Stable Company issued $500,000 of 6%, 5-year bonds at 98, with interest paid annually.
Assuming straight-line amortization, what is the total interest cost of the bonds?
a. $150,000
b. $160,000
c. $145,000
d. $140,000
Answer:
Which of the following is not performed by the payroll department?
a. Preparation of payroll checks
b. Maintaining payroll records
c. Signing of payroll checks
d. Preparation of payroll tax returns
Answer:
The following is selected information from Motley Corporation for the fiscal year
ending October 31, 2015.
Based on the accrual basis of accounting, what is Motley Corporation’s net income for
the year ending October 31, 2015?
a. $72,000.
b. $104,000.
c. $139,000.
d. $155,000.
Answer:
The two fundamental qualities of useful information are
a. verifiability and timeliness.
b. relevance and faithful representation.
c. comparability and flexibility.
d. understandability and consistency.
Answer:
If a company acquires a 40% common stock interest in another company,
a. the equity method is usually applicable.
b. all influence is classified as controlling.
c. the cost method is usually applicable.
d. the ability to exert significant influence over the activities of the investee does not
exist.
Answer:
On a classified balance sheet, current assets are customarily listed
a. in alphabetical order.
b. with the largest dollar amounts first.
c. in the order of liquidity.
d. in the order of acquisition.
Answer:
Unearned revenues are
a. cash received and a liability recorded before services are performed.
b. revenue for services performed and recorded as liabilities before they are received.
c. revenue for services performed but not yet received in cash or recorded.
d. revenue for services performed and already received in cash and recorded.
Answer:
Wesley Hospital installs a new parking lot. The paving cost $40,000 and the lights to
illuminate the new parking area cost $25,000. Which of the following statements is true
with respect to these additions?
a. $40,000 should be debited to the Land account.
b. $25,000 should be debited to Land Improvements.
c. $65,000 should be debited to the Land account.
d. $65,000 should be debited to Land Improvements.
Answer:
Noble Company had net income of $175,000 and net sales of $625,000 in 2015. The
company’s total assets for 2014/2015 averaged $4,000,000. Its common stockholders’
equity for the period averaged $2,340,000. Calculate (a) profit margin, (b) return on
assets, and (c) return on common stockholders’ equity.
Answer:
Posting
a. should be performed in account number order.
b. accumulates the effects of journalized transactions in the individual accounts.
c. involves transferring all debits and credits on a journal page to the trial balance.
d. is accomplished by examining ledger accounts and seeing which ones need updating.
Answer:
The declining-balance method of depreciation produces
a. a decreasing depreciation expense each period.
b. an increasing depreciation expense each period.
c. a declining percentage rate each period.
d. a constant amount of depreciation expense each period.
Answer:
Canton Manufacturing declared a 10% stock dividend when it had 150,000 shares of $3
par value common stock outstanding. The market price per common share was $12 per
share when the dividend was declared. The entry to record this dividend declaration
includes a credit to
a. Stock Dividends for $45,000.
b. Common Stock Dividends Distributable for $180,000.
c. Common Stock for $45,000.
d. Paid-in Capital in Excess of Par for $135,000.
Answer:
The fair value principle is applied for
a. all assets.
b. current assets.
c. buildings.
d. investment securities.
Answer:
Changes in pay rates during employment should be authorized by the
a. human resources department.
b. payroll department.
c. treasurer’s department.
d. timekeeping department.
Answer:
Paden Company purchased merchandise from Emmett Company with freight terms of
FOB shipping point. The freight costs will be paid by the
a. seller.
b. buyer.
c. transportation company.
d. buyer and the seller.
Answer:
For the basic accounting equation to stay in balance, each transaction recorded must
a. affect two or less accounts.
b. affect two or more accounts.
c. always affect exactly two accounts.
d. affect the same number of asset and liability accounts.
Answer:
Joanna Newsom owns and operates Joanna’s Burgers, a small fast food store, located at
the edge of City College campus in Newton, Ohio. After several very profitable years,
Joanna’s Burgers began to have problems. Most of the problems were related to
Joanna’s expansion of the eating area in the restaurant without corresponding increases
in the food preparation area. Joanna does not have the cash or financial backing to
expand further. She has therefore decided to sell her business.
Vivian Girls is interested in purchasing the business. However, she is located in another
city and is unfamiliar with Newton. She has asked Joanna why she is selling Joanna’s
Burgers. Joanna replies that her elderly mother requires extra care, and that her brother
needs help in his manufacturing business. Both are true, but neither is her primary
reason for selling. Joanna reasons that Vivian should not have asked her anyway, since
profitable businesses don’t come up for sale.
Required:
1> Identify the stakeholders in this situation.
2> Did Joanna act ethically in not revealing fully her reasons for selling the business?
Why or why not?
Answer:
A customer charges a treadmill at Annie’s Sport Shop. The price is $4,000 and the
financing charge is 9% per annum if the bill is not paid in 30 days. The customer fails to
pay the bill within 30 days and a finance charge is added to the customer’s account.
The accounts affected by the journal entry made by Annie’s Sport Shop to record the
finance charge are
a. Accounts Receivable
Cash
b. Cash
Finance Receivable
c. Accounts Receivable
Interest Payable
d. Accounts Receivable
Interest Revenue
Answer:
The book value of a plant asset is the difference between the
a. replacement cost of the asset and its historical cost.
b. cost of the asset and the amount of depreciation expense for the year.
c. cost of the asset and the accumulated depreciation to date.
d. proceeds received from the sale of the asset and its original cost.
Answer:
A stockholders’ equity statement shows
a. the names of each stockholder.
b. how profits are distributed to the various classes of stockholders.
c. the number of shares owned by each of the stockholders.
d. the changes in each stockholders’ equity account and in total stockholders’ equity
during the period.
Answer:
The board of directors may authorize more bonds than are issued.
Answer:
Record the following transactions for Graber Industries. The company uses the
straight-line amortization method.
December 31 Accrued interest and amortized discount.
Answer:
An employee earnings record is a cumulative record of each employee’s gross earnings,
deductions, and net pay during the year.
Answer:
Liabilities are generally classified as either ______________ or ______________ on a
classified balance sheet.
Answer:
The four major classifications of assets in a classified balance sheet are:
________________, ________________, ________________ and ________________.
Answer:
Compute Whiz Company’s adjusted cash balance per books based on the following
information:
Answer: