Which of the following activities is excluded from the statement of cash flows under
IFRS?
a. Financing activities
b. Investing activities
c. Noncash investing and financing activities
d. Operating activities
Answer:
Marke Inc. had cash sales of $400,000 and credit sales of $1,150,000. The accounts
receivable balance increased $30,000 during the year. How much cash did Marke
receive from its customers during the year?
a. $1,520,000
b. $1,120,000
c. $1,550,000
d. $780,000
Answer:
After transaction information has been recorded in the journal, it is transferred to the
a. trial balance.
b. income statement.
c. book of original entry.
d. ledger.
Answer:
Assume the following cost of goods sold data for a company:
If 2014 is the base year, what is the percentage increase in cost of goods sold from 2014
to 2016?
a. 70.4%
b. 42%
c. 85.7%
d. 117%
Answer:
A company usually determines the amount of supplies used during a period by
a. adding the supplies on hand to the balance of the Supplies account.
b. summing the amount of supplies purchased during the period.
c. taking the difference between the supplies purchased and the supplies paid for during
the period.
d. taking the difference between the balance of the Supplies account and the cost of
supplies on hand.
Answer:
Abaco Enterprises had beginning inventory of $45,000 at March 1, 2015. During the
month, the company made purchases of $360,000. The inventory at the end of the
month is $51,000. What is cost of goods available for sale for the month of March?
a. $45,000
b. $51,000
c. $354,000
d. $405,000
Answer:
If expenses are paid in cash, then
a. assets will increase.
b. liabilities will decrease.
c. stockholders’ equity will increase.
d. assets will decrease.
Answer:
An error has occurred in the closing entry process if
a. revenue and expense accounts have zero balances.
b. the retained earnings account is credited for the amount of net income.
c. the dividends account is closed to the retained earnings account.
d. the balance sheet accounts have zero balances.
Answer:
The standard format of a journal would not include
a. a reference column.
b. an account title column.
c. a T-account.
d. a date column.
Answer:
In 2015, Warehouse 13 had net credit sales of $750,000. On January 1, 2015, Allowance
for Doubtful Accounts had a credit balance of $16,000. During 2015, $29,000 of
uncollectible accounts receivable were written off. Past experience indicates that the
allowance should be 10% of the balance in receivables (percentage of receivable basis).
If the accounts receivable balance at December 31 was $150,000, what is the required
adjustment to the Allowance for Doubtful Accounts at December 31, 2015?
a. $150,000
b. $29,000
c. $28,000
d. $31,000
Answer:
If an adjustment is needed for unearned revenues, the
a. liability and related revenue are overstated before adjustment.
b. liability and related revenue are understated before adjustment.
c. liability is overstated and the related revenue is understated before adjustment.
d. liability is understated and the related revenue is overstated before adjustment.
Answer:
Mofro’s Computer Repair Shop started the year with total assets of $300,000 and total
liabilities of $200,000. During the year, the business recorded $500,000 in computer
repair revenues, $300,000 in expenses, and Mofro paid dividends of $50,000. Mofro’s
stockholders’ equity changed by what amount from the beginning of the year to the end
of the year?
a. $100,000.
b. $150,000.
c. $200,000.
d. $250,000.
Answer:
Sales revenues are usually considered recognized when
a. cash is received from credit sales.
b. an order is received.
c. goods have been transferred from the seller to the buyer.
d. adjusting entries are made.
Answer:
Expenses incurred but not yet paid or recorded are called
a. prepaid expenses.
b. accrued expenses.
c. interim expenses.
d. unearned expenses.
Answer:
Which of the following accounts has a normal credit balance?
a. Purchases
b. Sales Returns and Allowances
c. Freight-In
d. Purchase Discounts
Answer:
Management should select the depreciation method that
a. is easiest to apply.
b. best measures the plant asset’s market value over its useful life.
c. best measures the plant asset’s contribution to revenue over its useful life.
d. has been used most often in the past by the company.
Answer:
The return on common stockholders’ equity is computed by dividing
a. net income by ending common stockholders’ equity.
b. net income by average common stockholders’ equity.
c. net income minus preferred dividends by ending common stockholders’ equity.
d. net income minus preferred dividends by average common stockholders’ equity.
Answer:
Engler Company purchases a new delivery truck for $55,000. The sales taxes are
$4,000. The logo of the company is painted on the side of the truck for $1,600. The
truck license is $160. The truck undergoes safety testing for $290. What does Engler
record as the cost of the new truck?
a. $61,050
b. $60,890
c. $59,000
d. $60,600
Answer:
Stockholders’ equity is often referred to as
a. residual equity.
b. leftovers.
c. spoils.
d. second equity.
Answer:
Nola Corporation gathered the following information for the fiscal year ended
December 31, 2015:
Sales $1,300,000
Extraordinary fire loss 110,000
Selling and administrative expenses 160,000
Cost of goods sold 900,000
Loss on sale of equipment 40,000
Nola Corporation is subject to a 30% income tax rate.
Instructions
Prepare a partial income statement, beginning with income before income taxes.
Answer:
For each of the following, determine the missing amounts.
Answer:
If ending inventory is understated, net income and assets will be
Answer:
Using the following data for Renfro, Inc., compute its asset turnover.
Answer:
A liability is classified as a current liability if the company is to pay it within the
forthcoming year.
Answer:
Three factors that affect the computation of periodic depreciation expense are (1)
_______________, (2) _______________, and (3) _________________.
Answer:
A merchandiser frequently has a need to use contra accounts related to the sale of
goods. Identify the contra accounts that have normal debit balances and explain why
they are not considered expenses.
Answer:
Closing entries are unnecessary if the business plans to continue operating in the future
and issue financial statements each year.
Answer:
If $800,000, 6% bonds are issued on January 1, and pay interest semiannually, the
amount of interest paid on July 1 will be $24,000.
Answer: