Accounting 230 Exams 1-2 for 3
A company purchased land and building from a seller for $900,000. A separate appraisal reveals the fair value of the land to be $200,000 and the fair value of the building to be $800,000. For what amount would the company record land at the time of purchase? Multiple Choice $900,000. $200,000. $180,000. $220,000.
$180,000.
A company reports the following balances on their balance sheet: Assets $75,000 Liabilities 35,000 Retained Earnings 17,000 Given this information, what is the current balance in the common stock account?
23,000
Below are typical transactions for a company. What are the total number of Financing Activities listed below? -Purchase an Office Building -Pay Workers' Salaries -Pay back principal borrowings from bank -Pay for insurance policy -Pay Dividends to Stockholders -Sell equipment that was used in operations -Issue Common Stock -Provides Services to Customers -Borrow Money from Bank -Purchase stock in another company as an investment
4
Petite Fashions issued 500,000 of its 2 million shares of authorized common stock. At the end of the accounting period, 450,000 shares are outstanding. How many shares of treasury stock does Petite Fashions have? Multiple Choice 1.5 million shares. 450,000 shares. 50,000 shares. 0 shares.
50,000 shares.
Accumulated depreciation is: Multiple Choice An expense account. An asset. A contra-asset. A liability.
A contra-asset.
Which of the following is not included in calculating the acid-test ratio? Multiple Choice Accounts receivable. Current investment in marketable securities. Accounts payable. Inventory.
Inventory.
Return on assets is equal to: Multiple Choice Net income divided by long-term assets. Net income divided by average long-term assets. Average total assets divided by net income. Net income divided by average total assets
Net income divided by average total assets
Cash dividends are based on the number of shares: Multiple Choice Authorized. Issued. Outstanding. Authorized and issued.
Outstanding.
Suppose that Neuman Exploration Tours has filed a lawsuit against a competitor for an alleged trademark violation. At the end of the year, Neuman's attorney estimates that the company will likely win the lawsuit and be awarded between $1.5 and $2 million, with the most likely amount being $1.8 million. How much should Neuman record as a gain? Multiple Choice $2.0 million. $1.8 million. $1.5 million. $0.
$0.
A company issues 100,000 shares of $1 par value common stock for $17 per share. To record this transaction, the company would credit Additional Paid-in Capital for: Multiple Choice $100,000. $1,600,000. $1,700,000. $1,800,000.
$1,600,000.
Snow Company has the following inventory transactions for the year: Jan.1 Beginning inventory 200 4.00 Apr.20 Purchase 800 4.25 Sep.8 Purchase 400 4.50 Assuming Snow sells 1,000 units, calculate ending inventory under FIFO. Multiple Choice $1,650. $1,800. $4,200. $4,350.
$1,800.
A company issues 100,000 shares of $1 par value common stock for $17 per share. To record this transaction, the company would credit Common Stock for: Multiple Choice $100,000. $1,600,000. $1,700,000. $1,800,000.
$100,000.
Given the information in the table below, what is the company's gross profit? Sales revenue$350,000 Accounts receivable$280,000 Ending inventory$230,000 Cost of goods sold$180,000 Sales returns$50,000 Sales discounts$20,000 Multiple Choice -$280,000. -$170,000. -$50,000. -$100,000.
$100,000.
Airline Accessories obtains a $100,000, three-year loan, at 6% interest, with monthly payments of $3,042. What amount would be recorded as the reduction in principal for the first full month? Multiple Choice $500. $6,000. $3,042. $2,542.
$2,542.
At the beginning of 20X1, a company issues 100,000 shares of 4%, $10 par value, cumulative preferred stock. All remaining shares outstanding are common stock. The company does not pay any dividends in 20X1, but pays dividends of $100,000 at the end of 20X2. How much of the dividend will be paid to common stockholders in 20X2? Multiple Choice $100,000. $60,000. $80,000. $20,000.
$20,000
At the beginning of the year, Johnson Supply has inventory of $5,200. During the year, the company purchases an additional $20,000 of inventory. An inventory count at the end of the year reveals remaining inventory of $3,000. What amount will Bennett report for cost of goods sold? Multiple Choice $8,200 $17,800 $20,000 $22,200
$22,200
Aviation Systems sells its products with a three-year manufacturing warranty. The company's sales revenue is $600,000. Based on prior experience, the company estimates that warranty costs are 5% of sales revenue. Actual warranty costs related to these sales were $5,000 during the year. How much warranty expense should the company record this year? Multiple Choice $30,000. $25,000. $10,000. $ 5,000.
$30,000.
If Executive Airways borrows $10 million on April 1, 20X1, for one year at 6% interest, how much interest expense does it record for the year ended December 31, 20X1? Multiple Choice $300,000 $450,000 $150,000 $600,000
$450,000
At the end of the previous year, a company's balance sheet reports cash of $30,000. For the current year, the company's statement of cash flows reports operating cash inflows of $90,000; investing outflows of $110,000; and financing inflows of $40,000. What amount of cash will be reported in the current year's balance sheet? Multiple Choice $90,000. $20,000. $50,000. $120,000.
$50,000.
On October 1, a franchise was purchased for $2,000,000. The franchise agreement is for 10 years. What is the amount of amortization expense by the end of the first year, December 31 (using partial year straight-line amortization)? (Do not round intermediate calculations.) Multiple Choice $0. $50,000. $200,000. $100,000.
$50,000.
Airline Accessories obtains a $100,000, three year loan, at 6% interest, with monthly payments of $3,042. What amount would be recorded for interest expense for the first full month? Multiple Choice $500. $6,000. $3,042. $2,542.
$500.
On December 31, the Accounts Receivable ending balance is $80,000. Assume that the unadjusted balance of Allowance for Uncollectible Accounts is a debit of $500 and that the company estimates 7% of the accounts receivable will not be collected. The amount of bad debt expense recorded on December 31 will be: Multiple Choice $5,000. $5,100. $5,600. $6,100.
$6,100.
The original cost of a piece of equipment was $100,000. The equipment was depreciated using the straight-line method with annual depreciation of $20,000. After two years, the fair value of the equipment is $82,000. How much is the book value of the equipment at the end of the second year? Multiple Choice $100,000. $82,000. $80,000. $60,000.
$60,000.
On November 1, 20X1, a company signed a $200,000, 12%, six-month note payable with the amount borrowed plus accrued interest due six months later on May 1, 20X2. What is the amount of interest expense to report in 20X2? Multiple Choice $0 $12,000 $8,000 $24,000
$8,000
A delivery truck was purchased for $60,000 and is expected to be used for 5 years and 100,000 miles. The truck's residual value is $10,000. By the end of the first year, the truck has been driven 16,000 miles. What is the depreciation expense in the first year using activity-based depreciation? Multiple Choice $9,600. $12,000. $8,000. $10,000.
$8,000.
Crusher and Co. reported the following amounts in its income statement: Sales revenue$440,000 Advertising expense 60,000 Interest expense 10,000 Salaries expense 55,000 Utilities expense 25,000 Income tax expense 45,000 Cost of goods sold 180,000 What was Crusher's operating income? Multiple Choice -$120,000. -$260,000. -$110,000. -$65,000. (Incorrect)
-$260,000. Maybe?
A company has the following balances on December 31 prior to closing entries: Revenues $35,000 Retained Earnings, Jan. 1 10,000 Cash 7,000 Expenses 23,000 Accounts Payable 4,000 Dividends 1,000 Supplies 18,000 What would be the net adjustment to Retained Earnings at the end of the period?
