%, 10-year bond has: 1. The right to receive $1,000 at maturity. 2. The right to receive dividends of $1,000 per year. 3. Ownership rights in the issuing company. 4. The right to receive $10,000 at maturity. 5. The right to receive $10 per year until maturity.

1. The right to receive $1,000 at maturity.

The number of shares that a corporation's charter allows it to sell is referred to as: 1. Authorized stock. 2. Outstanding stock. 3. Preferred stock. 4. Common stock. 5. Issued stock.

1. authorized stock

An account used to record stockholders' investments in a business is called a(n): 1. common stock account 2. Liability account. 3. Expense account. 4. Dividends account. 5. Revenue account.

1. common stock account

A business's source documents may include all of the following except: 1. ledgers 2. checks 3. sales tickets. 4. purchase orders. 5. bank statements

1. ledgers

Identify the accounts that would normally have balances in the credit column of a business's trial balance. 1. Revenues and liabilities. 2. Assets and revenues. 3. Revenues and expenses. 4. Liabilities and expenses. 5. Dividends and liabilities.

1. revenues and liabilities

revenues are: 1. The increase in equity from a company's sales of products and services. 2. The excess of expenses over assets. 3. The same as net income. 4. The costs of assets or services used. 5. Resources owned or controlled by a company.

1. the increase in equity from a company's sales of products and services.

A company has sales of $695,000 and cost of goods sold of $278,000. Its gross profit equals: 1. $(417,000). 2. $417,000. 3. $973,000. 4. $278,000. 5. $695,000.

2. $417,000

Beckman Enterprises purchased a depreciable asset on October 1, Year 1 at a cost of $100,000. The asset is expected to have a salvage value of $20,000 at the end of its five-year useful life. If the asset is depreciated on the double-declining-balance method, the asset's book value on December 31, Year 2 will be: 1. $36,000 2. $54,000 3. $42,000 4. $16,000

2. $54,000

Triston Vale is paid on a monthly basis. For the month of January of the current year, he earned a total of $5,210. FICA tax for Social Security is 6.2% and the FICA tax for Medicare is 1.45%. The FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The amount of Federal Income Tax withheld from his earnings was $885.70. What is the amount of the employer's payroll taxes expenses for this employee? 1. $398.57 2. $711.17 3. $1,596.87 4. $1,284.27 5. $312.60

2. $711.17

A company had a tractor destroyed by fire. The tractor originally cost $85,000 with accumulated depreciation of $60,000. The proceeds from the insurance company were $20,000. The company should recognize: 1. A loss of $20,000. 2. A loss of $5,000. 3. A gain of $20,000. 4. A gain of $5,000. 5. A gain of $65,000.

2. A loss of $5,000.

Adonis Corporation issued 10-year, 8% bonds with a par value of $200,000. Interest is paid semiannually. The market rate on the issue date was 7.5%. Adonis received $206,948 in cash proceeds. Which of the following statements is true? 1. Adidas must pay $206,948 at maturity plus 20 interest payments of $8,000 each. 2. Adidas must pay $200,000 at maturity plus 20 interest payments of $8,000 each.

2. Adidas must pay $200,000 at maturity plus 20 interest payments of $8,000 each.

If a company purchases equipment costing $4,500 on credit, the effect on the accounting equation would be: 1. Assets increase $4,500 and liabilities decrease $4,500. 2. Assets increase $4,500 and liabilities increase $4,500. 3. Liabilities decrease $4,500 and assets increase $4,500. 4. Equity decreases $4,500 and liabilities increase $4,500.

2. Assets increase $4,500 and liabilities increase $4,500.

On December 31, Carmack Company's Prepaid Insurance account had a balance before adjustment of $6,000. The insurance was purchased on July 1 of the same year for one year of insurance coverage, with coverage beginning on that date. The adjusting entry needed on December 31 is: 1. Debit Insurance Expense $6,000; credit Accounts Payable $6,000. 2. Debit Insurance Expense $3,000; credit Prepaid Insurance $3,000. 3. Debit Cash $6,000; credit Prepaid Insurance $6,000. 4. Debit Insurance Expense $3,000; credit Accounts Payable $3,000. 5. Debit Prepaid Insurance $6,000; credit Cash $6,000.

2. Debit Insurance Expense $3,000; credit Prepaid Insurance $3,000.

Which of the following is not one of the policies and procedures that make up an internal control system? 1. Protect assets. 2. Guarantee a return to investors. 3. Promote efficient operations. 4. Urge adherence to company policies. 5. Ensure reliable accounting.

2. Guarantee a return to investors.

The relevant factors in computing depreciation do not include: 1. Depreciation method. 2. Market value. 3. Useful life. 4. Cost. 5. Salvage value.

2. Market value

The consistency concept: 1. Requires a company to use one method of inventory valuation exclusively. 2. Prescribes a company use the same accounting method of inventory valuation, an exception being when a change from one method to another will improve its financial reporting. 3. Requires that all companies in the same industry use the same accounting methods of inventory valuation. 4. Is also called the full disclosure principle. 5. Is also called the matching principle.

2. Prescribes a company use the same accounting method of inventory valuation, an exception being when a change from one method to another will improve its financial reporting.

Regardless of the inventory costing system used, cost of goods available for sale must be allocated at the end of the period between 1. net purchases during the period and ending inventory. 2. ending inventory and cost of goods sold. 3. beginning inventory and net purchases during the period. 4. beginning inventory and cost of goods sold. 5. ending inventory and beginning inventory.

2. ending inventory and cost of goods sold

If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have: 1. Increased $89,000. 2. Increased $22,000. 3. Increased $156,000. 4. Decreased $22,000. 5. Decreased $156,000.

2. increased $22,000

Obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as: 1. Bills. 2. Long-term liabilities. 3. Operating cycle liabilities. 4. Current liabilities. 5. Current assets.

2. long-term liabilities

The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash, and (3) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services, is called the: 1. Measurement (Cost) principle. 2. Revenue recognition principle. 3. Business entity assumption. 4. Going-concern assumption. 5. Objectivity principle.

2. revenue recognition principle.

A company sold equipment that originally cost $100,000 for $60,000 cash. The accumulated depreciation on the equipment was $40,000. The company should recognize a: 1. $40,000 loss. 2. $60,000 gain. 3. $0 gain or loss. 4. $20,000 loss. 5. $20,000 gain.

3. $0 gain or loss.

During the month of February, Victor Services had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the February 1 beginning cash balance? 1. $1,100. 2. $0. 3. $2,900. 4. $4,300. 5. $700.

3. $2, 900

A company issued 10-year, 7% bonds with a par value of $100,000. The company received $96,526 for the bonds. Using the straight-line method, the amount of interest expense for the first semiannual interest period is: 1. $7,000.00. 2. $3,326. 3. $3,673.70. 4. $3,500.00. 5. $7,347.40.

3. $3,673.70

Powers Company reported Net sales of $1,200,000 and average Accounts Receivable, net of $78,500. The accounts receivable turnover ratio is: 1. 16.3 times. 2. 28.6 times. 3. 15.3 times. 4. 0.65 times. 5. 14.3 times.

3. 15.3 times

Clairmont Industries reported Net income of $283,000 and average Total assets of $637,000. The Return on total assets is: 1. 55.6%. 2. 61.5%. 3. 44.4%. 4. 88.8%. 5. 125.1%.

3. 44.4%

A corporation issued 6,000 shares of its $2 par value common stock in exchange for land that has a market value of $84,000. The entry to record this transaction would include: 1. A credit to Land for $12,000. 2. A credit to Common Stock for $84,000. 3. A credit to Paid-in Capital in Excess of Par Value, Common Stock for $72,000. 4. A debit to Land for $12,000.

3. A credit to Paid-in Capital in Excess of Par Value, Common Stock for $72,000.

A company's ledger is: 1. A record containing increases and decreases in a specific asset, liability, equity, revenue, or expense item. 2. A list of all accounts a company uses with an assigned identification number. 3. A record containing all accounts and their balances used by the company. 4. A collection of documents that describe transactions and events entering the accounting process.

3. A record containing all accounts and their balances used by the company.

A disadvantage of bond financing is: 1. Bonds do not affect owners' control. 2. Bonds can increase return on equity. 3. Bonds pay periodic interest and the repayment of par value at maturity. 4. Interest on bonds is tax deductible.

3. Bonds pay periodic interest and the repayment of par value at maturity.

A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 28 is: 1. Debit Cash $1,600; credit Accounts Payable $1,600. 2. Debit Accounts Payable $1,800; credit Cash $1,800. 3. Debit Accounts Payable $1,600; credit Cash $1,600. 4. Debit Merchandise Inventory $1,600; credit Cash $1,600. 5. Debit Accounts Payable $1,600; credit Merchandise Inventory $32; credit Cash $1,568.

3. Debit Accounts Payable $1,600; credit Cash $1,600.

If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees, the end-of-period adjusting entry to record the portion of those fees that has been earned is: 1. Debit Cash and credit Legal Fees Earned. 2. Debit Cash and credit Unearned Legal Fees. 3. Debit Unearned Legal Fees and credit Legal Fees Earned.

3. Debit Unearned Legal Fees and credit Legal Fees Earned.

On a bank reconciliation, an unrecorded debit memorandum for printing checks is: 1. Added to the book balance of cash. 2. Deducted from the bank balance of cash. 3. Deducted from the book balance of cash. 4. Noted as a memorandum only.

3. Deducted from the book balance of cash

Depreciation: 1. Is applied to land. 2. Is an outflow of cash from the use of a plant asset. 3. Is the process of allocating the cost of a plant asset to expense. 4. Measures the decline in market value of an asset. 5. Measures physical deterioration of an asset.

3. Is the process of allocating the cost of a plant asset to expense.

Which of the following are not classified as plant assets? 1. Land improvements. 2. Land. 3. Patent. 4. Buildings. 5. Machinery and equipment.

3. Patent

Sales returns: 1. Are not recorded under the perpetual inventory system until the end of each accounting period. 2. Represent cash discounts. 3. Refer to merchandise that customers return to the seller after the sale. 4. Represent trade discounts. 5. Refer to reductions in the selling price of merchandise sold to customers.

3. Refer to merchandise that customers return to the seller after the sale.

The inventory valuation method that identifies each item in ending inventory with a specific purchase and invoice is the: 1. Weighted average inventory method. 2. Retail inventory method. 3. Specific identification method. 4. First-in, first-out method. 5. Last-in, first-out method.

3. Specific identification method

The appropriate section in the statement of cash flows for reporting the cash payment of wages is: 1. Investing activities. 2. This is not reported on the statement of cash flows. 3. Operating activities 4. Finance activities

3. operating activities

Acceptable methods of assigning specific costs to inventory and cost of goods sold include all of the following except: 1. FIFO method. 2. Specific identification method. 3. Retail Method. 4. Weighted average method 5. LIFO method

3. retail method

Which of the following does not affect the equity of a business? 1. Wages Expense 2. Common Stock 3. Unearned Revenue 4. Services Revenue 5. Dividends

3. unearned revenue

Garza Company had sales of $135,000, sales discounts of $2,000, and sales returns of $3,200. Garza Company's net sales equals: 1. $135,000. 2. $140,200. 3. $5,200. 4. $129,800. 5. $133,000.

4. $129,800.

At the end of its first month of operations, Michael's Consulting Services reported net income of $25,000. They also had account balances of: Cash, $18,000; Office Supplies, $2,000 and Accounts Receivable $10,000. The sole stockholder's total investment in exchange for common stock for this first month was $5,000. There were no dividends in the first month. Calculate the amount of total equity to be reported on the balance sheet at the end of the month. 1. $20,000 2. $25,000 3. $7,000 4. $30,000 5. $5,000

4. $30,000

On December 1, Victoria Company signed a 90-day, 6% note payable, with a face value of $15,000. What amount of interest expense is accrued at December 31 on the note? 1. $0 2. $300 3. $900 4. $75

4. $75

The credit terms 2/10, n/30 are interpreted as: 1. 2% discount if paid within 30 days. 2. 30% discount if paid within 10 days. 3. 30% discount if paid within 2 days. 4. 2% cash discount if the amount is paid within 10 days, or the balance due in 30 days. 5. 10% cash discount if the amount is paid within 2 days, or the balance due in 30 days.

4. 2% cash discount if the amount is paid within 10 days, or the balance due in 30 days.

A corporation sold 14,000 shares of its $1 par value common stock at a cash price of $13 per share. The entry to record this transaction would include: 1. A credit to Paid-in Capital in Excess of Par Value, Common Stock for $196,000. 2. A credit to Common Stock for $182,000. 3. A debit to Cash for $14,000. 4. A credit to Common Stock for $14,000. 5. A debit to Paid-in Capital in Excess of Par Value, Common Stock for $182,000.

4. A credit to Common Stock for $14,000.

Natural resources are: 1. Depleted using a straight-line method. 2. Not subject to allocation to expense over their useful lives. 3. Tangible assets used in the operations of the business. 4. Consumable assets such standing timber, mineral deposits, and oil and gas fields. 5. Current assets because they are depleted.

4. Consumable assets such standing timber, mineral deposits, and oil and gas fields.

What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $7,750 before adjustment, and the unexpired amount per analysis of policies is, $3,250? 1. Debit Prepaid Insurance, $4,500; credit Insurance Expense, $4,500. 2. Debit Cash, $7,750; Credit Prepaid Insurance, $7,750. 3. Debit Insurance Expense, $7,750; credit Prepaid Insurance, $7,750. 4. Debit Insurance Expense, $4,500; credit Prepaid Insurance, $4,500. 5. Debit Insurance Expense, $3,250; credit Prepaid Insurance, $3,250.

4. Debit insurance expense, $4,500; credit prepaid insurance $4,500.

The accounting equation for Long Company shows an increase in its assets and an increase in its liabilities. Which of the following transactions could have caused that effect? 1. Supplies were purchased for cash. 2. Cash was received from providing services to a customer. 3. Advertising expense for the month was paid in cash. 4. Equipment was purchased on credit. 5. Cash was received as a stockholder investment.

4. Equipment was purchased on credit.

Merchandise Inventory: 1. Is classified with investments on the balance sheet. 2. Includes supplies the company will use in future periods. 3. Must be sold within one month. 4. Is a current asset 5. is a long-term asset

4. Is a current asset.

The inventory valuation method that results in the lowest taxable income in a period of inflation is: 1. Gross profit method. 2. FIFO method. 3. Specific identification method. 4. LIFO method

4. LIFO method

A liability for dividends exists: 1. On the date of payment. 2. For dividends in arrears on cumulative preferred stock. 3. When cumulative preferred stock is sold. 4. On the date of declaration. 5. On the date of record.

4. On the date of declaration

Stockholders' equity consists of which of the following? 1. Long-term assets. 2. Premiums and discounts. 3. Retained earnings and cash. 4. Paid-in capital and retained earnings. 5. Paid-in capital and par value.

4. Paid-in capital and retained earnings.

The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is: 1. Always equal to its stated value. 2. Referred to as retained earnings. 3. Always equal to its par value. 4. Referred to as paid-in capital. 5. Always below its stated value.

4. Referred to as paid-in capital.

A bond traded at 102½ means that: 1. The bonds were retired at $1,025 each. 2. The market rate of interest is 2½% above the contract rate. 3. The market rate of interest is 2.5%. 4. The bond traded at 102.5% of its par value. 5. The bond pays 2.5% interest.

4. The bond traded at 102.5% of its par value.

One characteristic of plant assets is that they are: 1. Intangible. 2. Natural resources. 3. Long-term investments. 4. Used in operations. 5. Current assets.

4. Used in operations

Par value of a stock refers to the: 1. Maximum selling price of the stock. 2. Market value of the stock on the date of the financial statements. 3. Dividend value of the stock. 4. Value assigned per share by the corporate charter.

4. Value assigned per share by the corporate charter.

Outstanding checks refer to checks that have been: 1. Held as blank checks. 2. Written and not yet recorded in the company books. 3. Issued by the bank. 4. Written, recorded on the company books, sent to the payee, but not yet paid by the bank. 5. Written, recorded, sent to payees, and received and paid by the bank.

4. Written, recorded on the company books, sent to the payee, but not yet paid by the bank.

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is: 1. Revenue basis accounting. 2. Cash basis accounting. 3. The time period assumption. 4. Accrual basis accounting. 5. The expense recognition (matching) principle.

4. accrual basis accounting.

The right side of a T-account is a(n): 1. Account balance. 2. Decrease. 3. Debit. 4. credit. 5. increase.

4. credit

Mayan Company had net income of $132,000. The weighted-average common shares outstanding were 80,000. The company sold 3,000 shares before the end of the year. There were no other stock transactions. The company's earnings per share is: 1. $26.67. 2. $1.71. 3. $44.00. 4. $1.59. 5. $1.65.

5. $1.65.

Starlight Company has inventory of 8 units at a cost of $200 each on October 1. On October 2, it purchased 20 units at $205 each. 11 units are sold on October 4. Using the LIFO perpetual inventory method, what amount will be reported in cost of goods sold for the 11 units that were sold? 1. $2,200. 2. $2,228. 3. $2,215. 4. $2,239. 5. $2,255.

5. $2,255.

Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machines' first year depreciation under the straight-line method. 1. $29,025. 2. $23,779. 3. $27,000. 4. $25,800. 5. $24,000

5. $24,000

On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of equity as of May 31 of the current year? 1. $40,400. 2. $20,500. 3. $49,700. 4. $13,050. 5. $31,100

5. $31,100

The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee's pay. Assume that an employee earned total wages of $9,900. What is the amount of total unemployment taxes the employer must pay on this employee's wages? 1. $0.00. 2. $534.60. 3. $594.00. 4. $336.00. 5. $420.00.

5. $420.00

A company had a beginning balance in retained earnings of $430,000. It had net income of $60,000 and paid out cash dividends of $56,250 in the current period. The ending balance in retained earnings equals: 1. $426,250. 2. $490,000. 3. $546,250. 4. $116,250. 5. $433,750

5. $433,750

A company had beginning inventory of 10 units at a cost of $20 each on March 1. On March 2, it purchased 10 units at $22 each. On March 6 it purchased 6 units at $25 each. On March 8, it sold 22 units for $54 each. Using the FIFO perpetual inventory method, what was the cost of the 22 units sold? 1. $490 2. $570 3. $450 4. $520 5. $470.

5. $470.

Peavey Enterprises purchased a depreciable asset for $22,000 on April 1, Year 1. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $2,000, Peavey Enterprises should recognize depreciation expense in Year 2 in the amount of: 1. $20,000 2. $5,500 3. $9,250 4. $10,000 5. $5,000

5. $5,000

A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is: 1. Zero. This is an operating activity. 2. $5,000. 3. Zero. This is a financing activity. 4. $45,000. 5. $50,000

5. $50,000

A company purchased a mineral deposit for $800,000. It expects this property to produce 120,000 tons of minerals and to have a salvage value of $50,000. In the current year, the company mined and sold 9,000 tons of minerals. Its depletion expense for the current period equals: 1. $60,000. 2. $150,000. 3. $15,000. 4. $139,500. 5. $56,250

5. $56,250

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. What is the maturity value of the note on March 1? 1. $720 2. $9,720 3. $9,000 4. $9,120 5. $9,240

5. $9,240

Zhang Company reported Cost of goods sold of $835,000 and average Inventory of $41,750. The Inventory turnover ratio is: 1. 56 times. 2. 418 times. 3. 19 times. 4. 0.5 times. 5. 20 times

5. 20 times

A contingent liability is: 1. Always of a specific amount. 2. An obligation arising from a future event. 3. An obligation arising from the purchase of goods or services on credit. 4. An obligation not requiring future payment. 5. A potential obligation that depends on a future event arising from a past transaction or event.

