Accounting 102 Final - MARY
Which of the following practices by a credit card company results in lower interest charges to the cardholder? A) The card company states interest as a monthly percentage rather than an annual percentage. B) The card company allows a grace period before interest is accrued. C) The card company allows cardholders to skip payments on their cards. D) The card company calculates finance charges from the date of purchase to the date the amount is paid.
B) The card company allows a grace period before interest is accrued.
A system of internal control A) is infallible. B) can be rendered ineffective by employee collusion. C) invariably will have costs exceeding benefits. D) is premised on the concept of absolute assurance.
B) can be rendered ineffective by employee collusion.
Vertical analysis is also known as A) perpendicular analysis. B) common size analysis. C) trend analysis. D) straight-line analysis.
B) common size analysis.
The collection of a $1,000 account after the 2 percent discount period will result in a A) debit to Cash for $980. B) credit to Accounts Receivable for $1,000. C) credit to Cash for $1,000. D) debit to Sales Discounts for $20.
B) credit to Accounts Receivable for $1,000.
A current liability is a debt the company reasonably expects to pay from existing current assets within A) one year. B) the operating cycle. C) one year or the operating cycle, whichever is longer. D) one year or the operating cycle, whichever is shorter.
C) one year or the operating cycle, whichever is longer.
Jean's Vegetable Market had the following transactions during 2014: 1. Issued $50,000 of par value common stock for cash. 2. Repaid a 6 year note payable in the amount of $22,000. 3. Acquired land by issuing common stock of par value $50,000. 4. Declared and paid a cash dividend of $7,000. 5. Sold a long-term investment (cost $3,000) for cash of $6,000. 6. Acquired an investment in IBM stock for cash of $10,000. What is the net cash provided by financing activities? A) $21,000 B) $67,000 C) $28,000 D) $0
A) $21,000 Feedback: $50,000 - $22,000 - $7,000 = $21,000
As of December 31, 2015, Calexico Company has assets of $42,000 and stockholders' equity of $20,000. What are the liabilities for Calexico Company as of December 31, 2015? A) $22,000. B) $20,000. C) $42,000. D) $62,000.
A) $22,000.
Which of the following is not a right or preference associated with preferred stock? A) The right to vote B) First claim to dividends C) Preference to corporate assets in case of liquidation D) To receive dividends in arrears before common stockholders receive dividends
A) The right to vote
A chart of accounts usually starts with A) asset accounts. B) expense accounts. C) liability accounts. D) revenue accounts.
A) asset accounts.
A perpetual inventory system would likely be used by a(n) A) automobile dealership. B) hardware store. C) drugstore. D) convenience store.
A) automobile dealership.
Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as A) capital expenditures. B) expense expenditures. C) ordinary repairs. D) revenue expenditures.
A) capital expenditures.
On January 1, Soft Corporation had 80,000 shares of $10 par value common stock outstanding. On June 17, the company declared a 10% stock dividend to stockholders of record on June 20. Market value of the stock was $15 on June 17. The stock was distributed on June 30. The entry to record the transaction of June 30 would include a A) credit to Common Stock for $80,000. B) debit to Common Stock Dividends Distributable for $120,000. C) credit to Paid-in Capital in Excess of Par for $40,000. D) debit to Stock Dividends for $40,000.
A) credit to Common Stock for $80,000. Feedback: 80,000 × $10 × .10 = $80,000
On January 1, Soft Corporation had 80,000 shares of $10 par value common stock outstanding. On June 17, the company declared a 10% stock dividend to stockholders of record on June 20. Market value of the stock was $15 on June 17. The entry to record the transaction of June 17 would include a A) debit to Stock Dividends for $120,000. B) credit to Cash for $120,000. C) credit to Common Stock Dividends Distributable for $120,000. D) credit to Common Stock Dividends Distributable for $40,000.
A) debit to Stock Dividends for $120,000. Feedback: 80,000 × $15 × .10 = $120,000
All of the following items would be reported as other expenses and losses except A) freight-out. B) casualty losses. C) interest expense. D) loss from employees' strikes.
A) freight-out.
