The X Company has the following stock outstanding:
Preferred stock dividends are in arrears for 2013 and 2014. If the company declares and
pays $150,000 in dividends in 2015, the amount received by the preferred stockholders
would be
a. $84,000.
b. $42,000.
c. $126,000.
d. $150,000.
Answer:
The first step in the recording process is to
a. prepare financial statements.
b. analyze each transaction for its effect on the accounts.
c. post to a journal.
d. prepare a trial balance.
Answer:
Which of the following reflects the balances of prepayment accounts prior to
adjustment?
a. Balance sheet accounts are understated and income statement accounts are
understated.
b. Balance sheet accounts are overstated and income statement accounts are overstated.
c. Balance sheet accounts are overstated and income statement accounts are
understated.
d. Balance sheet accounts are understated and income statement accounts are
overstated.
Answer:
An adjusting entry
a. affects two balance sheet accounts.
b. affects two income statement accounts.
c. affects a balance sheet account and an income statement account.
d. is always a compound entry.
Answer:
The requirements for accounting for and reporting of inventories under IFRS, compared
to GAAP, tend to be more
a. detailed.
b. rules-based.
c. principles-based.
d. full of disclosure requirements.
Answer:
The most important element of the fraud triangle is
a. financial pressure.
b. incompatible duties.
c. opportunity.
d. rationalization.
Answer:
Langer Company has the following inventory information.
Assuming that a perpetual inventory system is used, what is the ending inventory
(round all calculations to nearest dollar) under the moving-average cost method?
a. $2,930
b. $2,966
c. $2,986
d. $3,054
Answer:
In the first month of operations, the total of the debit entries to the cash account
amounted to $1,200 and the total of the credit entries to the cash account amounted to
$800. The cash account has a(n)
a. $800 credit balance.
b. $1,200 debit balance.
c. $400 debit balance.
d. $400 credit balance.
Answer:
Ale Company has other operating expenses of $80,000. There has been a decrease in
prepaid expenses of $6,000 during the year, and accrued liabilities are $5,000 larger
than in the prior period. What were Ale’s cash payments for operating expenses?
a. $81,000
b. $82,000
c. $69,000
d. $80,000
Answer:
The comparative condensed balance sheets of Able Corporation are presented below.
Instructions
(a) Prepare a horizontal analysis of the balance sheet data for Able Corporation using
2015 as a base.
(b) Prepare a vertical analysis of the balance sheet data for Able Corporation in
columnar form for 2016.
Answer:
As interest is recorded on an interest-bearing note, the Interest Expense account is
a. increased; the Notes Payable account is increased.
b. increased; the Notes Payable account is decreased.
c. increased; the Interest Payable account is increased.
d. decreased; the Interest Payable account is increased.
Answer:
Earnings per share is calculated
a. only for common stock.
b. only for preferred stock.
c. for common and preferred stock.
d. only for treasury stock.
Answer:
When opening a bank checking account, a signature card
a. indicates to whom money is to be paid.
b. indicates each person authorized to sign checks on the account.
c. is attached to all pre-printed checks.
d. is required only when dealing with an out-of-state bank.
Answer:
If the total debit column exceeds the total credit column of the income statement
columns on a worksheet, then the company has
a. earned net income for the period.
b. an error because debits do not equal credits.
c. suffered a net loss for the period.
d. to make an adjusting entry.
Answer:
The Sales Returns and Allowances account does not provide information to
management about
a. possible inferior merchandise.
b. the percentage of credit sales versus cash sales.
c. inefficiencies in filling orders.
d. errors in overbilling customers.
Answer:
Which of the following statements concerning accrual-basis accounting is incorrect?
a. Accrual-basis accounting follows the revenue recognition principle.
b. Accrual-basis accounting is the method required by generally accepted accounting
principles.
c. Accrual-basis accounting recognizes expenses when they are paid.
d. Accrual-basis accounting follows the expense recognition principle.
Answer:
As an indicator of financial health, a low ratio is desirable for the
a. asset turnover ratio.
b. return on assets ratio.
c. acid-test ratio.
d. debt to assets ratio.
Answer:
Short-term stock investments should be valued on the balance sheet at
a. the lower of cost or fair value.
b. the higher of cost or fair value.
c. cost.
d. fair value.
Answer:
Shelly Company reported the following financial information:
Compute (a) the accounts receivable turnover and (b) the average
collection period for 2015.
Answer:
A bond with a face value of $200,000 and a quoted price of 102¼ has a selling price
of
a. $240,450.
b. $204,050.
c. $200,450.
d. $204,500.
Answer:
Cash register overages are deposited in the petty cash fund and cash shortages are
made-up from the petty cash fund.
Answer:
In preparing a bank reconciliation, outstanding checks are ______________ from the
cash balance per ______________.
Answer:
At the beginning of the year, Price Corporation acquired 25% of Cooper Company
common stock for $400,000. Cooper Company reported net income for the year of
$85,000 and paid $25,000 cash dividends during the year. The balance of the Stock
Investments account on the books of Price Corporation at the end of the year should be
$___________.
Answer:
The separate balance sheets of Platt Company and its wholly owned subsidiary, Speer
Company, as of the date of acquisition are shown below.
Instructions
(Provide the amount that should appear in the Consolidated Data column for each of the
selected accounts. If the accounts should not appear in the Consolidated Data column,
indicate ‘None’. Assume that all accounts have normal balances and that Speer
Company stock was acquired for cash at a price equal to its book value.
Answer:
Receivables may be sold because they may be the only reasonable source of cash.
Answer:
Sales resulting from the use of Visa and MasterCard are considered credit sales by the
retailer.
Answer:
The adjusted account balances of the Fitness Center at July 31 are as
follows:
Instructions
Prepare the end of the period closing entries for the Fitness Center.
Answer:
