1) Under IFRS the preferred term for accounts payable is provisions.
2) The general journal is used to record all transactions that do not fit one of the special
journals.
3) The operating cycle is the time span during which cash is used to acquire goods and
services and the goods and services are sold to customers.
4) The cost of removing an old building from acquired land would be a part of the land
account.
5) The components of the payroll system are a payroll register, payroll cheques, and an
earnings record for each employee.
6) Payroll deductions withheld from employees become a liability of the employer.
7) Accounting system flexibility creates additional cost to the organization.
8) Accrued interest on a note payable should be credited to interest payable.
9) Corporations and individuals both pay income tax.
10) The income statement must be prepared before the statement of owner’s equity
since net income or net loss is added to or subtracted from the beginning balance in the
owner’s capital account.
11) Capital on the adjusted trial balance represents capital at the end of the accounting
period.
12) Which of the following is an important internal control over payroll?
A) Separating the duties of the disbursement of paychecks from the recording of payroll
transactions in the ledger
B) Separating the duties of safeguarding property from record-keeping of property
C) Separating the duties of approving invoices from signing disbursement checks
D) Separating the duties of cash disbursement from bank reconciliations
13) Stan’s Shoe Repairs recorded $2,000 of unearned service revenue being earned and
the collection of $4,000 cash for service revenue previously accrued. The impact of
these two entries on total service revenue is:
A) a decrease of $2,000
B) an increase of $4,000
C) an increase of $6,000
D) an increase of $2,000
14) Net income is entered onto which column(s) of a worksheet?
A) adjusted trial balance debit column
B) income statement debit and balance sheet credit
C) income statement debit and balance sheet debit
D) adjusted trial balance credit and income statement credit
15) Table 6-6 Sam’s Wholesale Bikes
Refer to Table 6-6. What is the value of the February ending inventory assuming that
Sam’s uses the periodic weighted-average inventory method?
A) $12,845
B) $17,408
C) $13,614
D) $10,603
16) A liability that arises from an expense that the business has incurred but has not yet
paid is called a(n):
A) deferred asset
B) accrued asset
C) accrued expense
D) deferred expense
17) Table 9-11 Mark’s Sales
At the beginning of 2014, Mark’s sales had the following ledger balances:
During the year there were $450,000 of credit sales, $460,000 of collections, and
$3,700 of write-offs.
Refer to Table 9-11. At the end of the year, Mark’s adjusted for uncollectible account
expense using the percent-of-sales method, and applied a rate, based on past history, of
1.2%. At the end of the year, what was the balance in the allowance account?
A) $2,300
B) $1,700
C) $6,400
D) $2,700
18) The accountant at Wilton and Jones gathered the following selected accounting
information:
20142013
Cash$ 40,000$ 35,000
Short-term investments30,00017,000
Accounts receivable (net)35,00025,000
Inventory65,00065,000
Prepaid expenses7,0009,000
Accounts payable60,00054,000
Salary payable14,00015,000
Income taxes payable11,00013,000
Bonds payable (due 2019)80,00080,000
Net credit sales270,000235,000
Cost of goods sold165,000141,000
a) Compute the acid-test ratio for 2014 and 2013 .
b) Compute the days’ sales in receivables for 2013 and 2014 . The accounts receivable
(net) at December 31, 2012, were $39,000.
c) Are the ratios improving or deteriorating?
19) Carolina Supply accepted an eight-month, $16,000 note receivable, with 8%
interest, from Reading Corporation on August 1, 2013 . Carolina Supply’s year end is
December 31 . The amount of interest to be accrued on December 31, 2013 is:
A) $533
B) $1,280
C) $853
D) $320
20) Record journal entries for the following transactions involving property, plant and
equipment for Blankenship Company Ltd.:
a) Purchased equipment costing $100,000.
b) Paid freight to have equipment delivered, $500.
c) Paid $1,000 to have equipment installed.
d) Paid $50,000 to have a similar piece of equipment overhauled.
e) Paid $100 for periodic maintenance to the new equipment.
21) All of the following describe a liability except:
A) investments by owners
B) economic obligations to creditors
C) debts to creditors
D) outsider claims
22) Table 5-2
Referring to Table 5-2, what is the operating income or operating loss?
