Accounting Final Exam Troutman Sample Questions

Woodring Company purchased a new car for $90,000 by paying $36,000 cash, and trading in an old car with a recorded net cost and market value of $30,000. They also signed a Note for $24,000. The required journal entry will not: A) Credit Notes Payable for $24,000 B) Debit New Car for $90,000 C) Debit Notes Payable for $24,000 D) Credit Old Car for $30,000

Answer: C

Which one of the following is not a reason for which adjusting entries are made? A) To close the income statement accounts and prepare them for the following year's activity B) To allocate used or expired assets to reflect expenses incurred in the period C) To allocate the earned portion of unearned revenue to reflect revenues earned during the period D) To accrue expenses to reflect expenses incurred in the period that are not yet paid or recorded

Answer: A

A company received payment of $20,000 from a customer that had previously received services performed on account. What would the effect of this transaction on the company's current month accounting equation? A) No effect on Assets; No effect on Liabilities; No effect on Stockholders' Equity B) $20,000 increase in Assets; $20,000 increase in Liabilities; No effect on Stockholders' Equity C) $20,000 increase in Assets; No effect on Liabilities; $20,000 increase in Stockholders' Equity D) No effect on Assets; $20,000 increase in Liabilities; $20,000 decrease in Stockholders' Equity

Answer: A

Annabeth, Inc. had net sales of $1,530,000 during 2016. On January 1, 2016, Annabeth's accounts receivable were $320,000. On December 31, 2016, Annabeth's accounts receivable were $400,000. What was Annabeth's accounts receivable turnover for 2016? A) 4.25 B) 3.03 C) 3.83 D) 4.78

Answer: A

Data from the financial statements of Crafty Crafts and Hobbies, Inc. are presented below (in millions): Crafty Crafts Hobbies, Inc. Total liabilities, 2016 $31,957 $25,461 Total liabilities, 2015 36,104 30,046 Total assets, 2016 46,186 32,872 Total assets, 2015 46,514 35,208 Net sales, 2016 161,466 81,702 Net income, 2016 1,040 1,766 To the nearest hundredth of a percent, what is the return on sales ratio 2016 for Hobbies, Inc.? A) 2.16% B) 2.39% C) 2.90% D) Not enough information is provided

Answer: A

Data from the financial statements of Crafty Crafts and Hobbies, Inc. are presented below (in millions): Crafty Crafts Hobbies, Inc. Total liabilities, 2016 $31,957 $25,461 Total liabilities, 2015 36,104 30,046 Total assets, 2016 50,186 36,872 Total assets, 2015 47,054 35,208 Revenue, 2016 153,466 81,702 Net income, 2016 210 1,179 To the nearest hundredth, what is the 2016 debt-to-total-assets ratio for Crafty Crafts? A) 0.64 B) 0.26 C) 3.78 D) 44.16

Answer: A

David Bash's Landscaping Company has compiled the following list of account balances of various assets, liabilities, revenues and expenses on December 31, 2016, the end of its first year of operations. Common stock 50,400 Accounts payable 10,000 Salary expense 18,000 Repairs expense 3,200 Dividends 20,000 Truck 34,000 Equipment 25,200 Notes payable 32,800 Cash 70,400 Supplies expense 6,400 Service revenue 87,200 Gasoline expense 3,200 The total assets for David Bash's Landscaping on December 31, 2016 are: A) $129,600 B) $112,400 C) $126,400 D) $ 86,400

Answer: A

Early in the accounting period, Appreciative Client paid $3,000 for services in advance of receiving them; Cash was debited and Unearned Service Fees was credited for $3,000. At the end of the accounting period, two-thirds of the services paid for had yet to be performed. The proper adjusting entry is: A) Unearned Service Fees 1,000 Service Fees Earned 1,000 B) Service Fees Earned 2,000 Unearned Service Fees 2,000 C) Unearned Service Fees 2,000 Service Fees Earned 2,000 D) Service Fees Earned 1,000 Unearned Service Fees 1,000

Answer: A

Henry Company reported total stockholders' equity of $435,000 on its Dec 31, 2015, balance sheet. The following information is available for the year ended Dec 31, 2016: Revenues..................................................... $630,000 Expenses..................................................... $495,000 Assets, on December 31, 2016.................. $1,216,000 What are the total liabilities of the company on December 31, 2016? A) $ 646,000 B) $ 630,000 C) $1,216,000 D) $ 276,000

Answer: A

If inventory at the end of the year is understated by $70,000, what will this error cause? A) An understatement of net income for the year by $70,000 B) An overstatement of gross profit for the year by $70,000 C) An overstatement of inventory for the year by $70,000 D) An understatement of cost of goods sold for the year by $70,000

Answer: A

In 2016, Just Right Co. incurred cost of goods sold of $24,882 million on net sales of $32,130 million. What is Just Right's gross profit percentage for 2016? A) 22.6% B) 77.4% C) 29.1% D) 21.1%

Answer: A

Piper, Inc. had net sales of $2,700,000 during 2016. On January 1, 2016, Piper's accounts receivable were $640,000. On December 31, 2016, Piper's accounts receivable were $800,000. What was Piper's average collection period for 2016? A) 97.3 days B) 15.5 days C) 108.1 days D) 48.7 days

Answer: A

The Cash T-account of Rainbow, Inc. has a beginning balance of $52,000. During the year, $244,000 was debited and $241,000 was credited to the account. What is the ending balance of cash? A) $55,000 B) $37,000 C) ($ 5,000) D) Cannot be determined from the information given

Answer: A

The following data represent the beginning inventory and, in order of occurrence, the purchases and sales of Las Lemus, Inc. for an operating period. Units Unit Cost Total Cost Units Sold Beginning Inventory 32 $ 36 $1,152 Sale No. 1 10 Purchase No. 1 28 40 1,120 Sale No. 2 32 Purchase No. 2 20 38 760 __ Totals 80 $3,032 42 Assuming Las Lemus, Inc. uses weighted-average (periodic) inventory procedures, the ending inventory cost is: A) $1,440.20 B) $1,442.00 C) $1,444.00 D) $1,594.80

Answer: A

The following inventory was available for sale during the year for Thomasina Tools: Beginning inventory ................. 10 units at $ 80 First purchase ........................ 15 units at $110 Second purchase .................... 30 units at $140 Third purchase ....................... 20 units at $130 Thomasina has 25 units on hand at the end of the year. What is the dollar amount of inventory at the end of the year according to the first-in, first-out method? A) $3,300 B) $5,950 C) $3,150 D) $3,900

Answer: A

What are the economics resources of a business that can be expressed in monetary and how are they reported? A) Assets on the balance sheet B) Stockholders' equity on the balance sheet C) Dividends on the statement of retained earnings D) Liabilities on the balance sheet

Answer: A

Which one of the following is not a key linkage among the four primary financial statements? A) The expenses in the income statement link to the total liability balance. B) The statement of cash flows links to ending cash balance reported on the balance sheet. C) The income statement links to the ending retained earnings in the statement of retained earnings. D) The statement of retained earnings links to ending retained earnings on the balance sheet.

Answer: A

Which of the following is a distinguishing characteristic of a deferral? A) It affects at least one liability account B) It always impacts the cash account C) It includes the adjustment of an amount previously recorded in a balance sheet account D) It increases a balance sheet account and decreases an income statement account

Answer: C

Financial accounting oversight in the United States is provided by all of the following organizations except the: A) International Accounting Standards Board (IASB) B) Financial Accounting Standards Board (FASB) C) Public Company Accounting Oversight Board (PCAOB) D) U.S. Securities Exchange Commission (SEC)

Answer: A Rationale: While the United States is working to converge national standards with those standards set by the IASB, no final decision requiring the adoption of the IASB's standards has been made.

. Which of the following is a poor internal accounting control feature? A) Segregation of duties. B) Combining authorization with custodianship. C) Rotation of personnel. D) Internal auditing.

