MGT 11A Final
The interest accrued on $3600 at 7% for 60 days is
$42 (3600 x 0.07 x 60/360)
When originally purchased, a vehicle had an estimated useful life of 8 years. The vehicle cost $23,000 and its estimated salvage value is $1,500. After 4 years of straight-line depreciation, the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value. The depreciation expense in year 5 equals: A. $ 5,375.00. B. $ 2,687.50. C. $ 5,543.75. D. $10,750.00. E. $ 2,856.25.
A. $ 5,375.00. [(Cost-Revised Residual Value-Accumulated Depreciation)/Revised Remaining Useful Life] (23000-1500-(21500/8))/6-4)
On October 10, 2013, Printfast Company sells a commercial printer for $2,350 with a one-year warranty that covers parts. Warranty expense is projected to be 4% of sales. On February 28, 2014, the printer requires repairs. The cost of the parts for the repair is $80 and Printfast pays their technician $150 to perform the repair. What is the warranty liability for this printer at the at the end of 2014? A. $14.00. B. $84.80. C. $94.00. D. $0, there is no liability at the end of 2014. E. $230.00.
A. $14.00. $2,350 × 0.04 = $94.00 original estimated warranty liability $94.00 - 80.00 = $14.00 remaining
On January 1, 2013, Lane issues $700,000 of 7%, 15-year bonds at a price of 106¾. The interest payments are made on June 30 and December 31. Lane elects a fiscal year ending September 30. What is the amount that would be recorded as cash paid in the December 31, 2013, journal entry? A. $24,500 B. $22,925 C. $12,250 D. $11,462 E. $13,458
A. $24,500 (700,000 × 0.07 × 6/12) = 24,500
Conner Company borrows $185,600 cash on November 1, 2013, by signing a 120-day, 8% note. What is the total amount of interest that Conner will recognize for this note? A. $4,949. B. $14,848. C. $2,467. D. $0, no interest expense is recognized. E. $1485.
A. $4,949. $185,600 × 0.08 × 120/360 = $4,949
A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is: A. $50,000. B. $5,000. C. $45,000. D. Zero. This is an operating activity. E. Zero. This is a financing activity.
A. $50,000.
A company paid $0.48 in cash dividends per share. It has earnings per share of $4.20 and a market price per share of $30.00. Its dividend yield equals: A. 1.60% B. 6.25% C. 8.75% D. 11.40% E. 14.00%
A. 1.60% ($0.48/$30) (paid dividends per share/market price)
The following data regarding its common stock were reported by a corporation: Authorized shares 20,000 Issued shared 15,000 Treasury shares 3,000 The number of outstanding shares is: A. 12,000 B. 15,000 C. 17,000 D. 20,000 E. 23,000
A. 12,000 15,000 issued - 3,000 treasury = 12,000 outstanding
A depreciable asset currently has a $24,500 book value. The company owning the asset uses straight-line depreciation. They paid $37,000 for this asset and consider it to have a $2,000 salvage value with a seven year useful life. How long has the company owned this asset? A. 2.5 years. B. 2.36 years. C. 2.1 years. D. 7 years. E. Cannot be determined from the given information
A. 2.5 years. (Straight Line= 37000-2000/7 years= annual depreciation of 5000.)
Amortizing a bond discount: A. Allocates a part of the total discount to each interest period. B. Increases the market value of the Bonds Payable. C. Decreases the Bonds Payable account. D. Decreases interest expense each period. E. Increases cash flows from the bond.
A. Allocates a part of the total discount to each interest period.
An employer's federal unemployment taxes (FUTA) are reported: A. Annually. B. Semiannually. C. Quarterly. D. Monthly. E. Weekly.
A. Annually.
37. Employer payroll taxes: A. Are an added expense beyond the wages and salaries earned by employees. B. Represent the federal taxes withheld from employees. C. Represent the social security taxes withheld from employees. D. Are paid by the employee. E. All of the above.
A. Are an added expense beyond the wages and salaries earned by employees.
Employee vacation benefits: A. Are estimated liabilities. B. Are contingent liabilities. C. Are recorded as an expense when the employee takes a vacation. D. Are recorded as an expense when the employee retires. E. Increase net income.
A. Are estimated liabilities.
34. Uncertainties such as natural disasters: A. Are not contingent liabilities because they are future events not arising out of past transactions or events. B. Are contingent liabilities because they are future events arising from past transactions or events. C. Should be disclosed because of their usefulness to financial statements. D. Are estimated liabilities because the amounts are uncertain. E. Arise out of transactions such as debt guarantees.
A. Are not contingent liabilities because they are future events not arising out of past transactions or events.
A company issued 8%, 15-year bonds with a par value of $550,000. The current market rate is 8%. The journal entry to record each semiannual interest payment is: A. Picture B. Picture C. Picture D. Picture E. No entry is needed, since no interest is paid until the bond is due
A. Bond Interest Expense debit 22,000, Cash credit 22,000 $550,000 × 0.08 × 6/12 = $22,000
The understatement of the ending inventory balance causes: A. Cost of goods sold to be overstated and net income to be understated B. Cost of goods sold to be overstated and net income to be overstated C. Cost of goods sold to be understated and net income to be understated D. Cost of goods sold to be understated and net income to be overstated E. Cost of goods sold to be overstated and net income to be correct
A. Cost of goods sold to be overstated and net income to be understated
Unearned revenue is initially recognized with a: A. Credit to unearned revenue. B. Credit to revenue. C. Debit to revenue payable. D. Debit to revenue. E. Debit to unearned revenue.
A. Credit to unearned revenue.
Electron borrowed $75,000 cash from Tech Com by signing a promissory note. TechCom's entry to record the transaction should include a: A. Debit to Notes Receivable B. Debit to Accounts Receivable C. Credit to Notes Receivable D. Debit Notes Payable E. Credit to Sales
A. Debit to Notes Receivable
The reporting of net cash provided or used by operating activities that lists the major items of operating cash receipts, such as receipts from customers, and subtracts the major items of operating cash disbursements, such as cash paid for merchandise, is referred to as the: A. Direct method of reporting net cash provided or used by operating activities. B. Cash basis of accounting. C. Classified statement of cash flows. D. Indirect method of reporting net cash provided or used by operating activities. E. Net method of reporting cash flows from operating activities.
A. Direct method of reporting net cash provided or used by operating activities.
The annual federal unemployment tax return is: A. Form 940. B. Form 1099. C. Form 104. D. Form W-2. E. Form W-4.
A. Form 940.
The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the retained earnings account is the: A. Income Summary account B. Closing account C. Balance column account D. Contra account E. Nominal account
A. Income Summary account
Reporting of discontinued segments includes: A. Income or loss from operating the discontinued segment net of tax and gain or loss from disposal of the segment's net assets net of tax. B. Extraordinary items. C. Changes in accounting principle. D. Items that are both unusual and infrequent. E. Writing off of receivables.
A. Income or loss from operating the discontinued segment net of tax and gain or loss from disposal of the segment's net assets net of tax.
Which of the following statements is true? For the issuer: A. Interest paid on bonds is tax deductible. B. Interest paid on bonds is not tax deductible. C. Dividends paid to stockholders are tax deductible. D. Bonds are assets. E. Bonds always decrease return on equity.