A) operating income of $123,000
B) operating loss of $177,000
C) operating loss of $27,000
D) operating income of $27,000
23) Alpha Company had $45,000 in beginning inventory and $80,000 in ending
inventory. Cost of goods sold for the period was $25,000. The inventory turnover is:
A) 0.56
B) 0.3125
C) 0.4
D) 4.0
24) Laoshan Company uses a cash payments journal for all its payments by cheque. At
the end of December, the journal shows the following information:
When this journal is posted, what entry will be made to the accounts payable control
account?
A) Credit $4,800
B) Debit $4,800
C) Credit $7,880
D) Debit $7,880
25) Internal control does not:
A) help safeguard the assets a business uses in its operations
B) guarantee a company will not go bankrupt
C) prevent and detect error and fraud
D) promote operational efficiency
26) After all of the account balances have been extended to the income statement
columns of the worksheet, the totals of the debit and credit columns are $172,300 and
$176,900, respectively. It can be concluded the company has a:
A) net loss of $14,600
B) net income of $4,600
C) net income of $176,900
D) net loss of $176,900
27) Which of the following items are both reconciling items on the book side of the
reconciliation?
A) Outstanding cheques and correction of book error
B) Deposit in transit and NSF cheque
C) Bank service charge and outstanding cheques
D) Bank service charge and correction of book error
28) One of the differences between IFRS and ASPE is that:
A) ASPE is used mostly in Europe
B) IFRS uses accrual accounting; ASPE uses cash-basis accounting
C) IFRS uses cash-basis accounting; ASPE uses accrual accounting
D) to record amortization, IFRS uses the word depreciation; ASPE allows both
depreciation and amortization to be used
29) If the bank mistakenly recorded a $71 deposit as $17, the error would be shown on
the bank reconciliation as a:
A) $71 addition to the bank balance
B) $54 addition to the bank balance
C) $71 deduction from the bank balance
D) $54 deduction from the bank balance
30) The acid-test ratio would include in the numerator:
A) cash, short-term investments, and prepaid expenses
B) inventory, cash, and short-term investments
C) cash, short-term investments, and net current receivables
D) cash, inventory, and prepaid expenses
31) Bathworks Company wants to estimate its ending inventory based on the following
data: beginning inventory of $70,000, net sales revenue of $195,000, purchases of
$140,000, and a normal gross margin percent of 40%. Ending inventory is equal to:
A) $78,000
B) $117,000
C) $93,000
D) $132,000
32) State whether the following accounts are assets, liabilities or owner’s equity.
a)________Equipment
b)________Capital
c)________Supplies
d)________Accounts payable
e)________Accounts receivable
f)________Wages payable
g)________Cash
33) Intangible assets are classified on the balance sheet as:
A) long-term assets
B) property, plant and equipment
C) current assets
D) a component of owner’s equity
34) Martin Manufacturing Company uses a cash receipt journal. At the end of March,
the cash receipts journal was completed as follows:
Cash Receipts Journal
Provide a summary general journal entry, including all accounts that were affected
during the month.
35) Table 3-3
The unadjusted trial balance of Holitzner Roof Repairs appears below as at December
31, 2014 .
DebitCredit
Cash$5,300
Accounts receivable7,600
Roofing supplies1,100
Equipment6,000
Accumulated amortization$1,200
Salaries payable1,100
Interest payable
Unearned service revenue300
Note payable10,000
Carmen Holitzner, capital6,400
Carmen Holitzner, withdrawals600
Service revenue3,000
Salaries expense500
Amortization expense
Rent expense2,100
Roofing supplies expense
Interest expense__________
$22,600$22,600
Refer to Table 3-3. Given the following information, prepare the necessary adjusting
entries at year end, December 31, 2014 .
a) A physical count reveals only $520 of roofing supplies are on hand at December 31,
2014 .
b) The equipment is amortized at a rate of $120 per month.
c) Unearned service revenue amounted to $200 at December 31, 2014 .
d) Accrued salary expense at December 31, 2014, amounts to $150.
e) Interest accrued on the note payable at December 31, 2014, amounts to $50.
36) Amounts are posted individually from the purchases journal to the:
A) cash account in the general ledger
B) inventory account in the general ledger
C) accounts payable account in the general ledger
D) accounts payable subsidiary ledger
37) Santagos Industries gathered the following information from its accounting records
for the year ended December 31, 2013, prior to adjustment:
Net credit sales for the year$730,000
Accounts receivable balance, Dec. 31, 2013142,000
Allowance for doubtful
accounts balance, Dec. 31, 20131,850Dr.
Santagos uses the allowance method of accounting for uncollectible accounts and
estimates bad-debt expense at 1.5% of net credit sales.
Required:
a) Prepare the adjusting entry to record bad-debt expense on December 31, 2013 .
b) Determine the balance in allowance for doubtful accounts after the adjusting entry is
prepared.
c) Show how the receivables would be reported on the December 31, 2013, balance
sheet for Santagos Industries.
38) Table 11-17
Grant Caballero works for a media company. He earns $3,000 a week for a 40-hour
week and time and a half for anything over 40 hours per week. During the first week of
the year, Grant worked 45 hours. The income tax withholdings are 25% of gross
earnings. Canada Pension Plan deductions are 4.95% of gross earnings and
Employment Insurance deductions are 1.83% of gross earnings. The worker’s
compensation premium is 1.6% of gross earnings. Both Grant and the company
contribute 5% of gross earnings into a group RRSP. In addition Grant has $25 deducted
from his weekly pay to contribute to his favorite charity, Accounting Students’ Tutor
Fund.
Refer to Table 11-17. What is the amount of the employee’s share of the Canada
Pension Plan payable amount if the exemption is used in the calculation?
39) Most companies use straight-line amortization for their books but an accelerated
method for the tax return. Explain why companies use these two different methods that
result in the need for two sets of records.
40) Given the following unidentified journal, write an explanation for each transaction.
|Debits|Credits|
41) Why is it in the interest of a corporation for management to behave ethically?
42) Prepare a classified balance sheet in report form based on the adjusted trial balance
for the Wood Productions on December 31, 2013 .
Wood Productions
Adjusted Trial Balance
December 31, 2013
DebitCredit
Cash$2,000
Accounts receivable9,000
Prepaid rent5,000
Prepaid insurance2,500
Supplies3,200
Land30,000
Building50,000
Accumulated amort.-building$10,000
Equipment35,000
Accumulated amort.-equipment7,000
Accounts payable8,000
Salary payable3,000
Interest payable1,000
Mortgage payable
(due 12/31/2018)40,000
Jennifer Wood, Capital84,900
Jennifer Wood, Withdrawals10,000
Service revenue80,000
Salary expense28,000
Insurance expense5,000
Rent expense12,000
Utilities expense15,000
Advertising expense9,000
Amortization expense-building10,000
Amortization expense-equipment7,000
Supplies expense 1,200________
Total$233,900$233,900
43) Samson Distributing purchased a patent at a cost of $45,000 on June 30, 2013 . It is
estimated the the patent has a remaining useful life of 4 years in spite of the fact that the
patent will expire in 6 years from the date of purchase. Samson has a December year
end.
Record the amortization for 2013 for the patent.
44) Fill in the missing amounts for each case in the table presented below:
45) The process of entering transactions into the journal
46) The following unadjusted account balances and adjustment data are for Global
Advertising as of December 31, 2014:
Cash$14,000
Prepaid insurance3,000
Office supplies900
Office equipment15,500
Accumulated amort.-office equipment4,500
Accounts payable1,600
Salary payable0
Unearned service revenue5,500
Bill Johnson, Capital14,900
Bill Johnson, Withdrawals11,000
Service revenue29,700
Salary expense11,800
Amort. expense-office equipment0
Supplies expense0
Insurance expense0
Adjustment data:
Office supplies on hand December 31, 2014, $500
Prepaid insurance expired during 2014, $275
Unearned service revenue, December 31, 2014, $1,500
Amortization on equipment for 2014, $2,800
Accrued salaries, $1,800
Fill in the trial balance, adjustments, and adjusted trial balance columns in the following
table.
Global Advertising
Preparation of Adjusted Trial Balance
December 31, 2014
AccountTrial BalanceAdjustmentsAdjusted Trial Balance
47) Based on the following adjusted account balances, prepare a statement of owner’s
equity for the MacMahan Services for the year ended December 31, 2014 .
Service revenue 8,300
Advertising expense1,100
Salary expense6,800
Mandy MacMahan, Capital, Jan. 1, 20145,150
Insurance expense900
Supplies expense1,350
Mandy MacMahan, Withdrawals3,200
