From the following list, select the proper section from the statement of cashflows in whi
ch it would beclassified.
a. Operating Activities
b. Investing Activities
c. Financing Activities
Sold equipment no longer used in the business
The FASB standards do not have a specific rule that requires residual value and asset
life to be reviewed annually for property, plant, and equipment.
a. True
b. False
The group within an organization that is responsible for monitoring and evaluating the
internal control system is called:
a. the audit committee.
b. the internal audit staff.
c. the board of directors.
d. the accounting staff.
If a company erroneously records a $500 deposit as $400 in its books, which of the
following must occur when reconciling the bank statement?
a. The company will have to increase the balance per the bank statement by $100.
b. The company will have to increase the balance per the books by $100.
c. The company will have to decrease the balance per bank statement by $100.
d. None of the above
An adjusting entry could not consist of:
a. A debit to a liability and a credit to revenue.
b. A debit to an expense and a credit to a liability.
c. A debit to an expense and a credit to an asset.
d. A debit to an expense and a credit to revenue.
Cost of goods sold is equal to
a. the total amount of merchandise purchased during the year.
b. the cost of merchandise purchased plus transportation-in costs less ending inventory.
c. the cost of merchandise purchased plus transportation-in costs plus beginning
inventory minus purchase returns and allowances and purchase discounts minus ending
inventory.
d. the cost of merchandise purchased plus transportation-in costs plus beginning
inventory minus purchase returns and allowances and purchase discounts.
Each account has a normal balance. For the following list of accounts, indicate whether
the normal balance of each is a debit or a credit.
a. Debit
b. Credit
Unearned Advertising Fees
Gordon Vending, a sole proprietorship, had the following balances and transactions
during 2015: beginning capital, $40,000; contribution of cash to the business by the
owner, $15,000; revenue, $60,000; expenses, $35,000; withdrawal by the owner,
$5,000. What is the amount of the ending capital balance?
a. $40,000
b. $60,000
c. $75,000
d. $85,000
Some analysts properly refer to a company’s profit margin as its return on assets.
a. True
b. False
The statement of stockholders’ equity for Jutras Corporation shows an increase in the
Common Stock account of $8,000, an increase in Additional Paid-in Capital–Common
in the amount of $22,000, and an increase in Retained Earnings of $50,000. If the stock
has a par value of $3 and dividends of $10,000 were declared and paid during the year,
what is the amount of net income for the year?
a. $40,000
b. $50,000
c. $60,000
d. $90,000
Assume that the current ratio is 2:1 for the company in question. Show the effect of
each of the transactions below on total assets and the current ratio by using one of the
following symbols in each box to complete the table. If the numerator and denominator
of a ratio both increase or both decrease by the same amount, the effect of the event on
the ratio is “insufficient data.”
$2,000 invested today at 12% with compound interest will yield $2,480 in 2 years.
a. True
b. False
Which one of the following items would be subtracted from the balance per books in a
bank reconciliation
a. Outstanding checks
b. Deposit in transit
c. Service charges
d. Interest on customer note
The accounts receivable turnover ratio is computed by dividing net income by average
accounts receivable.
a. True
b. False