A. Interest paid on bonds is tax deductible.
The direct method of reporting operating cash flows: A. Is recommended but not required by the FASB. B. Must be used by all companies. C. Is used by most companies. D. Is considered supplementary disclosure. E. Is not recommended by the FASB, but is commonly used.
A. Is recommended but not required by the FASB
The direct method of reporting operating cash flows: A. Is recommended but not required by the FASB. B. Must be used by all companies. C. Is used by most companies. D. Is considered supplementary disclosure. E. Is not recommended by the FASB, but is commonly used.
A. Is recommended but not required by the FASB.
A premium on common stock: A. Is the amount paid in excess of par by purchasers of newly issued stock. B. Is the difference between par value and issue price when the amount paid is below par. C. Represents profit from issuing stock. D. Represents capital gain on sale of stock. E. Is prohibited in most states.
A. Is the amount paid in excess of par by purchasers of newly issued stock.
A corporation's minimum legal capital is often defined to be the total par value of the shares: A. Issued B. Authorized C. Subscribed D. Outstanding E. In treasury
A. Issued
The person who signs a note receivable and promises to pay the principal and interest is the A. Maker B. Payee C. Holder D. Receiver E. Owner
A. Maker
A discount on bonds payable: A. Occurs when a company issues bonds with a contract rate less than the market rate. B. Occurs when a company issues bonds with a contract rate more than the market rate. C. Increases the Bond Payable account. D. Decreases the total bond interest expense. E. Is not allowed in many states to protect creditors.
A. Occurs when a company issues bonds with a contract rate less than the market rate.
Intracompany standards for financial statement analysis are: A. Often based on a company's prior performance. B. Often set by competitors. C. Set by the company's industry. D. Based on rules of thumb. E. Published in Dun and Bradstreet.
A. Often based on a company's prior performance.
The appropriate section in the statement of cash flows for reporting the cash payment of wages is: A. Operating activities. B. Financing activities. C. Investing activities. D. Schedule of noncash investing or financing activity. E. None of these as this is not reported on the statement of cash flows.
A. Operating activities.
The appropriate section in the statement of cash flows for reporting the cash payment of wages is: A. Operating activities. B. Financing activities. C. Investing activities. D. Schedule of noncash investing or financing activity. E. None of these. This is not reported on the statement of cash flows.
A. Operating activities.
The appropriate section in the statement of cash flows for reporting the receipt of cash dividends from investments in securities is: A. Operating activities. B. Financing activities. C. Investing activities. D. Schedule of noncash investing or financing activity. E. None of these as this is not reported on the statement of cash flows.
A. Operating activities.
An example of an operating activity is: A. Paying wages B. Purchasing office equipment C. Borrowing money from a bank D. Selling stock E. Paying off a loan
A. Paying wages
An example of an operating activity is: A. Paying wages. B. Purchasing office equipment. C. Borrowing money from a bank. D. Selling stock. E. Paying off a loan.
A. Paying wages.
The deferred income tax liability: A. Represents income tax payments that are deferred until future years because of temporary differences between GAAP rules and tax accounting rules. B. Is a contingent liability. C. Can result in a deferred income tax asset. D. Is never recorded. E. Is recorded whether or not the difference between taxable income and financial accounting income is permanent or temporary.
A. Represents income tax payments that are deferred until future years because of temporary differences between GAAP rules and tax accounting rules.
Common-size statements: A. Reveal changes in the relative magnitude of each financial statement item. B. Do not emphasize the relative magnitude of each item. C. Compare financial statements over time. D. Show the dollar amount of change for financial statement items. E. Consist of two or more balance sheets arranged side-by-side.
A. Reveal changes in the relative magnitude of each financial statement item.
Which of the following are true regarding the closing process of a merchandiser? A. Sales Discounts, Sales Returns and Allowances and Cost of Goods Sold should all be credited during closing B. Sales Discounts, Sales Returns and Allowances and Cost of Goods Sold should all be debited during closing C. Sales Discounts and Sales Returns and Allowances should be debited; Cost of Goods Sold should be credited during closing D. Sales Discounts and Sales Returns and Allowances should be credited; Cost of Goods Sold should be debited during closing E. Sales Discounts and Sales Returns and Allowances are not closed; Cost of Goods Sold should be credited
A. Sales Discounts, Sales Returns and Allowances and Cost of Goods Sold should all be credited during closing
The direct method for the preparation of the operating activities section of the statement of cash flows: A. Separately lists each major item of operating cash receipts and cash payments. B. Reports adjustments to reconcile net income to net cash provided or used by operating activities in the statement. C. Reports an amount of cash flows from operations different from the amount determined using the indirect method. D. Is required if the company is a merchandiser. E. Is required by the FASB.
A. Separately lists each major item of operating cash receipts and cash payments.
The amount of federal income taxes withheld from an employee's paycheck is determined by: A. The employee's annual earnings rate and number of withholding allowances. B. The employer's merit rating. C. The employee's annual earnings rate and merit rating. D. Multiplying gross pay by 6.2%. E. The employee's credit rating.
A. The employee's annual earnings rate and number of withholding allowances.
Contingent liabilities must be recorded if: A. The future event is probable and the amount owed can be reasonably estimated. B. The future event is remote. C. The future event is reasonably possible. D. The amount owed cannot be reasonably estimated. E. All of the above.
A. The future event is probable and the amount owed can be reasonably estimated.
The credit terms 2/10, n/30 are interpreted as: A. a 2% cash discount if the amount is paid within 10 days, with the balance due in 30 days B. a 10% cash discount if the amount is paid within 2 days, with the balance due in 30 days C. a 30% discount is paid within 2 days D. a 30% discount if paid within 10 days E. a 2% discount if paid within 30 days
A. a 2% cash discount if the amount is paid within 10 days, with the balance due in 30 days
If a company borrows money from a bank, the interest paid on this loan should be reported on the statement of cash flows as a(n): A.Operating activity. B. Investing activity. C. Financing activity. D. Noncash investing and financing activity. E. None of these. This is not reported in the statement of cash flows.
A.Operating activity.
17. The interest accrued on $3,600 at 7% for 60 days is: A. $ 36. B. $ 42. C. $252. D. $180. E. $420.
B. $ 42. (3600 x 0.07(60/360)= 42)
A company has an inventory of 10 units at a cost of $10 on June 1. On June 3, they purchased 20 units at $12 each. On june 5, they sold 5 units. Using FIFO, what's the cost of the 12 units sold? A. 120 B. 124 C. 128 D. 130 E. 140
B. $124 [(10 units x $10) + (2 units x $12)]
A parcel of land is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as being worth $140,000 and is purchased for $137,000. The land should be recorded in the puncher's books at: A. $95,000 B. $137,000 C. $138,000 D. $140,000 E. $150,000
B. $137,000
Use the following information to calculate cash paid for wages and salaries: Salaries Expense: 168000 Salaries Payable, Jan 1: 6400 Salaries Payable, Dec 31: 10600 A. $157,400. B. $163,800. C. $168,000. D. $172,200. E. $174,400.
