1) a debit balance in the allowance for doubtful accounts
a.is the normal balance for that account
b.indicates that actual bad debt write-offs have exceeded previous provisions for bad
debts
c.indicates that actual bad debt write-offs have been less than what was estimated
d.cannot occur if the percentage of receivables method of estimating bad debts is used
2) using the following information, prepare a bank reconciliation for hammond
company for june 30, 2012.
a.the bank statement balance is $7,650.
b.the cash account balance is $6,422
c.outstanding checks totaled $1,450.
d.deposits in transit are $900.
e.the bank service charge is $22.
f.collection of note by bank, $700.
3) the cost principle requires that when assets are acquired, they be recorded at
a.market value
b.the amount paid for them
c.selling price
d.list price
4) the following information pertains to bell company. assume that all balance sheet
amounts represent both average and ending balance figures. assume that all sales were
on credit.
what is the current cash debt coverage ratio for this company?
a.0.5 times
b.3 times
c.0.33 times
d.0.14 times
5) kasper company purchased 42,000 shares of common stock of the ikerd corporation
as an investment for $1,000,000. during the year, ikerd corporation reported net income
of $400,000 and paid dividends of $100,000.
instructions
(a)assuming that the 42,000 shares represent a 15% interest in ikerd corporation:
1>prepare the journal entry to record the investment in ikerd stock.
2>prepare any entries that kasper company should make in accounting for its
investment in ikerd stock during the year.
3>what is the balance of the stock investments account on kasper company’s books at
the end of the year?
(b)repeat requirement (a) above except assume that the 42,000 shares represent a 25%
interest in ikerd corporation.
6) the following information pertains to lance company. assume that all balance sheet
amounts represent both average and ending balance figures. assume that all sales were
on credit.
what is the current ratio for this company?
a.1.30
b.1.40
c.1.80
d.0.64
7) mary richardo has performed $500 of cpa services for a client but has not billed the
client as of the end of the accounting period. what adjusting entry must mary make?
a.debit cash and credit unearned revenue
b.debit accounts receivable and credit unearned revenue
c.debit accounts receivable and credit service revenue
d.debit unearned revenue and credit service revenue
8) the recording process occurs
a.once a year.
b.once a month.
c.repeatedly during the accounting period.
d.infrequently in a manual accounting system.
9) under ifrs, the cash flow statement can be prepared using
a. the direct method only
b. the indirect method only
c. either the direct or indirect method
d. the t-account method only
10) units-of-activity is an appropriate depreciation method to use when
a.it is impossible to determine the productivity of the asset
b.the asset’s use will be constant over its useful life
c.the productivity of the asset varies significantly from one period to another
d.the company is a manufacturing company
11) a debit memorandum would not be issued by the bank for
a.a bank service charge
b.the issuance of traveler’s checks
c.the wiring of funds
d.the collection of a notes receivable
12) two categories of expenses in merchandising companies are
a.cost of goods sold and financing expenses
b.operating expenses and financing expenses
c.cost of goods sold and operating expenses
d.sales and cost of goods sold
13) (a) can accounting transaction debits and credits be recorded directly in the ledger
accounts?
(b)what are the advantages of first recording transactions in the journal and then posting
to the ledger?
14) pearson company bought a machine on january 1, 2012. the machine cost $108,000
and had an expected salvage value of $18,000. the life of the machine was estimated to
be 5 years. the depreciation expense using the straight-line method of depreciation is
a.$30,000
b.$21,600
c.$18,000
d.none of the above
15) wittebury corporation retires its £5,000,000 face value bonds at 105 on january 1,
following the payment of annual interest. the carrying value of the bonds at the
redemption date is $5,187,250. the entry to record the redemption will include
a.a credit of £62,750 to gain on bond redemption
b.a debit of £62,750 to loss on bond redemption
c.a credit of £25,000 to bonds payable
d.a credit of £62,250 to bonds payable