ACG 2021 Mid Term Practice

8. What is Frank's current ratio: A. 1.077. B. 0.929. C. 1.190. D. 0.933.

1.077

38. Using FIFO method, what is the cost of goods sold and ending inventory? A. $1,995; $875 B. $2,152; $220 C. $2,049; $520 D. $717; $920

A. $1,995; $875

17. A company started the year with no supplies. During this year they bought $200 worth of supplies on account and later paid $150 of the payable If there were $40 supplies left at the end of this year, what was the supply expense for the period? A. $160 B. $50 C. $40 D. $10

A. $160

19. Salary expense is $975 per day, Monday through Friday, and the business pays employees each Friday. If December 31 falls on a Wednesday, the amount of the adjusting entry to record accrued salaries would be: A. $2,925. B. $975. C. $1,950. D. $4,875.

A. $2,925.

1. What is the total of the debit side of the trial balance as of December 31, 2014: A. $665,000. B. $705,000. C. $645,000. D. $755,000.

A. $665,000.

35. On December 31, Thomas estimated the following percentages of accounts receivables to remain uncollectible. Amount Age Estimated uncollectible (%) $90,000 1-30 days 1% $50,000 31-90 days 3% $10,000 Over 90 days 5% If allowance for uncollectible accounts has a balance of $2,000, what should be the Uncollectible Accounts Expense in the income statement? A. $900 B. $2,900 C. $3,600 D. $4,900

A. $900

Which of the following financial statements is prepared as if a specific date? A. Balance sheet B. Income statement C. Retained earning statements D. Statement of cash flows

A. Balance sheet

Which of the following transactions would have no impact on stockholders equity A. Purchase of land from the proceeds of a bank loan B. Dividend to stockholders C. Net loss D. Investment of cash by stockholders

A. Purchase of land from the proceeds of a bank loan

Blankenship Company pays its employees every Friday for work rendered that week. The payroll is typically $10,000 per week. What journal entry would be recorded on Wednesday if the end of the accounting period occurred on a Wednesday A. Salary expense 6,000 Salary payable 6,000 B. Salary expense 6,000 Cash. 6,000 C. Salary payable 6,000 Cash 6,000 D. Salary payable 6,000 Salary expanse 6,000

A. Salary expense 6,000 Salary payable 6,000

42. Merchandise sold at FOB destination point indicates that: A. The seller holds title until the merchandise is received at the buyer's location B. The merchandise has not yet been shipped C. Seller doesn't have the merchandise at his warehouse D. Seller transfers title once the merchandise is shipped

A. The seller holds title until the merchandise is received at the buyer's location

22. The entry to close the expense accounts includes: A. a debit to Retained Earnings and credits to the respective expense accounts. B. a debit to Dividends and credits to the respective expense accounts. C. debits to the respective expense accounts and a credit to Retained Earnings. D. debits to the respective expense accounts and a credit to Dividends.

A. a debit to Retained Earnings and credits to the respective expense accounts.

7. What are Frank's current assets and current liabilities as on December 31, 2014: A. $ 125,000; $130,000. B. $ 140,000; $130,000. C. $ 125,000; $105,000. D. $ 140,000; $150,000.

B. $ 140,000; $130,000.

4. What are Frank's total assets and total liabilities on December 31, 2014: A. $ 420,000; $180,000. B. $ 420,000; $160,000. C. $ 440,000; $160,000. D. $ 460,000; $130,000.

B. $ 420,000; $160,000.

20. During 2014, XYZ Inc. sold merchandise worth $120,000 in cash and $150,000 on account. The company incurred expenses of $160,000, of which $70,000 is paid in cash. Compute net income of the company under accrual basis accounting. A. $200,000. B. $110,000. C. $50,000. D. $40,000

B. $110,000.

40. The Eunice Merchandising Company had the following records: Net sales $217,000 Beginning inventory 15,000 Net purchases 140,000 Ending inventory 20,000 What is the cost of goods sold and gross profit for this company? A. $140,000; $77,000 B. $135,000; $82,000 C. $130,000; $87,000 D. $120,000; $97,000

B. $135,000; $82,000

Gerald had beginning total stockholders equity of $160,000. During the year total assets increased by $240,000 and total liabilities increased by $120,00 Gerald's net income was $180,000. No additional investments were made; however dividend did occur during the year. How much were the dividends? A. $20,000 B. $60,000 C. $140,00 D. $220,000

B. $60,000

28. As of October 31, a company's Cash account has a balance of $851. On the same day, the bank statement for this account reports a balance of $1,430. There are outstanding checks totaling $840 and a deposit in transit of $60. The bank statement shows interest earned of $19, service charges of $30, a customer's returned check of $100, and a check printing fee of $90. The reconciled Cash balance that should be reported on the company's balance sheet as of October 31 is: A. $590 B. $650 C. $760 D. $750

B. $650

9. What is Frank's debt ratio: A. 0.283. B. 0.381. C. 2.333. D. 2.625.

B. 0.381.

33. During 2014, XYZ Inc. sold merchandise worth $320,000. It has $60,000 of beginning accounts receivables and $70,000 of ending accounts receivables. What is company's receivable turnover (rounded)? A. 73.00 B. 4.92 C. 11.25 D. 4.09

B. 4.92

21. Which of the following accounts would NOT be adjusted? A. Accumulated Depreciation B. Cash C. Depreciation Expense D. Wages

B. Cash

At the end of the current accounting period, Johnson Company failed to record utilities consumed during the period. Johnson will be billed for the utilities during the next accounting period. As a result, current period assets, liabilities, equity, and income, respectively, are: A. Overstated, overstated, correct, correct B. Correct, understated, overstated, overstated C. Overstated, understated, overstated, overstated D. Overstated, understated, correct, correct

B. Correct, understated, overstated, overstated

25. As of the end of September a bank reconciliation includes outstanding checks of $2,640. Indicate where the transaction would appear in the bank reconciliation statement: A. Add to the bank statement balance B. Deduct from the bank statement balance C. Add to the book balance D. Deduct from the book balance E. Does not appear on the bank reconciliation

B. Deduct from the bank statement balance

23. Which of the following is a primary concern of internal control? A. Promote training programs and control incentives B. Enhancing the reliability of accounting data C. Ensuring fairness of the financial statements D. Enhancing managerial performance

B. Enhancing the reliability of accounting data

On November 1, 20X1, limit company purchased a one year insurance policy for $12,000. At the end of December, 20X1, $2000 of instance had expired. The journal entry to properly state all accounts involved on December 31,20X1, would be A. Insurance expense 2,000 Prepaid insurance 22,000 Cash 24,000 B. Insurance expense 2,000 Prepaid insurance 2,000 C. Insurance expense 2,000 Cash 2,000 D. Prepaid insurance 2,000 Insurance expense 2,000

B. Insurance expense 2,000 Prepaid insurance 2,000

Lynn lipincott invested land valued at $5000 in her business. This transaction would be recorded by: A. Cash. 5000 Capital stock 5000 B. Land 5000 Capital stock 5000 C. Land 5000 Service revenue 5000 D. Capital stock 5000 Land 5000

B. Land 5000 Capital stock 5000

Blankenship Company pays its employees every Friday for work rendered that week. The payroll is typically $10,000 per week. Which of the following journal entries would Blankenship ordinarily record on the Friday payday? A. Salary expense 10,000 Salary payable 10,000 B. Salary expense 10,000 Cash 10,000 C. Salary payable 10,000 Cash 10,000 D. Salary payable 10,000 Salary expense 10,000

B. Salary expense 10,000 Cash 10,000

41. Overstated ending inventory leaves the following impacts on Cost of Goods Sold and Gross Profit: A. Overstated and overstated. B. Understated and overstated. C. Overstated and understated. D. No effect of Cost of Goods Sold and Gross Profit

B. Understated and overstated.

Current assets are those assets which management intends to convert into cash or consume within: A. The operating cycle B. One year C the longer of a or b D. The shorter of a or b

C the longer of a or b

32. A company sold $200,000 of merchandise on credit with a 5% discount. Of that sales, $15,000 worth of merchandise were later returned. During the year, the company collected $180,000 cash from its customers. What is the total dollar amount of net sales? A. $185,000 B. $155,000 C. $175,000 D. $20,000 E. $180,000

C. $175,000

39. Using LIFO method, what is the cost of goods sold and ending inventory? A. $1,995; $875 B. $2,152; $220 C. $2,275; $595 D. $717; $920

C. $2,275; $595

5. What is Frank's net income for 2014: A. $55,000. B. $70,000. C. $85,000. D. $90,000.

C. $85,000.

36. When an accounts receivable account has been determined to be uncollectible the entry to record the write off using the allowance method would include: A. A debit to Accounts Receivable. B. A debit to Uncollectible Account Expense. C. A debit to Allowance for Uncollectible Accounts. D. A credit to Notes Receivable.

C. A debit to Allowance for Uncollectible Accounts.

1. Which item is an asset? A. Unearned Revenue B. Interest Payable C. Accounts Receivable D. Dividends

C. Accounts Receivable

The proper journal entry to record Ransom Company's billing of clients for $500 of services rendered due in 15days is: A. Cash. 500 Accounts receivable 500 B. Accounts recoverable 500 Capital stock. 500 C. Accounts receivable 500 Service revenue. 500 D. Cash 500 Service revenue 500

C. Accounts receivable 500 Service revenue. 500

29. A company wrote a check to a vendor for $989. However, while recording in its Cash account, this payment was incorrectly recorded as $998. How is the difference of $9 handled on the bank reconciliation? A. Add to the bank statement balance B. Deduct from the bank statement balance C. Add to the book balance D. Deduct from the book balance E. Does not appear on the bank reconciliation

C. Add to the book balance

27. Which of the following requires an adjustment to the cash book balance on a bank reconciliation? A. Outstanding checks (bank side B. Bank error (bank side) C. Bank service charges D. Cash in transit (bank side) E. All of the above

C. Bank service charges

3. In the financial accounting records, most assets should be reported at: A. Current replacement cost. B. Current market value. C. Historical cost. D. Inflation-adjusted cost.

C. Historical cost.

31. An unrealized gain occurs: A. If the sales price is greater than the investment carrying amount. B. If the fair value of the investment is less than the current recorded value. C. If the fair value of the investment is greater than the current recorded value. D. None of the above.

C. If the fair value of the investment is greater than the current recorded value.

14. Under cash-basis accounting: A. Net income is calculated by deducting incurred expenses from earned revenues. B. Cash is adjusted for all income and expenses. C. Transactions are recognized in period in which cash is paid or received. D. None of the above.

C. Transactions are recognized in period in which cash is paid or received.

The receipt of $5,000 of unearned revenue would be recorded by debiting cash. What account should be credited upon recipes A. Cash. B. Revenue C. Unearned revenue D. Prepaid revenue

C. Unearned revenue

16. Allied, Inc. bought a 2-year insurance policy on August 1 for $3,600. The adjusting entry on December 31 would be: A. debit Insurance Expense, $150; credit Prepaid Insurance, $150. B. debit Prepaid Insurance, $150; credit Insurance Expense, $150. C. debit Insurance Expense, $750; credit Prepaid Insurance, $750. D. debit Prepaid Insurance, $750; credit Insurance Expense, $750.

C. debit Insurance Expense, $750; credit Prepaid Insurance, $750.

30. On December 1, the XYZ Co. received a 120 day, 12% note receivable of $2,500 from its customer. What is the total amount of the interest due by the customer on April 1? A. $300 B. $25 C. $600 D. $100

D. $100

34. The Reingold Hat Company uses the allowance method to account for bad debts. During 2014, the company recorded $800,000 in credit sales. At the end of the year, account balances were: Accounts receivable, $120,000; Allowance for uncollectible accounts, $3,000 (credit). If bad debt expense is estimated to be 3% of credit sales, the appropriate adjusting entry will include a debit to Uncollectible Account Expense of: A. Zero. B. $27,000 C. $21,000 D. $24,000

D. $24,000

24. Each of the following is an attribute of internal control except A. Segregation of duties. B. Establishment of responsibility. C. Independent internal verification. D. A sound marketing plan.

