Cooper Quizlet
A corporation uses the indirect method for preparing the statement of cash flows. A fixed asset has been sold for $25,000, representing a gain of $4,500. The value reported in the operating activities section regarding this event would be a. $29,500 b. $(4,500) c. $4,500 d. $25,000
b. $(4,500)
Earning revenue a. increases one asset; decreases another asset b. increases assets; increases stockholders' equity c. decreases assets; increases liabilities d. increases assets; decreases stockholders' equity
b. increases assets; increases stockholders' equity
If a manufacturer ships merchandise to a retailer on consignment, the unsold merchandise should be included in the inventory of the a. shipper b. manufacturer c. consignee d. retailer
b. manufacturer
Goods purchased on account for future use in the business, such as supplies, are called a. liabilities b. prepaid expenses c. prepaid liabilities d. revenues
b. prepaid expenses
Increases in stockholders' equity as a result of selling services or products to customers are known as a. expenses. b. revenues. c. assets. d. liabilities.
b. revenues.
The primary objectives of control over inventory are a. reporting inventory in the financial statements and keeping an accurate count of inventory b. safeguarding inventory from damage or theft and reporting inventory in the financial statements c. maintaining constant observation of the inventory and reporting inventory in the financial statements d. safeguarding the inventory from damage or theft and maintaining constant observation of the inventory
b. safeguarding inventory from damage or theft and reporting inventory in the financial statements
Comparing each item on a financial statement with a total amount from the same statement is referred to as a. horizontal analysis. b. vertical analysis. c. revenue recognition. d. None of these choices are correct.
b. vertical analysis.
The amount of deposits in transit is included on the bank reconciliation as a(n) a. addition to the balance per company's books b. deduction from the balance per company's books c. addition to the balance per bank statement d. deduction from the balance per bank statement
c. addition to the balance per bank statement
FIFO reports higher gross profit and net income than the LIFO method when a. prices are reduced by 50% b. prices are decreasing c. prices are increasing d. prices remain stable
c. prices are increasing
Which of the following statements about adjusting entries is NOT true? a. Adjusting entries should be dated as of the last day of the accounting period. b. An explanation is normally included with each adjusting entry. c. After adjusting entries are made in the journal, they are posted to the ledger. d. Adjusting entries are typically recorded on the last day of the accounting period.
d. Adjusting entries are typically recorded on the last day of the accounting period.
Which of the following accounts is not a liability account? a. Notes Payable b. Accounts Payable c. Wages Payable d. Fees Earned
d. Fees Earned
The purchase price of land acquired for a new business site would be debited to which of the following accounts? a. Miscellaneous Expense b. Buildings c. Land Improvements d. Land
d. Land
Which of the following controls a corporation? a. Chief executive officer (CEO) b. Board of directors c. Chief financial officer (CFO) d. Stockholders
d. Stockholders
What does working capital measure? a. the excess of a business's net income over its current liabilities b. the excess of a business's current assets over its total liabilities c. the excess of a business's assets over its liabilities d. the excess of a business's current assets over its current liabilities
d. the excess of a business's current assets over its current liabilities
What is the goal of the closing process? a. to move all equity accounts to Retained Earnings b. to verify that all adjustments have been made c. to end the accounting period with a profit d. to move all income statement and dividend accounts to Retained Earnings
d. to move all income statement and dividend accounts to Retained Earnings
The cost of removing an existing building to ready land for use as a new business site would be debited to which of the following accounts? a. Repairs and Maintenance Expense b. Buildings c. Land Improvements d. Machinery and Equipment
d. Machinery and Equipment
Which of the following statements about the days' cash on hand ratio is true? a. It uses all current assets in the numerator of the ratio. b. It may be useful in determining whether a business is able to meet its cash commitments. c. It is not useful in comparing different businesses to one another. d. The only operating expense used in the denominator of the ratio is depreciation expense.
b. It may be useful in determining whether a business is able to meet its cash commitments.
Of the following steps of the accounting cycle, which step should be completed first? a. Adjusting entries are journalized and posted to the ledger. b. Transactions are posted to the ledger. c. Closing entries are journalized and posted to the ledger. d. Financial statements are prepared.
b. Transactions are posted to the ledger.
