ACC

The discipline on business conduct placed by outsiders who interact with the company is referred to as: A. External Factors (NOT this one) B. Internal Controls C. External Controls D. External Environment

?

At the end of the current accounting period, account balances were as follows: Cash, $15,000; Accounts Receivable, $20,000; Common Stock, $8,000; Retained Earnings, $14,000. Liabilities for the period were: A. 13,000 B. 20,000 C. 27,000 D. 32,000

A

On December 31 of the current year, Prepaid Rent was debited $5,400 for three months of rent, paid in advance. The amount of the adjusting entry on December 31 is: A. $0 B. $1,800 C. $3,600 D. $5,400

A. $0

On January 1, 2012, Cashew Corporation purchased 70,000 of the 210,000 shares of outstanding stock of Peanut Company for $550,000. Net income reported by Peanut Company for 2012 was $450,000. Dividends paid by Peanut Company during 2012 were $150,000. The long-term investment will appear on Cashew Corporation's December 31, 2012 balance sheet in the amount of: A. $650,000 B. $450,000 C. $850,000 D. $700,000

A. $650,000

On January 2, 2006, KJ Corporation acquired equipment for $260,000. The estimated life of the equipment is 5 years or 40,000 hours. The estimated residual value is $20,000. What is the balance in Accumulated Depreciation on December 31, 2007, if KJ Corporation uses the straight-line method of depreciation? A. $96,000 B. $49,500 C. $51,500 D. $53,625

A. 96,000

Maxco Company acquired land and buildings for $1,000,000. The land is appraised at $450,000 and the buildings are appraised at $800,000. The debits to the Land and Buildings accounts will be: A. Land $360,000; Building $640,000. B. Land $500,000; Building $500,000. C. Land $450,000; Building $800,000. D. Land $562,500; Building $437,500

A. Land $360,000; Building $640,000

______ is the element in the fraud triangle results from either critical need or greed on the part of the perpetrator. A. Motive B. Opportunity C. Rationalization D. Reasoning

A. Motive

The objective of internal control that minimizes waste, which lowers costs and increases profits is: A. Operational efficiency B. Asset safeguards C. Cost minimization D. Reliable accounting records

A. Operational efficiency

On January 1, 2012, Berger Corporation paid $800,000 to purchase 40% of the outstanding stock of Oakley Company. Oakley Company reported net income of $200,000 for the year ending December 31, 2012 and paid cash dividends of $60,000 during 2012. On January 1, 2013, Berger Corporation sells its entire investment in Oakley Company for $1,100,000. Berger Corporation will report a(n): A. realized gain on the sale of $300,000 B. unrealized gain on the sale of $300,000 C. realized gain on the sale of $244,000 D. unrealized gain on the sale of $244,000

A. Realized gain on the sale of $300,000

The market value of an available-for-sale security has increased from the last carrying value. The journal entry to record this increase will include: A. a debit to the Allowance to Adjust Investment to Market. B. a credit to the Allowance to Adjust Investment to Market. C. a debit to the Unrealized Gain on Investment. D. no adjustment is required.

A. a debit to the Allowance to Adjust Investment to Market.

The current portion of long-term debt should: A. be reclassified as a current liability. B. be paid immediately. C. be classified as a long-term liability. D. not be separated from the long-term debt.

A. be reclassified as a current liability.

Fortune, Inc. declares a 10% common stock dividend when it has 20,000 shares of $10 par value common stock outstanding. If the market value of the common stock is $25, the journal entry to record the stock dividend would include a: A. debit to Retained Earnings $50,000. B. debit to Retained Earnings $20,000. C. credit to Paid-in Capital in Excess of Par Value $50,000. D. credit to Paid-in Capital in Excess of Par Value $20,000

A. debit to Retained Earnings $50,000.

To compute ending retained earnings on the statement of retained earnings: A. net income is added to the beginning retained earnings and dividends are subtracted from the beginning retained earnings. B. net income and dividends are both added to beginning retained earnings. C. net loss and dividends are both added to beginning retained earnings. D. net income or net loss does not affect retained earnings.

A. net income is added to the beginning retained earnings and dividends are subtracted from the beginning retained earnings.

The journal entry on the date of record is: A. non-existent. No journal entry is required on the date of record. B. to debit retained earnings and credit dividends payable. C. to credit dividends and credit cash. D. to debit dividends payable and credit cash.

A. non-existent. No journal entry is required on the date of record.

Stockholders' equity is divided into: A. retained earnings and paid-in capital. B. retained earnings and common stock. C. assets and liabilities. D. common stock and preferred stock.

A. retained earnings and paid-in capital.

With an accrual: A. the cash is received after the revenue is recorded B. Cash is paid before the expense is recorded C. plant assets can create an accrual adjustment D. prepaid expenses can create an accrual adjustment

A. the cash is received after the revenue is recorded

A company recently purchased a building that it plans to renovate to get ready for use in its operations. All expenditures to repair and renovate the existing building for its intended use are charged to: A. Land B. Land improvements (NOT this) C. Land improvements expense D. Building

A?

Golden Company had a balance of $40,000 in Accounts Payable at the beginning of June, and purchased $30,000 of merchandise on account during the month At the end of June, Golden's Account Payable balance was $28,000. What amount did Golden pay on account during June? A. 38,000 B. 42,000 C. 108,000 D. cannot be determined

B

When cash is paid for utilities: A. stockholders' equity is decreased. B. expenses are increased C. assets are increased D. liabilities are increased

B

When preparing accounting information, understand that: A. the auditors are primarily responsible for preparing the information B. the cost of disclosure should not exceed the expected benefits to the user C. accounting information can be produced quickly and inexpensively D. all information must be disclosed for a complete understanding of the underlying economic facts

B

Which of the following increases retained earnings: A. net loss B. net income C. expenses D. dividends

B

A company purchased medical equipment for $100,000 on January 1, 2019. The company determined that the yearly depreciation expense is $10,000. What will be the ending balance in the Accumulated Depreciation — Medical Equipment at December 31, 2022? A. $10,000 B. $40,000 C. $60,000 D. $100,000

B. $40,000

On January 2, 2011, KJ Corporation acquired equipment for $260,000. The estimated life of the equipment is 5 years or 40,000 hours. The estimated residual value is $20,000. If KJ Corporation uses the units of production method of depreciation, what will be the debit to Depreciation Expense for the year ended December 31, 2012, assuming that during this period, the asset was used 8,250 hours? A. $48,000 B. $49,500 C. $51,500 D. $53,625

B. $49,500

On January 2, 2008, Bantam Oil Company purchased an oil well for $625,000. The well contains an estimated 150,000 barrels of oil, with an estimated residual value of $25,000. During 2008, 15,000 barrels of oil were removed from the well. To record depletion for 2008, Bantam Oil Company will debit Depletion Expense for: A. $62,500 B. $60,000 C. $64,500 D. $69,444

B. $60,000

Land is purchased for $62,500. Back taxes paid by the purchaser were $7,500; total costs to demolish an existing building were $11,000; fencing costs were $12,500; and lighting costs were $1,500. What is the cost of the land? A. $62,500 B. $81,000 C. $93,500 D. $95,000

B. $81,000

Anderson Company has purchased equipment that requires annual payments of $20,000 to be paid at the end of each of the next 6 years. The discount rate is 12%. What amount will be used to record the equipment? A. $120,000 B. $82,220 C. $110,515 D. $77,100

B. $82,220

A company has current assets of $80,000, long-term assets of $150,000, current liabilities of $60,000, and long-term liabilities of $40,000. The current ratio is: A. 0.80 B. 1.33 C. 2.00 D. 2.33

B. 1.33

Carmel Corporation purchased 5% bonds for $42,000 on January 1, 2012. On July 1, 2012, Carmel received cash interest of $1,050. The journal entry to record the purchase on January 1 would include a: A. debit to Cash $ 1,050. B. debit to Long-Term Investment in Bonds $42,000. C. credit to Interest Revenue $1,050. D. credit to Interest Revenue $42,000

B. Debit to Long-Term investment in bonds $42,000

When preferred stock is cumulative, preferred dividends not paid in a year are: A. distributions of earnings. B. called dividends in arrears. C. a liability. D. never paid to the preferred stockholders.

