Accounting Principles 1 Final Mize

52. Wang Company had the following transactions during 2016: • Sales of $10,800 on account • Collected $4,800 for services to be performed in 2017 • Paid $2,600 cash in salaries • Purchased airline tickets for $600 in December for a trip to take place in 2017 What is Wang's 2016 net income using cash basis accounting? A) $1,600 B) $2,800 C) $13,000 D) $2,200

A) $1,600

8. Jackson Company recorded the following cash transactions for the year: Paid $135,000 for salaries. Paid $60,000 to purchase office equipment. Paid $15,000 for utilities. Paid $6,000 in dividends. Collected $275,000 from customers. What was Jackson's net cash provided by operating activities? A) $125,000 B) $65,000 C) $140,000 D) $119,000

A) $125,000

89. Sassy Saxophones has the following inventory data: July 1 Beginning inventory 50 units at $120 5 Purchases 300 units at $112 14 Sale 200 units 21 Purchases 150 units at $115 30 Sale 140 units Assuming that a periodic inventory system is used, what is the amount allocated to ending inventory on a LIFO basis? A) $18,320 B) $18,370 C) $38,480 D) $38,530 Page 24

A) $18,320

20. Use the following data to determine the total amount of working capital. Koonce Office Supplies Balance Sheet December 31, 2017 Cash $ 195,000 Accounts payable $ 210,000 Accounts receivable 150,000 Salaries and wages payable 30,000 Inventory 165,000 Mortgage payable 240,000 Prepaid insurance 90,000 Total liabilities $480,000 Stock investments 255,000 Land 270,000 Buildings $315,000 Common stock $360,000 Less: Accumulated Retained earnings 750,000 depreciation (60,000) 255,000 Total stockholders' equity $1,100,000 Trademarks 210,000 Total liabilities and Total assets $1,590,000 stockholders' equity $1,590,000 A) $360,000 B) $390,000 C) $130,000 D) $180,000

A) $360,000

100. Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjusting entry: A) Accounts Receivable Cash B) Cash Accounts Receivable C) Miscellaneous Expense Accounts Receivable D) No adjusting entry is necessary.

A) Accounts Receivable Cash

14. The right to receive money in the future is called a(n) A) account payable. B) account receivable. C) liability. D) revenue.

B) account receivable.

94. Which of the following statements is correct? A) Due to its liquid nature, cash is the easiest asset to steal. B) A good system of internal control will ensure that employees will not be able to steal cash. C) It takes two or more employees working together to be able to steal cash. D) All of these answer choices are correct. Page 25

A) Due to its liquid nature, cash is the easiest asset to steal.

49. Why do generally accepted accounting principles require the application of the revenue recognition principle? A) Failure to apply the revenue recognition principle could lead to a misstatement of revenue. B) It is easy to apply the revenue recognition principle because revenue issues are always easy to identify and resolve. C) Recording revenue when cash is received is an objective application of the revenue recognition principle. D) Accounting software has made the revenue recognition easy to apply.

A) Failure to apply the revenue recognition principle could lead to a misstatement of revenue.

18. Trademarks would appear in which balance sheet section? A) Intangible assets B) Investments C) Property, plant, and equipment D) Current assets

A) Intangible assets

9. Which of the following is an advantage of corporations relative to partnerships and sole proprietorships? A) Reduced legal liability for investors B) Harder to transfer ownership C) Lower taxes D) Most common form of organization

A) Reduced legal liability for investors

91. A very small company would have the most difficulty in implementing which of the following internal control activities? A) Separation of duties. B) Limited access to assets. C) Periodic independent verification. D) Sound personnel procedures.

A) Separation of duties.

79. When a perpetual inventory system is used, which of the following is a purpose of taking a physical inventory? A) To check the accuracy of the perpetual inventory records B) To determine cost of goods sold for the accounting period C) To compute inventory ratios D) All are a purpose of taking a physical inventory when a perpetual inventory system is used.

A) To check the accuracy of the perpetual inventory records

47. An accounting time period that is one year in length is called: A) a fiscal year. B) an interim period. C) the time period assumption. D) a reporting period.

A) a fiscal year.

15. When expenses exceed revenues, which of the following is true? A) a net loss results B) a net income results C) assets equal liabilities D) assets are increased

A) a net loss results

92. Two individuals at a retail store work the same cash register. You evaluate this situation as A) a violation of establishment of responsibility. B) a violation of separation of duties. C) supporting the establishment of responsibility. D) supporting internal independent verification.

A) a violation of establishment of responsibility.

97. If a check correctly written and paid by the bank for $628 is incorrectly recorded on the company's books for $682, the appropriate treatment on the bank reconciliation would be to A) add $54 to the book's balance. B) subtract $54 from the book's balance. C) deduct $54 from the bank's balance. D) deduct $628 from the book's balance.

A) add $54 to the book's balance.

59. Leyland Realty Company received a check for $18,000 on July 1, which represents a 6-month advance payment of rent on a building it rents to a client. Unearned Rent Revenue was credited for the full $18,000. Financial statements will be prepared on July 31. Leyland Realty should make the following adjusting entry on July 31: A) debit Unearned Rent Revenue, $3,000; credit Rent Revenue, $3,000. B) debit Rent Revenue, $3,000; credit Unearned Rent Revenue, $3,000. C) debit Unearned Rent Revenue, $18,000; credit Rent Revenue, $18,000. D) debit Cash, $18,000; credit Rent Revenue, $18,000.

A) debit Unearned Rent Revenue, $3,000; credit Rent Revenue, $3,000.

46. One of the accounting concepts upon which adjustments for prepayments and accruals are based is: A) expense recognition. B) cost. C) monetary unit. D) economic entity.

A) expense recognition.

55. Prepaid expenses are: A) paid and recorded in an asset account before they are used or consumed. B) paid and recorded in an asset account after they are used or consumed. C) incurred but not yet paid or recorded. D) incurred and already paid or recorded.

A) paid and recorded in an asset account before they are used or consumed.

4. Most business enterprises in the United States are A) proprietorships and partnerships. B) partnerships. C) corporations. D) government units.

A) proprietorships and partnerships.

50. Using accrual accounting, expenses are recorded and reported only: A) when they are incurred whether or not cash is paid. B) when they are incurred and paid at the same time. C) if they are paid before they are incurred. D) if they are paid after they are incurred. Page 13

A) when they are incurred whether or not cash is paid.

76. Manufactured inventory that has begun the production process but is not yet completed is A) work in process. B) raw materials. C) merchandise inventory. D) finished goods.

A) work in process.

81. Alpha First Company just began business and made the following four inventory purchases in June: June 1 150 units $ 1,040 June 10 200 units 1,560 June 15 200 units 1,680 June 28 150 units 1,320 $5,600 A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand. Using the LIFO inventory method, the value of the ending inventory on June 30 is A) $1,456 B) $1,508 C) $1,848 D) $1,824 Page 21

B) $1,508

63. Conway Company purchased merchandise inventory with an invoice price of $12,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Conway Company pays within the discount period? A) $12,000 B) $11,760 C) $10,800 D) $11,040 Page 16

B) $11,760

70. Financial information is presented below: Operating expenses $ 45,000 Sales returns and allowances 3,000 Sales discounts 7,000 Sales revenue 160,000 Cost of goods sold 96,000 The amount of net sales on the income statement would be A) $153,000. B) $150,000. C) $160,000. D) $157,000.

B) $150,000.

26. The following information is available for Bradshaw Corporation and Newell Corporation: (in millions) Bradshaw Corporation Newell Corporation 2017 2016 2017 2016 Preferred dividends 25 10 0 30 Net income 500 480 490 520 Shares outstanding at the end of the year 200 180 150 200 Shares outstanding at the beginning of the year 180 150 200 220 Based on this information, what is the amount of Bradshaw's earnings per share (rounded to two decimals) for 2017? A) $2.76 B) $2.50 C) $1.25 D) $1.32

B) $2.50

53. Given the data below for a firm in its first year of operation, determine net income under the accrual basis of accounting. Cash received from customers $45,000 Accounts receivable 12,000 Cash paid for expenses 26,000 Accounts payable (related to expenses) 3,000 Prepaid rent for next period 7,000 A) $19,000 B) $28,000 C) $21,000 D) $12,000 Page 14

B) $28,000

23. Use the following data to determine the total amount of working capital. Eddy Auto Supplies Balance Sheet December 31, 2017 Cash $ 126,000 Accounts payable $ 165,000 Accounts receivable 120,000 Salaries and wages payable 30,000 Inventory 210,000 Mortgage payable 270,000 Prepaid insurance 90,000 Total liabilities $465,000 Stock investments 255,000 Land 285,000 Buildings $339,000 Common stock $360,000 Less: Accumulated Retained earnings 750,000 depreciation (60,000) 279,000 Total stockholders' equity $1,110,000 Trademarks 210,000 Total liabilities and Total assets $1,575,000 stockholders' equity $1,575,000 A) $606,000 B) $351,000 C) $381,000 D) $261,000

B) $351,000

29. Based on the following data, what is the amount of current assets? Accounts payable $62,000 Accounts receivable 100,000 Cash 70,000 Intangible assets 100,000 Inventory 138,000 Long-term investments 160,000 Long-term liabilities 200,000 Short-term investments 80,000 Notes payable 56,000 Property, plant, and equipment 1,340,000 Prepaid insurance 2,000 A) $232,000 B) $390,000 C) $252,000 D) $250,000

B) $390,000

42. Barnes Company showed the following balances at the end of its first year: Cash $14,000 Prepaid insurance 700 Accounts receivable 3,500 Accounts payable 2,800 Notes payable 4,200 Common stock 5,400 Dividends 700 Revenues 29,000 Expenses 17,500 What amount did Barnes Company show as total credits? A) $42,100 B) $41,400 C) $40,700 D) $42,800

B) $41,400

68. Financial information is presented below: Operating expenses $ 28,000 Sales returns and allowances 7,000 Sales discounts 3,000 Sales revenue 150,000 Cost of goods sold 98,000 Gross profit would be A) $49,000. B) $42,000. C) $45,000. D) $52,000.

B) $42,000.

32. Crawford Company started the year with $60,000 in its Common Stock account and a credit balance in Retained Earnings of $44,000. During the year, the company earned net income of $48,000 and declared and paid $20,000 of dividends. In addition, the company sold additional common stock amounting to $28,000. As a result, the amount of its retained earnings at the end of the year would be A) $160,000. B) $72,000. C) $132,000. D) $100,000.

B) $72,000.

44. During February 2017, its first month of operations, the owner of Schwenn Enterprises invested cash of $100,000. Schwenn had cash sales of $20,000 and paid expenses of $35,000. Assuming no other transactions impacted the cash account, what is the balance in Cash at February 28? A) $15,000 credit B) $85,000 debit C) $120,000 debit D) $65,000 credit

B) $85,000 debit

78. Tidwell Company's goods in transit at December 31 include sales made (1) FOB destination (2) FOB shipping point and purchases made (3) FOB destination (4) FOB shipping point. Which items should be included in Tidwell's inventory at December 31? A) (2) and (3) B) (1) and (4) C) (1) and (3) D) (2) and (4)

B) (1) and (4)

73. If Hostell Company has net sales of $500,000 and cost of goods sold of $350,000, Hostell's gross profit rate is A) 70%. B) 30%. C) 43%. D) 100%. Page 19

B) 30%

98. For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation? A) Check for $63 recorded by the company as $36. B) Deposit of $600 recorded by the bank as $60. C) A returned $300 check recorded by the bank as $30. D) Check for $75 recorded by the company as $57.

B) Deposit of $600 recorded by the bank as $60.

99. Which of the following bank reconciliation items would not result in an adjusting entry? A) Service charge. B) Deposits in transit. C) NSF check of customer. D) Collection of a note by the bank. Page 26

B) Deposits in transit.

75. Crowder Corporation recorded the return of $200 of goods originally sold on credit to Discount Industries. Using the periodic inventory approach, Crowder would record this transaction as: A) Inventory 200 Accounts Receivable 200 B) Sales Returns and Allowances 200 Accounts Receivable 200 C) Accounts Payable 200 Sales Returns and Allowances 200 D) Accounts Receivable 200 Sales Returns and Allowances 200

B) Sales Returns and Allowances 200 Accounts Receivable 200

96. Which of the following is not an internal control activity for cash? A) The number of persons who have access to cash should be limited. B) The functions of record keeping and maintaining custody of cash should be combined. C) Surprise audits of cash on hand should be made occasionally. D) All cash receipts should be recorded promptly.

B) The functions of record keeping and maintaining custody of cash should be combined.

86. Inventory costing methods place primary reliance on assumptions about the flow of A) good. B) costs. C) resale prices. D) values. Page 23

B) costs.

48. The expense recognition principle matches: A) customers with businesses. B) expenses with revenues. C) assets with liabilities. D) creditors with businesses.

B) expenses with revenues.

1. The proprietorship form of business organization A) must have at least two owners in most states. B) generally receives favorable tax treatment relative to a corporation. C) combines the records of the business with the personal records of the owner. D) is classified as a separate legal entity.

B) generally receives favorable tax treatment relative to a corporation.

3. The partnership form of business organization A) is a separate legal entity. B) is a common form of organization for service-type businesses. C) enjoys an unlimited life. D) has limited liability.

B) is a common form of organization for service-type businesses.

27. The relationship between current assets and current liabilities is important in evaluating a company's A) profitability. B) liquidity. C) market value. D) solvency.

B) liquidity

64. If a company is given credit terms of 2/10, n/30, it should A) hold off paying the bill until the end of the credit period, while investing the money at 10% annual interest during this time. B) pay within the discount period and recognize a savings. C) pay within the credit period but don't take the trouble to invest the cash while waiting to pay the bill. D) recognize that the supplier is desperate for cash and withhold payment until the end of the credit period while negotiating a lower sales price.

B) pay within the discount period and recognize a savings.

19. Ratios that measure the income or operating success of a company for a given period of time are A) liquidity ratios. B) profitability ratios. C) solvency ratios. D) trending ratios.

B) profitability ratios.

82. Baker Bakery Company just began business and made the following four inventory purchases in June: June 1 150 units $ 1,040 June 10 200 units 1,560 June 15 200 units 1,680 June 28 150 units 1,320 $5.600 A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for June is A) $1,456 B) $1,508 C) $1,824 D) $1,848

C) $1,824

51. The following is selected information from C Corporation for the fiscal year ending October 31, 2017. Cash received from customers $150,000 Revenue recognized 225,000 Cash paid for expenses 85,000 Cash paid for computers on November 1, 2016 that will be used for 3 years 24,000 Expenses incurred including any depreciation 119,000 Proceeds from a bank loan, part of which was used to pay for the computers 50,000 Based on the accrual basis of accounting, what is C Corporation's net income for the year ending October 31, 2017? A) $132,000 B) $116,000 C) $106,000 D) $140,000

C) $106,000

21. Use the following data to determine the total dollar amount of assets to be classified as investments. Carne Auto Supplies Balance Sheet December 31, 2017 Cash $ 70,000 Accounts payable $130,000 Accounts receivable 100,000 Salaries and wages payable 20,000 Inventory 140,000 Mortgage payable 180,000 Prepaid insurance 80,000 Total liabilities $330,000 Stock investments 180,000 Land 190,000 Buildings $230,000 Common stock $240,000 Less: Accumulated Retained earnings 500,000 depreciation (60,000) 170,000 Total stockholders' equity $740,000 Trademarks 140,000 Total liabilities and Total assets $1,070,000 stockholders' equity $1,070,000 A) $0 B) $320,000 C) $180,000 D) $280,000

C) $180,000

74. Andrea's Fashions sold merchandise for $190,000 cash during the month of July. Returns that month totaled $4,000. If the company's gross profit rate is 40%, Andrea's will report monthly net sales revenue and cost of goods sold of A) $190,000 and $114,000. B) $186,000 and $74,400. C) $186,000 and $111,600. D) $190,000 and $111,600.

C) $186,000 and $111,600.

84. Olympus Climbers Company has the following inventory data: July 1 Beginning inventory 30 units at $19 $ 570 7 Purchases 105 units at $20 2,100 22 Purchases 15 units at $22 330 $3,000 A physical count of merchandise inventory on July 30 reveals that there are 48 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is A) $930. B) $990. C) $2,010. D) $2,070.

C) $2,010.

30. Using the following balance sheet and income statement data, what is the earnings per share? Current assets $ 32,000 Net income $ 42,000 Current liabilities 16,000 Stockholders' equity 78,000 Average assets 160,000 Total liabilities 42,000 Total assets 120,000 Average common shares outstanding was 15,000. A) $5.20 B) $8.00 C) $2.80 D) $0.36

C) $2.80

41. In the first month of operations, the total of the debit entries to the Cash account amounted to $7,000 and the total of the credit entries to the Cash account amounted to $4,000. The Cash account has a A) $4,000 credit balance. B) $7,000 debit balance. C) $3,000 debit balance. D) $3,000 credit balance. Page 11

C) $3,000 debit balance.

88. Trumpeting Trumpets has the following inventory data: July 1 Beginning inventory 50 units at $120 5 Purchases 300 units at $112 14 Sale 200 units 21 Purchases 150 units at $115 30 Sale 140 units Assuming that a periodic inventory system is used, what is the cost of goods sold on a FIFO basis? A) $18,320 B) $18,370 C) $38,480 D) $38,530

C) $38,480

43. During January 2017, its first month of operation, Osborn Enterprises earned net income of $6,800 and paid dividends to the owners of $2,000. At January 31, the balance in Retained Earnings will be A) $0. B) $6,800 credit. C) $4,800 credit. D) $2,000 debit.

C) $4,800 credit.

72. Sampson Company's accounting records show the following at the year ending on December 31, 2017. Purchase Discounts $ 11,200 Freight-In 15,600 Purchases 700,020 Beginning Inventory 47,000 Ending Inventory 57,600 Purchase Returns and Allowances 12,800 Using the periodic system, the cost of goods sold is A) $702,220. B) $697,820. C) $681,020. D) $719,020.

C) $681,020.

12. Jack and Jill form a partnership. Jack runs the business in New York, while Jill vacations in Hawaii. During the time Jill is away from the business, Jack increases the debts of the business by $20,000. Which of the following statements is true regarding this debt? A) Only Jack is personally liable for the debt, since he has been the managing partner during that time. B) Only Jill is personally liable for the debt of the business, since Jack has been working and she has not. C) Both Jack and Jill are personally liable for the business debt. D) Neither Jack nor Jill is personally liable for the business debt, since the partnership is a separate legal entity.

C) Both Jack and Jill are personally liable for the business debt.

5. Which of the following is not an advantage of the corporate form of business organization? A) No personal liability B) Easy to transfer ownership C) Favorable tax treatment D) Easy to raise funds

C) Favorable tax treatment

62. Which of the following items does not result in an adjustment in the merchandise inventory account under a perpetual system? A) A purchase of merchandise. B) A return of merchandise inventory to the supplier C) Payment of freight costs for goods shipped to a customer D) Payment of freight costs for goods received from a supplier

C) Payment of freight costs for goods shipped to a customer

54. Which of the following is an example of a deferral adjusting entry? A) Accrued expense B) Accrued revenue C) Prepaid expense D) All of these choices are correct.

C) Prepaid expense

39. Which accounts normally have credit balances? A) Revenues, liabilities, and dividends B) Revenues, liabilities, and assets C) Revenues, liabilities, and retained earnings D) Revenues, liabilities, and expenses

C) Revenues, liabilities, and retained earnings

11. A local retail shop has been operating as a sole proprietorship. The business is growing and now the owner wants to incorporate. Which of the following is not a reason for this owner to incorporate? A) Ability to raise capital for expansion B) Desire to limit the owner's personal liability C) The prestige of operating as a corporation D) The ease in transferring shares of the corporation's stock Page 3

C) The prestige of operating as a corporation

13. Which one of the following questions is most likely asked by an internal human resources director for the company? A) Which product line is most profitable? B) What price for our product will maximize the company income? C) What average pay raise is affordable for employees this year? D) Should any product lines be eliminated?

C) What average pay raise is affordable for employees this year?

34. An account consists of A) a title, a debit balance, and a credit balance. B) a title, a left side, and a debit balance. C) a title, a debit side, and a credit side. D) a title, a right side, and a debit balance.

C) a title, a debit side, and a credit side.

28. The current ratio is A) current assets plus current liabilities. B) current assets minus current liabilities. C) current assets divided by current liabilities. D) current assets times current liabilities.

C) current assets divided by current liabilities.

58. On July 1 the Fisher Shoe Store paid $24,000 to Acme Realty for 6 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by the Fisher Shoe Store is: A) debit Rent Expense, $24,000; credit Prepaid Rent, $4,000. B) debit Prepaid Rent, $4,000; credit Rent Expense, $4,000. C) debit Rent Expense, $4,000; credit Prepaid Rent, $4,000. D) debit Rent Expense, $24,000; credit Prepaid Rent, $20,000.

C) debit Rent Expense, $4,000; credit Prepaid Rent, $4,000.

57. Greese Company purchased office supplies costing $7,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $2,500 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be: A) debit Supplies Expense, $2,500; credit Supplies, $2,500. B) debit Supplies, $4,500; credit Supplies Expense, $4,500. C) debit Supplies Expense, $4,500; credit Supplies, $4,500. D) debit Supplies, $2,500; credit Supplies Expense, $2,500.

C) debit Supplies Expense, $4,500; credit Supplies, $4,500.

67. The entry to record the return of goods from a customer would include a A) debit to Sales Revenue. B) credit to Sales Revenue. C) debit to Sales Returns and Allowances. D) credit to Sales Returns and Allowances. Page 17

C) debit to Sales Returns and Allowances.

77. An employee assigned to counting computer monitors in boxes should A) estimate the number if there is a large quantity to be counted. B) read each box and rely on the box description for the contents. C) determine that the box contains a monitor. D) rely on the warehouse records of the number of computer monitors. Page 20

C) determine that the box contains a monitor.

31. The receipt of cash in advance from a customer A) increases assets and stockholders' equity. B) increases assets and decreases stockholders' equity. C) increases assets and liabilities. D) none of these answer choices are correct. Page 9

C) increases assets and liabilities.

2. A business organized as a corporation A) is not a separate legal entity in most states. B) requires that stockholders be personally liable for the debts of the business. C) is owned by its stockholders. D) has tax advantages over a proprietorship or partnership.

C) is owned by its stockholders.

45. After a business transaction has been analyzed and entered in the journal, the next step in the recording process is to transfer the information to A) the company's bank. B) stockholders' equity. C) ledger accounts. D) financial statements. Page 12

C) ledger accounts.

6. Debts and obligations of a business are referred to as A) assets. B) equities. C) liabilities. D) expenses. Page 2

C) liabilities.

93. Joe is a warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates A) documentation procedures are violated. B) independent internal verification is violated. C) segregation of duties is violated. D) establishment of responsibility is violated.