11,000
On January 1st, 2020 a company purchased a vehicle for $36,000. The company estimated the vehicle useful life of 120,000 miles. with a residual (salvage) value of $3,000. The company determined they no long needed the vehicle and sold it for $21,000 after being driven 60,000 miles. As a result of the sale the company would record a gain or (Loss) of:
1500
A company was preparing a trial balance with the following information: Cash 6,100 Deferred revenue 1,700 Prepaid insurance 1,500 Accounts payable 2,300 Retained earnings 1,900 Utilities expense 3,100 Dividends 2,000 Salaries expense 2,900 Accounts receivable 3,300 Common stock 6,300 Service revenue 7,500 Maintenance expense 800 The Debit column total balance would =
19,700
Which of following best describes a merchandising company? Multiple Choice A company whose revenues exceed expenses. A company that produces products from raw materials, labor, and overhead. A company that provides services to its customers. A company that purchases products that are primarily in finished form for resale to customers.
A company that purchases products that are primarily in finished form for resale to customers.
Douglas County Fairgrounds retires a $50 million bond issue when the carrying value of the bonds is $52 million, but the market value of the bonds is only $47 million. The entry to record the retirement will include: Multiple Choice A debit of $5 million to loss on early extinguishment. A credit of $5 million to gain on early extinguishment. No gain or loss on retirement. A debit to cash for $47 million.
A credit of $5 million to gain on early extinguishment.
A company issues 100,000 shares of 5%, $10 par value preferred stock for $17 per share. The entry to record this transaction would include: Multiple Choice A credit to Preferred Stock for $1,700,000. A debit to Additional-Paid in Capital for $700,000. A credit to Preferred Stock for $1,000,000. A credit to Additional-Paid in Capital for $1,700,000.
A credit to Preferred Stock for $1,000,000.
At the end of a reporting period, Gaston Corporation determines that its ending inventory has a cost of $6,500 and a net realizable value of $5,800. The adjustment to write down inventory to net realizable value would include: Multiple Choice A debit to inventory for $5,800. A credit to inventory for $700. A debit to cost of goods sold for $5,800. A credit to cost of goods sold for $700.
A credit to inventory for $700.
An accumulated deficit is: Multiple Choice A credit balance in retained earnings. A debit balance in retained earnings. A credit balance in stockholders' equity. A debit balance in stockholders' equity.
A debit balance in retained earnings.
The entry to record the estimate for uncollectible accounts includes: Multiple Choice A debit to Allowance for Uncollectible Accounts. A credit to Accounts Receivable. A debit to Sales Revenue. A debit to Bad Debt Expense.
A debit to Bad Debt Expense.
The entry to close the expense accounts includes: Multiple Choice A credit to Retained Earnings. A debit to all expense accounts. A debit to Retained Earnings. A debit to all expense accounts and a credit to Retained Earnings.
A debit to Retained Earnings.
When a product or service is delivered to a customer that previously paid in advance, the delivery is recorded as: Multiple Choice A debit to a revenue and a credit to a liability account. A debit to a revenue and a credit to an asset account. A debit to an asset and a credit to a revenue account. A debit to a liability and a credit to a revenue account.
A debit to a liability and a credit to a revenue account.
When a customer pays in advance for a product or service, the advance payment received by the company is recorded as: Multiple Choice A debit to an asset and a credit to a liability account. A debit to a revenue and a credit to an asset account. A debit to an asset and a credit to a revenue account. A debit to a liability and a credit to a revenue account.
A debit to an asset and a credit to a liability account.
Treasury stock is recorded as: Multiple Choice An asset. A liability. An increase in stockholders' equity. A decrease in stockholders' equity.
A decrease in stockholders' equity.
Equipment originally costing $100,000 has accumulated depreciation of $65,000. If it is sold for $40,000, the company should record: Multiple Choice A loss of $5,000. A gain of $5,000. A loss of $70,000. A gain of $70,000.
A gain of $5,000.
Equipment originally costing $65,000 has accumulated depreciation of $25,000. If the equipment is sold for $30,000, the company should record: Multiple Choice No gain or loss. A loss of $10,000. A gain of $10,000. A loss of $35,000.
A loss of $10,000.
If bonds are issued with a stated interest rate higher than the market interest rate, the bonds will be issued at Multiple Choice A premium. Face amount. A discount. A discount or premium depending on the maturity date.
A premium.
Which of the following is properly recorded as an intangible asset? Multiple Choice An internally developed trademark. A piece of land. A purchased patent. An internally developed copyright.
A purchased patent.
All transactions related to a particular item over a period of time are summarized in a(n): Multiple Choice Chart. Entry. Account. Schedule
Account.
When employee expenditures with company-issued credit cards are recorded: Multiple Choice Cash is debited. Expenses are credited. Retained Earnings is debited. Accounts Payable is credited.
Accounts Payable is credited.
A debit is used to decrease which of the following accounts? Multiple Choice Salaries Expense. Accounts Payable. Dividends. Supplies.
Accounts Payable.
Which of the following is not a primary source of long-term debt financing? Multiple Choice Notes payable. Accounts payable. Leases. Bonds.
Accounts payable.
Recording salaries owed to employees that will not be paid by the company until the following accounting period is an example of a(n): Multiple Choice Prepaid expense. Unearned revenue. Accrued expense. Accrued revenue.
Accrued expense.
If equipment is retired, which of the following accounts would be debited? Multiple Choice Accumulated depreciation. Depreciation expense. Equipment. Cash.
Accumulated depreciation.
Financial statements are prepared from which of the following trial balances? Multiple Choice -Adjusted trial balance. -Unadjusted trial balance. -Financial trial balance. -Post-closing trial balance.
Adjusted trial balance.
Financial statements are prepared from which of the following trial balances? Multiple Choice Unadjusted trial balance. Financial trial balance. Post-closing trial balance. Adjusted trial balance.
Adjusted trial balance.
A trial balance can best be explained as a list of Multiple Choice The income statement accounts used to calculate net income. Revenue, expense, and dividend accounts used to show the balances of the components of retained earnings. The balance sheet accounts used to show the equality of the accounting equation. All accounts and their balances at a particular date.
All accounts and their balances at a particular date.
Which of the following assets are never depreciated or amortized over time? Multiple Choice -Copyrights -Land Improvements (incorrect) -Patents -All choices are either amortized or depreciated over time
All choices are either amortized or depreciated over time
Retained earnings represents: Multiple Choice Amount of cash available for paying dividends. Total assets minus total liabilities. Net income minus dividends for the current year. All net income, less all dividends, since the company began operations.
All net income, less all dividends, since the company began operations.
The Sarbanes-Oxley Act (SOX) mandates which of the following? Multiple Choice Increased regulations related to auditor-client relations. Increased regulations related to internal control. Increased regulations related to corporate executive accountability. All of the answer choices are correct.
All of the answer choices are correct.
A company leases an office building for 24 months. At the beginning of the lease period, the lessee (user) would: Multiple Choice Record a lease asset. Record a lease liability. Record a lease for the present value of the 24 lease payments. All of the answers are correct.
All of the answers are correct.
A company's ratio of cash to noncash assets provides some indication of the company's ability to: Multiple Choice Maintain normal operations. Respond quickly to new opportunities. Prevent bankruptcy. All of the choices are correct.
All of the choices are correct.
Which of the following is considered cash for financial reporting purposes? Multiple Choice Coins and currency. Debit card sales. Checks received from customers. All of the choices are correct.
All of the choices are correct.
Which of the following is not a step in the process of measuring external transactions? Multiple Choice Analyze the impact of the transaction on the accounting equation. Record the transaction using debits and credits. Post the transaction to the T-account in the general ledger. All of the steps listed are steps in the measurement process of external transactions.
All of the steps listed are steps in the measurement process of external transactions.
Fan Company sells inventory on account. The entry or entries to record this sale using a perpetual inventory system would include a: Multiple Choice Debit to Accounts Receivable. Credit to Sales Revenue Debit to Cost of Goods Sold. All of the these are included to record the sale.
All of the these are included to record the sale.
Which of the following represents a characteristic of a liability? Multiple Choice A probable future sacrifice of economic benefits. Arising from present obligations to other entities. Resulting from past transactions or events. All of these are characteristics of a liability.
All of these are characteristics of a liability.
Net income is defined as: Multiple Choice All revenues minus all expenses. Sales Revenue minus Cost of Goods Sold. Gross Profit minus Operating Expenses. Income before Income Tax Expense.
All revenues minus all expenses.
Over the entire service life of an asset, which depreciation method records the highest total depreciation? Multiple Choice The straight-line method. The double declining method. The activity-based method. All the methods result in the same total depreciation.
All the methods result in the same total depreciation.
Depreciation in accounting is the: Multiple Choice Decrease in fair value of an asset. Decrease in selling price of an asset. Allocation of an asset's cost to an expense over time. Change in fair value of an asset.
Allocation of an asset's cost to an expense over time.
Which of the following is a characteristic of adjusting entries? Multiple Choice Used in cash-basis accounting. Recorded at the beginning of the accounting period. Reduces the balances of revenue accounts to zero. Allows for proper application of the revenue recognition principle (revenues) or expenses recognition.
Allows for proper application of the revenue recognition principle (revenues) or expenses recognition.
On July 1, 2021, a company loans one of its employees $26,000 and accepts a eight-month, 7% note receivable. Calculate the amount of interest revenue the company will recognize in 2021 and 2022
Amount of Interest Revenue 2021: 910 2022: 303
Which of the following is considered cash for financial reporting purposes? Multiple Choice Prepaid insurance. Credit card purchases. Investments in a 6-month Certificate of Deposit. Amounts held in checking accounts.
Amounts held in checking accounts.
Which of the following expenditures should be recorded as an asset? Multiple Choice An addition which increases future benefit. Repairs that maintain current benefits. Maintenance that maintain current benefits. Unsuccessful legal defense of an intangible asset.
An addition which increases future benefit.
Which of the following expenditures should be capitalized? Multiple Choice Research and development costs. An improvement to a tangible asset. Ordinary repairs and maintenance. Unsuccessful legal defense of an intangible asset.
An improvement to a tangible asset.
Which of the following is not a current liability? Multiple Choice Notes payable due in six months. Current portion of long-term debt. An unused line of credit. Deferred revenue to be earned in nine months.
An unused line of credit.
A company collected cash on February 4 from the sale of a ticket to a customer on January 26. The event took place on April 5. According to the revenue recognition principle, in which month should the company have recognized this revenue? Multiple Choice -February. -January. -April. -Evenly in each of the three months.
April.
Allied Partners filed suit against Big Sky, Inc., seeking damages for patent infringement. Big Sky's legal counsel believes it is probable that Big Sky will settle the lawsuit for an estimated amount in the range of $500,000 to $700,000, with all amounts in the range considered equally likely. How should Big Sky report this litigation? Multiple Choice As a liability for $700,000 with disclosure of the range. As a liability for $600,000 with disclosure of the range. As a liability for $500,000 with disclosure of the range. As a disclosure only. No liability is reported.
As a liability for $500,000 with disclosure of the range.
The equation that best describes the balance sheet is: Multiple Choice Assets= Common Stock - Liabilities + Retained Earnings. Assets - Liablities = Common Stock + Revenues - Epenses - Dividends. Assets - Common Stock = Retained Earnings + Liabilities. None of the answers are correct..
Assets - Common Stock = Retained Earnings + Liabilities.
Which of the following is true regarding a company assuming more debt? Multiple Choice Assuming more debt is always bad for the company. Assuming more debt is always good for the company. Assuming more debt can be good for the company as long as they earn a return in excess of the rate charged on the borrowed funds. Assuming more debt reduces leverage.
Assuming more debt can be good for the company as long as they earn a return in excess of the rate charged on the borrowed funds.
Outdoor Adventures issues bonds at a discount. On the maturity date, the bonds' carrying value will be Multiple Choice Above face amount. Below face amount. At face amount. Above or below face value depending on current market interest rates.
At face amount.
At the end of the year, a company's balance of Allowance for Uncollectible Accounts is $2,400 (debit) before adjustment. The company estimates future uncollectible accounts to be $12,000. What is the adjustment would the company record for Allowance for Uncollectible Accounts?
Bad Debt (D) 14,400 Allowance (C) 14,400
Which of the following is considered cash for financial reporting purposes? Multiple Choice Inventory that is likely to be sold within three months. Amounts to be collected from customers. Amounts owed to suppliers. Balances in savings accounts.
Balances in savings accounts.
The asset's cost less accumulated depreciation is called: Multiple Choice Replacement cost. Book value. Net fair value. Residual value.
Book value.
If bonds are issued at a premium, over the life of the bonds, the carrying value and interest expense will: Multiple Choice Both increase. Both decrease. Carrying value will increase and interest expense will decrease. Carrying value will decrease and interest expense will increase.
Both decrease.
When bonds are issued at face amount, what happens to the carrying value and interest expense over the life of the bonds? Multiple Choice Carrying value and interest expense increase. Carrying value and interest expense decrease. Carrying value and interest expense remain unchanged. Carrying value increases and interest expense decreases.
Carrying value and interest expense remain unchanged.
A company's petty cash refers to: Multiple Choice Cash used to pay employee salaries. Investment in short-term securities. Cash held in the bank. Cash on hand to pay for minor purchases.
Cash on hand to pay for minor purchases.
Operating cash flows include which of the following? Multiple Choice Cash received from a bank loan. Cash paid for supplies. Cash received from the sale of a used company truck. Cash received from the issuance of common stock.
Cash paid for supplies.
Financing cash flows include which of the following? Multiple Choice Cash received from a customer. Cash paid for supplies. Cash received from the sale of a used company truck. Cash received from the issuance of common stock.
Cash received from the issuance of common stock.
Investing cash flows include which of the following? Multiple Choice Cash received from a customer. Cash paid for supplies. Cash received from the sale of a used company truck. Cash received from the issuance of common stock.
Cash received from the sale of a used company truck.
The following data are taken from the cash-basis accounting records of Myerson Company for the year ended December 31, 2021: Customers Billed: 430,000 2020 Cash Collections: 24,000 2021 Cash Collections: 220,000 Supplies: 19,000 Remaining Supplies: 2,100 Salaries: 12,000 2021 Rent: 25,000 Calculate the amount of revenues and expenses for 2021 under cash-basis accounting.
Cash-basis revenues $244,000 ($24,000 + $220,000 = $244,000.) Cash-basis expense $56,000 ($19,000 + $12,000 + $25,000 = $56,000.)
A list of all account names used to record transactions of a company is referred to as a: Multiple Choice -Financial statement. -Journal. -Transaction. -Chart of accounts.
Chart of accounts.
A list of all account names used to record transactions of a company is referred to as a: Multiple Choice Transaction. Chart of accounts. Financial statement. Journal.
Chart of accounts.
Marley Inc. reports a cash balance at the end of the month of $2,595. A comparison of the company's cash records with the monthly bank statement reveals several additional cash transactions: bank service fees ($84), an NSF check from a customer ($340), a customer's note receivable collected by the bank ($1,100), and interest earned ($34). Required: Calculate the reconciled company balance for cash.