B. called dividends in arrears.

Pat's Pets recently paid to have the engine in its delivery van overhauled. The estimated useful life of the van was originally estimated to be 7 years. The overhaul is expected to extend the useful life of the van to 9 years. The overhaul is regarded as a(n): A. revenue expenditure B. capital expenditure C. equity expenditure D. matching expenditure

B. capital expenditure

The current ratio is current assets: A. minus current liabilities. B. divided by current liabilities. C. plus current liabilities. D. multiplied by current liabilities.

B. divided by current liabilities.

Bonds with a 6% interest rate were issued when the market rate of interest was 7%. The quoted bond price will be: A. greater than 100 B. less than 100 C. 100 D. equal to the face value

B. less than 100

Immediately after the last interest payment, Henderson Company converted $3,000,000 of its bonds into 300,000 shares of $10 par value common stock. The unamortized premium on the bonds at the date of the conversion was $870,000. As a result of this conversion: A. liabilities decreased by $3,870,000 and stockholders' equity increased by $3,000,000. B. liabilities decreased by $3,000,000 and stockholders' equity increased by $3,000,000. C. liabilities decreased by $3,870,000 and stockholders' equity increased by $3,870,000. D. liabilities decreased by $870,000 and stockholders' equity increased by $870,000.

B. liabilities decreased by $3,000,000 and stockholders' equity increased by $3,000,000.

A company completed the following transactions during the month of October:I. Purchased office supplies on account, $4,000.II. Provided services for cash, $10,000.III. Provided services on account, $12,000.IV. Collected cash from a customer on account $7,000.V. Paid the monthly rent of $3,000. What was the company's net income for the month? A. 0 B. 10,000 C. 19,000 D. 22,000

C

A company had credit sales of $30,000 and cash sales of $10,000 during the month of May. Also during May, the company paid wages of $1,000 and utilities of $800. It also received payments from customers on account totaling $4,000. What was the company's net income for the month? A. 10,000 B. 38,200 C. 41,000 D. 44,000

C

All of the following would be considered investing activities except for: A. Purchase of land for cash B. the sale of equipment for cash C. the payment of cash dividends D. the purchase of equipment for cash

C

Dividends: A. are paid by a business to shareholders as compensation for services B. affect net income C. are distributions to stockholders of assets (usually cash) generated by net income D. are distributions to stockholders of assets (usually cash) generated by a favorable balance in retained earnings

C

Expenses of a business include: A. sales and cash equivalents B. common stock and rent C. cost of goods sold and salaries D. retained earnings and utilities

C

Liabilities are: A. A form of paid in capital B. future economic benefits to which a company is entitled C. debts payable to outsiders called creditors D. the outflow of resources that decrease common stock

C

Purchasing supplies on account would: A. increase total assets and decrease total liabilities. B. increase total liabilities and decrease total assets. C. increase total assets and increase total liabilities D. increase total liabilities and increase stockholders' equity.

C

Revenues are: A. decreases in assets resulting from delivering goods or services to customers B. increases in liabilities resulting from delivering goods or services to customers C. increases in retained earnings resulting from delivering goods or services to customers D. decreases in retained earnings resulting from delivering goods or services to customers

C

The major types of transactions that affect retained earnings are: A. paid in capital and common stock B. assets and liabilities C. revenues, expenses, and dividends D. revenues and liabilities

C

The payment for monthly rent of an office building would include a: A. Debit to cash B. Debit to prepaid rent C. Debit to rent expense D. Credit to revenue

C

On November 1, Phillips Tool and Die Company paid six months' insurance in advance totaling $9,000. An adjusted trial balance prepared on December 31 would include a balance in the Prepaid Insurance account of: A. $0 B. $3,000 C. $6,000 D. $9,000

C $6,000

Farmer's Corp. has the following items that the controller is uncertain of where to place on the statement of cash flows: Net Income $ 81,000 Sale of Plant Assets $125,000 Depreciation Expense $35,000 Purchase of Plant Assets $180,000 A total of $_________ would appear in the Investing Activities section. A. $305,000 B. $116,500 C. $(55,000) D. $(46,000)

C. $(55,000)

Big Time Company owns all of the stock of Peterson Corporation and 80% of the stock of Tysen Corporation. Big Time Company earned net income of $750,000; Peterson earned $250,000; and Tysen earned $175,000. Big Time Company's consolidated income statement would report net income of: A. $1,000,000. B. $1,250,000. C. $1,140,000. D. $1,050,000.

