Useful life is expressed in terms of use expected from the asset under the
a. declining-balance method.
b. straight-line method.
c. units-of-activity method.
d. none of these answer choices are correct.
Answer:
Inventory is
a. reported under the classification of Property, Plant, and Equipment on the balance
sheet.
b. often reported as a miscellaneous expense on the income statement.
c. reported as a current asset on the balance sheet.
d. generally valued at the price for which the goods can be sold.
Answer:
A ratio calculated in the analysis of financial statements
a. expresses a mathematical relationship between two numbers.
b. shows the percentage increase from one year to another.
c. restates all items on a financial statement in terms of dollars of the same purchasing
power.
d. is meaningful only if the numerator is greater than the denominator.
Answer:
Which of the following is not a common cost flow assumption used in costing
inventory?
a. First-in, first-out
b. Middle-in, first-out
c. Last-in, first-out
d. Average cost
Answer:
Which statement about long-term investments is not true?
a. They will be held for more than one year.
b. They are not currently used in the operation of the business.
c. They include investments in stock of other companies and land held for future use.
d. They can never include cash accounts.
Answer:
The declaration of a stock dividend will
a. increase paid-in capital.
b. change the total of stockholders’ equity.
c. increase total liabilities.
d. increase total assets.
Answer:
To record estimated uncollectible accounts using the allowance method, the adjusting
entry would be a
a. debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts.
b. debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts.
c. debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.
d. debit to Loss on Credit Sales Revenue and a credit to Accounts Receivable.
Answer:
At March 1, Psychocandy Inc. reported a balance in Supplies of $200. During March,
the company purchased supplies for $750 and consumed supplies of $800. If no
adjusting entry is made for supplies
a. stockholders’ equity will be overstated by $800.
b. expenses will be understated by $750.
c. assets will be understated by $250.
d. net income will be understated by $800.
Answer:
Presented here is a partial amortization schedule for Roseland Company who sold
$3000,000, five year 10% bonds on January 1, 2014 for $318,000 and uses annual
straight-line amortization.
Which of the following amounts should be shown in cell (iii)?
a. $9,000.
b. $18,000.
c. $3,600.
d. $1,800.
Answer:
A plant asset cost $90,000 when it was purchased on January 1, 2008. It was
depreciated by the straight-line method based on a 9-year life with no salvage value. On
June 30, 2015, the asset was discarded with no cash proceeds. What gain or loss should
be recognized on the retirement?
a. No gain or loss.
b. $20,000 loss.
c. $15,000 loss.
d. $10,000 gain.
Answer:
An item is considered material if
a. it doesn’t cost a lot of money.
b. it is of a tangible good.
c. it is likely to influence the decision of an investor or creditor.
d. the cost of reporting the item is greater than its benefits.
Answer:
Which of the following statements is true?
a. Trading securities are debt securities that the investor has the intent to hold to
maturity.
b. Trading securities are securities bought and held primarily for sale in the near term.
c. Trading securities are securities that may be sold in the future.
d. Trading securities are reported at cost in the balance sheet.
Answer:
Changes in pay rates during employment should be authorized by the
a. human resources department.
b. payroll department.
c. treasurer’s department.
d. timekeeping department.
Answer:
John and Sam met at law school and decide to start a small law practice after
graduation. They agree to split revenues and expenses evenly. The most common form
of business organization for a business such as this would be a
a. joint venture.
b. partnership.
c. corporation.
d. proprietorship.
Answer:
Which one of the following payroll taxes does not result in a payroll tax expense for the
employer?
a. FICA tax
b. Federal income tax
c. Federal unemployment tax
d. State unemployment tax
Answer:
Owners enjoy limited liability in a
a. proprietorship.
b. partnership.
c. corporation.
d. sole proprietorship.
Answer:
Each of the following items affect the cash balance per books except
a. bank service charges.
b. notes collected by the bank.
c. NSF checks.
d. outstanding checks.
Answer:
The managers of Constantine Company receive performance bonuses based on the net
income of the firm. Which inventory costing method are they likely to favor in periods
of declining prices?
a. LIFO
b. Average Cost
c. FIFO
d. Physical inventory method
Answer:
Control over cash disbursements is improved if major expenditures are paid by check.
Answer:
If the present value of the cash ______________ exceeds the present value of the cash
________________, the investment should be rejected.
Answer:
Prepare a partial income statement, beginning with income before income taxes using
the following information for Stone Corporation for the fiscal year ended December 31,
2015:
Stone Corporation is subject to a 30% income tax rate.
Answer:
On March 8, Black Candy Company bought supplies on account from the Arcade Fire
Company for $550. Black Candy Company incorrectly debited Equipment for $500 and
credited Accounts Payable for $500. The entries have been posted to the ledger. the
correcting entry should be:
Answer:
Consolidated financial statements present a condensed version of the financial
statements so investors will not experience information overload.
Answer: