Accounting Midterms
Provided below is a list of important users of accounting information. Below the list are descriptions of a major need of each of the various users. Match the one user group that is most likely to have the need described to the right side. - Company Management - Labor Union - The profitability of each division of the company - The exact amount of profit on each product of the company - The company's profitability since the last work force contract was signed
* Company Management - The profitability of each division of the company - The exact amount of profit on each product of the company * Labor Union - The company's profitability since the last work force contract was signed
For each item listed, select the section of the balance sheet in which the item would be reported. Answers may be used more than once. - Current Assets - Property, Plant, Equipment - Current Liabilities - Long-Term Liabilities - Interest payable - Bonds payable - Computer used within the business - Computer available for resale
* Current Assets - Computer available for resale * Property, Plant, Equipment - Computer used within the business * Current Liabilities - Interest payable * Long-Term Liabilities - Bonds payable
Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement. - Current Liabilities (balance sheet) - Operating Revenue (income statement) - Operating Expenses (income statement) - service revenues - wages payable - costs of goods sold
* Current Liabilities - Wages payable * Operating Revenue - Service revenues * Operating Expenses - Cost of goods sold
Each account has a normal balance. For the following list of accounts, indicate whether the normal balance of each is a debit or a credit. - Debit - Credit - Investments - Capital Stock - Advertising Fees Earned - Wages and Salaries Expense
* Debit - Investments - Wages and Salaries Expense * Credit - Capital Stock - Advertising Fees Earned
Match the following choices to the listed situation. - Deferred expense - Deferred revenue - Accrued liability - Accrued asset - One year's premium on truck insurance was paid in advance. - Cash was collected from customers for rental of tents for next year. - A warehouse building was acquired for cash. - Income taxes are owed to the federal government at year-end. - Rent is owed by a tenant but not yet collected.
* Deferred expense - One year's premium on truck insurance was paid in advance. - A warehouse building was acquired for cash. * Deferred revenue -Cash was collected from customers for rental of tents for next year. * Accrued liability - Income taxes are owed to the federal government at year-end. * Accrued asset - Rent is owed by a tenant but not yet collected.
For each transaction, match the type of adjustment that would be required. - Deferred expense - Deferred revenue - Accrued liability - Accrued asset - Amounts earned but not received from customers are recorded. - Magazine subscriptions are delivered during the current period, although customers paid in a previous period. - Interest is incurred on money borrowed from the bank, but not yet paid. - The depreciation on office equipment used during the current year is recorded. - The cost of commissions to salesmen that has been earned, but not paid, at the end of the accounting period is recorded.
* Deferred expense - The depreciation on office equipment used during the current year is recorded. * Deferred revenue - Magazine subscriptions are delivered during the current period, although customers paid in a previous period. * Accrued Liability - Interest is incurred on money borrowed from the bank, but not yet paid. - The cost of commissions to salesmen that has been earned, but not paid, at the end of the accounting period is recorded. * Accrued asset - Amounts earned but not received from customers are recorded.
Identify which of the following would be recorded as external events, recorded as internal events, or not recorded. - Internal event - External event - Not recorded - The company hires a new secretary. - A customer pays its open account. - A vendor for a company's supplies is paid an amount owed on account. - The company transfers work in process to finished goods inventory.
* Internal Event - The company transfers work in process to finished goods inventory. *External Event - A customer pays its open account - A vendor for a company's supplies is paid an amount owed on account * Not recorded - The company hires a new secretary
Choose from the following list of account titles the one that most accurately fits the description of that account or is an example of that account. An account title may be used more than once or not at all. - Investments - Taxes Payable - Preferred Stock - Accounts Receivable - Notes Payable - A written obligation to repay a fixed amount, with interest, at some time in the future - A plot of land held for speculation - An amount owed by a customer -Corporate income taxes owed to the state government - Ownership in a company that allows the owner to receive dividends before common shareholders receive any distributions
* Investments - A plot of land held for speculation * Taxes Payable - Corporate income taxes owed to the state government * Preferred Stock - Ownership in a company that allows the owner to receive dividends before common shareholders receive any distributions * Accounts Receivable - An amount owed by a customer * Notes Payable - A written obligation to repay a fixed amount, with interest, at some time in the future.
