Financial Accounting Final Exam review
Which of the following components of internal control consist of work performed by internal and external auditors? C. monitoring of controls
A. control environment B. information systems C. monitoring of controls D. control procedures
On January 1, 2018, Benbrook Company purchased equipment and signed a six-year mortgage note for $ 194,000 at 15%. The note will be paid in equal annual installments of $51,262, beginning January 1, 2019. Calculate the balance of Mortgage Payable after the payment of the first installment. (Round your answer to the nearest whole number.) A. $ 171,838
A. $ 171,838 B. $ 142,738 C. $ 146,352 D. $29,100
The cost of an asset is $1,140,000, and its residual value is $290,000. Estimated useful life of the asset is four years. Calculate depreciation for the first year using the double-declining-balance method of depreciation. (Do not round any intermediate calculations, and round your final answer to the nearest dollar.) C. $ 570,000
A. $ 212,500 B. $ 285,000 C. $ 570,000 D. $ 425,000
Lana Appliances sells dishwashers with a four-year warranty. In 2018, sales revenue for dishwashers is $ 87,000. The company estimates warranty expense at 4.5% of revenues. What is the 2018 warranty expense? (Round your final answer to the nearest dollar.) A. $ 3,915
A. $ 3,915 B. $0 C. $ 3,071 D. $ 979 C
On January 1, 2018, McHenry Manufacturing Corporation purchased a machine for $ 40,900,000. McHenry's management expects to use the machine for 30,000 hours over the next six years. The estimated residual value of the machine at the end of the sixth year is $ 48,000. The machine was used for 4,300 hours in 2018 and 5,900 hours in 2019. Calculate the book value of the machine at the end of 2019 if the company uses the units-of-production method of depreciation. (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.) D. $ 27,010,354
A. $ 35,044,561 B. $ 40,900,000 C. $ 26,994,034 D. $ 27,010,354
Millburn Corporation has acquired a property that included both land and a building for $ 540,000. The corporation hired an appraiser who has determined that the market value of the land is $ 320,000 and that of the building is $ 430,000. At what amount should the corporation record the cost of land? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.) D. $232,000
A. $ 388,800 B. $ 270,000 C. $ 137,600 D. $232,000
McArthur, Inc. plans to develop a shopping center. In the first quarter, the following amounts were spent: Acquisition of land $ 22,000 Surveys and legal fees 1,000 Land clearing 200 Fencing 4,000 Install lighting and signage 13,060 What amount should be recorded as the land improvements cost? D. $ 17,060
A. $ 4,200 B. $ 1,200 C. $ 5,200 D. $ 17,060
Accounts Receivable has a balance of $5,000, and the Allowance for Bad Debts has a credit balance of $ 450. The allowance method is used. What is the net realizable value of Accounts Receivable after a $ 170 account receivable is written off? C. $ 4,550
A. $ 5,000 B. $ 4,380 C. $ 4,550 D. $ 4,720
A company received a bank statement with a balance of $ 6,000. Reconciling items included a bookkeeper error of $ 400-a $ 400 check recorded as $ 500-two outstanding checks totaling $840, a service charge of $ 22, a deposit in transit of $ 280, and interest revenue of $ 19. What is the adjusted bank balance? A. $ 5,440
A. $ 5,440 B. $ 4,937 C. $ 5,040 D. $ 5,381
The Allowance for Bad Debts account has a credit balance of $ 2,000 before the adjusting entry for bad debts expense. The company's management estimates that 2% of net credit sales will be uncollectible for the year 2019. Net credit sales for the year amounted to $ 290,000. What is the amount of Bad Debts Expense reported on the income statement for 2019? A. $ 5,800
A. $ 5,800 B. $ 7,800 C. $ 2,900 D. $ 3,800
On January 1, 2018, Sanderson, Inc. acquired a machine for $ 1,020,000. The estimated useful life of the asset is five years. Residual value at the end of five years is estimated to be $ 111,000. What is the book value of the machine at the end of 2019 if the company uses the straight-line method of depreciation? B. $ 656,400
A. $ 611,996 B. $ 656,400 C. $ 545,400 D. $ 612,000
Maybridge, Inc. has 2,000 shares of common stock outstanding. A stockholder has 800 shares. If the company distributes a 20% stock dividend, the stockholder now holds ________ shares of Maybridge stock. B. 960
A. 800 B. 960 C. 400 D. 160
Which of the following statements is true? B. Neither a stock dividend nor a stock split will result in net gains or losses.
A. A stock split increases the par value per share of the stock. B. Neither a stock dividend nor a stock split will result in net gains or losses. C. Both a stock dividend and a stock split reduce retained earnings. D. Both a stock dividend and a stock split increase the balance in the common stock account.
Which of the following statements is true of the Sarbanes-Oxley Act? D. The Public Company Accounting Oversight Board oversees the work of auditors of public companies.
A. All private and foreign companies must issue an internal control report evaluated by an outside auditor. B. Those who commit securities fraud must be sentenced to 10 years in prison. C. Accounting firms are allowed to provide both auditing services and a full range of consulting services to their public company clients. D. The Public Company Accounting Oversight Board oversees the work of auditors of public companies.
Which of the following statements regarding Accounts Payable is incorrect? C. The Accounts Payable account is decreased with a credit.
A. Because accounts payable are typically due in 30 days, they are current liabilities. B. Accounts payable occur because the business receives the goods or services before payment has been made. C. The Accounts Payable account is decreased with a credit. D. Accounts payable represent debts owed to creditors.
________ is a pay amount stated at an hourly rate. C. Wage
A. Bonus B. Commission C. Wage D. Salary
The bookkeeper of Wilson Electric Supply, Inc. recorded a $1,500 check as $15,000 in payment of the current month's rent. Which of the following journal entries is needed to adjust for this error in the books of the company? C. Cash 13,500 Rent Expense 13,500
A. Booking Error 1,500 Cash 1,500 B. Rent Expense 15,000 Cash 15,000 C. Cash 13,500 Rent Expense 13,500 D. Cash 13,500 Sales Revenue 13,500
Land Services, Inc. owns 32% of voting stock of World Investments, Inc. During the year 2018, World Investments, Inc. earned profits of $320,000. Under the equity method, which of the following journal entries will Land Services record? B. Equity Investments-World Investments, Inc. 102,400 Revenue from Investments 102,400
A. Cash 102,400 Dividend Revenue 102,400 B. Equity Investments-World Investments, Inc. 102,400 Revenue from Investments 102,400 C. Cash 102,400 Equity Investments-World Investments, Inc. 102,400 D. Equity Investments-World Investments, Inc. 320,000 Cash 320,000
Which of the following is included in the entry to record the issuance of 14,000 shares of $7 par value common stock at $21 per share for cash? D. Cash is debited for $294,000.
A. Common Stock is debited for $98,000. B. Paid-In Capital in Excess of Par-Common is debited for $196,000. C. Common Stock is credited for $294,000. D. Cash is debited for $294,000.
A corporation reported the following equity section on its current balance sheet. The common stock is currently selling for $15.00 per share. Common Stock, $6 par, 106,000 shares authorized, 57,000 shares issued and outstanding $342,000 Paid in Capital in Excess of Par 150,000 Retained Earnings 500,000 Total Stockholders' Equity $992,000 Which of the following would be included in the entry to record the distribution of a 15% stock dividend? A. Common Stock-$6 Par Value would be credited for $51,300.
A. Common Stock-$6 Par Value would be credited for $51,300. B. Stock Dividends would be credited for $51,300. C. Paid-In Capital in Excess of Par-Common is debited for $95,400. D. Stock Dividends would be debited for $95,400.
On June 16, 2018, Evergreen Inc. wrote off the $200 receivable from customer M. Simmons. On October 14, 2018, Evergreen unexpectedly receives $200 cash from M.Simmons. How should Evergreen record the $200 payment from M. Simmons? Evergreen uses the allowance method. C. Debit Accounts Receivable-M. Simmons and credit Allowance for Bad Debts; debit Cash and credit Accounts Receivable-M. Simmons
A. Debit Cash and credit Bad Debts Expense B. Debit Cash and credit Allowance for Bad Debts C. Debit Accounts Receivable-M. Simmons and credit Allowance for Bad Debts; debit Cash and credit Accounts Receivable-M. Simmons D. Debit Accounts Receivable-M. Simmons and credit Bad Debts Expense; debit Cash and credit Accounts Receivable-M. Simmons
Which of the following is true of dividends? A. Dividends are a distribution of cash, stock, or other property to stockholders.
A. Dividends are a distribution of cash, stock, or other property to stockholders. B. Dividends increase assets and decrease total stockholders' equity of a corporation. C. Dividend payments decrease paid-in capital. D. Dividend payments increase stockholders' equity.
Which of the following corporate characteristics is a disadvantage of a corporation? A. Earnings of a corporation may be subject to double taxation.
A. Earnings of a corporation may be subject to double taxation. B. Stockholders have limited liability. C. There is no mutual agency between the stockholders and the corporation. D. A corporation has a continuous life.
State Street Beverage Company issues $816,000 of 10%, 10-year bonds on March 31, 2017. The bonds pay interest on March 31 and September 30. Which of the following statements is true? D. If the market rate of interest is 11%, the bonds will issue at a discount.
A. If the market rate of interest is 11%, the bonds will issue above par. B. If the market rate of interest is 11%, the bonds will issue at par. C. If the market rate of interest is 11%, the bonds will issue at a premium. D. If the market rate of interest is 11%, the bonds will issue at a discount.
Which of the following is true of a contingent liability? A. It is a potential liability that depends on a future event.
A. It is a potential liability that depends on a future event. B. It is a liability resulting from a lawsuit settled in court. C. It is an actual liability that is difficult to estimate. D. It is an actual liability that depends on a past event.
Which of the following describes a serial bond? A. a bond that matures in installments at regular intervals
A. a bond that matures in installments at regular intervals B. a bond that is not backed by specific assets C. a bond that gives the bondholder a claim for specific assets D. a bond that matures at one specified time
Autumn Services, Inc. acquired 140,000 shares of Spring Metals, Inc. on January 1, 2018. Spring declares a cash dividend of $3.00 per share on February 15, 2019 and pays the cash dividend on March 2, 2019. With the current investment, Autumn Services, Inc. holds 8% of Spring's voting stock. Which of the following will be the correct journal entry for the day when the dividend payment is made (March 2, 2019)? B. Cash 420,000 Dividend Receivable 420,000
A. No Entry B. Cash 420,000 Dividend Receivable 420,000 C. Cash 420,000 Retained Earnings 420,000 D. Cash 420,000 Equity Investments 420,000
Which of the following accounts is credited by the seller when tax is collected on retail sales? D. Sales Tax Payable
A. Payroll Tax B. Unearned Revenue C. Accounts Payable D. Sales Tax Payable
Lack of mutual agency is best described as which of the following? A. Stockholders are not authorized to sign contracts or make business commitments on behalf of the corporation.
A. Stockholders are not authorized to sign contracts or make business commitments on behalf of the corporation. B. The liabilities of the corporation cannot be extended to the personal assets of the stockholder. C. Corporations pay income tax on corporate earnings, and shareholders pay income tax on corporate dividends. D. Shares of stock can be readily purchased and sold by investors on an organized stock exchange.
Which of the following is not a reason why paying by check is an important internal control? B. Before signing the check, the purchasing agent reviews the invoice or other evidence supporting the payment.
A. The check provides a record of the payment. B. Before signing the check, the purchasing agent reviews the invoice or other evidence supporting the payment. C. The check must be signed by an authorized official. D. All of the above statements are correct.
Alltech Company maintains a separate accounts receivable account for each customer. On June 18, Alltech provides $6,300 of services on account to customer Anthony and $1,200 of services on account to customer Walker. How will these two transactions affect the control and subsidiary accounts? A. The control account, Accounts Receivable, will be increased with a debit of $7,500.
A. The control account, Accounts Receivable, will be increased with a debit of $7,500. B. The individual customer accounts in the subsidiary ledger will be increased with credits. C. After posting these transactions, the sum of the balances in subsidiary accounts receivable will not equal the control account balance. D. The control account will have a debit balance and the subsidiary accounts will have a credit balance. This keeps the accounting equation in balance.
Regarding the issuance of stock, which of the following statements is incorrect? D. A company can sell its stock directly to stockholders, or it can use the services of the state's Securities and Exchange Commission.
A. The issue price is the amount the corporation receives from issuing its stock. B. Large corporations cannot finance all their operations through borrowing, so they raise capital by issuing stock. C. Large corporations need huge quantities of money. D. A company can sell its stock directly to stockholders, or it can use the services of the state's Securities and Exchange Commission.
Mercury Company established a petty cash fund with a $500 balance. Which of the following statements is incorrect? C. A journal entry is needed to debit the Cash account and credit the Petty Cash account for $500.
A. The petty cash custodian cashes a check for $500 and places the currency in the petty cash fund box. B. The sum of the cash plus the total of the petty cash tickets should equal $500 at all times. C. A journal entry is needed to debit the Cash account and credit the Petty Cash account for $500. D. There is no net effect on current assets.
Which of the following statements, regarding no-par stock, is incorrect? D. All of the statements are correct.
A. There can be no Paid-In Capital in Excess of Par. B. There is no par to be in excess of. C. Regardless of the stock's issue price, Cash is debited and Common Stock is credited for the cash received. D. All of the statements are correct.
Franklin Corporation invested $100,000 to acquire 20,000 shares of Hope Technologies, Inc. on March 1, 2018. Hope pays a cash dividend of $0.25 per share on July 2, 2019. The investment is classified as equity securities with no significant influence. Based on these two transactions, which of the following is true of the accounting equation as of July 2, 2019? C. Equity in the balance sheet will increase.
A. Total assets in the balance sheet will remain unchanged. B. Current assets in the balance sheet will remain unchanged. C. Equity in the balance sheet will increase. D. Total liabilities in the balance sheet will increase.
Which of the following occurs when a corporation distributes a stock dividend? D. Total stockholders' equity would be unchanged.
A. Total liabilities would increase. B. Total stockholders' equity would increase. C. Total assets would decrease. D. Total stockholders' equity would be unchanged.
A corporation originally issued $13 par value common stock for $15 per share. Which of the following is included in the entry to record the purchase of 300 shares of treasury stock for $11 per share? C. Treasury Stock-Common is debited for $3,300.
A. Treasury Stock-Common is debited for $1,650. B. Treasury Stock-Common is credited for $45. C. Treasury Stock-Common is debited for $3,300. D. Retained Earnings is debited for $1,650.
Which of the following may pay dividends? B. preferred stock
A. Treasury bills B. preferred stock C. notes payable D. investors
Masterpiece Sales Corporation offers warranties on all their electronic goods. Warranty expense is estimated at 3% of sales revenue. In 2019, the company had $603,000 in sales. In the same year, Masterpiece Sales replaced defective goods with goods that had a cost of $16,500. Which of the following is the entry needed to record the replacement of the defective goods? B. Estimated Warranty Payable 16,500 Merchandise Inventory 16,500
A. Warranty Expense 18,090 Estimated Warranty Payable 18,090 B. Estimated Warranty Payable 16,500 Merchandise Inventory 16,500 C. Warranty Expense 16,500 Estimated Warranty Payable 16,500 D. Warranty Expense 18,090 Merchandise Inventory 18,090
Which of the following is an example of an estimable probable contingency? A. Warranty Payable
A. Warranty Payable B. Income Taxes Payable C. FICA Taxes Payable D. Accounts Payable
Which of the following would be included in the entry by the payee to record a dishonored note receivable? A. a debit to Accounts Receivable
A. a debit to Accounts Receivable B. a debit to Notes Receivable C. a debit to Interest Revenue D. a credit to Interest Expense
The journal entry for accrued interest on a note payable includes ________. A. a debit to Interest Expense and credit to Interest Payable
A. a debit to Interest Expense and credit to Interest Payable B. a credit to Interest Expense and debit to Notes Payable C. a debit to Interest Payable and credit to Cash D. a debit to Interest Expense and credit to Cash
Rambler, Inc. reported sales revenue for 2019 of $903,000. The products were sold with a nine-month warranty. Members of Rambler's management estimate that the cost of the warranty will be equal to 7% of sales revenue. Which of the following will be included in the entry to record the actual amounts paid out as a result of warranty claims? B. a debit to Estimated Warranty Payable for the actual amount of payments
A. a debit to Warranty Expense for the actual amount of payments B. a debit to Estimated Warranty Payable for the actual amount of payments C. a debit to Estimated Warranty Payable for $63,210 D. a credit to Estimated Warranty Payable for $63,210
A petty cash fund was established with a $350 balance. It currently has cash of $45 and petty cash tickets totaling $305. Which of the following would be included in the entry to replenish the fund? A. a debit to various expenses for $305
A. a debit to various expenses for $305 B. a credit to Cash for $45 C. a credit to Petty Cash for $305 D. a debit to Petty Cash for $45
Which of the following is used by companies to separate cash duties and establish stronger control over cash receipts? B. a lock-box system
A. a firewall system B. a lock-box system C. an encryption system D. an imprest system
Which of the following items would require an adjusting entry after preparation of the bank reconciliation? C. errors made on the books revealed by the bank reconciliation
A. all items on the bank's side B. outstanding checks C. errors made on the books revealed by the bank reconciliation D. errors made by the bank revealed by the bank reconciliation
The bank statement reveals an EFT received from a customer that has not yet been recorded in the journal. How would this information be included on the bank reconciliation? B. an addition on the book side
A. an addition on the bank side B. an addition on the book side C. a deduction on the bank side D. a deduction on the book side
The bank charged a service fee of $55. How would this information be included on the bank reconciliation? C. a deduction on the book side
A. an addition on the bank side B. an addition on the book side C. a deduction on the book side D. a deduction on the bank side
Preferred stockholders ________. B. receive a dividend preference over common stockholders
A. are guaranteed that they will not have a loss on their investment B. receive a dividend preference over common stockholders C. are guaranteed to receive an annual dividend payment D. receive a set percentage of corporation net income
Vaughan Services hires a new accountant to maintain its petty cash fund. Although the employee possesses an accounting degree, he/she had been previously convicted of embezzlement. Which internal control procedure needs to be addressed in this situation? D. competent, reliable, and ethical personnel
A. assignment of responsibilities B. documents C. separation of duties D. competent, reliable, and ethical personnel
Which of the following items are reconciling items on the book side of the reconciliation? D. bank service charge and correction of book error
A. bank service charge and outstanding checks B. deposit in transit and NSF check C. outstanding checks and correction of book error D. bank service charge and correction of book error
Under the net method of handling credit and debit card payments, the ________ B. processing fee is debited to the Credit Card Expense account on or just after the date of sale
A. business writes a check to the third-party processor for the processing fee B. processing fee is debited to the Credit Card Expense account on or just after the date of sale C. net amount of the sale is credited to the Sales Revenue account on or just after the date of sale D. credit to the sales revenue is selling price less the transaction fee
Which of the following actions will decrease the amount of Total Stockholders' Equity? A. cash dividend declared
A. cash dividend declared B. repayment of bond principal C. stock dividend declared D. stock split
Which of the following is required to be deducted from employees' paychecks? C. federal income tax
A. charitable contributions B. FUTA C. federal income tax D. SUTA
Which of the following should be included in the cost of land? A. cost to clear the land of old buildings
A. cost to clear the land of old buildings B. cost to build sidewalks on the land C. cost of installing signage D. cost of installing fences
Available-for-sale (AFS) debt investments that are expected to be held longer than a year are reported as ________. B. long-term assets
A. current assets B. long-term assets C. equity D. either current assets or long-term assets
Which of the following accounting principles requires that warranty expense must be estimated and recognized in the same period when the related sales revenue is recognized? C. the matching principle
A. the consistency principle B. the disclosure principle C. the matching principle D. the revenue principle
Which of the following costs related to a business car would be capitalized? D. the cost to install an engine with higher horsepower
A. the cost to replace a broken windshield B. the cost to change the oil C. the cost of new tires D. the cost to install an engine with higher horsepower
Fallingstar, Inc. has 110,000 shares of common stock issued and outstanding, with a par value of $0.03 per share. It declared a 17% common stock dividend; market value is $14 per share. Which of the following is the correct journal entry to record the transaction? (Round your answers to the nearest whole dollar.) D. debit Stock Dividends $261,800, credit Common Stock Dividend Distributable $561, and credit Paid-In Capital in Excess of Par-Common $261,239
A. debit Common Stock Dividend Distributable $561, debit Paid-In Capital in Excess of Par-Common $261,239, and credit Retained Earnings $261,800 B. debit Stock Dividends $261,800 and credit Paid-In Capital in Excess of Par-Common $261,800 C. debit Stock Dividends $261,800 and credit Cash $261,800 D. debit Stock Dividends $261,800, credit Common Stock Dividend Distributable $561, and credit Paid-In Capital in Excess of Par-Common $261,239
A petty cash fund was established with a $600 balance. It currently has cash of $17 and petty cash tickets as shown below: Travel expense $102 Office supplies expense 285 Equipment rental expense 80 Which of the following would be included in the journal entry to replenish the Petty Cash fund? A. debit to Cash Short & Over for $116
A. debit to Cash Short & Over for $116 B. debit to Petty Cash for $116 C. credit to Cash Short & Over for $116 D. credit to Petty Cash for $116
Keith, an employee of Sunbeam, Inc., has gross salary for May of $ 17,000. The entire amount is under the OASDI limit of $118,500 and thus subject to FICA. He is also subject to federal income tax at a rate of 20%. Which of the following is a part of the journal entry to record the disbursement of his net pay? (Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%. Round the final answer to the nearest dollar.) C. credit to Cash for $12,300
A. debit to Cash for $12,300 B. debit to Employee Income Tax Payable of $12,300 C. credit to Cash for $12,300 D. debit to FICA Tax Payable of $12,300
The entry to record the payment of a previously declared dividend of $0.25 per share on 18,500 shares of common stock includes a ________. B. debit to Dividends Payable for $4,625
A. debit to Cash $4,625 B. debit to Dividends Payable for $4,625 C. credit to Cash Dividends for $4,625 D. debit to Cash Dividends for $4,625
When a company is using the direct write-off method, and an account is written off, the journal entry consists of a ________. B. credit to Accounts Receivable and a debit to Bad Debts Expense
A. debit to the Allowance for Bad Debts and a credit to Accounts Receivable B. credit to Accounts Receivable and a debit to Bad Debts Expense C. credit to Accounts Receivable and a debit to Interest Expense D. debit to Accounts Receivable and a credit to Cash
Trading debt investments include ________. C. debt securities that the investor plans to sell in the very near future
A. debt securities that the investor expects to hold longer than one year or debt securities that are not readily marketable B. investments in debt securities that the investor intends to hold until they mature C. debt securities that the investor plans to sell in the very near future D. investments in debt securities that are not readily marketable and that the investor intends to hold until they mature
Rearranging plain-text messages by a mathematical process is known as ________. A. encryption
A. encryption B. password C. phishing D. virus
Reducing expenses to increase operating profit is representative of ________. B. promoting operational efficiency
A. ensuring accurate, reliable accounting records B. promoting operational efficiency C. safeguarding assets D. following company policies
In the event of a corporate liquidation, preferred stockholders ________. A. have first claim on remaining corporate assets after debts are paid
A. have first claim on remaining corporate assets after debts are paid B. are guaranteed to receive a full refund of the stock purchase price C. may retain their proportionate share of voting rights D. are guaranteed to receive the par value of the preferred stock
A check payment for $658 was incorrectly entered in the Cash account as $856. Which of the following adjustments needs to be made? A. increase the book balance
A. increase the book balance B. decrease the bank statement balance C. increase the bank statement balance D. decrease the book balance
The distribution of a stock dividend ________. D. effects only stockholder's equity accounts
A. increases both dividends payable and cash B. decreases assets and increase liabilities C. decreases both assets and liabilities D. effects only stockholder's equity accounts
A(n) ________ is represented by a certificate and is commonly traded on an exchange. B. security
A. inventory B. security C. investee D. interest
On the date of record for a dividend, the company ________. B. determines who owns the shares of stock on that date
A. issues new shares of stock on that date B. determines who owns the shares of stock on that date C. disburses dividend payments to stockholders on that date D. records the dividend payable amount on that date
Which of the following is an asset that represents distinctive identifications of a product or service? D. trademark
A. license B. franchise C. copyright D. trademark
The gain or loss on the sale of a plant asset is determined by comparing the market value of assets received with the ________ of asset sold. D. book value
A. salvage value B. residual value C. original cost D. book value
Which of the following is the correct description of dividends in arrears? D. the cumulative amount of dividends that were not paid in previous years
A. the amount of dividends that were paid after the payment date B. the cumulative amount of dividends that were paid in previous years C. the amount of dividends that will be paid in the next year D. the cumulative amount of dividends that were not paid in previous years
A company check for payment must be signed by ________. C. an employee specifically authorized by the company
A. the company president B. a bank employee C. an employee specifically authorized by the company D. the external auditor
Which of the following is an attribute of the internal control procedure-competent, reliable, and ethical personnel? A. the need to train and supervise employees
A. the need to train and supervise employees B. purchase of burglar alarms C. providing cross training to allow sales personnel to record revenue transactions D. monitoring of internal controls by external auditors
Which of the following is an objective of internal control? D. to encourage employees to follow company policies
A. to ensure timely payment of accounts payable B. to ensure timely collection of accounts receivable C. to guarantee that a business makes a profit D. to encourage employees to follow company policies
An electronic funds transfers system ________. A. transfers cash by electronic communication rather than by paper documents
A. transfers cash by electronic communication rather than by paper documents B. does not include debit card transactions C. is seldom used by businesses D. uses forms such as checks and deposit tickets to transfer cash
When a business factors its accounts receivables, the business ________. B. no longer has to deal with the collection of the receivables from the customers
A. uses the receivables as security for a loan B. no longer has to deal with the collection of the receivables from the customers C. receives cash, less an applicable fee, after the factor collects from the customers D. receives the total amount of the receivables from the factor
Which of the following is not an acceptable task for a retail store manager? A. using the point-of-sale terminal's tape to record the journal entry for sales revenue
A. using the point-of-sale terminal's tape to record the journal entry for sales revenue B. overseeing the work of the sales clerks C. proving the cash by comparing the cash in the drawer against the point-of-sale terminal's record of cash sales D. making the cash deposit at the bank
When comparing the direct write-off and allowance methods, the major difference is _________. B. when to record bad debts expense
A. when to recognize revenue B. when to record bad debts expense C. developing adequate procedures for granting credit D. determining the balance of the Allowance for Bad Debts account
Tan's gross pay for the week is $1,500. His year-to-date pay is under the limit for OASDI. Assume that the rate for state and federal unemployment compensation taxes is 6% and that Tan's year-to-date pay has previously exceeded the $7,000 cap. What is the amount of state and federal unemployment tax that his employer must record as payroll tax expense and pay to the federal and state governments? A. $0
A. $0 B. $21.75 C. $111.75 D. $90
On December 1, 2018, Modern Dining Products borrowed $84,000 on a 12%, 5-year note with annual installment payments of $16,800 plus interest due on December 1 of each succeeding year. On December 1, the principal amount was recorded as a long-term note payable. What amount of the note payable will be shown as current portion of Long-Term Note Payable on the balance sheet as of December 31, 2018? (Round your answer to nearest whole number.) B. $16,800
A. $10,080 B. $16,800 C. $26,880 D. $33,600
The following information is from the 2019 records of Fast Lane Racing Gear: Accounts receivable, December 31, 2019 $40,000 (debit) Allowance for Bad Debts, December 31, 2019 prior to adjustment $1,700 (debit) Net credit sales for 2019 $178,000 Accounts written off as uncollectible during 2019 $17,000 Cash sales during 2019 $32,000 Bad debts expense is estimated by the aging-of-receivables method. Management estimates that $7,000 of accounts receivable will be uncollectible. Calculate the ending balance of Allowance for Bad Debts, after the adjustment for bad debts expense, at December 31, 2019. C. $7,000
A. $10,400 B. $8,000 C. $7,000 D. $5,340
After the December 31, 2019 adjusting journal entries have been posted, Sinclair Enterprises has the following account balances (all accounts have normal balances) are: Account Title Account Balance Accounts Receivable $159,000 Allowance for Bad Debts $4,600 Bad Debts Expense $8,200 What is the net realizable value as of December 31, 2019? D. $154,400
A. $150,800 B. $146,200 C. $163,600 D. $154,400
Venus Corp. sold goods, with a selling price of $17,221, for cash. The state sales tax rate is 8%. What amount is credited to the Sales Revenue account? (Round calculations to the nearest dollar.) A. $17,221
A. $17,221 B. $1,378 C. $18,599 D. $15,843
The following information is needed to reconcile the cash balance for Discount Dry Cleaning, Inc. * A deposit of $5,600 is in transit. * Outstanding checks total $1,300. * The book balance is $6,300 at February 28, 2019. * The bookkeeper recorded a $1,600 check as $17,400 in payment of the current month's rent. * The bank balance at February 28, 2019 was $17,930. * A deposit of $400 was credited by the bank for $4,000. * A customer's check for $3,400 was returned for nonsufficient funds. * The bank service charge is $70. What was the adjusted book balance? C. $18,630
A. $18,700 B. $18,770 C. $18,630 D. $18,000
On August 14, Park Avenue Bank lent $240,000 to City Coffee Shop on a 75 day, 2% note. What is the maturity value of the note? (Use a 360-day year and round answers to the nearest dollar.) D. $241,000
A. $244,800 B. $240,986 C. $240,000 D. $241,000
On January 1, Five Star Services has the following balances: Accounts Receivable $24,000 (debit) Bad Debts Expense $0 Five Star Services has the following transactions during January: Credit sales of $120,000, collections of credit sales of $86,000, and write-offs of $20,000. Five Star Services uses the direct write-off method. At the end of January, the balance of Accounts Receivable is ________. B. $38,000
A. $27,907 B. $38,000 C. $58,000 D. $14,333
On January 1, Southwest Corp. accepted a one-year note for $70,000 at 5% from one of its customers. When the note matured on December 31, the customer was unable to pay, and the company recorded the dishonor. The amount of the debit recorded on December 31 is ________. C. $73,500
A. $3,500 B. $66,500 C. $73,500 D. $70,000
A $45,000, two-month, 9% note payable was issued on December 1, 2018. What is the amount of interest expense recorded in the year 2019? (Round the final calculation to the nearest dollar.) A. $338
A. $338 B. $45,675 C. $4,050 D. $675
A company's Cash account shows an ending balance of $4,600. Reconciling items included a bookkeeper error of $130 (a $500 check recorded as $630), two outstanding checks totaling $830, a service charge of $25, a deposit in transit of $250, and interest revenue of $30. What is the adjusted book balance? D. $4,735
A. $4,465 B. $4,020 C. $5,180 D. $4,735
Organic Produce, Inc. has 49,000 shares of common stock outstanding and 6,000 shares of preferred stock outstanding. The common stock is $0.08 par value; the preferred stock is 4% noncumulative with a $100.00 par value. On October 15, 2019, the company declares a total dividend payment of $56,000. How much dividend will be paid to the preferred stockholders? B. $24,000
A. $48,000 B. $24,000 C. $3,920 D. $56,000
On March 1, 2018, Mandy Services issued a 3% long-term notes payable for $15,000. It is payable over a 3-year term in $5,000 principal installments on March 1 of each year, beginning March 1, 2019. Each yearly installment will include both principal repayment of $5,000 and interest payment for the preceding one-year period. What is the amount of total cash payment that Mandy will make on March 1, 2019? C. $5,450
A. $5,225 B. $15,000 C. $5,450 D. $5,000
At the beginning of 2019, Patriots, Inc. has the following account balances: Accounts Receivable $45,000 (Debit) Allowance for Bad Debts $8,000 (Credit) Bad Debts Expense $0 During the year, credit sales amounted to $810,000. Cash collected on credit sales amounted to $770,000, and $18,000 has been written off. At the end of the year, the company adjusted for bad debts expense using the percent-of-sales method and applied a rate, based on past history, of 3.5%. The amount of bad debts expense for 2019 is ________. C. $28,350
A. $56,875 B. $18,350 C. $28,350 D. $18,000
Jack's gross pay for the week is $1,400. His year-to-date pay is under the limit for OASDI. Assume that the rate for state and federal unemployment compensation taxes is 6% and that Jack's year-to-date pay has previously exceeded the $7,000 cap. What is the total amount of payroll taxes that Jack's employer must record as payroll tax expenses? (Do not round your intermediate calculations. Assume a FICAlong dashOASDI Tax of 6.2% and FICAlong dashMedicare Tax of 1.45%.) B. $107.10
A. $58.80 B. $107.10 C. $20.30 D. $86.80
Sean's gross pay for this month is $8,750. His gross year-to-date pay, prior to this month, totaled $112,000. Sean's rate for federal income tax is 25%. His voluntary deductions total $950. What is Sean's net pay? (Assume an OASDI rate of 6.2%, applicable on the first $118,500 earnings, and a Medicare rate of 1.45%, applicable on all earnings. Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.) B. $5,082.62
A. $6,562.50 B. $5,082.62 C. $5,612.50 D. $6,032.62
Electric, Inc. was incorporated on January 1, 2016. Electric issued 4,000 shares of common stock and 1,200 shares of preferred stock on that date. The preferred stock is cumulative, $100 par, with an 12% dividend rate. Electric has not paid any dividends yet. In 2019, Electric had its first profitable year, and on November 1, 2019, Electric declared a total dividend of $63,000. What is the total amount that will be paid to preferred shareholders? C. $57,600
A. $63,000 B. $14,400 C. $57,600 D. $13,200
A company has a petty cash fund amount of $200. When replenished, it has petty cash tickets of $33 for gas expense, $31 for postage expense, $16 for supplies expense, and $12 for miscellaneous expenses. Assume the cash balance is not over or short. In the journal entry, Cash would be credited for ________. D. $92
A. $64 B. $76 C. $80 D. $92
Midtown, Inc. had the following transactions in 2018, its first year of operations: Issued 31,000 shares of common stock. Stock has par value of $1.00 per share and was issued at $20.00 per share. Earned net income of $70,000. Paid no dividends. At the end of 2018, what is total stockholders' equity? B. $690,000
A. $70,000 B. $690,000 C. $31,000 D. $620,000
Tony's gross pay for the month is $2,700. Tony's deduction for federal income tax is based on a rate of 21%. Tom has no voluntary deductions. Tony's year-to-date pay is under the limit for OASDI. What is the amount of FICA tax withheld from Tony's pay? (Assume a FICAlong dashOASDI Tax of 6.2% and FICAlong dashMedicare Tax of 1.45%. Do not round any intermediate calculations, and round your final answer to the nearest cent.) B. $206.55
A. $773.55 B. $206.55 C. $387.45 D. $567.00
Fast Bikes, Inc. offers warranties on all their bikes. They estimate warranty expense at 3.5% of sales. At the beginning of 2018, the Estimated Warranty Payable account had a credit balance of $1,900. During the year, Fast Bikes had $296,000 in sales and had to pay out $5,900 in warranty payments. At the end of the year, what is the ending balance in the Estimated Warranty Payable accounts? B. $6,360
A. $8,460 B. $6,360 C. $7,800 D. $10,360
The following information is from the records of Mountainview Camera Shop: Accounts receivable, December 31, 2018 $80,000 (debit) Net credit sales for 2018 160,000 Accounts written off as uncollectible during 2018 16,000 Cash sales during 2018 42,000 The company uses the direct write-off method for bad debts. What is the amount of bad debts expense? B. $16,000
A. $80,000 B. $16,000 C. $64,000 D. $42,000
The Allowance for Bad Debts has a credit balance of $8,000 before the adjusting entry for bad debts expense. After analyzing the accounts in the accounts receivable subsidiary ledger using the aging-of-receivables method, the company's management estimates that uncollectible accounts will be $17,000. What will be the amount of Bad Debts Expense reported on the income statement? A. $9,000
A. $9,000 B. $25,000 C. $17,000 D. $8,000
The following information is from the December 31, 2018 balance sheet of May Corporation. Preferred Stock, $100 par $390,000 Paid-In Capital in Excess of Par-Preferred 25,000 Common Stock, $1 par 152,000 Paid-In Capital in Excess of Par-Common 346,000 Retained Earnings 83,900 Total Stockholders' Equity $996,900 What was the total paid-in capital as of December 31, 2018? A. $913,000
A. $913,000 B. $996,900 C. $888,000 D. $736,000
On October 1, 2018, Parker, Inc. made a loan to one of its customers. The customer signed a 9-month note for $110,000 at 14%. Calculate the maturity value of the note. (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.) B. $121,550
A. $94,600 B. $121,550 C. $98,450 D. $125,400
Assume the following information for Western Sales, Inc.: Common Stock, $1.00 par, 232,000 shares issued, 185,000 shares outstanding Paid-In Capital in Excess of Parlong dashCommon: $1,690,000 Retained Earnings: $2,460,000 Treasury Stock: 47,000 shares purchased at $17 per share If Western Sales purchases an additional 8,000 shares of treasury stock at $20 per share, what number of shares will be shown as issued and outstanding? B. 232,000 issued; 177,000 outstanding
A. 232,000 issued; 185,000 outstanding B. 232,000 issued; 177,000 outstanding C. 185,000 issued; 185,000 outstanding D. 224,000 issued; 185,000 outstanding
Land Corporation reported the following: Common Stock, $5 par, 211,000 shares authorized, 165,000 shares issued $825,000 Paid in Capital in Excess of Par-Common 217,000 Retained Earnings 207,000 Total Stockholders' Equity $1,249,000 Which of the following is included in the entry to record the corporation's purchase of 40,000 shares of its common stock for $12.00 per share? D. Treasury Stock-Common is debited for $480,000.
A. Paid-In Capital from Treasury Stock Transactions is credited for $135,000. B. Common Stock-$5 Par Value is credited for $200,000. C. Retained Earnings is debited for $480,000. D. Treasury Stock-Common is debited for $480,000.
A company originally issued 13,000 shares of $6 par value common stock at $12 per share. The board of directors declares a 12% stock dividend when the market price of the stock is $22 a share. Which of the following is included in the entry to record the declaration of a stock dividend? C. Stock Dividends is debited for $34,320.
A. Paid-In Capital in Excess of Parlong dashCommon is credited for $18,720. B. Stock Dividends is credited for $34,320. C. Stock Dividends is debited for $34,320. D. Stock Dividends is debited for $18,720.
Unearned revenue, for services to be performed in six months, appears on the balance sheet as ________. B. current liabilities
A. long-term assets B. current liabilities C. current assets D. long-term investments
When a company receives interest revenue on a long-term investment in bonds, ________. C. equity increases
A. long-term assets decrease B. current assets decrease C. equity increases D. long-term assets increase
The Loss on Disposal of Equity Investments is reported in the ________. B. other income and (expenses) section of the income statement
A. stockholders' equity section of the income statement B. other income and (expenses) section of the income statement C. stockholders' equity section of the balance sheet D. losses section of the statement of retained earnings
A company may purchase treasury stock to increase net assets by buying high and selling low.
FALSE
A trademark represents the exclusive right to reproduce and sell a book, musical composition, film, other work of art, or intellectual property.
FALSE
A natural resource is an asset that comes from the earth and is consumed.
TRUE
An imprest system is a way to account for petty cash by maintaining a constant balance in the petty cash account.
TRUE
An intangible asset is an asset with no physical form that is valuable because of the special rights it carries.
TRUE
Collusion involves two or more people working together to circumvent internal controls and defraud a company.
TRUE
Treasury stock is a corporation's own stock that it has previously issued and later reacquired.
TRUE
Under IFRS, "probable" is defined as more than a 50% chance.
TRUE