The use of computers in recording business events A) has made the recording process more efficient. B) does not use the same principles as manual accounting systems. C) has greatly impacted the identification stage of the accounting process. D) is economical only for large businesses.
A) has made the recording process more efficient.
The United States and the international standard-setting environment are primarily driven by meeting the needs of A) investors and creditors. B) tax authorities. C) central government planners. D) academic researchers.
A) investors and creditors.
On a balance sheet, natural resources may be described more specifically as all of the following except A) land improvements. B) mineral deposits. C) oil reserves. D) timberlands.
A) land improvements.
Free cash flow equals cash provided by A) operations less capital expenditures and cash dividends. B) operations less cash dividends. C) investing activities less capital expenditures and cash dividends. D) operations less capital expenditures.
A) operations less capital expenditures and cash dividends.
Blank checks A) should be safeguarded. B) should be pre-signed. C) do not need to be safeguarded since they must be signed to be valid. D) should not be prenumbered.
A) should be safeguarded.
Pickett Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 90,000 subscriptions in January at $15 each. What entry is made in January to record the sale of the subscriptions? A) Subscriptions Receivable 1,35000 Subscription Revenue 1,35000 B) Cash 1,350,000 Unearned Subscription Revenue 1,350,000 C) Subscriptions Receivable 225,000 Unearned Subscription Revenue 225,000 D) Prepaid Subscriptions 1,350,000 Cash 1,350,000
B) Cash 1,350,000 Unearned Subscription Revenue 1,350,000 Feedback: $90,000 × $15 = $1,350,000
On December 1, 2014, Crawley Corporation incurs a 15-year $600,000 mortgage liability in conjunction with the acquisition of an office building. This mortgage is payable in monthly installments of $7,200, which include interest computed at the rate of 12% per year. The first monthly payment is made on December 31, 2014. The portion of the second monthly payment made on January 31, 2015, which represents repayment of principal is: A) $1,200. B) $1,212. C) $7,200. D) $5,988.
B) $1,212. Feedback: $600,000 × .01 = $6,000; [$600,000 - ($7,200 - $6,000)] × .01 = $5,988; $7,200 - $5,988 = $1,212
Conrad Company reported the following balances at June 30, 2015: Sales Revenue $16,200 Sales Returns and Allowances 600 Sales Discounts 300 Cost of Goods Sold 7,500 Net sales for the month is A) $7,800 B) $15,300. C) $15,600. D) $16,200.
B) $15,300. Feedback: $16,200 - $600 - $300 = $15,300
Romanoff Industries had the following inventory transactions occur during 2015: Units Cost/unit 2/1/15 Purchase 54 $45 3/14/15 Purchase 93 $47 5/1/15 Purchase 66 $49 The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's gross profit using FIFO? (rounded to whole dollars) A) $3,318 B) $3,552 C) $6,948 D) $7,182
B) $3,552 Feedback: (54 × $45) + (93 × $47) + [(150 - 147) × $49] = $6,948; (150 × $70) - $6,948 = $3,552
The net income reported on the income statement for the current year was $245,000. Depreciation was $40,000. Account receivable and inventories decreased by $12,000 and $35,000, respectively. Prepaid expenses and accounts payable increased, respectively, by $1,000 and $8,000. How much cash was provided by operating activities? A) $296,000 B) $339,000 C) $323,000 D) $311,000
B) $339,000 Feedback: $245,000 + $40,000 + $12,000 + $35,000 - $1,000 + $8,000 = $339,000
A company decides to exchange its old machine and $231,000 cash for a new machine. The old machine has a book value of $189,000 and a fair value of $210,000 on the date of the exchange. The cost of the new machine would be recorded at A) $420,000. B) $441,000. C) $399,000. D) cannot be determined.
B) $441,000. Feedback: $231,000 + $210,000 = $441,000
Bush Company reported net income of $60,000 for the year. During the year, accounts receivable decreased by $8,000, accounts payable increased by $4,000 and depreciation expense of $5,000 was recorded. Net cash provided by operating activities for the year is A) $48,000. B) $77,000. C) $59,000. D) $55,000.
B) $77,000. Feedback: $60,000 + $8,000 + $4,000 + $5,000 = $77,000
Schwartzman Co., makes a credit card sale to a customer for $800. The credit card sale has a grace period of 30 days and then an interest charge of 1.5% per month is added to the balance. If the unpaid balance on the above sale is $640 at the end of the grace period, the interest charge is A) $6.40. B) $9.60. C) $11.00. D) $16.00.
B) $9.60. Feedback: $640 × .015 = $9.60
Which of the following statements regarding the effective-interest method of accounting for bonds characteristics is false? A) GAAP always requires use of the effective interest method. B) The amount of periodic interest expense decreases over the life of a discounted bond issue when the effective-interest method is used. C) Over the life of the bonds, the carrying value increases for discounted bonds when using the effective-interest method. D) The effective-interest method applies a constant percentage to the bond carrying value to compute interest expense.
B) The amount of periodic interest expense decreases over the life of a discounted bond issue when the effective-interest method is used.
During 2015, Rathke Corporation reported net sales of $3,000,000, net income of $1,200,000, and depreciation expense of $100,000. Rathke also reported beginning total assets of $1,000,000, ending total assets of $1,500,000, plant assets of $800,000, and accumulated depreciation of $500,000. Rathke's asset turnover is A) 3 times. B) 2.4 times. C) 2.0 times. D) .96 times.
B) 2.4 times. Feedback: $3,000,000 ÷ [($1,000,000 + $1,500,000) ÷ 2] = 2.4
The following financial statement information is available for Buil Corporation: 2015 2014 Inventory $ 44,000 $ 43,000 Current assets 80,000 106,000 Total assets 432,000 358,000 Current liabilities 25,000 36,000 Total liabilities 102,000 88,000 The current ratio for 2015 is A) .31:1. B) 3.2:1. C) 1.5:1. D) 4.24:1.
B) 3.2:1. Feedback: $80,000 ÷ $25,000 = 3.2 : 1
North Company reports the following amounts for 2015: Net income $ 160,000 Average stockholders' equity 2,000,000 Preferred dividends 45,000 Par value preferred stock 250,000 The 2015 rate of return on common stockholders' equity is: A) 5.8%. B) 6.6%. C) 8.0%. D) 9.1%.
B) 6.6%. Feedback: ($160,000 - $45,000) ÷ ($2,000,000 - $250,000) = 6.6
The following information pertains to Rural Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Assets Cash and short-term investments $ 40,000 Accounts receivable (net) 30,000 Inventory 40,000 Property, plant and equipment 220,000 Total Assets $330,000 Liabilities and Stockholders' Equity Current liabilities $ 60,000 Long-term liabilities 70,000 Stockholders' equity—common 200,000 Total Liabilities and Stockholders' Equity $330,000 Income Statement Sales $ 90,000 Cost of goods sold 44,000 Gross profit 46,000 Operating expenses 30,000 Net income $ 16,000 Number of shares of common stock 5,000 Market price of common stock $22 Dividends per share 1.00 What is the return on common stockholders' equity for Rural? A) 4.8% B) 8% C) 37.5% D) 16%
B) 8% Feedback: $16,000 ÷ $200,000 = 8%
Which of the following is a constraint in accounting? A) Comparability. B) Cost. C) Consistency. D) Relevance.
B) Cost.
Sebastian Belle, CPA, has billed her clients for services performed. She subsequently receives payments from her clients. What entry will Sebastian make upon receipt of the payments? A) Debit Unearned Service Revenue and credit Service Revenue B) Debit Cash and credit Accounts Receivable C) Debit Accounts Receivable and credit Service Revenue D) Debit Cash and credit Service Revenue
B) Debit Cash and credit Accounts Receivable
Which of the following is not one of the main factors that contribute to fraudulent activity? A) Opportunity. B) Incompatible duties. C) Financial Pressure. D) Rationalization.
B) Incompatible duties.
In a period of inflation, the cost flow method that results in the lowest income taxes is the A) FIFO method. B) LIFO method. C) average-cost method. D) gross profit method.
B) LIFO method.
On January 2, 2015, Superchunk purchased a general liability insurance policy for $2,700 for coverage for the calendar year. The entire $2,700 was charged to Insurance Expense on January 2, 2015. If the firm prepares monthly financial statements, the proper adjusting entry on January 31, 2015, will be: A) Insurance Expense 2,475 Prepaid Insurance 2,475 B) Prepaid Insurance 2,475 Insurance Expense 2,475 C) Insurance Expense 225 Prepaid Insurance 225 D) Prepaid Insurance 225 Insurance Expense 225
B) Prepaid Insurance 2,475 Insurance Expense 2,475 Feedback: $2,700 × 11/12 = $2,475
Which of the following would not result in unearned revenue? A) Rent collected in advance from tenants B) Services performed on account C) Sale of season tickets to football games D) Sale of two-year magazine subscriptions
B) Services performed on account
Liabilities are classified on the balance sheet as current or A) deferred. B) unearned. C) long-term. D) accrued.
C) long-term.
In performing a vertical analysis, the base for cost of goods sold is A) total selling expenses. B) net sales. C) total revenues. D) total expenses.
B) net sales.
On the dividend record date, A) a dividend becomes a current obligation. B) no entry is required. C) an entry may be required if it is a stock dividend. D) Dividends Payable is debited.
B) no entry is required.
The receivable that is usually evidenced by a formal instrument of credit is a(n) A) trade receivable. B) note receivable. C) accounts receivable. D) income tax receivable.
B) note receivable.
A stockholder who receives a stock dividend would A) expect the market price per share to increase. B) own more shares of stock. C) expect retained earnings to increase. D) expect the par value of the stock to change.
B) own more shares of stock.
When two accounts are required in one journal entry, the entry is referred to as a A) balanced entry. B) simple entry. C) posting. D) nominal entry.
B) simple entry.
In addition to the three basic financial statements, which of the following is also a required financial statement? A) the "Cash Budget" B) the Statement of Cash Flows C) the Statement of Cash Inflows and Outflows D) the "Cash Reconciliation"
B) the Statement of Cash Flows
In performing a vertical analysis, the base for prepaid expenses is A) total current assets. B) total assets. C) total liabilities and stockholders' equity. D) prepaid expenses.
B) total assets.
A lawyer collected $710 of legal fees in advance. He erroneously debited Cash for $170 and credited Accounts Receivable for $170. The correcting entry is A) Cash 170 Accounts Receivable 540 Unearned Service Revenue 710 B) Cash 710 Service Revenue 710 C) Cash 540 Accounts Receivable 170 Unearned Service Revenue 710 D) Cash 540 Accounts Receivable 540
C) Cash 540 Accounts Receivable 170 Unearned Service Revenue 710 Feedback: $710 - $170 = $540
The entry to record an installment payment on a long-term note payable is A) Mortgage Payable Cash B) Interest Expense Cash C) Mortgage Payable Interest Expense Cash D) Bonds Payable Cash
C) Mortgage Payable Interest Expense Cash
On February 1, Ville Company received a $6,000, 5%, four-month note receivable. The cash to be received by Ville Company when the note becomes due is A) $100. B) $6,000. C) $6,100. D) $6,300.
C) $6,100. Feedback: $6,000 + ($6,000 × .05 × 4/12) = $6,100
Ale Company has other operating expenses of $80,000. There has been a decrease in prepaid expenses of $6,000 during the year, and accrued liabilities are $5,000 larger than in the prior period. What were Ale's cash payments for operating expenses? A) $81,000 B) $82,000 C) $69,000 D) $80,000
C) $69,000 Feedback: $80,000 - $6,000 - $5,000 = $69,000
Matador Company purchases $1,300 of equipment from Danger Mouse Inc. for cash. The effect on the components of the basic accounting equation of Matador Company is A) an increase in assets and liabilities. B) a decrease in assets and liabilities. C) no change in total assets. D) an increase in assets and a decrease in liabilities.
C) no change in total assets.
Using the following information: 12/31/14 Accounts receivable $525,000 Allowance (35,000) Cash realizable value $490,000 During 2015, sales on account were $145,000 and collections on account were $100,000. Also during 2015, the company wrote off $4,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that uncollectible accounts should be estimated at $40,000. Bad debt expense for 2015 is A) $4,000. B) $5,000. C) $9,000 D) $40,000.
C) $9,000 Feedback: $40,000 - ($35,000 - $4,000) = $9,000
On January 1, 2015, Donahue Company, a calendar-year company, issued $600,000 of notes payable, of which $150,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2015, is A) Current Liabilities, $600,000. B) Long-term Debt , $600,000. C) Current Liabilities, $150,000; Long-term Debt, $450,000. D) Current Liabilities, $450,000; Long-term Debt, $150,000.
C) Current Liabilities, $150,000; Long-term Debt, $450,000. Feedback: $600,000 - $150,000 = $450,000
Which of the following is a true statement about closing the books of a corporation? A) Expenses are closed to the Expense Summary account. B) Only revenues are closed to the Income Summary account. C) Revenues and expenses are closed to the Income Summary account. D) Revenues, expenses, and the dividends account are closed to the Income Summary account.
C) Revenues and expenses are closed to the Income Summary account.
When constructing a worksheet, accounts are often needed that are not listed in the trial balance already entered on the worksheet from the ledger. Where should these additional accounts be shown on the worksheet? A) They should be inserted in alphabetical order into the trial balance accounts already given. B) They should be inserted in chart of account order into the trial balance already given. C) They should be inserted on the lines immediately below the trial balance totals. D) They should not be inserted on the trial balance until the next accounting period.
C) They should be inserted on the lines immediately below the trial balance totals.
Evidence that would not help with determining the effects of a transaction on the accounts would be a(n) A) cash register sales tape. B) bill. C) advertising brochure. D) check.
C) advertising brochure.
The periodicity assumption states that the economic life of a business can be divided into A) equal time periods. B) cyclical time periods. C) artificial time periods. D) perpetual time periods.
C) artificial time periods.
In Lynne Company, there was an increase in the land account during the year of $43,000. Analysis reveals that the change resulted from a cash sale of land at cost $115,000, and a cash purchase of land for $158,000. In the statement of cash flows, the change in the land account should be reported in the investment section: A) as a net purchase of land, $43,000. B) only as a purchase of land $158,000. C) as a purchase of land $158,000 and a sale of land $115,000. D) only as a sale of land $115,000.
C) as a purchase of land $158,000 and a sale of land $115,000.
The inventory turnover is computed by dividing cost of goods sold by A) beginning inventory. B) ending inventory. C) average inventory. D) 365 days.
C) average inventory.
A gain on sale of a plant asset occurs when the proceeds of the sale are greater than the A) salvage value of the asset sold. B) market value of the asset sold. C) book value of the asset sold. D) accumulated depreciation on the asset sold.
C) book value of the asset sold.
Bonds that may be exchanged for common stock at the option of the bondholders are called A) options. B) stock bonds. C) convertible bonds. D) callable bonds.
C) convertible bonds.
Liabilities of a company are owed to A) debtors. B) benefactors. C) creditors. D) underwriters.
C) creditors.
A supplier to a company would be most interested in the company's A) asset turnover. B) profit margin. C) current ratio. D) earnings per share.
C) current ratio.
A small company may be able to justify using a cash basis of accounting if they have A) sales under $1,000,000. B) no accountants on staff. C) few receivables and payables. D) all sales and purchases on account.
C) few receivables and payables.
Receivables might be sold to A) lengthen the cash-to-cash operating cycle. B) take advantage of deep discounts on the cash realizable value of receivables. C) generate cash quickly. D) finance companies at an amount greater than cash realizable value.
C) generate cash quickly.
If $250,000 of bonds are issued during the year but $130,000 of old bonds are retired during the year, the statement of cash flows will show a(n) A) net increase in cash of $120,000. B) net decrease in cash of $120,000. C) increase in cash of $250,000 and a decrease in cash of $130,000. D) net gain on retirement of bonds of $120,000.
C) increase in cash of $250,000 and a decrease in cash of $130,000.