Company Balance $2,595 Service Fees $(84) NSF Check $(340) Note Received $1,100 Interest Earned $34 TOTAL $3,305
Under a perpetual inventory system: Multiple Choice Cost of good sold is recorded with a period-end adjusting entry. Purchase discounts are not recorded. Inventory purchases are recorded only at the end of the period. Cost of goods sold is recorded with each sale.
Cost of goods sold is recorded with each sale.
A long-term asset is recorded at the: Multiple Choice Cost of the asset. Additional costs to get the asset ready for use. Cost of the asset plus all costs necessary to the asset ready for use. Cost of the asset less all costs necessary to the asset ready for use.
Cost of the asset plus all costs necessary to the asset ready for use.
The adjusting entry to record interest earned during the period includes a: Multiple Choice Credit to Cash. Debit to Cash. Debit to Interest Expense. Credit to Interest Revenue.
Credit to Interest Revenue.
The current ratio is: Multiple Choice Current assets divided by current liabilities. Current liabilities divided by current assets. Cash, short-term investments, and accounts receivable divided by current liabilities. Cash, short-term investments, accounts receivable, and inventory divided by current liabilities.
Current assets divided by current liabilities.
Which of the following is reported as a current liability? Multiple Choice Notes payable due in two years. Notes payable due in 15 months. Current portion of long-term debt. Unused line of credit.
Current portion of long-term debt.
Cash dividends are initially recorded on which date? Multiple Choice Date of declaration. Date of record. Date of payment. Balance sheet date.
Date of declaration.
Clement Company paid an account payable related to a previous utility bill of $930. This transaction should be recorded as follows on the payment date: Multiple Choice -Debit Cash $930, credit Utilities Expense $930. -Debit Utilities Expense $930, credit Cash $930. -Debit Cash $930, credit Accounts Payable $930. -Debit Accounts Payable $930, credit Cash $930.
Debit Accounts Payable $930, credit Cash $930.
Travel Planners, Inc. borrowed $5,000 from First State Bank and signed a promissory note. What entry should Travel Planners record? Multiple Choice Debit Cash, $5,000; Credit Notes Receivable, $5,000. Debit Notes Receivable, $5,000; Credit Cash, $5,000. Debit Cash, $5,000; Credit Notes Payable, $5,000. Debit Notes Payable, $5,000; Credit Cash, $5,000.
Debit Cash, $5,000; Credit Notes Payable, $5,000.
On the date of dividend declaration, which of the following entries is recorded? Multiple Choice Debit Dividends; Credit Cash. Debit Dividends; Credit Dividends Payable. Debit Dividends Payable; Credit Cash. No entry is recorded.
Debit Dividends; Credit Dividends Payable.
Travel Planners, Inc. borrowed $5,000 from First State Bank and signed a promissory note. What entry should First State Bank record? Multiple Choice Debit Cash, $5,000; Credit Notes Receivable, $5,000. Debit Notes Receivable, $5,000; Credit Cash, $5,000. Debit Cash, $5,000; Credit Notes Payable, $5,000. Debit Notes Payable, $5,000; Credit Cash, $5,000.
Debit Notes Receivable, $5,000; Credit Cash, $5,000.
Assume that $17,900 cash is paid for insurance to cover the next year. The appropriate debit and credit would be: Multiple Choice -Debit Cash $17,900, credit Prepaid Insurance $17,900. -Debit Prepaid Insurance $17,900, credit Insurance Expense $17,900. -Debit Prepaid Insurance $17,900, credit Cash $17,900. -Debit Insurance Expense $17,900, credit Prepaid Insurance $17,900.
Debit Prepaid Insurance $17,900, credit Cash $17,900.
The purchase of supplies with cash would be recorded as Multiple Choice Debit Cash; Credit Supplies Expense. Debit Supplies; Credit Cash. Debit Cash; Credit Supplies. Debit Supplies Expense; Credit Cash.
Debit Supplies; Credit Cash.
The payment for utilities of the current month would be recorded as Multiple Choice Debit Cash; Credit Utilities Payable. Debit Utilities Expense; Credit Utilities Payable. Debit Utilities Expense; Credit Cash. Debit Utilities Payable; Credit Cash.
Debit Utilities Expense; Credit Cash.
The entry to write down inventory from cost to net realizable value at the end of the year includes a: Multiple Choice Debit to Inventory. Credit to Sales Revenue. Debit to Cost of Goods Sold. Credit to Accounts Payable.
Debit to Cost of Goods Sold.
Paying dividends to stockholders would be recorded with a: Multiple Choice Credit to Dividends. Credit to Common Stock. Debit to Dividends. Debit to Salaries Expense.
Debit to Dividends.
The adjusting entry to record supplies used during the period includes a: Multiple Choice Debit to Supplies. Credit to Service Revenue Debit to Supplies Expense Credit to Cash
Debit to Supplies Expense
On March 15th, a company received $65,000 cash from its customer to render services on May 1st. The correct journal entry to record the transaction on March 15th would include: Multiple Choice -Debit to cash and a credit to deferred revenue. -Credit to deferred revenue and a credit to cash. -Debit to service revenue and a credit to cash. -Debit to cash and a credit to service revenue.
Debit to cash and a credit to deferred revenue.
On December 31st, Cougar Corp must prepare a journal entry to recognize depreciation expense. This journal entry would include a: Multiple Choice -Debit to equipment and a credit to depreciation expense. -Debit to equipment and a credit to accumulated depreciation -Debit to depreciation expense and a credit to accumulated depreciation. -Debit to depreciation expense and a credit to equipment
Debit to depreciation expense and a credit to accumulated depreciation.
Which of the following is not an advantage of debt financing? Multiple Choice Interest is tax deductible. The cost of borrowing may be lower than the return on equity. The ownership interest of current stockholders is unchanged. Debt financing often has no maturity date.
Debt financing often has no maturity date.
On December 10, a company pays $500 for advertising to appear on December 20. On which date should the expense be recorded under cash-basis accounting? Multiple Choice December 10. December 20. One-half on each date. Neither.
December 10.
On December 10, a company pays $500 for advertising to appear on December 20. On which date should the expense be recorded under accrual-basis accounting? Multiple Choice December 10. December 20. One-half on each date. Neither.
December 20.
Which of the following is possible for a particular business transaction? Multiple Choice Increase assets; decrease liabilities. Decrease assets; increase stockholders' equity. Decrease assets; decrease liabilities. Decrease liabilities; increase expenses.
Decrease assets; decrease liabilities.
At the end of the year, Marline Corporation determines that its ending inventory has a cost of $2,000 and a net realizable value of $1,900. What would be the effect of the adjustment to write down inventory to net realizable value? Multiple Choice Decrease in net income. Increase in net income. Increase in cost of ending inventory. No effect on net income or ending inventory.
Decrease in net income.
Which of the following adjusts the bank's balance of cash in a bank reconciliation? Multiple Choice Interest on bank deposit. NSF check. Deposits outstanding. Bank service fees.
Deposits outstanding.
Which of the following correctly describes the nature of depreciation? Multiple Choice Depreciation represents the valuation of property, plant, and equipment over its service life. Depreciation represents the valuation of an intangible asset over its service life. Depreciation represents the allocation of the cost of property, plant, and equipment over its service life. Depreciation represents the allocation of the cost of an intangible asset over its service life.
Depreciation represents the allocation of the cost of property, plant, and equipment over its service life.
