Accounting Final
A credit sale of $1,900 is made on April 25, terms 2/10, net/30, on which a return of $100 is granted on April 28. What amount is received as payment in full on May 4? A) $1,764 B) $1,862 C) $1,900 D) $1,800
A) $1,764
Equipment costing $70,000 with a salvage value of $14,000 and an estimated life of 8 years has been depreciated using the straight-line method for 2 years. Assuming a revised estimated total life of 6 years and no change in the salvage value, the depreciation expense for Year 3 would be A) $10,500. B) $9,333. C) $14,000. D) $7,000.
A) $10,500.
McKinney Corporation had beginning retained earnings of $2,242,000 and ending retained earnings of $2,499,000. During the year they issued common stock totaling $141,000. No dividends were paid. What was their net income for the year? A) $257,000 B) $116,000 C) $398,000 D) $323,000
A) $257,000
Bonds with a face value of $300,000 and a quoted price of 97 have a selling price of A) $291,750. B) $291,075. C) $291,006. D) $292,500.
A) $291,750.
A company sells a plant asset that originally cost $240,000 for $80,000 on December 31, 2014. The accumulated depreciation account had a balance of $120,000 after the current year's depreciation of $20,000 had been recorded. The company should recognize a A) $40,000 loss on disposal. B) $40,000 gain on disposal. C) $80,000 loss on disposal. D) $80,000 gain on disposal.
A) $40,000 loss on disposal.
The following credit sales are budgeted by Garcia Company: January $255,000 February 375,000 March 525,000 April 450,000 The company's past experience indicates that 70% of the accounts receivable are collected in the month of sale, 20% in the month following the sale, and 8% in the second month following the sale. The anticipated cash inflow for the month of March is A) $462,900. B) $420,000. C) $450,000. D) $441,000.
A) $462,900.
The financial statements of the Phelps Manufacturing Company reports net sales of $500,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for Phelps? A) 8.3 times B) 12.5 times C) 6.3 times D) 4.2 times
A) 8.3 times
Which of the following statements is correct? A) Due to its liquid nature, cash is the easiest asset to steal. B) A good system of internal control will ensure that employees will not be able to steal cash. C) It takes two or more employees working together to be able to steal cash. D) All of these answer choices are correct.
A) Due to its liquid nature, cash is the easiest asset to steal.
Which of the following should not be included in the physical inventory of a company? A) Goods held on consignment from another company. B) Goods in transit from another company shipped FOB shipping point. C) Goods shipped on consignment to another company. D) All of these answer choices should be included.
A) Goods held on consignment from another company.
Moss County Bank agrees to lend the Sadowski Brick Company $300,000 on January 1. Sadowski Brick Company signs a $300,000, 6%, 9-month note. What is the adjusting entry required if Sadowski Brick Company prepares financial statements on June 30? A) Interest Expense 9,000 Interest Payable 9,000 B) Interest Expense 9,000 Cash 9,000 C) Interest Payable 9,000 Cash 9,000 D) Interest Payable 9,000 Interest Expense 9,000
A) Interest Expense 9,000 Interest Payable 9,000
An accounting time period that is one year in length is called: A) a fiscal year. B) an interim period. C) the time period assumption. D) a reporting period.
A) a fiscal year
Two individuals at a retail store work the same cash register. You evaluate this situation as A) a violation of establishment of responsibility. B) a violation of separation of duties. C) supporting the establishment of responsibility. D) supporting internal independent verification.
A) a violation of establishment of responsibility.
The liability created by a business when it purchases coffee beans and coffee cups on credit from suppliers is termed a(n) A) account payable. B) account receivable. C) revenue. D) expense.
A) account payable
Under a perpetual inventory system A) accounting records continuously disclose the amount of inventory. B) increases in inventory resulting from purchases are debited to purchases. C) there is no need for a year-end physical count. D) the account purchase returns and allowances is credited when goods are returned to vendors.
A) accounting records continuously disclose the amount of inventory
An investment by the stockholders in a business increases A) assets and stockholders' equity. B) assets and liabilities. C) liabilities and stockholders' equity. D) assets only.
A) assets and stockholders' equity.
An adjusting entry can include a: A) debit to an asset and a credit to a revenue. B) debit to a revenue and a credit to an asset. C) credit to an expense and a debit to a revenue. D) debit to an expense and a credit to a revenue.
A) debit to an asset and a credit to a revenue.
The declining-balance method of depreciation produces a(n) A) decreasing depreciation expense each period. B) increasing depreciation expense each period. C) declining percentage rate each period. D) constant amount of depreciation expense each period.
A) decreasing depreciation expense each period.
One of the accounting concepts upon which adjustments for prepayments and accruals are based is: A) expense recognition. B) cost. C) monetary unit. D) economic entity.
A) expense recognition
The term "FOB" denotes A) free on board. B) freight on board. C) free only (to) buyer. D) freight charge on buyer.
A) free on board.