5. A potential obligation that depends on a future event arising from a past transaction or event.

Physical counts of inventory: 1. Are not necessary under the cost-to benefit constraint. 2. Are not necessary under the perpetual system. 3. Must be taken at least once a month. 4. Requires the use of hand-held portable computers. 5. Are necessary to adjust the Inventory account to the actual inventory available.

5. Are necessary to adjust the Inventory account to the actual inventory available.

If a company receives $12,000 from its sole stockholder to establish a corporation, the effect on the accounting equation would be: 1. Assets decrease $12,000 and equity decreases $12,000. 2. Liabilities increase $12,000 and equity decreases $12,000. 3. Assets increase $12,000 and liabilities increase $12,000. 4. Assets increase $12,000 and liabilities decrease $12,000. 5. Assets increase $12,000 and equity increases $12,000.

5. Assets increase $12,000 and equity increases $12,000.

An advantage of bonds is: 1. Bonds require payment of par value at maturity. 2. Bonds require payment of periodic interest. 3. Bonds can decrease return on equity. 4. Bond payments can be burdensome when income and cash flow are low. 5. Bonds do not affect owner control.

5. Bonds do not affect owner control.

Which of the following accounts is not included in the calculation of net income? 1. Services revenue. 2. Wages expense. 3. Rent revenue. 4. Rent expense. 5. Cash

5. Cash

The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is: 1. Financing activities. 2. This is not reported on the statement of cash flows. 3. Operating activities. 4. Schedule of noncash investing or financing activity 5. Investing activities.

5. Investing activities

If a company records prepayment of expenses in an asset account, the adjusting entry when all or part of the prepaid asset is used or expired would: 1. Cause an adjustment to prior expense to be overstated and assets to be understated. 2. decrease cash. 3. Cause an accrued liability account to exist. 4. Result in a debit to a liability and a credit to an asset account. 5. Result in a debit to an expense and a credit to an asset account.

5. Result in a debit to an expense and a credit to an asset account.

Identify the statement below that is incorrect: 1. The normal balance of dividends is a debit. 2. The normal balance of accounts receivable is a debit. 3. The normal balance of the common stock account is a credit. 4. The normal balance of unearned revenues is a credit. 5. The normal balance of an expense account is a credit.

5. The normal balance of an expense account is a credit.

Identify the statement below that is true: 1. Another name for the trial balance is the chart of accounts. 2. The trial balance is a book of original entry. 3. The trial balance is another name for the balance sheet as long as debits balance with credits. 4. If the trial balance is in balance, it proves that no errors have been made in recording and posting transactions. 5. The trial balance is a list of all accounts from the ledger with their balances at a point in time.

5. The trial balance is a list of all accounts from the ledger with their balances at a point in time.

All of the following statements related to recording warranty expense are true except: 1. The seller reports a warranty obligation as a liability. 2. Recording estimated warranty expense complies with the matching principle. 3. Recording estimated warranty expense complies with the full disclosure principle. 4. Warranty costs are probable and the amount can be estimated. 5. Warranty expense should be recorded in the period when the warranty service is performed.

5. Warranty expense should be recorded in the period when the warranty service is performed.

The inventory valuation method that tends to smooth out erratic changes in costs is: 1. Specific Identification 2. FIFO 3. LIFO 4. WIFO 5. Weighted Average

5. Weighted Average

Identify the account used by businesses to record the transfer of assets from a business to its stockholders: 1. A revenue account. 2. A liability account 3. the common stock account 4. an expense account 5. the dividends account

5. the dividends account

The adjusting entry to record an accrued expense is:

Increase an expense; increase a liability.

The chronological record of each complete transaction that has occurred in a business is called the:

journal