Answer: B

Assume December 31 is a Wednesday. Weld-Rite Company's wages are paid every Friday, and the weekly payroll (for five days) amounts to $6,000. To record the correct amount of expense for December, Weld-Rite makes the following entry on December 31: A) Wages Expense 3,360 Wages Payable 3,360 B) Wages Expense 3,600 Wages Payable 3,600 C) Wages Payable 6,000 Wages Expense 6,000 D) Wages Payable 3,600 Wages Expense 3,600

Answer: B

Assuming sales hold steady, which of the following actions would result in lowering income taxes for a company that uses the LIFO inventory method? A) Increasing sales prices B) Buying extra inventory near the end of the year in an inflationary environment C) Allowing the inventory quantity at year end to fall below beginning year levels D) None of these. All would cause increasing taxes

Answer: B

During its first month of operations, Pluto Company (1) borrowed $200,000 from a bank, and then (2) purchased an equipment costing $80,000 by paying cash of $40,000 and signing a long term note for the remaining amount. During the month, the company also (3) purchased inventory for $60,000 on credit, (4) performed services for clients for $120,000 on account, (5) paid $30,000 cash for accounts payable, and (6) paid $60,000 cash for utilities. What is the amount of total liabilities at the end of the month? A) $190,000 B) $270,000 C) $250,000 D) $330,000

Answer: B

Honey Corporation has the following normal account balances in its general ledger at the end of a period: Sales revenue $600,000 Advertising expense 90,000 Which of the following gives the correct entry required to close only the accounts above? A) Advertising Expense 90,000 Retained Earnings 510,000 Sales Revenue 600,000 B) Sales Revenue 600,000 Advertising Expense 90,000 Retained Earnings 510,000 C) Retained Earnings 510,000 Net Income 510,000 D) None of the above. These accounts are not closed.

Answer: B

In a double-entry accounting system: A) All accounts have normal debit balances B) A debit entry is recorded on the left side of an account C) Liabilities, common stock, and expense accounts all have normal credit balances D) A credit entry records a decrease in an account

Answer: B

In reconciling the September bank statement, the vice president discovered that the bookkeeper had recorded a check written for $438 as $483 in the cash disbursements journal. For the bank reconciliation, the $45 error should be: A) Added to balance per bank statement B) Added to balance per general ledger C) Deducted from balance per bank statement D) Deducted from balance per general ledger

Answer: B

Internal auditing is a company function that: A) Audits the firm's financial statements and expresses an opinion on them B) Provides independent appraisals of the company's financial statements, its internal control, and its operations C) Prepares the firm's income tax returns D) All of the above

Answer: B

Oakpark, Inc.'s $180,000 Accounts Receivable balance at December 31 consisted of $160,000 current balances and $20,000 past-due balances. At December 31, the Allowance for Doubtful Accounts had a credit balance of $1,600. Oakpark estimated that 2% of current balances and 15% of past-due balances will prove uncollectible. The adjusting entry to record credit losses is: A) Bad Debts Expense 5,800 Allowance for Doubtful Accounts 5,800 B) Bad Debts Expense 4,600 Allowance for Doubtful Accounts 4,600 C) Bad Debts Expense 4,200 Accounts Receivable 4,200 D) Bad Debts Expense 7,400 Allowance for Doubtful Accounts 7,400

Answer: B

On December 31, 2016 before adjusting entries, Accounts Receivable for Nickolas Company had a debit balance of $200,000, and the Allowance for Doubtful Accounts had a credit balance of $6,000. Credit sales for the year were $1,600,000. If credit losses are estimated at 1% of credit sales: A) The balance of the Allowance for Doubtful Accounts will be $10,000 after adjustment. B) The balance of the Allowance for Doubtful Accounts will be $22,000 after adjustment. C) The balance of the Allowance for Doubtful Accounts will be $16,000 after adjustment. D) Bad Debts Expense for the year will be $22,000.

Answer: B

Rain Company has net credit sales of $1,800,000 for the year and it estimates that doubtful accounts will be 2% of sales. If its Allowance for Doubtful Accounts has a credit balance of $6,000 prior to adjustment, its balance after adjustment will be a credit of: A) $28,000 B) $42,000 C) $27,960 D) $26,000

Answer: B

The accounting equation for Badger Enterprises is as follows: Assets = Liabilities + Stockholders' Equity $240,000 = $120,000 + $120,000 If the company now signs a bank note payable in exchange for $30,000, the accounting equation will change to: Assets Liabilities Stockholders' Equity A) $240,000 = $ 90,000 + $150,000 B) $270,000 = $150,000 + $120,000 C) $240,000 = $150,000 + $ 90,000 D) $270,000 = $120,000 + $150,000

Answer: B

The accounting record for Max III Company reported the following selected information: Operating Expenses $ 180,000 Sales Returns and Allowances 52,000 Sales Discounts 24,000 Sales Revenue 700,000 Cost of Goods Sold 268,000 Determine Max III Company's gross profit. A) $308,000 B) $356,000 C) $280,000 D) $332,000

Answer: B

The following data refer to Jacket Company's ending inventory: Item code Quantity Unit Cost Unit Market Small 100 $114 $116 Medium 420 76 88 Large 600 84 88 Extra-Large 220 134 128 How much is the inventory if the lower of cost or market rule is applied to each item of inventory? A) $126,320 B) $121,880 C) $132,720 D) None of the above

Answer: B

The following information pertains to Louis Company: Cash balance per bank statement $28,700 Cash balance per general ledger 30,160 Bank service charge 80 Deposits in transit to bank 3,600 Outstanding checks 2,620 NSF check returned by bank 400 Louis should show the following reconciled cash balance from the bank reconciliation on its balance sheet: A) $27,080 B) $33,780 C) $29,680 D) $32,220

Answer: C

The following data represent the beginning inventory and, in order of occurrence, the purchases and sales of Las Lemus, Inc. for an operating period. Units Unit Cost Total Cost Units Sold Beginning Inventory 32 $ 36 $1,152 Sale No. 1 10 Purchase No. 1 28 40 1,120 Sale No. 2 32 Purchase No. 2 20 38 760 __ Totals 80 $3,032 42 Assuming Las Lemus, Inc. uses LIFO periodic inventory procedures, the ending inventory cost is: A) $1,326 B) $1,392 C) $1,444 D) $1,480

Answer: B

Which of the following is not a category for classifying cash flows in a statement of cash flows? A) Operating activities B) Nonoperating activities C) Financing activities D) Investing activities

Answer: B

Which of the following is not a component of the annual report which some companies provide to their shareholders? A) Auditor's report B) Statement of SEC Compliance C) Management Discussion and Analysis D) Notes to the Financial Statements

Answer: B

A company provides services to clients during the period that are neither paid for, nor billed to the clients. What must the company do? A) Bill the client prior to year end in order to recognize the revenue B) Record the revenues as a liability at the end of the year C) Accrue revenue by making an adjusting entry at the end of the period D) All of the above are true

Answer: C

Assuming rising prices, which method will give the highest dollar value for cost of goods sold on the income statement? A) FIFO B) Average Cost C) LIFO D) All of these give equal values for cost of goods sold

Answer: C

Beautiful Lawns Company estimates its doubtful accounts by aging its accounts receivable and applying percentages to various aged categories of accounts. The Beautiful Lawns Company computes a total of $3,600 in estimated doubtful accounts as of December 31, 2016. Its Accounts Receivable account has a balance of $112,800 and its Allowance for Doubtful Accounts has a credit balance of $600 before adjustment at December 31, 2016. How much bad debts expense will Beautiful Lawns report in 2016? A) $ 480 B) $3,840 C) $3,000 D) $3,360

Answer: C

Chocolate Mountain Company has Beginning retained earnings of $300,000, earns a net income of $75,000, and has an Ending retained earnings balance of $368,000 during the period. The amount which Chocolate Mountain paid in dividends must have been: A) $ 4,000 B) $75,000 C) $ 7,000 D) $68,000

Answer: C

Data from the financial statements of Crafty Crafts and Hobbies, Inc. are presented below (in millions): Crafty Crafts Hobbies, Inc. Total liabilities, 2016 $31,957 $25,461 Total liabilities, 2015 36,104 30,046 Total assets, 2016 46,186 32,872 Total assets, 2015 46,514 35,208 Net sales, 2016 161,466 81,702 Net income, 2016 1,040 1,766 To the nearest hundredth of a percent, what is the return on assets ratio 2016 for Hobbies, Inc.? A) 0.03% B) 6.94% C) 5.37% D) Not enough information is provided

Answer: C

David Bash's Landscaping Company has compiled the following list of account balances of various assets, liabilities, revenues and expenses on December 31, 2016, the end of its first year of operations. Common stock 50,400 Accounts payable 10,000 Salary expense 18,000 Repairs expense 3,200 Dividends 20,000 Truck 34,000 Equipment 25,200 Notes payable 32,800 Cash 70,400 Supplies expense 6,400 Service revenue 87,200 Gasoline expense 3,200 The stockholders' equity for David Bash's Landscaping on December 31, 2016 is: A) $ 90.000 B) $110,800 C) $ 86,800 D) $ 90,400

Answer: C

David Bash's Landscaping Company has compiled the following list of account balances of various assets, liabilities, revenues and expenses on December 31, 2016, the end of its first year of operations. Common stock 50,400 Accounts payable 10,000 Salary expense 18,000 Repairs expense 3,200 Dividends 20,000 Truck 34,000 Equipment 25,200 Notes payable 32,800 Cash 70,400 Supplies expense 6,400 Service revenue 87,200 Gasoline expense 3,200 The retained earnings for David Bash's Landscaping on December 31, 2016 are: A) $12,600 B) $ 2,800 C) $36,400 D) $56,400

Answer: C

During its first and second years of operations, Outback Company, a corporation using a periodic inventory system, made undiscovered errors in taking its year-end inventories that understated Year 1 ending inventory by $80,000 and overstated Year 2 ending inventory by $110,000. The combined effect of these errors on reported income is: Year 1 Year 2 Year 3 A) Understated Overstated Not affected $80,000 $110,000 --- B) Understated Overstated Not affected $80,000 $30,000 --- C) Understated Overstated Understated $80,000 $190,000 $110,000 D) Overstated Understated Overstated $80,000 $110,000 $30,000

Answer: C

John Den Bear Company had a $150,000 beginning balance in Accounts Receivable and a $6,000 credit balance in the Allowance for Doubtful Accounts. During the year, credit sales were $600,000 and customers' accounts collected were $590,000. Also, $4,000 in worthless accounts were written off. What was the net amount of receivables included in the current assets at the end of the year, before any provision was made for doubtful accounts? A) $130,000 B) $126,000 C) $154,000 D) $120,000

Answer: C

Keith Company paid Major Company for merchandise with an $8,000, 60-day, 9% note dated April 1. If Keith Company pays the note at maturity, what entry should Major make at that time? A) Cash 8,720 Interest income 720 Notes receivable 8,000 B) Notes payable 8,000 Interest expense 720 Cash 8,720 C) Cash 8,120 Interest income 120 Notes receivable 8,000 D) Notes payable 7,880 Interest expense 120 Cash 8,000

Answer: C

Marzipan Company reported the following data for 2016: Cost of Beginning Inventory: $ 50,000 Invoice Cost of merchandise purchases: 1,100,000 Purchase Returns and Allowances: 50,000 Purchase Discounts received: 20,000 Cost of Transportation in: 30,000 Cost of merchandise sold to customers in sales transactions: $660,000 Determine Marzipan Company's Balance of Ending Inventory. A) $1,000,000 B) $1,040,000 C) $450,000 D) $440,000

Answer: C

The Blue Plum Company's Office Supplies account had a beginning balance of $16,000. During the month, purchases of office supplies totaling $4,000 were debited to the Office Supplies account. If $6,000 worth of office supplies is still on hand at month-end, what is the proper adjusting entry? A) Office Supplies Expense 6,000 Office Supplies 6,000 B) Office Supplies 6,000 Office Supplies Expense 6,000 C) Office Supplies Expense 14,000 Office Supplies 14,000 D) Office Supplies 14,000 Office Supplies Expense 14,000

Answer: C

A company incurred $60,000 (to be paid next year) for the current year's advertising activities. What would the effect of this transaction on the current year's accounting equation? A) No effect on Assets; $60,000 decrease in Liabilities; $60,000 increase in Stockholders' Equity B) $60,000 increase in Assets; $60,000 increase in Liabilities; No effect on Stockholders' Equity C) $60,000 increase in Assets; No effect on Liabilities; $60,000 increase in Stockholders' Equity D) No effect on Assets; $60,000 increase in Liabilities; $60,000 decrease in Stockholders' Equity

Answer: D

A company performed $17,270 of services and received $6,000 in cash with the remaining amount to be paid in 60 days with no interest. What would the effect of this transaction on the company's current month-end accounting equation? A) $6,000 increase in Assets; $11,270 decrease in Liabilities; $17,270 increase in Stockholders' Equity B) $17,270 increase in Assets; $17,270 increase in Liabilities; No effect on Stockholders' Equity C) $11,270 increase in Assets; No effect on Liabilities; $11,270 increase in Stockholders' Equity D) $17,270 increase in Assets; No effect on Liabilities; $17,270 increase in Stockholders' Equity

Answer: D

A retailer that makes credit card sales: A) Absorbs any losses on uncollectible credit card accounts B) Is charged a fee ranging from 1% to 5% of the amount of each credit card sale C) Records such sales as a debit to Cash or Accounts Receivable, a debit to Credit Card Fees Expense, and a credit to Sales Revenue D) Both (B) and (C).

Answer: D

Assume the following unadjusted account balances at the end of the accounting period for Johanna Company: Accounts Receivable, $100,000; Allowance for Doubtful Accounts, $1,400 (debit balance); and Net sales, $1,200,000. If Johanna's past experience indicates credit losses of 1% of net sales, the adjusting entry to estimate doubtful accounts is: A) Bad Debts Expense 12,000 Accounts Receivable 12,000 B) Bad Debts Expense 10,600 Allowance for Doubtful Accounts 10,600 C) Bad Debts Expense 13,400 Allowance for Doubtful Accounts 13,400 D) Bad Debts Expense 12,000 Allowance for Doubtful Accounts 12,000

Answer: D

Blade Company calculates it has earned (but not yet collected or recorded) interest of $2,100 at December 31 on outstanding notes receivable. How should Blade record this on December 31? A) Interest Payable 2,100 Interest Income 2,100 B) Interest Income 2,100 Interest Receivable 2,100 C) Interest Receivable 2,100 Interest Payable 2,100 D) Interest Receivable 2,100 Interest Income 2,100

Answer: D

Chet Company paid $52,800 for a four-year insurance policy on September 1 and recorded the $52,800 as a debit to Prepaid Insurance and a credit to Cash. What adjusting entry should Chet make on December 31, the end of the accounting period (no previous adjustment has been made)? A) Prepaid Insurance 48,400 Insurance Expense 48,400 B) Insurance Expense 13,200 Prepaid Insurance 13,200 C) Prepaid Insurance 4,400 Insurance Expense 4,400 D) Insurance Expense 4,400 Prepaid Insurance 4,400

Answer: D

David Bash's Landscaping Company has compiled the following list of account balances of various assets, liabilities, revenues and expenses on December 31, 2016, the end of its first year of operations. Common stock 50,400 Accounts payable 10,000 Salary expense 18,000 Repairs expense 3,200 Dividends 20,000 Truck 34,000 Equipment 25,200 Notes payable 32,800 Cash 70,400 Supplies expense 6,400 Service revenue 87,200 Gasoline expense 3,200 The total liabilities for David Bash's Landscaping on December 31, 2016 are: A) $146,000 B) $ 75,600 C) $ 46,800 D) $ 42,800

Answer: D

David Bash's Landscaping Company has compiled the following list of account balances of various assets, liabilities, revenues and expenses on December 31, 2016, the end of its first year of operations. Common stock 50,400 Accounts payable 10,000 Salary expense 18,000 Repairs expense 3,200 Dividends 20,000 Truck 34,000 Equipment 25,200 Notes payable 32,800 Cash 70,400 Supplies expense 6,400 Service revenue 87,200 Gasoline expense 3,200 1. The net income for David Bash's Landscaping for the year was: A) $51,200 B) $22,800 C) $23,600 D) $56,400

Answer: D

Fernando's Groceries purchased milk cartons at an invoice price of $12,000 and terms of 2/10, n/30. On arrival of the goods, Fernando's realized that half of the milk was past the expiration date, and returned them immediately to the supplier. If Fernando's pays the remaining amount of the invoice within the discount period, the amount paid should be: A) $ 5,760 B) $11,760 C) $12,000 D) $ 5,880

Answer: D

Gardeners', Inc., which uses a periodic inventory system, shows the following on December 31, 2016. Purchase Discounts $ 11,200 Freight-in 15,600 Purchases 420,020 Beginning Inventory 67,000 Ending Inventory 57,600 Purchase Returns 12,800 The cost of goods sold for the year 2016 is: A) $419,020 B) $397,820 C) $381,020 D) $421,020

Answer: D

Jonathan Frisby Company purchased supplies for $28,000 on credit on January 1, 2016. On January 15, the company made a cash payment of $8,000 to the supplier, and signed a one-year note for the remaining amount to settle the account. Jonathan Frisby Company's journal entry on January 15 will include: A) Debit Cash for $20,000 B) Debit Notes Payable for $20,000 C) Credit Accounts Payable for $20,000 D) Credit Notes Payable for $20,000

Answer: D

Steel Company and Copper Company reported the following information in their financial statements, prior to their merger: Steel Company Copper Company $millions Sales COGS Inventories Sales COGS Inventories 2016 $28,500 $23,300 $6,670 $44,280 $32,100 $16,900 2015 27,500 17,120 8,440 46,100 24,400 15,400 To the closest hundredth, how much is the 2016 inventory turnover for Steel Company? A) 2.89 B) 2.41 C) 1.28 D) 3.08

Answer: D

Stone Company has beginning equity of $1,200,000, net income of $200,000, dividends of $120,000 and investments by owners in exchange for stock of $40,000. Its ending equity is: A) $ 892,000 B) $ 960,000 C) $1,072,000 D) $1,320,000

Answer: D

Sullivan Company received its February bank statement, which included a memo indicating that the check of Emma Company for $435 had been returned as "NSF." Sullivan's bank reconciliation should list this check as a(n): A) Addition to balance per bank statement B) Deduction from balance per bank statement C) Addition to balance per general ledger D) Deduction from balance per general ledger

Answer: D

The Andrea's Flowers company's failure to record depreciation expense at the end of an accounting period, results in: A) Understated income B) Understated assets C) Overstated expenses D) Overstated assets

Answer: D

The following data represent the beginning inventory and, in order of occurrence, the purchases and sales of Las Lemus, Inc. for an operating period. Units Unit Cost Total Cost Units Sold Beginning Inventory 32 $ 36 $1,152 Sale No. 1 10 Purchase No. 1 28 40 1,120 Sale No. 2 32 Purchase No. 2 20 38 760 __ Totals 80 $3,032 42 3. Assuming Las Lemus, Inc. uses FIFO periodic inventory procedures, the ending inventory cost is: A) $1,368 B) $1,392 C) $1,444 D) $1,480

Answer: D

The primary components of the stockholders' equity section of a balance sheet for a corporation are: A) A capital amount for each stockholder in the corporation B) Net income and retained earnings C) Common stock and dividends D) Common stock and retained earnings

Answer: D

To take advantage of a zero percent rent increase for the coming year, a company paid, at year-end, $150,000 rent for the first three months of the next year. What would the effect of this transaction on the company's year-end accounting equation? A) No effect on Assets; $150,000 decrease in Liabilities; $150,000 increase in Stockholders' Equity B) $150,000 increase in Assets; $150,000 increase in Liabilities; No effect on Stockholders' Equity C) $150,000 increase in Assets; No effect on Liabilities; $150,000 increase in Stockholders' Equity D) No effect on Assets; No effect on Liabilities; No effect on Stockholders' Equity

Answer: D

Under the allowance method of accounting for credit losses, the entry to write off a specific account: A) Will increase total assets B) Debits Bad Debts Expense and credits Allowance for Doubtful Accounts C) Is the same as the entry to write off a specific account under the direct write-off method D) Does not affect net income or total assets

Answer: D

Using a periodic inventory system, the seller's journal entry to record the sale of merchandise on account includes a: A) Credit to Purchases B) Debit to Inventory C) Credit to Accounts Receivable D) Credit to Sales Revenue

Answer: D

What are the obligations or debts that a business must pay in cash or in goods and services at some future time because of past transactions or events called and how are they reported? A) Assets on the balance sheet B) Stockholders' equity on the balance sheet C) Dividends on the statement of retained earnings D) Liabilities on the balance sheet

Answer: D

Which statement is true of the statement of stockholders' equity? A) It reports a company's assets, liabilities, and equities. B) It reports a company's revenue and expenses for a period. C) It reports a company's cash flows from operating activities, investing activities, and financing activities. D) It shows a company's stock issuances and dividends paid to shareholders.

Answer: D

The qualitative characteristics of accounting information: A) Include relevance which means that information must be timely and contribute to the predictive and evaluative decisions made by investors and creditors. B) Are intended to contribute to the usefulness of financial reporting for investment and credit decisions. C) Include faithful representation which has the characteristic of being complete, neutral, free from error (reliable), and verifiable. D) Include comparability and consistency. E) All of the above

Answer: E