The ending merchandise inventory was overstated. This error would cause:
A) net income to be understated.
B) revenue to be understated.
C) net income to be overstated.
D) expense to be overstated.
Corbin Corporation issued 300, $1,000, 11% bonds at 98. The entry to record this
transaction is:
A) debit Cash $300,000; credit Bonds Payable $294,000; credit Discount on Bonds
Payable $6,000.
B) debit Cash $294,000; credit Bonds Payable $294,000.
C) debit Cash $300,000; credit Bonds Payable $300,000.
D) debit Cash $294,000; debit Discount on Bonds Payable $6,000; credit Bonds
Payable $300,000.
A debit to the Capital account was posted to an expense account. This would cause:
A) assets to be overstated.
B) liabilities to be understated.
C) capital to be overstated.
D) expense to be overstated.
Payment for merchandise sold on credit for $100 subject to 1/10 n/30 was received
within the discount period$99 was received. This was recorded with a debit to Sales
Discounts for $1, a debit to Cash for $99, and a credit to Accounts Receivable $100, but
no mention was made of the subsidiary ledger account. This error will cause:
A) the net income for the period to be overstated.
B) the net income for the period to be understated.
C) the control account to not agree with the subsidiary ledger.
D) the assets to be overstated.
Kate’s earnings during the month of May were $1,200. Her earnings for the year prior to
May were $12,300. Kate’s employer is subject to state unemployment of 2.0% and
federal unemployment taxes of 0.8% on the first $7,000. The employer’s unemployment
payroll tax expense for May is:
A) $10.40.
B) $26.00.
C) $0.
D) $36.40.
The financial statement that shows revenue and expenses for a period of time is the:
A) balance sheet.
B) income statement.
C) statement of owner’s equity.
D) statement of cash flows.
List and discuss the following:
a. Rights of common stockholders
b. Rights of preferred stockholders
Doug paid $1,200 on a one-year insurance policy on March 1. The entry included a
debit to Prepaid Insurance. The adjusting entry on December 31 would include a:
A) debit to Prepaid Insurance for $1,000; and a credit to Cash for $1,000.
B) debit to Insurance Expense for $1,000; and a credit to Prepaid Insurance for $1,000.
C) debit to Insurance Expense for $1,200; and a credit to Prepaid Insurance for $1,200.
D) debit to Cash for $1,200; and a credit to Prepaid Insurance for $1,200.
A restrictive endorsement on a check:
A) can be further endorsed by someone else.
B) is the safest endorsement for businesses.
C) permits the bank to use its best judgment.
D) must be endorsed by the company president.
The Overhead-Applied account is used for the:
A) application of overhead to production and it has a credit balance.
B) accumulation of all actual overhead costs and it has a credit balance.
C) application of overhead to production and it has a debit balance.
D) accumulation of all actual overhead costs and it has a debit balance.
Transactions involving the purchase and sale of fixed assets would be considered:
A) buying and selling activities.
B) financing activities.
C) operating activities.
D) investing activities.
Bonds that are backed solely by the general credit of the corporation issuing the bonds
are called:
A) callable bonds.
B) debenture bonds.
C) indenture bonds.
D) convertible bonds.
The bank statement does NOT show:
A) the beginning bank balance of the cash at the start of the month.
B) the checks the bank has paid and any deposits received.
C) any other charges or additions to the bank balance.
D) outstanding checks.
If, on the comparative balance sheet, Accounts Payable has increased, the amount of
increase would be:
A) added to net income on the statement of cash flows (indirect method).
B) subtracted from net income on the statement of cash flows (indirect method).
C) ignored because cash is not involved.
D) None of these answers is correct.
An adjustment that must be made for the accrued interest on a note payable would
include a:
A) credit to Interest Expense.
B) debit to Interest Expense.
C) debit to Interest Payable.
D) credit to Notes Payable.
Hall Novelty Shop uses a periodic inventory system. It sold 65 balloons during April.
Other data for April includes:
Cost of goods sold under the weighted-average method (rounded to the nearest dollar)
is:
A) $52.
B) $432.
C) $234.
D) $48.
As the past due time increases for an account, the likelihood of collecting that account:
A) usually goes down
B) usually goes up.
C) Time does not affect collectibility.
D) None of the above
The journal entry to record the entry of a customer’s nonsufficient funds check would
include a:
A) debit to Revenue.
B) credit to Cash.
C) debit to Accounts Payable.
D) credit to Accounts Receivable.
The credit portion of the adjustment for the depletion of a coal mine was credited to the
Coal Mine account. This error would cause:
A) the period’s net income to be overstated.
B) the period’s net income to be understated.
C) the period end assets to be overstated.
D) None of these is correct.
A statement of cash flows would NOT disclose the effect of which of the following
transactions?
A) Stock dividends declared
B) Bonds payable issued
C) Purchase of treasury stock
D) Capital stock issued to acquire fixed assets
What would be the depreciation expense using double declining-balance to compute the
expense for year 2 of a machine costing $20,000, when residual value is $3,000, and
useful life is 4 years?
A) $3,600
B) $6,000
C) $5,000
D) $3,000
Which of the following entries records the acquisition of office supplies for cash?
A)
B)
C)
D)
The entry to record the payment of office salaries would be:
A) Debit Cash; Credit Accounts Receivable
B) Debit Cash; Credit Salaries Expense
C) Debit Salaries Expense; Credit Accounts Payable
D) Debit Salaries Expense; Credit Cash
Laird Corporation bought $5,000 of merchandise from Woods Corporation, terms 2/10,
n/30. The company uses the periodic inventory system and the voucher system. The
journal entry to record the payment under the net method after the discount period
would be to:
A) debit Vouchers Payable $5,000 credit Cash $5,000.
B) debit Vouchers Payable $5,000; credit Discounts Lost $100; credit Cash $4,900.
C) debit Vouchers Payable $4,900; credit Cash $4,900.
D) debit Vouchers Payable $4,900; debit Discounts Lost $100; credit Cash $5,000.
A distribution to stockholders in the form of stock is called a:
A) stock dividend.
B) stock split.
C) stock conversion.
D) cash dividend.
The physical count of inventory was incorrect, which overstated the ending inventory.
This would cause:
A) Cost of Goods Sold to be overstated.
B) Cost of Goods Sold to be understated.
C) gross profit to be understated.
D) operating expenses to be understated.
Which account is classified as a contra-asset?
A) Bad Debts Expense
B) Allowance for Doubtful Accounts
C) Sales Returns and Allowances
D) Sales Discounts
A form used in business to place an order for the buying of goods from a seller is:
A) purchase requisition.
B) purchase order.
C) purchase demand.
D) purchases returns.
The following information is given for Sunny Corporation:
Net income $40,000
Depreciation expense 6,000
Decrease in accounts receivable 5,000
Increase in supplies on hand 2,000
Sale of common stock 40,000
Purchase of equipment for cash 40,000
Payment of dividends 6,000
Increase in accounts payable 5,000
The indirect method is used. The beginning Cash balance is $23,000.
Required:
Answer the following questions with the information provided above.
a) The cash flow from operating activities is ________.
b) The cash flow from investing activities is ________.
c) The cash flow from financing activities is ________.
d) The net change in cash is ________.
e) The ending balance of cash is ________.
A decrease in long-term note payable would mean:
A) an increase of cash flow from investing activities.
B) a decrease of cash flow from investing activities.
C) an increase of cash flow from financing activities.
D) a decrease of cash flow from financing activities.