The double-entry system requires that each transaction must be recorded A) in at least two different accounts. B) in two sets of books. C) in a journal and in a ledger. D) first as a revenue and then as an expense.
A) in at least two different accounts.
Collection of a $600 Accounts Receivable A) increases an asset $600; decreases an asset $600. B) increases an asset $600; decreases a liability $600. C) decreases a liability $600; increases stockholders' equity $600. D) decreases an asset $600; decreases a liability $600.
A) increases an asset $600; decreases an asset $600.
Internal controls are not designed to safeguard assets from A) natural disasters. B) employee theft. C) robbery. D) unauthorized use.
A) natural disasters.
An adjusting entry is not required for A) outstanding checks. B) collection of a note by the bank. C) NSF checks. D) bank service charges.
A) outstanding checks.
After the physical inventory is completed, A) quantities are listed on inventory summary sheets. B) quantities are entered into various general ledger inventory accounts. C) the accuracy of the inventory summary sheets is checked by the person listing the quantities on the sheets. D) unit costs are determined by dividing the quantities on the summary sheets by the total inventory costs.
A) quantities are listed on inventory summary sheets
If goods in transit are shipped FOB destination A) the seller has legal title to the goods until they are delivered. B) the buyer has legal title to the goods until they are delivered. C) the transportation company has legal title to the goods while the goods are in transit. D) no one has legal title to the goods until they are delivered.
A) the seller has legal title to the goods until they are delivered.
A current liability is a debt that can reasonably be expected to be paid A) within one year, or the operating cycle, whichever is longer. B) between 6 months and 18 months. C) out of currently recognized revenues. D) out of cash currently on hand.
A) within one year, or the operating cycle, whichever is longer.
Manufactured inventory that has begun the production process but is not yet completed is A) work in process. B) raw materials. C) merchandise inventory. D) finished goods.
A) work in process
Detailed records of goods held for resale are not maintained under a A) perpetual inventory system. B) periodic inventory system. C) double entry accounting system. D) single entry accounting system.
B) periodic inventory system
The operating cycle of a merchandising company is A) always one year in length. B) ordinarily longer than that of a service company. C) about the same as that of a service company. D) ordinarily shorter than that of a service company.
B) ordinarily longer than that of a service company
Alpha First Company just began business and made the following four inventory purchases in June: June 1 150 units $ 780 June 10 200 units 1,170 June 15 200 units 1,260 June 28 150 units 990 $4,200 A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand. Using the LIFO inventory method, the value of the ending inventory on June 30 is A) $1,092 B) $1,131 C) $1,386 D) $1,368
B) $1,131
Morgan Company does not ring up sales taxes separately on the cash register. Total receipts for February amounted to $25,440. If the sales tax rate is 6%, what amount must be remitted to the state for February's sales taxes? A) $1,527 B) $1,440 C) $1,435 D) It cannot be determined.
B) $1,440
In the month of November Gavin Company Inc. wrote checks in the amount of $37,000. In December, checks in the amount of $50,632 were written. In November, $33,872 of these checks were presented to the bank for payment, and $43,532 in December. What is the amount of outstanding checks at the end of December? A) $7,100. B) $10,228. C) $3,128. D) $14,200.
B) $10,228.
The interest on a $10,000, 6%, 60-day note receivable is A) $680. B) $100. C) $200. D) $300.
B) $100.
Sielert Corporation borrowed $900,000 from National Bank on May 31, 2013. The three-year, 7% note required annual payments of $342,945 beginning May 31, 2014. The total amount of interest to be paid over the life of the loan is A) $63,000. B) $128,835. C) $251,403. D) $189,000.
B) $128,835.
Mitchell Corporation bought equipment on January 1, 2014 .The equipment cost $180,000 and had an expected salvage value of $30,000. The life of the equipment was estimated to be 6 years. The depreciable cost of the equipment is A) $180,000. B) $150,000. C) $30,000. D) $25,000.
B) $150,000.
On January 15, Nifty Company sells merchandise on account to Martinez Associates for $3,000 with terms 3/10, n/30. On January 20, Martinez returns merchandise worth $600 to Nifty. On January 24, payment is received from Martinez for the balance due. What is the amount of cash received? A) $2,400 B) $2,328 C) $2,310 D) $1,680
B) $2,328
The following information is available for Bradshaw Corporation and Newell Corporation: Bradshaw Corporation Newell Corporation (in millions) 2014 2013 2014 2013 Preferred dividends 25 10 0 30 Net income 500 480 490 520 Shares outstanding at the end of the year 200 180 150 200 Shares outstanding at the beginning of the year 180 150 200 220 Based on this information, what is the amount of Bradshaw's earnings per share (rounded to two decimals) for 2014? A) $2.76 B) $2.50 C) $1.25 D) $1.32
B) $2.50
In 2014 the Golic Co. had net credit sales of $600,000. On January 1, 2014, the Allowance for Doubtful Accounts had a credit balance of $15,000. During 2014, $24,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage-of-receivables basis). If the accounts receivable balance at December 31 was $160,000 what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2014? A) $16,000. B) $25,000. C) $31,000. D) $24,000.