From the list of accounts below, determine whether the account would be a nominal account or a real account. - Nominal Account - Real Account - Cash - Sales Revenue - Office Equipment - Depreciation Expense
* Nominal Account - Sales Revenue - Depreciation Expense *Real Account - Cash - Office Equipment
From the list of accounts below, determine whether the account would be a nominal account or a real account. - Nominal Account - Real Account - Prepaid Rent - Unearned Revenue - Utilities Expense - Interest Payable
* Nominal Account - Utilities Account * Real Account - Prepaid rent - Unearned Revenue - Interest Payable
From the following list, select the proper section from the statement of cash flows in which it would be classified. - Operating Activities - Investing Activities - Paid income taxes - Received cash from selling goods to customers - Sold equipment no longer used in the business - Paid suppliers cash for inventory purchased
* Operating Activities - Paid Income Taxes - Received cash from selling goods to customers - Paid suppliers cash for inventory purchased * Investing Activities - Sold equipment no longer used in the business
Choose from the following list of account titles the one that most accurately fits the description of that account or is an example of that account. An account title may be used more than once or not at all. - Prepaid Asset - Retained Earnings - Buildings - A warehouse used to store equipment - Claims by the owner on the undistributed net income of a business - Rent paid on an office building in advance of use of the facility
* Prepaid Asset - Rent paid on an office building in advance of use of the facility * Retained Earnings - Claims by the owner on the undistributed net income of a business * Buildings - A warehouse used to store equipment
Select the correct revenue recognition principle for each of the following. - Recognize revenue over the passage of time. - Recognize revenue when the customer takes possession of the product. - Recognize revenue when cash is collected. - Recognize revenue when service is performed. - Interest revenue - Rent revenue - Revenue from a customer's subscription to a magazine - Merchandise revenue - Revenue from providing carpet cleaning services
* Recognize revenue over the passage of time. - Interest revenue - rent revenue - Revenue from a customer's subscription to a magazine * Recognize revenue when the customer takes possession of the product. - Merchandise revenue * Recognize revenue when cash is collected. - None * Recognize revenue when service is performed. - revenue from providing carpet cleaning services
Match the following business forms with their characteristics below - Sole proprietorship - Partnership - Corporation - Must file articles of incorporation with the state - Easy to raise large sums of money - Single owner - Need an agreement about contributions to the business
* Sole Proprietorship - Single Owner * Partnership - Need an agreement about contributions to the business * Corporation - Must file articles of incorporation with the state. - Easy to raise large sums of money.
Match the following business forms with their characteristics below. - Sole proprietorship - Partnership - Corporation - Usually owned and operated by the same person - Owned by two or more individuals - Control most private resources in the U.S. - A share of stock acts as evidence of ownership.
* Sole Proprietorship - Usually owned and operated by the same person * Partnership - Owned by two or more individuals * Corporation - Control most private resources in the U.S. - A share of stock acts as evidence of ownership.
Provided below is a list of important users of accounting information. Below the list are descriptions of a major need of each of the various users. Match the one user group that is most likely to have the need described to the right side. - Stockholder - Internal Revenue Service - Securities and Exchange Commission - The prospects for future dividend payments - The financial status of a company issuing securities to the public for the first time - The profitability of the company based upon the Internal Revenue Code
* Stockholder - The prospects for future dividend payments * Internal Revenue Service - The profitability of the company based upon the Internal Revenue Code * Securities and Exchange Commission - The financial status of a company issuing securities to the public for the first time
From the following choices, select the answer that describes the effect on working capital as a result of the transaction. - Working capital will increase -Working capital will not change - Borrowed cash using a long-term note - Borrowed cash using a six-month note - Collected an account receivable
* Working capital will increase - Borrowed cash using a long-term note * Working capital will not change - Borrowed cash using a six-month note - Collected an account receivable
For each of the following accounts, indicate whether it is a balance sheet account or an income statement account. - Balance sheet account - Income statement account - Income taxes expense - Accounts receivable - Accounts payable - Retained earnings
*Balance sheet account - Accounts Receivable - Accounts Payable - Retained Earnings * Income statement account - Income Taxes Expense
A debit is a negative entry. True False
False
Debits are good and credits are bad in financial terms. True False
False
Every business transaction is recorded by a debit to a balance sheet account and a credit to an income statement account. True False
False
Expense accounts are closed or zeroed out in the closing process. True False
False
Since there is a lack of a profit motive in nonbusiness entities, they do not need information provided by an accounting system. True False
False
The SEC created the objectives of financial reporting. True False
False
The concept of conservatism is the capacity of information to make a difference in a decision. True False
False
