1) if a promissory note is dishonored, the payee should not record interest income.
2) when using the direct write-off method year-end adjustments for bad debt expense
must be made.
3) if a company uses the allowance method to account for uncollectible accounts, the
entry to write off an uncollectible account only involves balance sheet accounts.
4) two primary objectives of management are to achieve profitability and liquidity.
5) the purchase of a company that is in the same industry, but involved in a different
activity, is called a vertical acquisition.
6) a detailed stockholders equity section in the balance sheet will list the names of
individuals who are eligible to receive dividends on the date of record.
7) the economic resources that are owned by a business are called stockholders equity.
8) the most important element of the fraud triangle is rationalization.
9) current liabilities are expected to be paid within one year or the operating cycle,
whichever is longer.
10) inventory methods such as fifo and lifo deal more with flow of costs than with flow
of goods.
11) cash provided by operations is generally equal to operating income.
12) a periodic inventory system does not require a detailed record of inventory items.
13) a debit means that an account has been decreased.
14) jack’s copy shop bought equipment for $90,000 on january 1, 2011. jack estimated
the useful life to be 3 years with no salvage value, and the straight-line method of
depreciation will be used. on january 1, 2012, jack decides that the business will use the
equipment for a total of 5 years. what is the revised depreciation expense for 2012?
a.$30,000
b.$12,000
c.$15,000
d.$22,500
15) which of the statements below is not true?
a.an adjusted trial balance should show ledger account balances
b.an adjusted trial balance can be used to prepare financial statements
c.an adjusted trial balance proves the mathematical equality of debits and credits in the
ledger
d.an adjusted trial balance is prepared before all transactions have been journalized
16) which statement is correct?
a.accumulated depreciation should always have a debit balance in the adjusted trial
balance
b.accumulated depreciation is added to the long-term liabilities on the balance sheet
c.accumulated depreciation, office equipment represents the total cost of office
equipment that has expired up to the date of the balance sheet
d.accumulated depreciation is used to reveal the value of the related asset on the date of
the balance sheet
17) the statement of cash flows will not report the
a.amount of checks outstanding at the end of the period
b.sources of cash in the current period
c.uses of cash in the current period
d.change in the cash balance for the current period
18) which of the following is not a basic principle of cash management?
a.increase the speed of collection on receivables
b.maintain idle cash
c.keep inventory levels low
d.delay payment of liabilities
19) if you are able to earn a 15% rate of return, what amount would you need to invest
to have $2,000 one year from now?
a.$1,980.20
b.$1,750.00
c.$1,700.00
d.$1,739.14
20) on january 15, nifty company sells merchandise on account to martinez associates
for $2,000 with terms 3/10, n/05. on january 20, martinez returns merchandise worth
$400 to nifty. on january 24, payment is received from martinez for the balance due.
what is the amount of cash received?
a.$1,600
b.$1,552
c.$1,540
d.$1,120
21) sprague associates sold office furniture for $16,000. the furniture had an original
cost of $48,000 and accumulated depreciation of $24,000. ignoriing the tax effect, as a
result of the sale
a.net income will increase $16,000
b.net income will increase $8,000
c.net income will decrease $8,000
d.net income will decrease $16,000
22) karlin company gathered the following reconciling information in preparing its april
bank reconciliation:
the adjusted cash balance per books on april 30 is
a.$12,300
b.$11,760
c.$11,100
d.$12,220
23) which sales accounts normally have a debit balance?
a.sales discounts
b.sales returns and allowances.
c.both (a) and (b)
d.neither (a) and (b)
24) a company that receives money in advance of performing a service
a.debits cash and credits prepaid services.
b.debits unearned fees and credits accounts payable.
c.debits cash and credits unearned service revenue.
d.debits cash and credits accounts receivable.
25) specific identification must be used for inventory valuation where the inventory
items are not interchangeable under
26) knight company issued $400,000, 10-year bonds and agreed to make annual
deposits of $30,350 to a fund. the deposits are made at the end of each year to a fund
paying 6% interest compounded annually. what amount will be in the fund at the end of
the 10 years?
27) sue sloan and associates is a financial planning service. the account balances at
december 31, 2014 are shown by the following alphabetical list:
instructions
prepare a trial balance with the accounts arranged in financial statement order.
28) an unrealized gain or loss on available-for-sale securities is reported as a separate
component of _________________.
29) closing entries deal primarily with the balances of permanent accounts.