B) $25,000.
Crawford Company started the year with $30,000 in its Common Stock account and a credit balance in Retained Earnings of $22,000. During the year, the company earned net income of $24,000 and declared and paid $10,000 of dividends. In addition, the company sold additional common stock amounting to $14,000. As a result, the amount of its retained earnings at the end of the year would be A) $80,000. B) $36,000. C) $66,000. D) $50,000.
B) $36,000.
Use the following data to determine the total dollar amount of assets to be classified as current assets. Koonce Office Supplies Balance Sheet December 31, 2014 Cash $ 130,000 Accounts payable $ 140,000 Accounts receivable 100,000 Salaries and wages payable 20,000 Inventory 110,000 Mortgage payable 160,000 Prepaid insurance 60,000 Total liabilities $320,000 Stock investments 170,000 Land 180,000 Buildings $210,000 Common stock $240,000 Less: Accumulated Retained earnings 500,000 depreciation (40,000) 170,000 Total stockholders' equity $740,000 Trademarks 140,000 Total liabilities and Total assets $1,060,000 stockholders' equity $1,060,000 A) $570,000 B) $400,000 C) $340,000 D) $290,000
B) $400,000
Winrow Company received proceeds of $565,500 on 10-year, 8% bonds issued on January 1, 2013. The bonds had a face value of $600,000, pay interest annually on December 31st, and have a call price of 101. Winrow uses the straight-line method of amortization. What is the amount of interest Winrow must pay the bondholders in 2013? A) $45,240 B) $48,000 C) $51,450 D) $44,550
B) $48,000
Equipment with a cost of $225,000 has an estimated salvage value of $15,000 and an estimated life of 4 years or 10,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 2,700 hours? A) $56,250. B) $52,500. C) $56,700. D) $54,375.
B) $52,500.
Elston Company compiled the following financial information as of December 31, 2014: Service revenue $700,000 Common stock 150,000 Equipment 200,000 Operating expenses 625,000 Cash 175,000 Dividends 50,000 Supplies 25,000 Accounts payable 100,000 Accounts receivable 75,000 Retained earnings, 1/1/14 375,000 Elston's stockholders' equity on December 31, 2014 is A) $525,000. B) $550,000. C) $400,000. D) $600,000.
B) $550,000.
Thompson Corporation's unadjusted trial balance includes the following balances (assume normal balances): • Accounts receivable $1,492,000 • Allowance for doubtful accounts $ 28,400 Bad debts are estimated to be 6% of outstanding receivables. What amount of bad debt expense will the company record? A) $89,520 B) $61,120 C) $59,416 D) $91,224
B) $61,120
Conway Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Conway Company pays within the discount period? A) $9,000 B) $8,820 C) $8,100 D) $8,280
B) $8,820
Tidwell Company's goods in transit at December 31 include sales made (1) FOB destination (2) FOB shipping point and purchases made (3) FOB destination (4) FOB shipping point. Which items should be included in Tidwell's inventory at December 31? A) Sales made FOB shipping point and purchase made FOB destination B) (1) and (4) C) (1) and (3) D) (2) and (4)
B) (1) and (4)
Nichols Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $200,000 and credit sales are $1,000,000. Management estimates that 4% of accounts receivable will be uncollectible. What adjusting entry will Nichols Company make if the Allowance for Doubtful Accounts has a credit balance of $2,000 before adjustment? A) Bad Debts Expense 8,000 Allowance for Doubtful Accounts 8,000 B) Bad Debts Expense 6,000 Allowance for Doubtful Accounts 6,000 C) Bad Debts Expense 6,000 Accounts Receivable 6,000 D) Bad Debts Expense 8,000 Accounts Receivable 8,000
B) Bad Debts Expense 6,000 Allowance for Doubtful Accounts 6,000
Which of the following is not a step for solving an ethical dilemma? A) Identifying the alternatives and weighing the impact of each alternative on various stakeholders. B) Certifying the ethical accuracy of the financial information. C) Identifying and analyzing the principal elements in the situation. D) Recognizing the ethical situation and issues involved.
B) Certifying the ethical accuracy of the financial information.
Which of the following is not considered an asset? A) Equipment B) Dividends C) Accounts receivable D) Inventory
B) Dividends
Which of the following is not one of the main factors that contribute to fraudulent activity? A) Opportunity. B) Incompatible duties. C) Financial pressure. D) Rationalization.
B) Incompatible duties.