The general journal is often used to record repetitive transactions. True False
False
The purpose of financial reporting is to provide economic information to external decision makers only. True False
False
The quality of accounting information that makes it comprehensible to those willing to spend the necessary time is consistency. True False
False
A partnership is a business owned by two or more individuals. True False
True
Assets can be tangible or intangible in nature. True False
True
Capital stock indicates the owners' contributions to a corporation. True False
True
The amount of a transaction may be immaterial by company standards but still be considered significant by financial statement users. True False
True
Monaco & Associates Use the following five transactions for Monaco & Associates to answer the following question. Oct. 1 Bills are sent to clients for services provided in September in the amount of $800. 9 Dravo Co. delivers office furniture ($1,060) and office supplies ($160) to Monaco leaving an invoice for $1,220. 15 Payment is made to Dravo Co. for the furniture and office supplies delivered on October 9. 23 A bill for $430 for electricity for the month of September is received and will be paid on its due date in November. 31 Salaries of $850 are paid to employees. See the transactions for Monaco & Associates. The journal entry to record the October 1 transaction will include a debit of $800 to a. Accounts Receivable. b. Sales Revenue. c. Cash. d. Retained Earnings.
a. Accounts Receivable.
A list of all accounts and their balances that is used to prove the equality of debits and credits as of a specific date is a(n) a. trial balance. b. chart of accounts. c. general journal. d. account.
a. trial balance.
Which of the following items will be found in a corporate annual report? a. Management's statement that the auditors are responsible for the financial statements b. Notes to the financial statements c. Selected financial data from competitor companies d. Company budgets
b. Notes to the financial statements
When is revenue from the sale of merchandise normally recognized? a. When the merchandise is sold, if sold for cash, or when payment is received, if sold on credit b. On the date the sale is made c. When the customer pays for the merchandise d. Either on the date on which the sale occurs, or the date on which the customer pays
b. On the date the sale is made
Expenses originate from a. collecting cash from customers. b. using an asset or recognizing liabilities. c. incurring liabilities or providing services to customers. d. paying off liabilities.
b. using an asset or recognizing liabilities.
Which of the following is an organization that lends funds to a business entity and expects repayment of the funds? a. A stockholder b. An owner c. A creditor d. A partner
c. A creditor
Hennigan Company Use the five transactions below for Hennigan Rentals to answer the questions that follow. Dec. 1 Hennigan purchases two new saws on credit at $375 each. The saws are added to Hennigan's rental inventory. Payment is due in 30 days. 8 Hennigan accepts advance deposits for tool rentals of $75. 15 Hennigan receives a bill from Farmer's Electric Company for $150. Payment is due in 30 days. 20 Customers are charged $750 by Hennigan for tool rentals. Payment is due from the customers in 30 days. 31 Hennigan receives $500 in payments from the customers that were billed for rentals on December 20. Refer to the transactions for Hennigan Rentals. Based on the December 15 transaction, Farmer's Electric will record which of the following in its accounting records? a. A credit in Accounts Payable for $150 b. A debit in Accounts Payable for $150 c. A debit in Accounts Receivable for $150 d. A credit in Accounts Receivable for $150
c. A debit in Accounts Receivable for $150
Which statement summarizes the income earned and the dividends paid? a. Balance sheet b. Statement of cash flows c. Statement of retained earnings d. Income statement
c. Statement of retained earnings
Jogg Corp.'s plant operates five days per week with a daily payroll of $50,000. Employees are paid every Tuesday for the prior week's work (Monday through Friday). The last day of the month is Tuesday, April 30. What effect does the accrual at April 30 have on Jogg's net income? a. Increase by $150,000 b. Decrease by $150,000 c. Increase by $250,000 d. Decrease by $100,000
d. Decrease by $100,000
Why is the time period assumption required? a. The dollar is the monetary unit in the United States b. The federal government requires it c. Inflation exists d. External users of financial statements want statements that accurately reflect net income or earnings for a specific time period
d. External users of financial statements want statements that accurately reflect net income or earnings for a specific time period
Which one of the following groups is considered an internal user of financial statements? a. The labor union representing employees of a company that is involved in labor negotiations b. The financial analysts for a brokerage firm who are preparing recommendations for the firm's brokers on companies in a certain industry c. A bank reviewing a loan application from a corporation d. Factory managers who supervise production line workers
d. Factory managers who supervise production line workers
What are the two subtotals that distinguish the multiple-step income statement from the single-step income statement? a. Income before taxes and income taxes b. Total revenues and total expenses c. Total operating revenues and total operating expenses d. Income from operations and income before taxes
d. Income from operations and income before taxes
Income statement accounts are also known as which of the following? a. Closing accounts b. Real accounts c. Final accounts d. Nominal accounts
d. Nominal accounts
Which the following organizations is primarily responsible for establishing GAAP today? a. SEC b. IRS c. IASB d. None of these choices are correct.