C. $1,140,000

The carrying value of a bond immediately after the bond was issued was $245,000. The bond price was 98. The face value of the bond was: A. $245,000 B. $121,250 C. $250,000 D. $249,900

C. $250,000

The bank statement balance is $6,450 and shows a service charge of $30, interest earned of $25, and a NSF check for $475. Deposits in transit total $1,850; outstanding checks are $1,125. What is the adjusted bank balance? A. $5,725 B. $5,970 C. $7,175 D. $7,655

C. $7,175

Company A has current assets of 75,000 and current liabilities of $40,000. The company decides to issues stock and receives cash of $70,000. After this transaction, the company's current ratio will be: A. 0.68 B. 1.88 C. 3.62 D. 4.36

C. 3.62

The primary way that fraud is prevented and detected is through a proper system of: A. Checks and balances B. Management directives C. Internal control D. Internal and external audits

C. Internal Control

The balance in the Unrealized Gains and Losses on Available-for-sale Securities account appear in which financial statement? A. The balance sheet as a contra asset account. B. The income statement under Other Expenses and Losses. C. The balance sheet, as part of the stockholders' equity section. D. Not shown on the financial statements until the securities are sold.

C. The balance sheet, as part of the stockholders' equity section

If an investor owns less than 20% of the common stock of another company as a long-term investment: A. the equity method of accounting should be used for the investment. B. no dividends are expected to be received. C. the investor usually has little or no influence on the investee. D. the investor has significant influence on the investee.

C. The investor usually has little or no influence over the investee

Double taxation means that the: A. corporation's income tax is allocated to the shareholders based on ownership percentage. B. corporate earnings are subject to state and federal income tax. C. corporation pays tax on its earnings and the shareholders pay tax on dividends. D. shareholder's dividends are taxed at the corporate tax rate.

C. corporation pays tax on its earnings and the shareholders pay tax on dividends.

Sisco Company issued $500,000, 6%, 10-year bonds for $425,000 with a market rate of 8%. The effective-interest method of amortization is to be used and interest is paid annually. The journal entry on the first interest payment date would include a: A. debit to Interest Expense of $30,000. B. credit to Cash of $34,000. C. credit to Discount on Bonds Payable of $4,000. D. debit to Interest Expense of $4,000.

C. credit to Discount on Bonds Payable of $4,000.

Tyler Company paid $1,500 cash to replace a wheel on equipment sold under warranty. The entry to record the payment would be to: A. debit warranty expense and credit cash. B. debit equipment expense and credit cash. C. debit warranty payable and credit cash. D. debit parts expense and credit cash.

C. debit warranty payable and credit cash.

An unrealized gain: is recorded when a trading security is sold for more than its cost. A. is recorded when a trading security B. is sold for less than its cost. C. is recorded when the fair value of the trading security is more than its cost. D. is recorded when the fair value of the trading security is less than its cost.

C. is recorded when the fair value of the trading security is more than its cost.

The event that triggers revenue recognition for the sale of goods is the: A. date a contract is signed B. date cash is received C. transfer of control of the goods to the purchaser D. Completion of service

C. transfer of control of the goods to the purchaser

Under the expense recognition principle: A. expenses are the costs of assets used up in earning revenue. B. expenses cannot be recognized when a liability is created in earning revenue. C. expenses have a future benefit to the company D. expenses are recognized at the same time services are recorded.(NOT this one)

C?

Cash dividends paid to stockholders will: A. increase assets and decrease liabilities. B. increase assets and increase liabilities. C. have no effect on stockholders' equity or revenues. D. decrease assets and decrease stockholders' equity.