Barber Company lends Monroe Company $30,000 on April 1, accepting a four-month, 6% interest note. Barber Company prepares financial statements on April 30. What adjusting entry should be made before the financial statements can be prepared? A) Note Receivable 30,000 Cash 30,000 B) Interest Receivable 150 Interest Revenue 150 C) Cash 150 Interest Revenue 150 D) Interest Receivable 450 Interest Revenue 450
B) Interest Receivable 150 Interest Revenue 150
Which of the following is an asset? A) Mortgage payable B) Investments C) Common stock D) Retained earnings
B) Investments
Which of the following describes the classification and normal balance of the Unearned Rent Revenue account? A) Asset, debit B) Liability, credit C) Revenues, credit D) Expense, debit
B) Liability, credit
Which one of the following is not an objective of a system of internal controls? A) Safeguard company assets. B) Overstate liabilities in order to be conservative. C) Enhance the accuracy and reliability of accounting records. D) Reduce the risks of errors.
B) Overstate liabilities in order to be conservative
Which of the following activities is not a component of the operating cycle? A) Sale of merchandise B) Payment of employees' salaries C) Collection of cash from merchandise sales D) Purchase of merchandise
B) Payment of employees' salaries
Which of the following is a true statement about inventory systems? A) Periodic inventory systems require more detailed inventory records. B) Perpetual inventory systems require more detailed inventory records. C) A periodic system requires cost of goods sold be determined after each sale. D) A perpetual system determines cost of goods sold only at the end of the accounting period.
B) Perpetual inventory systems require more detailed inventory records
Interest expense on an interest-bearing note is A) always equal to zero. B) accrued over the life of the note. C) only recorded at the time the note is issued. D) only recorded at maturity when the note is paid.
B) accrued over the life of the note.
Failure to prepare an adjusting entry at the end of a period to record an accrued revenue would cause: A) net income to be overstated. B) an understatement of assets and an understatement of revenues. C) an understatement of revenues and an understatement of liabilities. D) an understatement of revenues and an overstatement of liabilities.
B) an understatement of assets and an understatement of revenues.
Internal control is defined, in part, as a plan that safeguards A) all balance sheet accounts. B) assets. C) liabilities. D) capital stock.
B) assets.
Raxon Company borrowed $40,000 from the bank signing a 6%, 3-month note on September 1. Principal and interest are payable to the bank on December 1. If the company prepares monthly financial statements, the adjusting entry that the company should make for interest on September 30, would be: A) debit Interest Expense, $2,400; credit Interest Payable, $2,400. B) debit Interest Expense, $200; credit Interest Payable, $200. C) debit Note Payable, $2,400; credit Cash, $2,400. D) debit Cash, $600; credit Interest Payable, $600.
B) debit Interest Expense, $200; credit Interest Payable, $200.
The purchase of an asset on credit A) increases assets and stockholders' equity. B) increases assets and liabilities. C) decreases assets and increases liabilities. D) leaves total assets unchanged.
B) increases assets and liabilities
A debit balance in the Allowance for Doubtful Accounts A) is the normal balance for that account. B) indicates that actual bad debt write-offs have exceeded previous provisions for bad debts. C) indicates that actual bad debt write-offs have been less than what was estimated. D) cannot occur if the percentage of receivables method of estimating bad debts is used
B) indicates that actual bad debt write-offs have exceeded previous provisions for bad debts.
The factor which determines whether or not goods should be included in a physical count of inventory is A) physical possession. B) legal title. C) management's judgment. D) whether or not the purchase price has been paid.
B) legal title.
Management usually wants ________ financial statements and the IRS requires all businesses to file _________ tax returns. A) annual, annual B) monthly, annual C) quarterly, monthly D) monthly, monthly
B) monthly, annual
Interest is usually associated with A) accounts receivable. B) notes receivable. C) doubtful accounts. D) bad debts.
B) notes receivable.
Net income will result if gross profit exceeds A) cost of goods sold. B) operating expenses. C) purchases. D) cost of goods sold plus operating expenses.
B) operating expenses
Gross profit equals the difference between A) net income and operating expenses. B) sales revenue and cost of goods sold. C) sales revenue and operating expenses. D) sales revenue and cost of goods sold plus operating expenses.
B) sales revenue and cost of goods sold
If a check correctly written and paid by the bank for $491 is incorrectly recorded on the company's books for $419, the appropriate treatment on the bank reconciliation would be to A) add $72 to the book's balance. B) subtract $72 from the book's balance. C) deduct $72 from the bank's balance. D) deduct $491 from the book's balance.
B) subtract $72 from the book's balance.
Baker Bakery Company just began business and made the following four inventory purchases in June: June 1 150 units $ 780 June 10 200 units 1,170 June 15 200 units 1,260 June 28 150 units 990 $4,200 A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for June is A) $1,092 B) $1,131 C) $1,368 D) $1,386
C) $1,368
Jack's Copy Shop bought equipment for $150,000 on January 1, 2013. Jack estimated the useful life to be 3 years with no salvage value, and the straight-line method of depreciation will be used. On January 1, 2014, Jack decides that the business will use the equipment for a total of 5 years. What is the revised depreciation expense for 2014? A) $50,000. B) $20,000. C) $25,000. D) $37,500.
C) $25,000.
Whyte Clinic purchases land for $280,000 cash. The clinic assumes $3,000 in property taxes due on the land. The title and attorney fees totaled $2,000. The clinic had the land graded for $4,400. What amount does Whyte Clinic record as the cost for the land? A) $284,400. B) $280,000. C) $289,400. D) $285,000.
C) $289,400.
On January 1, 2013, M. Johanson Company purchased equipment for $36,000. The company is depreciating the equipment at the rate of $500 per month. The book value of the equipment at December 31, 2013 is: A) $0. B) $6,000. C) $30,000. D) $36,000.
C) $30,000
A company purchased land for $350,000 cash. Real estate brokers' commission was $25,000 and $35,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land would be recorded at A) $385,000. B) $350,000. C) $375,000. D) $410,000.
C) $375,000.
Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $45,000. If the balance of the Allowance for Doubtful Accounts is $11,000 debit before adjustment what is the amount of bad debt expense for that period? A) $45,000 B) $11,000 C) $56,000 D) $34,000
C) $56,000
The following information is related to December 31, 2013 balances. • Accounts receivable $700,000 • Allowance for doubtful accounts (credit) (60,000) • Cash realizable value 640,000 During 2014 sales on account were $195,000 and collections on account were $115,000. Also, during 2014 the company wrote off $11,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that bad debts should be estimated at $72,000. The change in the cash realizable value from the balance at 12/31/13 to 12/31/14 was A) $68,000 increase. B) $80,000 increase. C) $57,000 increase. D) $69,000 increase.
C) $57,000 increase.
In the first month of operations, the total of the debit entries to the Cash account amounted to $1,400 and the total of the credit entries to the Cash account amounted to $800. The Cash account has a A) $800 credit balance. B) $1,400 debit balance. C) $600 debit balance. D) $600 credit balance.
C) $600 debit balance.
Jamal Company began the year with $84,000 in its Common Stock account and a debit balance in Retained Earnings of $36,000. During the year, the company earned net income of $18,000 and declared and paid $6,000 of dividends. In addition, the company sold additional common stock amounting to $22,000. Based on this information, what should the transaction analysis show for the ending total of all stockholders' equity accounts? A) $154,000 B) $166,000 C) $82,000 D) $110,000
C) $82,000
When is a physical inventory usually taken? A) When goods are not being sold or received. B) When the company has its greatest amount of inventory. C) At the end of the company's fiscal year. D) When the company has its greatest amount of inventory and at the end of the company's fiscal year.
C) At the end of the company's fiscal year
Four thousand bonds with a face value of $1,000 each, are sold at 102. The entry to record the issuance is A) Cash 4,080,000 Bonds Payable 4,080,000 B) Cash 4,000,000 Premium on Bonds Payable 80,000 Bonds Payable 4,080,000 C) Cash 4,080,000 Premium on Bonds Payable 80,000 Bonds Payable 4,000,000 D) Cash 4,080,000 Discount on Bonds Payable 80,000 Bonds Payable 4,000,000
C) Cash 4,080,000 Premium on Bonds Payable 80,000 Bonds Payable 4,000,000
Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets? A) Salvage value. B) Estimated useful life. C) Cash needed to replace the plant asset. D) Cost.
C) Cash needed to replace the plant asset
Which of the following is not a limitation of internal control? A) Cost of establishing control procedures should not exceed their benefit. B) The human element. C) Collusion. D) The size of the company.
C) Collusion.
On January 1, 2014, Keisler Company, a calendar-year company, issued $700,000 of notes payable, of which $175,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2014, is A) Current liabilities, $700,000. B) Long-term debt, $700,000. C) Current liabilities, $175,000; Long-term Debt, $525,000. D) Current liabilities, $525,000; Long-term Debt, $175,000.
C) Current liabilities, $175,000; Long-term Debt, $525,000.
Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account? A) Freight Expense B) Freight-In C) Inventory D) Freight-Out
C) Inventory
Collier Company has implemented a just-in-time system, which relies on suppliers to deliver goods for resale as needed. This implementation is most consistent with which of the following basic principles of cash management? A) Increasing the speed of receivables collection. B) Planning the timing of major expenditures. C) Keeping inventory levels low. D) Delaying the payment of liabilities.
C) Keeping inventory levels low.
Which of the following is not a basic principle of cash management? A) Increase collection of receivables. B) Keep inventory levels low. C) Pay all liabilities early. D) Invest idle cash.
C) Pay all liabilities early.
Which of the following is a true statement about closing the books of a corporation? A) Expenses are closed to the Expense Summary account. B) Only revenues are closed to the Income Summary account. C) Revenues and expenses are closed to the Income Summary account. D) Revenues, expenses, and the Dividends account are closed to the Income Summary account.
C) Revenues and expenses are closed to the Income Summary account
Snelling Tables paid employee wages on and through Friday, January 26, and the next payroll will be paid in February. There are three more working days in January (29-31). Employees work 5 days a week and the company pays $900 a day in wages. What will be the adjusting entry to accrue wages expense at the end of January? A) Salaries and Wages Expense 900 Salaries and Wages Payable 900 B) Salaries and Wages Expense 4,500 Salaries and Wages Payable 4,500 C) Salaries and Wages Expense 2,700 Salaries and Wages Payable 2,700 D) No adjusting entry is required.