D. A sound marketing plan.

37. The perpetual inventory system: A. Keeps a continuous record for each inventory item. B. Is used by most businesses. C. Requires an annual count of inventory on hand. D. All of the above

D. All of the above

11. Which of the following is not a step in the accounting cycle? A. Journal entries are prepared and posted to ledger accounts. B. Trial balance is prepared. C. Financial Statements are prepared. D. All of the above are steps in the accounting cycle.

D. All of the above are steps in the accounting cycle.

Which of the following equations properly represents a derivation of the fundamental accounting equation. A. Assets + liabilities =owners equity B. Assets = owners equity C. Cash = assets D. Assets - liabilities = owners equity

D. Assets - liabilities = owners equity

Which of the following accounts would not be closed at the end of accounting period A. Income summary B. Dividend C. Revenue D. Capital stock

D. Capital stock

Which of the following is NOT a fundamental quality of accounting information A. Faithful representation B. Materiality C. Relevance D. Comparability

D. Comparability

10. Which of the following is not reported in the Balance Sheet? A. Prepaid insurance and interest receivable. B. Accrued salary and unearned revenue. C. Equipment and accumulated depreciation. D. Cost of goods sold and sales.

D. Cost of goods sold and sales.

15. Sale of merchandise on credit for $4,000 was recorded by debiting Cash and crediting Sales. They entry needs to be corrected by: A. Debit Accounts Receivable $4,000, credit Sales $4,000 B. Debit Cash $4,000, credit Accounts Receivable $4,000 C. Debit Sales $4,000, credit Cash $4,000 D. Debit Accounts Receivable $4,000, credit Cash $4,000

D. Debit Accounts Receivable $4,000, credit Cash $4,000

18. On January 1 Corporate Condos. Inc received $96,000 for one year's rent for building A. What would the adjusting entry be on March 31? A. Debit Rent Expense $8,000, credit Prepaid Rent $8,000 B. Debit unearned rent revenue $8,000, credit rent revenue $8,000 C. Debit Rent Expense $24,000, credit Prepaid Rent $24,000 D. Debit unearned rent revenue $24,000, credit rent revenue $24,000

D. Debit unearned rent revenue $24,000, credit rent revenue $24,000

26. A customer's check was returned for nonsufficient funds. Indicate where the transaction would appear in the bank reconciliation statement: A. Add to the bank statement balance B. Deduct from the bank statement balance C. Add to the book balance D. Deduct from the book balance E. Does not appear on the bank reconciliation

D. Deduct from the book balance

13. When a company sells merchandise, but the customer does not pay it immediately, it should: A. Increase Assets and Increase Expense. B. Increase Assets and Increase Liabilities. C. Increase Revenue and Increase Liability. D. Increase Revenue and Increase Assets.

D. Increase Revenue and Increase Assets.

2. Recording a payable for the purchase of $90,000 of services incurred during the period had what net effect at the end of the period? A. Decrease in assets B. Increase in owner's equity C. Decrease in liabilities D. No effect on assets

D. No effect on assets

12. On a trial balance which of the following would all have debit balances: A. Depreciation expense, prepaid insurance, rent revenue, cost of goods sold. B. Accrued salary, utilities expense, accumulated depreciation, sales. C. Equipment, unearned revenue, accounts receivable, notes receivable. D. None of the above

D. None of the above

Which of these items would be accounted for as an expense A. Repayment of a bank loan B. Dividend to stockholders C. The purchase of land D. Payment of the current periods rent

D. Payment of the current periods rent

The basic sequence in the accounting process can best be described as: A. Transaction, journal entry, source document. Post to ledger account, trial balance B. Source documents, transaction, post to ledger account , journal entry, trial balance C. Transaction, source documents, journal entry, trial balance, post to ledger account D. Transaction, source document, journal entry, post to ledger account, trial balance

D. Transaction, source document, journal entry, post to ledger account, trial balance

5. Malcom's financial statements revealed uncollectible accounts expense of $8,000, accounts receivable of $140,000, and allowance for uncollectible accounts of $12,000. The net realizable value of Malcom's accounts receivable is: a. $128,000 b. $132,000 c. $136,000 d. $152,000

a. $128,000

7. Lindy Company uses an allowance method to account for bad debts. Lindy estimates that 5% of the outstanding accounts receivable will be uncollectible. At the end of the year, Lindy has outstanding accounts receivable of $750,000, and a credit balance in the Allowance for Uncollectible Accounts of $9,000 before any adjustments. Lindy should record uncollectible accounts expense of: a. $28,500 b. $37,500 c. $46,500 d. $55,500

a. $28,500

2. When reconciling the ending cash balance per the bank statement to the correct adjusted cash balance, how would deposits in transit be handled? a. Added to the balance per the bank statement. b. Subtracted from the balance per the bank statement. c. Added to the balance per company records. d. Ignored.

a. Added to the balance per the bank statement.

3. Inventory accounts should be classified in which section of a balance sheet? a. Current assets b. Investments c. Property, plant, and equipment d. Intangible assets

a. Current assets

1. The Cash account on the balance sheet should not include which of the following items: a. Travel advances to employees b. Currency c. Money orders d. Deposits in transit

a. Travel advances to employees

3. Refer to #7. During its first year of operation, Lenton Company acquired three investments in trading securities. Investment A cost $50,000 and had a year-end market value of $60,000. Investment B cost $35,000 and had a year-end market value of $17,000. Investment C cost $26,000 and had a year-end market value of $24,000. The journal entry to record the decline in market value would include: a. a debit to Unrealized Loss on Trading Securities. b. a credit to Unrealized Gain on Trading Securities. c. a debit to Trading Securities. d. At least two of the above.

a. a debit to Unrealized Loss on Trading Securities.

4. Trade accounts receivable: a. arise from the sale of a company's products or services. b. are reported in the noncurrent asset section of the balance sheet. c. include deposits with utilities. d. generally comprise the minority of the total receivables balance.

a. arise from the sale of a company's products or services.

1. Trading securities owned by a company are most likely: a. reported on the balance sheet as a current asset. b. reported on the balance sheet as a noncurrent asset. c. reported on the balance sheet as a contra-equity account. d. reported on the balance sheet as a reduction of liabilities.

a. reported on the balance sheet as a current asset.

2. During its first year of operation, Lenton Company acquired three investments in trading securities. Investment A cost $50,000 and had a year-end market value of $60,000. Investment B cost $35,000 and had a year-end market value of $17,000. Investment C cost $26,000 and had a year-end market value of $24,000. What amount should be reported as a charge against income in Lenton's income statement for the first year of operation? a. $0 b. $10,000 c. $20,000 d. $30,000

b. $10,000

5. Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year. January 2 Beginning Inventory 500 units at $3.00 April 7 Purchased 1,100 units at $3.20 June 30 Purchased 400 units at $4.00 December 7 Purchased 1,600 units at $4.40 Sales during the year were 2,700 units at $5.00. If Hefty used the first-in, first-out method, ending inventory would be: a. $2,780 b. $3,960 c. $9,700 d. $10,880

b. $3,960

1. Lux had net purchases of $50,000, ending inventory of $25,000, net sales of $100,000, and gross profit of $32,000. How much was Lux's beginning inventory? a. $7,000 b. $43,000 c. $93,000 d. $143,000

b. $43,000

9. Interest on a loan may be computed by which of the following formulas? a. (principal x rate)/time b. (principal x rate x time) c. (principal x time)/rate d. (principal x time)/time

b. (principal x rate x time)

2. Russell Merchandising uses the perpetual inventory system. Which of the following statements is correct? a. When Russell records a sale, it should also debit inventory. b. When Russell records a sale, it should also credit inventory. c. When Russell records a sale, it should also credit cost of goods sold. d. When Russell records a sale, it should also debit cost of goods available for sale

b. When Russell records a sale, it should also credit inventory.

3. A bank reconciliation sometimes points to the need for adjusting entries. In general, the source of the adjustments is: a. the reconciliation of the ending balance per the bank statement to the adjusted cash balance. b. the reconciliation of the cash balance per the company records to the adjusted cash balance. c. both a and b. d. none of the above.

b. the reconciliation of the cash balance per the company records to the adjusted cash balance.

7. Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year. January 2 Beginning Inventory 500 units at $3.00 April 7 Purchased 1,100 units at $3.20 June 30 Purchased 400 units at $4.00 December 7 Purchased 1,600 units at $4.40 Sales during the year were 2,700 units at $5.00. If Hefty used the weighted-average method, Cost of Goods Sold would be: a. $3,255 b. $3,415 c. $10,245 d. $13,500

c. $10,245

4. The correct (adjusted) ending cash balance is: a. $4,914 b. $7,268 c. $7,313 d. $7,383

c. $7,313

a. Cash 70 Cash Short & Over 70 b. Miscellaneous Expense 70 Cash 70 c. Miscellaneous Expense 25 Accounts Receivable 45 Cash 70 d. Miscellaneous Expense 2,399 Cash 2,399

c. Miscellaneous Expense 25 Accounts Receivable 45 Cash 70

6. Branz Company had credit sales during the current year which amounted to $700,000. Historically, 3% of credit sales are uncollectible. If Branz uses the allowance method of recording uncollectible accounts, a proper journal entry for the year would be: a. Accounts Receivable 21,000 Allow. for Uncollectible Accounts 21,000 b. Uncollectible Accounts Expense 21,000 Accounts Receivable 21,000 c. Uncollectible Accounts Expense 21,000 Allow. for Uncollectible Accounts 21,000 d. Allow. for Uncollectible Accounts 21,000 Accounts Receivable 21,000

c. Uncollectible Accounts Expense 21,000 Allow. for Uncollectible Accounts 21,000

6. Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year. January 2 Beginning Inventory 500 units at $3.00 April 7 Purchased 1,100 units at $3.20 June 30 Purchased 400 units at $4.00 December 7 Purchased 1,600 units at $4.40 Sales during the year were 2,700 units at $5.00. If Hefty used the periodic LIFO method, cost of goods sold would be: a. $2,780 b. $3,960 c. $9,700 d. $10,880

d. $10,880

8. Flynn Company uses an allowance method for recording uncollectibles. Flynn determined that $4,000 due from Mitchell will not be collected. The entry Flynn should record to write off the Mitchell account is: a. Uncollectible Accounts Expense 4,000 Accounts Receivable 4,000 b. Sales 4,000 Accounts Receivable 4,000 c. Uncollectible Accounts Expense 4,000 Allow. for Uncollectible Accounts 4,000 d. Allow. for Uncollectible Accounts 4,000 Accounts Receivable 4,000

d. Allow. for Uncollectible Accounts 4,000 Accounts Receivable 4,000

4. Ritz Company agreed to purchase certain inventory items from Hostess Corporation. Hostess shipped the goods F.O.B. destination. On December 31, Ritz's accounting year-end, Ritz was aware that the goods had been shipped and would be received any day. a. Ritz should include the goods in its inventory calculated on December 31. b. Ritz should include the goods in its inventory calculated on December 31, but should not record the obligation to pay for them. c. Ritz should not include the goods in its inventory calculated on December 31, but should include the related payable on its balance sheet at December 31. d. Ritz should not include the goods in its inventory calculated on December 31, and should not include the related payable on its balance sheet at December 31

d. Ritz should not include the goods in its inventory calculated on December 31, and should not include the related payable on its balance sheet at December 31