Financial statements that are prepared for a period shorter than a year are called:
A) accounting period statements.
B) fiscal year statements.
C) interim statements.
D) operating statements.
The two methods of accounting for uncollectible receivables are the direct write-off
method and the:
A) equity method.
B) cash method.
C) interest method.
D) allowance method.
When merchandise is bought for resale, which of the following accounts would be
increased?
A) Store Equipment
B) Purchases
C) A/R
D) Supplies Expense
Isaiah Company has net income before interest and taxes of $825,000; beginning total
assets of $2,100,000; and ending total assets of $2,500,000. Isaiah’s return on total
assets is:
A) 33.0%.
B) 11.2%.
C) 3.1%.
D) 31.3%.
The ownership of the corporation consists of:
A) the governing body.
B) the officers of the corporation.
C) the stockholders.
D) the board of directors.
When using a perpetual inventory method, what account(s) must be updated when a
sale is recognized?
A) Cost of Goods Sold
B) Supplies
C) Merchandise Inventory
D) Both A and C are correct.
The Fair Labor Standards Act must be followed if:
A) the company has more than 100 employees.
B) the employees have received regular earnings.
C) the company does business in more than one state.
D) all employees are categorized as salary.
All other factors being equal, issuing stocks rather than issuing bonds will:
A) increase earnings per share.
B) decrease earnings per share.
C) have no effect on earnings per share.
D) Cannot be determined from information given
An acceptable variation of the accounting equation is:
A) Assets – Owner’s Equity = Liabilities.
B) Assets + Owner’s Equity = Liabilities.
C) Assets = Liabilities – Owner’s Equity.
D) All of these answers are correct.
Which of the following is NOT a characteristic of common stock?
A) The right to share profits by receiving dividends
B) The right to vote
C) The right to sell their stock
D) The right to prior claims of profit over preferred stockholders
Goods on consignment to another company:
A) belong to the consignee because title has passed.
B) belong to the consignor because title has passed.
C) belong to the consignor because the consignee is merely selling them for the
consignor.
D) belong to the consignee because the consignor is merely selling them for the
consignee.
When all of the cash for an account previously written off under the direct write-off
method is unexpectedly collected, the correct entry would be:
A) debit Bad Debt Expense and credit Accounts Receivable.
B) debit Accounts Receivable and credit Bad Debt Expense.
C) debit Cash and credit Accounts Receivable.
D) dependent on the period in which the cash was collected.
Betty’s Boutique discounts its own 150-day, 9%, $20,000 note payable at a bank. It
records the proceeds as:
A) debit Cash $19,250; debit Discounts on Notes Payable $750; credit Notes
Receivable $20,000.
B) debit Cash $19,250; credit Discounts on Notes Payable $750; credit Notes Payable
$20,000.
C) debit Cash $18,200; debit Discount on Notes Payable $1,800; credit Notes Payable
$20,000.
D) debit Cash $19,250; credit Notes Payable $19,250.
When a company distributes some of their profits to shareholders, it is in the form of:
A) cumulative stock.
B) reduced taxes.
C) dividends.
D) bonds.
Using a 360-day year, interest calculated for 90 days on a $9,000, 6% promissory note
is:
A) $135.
B) $540.
C) $450.
D) some other amount.
Sterling Supply uses a periodic inventory system. Sterling Supply sold 25 globes during
March. Other data for March includes:
Round per unit cost to two decimal places. Ending inventory under the
weighted-average method is:
A) $281.25.
B) $155.00.
C) $443.45.
D) $168.75.
To determine how each profit center is performing, management would analyze the:
A) income tax rate.
B) indirect expenses.
C) gross profit for each profit center.
D) other expenses.
Management has authorized the purchase of a large quantity of inventory for early
December. The purchase will have credit terms of 2/10, n/30, and they will authorize
payment by the discount date. How will this decision affect the period’s cash flows from
operationsindirect method?
A) It will increase this period’s cash flows from operations.
B) It will decrease this period’s cash flows from operations.
C) It will not affect this period’s cash flows from operations.
D) This does not affect cash flows from operations.
The employee earnings record:
A) shows all employee information related to an entire pay period.
B) keeps track of an individual employee’s payroll history for a calendar year.
C) is a substitute for a W-4.
D) None of the above is correct.
Recording to the accounts receivable subsidiary ledger is done:
A) daily.
B) monthly.
C) weekly.
D) annually.
If the employee has $500 withheld from their check for FICA-OASDI, what is the
amount that the employer would need to pay?
A) $500
B) $100
C) $0
D) $400
Financial statements are prepared from the:
A) trial balance.
B) worksheet income and balance sheet columns.
C) adjusted trial balance.
D) ledger.
Which of the following statements is false regarding a proper journal entry?
A) Debits are always listed first in the entry.
B) Credits are always indented.
C) Skip a line between transactions.
D) Always list the expenses first.
Which of the following accounts will NOT appear on the post-closing trial balance?
A) Accounts Receivable
B) Cash
C) Accounts Payable
D) Withdrawals
The income/loss agreement was ignored when closing the income summary and all
income was distributed evenly. This error would cause:
A) the total partners’ equity to be overstated.
B) the total partners’ equity to be understated.
C) the total partners’ equity to be unaffected.
D) the ending assets to be overstated.
What is the inventory turnover if the beginning inventory was $75,000, cost of goods
sold was $300,000, and ending inventory was $65,000?
A) 6.4 times
B) 4.3 times
C) 3.8 times
D) None of the above
On March 5, Weber Services discounts a customer’s 9%, 60-day, $10,000 note dated
January 20. The discount rate charged by the bank is 12%. The discount period is:
A) 24 days.
B) 16 days.
C) 60 days.
D) 0 days.
If only one type of stock is issued, it is:
A) no-par preferred stock.
B) preferred stock.
C) legal capital.
D) common stock.
The payment of accounts payable would:
A) increase both assets and liabilities.
B) increase assets and decrease liabilities.
C) decrease both assets and liabilities.
D) decrease assets and increase liabilities.
Which of the following statements is true in regards to secured bonds?
A) Secured bonds are paid on multiple dates.
B) Secured bonds are backed with specific assets.
C) Secured bonds are registered with the issuing company.
D) Secured bonds can be converted to stock.
An outflow of cash from investing activities would be:
A) the issuance of stock.
B) the sale of investment in equity securities.
C) interest received on loans.
D) the purchase of fixed assets.
Which of the financial statements is prepared first from the worksheet?
A) Balance sheet
B) Income statement
C) Statement of owner’s equity
D) None of these answers is correct.