Premium on Bonds Payable A) has a debit balance. B) is a contra account. C) is considered to be a reduction in the cost of borrowing. D) is deducted from bonds payable on the balance sheet.
C) is considered to be a reduction in the cost of borrowing.
A liquidity ratio measures the A) income or operating success of an enterprise over a period of time. B) ability of the enterprise to survive over a long period of time. C) short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash. D) number of times interest is earned.
C) short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash.
The journal entry to record a credit sale of merchandise is A) Cash Sales Revenue B) Cash Service Revenue C) Accounts Receivable Service Revenue D) Accounts Receivable Sales Revenue
D) Accounts Receivable Sales Revenue
If a corporation issued $4,000,000 in bonds which pay 10% annual interest, what is the annual net cash cost of this borrowing if the income tax rate is 30%? A) $4,000,000 B) $120,000 C) $400,000 D) $280,000
D) $280,000 Feedback: $4,000,000 × .10 × (1 - .30) = $280,000
Rouse Corporation's December 31, 2015 balance sheet showed the following: 8% preferred stock, $10 par value, cumulative, 20,000 shares authorized; 15,000 shares issued $ 150,000 Common stock, $10 par value, 2,000,000 shares authorized; 1,950,000 shares issued, 1,930,000 shares outstanding 19,500,000 Paid-in capital in excess of par—preferred stock 60,000 Paid-in capital in excess of par—common stock 24,000,000 Retained earnings 7,650,000 Treasury stock (20,000 shares) 630,000 Rouse's total stockholders' equity was A) $51,990,000. B) $43,710,000. C) $51,360,000. D) $50,730,000.
D) $50,730,000. Feedback: $150,000 + $19,500,000 + $60,000 + $24,000,000 + $7,650,000 - $630,000 = $50,730,000
Crawford Company has total proceeds (before segregation of sales taxes) from sales of $7,155. If the sales tax is 6%, the amount to be credited to the account Sales Revenue is: A) $7,155. B) $6,726. C) $7,584. D) $6,750.
D) $6,750. Feedback: $7,155/(1 + .06) = $6,750
Presto Company purchased equipment and these costs were incurred: Cash price $65,000 Sales taxes 3,600 Insurance during transit 640 Installation and testing 860 Total costs $70,100 Presto will record the acquisition cost of the equipment as A) $65,000. B) $68,600. C) $69,240. D) $70,100.
D) $70,100. Feedback: $65,000 + $3,600 + $640 + $860 = $70,100
An accountant has debited an asset account for $1,300 and credited a liability account for $500. Which of the following would be an incorrect way to complete the recording of the transaction? A) Credit an asset account for $800. B) Credit another liability account for $800. C) Credit a Stockholders' account for $800. D) Debit a Stockholders' account for $800.
D) Debit a Stockholders' account for $800.
Pavement Company purchased a truck from Bee Thousand Corp. by issuing a 6-month, 8% note payable for $90,000 on November 1. On December 31, the accrued expense adjusting entry is A) No entry is required. B) Interest Expense 7,200 Interest Payable 7,200 C) Interest Expense 3,600 Interest Payable 3,600 D) Interest Expense 1,200 Interest Payable 1,200
D) Interest Expense 1,200 Interest Payable 1,200 Feedback: $90,000 × .08 × 2/12 = $1,200
If a corporation declares a 10% stock dividend on its common stock, the account to be debited on the date of declaration is A) Common Stock Dividends Distributable. B) Common Stock. C) Paid-in Capital in Excess of Par. D) Retained Earnings
D) Retained Earnings
Which of the following statements is not true when a fully depreciated plant asset is retired? A) The plant asset's book value is equal to its estimated salvage value. B) The accumulated depreciation account is debited. C) The asset account is credited. D) The plant asset's original cost equals its book value.
D) The plant asset's original cost equals its book value.
Treasury stock is A) stock issued by the U.S. Treasury Department. B) stock purchased by a corporation and held as an investment in its treasury. C) corporate stock issued by the treasurer of a company. D) a corporation's own stock which has been reacquired but not retired.
D) a corporation's own stock which has been reacquired but not retired.
The average collection period for accounts receivable is computed by dividing 365 days by A) net credit sales. B) average accounts receivable. C) ending accounts receivable. D) accounts receivable turnover.
D) accounts receivable turnover.
Beethoven Company provided consulting services and billed the client $3,100. As a result of this event, A) assets remained unchanged. B) assets increased by $3,100. C) stockholders' equity increased by $3,100. D) assets and stockholders' equity both increased by $3,100.
D) assets and stockholders' equity both increased by $3,100.
In the stockholders' equity section of the balance sheet, the classification of capital stock consists of A) additional paid-in capital and common stock. B) common stock and treasury stock. C) common stock, preferred stock, and treasury stock. D) common stock and preferred stock.
D) common stock and preferred stock.
The income statement for the month of June, 2015 of Camera Obscura Enterprises contains the following information: Revenues $7,000 Expenses: Salaries and Wages Expense $3,000 Rent Expense 1,500 Advertising Expense 800 Supplies Expense 300 Insurance Expense 100 Total expenses 5,700 Net income $1,300 The entry to close the revenue account includes a A) debit to Income Summary for $1,300. B) credit to Income Summary for $1,300. C) debit to Income Summary for $7,000. D) credit to Income Summary for $7,000.
D) credit to Income Summary for $7,000.
The ratios that are used to determine a company's short-term debt paying ability are A) asset turnover, times interest earned, current ratio, and accounts receivable turnover. B) times interest earned, inventory turnover, current ratio, and accounts receivable turnover. C) times interest earned, acid-test ratio, current ratio, and inventory turnover. D) current ratio, acid-test ratio, accounts receivable turnover, and inventory turnover.
D) current ratio, acid-test ratio, accounts receivable turnover, and inventory turnover.
The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to A) decrease total liabilities and stockholders' equity. B) increase total expenses and total liabilities. C) increase total assets and stockholders' equity. D) decrease total assets and stockholders' equity.
D) decrease total assets and stockholders' equity.
A basic assumption of accounting that requires activities of an entity be kept separate from the activities of its owner is referred to as the A) stand alone concept. B) monetary unit assumption. C) corporate form of ownership. D) economic entity assumption.
D) economic entity assumption.
Land acquired from the issuance of common stock is reported A) as a financing activity. B) as an investing activity. C) as an operating activity. D) in a separate schedule at the bottom of the statement of cash flows.
D) in a separate schedule at the bottom of the statement of cash flows.
A 30-day note dated June 18 has a maturity date of A) July 19. B) July 18. C) July 17. D) July 16.
Feedback: 30 - (30 - 18) = 18 B) July 18.
If an account is collected after having been previously written off, A) the allowance account should be debited. B) only the control account needs to be credited. C) both income statement and balance sheet accounts will be affected. D) there will be both a debit and a credit to accounts receivable.
D) there will be both a debit and a credit to accounts receivable.
The following information is available for Everett Company at December 31, 2015: beginning inventory $80,000; ending inventory $120,000; cost of goods sold $1,050,000; and sales $1,800,000. Everett's inventory turnover in 2015 is A) 8.7 times. B) 10.5 times. C) 13.2 times. D) 18 times.
Feedback: $1,050,000 ÷ [($80,000 + $120,000) ÷ 2] = 10.5 B) 10.5 times.
On July 1, Runner's Sports Store paid $14,000 to Corona Realty for 4 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by Runner's Sports Store is A) Debit Rent Expense, $14,000; Credit Prepaid Rent, $3,500. B) Debit Prepaid Rent, $3,500; Credit Rent Expense, $3,500. C) Debit Rent Expense, $3,500; Credit Prepaid Rent, $3,500. D) Debit Rent Expense, $14,000; Credit Prepaid Rent, $14,000.
Feedback: $14,000 ÷ 4 = $3,500 C) Debit Rent Expense, $3,500; Credit Prepaid Rent, $3,500.
In the month of November, Kinsey Company Inc. wrote checks in the amount of $18,500. In December, checks in the amount of $25,316 were written. In November, $16,936 of these checks were presented to the bank for payment, and $21,766 were presented in December. What is the amount of outstanding checks at the end of November? A) $1,564 B) $4,830 C) $5,114 D) $6,816
Feedback: $18,500 - $16,936 = $1,564 A) $1,564
In the month of November, Kinsey Company Inc. wrote checks in the amount of $27,750. In December, checks in the amount of $37,974 were written. In November, $25,404 of these checks were presented to the bank for payment, and $32,649 were presented in December. What is the amount of outstanding checks at the end of December? A) $2,346 B) $7,245 C) $7,671 D) $10,224
Feedback: $27,750 + $37,974 - ($25,404 + $32,649) = $7,671 C) $7,671
McKendrick Shoe Store has a beginning inventory of $45,000. During the period, purchases were $195,000; purchase returns, $6,000; and freight-in $15,000. A physical count of inventory at the end of the period revealed that $30,000 was still on hand. The cost of goods available for sale was A) $189,000. B) $204,000. C) $219,000. D) $249,000.
Feedback: $45,000 + $195,000 - $6,000 + $15,000 = $249,000 D) $249,000.
On March 8, Black Candy Company bought supplies on account from the Arcade Fire Company for $550. Black Candy Company incorrectly debited Equipment for $500 and credited Accounts Payable for $500. The entries have been posted to the ledger. the correcting entry should be: A) Supplies 550 Accounts Payable 550 B) Supplies 550 Accounts Payable 500 Equipment 50 C) Supplies 550 Equipment 550 D) Supplies 550 Equipment 500 Accounts Payable 50
Feedback: $550 - $500 = $50 D) Supplies 550 Equipment 500 Accounts Payable 50
If a check correctly written and paid by the bank for $584 is incorrectly recorded on the company's books for $548, the appropriate treatment on the bank reconciliation would be to A) deduct $36 from the book's balance. B) add $36 to the book's balance. C) deduct $36 from the bank's balance. D) deduct $584 from the book's balance.
Feedback: $584 - $548 = $36 A) deduct $36 from the book's balance.
Delmar Company had beginning inventory of $90,000, ending inventory of $110,000, cost of goods sold of $600,000, and sales of $960,000. Delmar's days in inventory is: A) 38.0 days. B) 54.3 days. C) 60.8 days. D) 67.5 days.
Feedback: $600,000 ÷ [($90,000 + $110,000) ÷ 2] = 6; 365 ÷ 6 = 60.8 C) 60.8 days.
Jack Company provides for bad debt expense at the rate of 2% of credit sales. The following data are available for 2015: Allowance for doubtful accounts, 1/1/15 (Cr.) $ 12,000 Accounts written off as uncollectible during 2015 9,000 Credit sales in 2015 1,200,000 The Allowance for Doubtful Accounts balance at December 31, 2015, should be A) $3,000. B) $21,000. C) $24,000. D) $27,000.
Feedback: ($1,200,000 × .02) + ($12,000 - $9,000) = $27,000 D) $27,000.
H. Hunter Company's records indicate the following information for the year: Merchandise inventory, 1/1 $ 550,000 Purchases 2,250,000 Net sales 3,200,000 On December 31, a physical inventory determined that ending inventory of $500,000 was in the warehouse. H. Hunter's gross profit on sales has remained constant at 30%. H. Hunter suspects some of the inventory may have been taken by some new employees. At December 31, what is the estimated cost of missing inventory? A) $60,000 B) $100,000 C) $150,000 D) $1,340,000
Feedback: ($550,000 + $2,250,000) - ($3,200,000 × .70) = $560,000; $560,000 - $500,000 = $60,000 A) $60,000
During July, the following purchases and sales were made by Big Dan Company. There was no beginning inventory. Big Dan Company uses a perpetual inventory system. Purchases Sales July 3 40 units @ $12 July 13 50 units 11 40 units @ $13 22 20 units 20 30 units @ $15 Under the FIFO method, the cost of goods sold for each sale is: July 13 July 22 A) $600 $240 B) 610 260 C) 650 260 D) 750 300
Feedback: (40 × $12) + [(50 - 40) × $13] = $610; 20 × $13 = $260 B) 610 260