B. $163,800. (salries expense + Salaries payable jan 1 - Salaries payable dec 31)
A company uses the periodic inventory system and has the following activity: Nov 1 Beg Inventory of 100 units @ $20 Nov 5 Purchased 100 units @ $22 Nov 8 Purchased 50 units @ $23 Nov 16 Sold 200 units @ $45 Nov 19 Purchased 50 units @$25 Using the weighted-average inventory method, the company's ending inventory would be: A. $2000 B. $2200 C. $2250 D. $2400 E. $4400
B. $2200 (Weighted Avg: Cost of goods available/total units available to sell) [(100x22 + 100x20 + 50x23 + 50x25)/(100 + 100 + 50 +50)] (=$22-> we sold 200 so we only have 100 units left from our 300 so $22x100= $2200)
On December 1, Martin Company signed a $5,000, 3-month, 6% note payable, with the principle plus interest due on March 1 of the following year. What amount of interest expense is accrued at December 31 on the note? A. $0 B. $25 C. $50 D. $75 E. $300
B. $25 $5,000 × 0.06 × 1/12 = $25
35. On December 1, Martin Company signed a $5,000 3-month 6% note payable, with the principle plus interest due on March 1 of the following year. What amount of interest expense is accrued at December 31 on the note? A. $0 B. $25 C. $50 D. $75 E. $300
B. $25 (5000 x 0.06(1/12)= $25)
28. A company purchased a rope braiding machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. It is estimated that the machine could produce 750,000 units of climbing rope over its useful life. In the first year, 105,000 units were produced. In the second year, production increased to 109,000 units. Using the units-of-production method, what is the amount of depreciation that should be recorded for the second year? A. $25,200. B. $26,160. C. $26,660. D. $27,613. E. $53,160.
B. $26,160. (Units of Production: 1st calculate DC= cost-residual Then: dc/# of total units produced over lifetime for the depreciation rate. Then: DR x # of units of output for a certain year) (DC=190000 - 10000 = 180000; DR= 180000/750000=0.24; 0.24 x 109000 2nd year units = 26160)
A company issues 9%, 20-year bonds with a par value of $750,000. The current market rate is 9%. The amount of interest owed to the bondholders for each semiannual interest payment is. A. $0 B. $33,750 C. $67,500 D. $750,000 E. $1,550,000
B. $33,750 $750,000 × 0.09 × ½ year = $33,750
On September 30, the Cash account of Value Company had a normal balance of $5000. During September, the account was debited for a total of $12,200 and credited for a total of $11,500. What was the balance in the Cash account at the beginning of September? A. $0 balance B. $4,300 debit balance C. $4,300 credit balance D. $5,700 debit balance E. $5,700 credit balance
B. $4,300 debit balance
A company paid $0.75 in cash dividends per share. It has earnings per share of $3.50 and a market price per share of $37.50. Its dividend yield equals: A. 11.7% B. 2.0% C. 10.9% D. 21.4% E. 46.7%
B. 2.0% $0.75/$37.50 = 2%
On September 30, the Cash account of Value Company had a normal balance of $5,000. During September, the account was debited for a total of $12,200 and credited for a total of $11,500. What was the balance in the Cash account at the beginning of September? A. A $0 balance. B. A $4,300 debit balance. C. A $4,300 credit balance. D. A $5,700 debit balance. E. A $5,700 credit balance.
B. A $4,300 debit balance.
Unearned revenue is reported in the financial statements as: A. A revenue on the balance sheet B. A liability on the balance sheet C. An unearned revenue on the income statement D. An asset on the balance sheet E. An operating activity on the statement of cash flows
B. A liability on the balance sheet
Acme has an agreement with a major credit card company which calls for the cash to be received immediately upon deposit of Acme customers' credit card sales receipts. The credit card company receives a 3.5% fee from Acme's card sales. If Acme has $2000 in credit card sales, which of the following is true? A. Acme debits Cash $2000 B. Acme debits Cash $1930 C. Acme debits Accounts Receivable--Credit Card Co $2000 D. Acme debits Accounts Receivable--Credit Card Co $1930 E. Acme credits Sales $1930
B. Acme debits Cash $1930
When closing entries are made: A. All ledger accounts are closed to start the new accounting period B. All temporary accounts are closed but not the permanent accounts C. All real accounts are closed but not the the nominal accounts D. All permanent accounts are closed but not the nominal accounts E. All balance sheet accounts are closed
B. All temporary accounts are closed but not the permanent accounts
Which of the following is true regarding the effective interest amortization method? A. Allocates bond interest expense using a changing interest rate. B. Allocates bond interest expense using a constant interest rate. C. Allocates a decreasing amount of interest over the life of a discounted bond. D. Allocates bond interest expense using the current market rate for each period. E. Is not allowed by the FASB.
B. Allocates bond interest expense using a constant interest rate.
Which of the following financial statement sections includes information on the background on a company, its industry, and its economic setting? A. Executive summary B. Analysis overview C. Evidential conclusions D. Factor analysis E. Inferences
B. Analysis overview
23. Land improvements are: A. Assets that increase the usefulness of land, and like land, are not depreciated. B. Assets that increase the usefulness of land, but that have a limited useful life and are subject to depreciation. C. Included in the cost of the land account. D. Expensed in the period incurred. E. Also called basket purchases.
B. Assets that increase the usefulness of land, but that have a limited useful life and are subject to depreciation.
25. The total cost of an asset less its accumulated depreciation is called: A. Historical cost. B. Book value. C. Present value. D. Current (market) value. E. Replacement cost.
B. Book value.
A company received cash proceeds of $206,948 on a bond issue with a par value of $200,000. The difference between par value and issue price for this bond is recorded as a: A. Credit to Interest Income. B. Credit to Premium on Bonds Payable. C. Credit to Discount on Bonds Payable. D. Debit to Premium on Bonds Payable. E. Debit to Discount on Bonds Payable.
B. Credit to Premium on Bonds Payable.
In applying the lower cost or market method to inventory valuation, market is defined as: A.Historical cost B. Current replacement cost C. Current sales price D. LIFO E. FIFO
B. Current replacement cost
A depreciation method in which a plant asset's depreciation expense for a period is determined by applying a constant depreciation rate each period to the asset's beginning book value is called: A. Book value depreciation. B. Declining-balance depreciation. C. Straight-line depreciation. D. Units-of-production depreciation. E. Modified accelerated cost recovery system (MACRS) depreciation.
B. Declining-balance depreciation.
The distribution of assets to stockholders is called a: A. Liability B. Dividend C. Expense D. Contribution E. Investment
B. Dividend
The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is: A. Operating activities. B. Financing activities. C. Investing activities. D. Schedule of noncash investing or financing activity. E. None of these as this is not reported on the statement of cash flows.
B. Financing activities.
The Federal Insurance Contributions Act (FICA) requires that each employer file a: A. W-4. B. Form 941. C. Form 1040. D. Form 1099. E. Form 521B.
B. Form 941.
An estimated liability: A. Is an unknown liability of a certain amount. B. Is a known obligation of an uncertain amount that can be reasonably estimated. C. Is a liability that may occur if a future event occurs. D. Can be the result of a lawsuit. E. Is not recorded until the amount is known for certain.
B. Is a known obligation of an uncertain amount that can be reasonably estimated.
A contingent liability: A. Is always of a specific amount. B. Is a potential obligation that depends on a future event arising out of a past transaction or event. C. Is an obligation not requiring future payment. D. Is an obligation arising from the purchase of goods or services on credit. E. Is an obligation arising from a future event.