Management can estimate the amount of loss that will occur due to litigation against the company. If the likelihood of loss is reasonably likely, a contingent liability should be: Multiple Choice Disclosed but not reported as a liability. Disclosed and reported as a liability. Neither disclosed or reported as a liability. Reported as a liability but not disclosed.
Disclosed but not reported as a liability.
Preferred stock is called preferred because it usually has two preferences over common stock. These preferences relate to: Multiple Choice Dividends and voting rights. Par value and dividends. The preemptive right and voting rights. Dividends and distribution of assets if the corporation is dissolved.
Dividends and distribution of assets if the corporation is dissolved.
Section 404 of the Sarbanes-Oxley Act requires companies to: Multiple Choice Provide financial statements. Document and assess internal controls. Provide healthcare for employees. File their tax return with the Internal Revenue Service.
Document and assess internal controls.
Which of the following depreciation methods typically results in the highest depreciation expense during the first year of an asset's life? Multiple Choice Straight-line method. Activity-based method. Double declining balance method. Each method will result in the same depreciation during the first year.
Double declining balance method.
The disadvantages of a corporation compared to a sole proprietorship or partnership include: Multiple Choice Double taxation. The ability to raise capital. Limited liability. The ability to transfer ownership.
Double taxation.
What is the concept behind separation of duties in establishing internal control? Multiple Choice Employee fraud is less likely to occur when access to assets and access to accounting records are separated. The company's financial accountant should not share information with the company's tax accountant. Duties of middle-level managers of the company should be clearly separated from those of top executives. The external auditors of the company should have no contact with managers while the audit is taking place.
Employee fraud is less likely to occur when access to assets and access to accounting records are separated.
Which of the following increases an employer's payroll costs? Multiple Choice FICA withholding from the employee. State income tax. Federal income tax. Employer's FICA contribution.
Employer's FICA contribution.
Which of the following generally would be considered a good internal control over cash payments? Multiple Choice Employees responsible for making cash disbursements should also be in charge of cash receipts. Ensure checks are serially numbered and signed only by authorized employees. The employee who authorizes payment should also be the employee who prepares the check. Require only one signature for larger checks.
Ensure checks are serially numbered and signed only by authorized employees.
The balance of retained earnings in the adjusted trial balance: Multiple Choice Equals the balance of retained earnings after closing entries. Equals the balance of retained earnings at the beginning of the accounting period. Is not shown. Is the amount shown for retained earnings in the balance sheet.
Equals the balance of retained earnings at the beginning of the accounting period.
BLUE YELLOW PINK
Exam 1 Exam 2 Quizzes
Which of the following is paid by both the employee and the employer? Multiple Choice FICA taxes. Federal unemployment taxes. State unemployment taxes. Personal income taxes.
FICA taxes.
Which cost flow assumption generally results in the highest reported amount of net income in periods of rising inventory costs? Multiple Choice LIFO. FIFO. Weighted-average. Income will be the same under each assumption.
FIFO.
The cash paid for interest on bonds payable is calculated as: Multiple Choice Face amount times the stated interest rate. Carrying value times the market interest rate. Face amount times the market interest rate. Carrying value times the stated interest rate.
Face amount times the stated interest rate.
A lower receivables turnover ratio generally indicates more effective management of accounts receivable by company managers. True or False
False
Which of the following intangible assets are not amortized? Multiple Choice Goodwill. Patents. Copyrights. Franchises.
Goodwill.
Operating income is defined as: Multiple Choice All revenues minus all expenses. Sales Revenue minus Cost of Goods Sold. Gross Profit minus Operating Expenses. Income before Income Tax Expense.
Gross Profit minus Operating Expenses.
After the closing entries are posted to the accounts, all temporary accounts: Multiple Choice Have zero balances. Have balances equal to the amounts shown in the unadjusted trial balance. Have balances equal to the amounts shown in the adjusted trial balance. Are open.
Have zero balances.
If bonds are issued at a discount, interest expense will be Multiple Choice Lower than cash interest paid. Higher than cash interest paid. Equal to cash interest paid. Lower or higher depending on current market interest rates.
Higher than cash interest paid.
If a company has an increase in total revenues of $10,000, which of the following is possible? Total assets increase by $10,000. Total liabilities increase by $10,000. Total stockholders' equity decreases by $10,000. Multiple Choice I only II only III only II or III
I only
The revenue recognition principle states that companies typically record revenue: Multiple Choice In the period in which we provide goods and services to customers. In the period in which customers order goods and services. In the period in which we received cash from customers for goods and services. In the period in which goods and services are prepared to be sold to customers.
In the period in which we provide goods and services to customers.
Under cash-basis accounting, companies typically record revenue: Multiple Choice In the period in which we provide goods and services to customers. In the period in which customers order goods and services. In the period in which we received cash from customers for goods and services. In the period in which goods and services are prepared to be sold to customers.
In the period in which we received cash from customers for goods and services.
Under accrual-basis accounting, companies typically report expenses: Multiple Choice In the same period in which an asset is purchased. In the same period in which cash is paid. In the same period as the revenue they help to generate. In the same period in which a liability is paid.
In the same period as the revenue they help to generate.
Under cash-basis accounting, companies typically report expenses: Multiple Choice In the same period in which an asset is purchased. In the same period in which cash is paid. In the same period as the revenue they help to generate. In the same period in which a divided is paid.
In the same period in which cash is paid.
Providing services to customers for cash would have what effect on the accounting equation? Multiple Choice Increase total assets. Increase total liabilities. Increase total stockholders' equity. Increase total assets and total stockholders' equity.
Increase total assets and total stockholders' equity.
If bonds are issued at a discount, over the life of the bonds, interest expense will: Multiple Choice Decrease. Increase. Remain unchanged. The effect cannot be determined from the information given.
Increase.
If bonds are issued at a discount, over the life of the bonds, the carrying value will: Multiple Choice Increase. Decrease. Stay the same. Depend on the current market interest rate.
Increase.
When treasury stock is resold, total stockholders' equity: Multiple Choice Increases. Decreases. Does not change. The effect depends on the relationship between the purchase price and resale price.
Increases.
Which of the following accounts normally has a credit balance? Multiple Choice -Dividends. -Interest Payable -Accounts Receivable. -Cash.
Interest Payable
Which of the following expenditures should be recorded as an asset? Multiple Choice Interest costs during the construction period of a new building. Repair of a machine. Property taxes incurred on an existing building. Depreciation during the first year of an existing building.
Interest costs during the construction period of a new building.
Which of the following adjusts the company's balance of cash in a bank reconciliation? Multiple Choice Interest on bank deposit. Checks outstanding. An error by the bank. Deposits outstanding.
Interest on bank deposit.
Fan Company purchases inventory on account. The entry to record this purchase using a perpetual inventory system would include a debit to: Multiple Choice Accounts Payable. Inventory. Cost of Goods Sold. Purchases.
Inventory.
The users that are most interested in the financial statements of a company are: Multiple Choice -Investors -Managers -Employees -All the answers are correct.
Investors
Which of the following transactions causes an increase in total assets? Multiple Choice Pay employee salaries for the current month. Pay dividends to stockholders. Issue common stock in exchange for cash. Purchase office equipment for cash.
Issue common stock in exchange for cash.
Bonds issued at a premium are: Multiple Choice Issued above face value. Issued below face value. Issued at face value. Riskier bonds sold at a bargain price.
Issued above face value.
Which of the following correctly describes Retained Earnings? Multiple Choice -It equals assets minus total liabilities. -It is all the income a company has earned to date. -It represents the investment by stockholders in a company. -It is the cumulative earnings of a company less dividends declared since the company began.
It is the cumulative earnings of a company less dividends declared since the company began.
Which of the following is not a characteristic of a liability? Multiple Choice It represents a probable, future sacrifice of economic benefits. It must be payable in cash. It arises from present obligations to other entities. It results from past transactions or events.
It must be payable in cash.
Inventory is defined as: Multiple Choice Items a company intends for sale to customers. Any assets of the company that can be sold. The amount of cash received from the sale of goods to customers during the year. The cost of goods sold to customers during the year.
Items a company intends for sale to customers.
A company's capital structure refers to: Multiple Choice Its mixture of current versus long-term assets. Its mixture of current versus long-term liabilities. Its mixture of liabilities and stockholders' equity. Its mixture of paid-in capital versus retained earnings.
Its mixture of liabilities and stockholders' equity.
Transactions are recorded using debits and credits in a(n): Multiple Choice Financial statement. Annual report. Chart of accounts. Journal.
Journal.
Which cost flow assumption must be used for financial reporting if it is also used for tax reporting? Multiple Choice LIFO. FIFO. Weighted-average. Any assumption can be used regardless of the tax reporting.
LIFO.
Which inventory cost flow assumption generally results in the lowest reported amount for inventory when inventory costs are rising? Multiple Choice Specific identification. First-in, first-out (FIFO). Last-in, first-out (LIFO). Average cost.
Last-in, first-out (LIFO).
An advantage of leasing an asset rather than purchasing the asset is: Multiple Choice Leases are not reported as liabilities in the balance sheet. Leases typically require less cash upfront to begin using the asset. Lease payments are tax deductible while depreciation on a purchased asset is not. Leased assets are more likely to generate additional profits than are purchased assets.
Leases typically require less cash upfront to begin using the asset.
Which of the following statements regarding liabilities is true? Multiple Choice Liabilities are always payable in cash. Liabilities are all reported as current in the balance sheet. Liabilities result from future transactions. Liabilities represent probable future sacrifices of benefits.
Liabilities represent probable future sacrifices of benefits.
Federal and state income taxes withheld by employers from their employees' payroll are initially recorded with a credit to a(n): Multiple Choice Liability. Expense. Asset. Revenue.
Liability.
The advantages of a corporation compared to a sole proprietorship or partnership include: Multiple Choice Lower total taxes. The ability of stockholders to make operating decisions for their company. Limited liability. Less paper work.
Limited liability.
Animal World issues ten-year bonds at their face amount of $100 million with the option to call the bonds at $102 million. Two years later, interest rates have decreased and Animal World decides to call the bonds. The company estimates that over the next eight years, they will save $16 million of cash interest. The journal entry to retire the bonds will include a: Multiple Choice Gain of $2 million. Loss of $2 million. Gain of $16 million. Gain of $14 million.
Loss of $2 million.
Closing entries are: Multiple Choice Optional. Made to transfer the balances of temporary accounts to retained earnings. Made to record events that occurred during the period but have not yet been recorded. Made to transfer the balances of permanent accounts to retained earnings.
Made to transfer the balances of temporary accounts to retained earnings.
On March 12, a company provides services on account to Happy Homes for $10,200, terms 4/10, n/30. Happy Homes pays for those services on March 20. Required: For the company, record the service on account on March 12 and the collection of cash on March 20.
March 12 Accounts Receivable D:10,200 Service Revenue C:10,200 March 30 Cash D:9,792 Sales Discounts D:408 Accounts Receivable C:10,200
On March 4, Tonkawa Law asks Green Lawn Services for basic lawn maintenance totaling $200. Green Lawn provides maintenance on March 8, and Tonkawa pays for the lawn maintenance on March 12. Using cash-basis accounting, on which date should Tonkawa record lawn maintenance expense? Multiple Choice March 4 (date of request). March 8 (date of lawn maintenance service). March 12 (date of cash payment). Evenly over the three dates.
March 12 (date of cash payment).
On March 4, Tonkawa Law asks Green Lawn Services for basic lawn maintenance totaling $200. Green Lawn provides maintenance on March 8, and Tonkawa pays for the lawn maintenance on March 12. Under accrual-basis accounting, on which date should Tonkawa record lawn maintenance expense? Multiple Choice March 4 (date of request). March 8 (date of lawn maintenance service). March 12 (date of cash payment). Evenly over the three dates.
March 8 (date of lawn maintenance service).
Which of the following definitions describes a serial bond? Multiple Choice Matures on a single date. Secured only by the "full faith and credit" of the issuing corporation. Matures in installments. Supported by specific assets pledged as collateral by the issuer.
Matures in installments.
Which of the following describes the information reported in the statement of cash flows? Multiple Choice Net cash flows from operating, investing, and financing activities. Changes in stockholders' equity through changes in common stock and retained earnings. Net income for the period calculated as revenues minus expenses. Equality of total assets with total liabilities plus stockholders' equity.
Net cash flows from operating, investing, and financing activities.
Which of the following describes the information reported in the income statement? Multiple Choice Net income for the period is calculated by subtracting expenses from revenues. Total assets equal total liabilities plus stockholders' equity. Changes in stockholders' equity are shown through changes in common stock and retained earnings. All accounts and account balances are shown.
Net income for the period is calculated by subtracting expenses from revenues.
Assuming a current ratio of 1.0 and an acid-test ratio of 0.75, how will the purchase of office supplies for cash affect each ratio? Multiple Choice Increase the current ratio and increase the acid-test ratio. No change to the current ratio and decrease the acid-test ratio. Decrease the current ratio and decrease the acid-test ratio. Increase the current ratio and decrease the acid-test ratio.
No change to the current ratio and decrease the acid-test ratio.
Purchasing land with cash would have what effect on the accounting equation? Multiple Choice Total assets decrease. Total liabilities increase. Total assets increase. No effect.
No effect.
On November 15, Meier Company received $3,000 cash from a customer for services that were performed on November 1. According to the Revenue Recognition Principle, on which date should the revenue be recorded? Multiple Choice November 1. November 15. One-half on each date. Neither.
November 1.
On November 15, Meier Company received $3,000 cash from a customer for services that were performed on November 1. On which date should the revenue be recorded under cash-basis accounting? Multiple Choice November 1. November 15. One-half on each date. Neither.
November 15.
A company had the following transactions during the year: 2-year Rent: 8,200 Office supplies: 3,100 Equipment (Cash): 11,000 Equipment (Notes Pay.) 6,000 Bank: 6,900 Salaries: 7,800 Account in 2: 1,600 Paid Dividends: 2,900 Sold Land: 10,900 (from 7,800) Service Revenue: 26,000 Calculate cash flows from operating activities, investing activities, and financing activities.
Operating activities $8,400t Investing activities $(100) Financing activities $4,000
On April 1, a company purchased two units of inventory, A and B. The cost of unit A was $625, and the cost of unit B was $580. On April 30, the company had not sold the inventory. The net realizable value of unit A was now $650 while the net realizable value of unit B was $500. The adjustment associated with the lower of cost and net realizable value on April 30 will be: 1.Cost of Goods Sold 55 Inventory 55 2.Inventory 55 Cost of Goods Sold 55 3.Cost of Goods Sold 80 Inventory 80 4.Inventory 80 Cost of Goods Sold 80
Option 3
Providing services to customers on account for $100 is recorded as a.Accounts Receivable100 Service Revenue 100 b.Cash100 Accounts Receivable 100 c.Service Revenue100 Accounts Receivable 100 d.Service Expense100 Accounts Payable 100 Multiple Choice Option a Option b Option c Option d
Option a
Purchasing office supplies on account for $100 is recorded as: a.Supplies100 Accounts Payable 100 b.Cash100 Supplies 100 c.Supplies100 Cash 100 d.Accounts Payable100 Supplies 100 Multiple Choice Option a Option b Option c Option d
Option a
Which of the following expenditures should be recorded as an expense? Multiple Choice An addition which increases future benefit. An improvement. Ordinary repairs and maintenance. Successful legal defense of an intangible asset.