C) segregation of duties is violated.

36. The normal balance of any account is the A) left side. B) right side. C) side which increases that account. D) side which decreases that account.

C) side which increases that account.

33. The left side of an account is A) blank. B) a description of the account. C) the debit side. D) the balance of the account.

C) the debit side.

80. The LIFO inventory method assumes that the cost of the latest units purchased are A) the last to be allocated to cost of goods sold. B) the first to be allocated to ending inventory. C) the first to be allocated to cost of goods sold. D) not allocated to cost of goods sold or ending inventory.

C) the first to be allocated to cost of goods sold.

83. Charlene Cosmetics Company just began business and made the following four inventory purchases in June: June 1 150 units $ 1,040 June 10 200 units 1,560 June 15 200 units 1,680 June 28 150 units 1,320 $5,600 A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand. Using the average cost method, the amount allocated to the ending inventory on June 30 is A) $1,639. B) $1,824. C) $1,764. D) $1,680. Page 22

D) $1,680. Page 22

85. Quiet Phones Company has the following inventory data: July 1 Beginning inventory 30 units at $19 $ 570 7 Purchases 105 units at $20 2,100 22 Purchases 15 units at $22 330 $3,000 A physical count of merchandise inventory on July 30 reveals that there are 48 units on hand. Using the LIFO inventory method, the amount allocated to cost of goods sold for July is A) $930. B) $990. C) $2,010. D) $2,070.

D) $2,070.

24. For 2017 Fielder Corporation reported net income of $32,000; net sales $400,000; and average share outstanding 16,000. There were no preferred dividends. What was the 2017 earnings per share? A) $0.08 B) $0.50 C) $25.00 D) $2.00

D) $2.00

87. Piper Pipes has the following inventory data: July 1 Beginning inventory 50 units at $120 5 Purchases 300 units at $112 14 Sale 200 units 21 Purchases 150 units at $115 30 Sale 140 units Assuming that a periodic inventory system is used, what is the cost of goods sold on a LIFO basis? A) $18,320 B) $18,370 C) $34,480 D) $38,530

D) $38,530

22. Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment. Eddy Auto Supplies Balance Sheet December 31, 2017 Cash $ 126,000 Accounts payable $ 165,000 Accounts receivable 120,000 Salaries and wages payable 30,000 Inventory 210,000 Mortgage payable 270,000 Prepaid insurance 90,000 Total liabilities $465,000 Stock investments 255,000 Land 285,000 Buildings $339,000 Common stock $360,000 Less: Accumulated Retained earnings 750,000 depreciation (60,000) 279,000 Total stockholders' equity $1,110,000 Trademarks 210,000 Total liabilities and Total assets $1,575,000 stockholders' equity $1,575,000 A) $1,029,000 B) $774,000 C) $834,000 D) $564,000

D) $564,000

71. Sampson Company's accounting records show the following for the year ending on December 31, 2017. Purchase Discounts $ 11,200 Freight-In 15,600 Purchases 700,020 Beginning Inventory 47,000 Ending Inventory 57,600 Purchase Returns and Allowances 12,800 Using the periodic system, the cost of goods purchased is A) $660,420. B) $708,420. C) $717,220. D) $691,620.

D) $691,620.

69. Financial information is presented below: Operating expenses $ 28,000 Sales returns and allowances 7,000 Sales discounts 3,000 Sales revenue 150,000 Cost of goods sold 98,000 The profit margin would be A) .28. B) .09. C) .30. D) .10.

D) .10.

66. The journal entry to record a credit sale ignoring cost of goods sold is A) Cash Sales Revenue B) Cash Service Revenue C) Accounts Receivable Sales Returns and Allowances D) Accounts Receivable Sales Revenue

D) Accounts Receivable Sales Revenue

60. If a company fails to adjust a Prepaid Rent account for rent that has expired, what effect will this have on that month's financial statements? A) Failure to make an adjustment does not affect the financial statements. B) Expenses will be overstated and net income and stockholders' equity will be understated. C) Assets will be overstated and net income and stockholders' equity will be understated. D) Assets will be overstated and net income and stockholders' equity will be overstated.

D) Assets will be overstated and net income and stockholders' equity will be overstated.

38. Which accounts normally have debit balances? A) Assets, expenses, and revenues B) Assets, expense, and retained earnings C) Assets, liabilities, and dividends D) Assets, expenses, and dividends

D) Assets, expenses, and dividends

40. An accountant has debited an asset account for $1,000 and credited a liability account for $500. What can be done to complete the recording of the transaction? A) Nothing further must be done. B) Debit a stockholders' equity account for $500. C) Debit another asset account for $500. D) Credit a different asset account for $500.

D) Credit a different asset account for $500.

95. Bonding involves all of the following except A) The company obtains insurance protection against misappropriation of assets by a dishonest employee. B) The insurance company screens employees before they are added to the policy. C) The company informs employees that the insurance company will vigorously prosecute all offenders. D) Employees do not commit inappropriate acts because of the threat of prosecution and their loyalty to the employer.

D) Employees do not commit inappropriate acts because of the threat of prosecution and their loyalty to the employer.

90. Of the following companies, which one would not likely employ the specific identification method for inventory costing? A) Music store specializing in organ sales B) Farm implement dealership C) Antique shop D) Hardware store

D) Hardware store

16. In a classified balance sheet, assets are usually classified as A) current assets; long-term assets; property, plant, and equipment; and intangible assets. B) current assets; long-term investments; property, plant, and equipment; and common stocks. C) current assets; long-term investments; tangible assets; and intangible assets. D) current assets; long-term investments; property, plant, and equipment; and intangible assets.

D) current assets; long-term investments; property, plant, and equipment; and intangible assets.

61. The primary difference between a periodic and perpetual inventory system is that a periodic system A) keeps a record showing the inventory on hand at all time. B) provides better control over inventories. C) records the cost of the sale on the date the sale is made. D) determines the inventory on hand only at the end of the accounting period.

D) determines the inventory on hand only at the end of the accounting period.

17. A current asset is A) the last asset purchased by a business. B) an asset which is currently being used to produce a product or service. C) usually found as a separate classification in the income statement. D) expected to be converted to cash or used in the business within a relatively short period of time.

D) expected to be converted to cash or used in the business within a relatively short period of time

7. The statement of cash flows would disclose the payment of a dividend A) nowhere on the statement. B) in the operating activities section. C) in the investing activities section. D) in the financing activities section.

D) in the financing activities section

35. A debit to an asset account indicates a(n) A) error. B) credit was made to a liability account. C) decrease in the asset. D) increase in the asset.

D) increase in the asset.

65. Stan's Market recorded the following events involving a recent purchase of inventory: Received goods for $120,000, terms 2/10, n/30. Returned $2,400 of the shipment for credit. Paid $600 freight on the shipment. Paid the invoice within the discount period. As a result of these events, the company's inventory A) increased by $115,248. B) increased by $118,200. C) increased by $115,836. D) increased by $115,848.

D) increased by $115,848.

37. A revenue account A) is increased by debits. B) is decreased by credits. C) has a normal balance of a debit. D) is increased by credits. Page 10

D) is increased by credits. Page 10

25. Earnings available to common stockholders is equal to A) total revenues B) net income + preferred dividends. C) preferred dividends - net income. D) net income - preferred dividends.

D) net income - preferred dividends.

56. Adjusting entries affect at least: A) one revenue and one expense account. B) one asset and one liability account. C) one revenue and one balance sheet account. D) one income statement account and one balance sheet account.

D) one income statement account and one balance sheet account.

10. A small neighborhood barber shop that is operated by its owner would likely be organized as a A) joint venture. B) partnership. C) corporation. D) proprietorship.

D) proprietorship.