An error must have been made if which of the following accounts appears on the
post-closing trial balance with a balance other than zero?
A) Equipment
B) Common Stock
C) Accumulated Depreciation
D) Depreciation Expense
The Sarbanes-Oxley Act (SOX) requires the establishment of an audit committee that
includes the:
A) president of the company.
B) chief financial officer of the company.
C) independent directors.
D) company ‘s external auditors.
Which ratio is used to evaluate how well a company is managing its property, plant, and
equipment?
A) Receivables turnover
B) Inventory turnover
C) Fixed asset turnover
D) Asset turnover
The following accounts are taken from the December 31, Year 4 financial statements of
a company.
Use the information above to answer the following question. What is the amount of
total liabilities at the end of Year 4?
A) $7,075.
B) $10,075.
C) $9,075.
D) $12,975.
Which of the following statements about the Retained Earnings account is correct?
A) Retained Earnings is a permanent account; income statement accounts are
temporary.
B) Retained Earnings and income statement accounts are all temporary accounts.
C) Retained Earnings and income statement accounts are all permanent accounts.
D) Retained Earnings is a temporary account, while income statement accounts are
permanent accounts.
Which of the following would not be reported on the balance sheet?
A) Accounts Receivable
B) Accounts Payable
C) Advertising Expense
D) Cash
On January 1, 2016, Horton Inc. sells a machine for $23,000. The machine was
originally purchased on January 1, 2014 for $40,000. The machine was estimated to
have a useful life of 5 years and a residual value of $0. Horton uses straight-line
depreciation. In recording this transaction:
A) a loss of $1,000 would be recorded.
B) a gain of $1,000 would be recorded.
C) a loss of $17,000 would be recorded.
D) a gain of $23,000 would be recorded.
A company started the current year with assets of $700,000, liabilities of $350,000 and
common stock of $200,000. During the current year, assets increased by $400,000,
liabilities decreased by $50,000 and common stock increased by $275,000. There was
no payment of dividends to owners during the year.
Use the information above to answer the following question. What was the amount of
the change in total stockholders’ equity during the year?
A) $350,000 increase
B) $450,000 increase
C) $250,000 increase
D) $200,000 increase
Anthem Inc. issues 200,000 shares of stock with a par value of $0.01 for $150 per
share. Three years later, it repurchases these shares for $80 per share. Anthem records
the repurchase in which of the following ways?
A) Debit Common Stock for $2,000, debit Additional Paid-in Capital for $29,998,000
and credit Cash for $30 million.
B) Debit Treasury Stock for $16 million and credit Cash for $16 million.
C) Debit Common Stock for $2,000, debit Additional Paid-in Capital for $15,998,000
and credit Cash for $16 million.
D) Debit Stockholders’ Equity for $30 million, credit Additional Paid-in Capital for $16
million and credit Cash for $16 million.
At the end of the month, the adjusting journal entry to record the use of supplies would
include a debit to:
A) Supplies and a credit to Supplies Expense.
B) Supplies Expense and a credit to Supplies.
C) Supplies and a credit to Service Revenue.
D) Supplies and a credit to Cash.
A company began the year with assets of $100,000 and liabilities of $75,000. During
the year assets increased by $12,000 and liabilities decreased by $9,000.
Use the information above to answer the following question. What is the amount of
stockholders’ equity at the beginning of the year?
A) $0
B) $25,000.
C) $175,000.
D) $100,000.