Which of the following errors will cause a trial balance to be out of balance? The entry
to record a payment on account was
a. not posted at all.
b. posted as a debit to Cash and a credit to Accounts Payable.
c. posted as a debit to Cash and a debit to Accounts Payable.
d. posted as a debit to Accounts Receivable and a credit to Cash.
Answer:
If a company has overdrawn its bank balance, then
a. its cash account will show a debit balance.
b. its cash account will show a credit balance.
c. the cash account debits will exceed the cash account credits.
d. it cannot be detected by observing the balance of the cash account.
Answer:
What type of ratios best measure the short-term ability of the enterprise to pay its
maturing obligations and to meet unexpected needs for cash?
a. Leverage
b. Solvency
c. Profitability
d. Liquidity
Answer:
Under income is defined as
a. revenue less expenses.
b. revenues and gains, less expenses and losses.
c. revenues and gains.
d. revenues, gains, and contributions by owners.
Answer:
If accounts payable have increased during a period,
a. revenues on an accrual basis are less than revenues on a cash basis.
b. expenses on an accrual basis are less than expenses on a cash basis.
c. expenses on an accrual basis are greater than expenses on a cash basis.
d. expenses on an accrual basis are the same as expenses on a cash basis.
Answer:
Dixon Corp. purchased 20,000 shares of its own $2 par common stock at a cost of $13
per share on April 30, 2015. The stock was originally issued at $11 per share. The entry
to record the purchase of the stock should include a debit to
a. Common Stock for $40,000.
b. Treasury Stock for $40,000.
c. Common Stock for $260,000.
d. Treasury Stock for $260,000.
Answer:
The future value of 1 factor will always be
a. equal to 1.
b. greater than 1.
c. less than 1.
d. equal to the interest rate.
Answer:
Carothers Company assembled the following information in completing its March bank
reconciliation: balance per bank $7,640; outstanding checks $1,550; deposits in transit
$2,500; NSF check $160; bank service charge $50; cash balance per books $8,800. As a
result of this reconciliation, Carothers will
a. reduce its cash account by $50.
b. reduce its cash account by $210.
c. reduce its cash account by $950.
d. increase its cash account by $110.
Answer:
If $40,000 is put in a savings account paying interest of 4% compounded annually, what
amount will be in the account at the end of 5 years?
a. $32,878
b. $48,000
c. $48,620
d. $48,666
Answer:
In a perpetual inventory system, the Cost of Goods Sold account is used
a. only when a cash sale of merchandise occurs.
b. only when a credit sale of merchandise occurs.
c. only when a sale of merchandise occurs.
d. whenever there is a sale of merchandise or a return of merchandise sold.
Answer:
Which of the following steps is not required in preparing the statement of cash flows?
a. Determine the net change in cash.
b. Determine the net cash provided by operating activities.
c. Determine cash from investing and financing activities.
d. Determine the change in current assets.
Answer:
Farris Company borrowed $800,000 from BankTwo on January 1, 2014 in order to
expand its mining capabilities. The five-year note required annual payments of
$208,349 and carried an annual interest rate of 8.5%. What is the balance in the notes
payable account at January 1, 2016?
a. $800,000
b. $507,372
c. $659,651
d. $664,000
Answer:
Eckman Company purchased equipment for $120,000 on January 1, 2014, and will use
the double-declining-balance method of depreciation. It is estimated that the equipment
will have a 5-year life and a $6,000 salvage value at the end of its useful life. The
amount of depreciation expense recognized in the year 2016 will be
a. $17,280.
b. $27,360.
c. $28,800.
d. $16,416.
Answer:
Using the percentage-of-receivables method for recording bad debt expense, estimated
uncollectible accounts are $32,000. If the balance of the Allowance for Doubtful
Accounts is $8,000 debit before adjustment, what is the amount of bad debt expense for
that period?
a. $8,000
b. $24,000
c. $32,000
d. $40,000
Answer:
Joe’s Supply Co. has the following transactions related to notes receivable during the
last 2 months of 2015.
Instructions
(a) Journalize the transactions for Joe’s Supply Co.
(b) Record the collection of the Rondelli note at its maturity in 2016.
Answer:
A company shows a balance in Salaries and Wages Payable of $38,000 at the end of the
month. The next payroll amounting to $48,000 is to be paid in the following month.
What will be the journal entry to record the payment of salaries?
Answer:
Another name for trend analysis is horizontal analysis.
Answer:
This information is for Downing Company for the year ended December 31, 2015.
Instructions
Prepare the 2015 statement of cash flows for Downing Company.
Answer:
On January 1, 2014, Brenner Company purchased at face value, a $1,000, 10% bond
that pays interest on January 1 and July 1. Brenner Company has a calendar year end.
The entry for the receipt of interest on January 1, 2015 is
Answer:
On January 1, Oetry Corporation purchased a 35% equity in Selig Company for
$190,000. At December 31, Selig declared and paid a $50,000 cash dividend and
reported net income of $80,000.
Instructions
Prepare the necessary journal entries for Oetry Corporation.
Answer: