****ALL ACCT FINAL

Cash equivalents include: a. equity investments. b. certificates of deposit. c. treasury bills. d. money market accounts and commercial paper.

d

A company should choose a depreciation method that: a. best allocates the original cost of the asset to the periods benefited by the use of the asset. b. shows the highest amount of net income. c. generates the most conservative estimate of the depreciation expense for the period. d. saves the most taxes by generating the highest amount of expense and decreasing the net income.

a

In recording the cost of merchandise sold for cash, based on data available from perpetual inventory records, the journal entry is: a. debit Cost of Merchandise Sold; credit Merchandise Inventory b. debit Merchandise Inventory; credit Cost of Merchandise Sold c. debit Accounts Receivable; credit Sales d. debit Cost of Merchandise Sold; credit Sales

a

One of the main disadvantages of the corporate form is the: a. double taxation of dividends. b. obligatory issuing of stock. c. professional management. d. charter.

a

Select the type of business that is most likely to obtain large amounts of resources by issuing stock. a. Corporation b. Sole proprietorship c. Partnership d. None are correct.

a

The depreciation method that does not use salvage value in calculating the first year's depreciation expense is: a. double-declining-balance method b. units-of-activity method c. straight-line method d. straight-line method and units-of-activity method

a

Treasury shares represent the: a. number of previously issued shares that have been repurchased by the corporation. b. maximum number of shares that can be sold by the corporation. c. number of shares that are currently held by stockholders. d. number of shares that the corporation has sold.

a

Which inventory cost flow method assigns the cost of the most recent items purchased to ending inventory? a. FIFO b. LIFO c. Specific identification d. Weighted average

a

Which of the following is not a characteristic of a corporation? a. A corporation's resources are limited to their individual stockholders' resources. b. Ownership is divided into shares of stock. c. Corporations experience an ease in obtaining large amounts of resources by issuing stock. d. Corporations are organized as a separate legal taxable entity.

a

Which of the following is not considered to be a cash equivalent? a. U.S. Treasury bills with an original maturity of six months b. A money market account with a stock brokerage firm c. A certificate of deposit with a term of 75 days when acquired d. Corporate commercial paper due in 60 days after purchase

a

Authorized shares represent the: a. number of previously issued shares that have been repurchased by the corporation. b. maximum number of shares of stock that a company can legally issue. c. number of shares that the corporation has sold. d. number of shares that are currently held by stockholders.

b

Characteristics of a corporation include: a. direct management by the shareholders (owners). b. shareholders who have limited liability. c. its inability to own property. d. shareholders who are mutual agents.

b

Donnay Corporation established a petty cash fund in the amount of $300. Which of the following is the correct entry for Donnay to record this event? a. Miscellaneous Expense 300 Petty Cash Fund 300 b. Petty Cash Fund 300 Cash 300 c. Cash 300 Petty Cash Fund 300 d. None of these, as no entry is necessary to record an exchange of cash.

b

How are cash equivalents reported or disclosed in the financial statements? a. They are included with short-term investments as a current asset on the balance sheet. b. They are included with cash as a current asset on the balance sheet. c. They are only reported on the statement of cash flows. d. They are only disclosed in the notes to the financial statements.

b

Jillian Corporation has a $375 petty cash fund. At the end of each month, Jillian's petty cash custodian presents the records of the petty cash transactions. On August 31, there was $33 cash remaining in the fund and the documents supporting the following transactions were presented for reimbursement. August 4 U.S. post office (postage) $72 August 14 Callabaugh supply (office supplies) 219 August 15 Speedy delivery (package delivery) 51 Which of the following entries is necessary for recording the replenishment of the fund on August 31? a. Miscellaneous Expenses 342 Petty Cash Fund 342 b. Postage Expense 72 Office Supplies Expense 219 Delivery Expense 51 Cash 342 c. Postage Expense 72 Office Supplies Expense 219 Delivery Expense 51 Cash Over and Short 33 Petty Cash Fund 375 d. Cash 342 Petty Cash Fund 342

b

Outstanding shares represent the: a. number of shares that the corporation has sold. b. number of shares that are currently held by stockholders. c. number of previously issued shares that have been repurchased by the corporation. d. maximum number of shares that can be sold by the corporation.

b

Which inventory cost flow method assigns the average unit cost to all units whether sold or left in ending inventory? a. FIFO b. Weighted average c. LIFO d. Specific identification

b

Which of the following is not characteristic of a corporation? a. The financial loss that a stockholder may suffer from owning stock in a public company is limited. b. Cash dividends paid by a corporation are deductible as expenses by the corporation. c. A corporation can own property in its name. d. Corporations are required to file federal income tax returns.

b

Which of the following statements best describes the term "outstanding check" from a company's point of view? a. A check written by the company and presented to the bank for payment. b. A check written by the company but not yet presented to the bank for payment. c. A check written by a customer to the company, and the check has been presented to the bank for payment. d. A check written by a customer to the company, but it has not yet been presented to the bank for payment.

b

A disadvantage of the corporate form of business entity is: a. the ease of transfer of ownership. b. mutual agency for stockholders. c. that corporations are subject to more governmental regulations. d. unlimited liability for stockholders.

c

After a corporation declares a cash dividend, what takes place on the date of record? a. Liabilities decrease. b. Cash decreases. c. No entry is necessary. d. Equity decreases.

c

All of the following are reasons that a corporation may purchase treasury stock except: a. to buy out the ownership of stockholders. b. to increase the reported amount of earnings per share. c. if it desires to make an investment in its own stock and is reported as an asset. d. if it needs the stock for its employee stock bonus program.

c

If the depreciation method is known, which of the following sets of factors is needed to calculate depreciation on plant and equipment? a. The estimated salvage value of the asset, its replacement cost, and its market value b. The asset's historical cost, replacement cost, and its estimated salvage value c. The useful life of the asset, its historical cost, and its estimated salvage value d. The asset's replacement cost, its estimated life, and its estimated salvage value

c

Par value represents the: a. amount for which any treasury shares have been acquired by the corporation. b. current market price of the stock. c. arbitrary amount that establishes a minimum price for the stock when it is first issued. d. amount for which treasury shares may be reissued.

c

When is a liability for cash dividends created? a. At the date of payment. b. At the date of record. c. At the date of declaration. d. At the end of each fiscal year.

c

Which inventory cost flow method assigns the cost of the most recent items purchased to cost of goods sold? a. Specific identification b. Weighted average c. LIFO d. FIFO

c

Which inventory costing method results in the highest inventory balance during a period of rising purchase prices? a. LIFO b. Both FIFO and LIFO result in the same inventory balance. c. FIFO d. Weighted average cost

c

While preparing a bank reconciliation, which of the following items would be subtracted from the balance per the bank statement? a. Deposits in transit b. Interest earned on the bank account c. Outstanding checks d. Bank service charges

c

While reconciling the checking account, an accountant with Elliter, Inc. noticed that an error had been made in recording a check received by the company. Elliter recorded the receipt as $729 and the correct amount of the check was $279. Which of the following reconciling adjustments is necessary? a. Deduct $450 from the bank statement balance. b. Add $450 to the bank statement balance. c. Deduct $450 from the company's records. d. Add $450 to the company's records.

c

A petty cash custodian should always: a. record petty cash expenditures in the company's accounting records. b. sign the checks for items paid from the petty cash fund. c. prepare the bank reconciliation for the petty cash account. d. maintain supporting documentation for any payment made from the petty cash fund.

d

The amount of inventory expensed during the year is reported on the income statement as: a. administrative expenses. b. sales revenue. c. operating expenses. d. cost of goods sold.

d

The treasurer for Kent Enterprises was preparing a bank reconciliation as of October 31, 2012, when the following items were identified: Balance per Kent's company records $32,800 Deposits in transit 4,300 Outstanding checks 2,200 Interest earned on the checking account 100 NSF check from Kent's customer 400 Kent's adjusted cash balance at October 31, 2012, is: a. $34,600. b. $34,900. c. $32,800. d. $32,500.

d

Which of the following should be included in the acquisition cost of a piece of equipment? a. Installation costs b. Testing costs prior to placing the equipment into production c. Transportation costs d. All of these

d

Which one of the following would never be considered a cash equivalent? a. Corporate commercial paper b. U.S. Treasury bills c. Money market funds d. Common stock issued by a corporation

d

While preparing a bank reconciliation, which of the following items would be subtracted from the balance per the company records? a. Outstanding checks b. Deposits in transit c. Interest earned on the bank account d. Bank service charges

d

Your answer: Upon review of Mack's statement of cash flows, the following was noted: Cash flows from operating activities $15,000 Cash flows from investing activities 40,000 Cash flows from financing activities (50,000) From this information, the most likely explanation is that Mack is: a. using cash from investors to provide for operations. b. using its profits to expand growth. c. using cash from operations and borrowing to purchase long-term assets. d. using cash from operations and selling long-term assets to pay back debt.

d

Your answer: While preparing the February 28th bank reconciliation for the checking account for Willow, Inc., the accountant identified the following items: Balance per Willow's company records $46,200 Outstanding checks 1,100 Interest earned on the checking account 50 A customer's NSF check returned by the bank 500 In addition, Willow made an error in recording a customer's check; the amount was recorded in cash receipts as $150, while the bank correctly recorded the amount as $510. What amount will Willow report as its actual cash balance on February 28th? a. $45,890 b. $44,650 c. $46,250 d. $46,110

d

Which of the following is the appropriate general journal entry to record the declaration of cash dividends? a. Retained Earnings Cash b. Additional Paid-in Capital Dividends Payable c. Dividends Payable Cash d. Retained Earnings Dividends Payable

a

Which of the following procedures is incorrect for establishing and maintaining a petty cash fund? a. When the petty cash fund needs to be replenished, an entry is recorded to recognize an increase in the petty cash account. b. The company must obtain the cash needed for the fund and record an entry for the establishment of the fund. c. A check is prepared for a small, fixed amount; when the check is cashed, the money is entrusted to a petty cash custodian. d. When appropriate documentation is presented, cash payments are made from the fund; the petty cash custodian retains the documentation.

a

Your answer: Which of the following journal entries is recorded as a result of the bank reconciliation process to record a NSF check for $250? a. Cash 250 Accounts Receivable 250 b. Cash 250 Accounts Payable 250 c. Accounts Receivable 250 Cash 250 d. Accounts Receivable 250 Petty Cash 250

c

ssued shares represent the: a. maximum number of shares that can be sold by the corporation. b. number of shares that are currently held by stockholders. c. number of previously issued shares that have been repurchased by the corporation. d. number of shares that the corporation has distributed to owners to date.

d