Ordinary repairs and maintenance.
An exclusive 20-year right to manufacture a product or to use a process is a: Multiple Choice Patent. Copyright. Trademark. Franchise.
Patent.
Which of the following transactions decreases stockholders' equity? Multiple Choice Purchase supplies on account. Pay salaries for the current period. Repay amounts previously borrowed from the bank. Purchase office supplies on account.
Pay salaries for the current period.
Which of the following transactions causes a decrease in stockholders' equity? Multiple Choice Paying advertising expense for the current month. Repaying amount borrowed from the bank. Providing services to customers for cash. Providing services to customers on account.
Paying advertising expense for the current month.
Operating cash flows would include which of the following? Multiple Choice Repayment of borrowed money. Payment for employee salaries. Services provided to customers on account. Payment for a new operating equipment.
Payment for employee salaries.
Investing cash flows would include which of the following? Multiple Choice Payment for advertising. Payment of dividends to stockholders. Cash sales to customers. Payment for land.
Payment for land.
Operating cash flows would include which of the following? Multiple Choice Payment for prepaid insurance. Receipt of cash from selling a building. Payment of dividends to stockholders. Receipt of cash from bank borrowing.
Payment for prepaid insurance.
Operating cash flows would exclude: Multiple Choice -Payment of employee salaries. -Receipt of cash from customers. -Payment of dividends. -Payment for advertising.
Payment of dividends.
Which of the following represents an external transaction? Multiple Choice Lapse of insurance due to passage of time. Use of office supplies by employees over time. Payment of utility bill. Salaries earned by employees but not yet paid.
Payment of utility bill.
The process of transferring debit and credit information from the general journal to the general ledger is known as: Multiple Choice Posting. Charting. Journalizing. Processing.
Posting
Account balances in the general ledger are updated for transactions through the process of: Multiple Choice Balancing. Analyzing. Posting. Journalizing.
Posting.
Which step in the process of measuring external transactions involves assessing the equality of total debits and total credits? Multiple Choice Use source documents to determine accounts affected by the transaction. Prepare a trial balance. Analyze the impact of the transaction on the accounting equation. Post the transaction to the T-account in the general ledger.
Prepare a trial balance.
Return on assets is equal to: Multiple Choice Profit margin times asset turnover. Profit margin minus asset turnover. Profit margin plus asset turnover. Profit margin divided by asset turnover.
Profit margin times asset turnover.
Convertible bonds: Multiple Choice Provide potential benefits only to the lender. Provide potential benefits only to the borrower. Provide potential benefits to both the lender and the borrower. Provide no potential benefits.
Provide potential benefits to both the lender and the borrower.
Callable bonds: Multiple Choice Provide potential benefits to the issuer. Provide potential benefits to the investor. Provide potential benefits to both the issuer and the investor. Provide no potential benefits.
Provide potential benefits to the issuer.
Which of the following transactions causes an increase in stockholders' equity? Multiple Choice Pay dividends to stockholders. Obtain cash by borrowing from a local bank. Provide services to customers on account. Purchase advertising on a local radio station.
Provide services to customers on account.
Which of the following is an example of an accrued revenue? Multiple Choice Prepaying insurance coverage for the next 12 months. Delaying the payment of interest on an outstanding loan until next year. Receiving cash in advance of a service to be provided to a customer. Providing services to a customer without having yet collected the cash.
Providing services to a customer without having yet collected the cash.
Which of the following transactions would result in an account receivable? Multiple Choice Providing services to customers on account. Paying for supplies previously purchased on account. Receiving a loan from the bank. Purchasing supplies on account.
Providing services to customers on account.
Which of the following transactions increases total liabilities? Multiple Choice Pay for rent in the current period. Purchase equipment with cash. Pay dividends to stockholders. Purchase office supplies on account.
Purchase office supplies on account.
Which item is considered a detective control? Multiple Choice -Separation of Duties. -Physical Controls -Reconciliations -Proper authorization
Reconciliations
A contingent liability that is probable and can be reasonably estimated must be Multiple Choice Disclosed. Not disclosed. Recorded. Paid.
Recorded.
Which of the following is an example of a prepaid expense? Multiple Choice Utilities have been incurred but not yet paid. Rent has been purchased in advance. Service was provided to a customer but not yet billed. Interest is incurred through the passage of time.
Rent has been purchased in advance.
Financing cash flows would include which of the following? Multiple Choice Payment of salaries to employees. Sale of services to customers for cash. Repayment of long-term borrowing to the bank. Purchase of equipment for cash for company operations.
Repayment of long-term borrowing to the bank.
Which of the following is not recorded as an intangible asset in the balance sheet? Multiple Choice Patents. Research and development. Trademarks. Goodwill.
Research and development.
Which of the following accounts is listed in a post-closing trial balance? Multiple Choice Salaries Payable. Dividends. Advertising Expense. Service Revenue.
Salaries Payable.
Which of the following refers to the seller reducing the customer's balance owed because of some deficiency in the company's product or service? Multiple Choice Sales Allowance. Sales Discount. Trade Discount. Allowance for Uncollectible Accounts.
Sales Allowance.
Gross profit is defined as: Multiple Choice All revenues minus all expenses. Sales Revenue minus Cost of Goods Sold. Sales Revenue minus Operating Expenses. Income before Income Tax Expense.
Sales Revenue minus Cost of Goods Sold
Bonds can be secured or unsecured. Likewise, bonds can be term or serial bonds. Which is less common? Multiple Choice Secured and term. Secured and serial. Unsecured and term. Unsecured and serial.
Secured and serial.
A multiple-step income statement provides the advantage of: Multiple Choice Placing all revenues before all expenses. Separating revenues and expenses based on their different types of activities. Placing all revenues after all expenses. Excluding the effects of income taxes in the calculation of net income.
Separating revenues and expenses based on their different types of activities.
On September 9, Clearmore Services receives a request for services from a customer. The service is scheduled for September 15. On September 15, the service is provided, and the customer pays one week later on September 22. Using accrual-basis accounting, on which date should Clearmore Services record service revenue? Multiple Choice September 9 (date of service request). September 15 (date of service). September 22 (date of cash receipt). Evenly over the three dates.
September 15 (date of service).
On September 9, Clearmore Services receives a request for services from a customer. The service is scheduled for September 15. On September 15, the service is provided, and the customer pays one week later on September 22. Using cash-basis accounting, on which date should Clearmore Services record service revenue? Multiple Choice September 9 (date of service request). September 15 (date of service). September 22 (date of cash receipt). Evenly over the three dates.
September 22 (date of cash receipt).
A credit is used to increase which of the following accounts? Multiple Choice Dividends. Insurance Expense. Cash. Service Revenue.
Service Revenue.
Which of the following accounts is not listed in a post-closing trial balance? Multiple Choice Service Revenue. Accounts Receivable. Equipment. Interest Payable.
Service Revenue.
Which of the following will result in higher depreciation expense in the first year of the asset's life? Multiple Choice Short service life and high residual value. Short service life and low residual value. Long service life and low residual value. Long service life and high residual value.
Short service life and low residual value.
Generally Accepted Accounting Principles (GAAP) are best defined by: Multiple Choice -Standards or methods for presenting financial accounting information. -Government-mandated rules that companies must follow. -Rules that help estimate the profitability of a company. -The group of individuals that create and enforce all accounting rules.