C) Salaries and Wages Expense 2,700 Salaries and Wages Payable 2,700
At Emerson Company, one bookkeeper prepares the cash deposits while the other bookkeeper enters the collections in the journal and ledger. Which of the following is the best explanation of this type of internal control principle over cash receipts? A) Physical controls. B) Documentation procedures. C) Segregation of duties. D) Mechanical controls.
C) Segregation of duties.
On a classified balance sheet, short-term investments are classified as A) an intangible asset. B) property, plant, and equipment. C) a current asset. D) a long-term investment.
C) a current asset.
Independent internal verification of the physical inventory process occurs when A) the employee is required to count all items twice for sake of verification. B) the items counted are compared to the inventory account balance. C) a second employee counts the inventory and compares the result to the count made by the first employee. D) all prenumbered inventory tags are accounted for.
C) a second employee counts the inventory and compares the result to the count made by the first employee.
Bonds that may be exchanged for common stock at the option of the bondholders are called A) options. B) stock bonds. C) convertible bonds. D) callable bonds.
C) convertible bonds.
Depreciation is a process of A) asset devaluation. B) cost accumulation. C) cost allocation. D) asset valuation.
C) cost allocation.
On July 1 the Fisher Shoe Store paid $18,000 to Acme Realty for 6 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by the Fisher Shoe Store is: A) debit Rent Expense, $18,000; credit Prepaid Rent, $3,000. B) debit Prepaid Rent, $3,000; credit Rent Expense, $3,000. C) debit Rent Expense, $3,000; credit Prepaid Rent, $3,000. D) debit Rent Expense, $18,000; credit Prepaid Rent, $15,000.
C) debit Rent Expense, $3,000; credit Prepaid Rent, $3,000.
Thayer Company purchased a building on January 2 by signing a long-term $2,520,000 mortgage with monthly payments of $23,100. The mortgage carries an interest rate of 10 percent. The entry to record the first monthly payment will include a A) debit to the Cash account for $23,100. B) credit to the Cash account for $21,000. C) debit to the Interest Expense account for $21,000. D) credit to the Mortgage Payable account for $23,100.
C) debit to the Interest Expense account for $21,000.
An employee assigned to counting computer monitors in boxes should A) estimate the number if there is a large quantity to be counted. B) read each box and rely on the box description for the contents. C) determine that the box contains a monitor. D) rely on the warehouse records of the number of computer monitors.
C) determine that the box contains a monitor.
Payments to stockholders are called A) expenses. B) liabilities. C) dividends. D) distributions.
C) dividends.
Issuing shares of stock in exchange for cash is an example of a(n) A) delivering activity. B) investing activity. C) financing activity. D) operating activity.
C) financing activity.
Sales revenues are usually considered earned when A) cash is received from credit sales. B) an order is received. C) goods have been transferred from the seller to the buyer. D) adjusting entries are made.
C) goods have been transferred from the seller to the buyer.
As interest is recorded on an interest-bearing note, the Interest Expense account is A) increased; the Notes Payable account is increased. B) increased; the Notes Payable account is decreased. C) increased; the Interest Payable account is increased. D) decreased; the Interest Payable account is increased.
C) increased; the Interest Payable account is increased.
Liabilities are classified on the balance sheet as current or A) deferred. B) unearned. C) long-term. D) accrued.
C) long-term.
The balance sheet A) summarizes the changes in retained earnings for a specific period of time. B) reports the changes in assets, liabilities, and stockholders' equity over a period of time. C) reports the assets, liabilities, and stockholders' equity at a specific date. D) presents the revenues and expenses for a specific period of time.
C) reports the assets, liabilities, and stockholders' equity at a specific date.
If services are rendered on account, then A) assets will decrease. B) liabilities will increase. C) stockholders' equity will increase. D) liabilities will decrease.
C) stockholders' equity will increase.
Under the allowance method of accounting for uncollectible accounts, A) the cash realizable value of accounts receivable is greater before an account is written off than after it is written off. B) Bad Debt Expense is debited when a specific account is written off as uncollectible. C) the cash realizable value of accounts receivable in the balance sheet is the same before and after an account is written off. D) Allowance for Doubtful Accounts is closed each year to Income Summary.
C) the cash realizable value of accounts receivable in the balance sheet is the same before and after an account is written off.
The left side of an account is A) blank. B) a description of the account. C) the debit side. D) the balance of the account.
C) the debit side.
Notes or accounts receivables that result from sales transactions are often called A) sales receivables. B) non-trade receivables. C) trade receivables. D) merchandise receivables.
C) trade receivables.
Merchandising companies that sell to retailers are known as A) brokers. B) corporations. C) wholesalers. D) service firms.