B. Is a potential obligation that depends on a future event arising out of a past transaction or event.
The total amount of deprecation recorded against an asset or group of assets during the entire time the asset or assets have been owned: A. Is referred to as deprecation expense B. Is referred to as accumulated deprecation C. Is shown on the income statement of the final period D. Is only recorded when the asset is disposed of E. Is referred to as an accrued asset
B. Is referred to as accumulated deprecation
Once the estimated depreciation expense for an asset is calculated: A. It cannot be changed due to the historical cost principle. B. It may be revised based on new information. C. Any changes are accumulated and recognized when the asset is sold. D. The estimate itself cannot be changed; however, new information should be disclosed in financial statement footnotes. E. It cannot be changed due to the consistency principle.
B. It may be revised based on new information.
To provide security to creditors and to reduce interest costs, bonds and notes payable can be secured by: A. Safe deposit boxes B. Mortgages C. Equity D. The FASB E. Debentures
B. Mortgages
Liabilities: A. Must be certain. B. Must sometimes be estimated. C. Must be for a specific amount. D. Must always have a definite date for payment. E. Must involve an outflow of cash.
B. Must sometimes be estimated.
On Oct 29, a company concluded that a customer's $4400 account receivable was uncollectible and should be written off. What effect will this write-off have on this company's net income and total assets assuming the allowance method is used to account for bad debts? A. Decrease in net income; no effect on total assets B. No effect on net income; no effect on total assets C. Decrease in net income; decrease in total assets D. Increase in net income; no effect on total assets E. No effect on net income; decrease in total assets
B. No effect on net income; no effect on total assets
On October 29 of the current year, a company concluded that a customer's $4,400 account receivable was uncollectible and that the account should be written off. What effect will this write-off have on this company's net income and total assets assuming the allowance method is used to account for bad debts? A. Decrease in net income; no effect on total assets. B. No effect on net income; no effect on total assets. C. Decrease in net income; decrease in total assets. D. Increase in net income; no effect on total assets. E. No effect on net income; decrease in total assets.
B. No effect on net income; no effect on total assets.
Due to an oversight, a company made no adjusting entry for accrued and unpaid employee wages of $24,000 on December 31. This oversight would: A. Understate net income by $24,000 B. Overstate net income by $24,000 C. Have no effect on net income D. Overstate assets by $24,000 E. Understate assets by $24,000
B. Overstate net income by $24,000
Due to an oversight, a company made no adjusting entry for accrued and unpaid employee wages of $24,000 on December 31. This oversight would: A. Understate net income by $24,000. B. Overstate net income by $24,000. C. Have no effect on net income. D. Overstate assets by $24,000. E. Understate assets by $24,000.
B. Overstate net income by $24,000.
When the maker of a note honors a note this indicates that the note is: A. Signed B. Paid in full C. Guaranteed D. Notarized E. Consigned
B. Paid in full
General standards of comparisons (rules-of-thumb) are developed from: A. Industry statistics from the government. B. Past experience. C. Analysis of competitors. D. Relations between financial items. E. Dun and Bradstreet.
B. Past experience.
Which of the following items is reported on the statement of cash flows under financing activities? A. Declaration of a cash dividend. B. Payment of a cash dividend. C. Declaration of a stock dividend. D. Payment of a stock dividend. E. Stock split.
B. Payment of a cash dividend.
Which of the following items is reported on the statement of cash flows under financing activities? A. Declaration of a cash dividend. B. Payment of a cash dividend. C. Declaration of a stock dividend. D. Payment of a stock dividend. E. Stock split.
B. Payment of a cash dividend.
The process of transferring general journal information to the ledger is: A. Double-entry accounting B. Posting C. Balancing an account D. Journalizing E. Not required unless debits do not equal credits
B. Posting
A stock dividend transfers: A. Contributed capital to retained earnings. B. Retained earnings to contributed capital. C. Retained earnings to assets. D. Contributed capital to assets. E. Assets to contributed capital.
B. Retained earnings to contributed capital.
The dollar change for a financial statement item is calculated by: A. Subtracting the analysis period amount from the base period amount. B. Subtracting the base period amount from the analysis period amount. C. Subtracting the analysis period amount from the base period amount, dividing the result by the base period amount, and then multiplying that amount by 100. D. Subtracting the base period amount from the analysis period amount, dividing the result by the base period amount, and then multiplying that amount by 100. E. Subtracting the base period amount from the analysis amount, then dividing the result by the base amount.
B. Subtracting the base period amount from the analysis period amount.
Double-entry accounting is an accounting system: A. That records each transaction twice B. That records the effects of transactions and other events in at least two accounts with equal debits and credits C. In which each transaction affects and is recorded in two or more accounts but that could include two debits and no credits D. That may only be used if the T-accounts are used E. That insures that errors never occur
B. That records the effects of transactions and other events in at least two accounts with equal debits and credits
A company issued 7% preferred stock with a $100 par value. This means that: A. Preferred shareholders have a guaranteed dividend. B. The amount of the potential dividend is $7 per year per preferred share. C. Preferred shareholders are entitled to 7% of the annual income. D. The market price per share will approximate $100 per share. E. Only 7% of the total contributed capital can be preferred stock.
B. The amount of the potential dividend is $7 per year per preferred share.
A bond traded at 102½ means that: A. The bond pays 2.5% interest. B. The bond traded at $1,025 per $1,000 bond. C. The market rate of interest is 2.5%. D. The bonds were retired at $1,025 each. E. The market rate of interest is 2½% above the contract rate.
B. The bond traded at $1,025 per $1,000 bond.
Prior period adjustments to financial statements can result from: A. Changes in estimates. B. Using unacceptable accounting principles. C. Discontinued operations. D. Changes in tax law. E. Extraordinary items.
B. Using unacceptable accounting principles.
Owners of preferred stock often do not have: A. Ownership rights to assets of the corporation. B. Voting rights. C. Preference to dividends. D. The right to sell their stock on the open market. E. Preference to assets at liquidation.
B. Voting rights.
When preparing an unadjusted trial balance using a periodic inventory system, the amount shown for Merchandise Inventory is: A. the ending inventory amount B. the beginning inventory amount C. equal to the cost of goods sold D. equal to the cost of goods purchased E. equal to the gross profit
B. the beginning inventory amount
A company purchased a POS cash register on January 1 for $5,400. This register has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second-year of its useful life using the double-declining-balance method? A. $ 500. B. $ 800. C. $ 864. D. $1,000. E. $1,080.
C. $ 864. (Depreciation Rate: (1/# useful years) x 2) (Double Declining Method: depreciation rate x beginning book value for each year) (DR: (1/10) x 2 = 0.2) (DDM: 5400 x 0.2 for first year = 1080) (5400-1800 x 0.2 for second year = 864)
A company issued 60 shares of $100 par value stock for $7,000 cash. The total amount of paid-in capital in excess of par is: A. $100 B. $600 C. $1,000 D. $6,000 E. $7,000
C. $1,000 $7,000 - (60 shares × $100 par) = $1,000
A company had the following accounts and balances year-end. Insert Image If all the accounts have normal balances, what are the totals for the trial balance? A. $45,200 B. $67,000 C. $104,800 D. $209,600 E. $186,600
C. $104,800
During the month of February, Hoffer Company had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the January 31 beginning cash balance? A. $700 B. $1,100 C. $2,900 D. $0 E. $4,300
C. $2,900
16. A company has inventory of 15 units at a cost of $12 each on August 1. On August 5, they purchased 10 units at $13 per unit. On August 12 they purchased 20 units at $14 per unit. On August 15, they sold 30 units. Using the FIFO perpetual inventory method, what is the value of the inventory at August 12 after the sale? A. $140. B. $160. C. $210. D. $380. E. $590.
