As per the ________, the entity will remain in operation for the foreseeable future.
A) economic entity concept
B) monetary unit assumption
C) going concern assumption
D) cost principle
A business makes a payment in cash for advertising expense. Which of the following
accounts is credited?
A) Prepaid Advertising
B) Accounts Receivable
C) Cash
D) Advertising Expense
The financial statements for Stephens’ Electric Company include the following items:
Compute the 2018 cash ratio. (Round your answer to two decimal places.)
A) 1.03
B) 1.09
C) 1.50
D) 0.56
The following information is from the 2019 records of Fast Lane Racing Gear:
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.
A) $5,340
B) $10,400
C) $8,000
D) $7,000
Which of the following is a condition for recording an available-for-sale debt
investment?
A) The investor intends to hold the debt security until it matures.
B) The investor intends to sell the security in the very near term.
C) The investment must be a debt security.
D) The investor has the ability to hold the security until it matures.
Sales revenue for a sporting goods store amounted to $526,000 for the current period.
All sales are on account and are subject to a sales tax of 10%. Which of the following
would be included in the journal entry to record the sales transaction?
A) a debit to Sales Revenue for $526,000
B) a credit to Accounts Receivable for $526,000
C) a debit to Sales Tax Payable for $52,600
D) a debit to Accounts Receivable for $578,600
Which of the following is included in the entry to record the employer’s payroll taxes?
A) a debit to State Unemployment Tax Payable
B) a credit to Payroll Tax Expense
C) a credit to FICA—OASDI Tax Payable
D) a credit to Salaries Payable
The balances of select accounts of McMurray, Inc. as of December 31, 2018 are given
below:
The Unearned Revenue is the amount of cash received for services to be rendered in
January 2019. Interest Payable will be paid on February 5, 2019. What are the total
long-term liabilities shown on the balance sheet at December 31, 2018?
A) $1,300
B) $3,000
C) $4,300
D) $24,000
Which of the following statements, regarding the reporting of intangible assets, is
correct?
A) If a company uses the contra account, Accumulated Amortization, this account is
typically shown on the balance sheet.
B) Amortization expense is reported on the balance sheet.
C) Intangible assets are shown only at their net book value.
D) All intangible assets are shown on the balance sheet at fair market value on balance
sheet date.
For each of the following decisions, identify if it applies to a financial accounting (FA)
or a managerial accounting (MA) decision maker. Your answer should be either FA or
MA. Include only one choice for each accounting decision.
Which of the following columns is typically included in a payroll register?
A) Direct Labor Hours Worked
B) Warranties Payable
C) Current Period Earnings
D) Sales Tax
What is the term used for the difference between the Equipment account and the
Accumulated Depreciation-Equipment account?
A) contra asset
B) market value
C) historical cost
D) book value
A(n) ________ is a device that enables members of a local network to access the
network while keeping nonmembers out of the network.
A) burglar alarm
B) firewall
C) fireproof vault
D) electronic sensor
Which of the following is true of the comparison between a manual and a computerized
accounting information system?
A) In both manual and computerized systems, reports and financial statements must be
created using Word documents, Excel spreadsheets, or PowerPoint.
B) In a computerized system, the software can generate financial reports
instantaneously that cannot be formatted.
C) In a manual system, data are contained in paper documents, which are often stored in
filing cabinets and off-site document warehouses; whereas in a computerized system,
data are stored on a main computer called a server.
D) In both manual and computerized systems, processing data includes manually
journalizing transactions and posting to the accounts.
Mid-Town Auto Parts Company uses the direct method to prepare its statement of cash
flows. Refer to the following information reported for 2019:
1. Sales Revenue, $519,000
2. Accounts Receivable, beginning balance, $97,000
3. Accounts Receivable, ending balance, $65,000
Compute the collections from customers.
A) $551,000
B) $454,000
C) $162,000
D) $357,000
The accounting principle that ensures all expenses are recorded during the period when
they are incurred and offsets those expenses against the revenues of the period is called
the ________ principle.
A) comparison
B) accrual
C) matching
D) revenue recognition
A business’s cash receipts and cash payments for a specific period are reported on a(n)
________.
A) income statement
B) balance sheet
C) statement of cash flows
D) cash reconciliation statement
The purchases journal of a business that uses the periodic inventory system will include
a column titled ________.
A) Cost of Goods Sold DR
B) Purchases DR
C) Accounts Payable DR
D) Merchandise Inventory DR
Westwood Supply Services received $1,000 cash from a customer; the amount was
owed to the business from the previous month. Which of the following accounts will
decrease as a result of this transaction?
A) Cash
B) Revenue
C) Accounts Payable
D) Accounts Receivable
Routing Solutions paid $210,000 to acquire Tabletz, Inc., an electronic
gadget-advertising website. At the time of the acquisition, Tabletz’s balance sheet
reported total assets of $210,000 and liabilities of $105,000. The fair market value of
Tabletz’s assets was $210,000. The fair market value of its liabilities was $105,000.
How much goodwill did Routing Solutions purchase as part of the acquisition of
Tabletz?
A) $210,000
B) $52,500
C) $105,000
D) $157,500
The Accounts Receivable account of Brownstone, Inc. has the following postings:
Calculate the ending balance of the account.
A) $28,000 debit
B) $25,000 debit
C) $3,000 credit
D) $22,000 debit
Complete Electronics Inc. sells a point-of-sale computer with a two-year service
contract. Complete collects $3,000 cash for the selling price of the computer and $576
for the two-year service contract. How is revenue recognized?
A) Complete will record Sales Revenue of $3,576 when the computer is delivered to the
customer.
B) Complete will record Sales Revenue of $1,788 per year for two years.
C) Complete will record Sales Revenue of $3,000 when the computer is delivered and
Service Revenue of $24 per month for 24 months.
D) Complete will record Sales Revenue of $3,000 when the computer is delivered and
will record revenue for the service contract as service calls are made.
From the following details, calculate net sales revenue.
A) $467,000
B) $453,000
C) $460,000
D) $475,000
A company which sells merchandise or services can receive cash from customers
________.
A) over the counter
B) by electronic funds transfer
C) through the mail
D) in any of the above forms
Wilson Engraving just completed operations for the year ending December 31, 2018.
Accounts from the adjusted trial balance dated December 31, 2018 are listed in
alphabetical order below:
Balance
Requirement:
a. Prepare the closing entries. Omit explanations.
b. Prepare, in good form, the income statement, statement of retained earnings, and
balance sheet.
c. Compute the current ratio. Label your work. Comment on the current ratio.
Which of the following occurs when a corporation distributes a stock dividend?
A) Total liabilities would increase.
B) Total stockholders’ equity would increase.
C) Total assets would decrease.
D) Total stockholders’ equity would be unchanged.
The following information is from the December 31, 2018 balance sheet of May
Corporation.
What was the total paid-in capital as of December 31, 2018?
A) $736,000
B) $996,900
C) $913,000
D) $888,000
Nature Metals Company uses the direct method to prepare its statement of cash flows.
Use the following information reported for the year 2018 to compute the cash paid to
suppliers for operating expenses.
Operating expenses, $30,000
Accrued Liabilities, beginning balance, $3500
Accrued Liabilities, ending balance, $5600
A) $33,500
B) $32,100
C) $27,900
D) $35,600
Which of the following is included in the entry to record accrual of warranty expense?
A) a debit to Warranty Expense
B) a credit to Merchandise Inventory
C) a credit to Warranty Expense
D) a debit to Estimated Warranty Payable
The account title used for recording the payment of rent in advance for an office
building is ________.
A) Prepaid Rent
B) Rent Payable
C) Rent Revenue
D) Rent Expense
A cash payments journal is a special journal that ________.
A) differs from the cash disbursements journal
B) eliminates the need to perform a bank reconciliation
C) is used to record cash payments by check and currency
D) is used to record the net of cash payments and cash receipts by check and currency
Regarding a classified balance sheet, which of the following statements is correct?
A) Accounts are classified by their purchase dates.
B) Account balances are listed from the highest amount to the lowest amount.
C) Assets are listed in the order of their liquidity.
D) Assets are listed in alphabetical order.
On October 1, 2018, Northern Inc. purchased a patent for $204,000 cash. Although the
patent gives legal protection for 20 years, the patent is expected to be used for only 10
years. The patent has no residual value. What will be the balance in the patent account
on September 30, 2019?
A) $183,600
B) $204,000
C) $193,800
D) $102,000