An unfunded pension liability is reported on the balance sheet as a. owner's equity b. a current liability or long-term liability, depending on when the pension liability is to be paid c. a current liability d. a long-term liability
b. a current liability or long-term liability, depending on when the pension liability is to be paid
A decrease in the accounts payable balance would appear on the statement of cash flows as a(n) a. deduction from net income in the operating activities section using the indirect method b. addition to net income in the operating activities section using the indirect method c. outflow of cash in the investing activities section d. item listed in a separate schedule of noncash investing and financing activities
b. addition to net income in the operating activities section using the indirect method
A journal entry to record the issuance of preferred stock at a premium would include a __________ to __________. a. credit; Cash b. debit; Paid-In Capital in Excess of Par c. debit; Preferred Stock d. credit; Preferred Stock
d. credit; Preferred Stock
On May 1, Dollar Co. sold merchandise to Pound Co. on account, $25,500, terms net 45. The cost of the goods sold was $19,500. The entry to journalize the sale will include a a. credit to Accounts Receivable for $19,500 b. debit to Sales for $25,500 c. credit to Sales for $19,500 d. debit to Accounts Receivable for $25,500
d. debit to Accounts Receivable for $25,500
A corporation may reacquire (purchase) its own stock for all of the following reasons EXCEPT a. to provide shares for resale to employees. b. to reissue as bonuses to employees. c. to support the market price of the stock. d. to pay dividends on the reacquired shares
d. to pay dividends on the reacquired shares.
On the balance sheet, the balance of Treasury Stock is a. added to stockholders' equity. b. deducted from stockholders' equity. c. disclosed only in the notes. d. not reported.
b. deducted from stockholders' equity.
Which of the following reflects a weak internal control system? a. A single employee is responsible for comparing a receiving report to an invoice. b. All employees must take their vacations. c. A single employee is responsible for collecting and recording of cash. d. All employees are well supervised.
c. A single employee is responsible for collecting and recording of cash.
Of the following steps of the accounting cycle, which step should be completed last? a. Transactions are posted to the ledger. b. An unadjusted trial balance is prepared. c. An adjusted trial balance is prepared. d. Adjusting entries are journalized and posted to the ledger
c. An adjusted trial balance is prepared.
Which of the following accounts should be closed to Retained Earnings at the end of the fiscal year? a. Accumulated Depreciation b. Customer Refunds Payable c. Cost of Goods Sold d. Inventory
c. Cost of Goods Sold
If depreciation is not adjusted, which of the following would occur? a. Assets and expenses would be overstated. b. Assets and expenses would be understated. c. Net income would be overstated, and expenses would be understated. d. Net income would be understated, and stockholders' equity would be overstated.
c. Net income would be overstated, and expenses would be understated.
EFT a. can process certain cash transactions at less cost than by using the mail b. means effective funds transfer c. makes it easier to document purchases and sales transactions d. means efficient funds transfer
a. can process certain cash transactions at less cost than by using the mail
A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. This item would be included in the bank reconciliation as a(n) a. addition to the balance per the company's records b. deduction from the balance per the company's records c. deduction from the balance per the bank statement d. addition to the balance per the bank statement
b. deduction from the balance per the company's records
If bonds are issued at a premium, the stated interest rate is a. adjusted to a higher rate of interest b. higher than the market rate of interest c. too low to attract investors d. lower than the market rate of interest
b. higher than the market rate of interest
Companies whose stock is traded in a public market a. must report EPS in the notes of their financial statements. b. must report EPS on their income statement. c. must report EPS on their balance sheet. d. are not required to report EPS.
b. must report EPS on their income statement.
In order to make their stock more attractive to investors, many corporations a. pay special dividends. b. pay quarterly cash dividends. c. refrain from paying cash dividends. d. pay extra dividends.
b. pay quarterly cash dividends.
A major objective of a stock split is to __________ of the stock. a. increase the par value b. reduce the market price per share c. decrease the number of stockholders d. reduce the number of shares outstanding
b. reduce the market price per share
Which of the following is not a factor in determining federal income taxes withheld from an individual's pay? a. marital status b. types of earnings c. gross pay d. number of withholding allowances
b. types of earnings
A corporation issues for cash $1,000,000 of 10%, 20-year bonds, interest payable annually, at a time when the market rate of interest is 12%. The straight-line method is adopted for the amortization of bond discount or premium. Which of the following statements is true? a. The amount of the annual interest expense gradually decreases over the life of the bonds. b. The amount of the annual interest expense is computed at 10% of the bond carrying amount at the beginning of the year. c. The amount of unamortized discount decreases from its balance at issuance date to a zero balance at maturity. d. The bonds will be issued at a premium.
c. The amount of unamortized discount decreases from its balance at issuance date to a zero balance at maturity.
The effect of a debit memo on the company's books decreases an asset. On the bank's records, the debit memo a. decreases an asset b. increases a liability c. decreases a liability d. increases an asset
c. decreases a liability
The return required by the market on the day of bond issuance is called the a. principal b. bond premium c. effective rate d. contract rate
c. effective rate
The accounts receivable turnover measures a. the number of days of accounts receivable outstanding b. the fair market value of accounts receivable c. how frequently during the year the accounts receivable are converted to cash d. the efficiency of the accounts payable function
c. how frequently during the year the accounts receivable are converted to cash
The journal entry on the declaration date for a cash dividend would a. include a debit to Cash. b. include a credit to Cash. c. include a credit to Cash Dividends Payable. d. not require a journal entry.
c. include a credit to Cash Dividends Payable.
Monitoring a. is used by management for guiding operations and ensuring compliance with requirements b. provides reasonable assurance that business goals will be achieved c. is used to locate weaknesses and improve controls d. is the overall attitude of management and employees
c. is used to locate weaknesses and improve controls
Ending inventory is made up of the oldest purchases when a company uses the a. first-in, first-out method b. retail method c. last-in, first-out method d. weighted average cost method
c. last-in, first-out method
Free cash flow is a. cash from financing less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends b. all cash in the bank c. net cash flows from operating activities less cash used to purchase fixed assets to maintain productive capacity d. cash from operations
c. net cash flows from operating activities less cash used to purchase fixed assets to maintain productive capacity
EPS is calculated as __________ divided by __________. a. net income; average number of common shares outstanding b. revenue; average number of shares issued and outstanding c. net income less preferred dividends; average number of common shares outstanding d. net income; average number of preferred shares outstanding
c. net income less preferred dividends; average number of common shares outstanding
The difference between accounts receivable and allowance for doubtful accounts is a. the bad debt expense b. the accounts receivable turnover c. the net realizable value of accounts receivable d. none of these choices
c. the net realizable value of accounts receivable
When there are two closing entries. The first one is to close revenues and expenses to _________, and the second one is to close _________ to Retained Earnings. a. Dividends; Common Stock b. Dividends; Retained Earnings c. Retained Earnings; Common Stock d. Retained Earnings; Dividends
d. Retained Earnings; Dividends
The entry to journalize the return of merchandise from a customer would include a a. debit to Sales b. debit to Estimated Returns Inventory c. credit to Sales d. debit to Customer Refunds Payable
d. debit to Customer Refunds Payable
On June 1, Michael Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years or 30,000 hours. Using straight-line depreciation, compute depreciation expense for the second year. a. $30,000 b. $17,500 c. $40,000 d. $12,500
a. $30,000 Annual Depreciation = Depreciable Cost ÷ Useful Life = $90,000 ÷ 3 = $30,000
The assets and liabilities of a company are $128,000 and $84,000, respectively. Stockholders' equity should equal a. $44,000 b. $84,000 c. $128,000 d. $212,000 Assets = Liabilities + Stockholders' Equity
a. $44,000
A corporation has a $500,000 beginning balance in Retained Earnings. Its net income for the year was $200,000. Sales revenue amounted to $1,000,000, and dividends declared and paid by year-end amounted to $100,000. What was the ending balance in Retained Earnings? a. $600,000 b. $700,000 c. $1,200,000 d. $1,400,000
a. $600,000 1. Treasury stock is deducted from stockholders' equity. 2. $500,000 + ($200,000 - $100,000) = $600,000; sales revenue is not necessary in the computation.