C. $210. (sold 30 units from August 15th: all 15 of the August 1st units + all 10 of the August 5 units (=25 total so far) + 5 of the 20 units from August 12th. 15 units at $14/unit left after August 12th = $210)
A company's board of directors votes to declare a cash dividend of $0.75 per share. The company has 15,000 shares authorized, 10,000 issued, and 9,500 shares outstanding. The total amount of the cash dividend is: A. $375 B. $4,125 C. $7,125 D. $7,500 E. $11,250
C. $7,125 $0.75 × 9,500 shares = $7,125
A company purchased $1800 of merchandise on December 5. On DEc 7, it returned $200 worth of merchandise. On Dec 8, it paid the balance in full, taking a 2% discount. The amount of cash paid on Dec 8 is: A. 200 B. 1564 C. 1568 D. 1600 E. 1800
C. 1568 (1800-200 x 0.02=32; 1600-32=1568)
Acme-Jone Co uses a weighted average perpetual inventory method system. Aug 2, 10 units purchased $12/unit Aug 18, 15 units purchased $14/unit Aug 29, 12 units sold What's the amount of the cost of goods sold for this sale? A. 148 B. 150.50 C. 158.40 D. 210 E. 330
C. 158.40 (Weighted-Avg: Cost of goods available/total units= $120+$210/25=13.2 x 12 (units sold))
40. The statement of cash flows is: A. Another name for the statement of financial position. B. A financial statement that presents information about changes in equity during a period. C. A financial statement that reports the cash inflows and cash outflows for an accounting period, and that classifies those cash flows as operating activities, investing activities, or financing activities. D. A financial statement that lists the types and amounts of assets, liabilities, and equity of a business on a specific date. E. A financial statement that lists the types and amounts of the revenues and expenses of a business for an accounting period.
C. A financial statement that reports the cash inflows and cash outflows for an accounting period, and that classifies those cash flows as operating activities, investing activities, or financing activities.
Adidas issued 10-year, 8% bonds with a par value of $200,000, where interest is paid semiannually. The market rate on the issue date was 7.5%. Adidas received $206,948 in cash proceeds. Which of the following statements is true? A. Adidas must pay $200,000 at maturity and no interest payments. B. Adidas must pay $206,948 at maturity and no interest payments. C. Adidas must pay $200,000 at maturity plus 20 interest payments of $8,000 each. D. Adidas must pay $206,948 at maturity plus 20 interest payments of $8,000 each. E. Adidas must pay $200,000 at maturity plus 20 interest payments of $7,500 each.
C. Adidas must pay $200,000 at maturity plus 20 interest payments of $8,000 each. Semiannual interest payment: $200,000 × 0.08 × ½ year = $8,000
Adjusting entries: A. Affect only income statement accounts B. Affect only balance sheet accounts C. Affect both income statement and balance sheet accounts D. Affect only cash flow statement accounts E. Affect only equity accounts
C. Affect both income statement and balance sheet accounts
If a company failed to make the end-of-period adjustment to remove from the Unearned Management Fees account the amount of management fees that were earned, this omission would cause: A. An overstatement of net income B. An overstatement of assets C. An overstatement of liabilities D. An overstatement of equity E. An understatement of liabilities
C. An overstatement of liabilities
Amounts received in advance from customers for future products or services: A. Are revenues. B. Increase income. C. Are liabilities. D. Are not allowed under GAAP. E. Require an outlay of cash in the future.
C. Are liabilities.
Industry standards for financial statement analysis: A. Are based on a company's prior performance. B. Are set by the government. C. Are set by the financial performance and condition of the company's industry. D. Are based on rules of thumb. E. Compare a company's income with the prior year's income.
C. Are set by the financial performance and condition of the company's industry.
Extraordinary items: A. Are not reported on a corporate income statement. B. Are included in income from operations. C. Are unusual and infrequent. D. Include changes in accounting principle. E. Are disclosed before discontinued operations on the income statement.
C. Are unusual and infrequent.
The cash flow on total assets ratio: A. Is the same as return on assets. B. Is the same as profit margin. C. Can be an indicator of earnings quality. D. Is highly affected by accounting principles of income recognition and measurement. E. Is average net assets divided by cash flows from operations.
C. Can be an indicator of earnings quality.
47. A statement of cash flows should reconcile the differences between the beginning and ending balances of: A. Net income. B. Equity. C. Cash and cash equivalents. D. Working capital. E. Cash, cash equivalents, and short-term investments.
C. Cash and cash equivalents.
A statement of cash flows should reconcile the differences between the beginning and ending balances of: A. Net income. B. Equity. C. Cash and cash equivalents. D. Working capital. E. Cash, cash equivalents and short-term investments.
C. Cash and cash equivalents.
The main purpose of the wage bracket withholding table is to: A. Compute social security withholding. B. Compute Medicare withholding. C. Compute federal income tax withholding. D. Prepare the W-4. E. Compute gross earnings.
C. Compute federal income tax withholding.
A bond sells at a discount when the: A. Contract rate is above the market rate. B. Contract rate is equal to the market rate. C. Contract rate is below the market rate. D. Bond has a short-term life. E. Bond pays interest only once a year.
C. Contract rate is below the market rate.
36. The employer should record payroll deductions as: A. Employee receivables. B. Payroll taxes. C. Current liabilities. D. Wages payable. E. Employee payables.
C. Current liabilities.
On January 1, 2013, Jacob issues $600,000 of 11%, 15-year bonds at a price of 102½. What is the journal entry to record the issuance of these bonds? A. Picture B. Picture C. Picture D. Picture E. Picture
C. Debit Cash 615,000, Credit Bonds Payable 600,000 and credit Premium on Bonds Payable 15,000 Issue price: $600,000 × 1.025 = $615,000 Premium: $615,000 - $600,000 = $15,000
If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees, the end-of-period adjusting entry to record the portion of those fees that's been earned is: A. Debit Cash and credit Legal Fees Earned B. Debit Cash and credit Unearned Legal Fees C. Debit Unearned Legal Fees and credit Legal Fees Earned D. Debit Legal Fees Earned and credit Unearned Legal Fees E. Debit Unearned Legal Fees and credit Accounts Receivable
C. Debit Unearned Legal Fees and credit Legal Fees Earned
An error is indicated of the following account has a balance appearing on the post-closing trial balance: A. Office equipment B. Accumulated Deprecation-Office expense C. Deprecation Expense-Office equipment D. Common Stock E. Salaries Payable
C. Deprecation Expense-Office equipment
The statement of changes in stockholders' equity: A. Is part of the statement of retained earnings. B. Shows only the ending balances in stockholders' equity. C. Describes changes in contributed capital and retained earnings subcategories. D. Does not include changes in treasury stock. E. Is reported by very few companies.
C. Describes changes in contributed capital and retained earnings subcategories.
An adjusting entry could be made for each of the following except: A. Prepaid expenses B. Depreciation C. Dividends D. Unearned revenues E. Accrued revenues
C. Dividends
8. An adjusting entry could be made for each of the following except: A. Prepaid expenses. B. Depreciation. C. Dividends. D. Unearned revenues. E. Accrued revenues.
C. Dividends.
The common-size percent is computed by: A. Dividing the analysis amount by the base amount. B. Dividing the base amount by the analysis amount. C. Dividing the analysis amount by the base amount and multiplying the result by 100. D. Dividing the base amount by the analysis amount and multiplying the result by 1,000. E. Subtracting the base amount from the analysis amount and multiplying the result by 100.
C. Dividing the analysis amount by the base amount and multiplying the result by 100.
The buyer who pays cash for an account receivable is called: A. Payor B. Pledgor C. Factor D. Payee E. Pledgee
C. Factor
A company's transactions with its creditors to borrow money and/or to repay the principal amounts of loans are reported as cash flows from: A. Operating activities B. Investing activities C. Financing activities D. Direct activities E. Indirect activities
C. Financing activities
The accounting principle that requires significant noncash financing and investing activities be reported on the statement of cash flows is the: A. Historical cost principle B. Materiality principle C. Full disclosure principle D. Going concern principle E. Business entity principle
C. Full disclosure principle
42. The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is: A. Operating activities. B. Financing activities. C. Investing activities. D. Schedule of noncash investing or financing activity. E. None of these. This is not reported on the statement of cash flows.
C. Investing activities.
The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is: A. Operating activities. B. Financing activities. C. Investing activities. D. Schedule of noncash investing or financing activity. E. None of these as this is not reported on the statement of cash flows.
C. Investing activities.
The carrying value of a long-term note payable: A. Is computed as the future value of all remaining future payments, using the market rate as interest. B. Is the face value of the long-term note less the total of all future interest payments. C. Is computed as the present value of all remaining future payments, discounted using the market rate of interest at the time of issuance. D. Is computed as the present value of all remaining interest payments, discounted using the note's rate of interest. E. Decreases each time period the discount on the note is amortized.
C. Is computed as the present value of all remaining future payments, discounted using the market rate of interest at the time of issuance.
The record in which transactions are first recorded is the: A. Account balance B. Ledger C. Journal D. Trial Balance E. Cash account
C. Journal
A company paid $150,000, plus a 6% commission and $4,000 in closing costs for a property. The property included land appraised at $87,500, land improvements appraised at $35,000, and a building appraised at $52,500. What should be the allocation of this property's costs in the company's accounting records? A. Land $75,000; Land Improvements, $30,000; Building, $45,000. B. Land $75,000; Land Improvements, $30,800; Building, $46,200. C. Land $81,500; Land Improvements, $32,600; Building, $48,900. D. Land $79,500; Land Improvements, $32,600; Building, $47,700. E. Land $87,500; Land Improvements; $35,000; Building; $52,500.
C. Land $81,500; Land Improvements, $32,600; Building, $48,900. (company paid 150,000 + (150,000 x 0.06) + 4000 =163000.) (find the right combo of costs that adds to 163000)
Unearned revenues are: A. Revenues that have been earned and received in cash B. Revenues that have been earned but not yet collected in cash C. Liabilities created when a customer pays in advance for products or services before the revenue is earned D. Recorded as an asset in the accounting records E. Increases to owner's capital
C. Liabilities created when a customer pays in advance for products or services before the revenue is earned
Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as: A. Financing activities B. Investing activities C. Operating activities D. Direct activities E. Indirect activities
C. Operating activities
Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as: A. Financing activities. B. Investing activities. C. Operating activities. D. Direct activities. E. Indirect activities.
C. Operating activities.
Assets, liabilities, and equity accounts are not closed; these accounts are called: A. Nominal Accounts B. Temporary accounts C. Permanent accounts D. Contra accounts E. Accrued accounts
C. Permanent accounts
An example of an investing activity is: A. Paying wages of employees B. Paying dividends C. Purchasing land D. Selling inventory E. Contribution from owner
C. Purchasing land
An example of an investing activity is: A. Paying wages of employees. B. Paying dividends. C. Purchasing land. D. Selling inventory. E. Contribution from owner.
C. Purchasing land.
The indirect method for the preparation of the operating activities section of the statement of cash flows: A. Separately lists each major item of operating cash receipts. B. Separately lists each major item of operating cash payments. C. Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities. D. Is required if the company is a merchandiser. E. Must not be used in all circumstances
C. Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities.
7. Which of the following groups of accounts are not balance sheet accounts? A. Assets. B. Liabilities. C. Revenues. D. Equity accounts. E. All of the above are balance sheet accounts.
C. Revenues.
11. A company had expenses other than cost of goods sold of $250,000. Determine sales and gross profit given cost of goods sold was $100,000 and net income was $150,000. A. Sales: $350,000; Gross Profit: $150,000. B. Sales: $350,000; Gross Profit: $50,000. C. Sales: $500,000; Gross Profit: $400,000. D. Sales: $500,000; Gross Profit: $50,000. E. Sales: $400,000; Gross Profit: $500,000.
C. Sales: $500,000; Gross Profit: $400,000. (Gross Profit = Net Income + Other Expenses)
Prior period adjustments are reported in the: A. Income statement. B. Balance sheet. C. Statement of retained earnings. D. Statement of cash flows. E. Notes to the financial statements.
C. Statement of retained earnings.
The quality of receivables refers to: A. The creditworthiness of sellers B. The speed of collection C. The likelihood of collection without loss D. Sales turnover E. The interest rate
C. The likelihood of collection without loss
A bondholder that owns a $1,000, 10%, 10-year bond has: A. Ownership rights in the company who issued the bond. B. The right to receive $10 per year until maturity. C. The right to receive $1,000 at maturity. D. The right to receive $10,000 at maturity. E. The right to receive dividends of $1,000 per year.
C. The right to receive $1,000 at maturity.
The matching principle requires: A. That expenses be ignored if their effect on the financial statements are less important than revenues to the financial statement user. B. The use of the direct write-off method for bad debts. C. The use of the allowance method of accounting for bad debts. D. That bad debts be disclosed in the financial statements. E. That bad debts not be written off.
C. The use of the allowance method of accounting for bad debts.
The matching principle requires: A. That expenses be ignored if their effect on the financial statements are less important than revenues to the financial statement user. B. The use of the direct write-off method for bad debts C. The use of the allowance method of accounting for bad debts. D. That bad debts be disclosed in the financial statements E. That bad debts not be written off
C. The use of the allowance method of accounting for bad debts.
Viscount Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are: A. Total assets decrease and equity increases B. Both total assets and total liabilities decrease C. Total assets, total liabilities and equity are unchanged D. Both total assets and equity are unchanged and liabilities increase E. Total assets increase and equity decreases
C. Total assets, total liabilities and equity are unchanged
A promissory note received from a customer in exchange for an account receivable is A. a cash equivalent for the recipient B. an account receivable for the recipient C. a note receivable for the recipient D. a short-term investment for the recipient E. a note payable for the recipient
C. a note receivable for the recipient
Accounting standards: A.) Allow companies to omit the statement of cash flows from a complete set of financial statements if cash is an insignificant asset. B.) Require that companies omit the statement of cash flows from a complete set of financial statements if the company has no investing activities. C.) Require that companies include a statement of cash flows in a complete set of financial statements. D.) Allow companies to include the statement of cash flows in a complete set of financial statements if the cash balance makes up more than 50% of the current assets. E.) Allow companies to omit the statement of cash flows from a complete set of financial statements if the company has no financing activities.
C.) Require that companies include a statement of cash flows in a complete set of financial statements.
A company has 40,000 shares of common stock outstanding. The stockholders' equity applicable to common shares is $470,000 and the par value per common share is $10. The book value per share is: A. $0.09 B. $1.75 C. $10.00 D. $11.75 E. $47.50
D. $11.75 $470,000/40,000 shares = $11.75 per share
If equity is $300,000 and liabilities are $192,000, then assets equals: A. $108,000 B. $192,000 C. $300,000 D. $492,000 E. $792,000
D. $492,000
Blanket Corporation sold equipment for cash of $40,500. Accumulated depreciation on the sale date amounted to $34,000 and a loss of $1,800 was recognized on the sale. What was the original cost of the asset? A. $72,300. B. $75,900. C. $ 4,700. D. $76,300. E. $42,300
D. $76,300. (Original Value: value sold + accumulated depreciation as of sale date + loss on sale) (40,500 + 34,000 + 1800 = 76300)
Treasury stock is classified as: A. An asset account. B. A contra asset account. C. A revenue account. D. A contra equity account. E. A liability account.
D. A contra equity account.
On June 30, 2007 Apricot Co. paid $5,000 cash for management services to be preformed over a two-year period. Apricot follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. On June 30,2007 Apricot should record: A. A credit to an expense for $5,000 B. A debit to an expense for $5000 C. A credit to a prepaid expense for $5000 D. A debit to a prepaid expense for $5000 E. A debit to Cash for $5000
D. A debit to a prepaid expense for $5000
The adjusted trial balance contains information pertaining to: A. Asset accounts only B. Balance sheet accounts only C. Income statement accounts only D. All general ledger accounts E. Revenue accounts only
D. All general ledger accounts
Which of the following is a true statement regarding debits and credits? A. If a company earned a profit, debits will not equal credits B. For a business, debits are better than credits C. A company's books are not in balance if they have a current period loss D. Assets and expenses are both increased with a debit E. Liabilities and equity are both increased with a debit
D. Assets and expenses are both increased with a debit
Prepaid expenses are: A. Payments made for products and services that do not ever expire B. Classified as liabilities on the balance sheet C. Decreases in equity D. Assets that represent prepayments of future expenses E. Promises of payments by customers
D. Assets that represent prepayments of future expenses
An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is relatively insensitive to interest rate changes is a(n): A. Short-term marketable equity security. B. Operating activity. C. Common stock. D. Cash equivalent. E. Financing activity.
D. Cash equivalent.
A list of all accounts and the identification number assigned to each account used by a company is called a: A.Ledger B. Journal C. Trial balance D. Chart of accounts E. General Journal
D. Chart of accounts
5. Management Services, Inc. provides services to clients. On May 1, a client prepaid Management Services $60,000 for 6-months services in advance. Management Services' general journal entry to record this transaction will include a A. Debit to Unearned Management Fees for $60,000. B. Credit to Management Fees Earned for $60,000. C. Credit to Cash for $60,000. D. Credit to Unearned Management Fees for $60,000. E. Debit to Management Fees Earned for $60,000.
D. Credit to Unearned Management Fees for $60,000.
Management services, Inc. provides services to clients. On May 1st, a client prepaid management services $60,000 for 6-months services in advance. Management services' general journal entry to record this transaction will include a: A. Debit to Unearned management fees for $60,000 B. Credit toCsh for $60,000 C. Credit to Cash for $60,000 D. Credit to Unearned management fees fees for $60,000 E. Debit to Management fees earned for $60,000
D. Credit to Unearned management fees fees for $60,000
Revenues are: A. The same as net income B. The excess of expenses over assets C. Resources owned or controlled by a company D. Increases in retained earnings from a company's earning activities E. The costs of assets or services used
D. Increases in retained earnings from a company's earning activities
Revenues are: A. The same as net income. B. The excess of expenses over assets. C. Resources owned or controlled by a company D. Increases in retained earnings from a company's earning activities. E. The costs of assets or services used.
D. Increases in retained earnings from a company's earning activities.
The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the: A. Recognition principle B. Cost Principle C. Cash basis of accounting D. Matching principle E. Time period principle
D. Matching principle
A company's cost of goods sold was $4,000. Determine net purchases and ending inventory given goods available for sale were $11,000 and beginning inventory was $5,000. A. Net Purchases: $15,000; Ending Inventory: $7,000. B. Net Purchases: $10,000; Ending Inventory: $15,000. C. Net Purchases: $9,000; Ending Inventory: $6,000. D. Net Purchases: $6,000; Ending Inventory: $7,000. E. Net Purchases: $16,000; Ending Inventory: $20,000
D. Net Purchases: $6,000; Ending Inventory: $7,000. (11,000 -5,000 = 6,000 net purchases) (Goods available for sale - beginning inventory = Net Purchases)
A company's cost of goods sold was $4000. Determine net purchases and ending inventory given goods available for sale were $11,000 and beginning inventory was $5000. A. Net Purchases: $15000, Ending Inventory: $7000 B. Net Purchases: $10000, Ending Inventory: $15000 C. Net Purchases: $9000, Ending Inventory: $6000 D. Net Purchases: $6000, Ending Inventory: $7000 E. Net Purchases: $16000, Ending Inventory: $20000
D. Net Purchases: $6000, Ending Inventory: $7000 (goods available for sale (11000) - beginning inventory (5000) = *net purchases(6000)) (*ending inventory= goods available for sale - cost of goods sold = 7000)
The first line item in the operating activities section of a spreadsheet for a statement of cash flows prepared using the indirect method is: A. Cash. B. Cash received from customers. C. Increase (decrease) in accounts receivable. D. Net income. E. Adjustments to net income.
D. Net income.
A written promise to pay a definite sum of money on a specific date is a: A. Unearned revenue B. Prepaid expense C. Credit account D. Note payable E. Account receivable
D. Note payable
Under IFRS, cash outflows for interest expense are classified as A. Operating. B. Investing. C. Financing. D. Operating or investing, assuming that the classification is applied consistently across all periods. E. Investing or financing, depending upon who is the recipient of the interest paid.
D. Operating or investing, assuming that the classification is applied consistently across all periods.
The purchase of long-term assets by issuing a note payable for the entire amount is reported on the statement of cash flows in the: A. Operating activities. B. Financing activities. C. Investing activities. D. Schedule of noncash financing and investing activities. E. None of these as this is not reported on the statement of cash flows.
D. Schedule of noncash financing and investing activities.
The appropriate section in the statement of cash flows for reporting the purchase of land in exchange for common stock is: A. Operating activities. B. Financing activities. C. Investing activities. D. Schedule of noncash investing or financing activity. E. None of these as this is not reported on the statement of cash flows.
D. Schedule of noncash investing or financing activity.
In horizontal analysis the percent change is computed by: A. Subtracting the analysis period amount from the base period amount. B. Subtracting the base period amount from the analysis period amount. C. Subtracting the analysis period amount from the base period amount, dividing the result by the base period amount, and then multiplying that amount by 100. D. Subtracting the base period amount from the analysis period amount, dividing the result by the base period amount, and then multiplying that amount by 100. E. Subtracting the base period amount from the analysis amount, then dividing the result by the analysis period amount.
D. Subtracting the base period amount from the analysis period amount, dividing the result by the base period amount, and then multiplying that amount by 100.