D

The debt created by a business when it makes a purchase on account is a(n): A. revenue B. prepaid expense C. account receivable D. account payable

D

The entry to record a shareholder's investment of $600 into the business would be: A. Dr. Dividends 600 Cr. Cash 600 B. Dr. Cash 600 Cr. Dividends 600 C. Dr. Cash 600 Cr. Service Rev 600 D. Dr. Cash 600 Cr. Common stock 600

D

The net income shown on the income statement also appears on the: A. balance sheet and operations statement B. statement of assets C. statement of financial position D. statement of retained earnings

D

The beginning cash balance is $3,000, estimated cash receipts are $105,000, and estimated cash disbursements are $111,000. How much cash must be borrowed to have a desired ending balance of $5,000? A. $2,000 B. $6,000 C. $5,000 D. $8,000

D. $8,000

A company has a beginning cash balance of $3,000. For the year, the company estimates cash disbursements of $85,900. It has a desired ending cash balance of $5,500 and anticipates no new financing. The estimated cash receipts are: A. $77,400 B. $79,900 C. $82,900 D. $88,400

D. $88,400

The book value of a plant asset is the: A. accumulated depreciation less the cost of the asset B. Cost of the asset C. Balance in the accumulated depreciation account D. Cost of the asset less the accumulated depreciation

D. Cost of the asset less the accumulated depreciation

Green Corporation purchases 40,000 shares of its own $10 par value common stock for $25 per share. What will be the effect on stockholders' equity? A. Increase $400,000 B. Increase $1,000,000 C. Decrease $400,000 D. Decrease $1,000,000

D. Decrease $1,000,000

An adjustment for which the business paid or received cash in advance is: A. An accrual B. A deferral C. Earned revenue D. Expense recognition

D. Expense recognition

Research and development costs incurred by a company should be: A. capitalized and depreciated over a period not to exceed 20 years. B. capitalized and amortized over the useful life of the asset. C. either capitalized and depreciated or expensed immediately at the option of the accountant. D. Expensed on the current year's income statement.

D. Expensed on the current year's income statement.

Which is NOT an objective of an internal control system? A. Safeguarding of assets B. Compliance with company policies C. Compliance with legal requirements D. Risk minimization

D. Risk minimization

Cash equivalents include all of the following except: A. Time deposits B. High-grade government securities C. Certificates of deposit D. Stocks and bonds

D. Stocks and bonds

Which one of the following is NOT a stockholders' right of ownership in a corporation? A. To vote and elect the board of directors B. To receive a proportionate share of the assets upon liquidation C. To maintain one's proportional share of ownership in the corporation D. To declare dividends

D. To declare dividends

When a company receives cash by mail, the bank deposit for the cash receipts should be made by the: A. mail room clerk B. Certified public accountant C. Controller D. Treasurer

D. Treasurer

The stated interest rate is always declared as a(n): A. monthly rate. B. daily rate. C. semiannual rate. D. annual rate.

D. annual rate.

Gardner Corporation issues $2,000,000, 10-year, 8% bonds payable at a price of 98. The journal entry to record the issuance will include a: A. debit to cash of $2,000,000 B. credit to discount on bonds payable for $40,000. C. credit to bonds payable for $1,960,000. D. debit to cash for $1,960,000.

D. debit to cash for $1,960,000.

Declaring and distributing stock dividends: A. is the distribution of cash to the stockholders. B. increases the total liabilities of the corporation and decreases the total stockholders' equity. C. reduces the total assets of the corporation. D. has no effect on total stockholders' equity.

D. has no effect on total stockholders' equity.

Current liabilities fall into two categories which are referred to as: A. contingent liabilities and contra-liabilities. B. contingent liabilities and noncontingent liabilities. C. unearned liabilities and contra-liabilities. D. liabilities of a known amount and estimated liabilities.

D. liabilities of a known amount and estimated liabilities.

Preferred stockholders: A. receive dividends after common stockholders. B. receive corporate assets upon liquidation after the common stockholders. C. do not have any stockholder rights. D. receive a fixed dividend when the board of directors declares the dividend.

D. receive a fixed dividend when the board of directors declares the dividend.

Book value per share of common stock is computed by dividing: A. total paid-in capital by the number of common shares of stock issued. B. total paid-in capital by the number of common shares of stock outstanding. C. total stockholders' equity by the number of common shares of stock issued. D. total stockholders' equity by the number of common shares of stock outstanding.

D. total stockholders' equity by the number of common shares of stock outstanding.