Land costing $98,520 was sold for $68,021 cash. The loss on the sale was reported on the income statement as "Other expense." On the statement of cash flows, what amount should be reported as an investing activity from the sale of land? a. $68,021 b. $166,541 c. $98,520 d. $30,499
a. $68,021
Bountiful Company had sales of $650,000 and cost of goods sold of $200,000 during a year. Total assets at the beginning of the year were $175,000 and at the end of the year were $167,000. The asset turnover ratio is a. 3.80 b. 0.29 c. 3.00 d. 0.26 Asset Turnover Ratio = Sales ÷ Average Total Assets
a. 3.80 Asset Turnover Ratio = Sales ÷ Average Total Assets = $650,000 ÷ [($175,000 + $167,000) ÷ 2] = $650,000 ÷ $171,000 = 3.80
If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer's account as uncollectible? a. Accounts Receivable b. Bad Debt Expense c. Allowance for Doubtful Accounts d. Interest Expense
a. Accounts Receivable
Which of the following statements is not true? a. All receivables that are expected to be realized in cash beyond 265 days are reported in the "Noncurrent assets" section. b. Current assets are normally reported in order of their liquidity. c. Disclosures related to receivables are reported in the financial statement notes. d. Cash and cash equivalents are the first items reported under "Current assets." Feedback Area Feedback
a. All receivables that are expected to be realized in cash beyond 265 days are reported in the "Noncurrent assets" section.
In a vertical analysis, which of the following accounts is most likely to represent 100 percent? a. Fees Earned b. Supplies Expense c. Rent Expense d. Wages Expense
a. Fees Earned
Current Assets - Current Liabilities = a. Working Capital b. Current Ratio c. Quick Ratio d. Quick Asset
a. Working Capital
A minimum cash balance required by a bank is called a. a compensating balance b. an EFT c. cash in bank d. a cash equivalent
a. a compensating balance
On November 21, Civic Company received $550 from customers in payment of their accounts. The journal entry to record this transaction would include a. a debit to Cash. b. a debit to Accounts Receivable. c. a credit to Accounts Payable. d. a credit to Cash.
a. a debit to Cash.
Debts listed as current liabilities are those that a. are due to be paid in 5 to 10 years b. will be paid in less than one year c. are due to be paid in more than one year d. are owed to the stockholders and will never be paid
a. are due to be paid in 5 to 10 years
Two methods of accounting for uncollectible accounts are the a. direct write-off method and the allowance method b. allowance method and the net realizable method c. allowance method and the accrual method d. direct write-off method and the accrual method
a. direct write-off method and the allowance method
The dollar amount stated on a promissory note is the a. face amount b. maturity value c. term d. interest
a. face amount
When merchandise is assumed to be sold in the order in which the purchases were made, the company is using the a. first-in, first-out method b. last-in, first-out method c. weighted average cost method d. first-in, last-out method
a. first-in, first-out method
If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest semiannually would sell at an amount a. greater than face value b. equal to the face value c. that cannot be determined d. less than face value
a. greater than face value
Which of the following accounts is NOT an asset account? a. Cash b. Accounts Payable c. Building d. Equipment
b. Accounts Payable
On March 10, Blarney Corporation issued 10,000 shares of no-par common stock at $40 a share. The journal entry to record the issuance of the stock would include a debit to __________ for __________. a. Cash; $10,000 b. Cash; $400,000 c. Common Stock; $400,000 d. Common Stock; $10,000
b. Cash; $400,000
Control of inventory should begin as soon as the inventory is received. Which of the following internal control steps is not done to meet this goal? a. Compare the receiving report to the purchase order. b. Check the invoice with the person who specifically purchased the item. c. Prepare a receiving report. d. Compare the receiving report and purchase order to the vendor's invoice.
b. Check the invoice with the person who specifically purchased the item.
Which of the following businesses would be most likely to use the accrual basis of accounting? a. Real estate agent b. Grocery store c. Physician d. Attorney
b. Grocery store
Which of the following shows the correct order of events? a. Unadjusted trial balance, adjusting entries, financial statements, adjusted trial balance b. Unadjusted trial balance, adjusting entries, adjusted trial balance, financial statements c. Financial statements, unadjusted trial balance, adjusting entries, adjusted trial balance d. Financial statements, adjusted trial balance, unadjusted trial balance, adjusting entries
b. Unadjusted trial balance, adjusting entries, adjusted trial balance, financial statements
On December 31, Strike Company has decided to discard one of its batting cages. The equipment had an initial cost of $310,000 and has accumulated depreciation of $260,000. Depreciation has been recorded up to the end of the year. Which of the following will be included in the entry to journalize the disposal? a. debit Loss on Disposal of Asset for $260,000 b. credit Equipment for $310,000 c. debit Accumulated Depreciation for $310,000 d. credit Gain on Disposal of Asset for $50,000
b. credit Equipment for $310,000
On December 15, Zapp Company paid $1,900 to Sylvan Supply Co. on account. The journal entry to record this transaction would include a __________ to __________. a. debit; Cash b. credit; Cash c. credit; Accounts Payable d. credit; Accounts Receivable
b. credit; Cash
When using a perpetual inventory system, the entry to journalize the cost of goods sold is a. No entry is made to journalize the cost of goods sold. b. debit Cost of Goods Sold and credit Inventory c. debit Cost of Goods Sold and credit Sales d. debit Inventory and credit Cost of Goods Sold
b. debit Cost of Goods Sold and credit Inventory
When a company receives an interest-bearing note receivable, it will a. credit Notes Receivable for the maturity value of the note b. debit Notes Receivable for the face value of the note c. credit Notes Receivable for the face value of the note d. debit Notes Receivable for the maturity value of the note
b. debit Notes Receivable for the face value of the not
The adjusting entry for accrued revenues a. debits a revenue account and credits an asset account. b. debits an asset account and credits a revenue account. c. debits a revenue account and credits a liability account. d. debits a liability account and credits a revenue account.
b. debits an asset account and credits a revenue account.
If $2,000,000 of 10% bonds are issued at 97, the amount of cash received from the sale is a. $2,100,000 b. $2,060,000 c. $1,940,000 d. $2,000,000
c. $1,940,000 Proceeds = Face Value × Bond Quote = $2,000,000 × 0.97 = $1,940,000
Astin Company has current assets of $82,530, total assets of $242,050, total net income of $58,240, current liabilities of $72,120, and total liabilities of $205,300. Astin Company's working capital is a. $36,570 b. $68,650 c. $10,410 d. $24,920 Working Capital = Current Assets - Current Liabilities
c. $10,410 $82,530 - $72,120 = $10,410
Excom sells radios and each unit carries a 2-year replacement warranty. The cost of repair defects under the warranty is estimated at 5% of the sales price. During September, Excom sells 168 radios for $42 each. One radio is actually replaced during September. For what amount in September would Excom debit Product Warranty Expense? (Round your answer to the nearest dollar.) a. $25 b. $4,200 c. $353 d. $42
c. $353 Product Warranty Expense = 5% × Sales = 5% × $7,056 = $353
On May 21, Civic Company paid dividends of $1,000 to the shareholders. The journal entry to record this transaction would include a debit to a. Cash. b. Common Stock. c. Dividends. d. Retained Earnings
c. Dividends.
During the taking of its physical inventory on December 31, 20Y4, Barry's Bike Shop incorrectly counted its inventory as $219,531 instead of the correct amount of $164,347. The effect on the balance sheet and income statement would be a. assets overstated by $55,184; retained earnings understated by $55,184; and net income statement understated by $55,184 b. assets overstated by $55,184; retained earnings understated by $55,184; and no effect on the income statement c. assets, retained earnings, and net income all overstated by $55,184 d. assets and retained earnings overstated by $55,184; and net income understated by $55,184
c. assets, retained earnings, and net income all overstated by $55,184
Liabilities are reported on the a. statement of stockholders' equity b. income statement c. balance sheet d. statement of cash flows
c. balance sheet
Multiple-step income statements show a. neither gross profit nor operating income b. gross profit but not operating income c. both gross profit and operating income d. operating income but not gross profit
c. both gross profit and operating income
If merchandise sold on account is returned to the seller, the seller acknowledges the return by issuing a a. sales invoice b. purchase invoice c. credit memo d. debit memo
c. credit memo
Using a perpetual inventory system, the entry to journalize the return of merchandise purchased on account includes a a. credit to Accounts Payable b. credit to Sales c. credit to Inventory d. debit to Cost of Goods Sold
c. credit to Inventory
On February 10, a corporation purchases 2,000 shares of its common stock at $50 per share. The entry to record the purchase would include a __________ to __________ for $100,000. a. debit; Cash b. credit; Treasury Stock c. debit; Treasury Stock d. debit; Common Stock
c. debit; Treasury Stock
Asset accounts and liability accounts are increased by __________ and __________, respectively. a. debits; debits b. credits; credits c. debits; credits d. credits; debits
c. debits; credits
What is the depreciation, for the year of acquisition and for the following year of a fixed asset acquired on October 1 for $250,000, with an estimated life of 5 years, and residual value of $25,000, using the straight-line method. Assume a fiscal year ending December 31. a. Year of acquisition, $25,000; following year, $45,000 b. Year of acquisition, $45,000; following year, $45,000 c. Year of acquisition, $11,250; following year, $90,000 d. Year of acquisition, $11,250; following year, $45,000
d. Year of acquisition, $11,250; following year, $45,000 ($250,000 − $25,000) ÷ 5 = $45,000 full year$45,000 × 3/12 = $11,250 partial year
Notes may be issued a. when assets are purchased b. when borrowing money c. to creditors to temporarily satisfy an account payable created earlier d. all of these choices
d. all of these choices
Which of the following should be added to net income in determining the net cash flows from operating activities using the indirect method? a. a decrease in accounts payable b. a gain on the sale of land c. dividends paid on common stock d. an increase in accrued expenses
d. an increase in accrued expenses
Fixed assets are ordinarily presented on the balance sheet a. in a separate section along with intangible assets b. at replacement costs c. at current market values d. at cost less accumulated depreciation
d. at cost less accumulated depreciation
On the statement of cash flows, the operating activities section would include a. payments for the acquisition of investments b. receipts from the issuance of common stock c. receipts from the sale of investments d. cash receipts from sales of merchandis
d. cash receipts from sales of merchandise
Revenue accounts and expense accounts are increased by __________ and __________, respectively. a. debits; debits b. credits; credits c. debits; credits d. credits; debits
d. credits; debits
Prepaid insurance is reported on the balance sheet as a a. current liability b. fixed asset c. long-term liability d. current asset
d. current asset
The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called a. deferral b. amortization c. depreciation d. depletion
d. depletion
A stock dividend __________ of a corporation. a. increases the assets and decreases the liabilities b. decreases the assets and increases the stockholders' equity c. increases the assets and decreases the total stockholders' equity d. does not change the assets, liabilities, or total stockholders' equity
d. does not change the assets, liabilities, or total stockholders' equity
If an accrual is for an expense, the adjusting entry debits an __________ account and credits a(n) __________ account. a. asset; revenue b. unearned revenue; revenue c. expense; asset d. expense; liability
d. expense; liability
Cash paid for preferred stock dividends should be shown on the statement of cash flows as a(n) a. investing activity b. operating activity c. noncash investing and financing activity d. financing activity
d. financing activity
The ratio measuring the number of dollars of sales earned per dollar of fixed assets is the a. intangible asset ratio b. current asset turnover ratio c. days' in assets ratio d. fixed asset turnover ratio
d. fixed asset turnover ratio
Purchasing supplies on account __________ a(n) __________ account. a. decreases; asset b. increases; revenue c. decreases; expense d. increases; liability
d. increases; liability
An event is remotely possible and the related liability is estimable. It will a. be recorded and disclosed b. be disclosed only c. be recorded only d. not be recorded or disclosed
d. not be recorded or disclosed
All of the following are considered advantages of the corporate form of business EXCEPT a. limited liability. b. double taxation. c. continuous life. d. separate legal existence.
d. separate legal existence.
The type of account and normal balance of Petty Cash is a(n) a. asset, debit b. expense, debit c. liability, credit d. revenue, credit
a. asset, debit
When a company uses the allowance method of accounting for uncollectible receivables, the entry to reinstate a previously written off account would include a a. credit to Allowance for Doubtful Accounts b. credit to Bad Debt Expense c. debit to Allowance for Doubtful Accounts d. debit to Bad Debt Expense
a. credit to Allowance for Doubtful Accounts
Expenditures for research and development are generally recorded as a. current operating expenses b. current assets c. assets and amortized over their estimated useful life d. assets and amortized over 40 years
a. current operating expenses
The entry used to journalize the payment of an interest-bearing note is a. debit Notes Payable and Interest Expense and credit Cash b. debit Cash and credit Notes Payable c. debit Notes Payable and Interest Receivable and credit Cash d. debit Accounts Payable and credit Cash
a. debit Notes Payable and Interest Expense and credit Cash
When only one class of stock is issued, it is called __________ stock .a. common b. preferred c. no-par d. cumulative preferred
a. common
The entry used to journalize the payment of a discounted note is a. debit Notes Payable and credit Cash b. debit Cash and credit Notes Payable c. debit Notes Payable and Interest Expense and credit Cash d. debit Accounts Payable and credit Cash
a. debit Notes Payable and credit Cash
The date of __________ is the date the board of directors formally authorizes the payment of the dividend. a. declaration b. record c. payment d. authorization
a. declaration
In determining net cash flows from operating activities using the indirect method, a gain on the sale of equipment is a. deducted from net income b. reported separately as a noncash investing and financing activity c. added to net income d. ignored because it does not affect cash
a. deducted from net income
When comparing a retail business to a service business, the financial statement that changes the most is the a. income statement b. statement of cash flows c. balance sheet d. statement of stockholders' equity
a. income statement
What are the processes and procedures a company uses to safeguard its assets, process information correctly, and ensure its compliance with laws and regulations called? a. internal control b. external control c. Sarbanes-Oxley Act d. fraud prevention control
a. internal control
If the market rate of interest is 7%, the price of 6% bonds paying interest semiannually with a face value of $500,000 will be a. less than $500,000 b. equal to $500,000 c. greater than $500,000 d. greater than or less than $500,000, depending on the maturity date of the bonds
a. less than $500,000
Which method of estimating uncollectible receivables focuses on the income statement? a. percent of sales method b. aging of receivables method c. direct write-off method d. allowance method
a. percent of sales method
Classify the following journal entry: Account Debit Credit Cash 450 Fees Earned 450 a. transaction entry b. adjusting entry c. closing entry d. none of these choices
a. transaction entry
Classify the following journal entry: Unearned Revenue 985 (left) Fees Earned 985(right) a. transaction entry b. adjusting entry c. closing entry d. none of these choices
b. adjusting entry
Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a a. credit to Accounts Receivable b. debit to Accounts Receivable c. debit to Allowance for Doubtful Accounts d. credit to Bad Debt Expense
b. debit to Accounts Receivable
The journal entry a company uses for the interest payment and amortization of bond discount would include a a. debit to Interest Expense and a credit to Cash b. debit to Interest Expense and a credit to Cash and Discount on Bonds Payable c. debit to Interest Expense and a credit to Interest Payable and Discount on Bonds Payable d. debit to Interest Expense and Discount on Bonds Payable and a credit to Cash Feedback Area Feedback
b. debit to Interest Expense and a credit to Cash and Discount on Bonds Payable
On May 18, Rodriguez Co. issued an $84,000, 6%, 120-day note payable on an overdue account payable to Wilson Company. Assume that the fiscal year of Rodriguez ends on June 30. Which of the following relationships is true? a. Wilson is the borrower and credits Accounts Payable. b. Rodriguez is the creditor and credits Accounts Receivable. c. Wilson is the creditor and debits Accounts Receivable. d. Rodriguez is the borrower and debits Accounts Payable.
d. Rodriguez is the borrower and debits Accounts Payable.
Selling the bonds at a premium has the effect of a. attracting investors that are willing to pay a lower rate of interest than on similar bonds b. causing the interest expense to be higher than the bond interest paid c. raising the effective interest rate above the stated interest rate d. causing the interest expense to be lower than the bond interest paid
d. causing the interest expense to be lower than the bond interest paid
The adjusting entry to account for normal inventory shrinkage involves a a. debit to Inventory and a credit to Cost of Goods Sold b. debit to Inventory Shrinkage and a credit to Inventory c. debit to Inventory and a credit to Inventory Shrinkage d. debit to Cost of Goods Sold and a credit to Inventory
d. debit to Cost of Goods Sold and a credit to Inventory