C) wholesalers
Charlene Cosmetics Company just began business and made the following four inventory purchases in June: June 1 150 units $ 780 June 10 200 units 1,170 June 15 200 units 1,260 June 28 150 units 990 $4,200 A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand. Using the average cost method, the amount allocated to the ending inventory on June 30 is A) $1,229. B) $1,368. C) $1,323. D) $1,260.
D) $1,260.
Wilton sells softball equipment. On November 14, they shipped $3,000 worth of softball uniforms to Paola Middle School, terms 2/10, n/30. On November 21, they received an order from Douglas High School for $1,800 worth of custom printed bats to be produced in December. On November 30, Paola Middle School returned $300 of defective merchandise. Wilton has received no payments from either school as of month end. What amount will be recognized as net accounts receivable on the balance sheet as of November 30? A) $4,800 B) $4,500 C) $3,000 D) $2,700
D) $2,700
At December 31, 2014 Mohling Company's inventory records indicated a balance of $602,000. Upon further investigation it was determined that this amount included the following: • $112,000 in inventory purchases made by Mohling shipped from the seller 12/27/14 terms FOB destination, but not due to be received until January 2nd • $74,000 in goods sold by Mohling with terms FOB destination on December 27th. The goods are not expected to reach their destination until January 6th. • $6,000 of goods received on consignment from Dollywood Company What is Mohling's correct ending inventory balance at December 31, 2014? A) $490,000 B) $596,000 C) $410,000 D) $484,000
D) $484,000
On January 1, 2014, $2,000,000, 10-year, 10% bonds, were issued for $1,940,000. Interest is paid annually on January 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, the monthly amortization amount is A) $19,400. B) $6,000. C) $1,616. D) $500
D) $500
Given the following adjusted trial balance: Debit Credit Cash $1,562 Accounts receivable 2,098 Inventory 3,124 Prepaid rent 86 Equipment 300 Accumulated depreciation-equipment 52 Accounts payable 82 Unearned service revenue 122 Common stock 206 Retained earnings 6,610 Service revenue 268 Interest revenue 56 Salaries and wages expense 160 Travel expense 66 _____ Total $7,396 $7,396 After closing entries have been posted, the balance in retained earnings will be: A) $6,340. B) $6,512. C) $6,880. D) $6,708.
D) $6,708.
At December 31, 2014 Howell Company's inventory records indicated a balance of $858,000. Upon further investigation it was determined that this amount included the following: • $168,000 in inventory purchases made by Howell shipped from the seller 12/27/14 terms FOB destination, but not due to be received until January 2nd • $111,000 in goods sold by Howell with terms FOB destination on December 27th. The goods are not expected to reach their destination until January 6th. • $9,000 of goods received on consignment from Westwood Company What is Howell's correct ending inventory balance at December 31, 2014? A) $690,000 B) $849,000 C) $570,000 D) $681,000
D) $681,000
Use the following data to calculate the current ratio. Koonce Office Supplies Balance Sheet December 31, 2014 Cash $ 130,000 Accounts payable $ 140,000 Accounts receivable 100,000 Salaries and wages payable 20,000 Inventory 110,000 Mortgage payable 160,000 Prepaid insurance 60,000 Total liabilities $320,000 Stock investments 170,000 Land 180,000 Buildings $210,000 Common stock $240,000 Less: Accumulated Retained earnings 500,000 depreciation (40,000) 170,000 Total stockholders' equity $740,000 Trademarks 140,000 Total liabilities and Total assets $1,060,000 stockholders' equity $1,060,000 A) 2.13 : 1 B) 1.44 : 1 C) 2.86 : 1 D) 2.50 : 1
D) 2.50 : 1
Douglas Company has a $51,000 note that carries an annual interest rate of 10%. If the amount of the total interest on the note is equal to $3,400, then what is the duration of the note in months? A) 6 months B) 4 months C) 12 months D) 8 months
D) 8 months
Which of the following correctly identifies normal balances of accounts? A) Assets Debit Liabilities Credit Common Stock Credit Revenues Debit Expenses Credit B) Assets Debit Liabilities Credit Common Stock Credit Revenues Credit Expenses Credit C) Assets Credit Liabilities Debit Common Stock Debit Revenues Credit Expenses Debit D) Assets Debit Liabilities Credit Common Stock Credit Revenues Credit Expenses Debit
D) Assets Debit Liabilities Credit Common Stock Credit Revenues Credit Expenses Debit
Which of the following is not a current liability? A) Salaries and Wages Payable B) Accounts Payable C) Taxes Payable D) Bonds Payable
D) Bonds Payable
Which of the following would not be included in the Equipment account? A) Installation costs. B) Freight costs. C) Cost of trial runs. D) Electricity used by the machine.
D) Electricity used by the machine.
Which of the following is not properly classified as property, plant, and equipment? A) Building used as a factory. B) Land used in ordinary business operations. C) A truck held for resale by an automobile dealership. D) Land improvement, such as parking lots and fences.
D) Land improvement, such as parking lots and fences.
Are advanced receipts from customers treated as revenue at the time of receipt? Why or why not? A) Yes, they are treated as revenue at the time of receipt because the company has access to the cash. B) No, the amount of revenue cannot be adequately determined until the company completes the work. C) Yes, The intent of the company is to perform the work and the customer is confident that the services will be completed. D) No, revenue cannot be recognized until the work is performed.
D) No, revenue cannot be recognized until the work is performed.
The closing entry process consists of closing: A) all asset and liability accounts. B) out the Retained Earnings account. C) all permanent accounts. D) all temporary accounts.
D) all temporary accounts
The balance in the Accumulated Depreciation account represents the A) cash fund to be used to replace plant assets. B) amount to be deducted from the cost of the plant asset to arrive at its fair market value. C) amount charged to expense in the current period. D) amount charged to expense since the acquisition of the plant asset.
D) amount charged to expense since the acquisition of the plant asset.
The book value of an asset is equal to the A) asset's fair value less its historical cost. B) blue book value relied on by secondary markets. C) replacement cost of the asset. D) asset's cost less accumulated depreciation.
D) asset's cost less accumulated depreciation.
Liabilities are generally classified on a balance sheet as A) small liabilities and large liabilities. B) present liabilities and future liabilities. C) tangible liabilities and intangible liabilities. D) current liabilities and long-term liabilities.
D) current liabilities and long-term liabilities.
The Vintage Laundry Company purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $1,000 on hand. The adjusting entry that should be made by the company on June 30 is: A) debit Supplies Expense, $1,000; credit Supplies, $1,000. B) debit Supplies, $5,500; credit Supplies Expense, $5,500. C) debit Supplies, $1,000; credit Supplies Expense, $1,000. D) debit Supplies Expense, $5,500; credit Supplies, $5,500.
D) debit Supplies Expense, $5,500; credit Supplies, $5,500.
Gomez Corporation issues 600, 10-year, 8%, $1,000 bonds dated January 1, 2014, at 96. The journal entry to record the issuance will show a A) debit to Cash of $600,000. B) credit to Discount on Bonds Payable for $24,000. C) credit to Bonds Payable for $576,000. D) debit to Cash for $576,000.
D) debit to Cash for $576,000.
The payment of a liability A) decreases assets and stockholders' equity. B) increases assets and decreases liabilities. C) decreases assets and increases liabilities. D) decreases assets and liabilities.
D) decreases assets and liabilities.
The primary difference between a periodic and perpetual inventory system is that a periodic system A) keeps a record showing the inventory on hand at all time. B) provides better control over inventories. C) records the cost of the sale on the date the sale is made. D) determines the inventory on hand only at the end of the accounting period.
D) determines the inventory on hand only at the end of the accounting period.
In a perpetual inventory system, cost of goods sold is recorded A) on a daily basis. B) on a monthly basis. C) on an annual basis. D) each time a sale occurs.
D) each time a sale occurs.
A machine costing $132,000 was destroyed when it caught fire. At the date of the fire, the accumulated depreciation on the machine was $60,000. An insurance check for $150,000 was received based on the replacement cost of the machine. The entry to record the insurance proceeds and the disposition of the machine will include a A) gain on disposal of $18,000. B) credit to the Equipment account for $72,000. C) credit to the Accumulated Depreciation account for $60,000. D) gain on disposal of $78,000.
D) gain on disposal of $78,000.
A debit to an asset account indicates a(n) A) error. B) credit was made to a liability account. C) decrease in the asset. D) increase in the asset.
D) increase in the asset.
Tony's Market recorded the following events involving a recent purchase of inventory: Received goods for $40,000, terms 2/10, n/30. Returned $800 of the shipment for credit. Paid $200 freight on the shipment. Paid the invoice within the discount period. As a result of these events, the company's inventory A) increased by $38,416. B) increased by $39,400. C) increased by $38,612. D) increased by $38,616.
D) increased by $38,616
All of the following requirements about internal controls were enacted under the Sarbanes Oxley Act except A) independent outside auditors must attest to the level of internal control. B) companies must develop sound internal controls over financial reporting. C) companies must continually assess the functionality of internal controls. D) independent outside auditors must eliminate redundant internal controls.
D) independent outside auditors must eliminate redundant internal controls.
The purchase of an asset for cash A) increases assets and stockholders' equity. B) increases assets and liabilities. C) decreases assets and increases liabilities. D) leaves total assets unchanged.
D) leaves total assets unchanged.
Unearned revenue is classified as a(n): A) asset account. B) revenue account. C) contra revenue account. D) liability.
D) liability.
The periodicity assumption states that: A) a transaction can only affect one period of time. B) estimates should not be made if a transaction affects more than one time period. C) adjustments to the enterprise's accounts can only be made in the time period when the business terminates its operations. D) the economic life of a business can be divided into artificial time periods.
D) the economic life of a business can be divided into artificial time periods