d. None of these choices are correct.
Which of the following events (transactions) is an internal event for a business entity? a. An accountant receives cash payments from clients for services performed. b. An accountant purchases computer equipment to maintain business records and prepare legal documents. c. An accountant provides services for clients. d. Periodically, the historical cost of the computer equipment used by an accountant is recorded as depreciation expenses.
d. Periodically, the historical cost of the computer equipment used by an accountant is recorded as depreciation expenses.
An accountant describes the effects of an economic event on an entity by recording the transaction and reporting the amount on the financial statements. What is this called? a. Disclosure b. Measurement c. Matching d. Recognition
d. Recognition
Which one of the following items is correct concerning the time element of financial statements? a. Both the income statement and the balance sheet cover a period of time. b. The balance sheet covers a period of time. c. An income statement lists amounts at a specific point in time. d. The statement of retained earnings explains changes during a particular period.
d. The statement of retained earnings explains changes during a particular period.
Your bookkeeper is off for the day and you are trying to figure out what her last entry in the journal could be for. Unfortunately, she only recorded the debit side of the transaction as $4,400 to Accounts Payable. It is possible that this debit could correspond to a. a $4,400 issuance of the company's capital stock. b. a $4,400 sale to a customer. c. a purchase of equipment costing $4,400 on credit. d. a payment of $4,400 to a supplier to settle a balance due.
d. a payment of $4,400 to a supplier to settle a balance due.
If a work sheet is used, it is prepared a. before journalizing transactions. b. after recording and posting adjustments. c. after closing the accounts. d. before preparing financial statements.
d. before preparing financial statements.
The system of accounting in which there are at least two accounts affected in every transaction so that the accounting equation stays in balance is a(n) a. credit. b. journalizing. c. debit. d. double-entry system.
d. double-entry system.
Measurement of the economic effects on an entity involves each of the following except a. quantification of effects. b. selection of an appropriate unit of measure. c. identification of the attribute to be measured. d. recording the economic effects in the financial statements.
d. recording the economic effects in the financial statements.
For each item listed, select the section of the balance sheet in which the item would be reported. Answers may be used more than once. - Current Assets - Property, Plant, Equipment - Current Liabilities - Stockholders' Equity - Cash - Accounts payable - Retained earnings - Land
* Current Assets - Cash * Property, Plant, Equipment - Land * Current Liabilities - Accounts payable * Stockholders' Equity - Retained Earnings
Lucky Company purchased a truck at a cost of $12,000 in 2012. As of January 1, 2017, depreciation of $10,000 had been recorded on this asset. Depreciation expense for 2017 is $2,000. After the adjustments are recorded and posted at December 31, 2017, what is the carrying value of the truck? a. $0 b. $12,000 c. $2,000 d. $5,500
a. $0
Gear Shop purchased supplies at a cost of $1,000 during the year. At January 1, the beginning balance in the Supplies account was $300. At December 31, supplies on hand are $100. Determine supplies expense for the year. a. $1,200 b. $1,100 c. $1,300 d. $1,400
a. $1,200
Rosu Company has total current assets of $150,000 and total current liabilities of $50,000. What is the amount of working capital for Rosu Company? a. $100,000 b. $125,000 c. $200,000 d. $179,000
a. $100,000
Marvel Shoes Marvel Shoes reported the following items on its statement of cash flows for the current year: Net cash inflows from operating activities $ 70,000 Net cash outflows from investing activities (20,000) Net cash outflows from financing activities (40,000) Cash balance at the beginning of the year 30,000 Read the information about Marvel Shoes. What was the cash balance for Marvel Shoes at the end of the current year? a. $40,000 b. $30,000 c. $10,000 d. $70,000
a. $40,000
Wolfe Inc. Wolfe Inc. reports these account balances at January 1, 2017: Retained Earnings $ 49,000 Accounts Receivable 20,000 Accounts Payable 24,000 Capital Stock 185,000 Land 153,000 Cash 13,000 Equipment 20,000 Notes Payable 28,000 Buildings 80,000 See the account balances for Wolfe Inc. On January 31, Wolfe collected $12,000 of its accounts receivable and paid $11,000 on its note payable. On January 31, 2017, the total liabilities are a. $41,000. b. $56,000. c. $0. d. $30,000.
a. $41,000.
At December 31, 2017, the accounting records of Tasty Foods Corporation contain the following: Accounts payable $ 16,000 Accounts receivable $ 40,000 Land 240,000 Cash ? Capital stock ? Equipment 120,000 Building 180,000 Notes payable 190,000 Retained earnings 160,000 If capital stock is $260,000, what is the December 31, 2017 cash balance? a. $46,000 b. $86,000 c. $94,000 d. $506,000
a. $46,000
Which set of items below includes current assets? a. Cash, accounts receivable, inventory, and office supplies b. Net income, cash, office supplies, and inventory c. Accounts receivable, net income, inventory, and dividends d. Cash, accounts receivable, capital stock, and sales
a. Cash, accounts receivable, inventory, and office supplies
Which of the following statements is true concerning external users of financial information? a. External users rely on the financial statements to help make informed decisions. b. External users need detailed records of the business to make informed decisions. c. External users rely on management to tell them whether the company is a good investment. d. External users are primarily responsible for the preparation of financial statements.
a. External users rely on the financial statements to help make informed decisions.
Which of the following transactions affects the liabilities for Gravette, Inc.? a. Payment is made on a bank loan which Gravette had obtained six months ago. b. Supplies are purchased for cash by Gravette. c. The owners of Gravette invest $100,000 in the company. d. Gravette places an order for merchandise with a supplier; the merchandise will be shipped to Gravette in 60 days.
a. Payment is made on a bank loan which Gravette had obtained six months ago.
Which of the following statements best describes the term "revenues"? a. Revenues represent assets received from the sale of products or services. b. Revenues represent an outflow of assets resulting from the sale of goods or services. c. Revenues represent assets used or consumed in the sale of products or services. d. Revenues represent the dollar amount of bonds sold to the public.
a. Revenues represent assets received from the sale of products or services.
Which one of the following best describes the external auditor's report? a. The external auditor's report is an opinion. b. The external auditor's report must comply with both FASB and IASB standards. c. The external auditor's report is a statement of fact. d. The firms that provide external audit reports are restricted to 20 partners, based on authoritative standards issued by the PCAOB.
a. The external auditor's report is an opinion.
Payment is received from customers who were billed earlier for services provided for them. For this transaction, identify the effect on the accounting equation. a. There is no effect on the accounting equation as one asset account increases while another asset account decreases. b. Assets increase and liabilities increase. c. Assets increase and stockholders' equity increases. d. Liabilities increase and stockholders' equity decreases.
a. There is no effect on the accounting equation as one asset account increases while another asset account decreases.
One effect on the accounting equation when a firm borrows money is that a. assets increase. b. liabilities decrease. c. stockholders' equity decreases. d. assets decrease.
a. assets increase.
Vivo Co. received an 8-month, 9% note for $100,000 from its agent on October 1, 2016. The note is due on May 30, 2017. If Vivo accounting period ends on December 31, 2016, how much interest revenue should Vivo recognize during 2016 and 2017? 2016 2017 a. $3,375 $5,625 b. $2,250 $3,750 c. $9,000 $0 d. $3,750 $2,250
b. $2,250 $3,750
Cobb Company Selected data from the accounting records of Cobb Company are listed below. General and administrative expenses $2,200 Operating revenues $6,000 Selling expenses 1,800 Income taxes 600 Other revenues (expenses) 800 Dividends paid 1,200 Read the information about Cobb Company. What is Cobb's income from operations? a. $2,200 b. $2,000 c. $2,800 d. $1,600
b. $2,000
If the current ratio is 2.5 to 1, net income is $6,000, and current liabilities are $18,000, how much is working capital? a. $45,000 b. $27,000 c. $6,000 d. $14,000
b. $27,000
Sawaddee Enterprises began the year with total assets of $450,000 and total liabilities of $230,000. If Sawaddee's total assets doubled to $900,000 and its owners' equity remained the same during the year, what was the amount of its total liabilities at the end of the year? a. $780,000 b. $680,000 c. $220,000 d. $900,000
b. $680,000
Which of the following includes only current assets? a. Accounts receivable, cash, furniture, office supplies b. Accounts receivable, cash, inventory, office supplies c. Cash, accounts payable, inventory, office supplies d. Cash, land, accounts receivable, inventory
b. Accounts receivable, cash, inventory, office supplies
Which one of the following is an economic obligation for a business entity? a. Payment of rent for the next year b. Amounts owed to creditors c. Salaries paid to employees for services rendered d. Materials used in manufacturing products
b. Amounts owed to creditors
Which one of the following is an example of a deferred revenue? a. Sales are made to customers on credit. b. Cash is received prior to providing the services to customers. c. Interest has been earned by a bank deposit, but it has not been recorded. d. Cash sales are made to customers.
b. Cash is received prior to providing the services to customers.
Which one of the following is a financing activity of a business? a. Purchasing a manufacturing plant b. Issuing stock for cash c. Paying for purchases of inventory d. Paying salaries
b. Issuing stock for cash
Failure to record depreciation expense for the period results in which of the following? a. No effect on total assets b. Net income and stockholders' equity being overstated c. Net income being overstated d. Stockholders' equity being overstated
b. Net income and stockholders' equity being overstated
What is the effect on the accounting equation when a company recognizes rent as earned that had previously been received in advance from customers? a. Expenses increase b. Net income increases c. Revenues decrease d. Liabilities increase
b. Net income increases
Longitude Company borrowed on a two-year, 10%, $150,000 note on May 1, with interest and principal to be paid at maturity. How much interest will Longitude report on its income statement for the year ending December 31? a. $5,000 b. $30,000 c. $10,000 d. $15,000
c. $10,000
Murphy Corporation's end-of-year balance sheet consisted of the following amounts: Cash $ 35,000 Accounts receivable $46,000 Property, plant, and equipment 69,000 Long-term debt 41,000 Capital stock 107,000 Accounts payable 22,000 Retained earnings ? Inventory 33,000 What is Murphy's owners' equity balance at the end of the current year? a. $63,000 b. $173,000 c. $120,000 d. $3,000
c. $120,000
Moore Industries Moore Industries began operations on January 2, 2017, with an investment of $50,000 by each of its two stockholders. Net income for its first year of business was $240,000. Moore Industries paid a total of $100,000 in dividends to its stockholders during the year. Read the information about Moore Industries. What is the company's retained earnings balance at December 31, 2017? a. $340,000 b. $190,000 c. $140,000 d. $240,000
c. $140,000
If a company has $152,000 of revenues, declares and pays $55,000 in dividends, and has net income of $89,000, how much were expenses for the year? a. $144,000 b. $8,000 c. $63,000 d. Unable to determine the amount due to incomplete information.
c. $63,000
Jobston, Inc. The balance sheet of Jobston, Inc. includes the following items: Cash $22,400 Accounts receivable 11,700 Inventory 23,300 Prepaid insurance 1,040 Land 80,000 Accounts payable 47,500 Salaries payable 1,200 Capital stock 84,040 Retained earnings 5,700 Read the information about Jobston, Inc. What is Jobston's working capital? a. $58,440 b. $84,040 c. $9,740 d. $89,740
c. $9,740
All of the following are examples of manufacturers except a. Boeing. b. Whirlpool. c. Amazon.com. d. Ford.
c. Amazon.com.
You are comparing three companies that use different depreciation methods. Which of the following would help you the most in making a comparison of the companies? a. The average earnings per share for the quarter b. Claims to resources c. Disclosure of accounting policies d. Prospective cash receipts
c. Disclosure of accounting policies
A bank loaned $62 million to Apex Corporation to finance the construction of a new distribution warehouse. In which section of Apex's statement of cash flows would you be able to determine whether the company repaid any portion of the debt during the year? a. Investing Activities b. Operating Activities c. Financing Activities d. Profit Activities
c. Financing Activities
Which of the following accounts is increased by a credit entry? a. Dividends b. Accounts Receivable c. Interest Revenue d. Salary Expense
c. Interest Revenue
A pool cleaning service signs a contract with a new customer on May 1. The pool is vacuumed and "shocked" for the customer on June 1, and the bill for the services is paid on July 1. Under the accrual basis, the business should recognize revenue on a. May 1. b. July 1. c. June 1. d. December 31.
c. June 1.
Which of the following accounts are normally reported as long-term liabilities on a classified balance sheet? a. Interest payable and mortgage payable b. Income taxes payable and salaries payable c. Notes payable due in five years and bonds payable d. Capital stock and accounts payable
c. Notes payable due in five years and bonds payable
Which of the following transactions involves an accrued asset? a. Rent collected in advance from a tenant b. Wages earned by employees but not yet paid c. Rent owed by a tenant but not yet collected d. One year's premium on life insurance policy paid in advance
c. Rent owed by a tenant but not yet collected
Fox Auto sold merchandise to a customer for $3,000 on credit on March 10. The customer paid Fox Auto the amount due on March 31. Under the accrual basis of accounting, which of the following statements is true? a. Fox Auto will recognize the revenue on March 31. b. Revenue is recognized after the cost of the merchandise sold has been paid by Fox Auto. c. The March 31 transaction has no effect on total assets under the accrual basis. d. The March 10 transaction increases revenue, but has no effect on assets because cash has not been received.
c. The March 31 transaction has no effect on total assets under the accrual basis.
The purchase of office equipment at a cost of $3,600 with an immediate down payment of $1,000 and agreement to pay the balance within 60 days is recorded by a. a debit of $2,600 to Accounts Receivable, a debit of $1,000 to Cash, and a credit of $3,600 to Office Equipment. b. a debit of $3,600 to Office Equipment, a credit of $1,000 to Cash, and a credit of $2,600 to Accounts Receivable. c. a debit of $3,600 to Office Equipment, a credit of $1,000 to Cash, and a credit of $2,600 to Accounts Payable. d. None of these choices are correct.
c. a debit of $3,600 to Office Equipment, a credit of $1,000 to Cash, and a credit of $2,600 to Accounts Payable.
The term "chronological order" is best associated with a. a trial balance. b. credit entries. c. a journal. d. capital stock.
c. a journal.
Mitchell Company prepares monthly financial statements and will record a prepaid expense account for each of the following except a. Mitchell purchases office supplies to last for several months. b. Mitchell paid for three months of window washing services in advance. c. a tenant that pays Mitchell for six months of rent in advance. d. Mitchell purchases a four-year casualty insurance policy.
c. a tenant that pays Mitchell for six months of rent in advance.
The correct term for an entry made to the left side of an account is a. credit. b. double-entry system. c. debit. d. journalizing.
c. debit.
Mobile Power Corp. reported the following information for the year ended December 31, 2017. Revenue $ 40,000 Expenses 23,000 Dividends 10,000 Retained earnings at December 31, 2017 175,000 What was the retained earnings balance for Mobile Power at December 31, 2016? a. $192,000 b. $182,000 c. $165,000 d. $168,000
d. $168,000
The payment of employee salaries has what effect on the accounting equation? a. Assets increase and liabilities decrease. b. Liabilities decrease and stockholders' equity decreases. c. Assets decrease and liabilities increase. d. Assets decrease and stockholders' equity decreases.
d. Assets decrease and stockholders' equity decreases.
Which one of the following is not an external user of financial information? a. Creditors b. IRS c. Stockholders d. Company management
d. Company management
Lottony, Inc. is concerned about its profitability for the current year, since its profit margin has dropped 10% since last year. Which of the following is the least useful comparison in evaluating the drop in Lottony's profit margin? a. Comparison with its profit margins for the past five years b. Comparison with the industry average for the current year c. Comparison with the profit margins for its major competitors for the current year d. Comparison with its current ratio for the current year
d. Comparison with its current ratio for the current year