Standards or methods for presenting financial accounting information.
The statement of stockholders' equity: Multiple Choice Lists the balance of each revenue and each expense, and reports the difference as net income. Summarizes the changes in the balance in each stockholders' equity account over a period of time. Lists the balances of each asset and each liability, and reports the difference as stockholders' equity. All of the other answers are correct.
Summarizes the changes in the balance in each stockholders' equity account over a period of time.
The Cash Flow Statement beginning and ending cash balances tie to which financial statement(s)? Multiple Choice -The Income Statement -The Balance Sheet -The Statement of Stockholders' Equity -Both the Statement of Retained Earnings and the Balance Sheet.
The Balance Sheet
When accounts receivable are collected: Multiple Choice -Total assets increase. -The amount of total assets is unchanged. -Stockholders' equity increases. -Total assets decrease.
The amount of total assets is unchanged.
In each succeeding payment on an installment note: Multiple Choice The amount that goes to interest expense increases. The amount that goes to interest expense decreases. The amount that goes to interest expense is unchanged. The amounts paid for both interest and principal increase proportionately.
The amount that goes to interest expense decreases.
Who is ultimately responsible for the establishment and success of a company's internal control system? Multiple Choice The company's top executives. The company's stockholders. The company's external auditors. The company's board of directors.
The company's top executives.
Which of the following represents the balance of Cost of Goods Sold at the end of the year? Multiple Choice The cost of inventory not yet sold by the end of the year. The cost of inventory purchased during the year. The cost of inventory at the beginning of the year. The cost of inventory sold during the year.
The cost of inventory sold during the year.
Financial leverage is best measured by which of the following ratios? Multiple Choice The return on assets ratio. The return on equity ratio. The times interest earned ratio. The debt to equity ratio.
The debt to equity ratio.
At any given time, the amount of cash in the petty cash fund should equal: Multiple Choice All vouchers written during the accounting period. The established balance of the fund less all vouchers written during the accounting period. The amount of cash withdrawn from the fund during the accounting period. The amount of cash used to establish the fund.
The established balance of the fund less all vouchers written during the accounting period.
Which of the following shows a chronological record of all transactions? Multiple Choice The general ledger. The chart of accounts. The trial balance. The general journal.
The general journal.
Interest expense is recorded in the period in which: Multiple Choice The interest is paid. The interest is incurred. The interest is paid or incurred. The interest is paid and incurred.
The interest is incurred.
If a company issues par-value stock, the amount credited to common stock will be: Multiple Choice The total market value of all the shares issued. The par value per share times the number of shares issued. The difference between the market and the par value per share times the total number of shares issued. The amount the board of directors chooses to assign to the shares.
The par value per share times the number of shares issued
The primary difference between the periodic and perpetual inventory systems is: Multiple Choice -The reported amount of ending inventory is higher under the periodic system. -The perpetual system maintains a continual record of inventory transactions, whereas the periodic system records these transactions only at the end of the period. -The reported amount of sales revenue is higher under the periodic inventory system. -The reported amount of cost of goods sold is higher under the perpetual inventory system.
The perpetual system maintains a continual record of inventory transactions, whereas the periodic system records these transactions only at the end of the period.
Effective internal control over cash includes the requirement that: Multiple Choice Only checks are used for payment of purchases. The same person who makes deposits should also record the deposits. The person who makes deposits should NOT record the deposits. Only checks are used for payment of purchases and the same person who makes deposits should also record the deposits.
The person who makes deposits should NOT record the deposits.
The issue price of a bond is calculated as: Multiple Choice The bond's face amount to be paid at maturity. The present value of the bond's face amount to be paid at maturity. The present value of the bond's periodic interest payments over the life of the bond. The present value of the bond's face amount plus the present value of its periodic interest payments.
The present value of the bond's face amount plus the present value of its periodic interest payments.
The amount of the gain on the sale of equipment equals: Multiple Choice The selling price minus the book value of the equipment. The selling price minus the original cost of the equipment. The selling price minus the fair value of the equipment. The selling price minus accumulated depreciation of the equipment.
The selling price minus the book value of the equipment.
Which of the following statements is false regarding the amortization of intangible assets? Multiple Choice Intangible assets with a limited useful life are amortized. The service life of an intangible asset is always equal to its legal life. The expected residual value of most intangible assets is zero. Goodwill is the most common intangible asset with an indefinite useful life.
The service life of an intangible asset is always equal to its legal life.
A company resells 10,000 shares of treasury stock for $22 per share. The stock was purchased in a previous year for $18 per share. By how much would net income be affected by the sale of this treasury stock? Multiple Choice $220,000. $180,000. $40,000. There would be no effect on net income from the sale of treasury stock.
There would be no effect on net income from the sale of treasury stock.
The primary reason the balance of cash in the company's records will differ from the balance of cash in the bank's records includes: Multiple Choice Timing differences of recording cash transactions by the company and by the bank. Cash theft by the company's employees. Accounting errors made by the company. Accounting errors made by the bank.
Timing differences of recording cash transactions by the company and by the bank.
What is a direct purpose of internal controls? Multiple Choice To improve the accuracy and reliability of accounting information. To help managers determine which projects are likely to be more profitable. To assist top executives in planning employment capacity. To minimize tax payments to the Internal Revenue Service (IRS).
To improve the accuracy and reliability of accounting information.
Common shareholders usually have all of the following rights except: Multiple Choice To participate in the day-to-day operations. To share in the distribution of assets. To elect board of directors. To receive dividends when declared.
To participate in the day-to-day operations.
Markle's Inc. had the following transactions during the year: total sales = $600,000; sales discounts = $12,500; sales returns = $35,000; sales allowances = $15,000. In addition, at the end of the year the company estimates the following transactions associated with sales in the current year will occur next year: sales discounts = $1,250; sales returns = $4,200; sales allowances = $2,000. Compute net sales.
Total Sales: $600,000 Less: Sale Discount (13,750) Less: Sales Return (39,200) Less: Sales Allowances (17,000) Net Sales: 530,050
A company took out a loan to purchase land for $450,000. What would be the effect of this transaction on Company's total assets? Multiple Choice -Total assets would go down by $450,000. -Liabilities would increase and Stockholder's Equity would decrease. -Total assets would go up by $450,000 -There would be zero effect on total assets.
Total assets would go up by $450,000
Which of the following is true about a trial balance? Multiple Choice Only income statement accounts are shown. Total debit amounts should always equal total credit amounts. Only balance sheet accounts are shown. The trial balance shows the change in all account balances over the accounting period.
Total debit amounts should always equal total credit amounts.
Posting is the process of Multiple Choice Analyzing the impact of the transaction on the accounting equation. Obtaining information about external transactions from source documents. Transferring the debit and credit information from the journal to individual accounts in the general ledger. Listing all accounts and their balances at a particular date and showing the equality of total debits and total credits.
Transferring the debit and credit information from the journal to individual accounts in the general ledger.
A debit is used to increase which of the following accounts? Multiple Choice Utilities Expense. Accounts Payable. Service Revenue. Common Stock.
Utilities Expense.
Purchasing office supplies on account for $100 is recorded as: a.Supplies100 Accounts Payable 100 b.Cash100 Supplies 100 c.Supplies100 Cash 100 d.Accounts Payable100 Supplies 100
a.Supplies100 Accounts Payable 100
In most cases, current liabilities are payable within ____ year(s), and long-term liabilities are payable more than ____ year(s) from now. Multiple Choice one; two one; one two; two one; ten
one; one