A debit is: A. An increase in an account B. The right-hand side of a T-account C. A decrease in an account D. The left-hand side of a T-account E. An increase to a liability account
D. The left-hand side of a T-account
Revenue is properly recognized: A. When the customer's order is received B. Only if the transaction creates an accounts receivable C. At the end of the accounting period D. Upon completion of the sale or when services have been preformed and the business has the right to collect the sales price E. When cash from a sale is received
D. Upon completion of the sale or when services have been preformed and the business has the right to collect the sales price
The accounts receivable turnover is calculated by:
Dividing Net Sales by Average Accounts Receivable
A company had inventory on Nov 1 of 5 units at a cost of $20 eahc. On Nov 2, they purchased 10 units at $22 each. On Nov 6 they purchased 6 units at $25 each. On Nov 8, 8 units were sold for $55 each. Using LIFO, what was the value of the inventory on Nov 8 after the sale? A. $304 B. $296 C. $288 D. $280 E. $276
E. $276 (6 units from nov 6, 2 units from nov 2. So 8 units at $22 and 5 units at $20 are left = $276)
13. Given the following items and costs as of the balance sheet date, determine the value of Faltron Company's merchandise inventory. $1,000 goods sold by Faltron to another company. The goods are in transit and shipping terms are FOB destination. $2,000 goods sold by another company to Faltron. The goods are in transit and shipping terms are FOB destination. $3,000 owned by Faltron but in the possession of another company the consignee. Damaged goods owned by Faltron which originally cost $4,000 but which now have a $500 net realizable value. A. $10,000. B. $6,500. C. $5,500. D. $5,000. E. $4,500.
E. $4,500. (1000 goods sold BY Faltron + 3000 owned by Faltron + 500 net value of damaged goods)
A company purchased equipment and signed a seven-year installment loan at 9% annual interest. The annual payments equal $9,000. The present value factor for an annuity for seven years at 9% is 5.0330. What value for this equipment should be recorded on the company's books on the day the contract is signed? A. $9,000 B. $5,033 C. $63,000 D. $57,330 E. $45,297
E. $45,297 $9,000 × 5.0330 = $45,297
A company issued 60 shares of $100 par value stock for $7,000 cash. The total amount of contributed capital is: A. $100 B. $600 C. $1,000 D. $6,000 E. $7,000
E. $7,000
Picture The company is subject to the following taxes: Picture What is the amount that Mission Company will withhold from Smith's August gross pay? A. $62.00 B. $138.50 C. $443.20 D. $581.70 E. $76.50
E. $76.50 $1,000 × 0.0765 = $76.50
Changes in accounting estimates are: A. Considered accounting errors. B. Reported as prior period adjustments. C. Accounted for with a cumulative "catch-up" adjustment. D. Extraordinary items. E. Accounted for in current and future periods.
E. Accounted for in current and future periods.
If a period-end inventory amount is reported in error, it can cause a mistake in: A. Cost of Goods Sold B. Gross Profit C. Net Income D. Current Assets E. All of the Above
E. All of the Above
Accounting is an information and measurement system that: A.Identifies business activities B.Records business activities C. Communicates business activities D. Helps people make better decisions E. All of the above
E. All of the above
The amount of bad debt expense can be estimated by: A. The percent of sales method B. The percent of accounts receivable method C. The aging of accounts receivable method D. Only b and c E. All of the above
E. All of the above
14. Incidental and necessary costs of inventory: A. Can be assigned to each inventory unit. B. May be immaterial. C. Can be allocated to cost of goods sold. D. Are subject to the cost-to-benefit constraint when deciding how to account for them. E. All of the above.
E. All of the above.
A cash equivalent is an investment that: A. Is readily convertible to a known amount of cash. B. Is sufficiently close to its maturity date so its market value is unaffected by interest rate changes. C. Generally is within 3 months of its maturity date. D. Is highly liquid. E. All of the above.
E. All of the above.
Preparation of the statement of cash flows involves: A. Computing the net increase or decrease in cash. B. Computing and reporting net cash provided or used by operations. C. Computing and reporting net cash provided or used by investing activities. D. Computing and reporting net cash provided or used by financing activities. E. All of the above.
E. All of the above.
A debit is used to record: A. A decrease in an asset account B. A decrease in an expense account C. An increase in a revenue account D. An increase in the balance of common stock E. An increase in the balance of retained earnings
E. An increase in the balance of retained earnings
The different between the cost of an asset and the accumulated deprecation for that asset is called A. Depreciation Expense B. Unearned Deprecation C. Prepaid Depreciation D. Deprecation Value E. Book Value
E. Book Value
During a period of steadily rising costs, the inventory valuation method that yields the lowest reported net income is: A. Specific identification method B. Average cost method C. weighted-average method D. FIFO method E. LIFO method
E. LIFO method
During a period of steadily rising costs, the inventory valuation method that yields the lowest reported net income is: A. Specific identification method. B. Average cost method. C. Weighted-average method. D. FIFO method. E. LIFO method.
E. LIFO method. (lowest net income)
3. Creditors' claims on the assets of a company are called: A. Net losses. B. Expenses. C. Revenues. D. Equity. E. Liabilities.
E. Liabilities.
9. Another name for temporary accounts is: A. Real accounts. B. Contra accounts. C. Accrued accounts. D. Balance column accounts. E. Nominal accounts.
E. Nominal accounts.
The accounting prescribing that financial statement information be supported by independent, unbiased evidence other than someone's belief or opinion is the: A.Business entity principle B. Monetary unit principle C. Going-concern principle D. Cost principle E. Objectivity principle
E. Objectivity principle
A component of operating efficiency and profitability, calculated by expressing net income as a percent of net sales, is equal to the: A. Acid-test ratio. B. Merchandise turnover. C. Price earnings ratio. D. Accounts receivable turnover. E. Profit margin ratio.
E. Profit margin ratio.
Which one of the following is representative of typical cash flows from operating activities? A. Proceeds from collecting the principal amount of loans. B. Repayment of principal on loans. C. Proceeds from the issuance of bonds and notes payable. D. Payments by a merchandiser to acquire equity securities of other companies. E. Receipts of cash sales.
E. Receipts of cash sales.
If an issuer sells a bond at any other date than the interest payment date: A. This means the bond sells at a premium. B. This means the bond sells at a discount. C. The issuing company will report a loss on the sale of the bond. D. The issuing company will report a gain on the sale of the bond. E. The buyer normally pays the issuer the purchase price plus any interest accrued since the last interest payment date.
E. The buyer normally pays the issuer the purchase price plus any interest accrued since the last interest payment date.
In which of the following situations would the trail balance not balance? A. A $1,000 collection of an account receivable was erroneously posted as a debit to Accounts Receivable and a credit to cash B. The purchase of office supplies on account for &3,250 was erroneously recorded in the journal as $2,350 debit to Office Supplies and credit to Accounts payable C. A $50 cash receipt for the performance of a service was not recorded at all D. The purchase of office equipment for $1,200 was posted as a debit to Office supplies and a credit to Cash for $1,200 E. The cash payment of a $750 account payable was posted as a debit to Accounts Payable ad a debit to Cash for $750
E. The cash payment of a $750 account payable was posted as a debit to Accounts Payable ad a debit to Cash for $750
The comparison of a company's financial condition and performance to a base amount is known as: A. Financial reporting. B. Horizontal ratios. C. Investment analysis. D. Risk analysis. E. Vertical analysis.
E. Vertical analysis.
The inventory valuation method that results in the lowest taxable income in a period of inflation is
LIFO
Beginning inventory plus Net cost of purchases is:
Merchandise available for sale