Income Summary, before closing to Capital, contains a debit balance of $110 and a
credit balance of $200. What is the entry to close Income Summary to Capital?
A) Debit Income Summary $100; credit Capital $200
B) Debit Income Summary $86; credit Capital $110
C) Debit Capital $90; credit Income Summary $90
D) Debit Income Summary $90; credit Capital $90
If Cash is $1,595 in 20X2 and $3,671 in 20X1, what is the percent of increase or
(decrease) from 20X1 to 20X2?
A) 56.55%
B) (56.55%)
C) 36.12%
D) (36.12%)
The document indicating to the customer that the seller is reducing the amount owed by
the customer is:
A) credit memorandum.
B) sales discount.
C) sales returns and allowances.
D) debit memorandum.
What is Jane’s rate of return on total assets if total assets are $125,000, net income is
$2,000, interest expense is $1,600, and income tax is $3,000?
A) 4.66%
B) 5.28%
C) 5.65%
D) 2.33%
A company installed a new engine in their delivery vehicle. This is an example of a(n):
A) addition.
B) betterment.
C) extraordinary repair
D) revenue expenditure.
The basis on which profits and losses are shared is governed by:
A) the SEC.
B) the IRS.
C) the partnership agreement.
D) the partners, and must be shared equally.
Renzi’s Volleyball Gym purchased equipment for $1,200. It made a down payment of
$500 with the remainder on account. The journal entry to record this transaction is:
A)
B)
C)
D)
The first step of the accounting cycle is:
A) recording journal entries.
B) posting to the ledger.
C) preparing a trial balance.
D) analyzing business transactions.
The accrual of an expense was not recorded. This would:
A) overstate assets and overstate liabilities.
B) overstate expenses and understate liabilities.
C) understate expenses and overstate liabilities.
D) understate expenses and understate liabilities.
The journal entry to write off an account judged to be uncollectible under the allowance
would include a credit to:
A) Sales.
B) Accounts Receivable.
C) Allowance for Doubtful Accounts.
D) Bad Debts Expense.
Which of the following is NOT a direct departmental expense in a sales department?
A) Sales salaries
B) Delivery expense for unrelated items
C) Advertising for the sales department
D) All are direct departmental expenses.
Applying the ratio based on investment method, compute Taylor and Timmy’s share of
net income if Taylor invested $400,000 and Timmy invested $600,000. Net income was
$75,000.
A) Taylor, $15,000; Timmy, $60,000
B) Taylor, $37,500; Timmy, $37,500
C) Taylor, $30,000; Timmy, $45,000
D) None of these answers is correct.
A credit customer purchased $450 worth of items. Two days later, the customer returned
$300 worth of those items. The entry to record this under the perpetual inventory
method would include:
A) a debit to Sales Returns and Allowances $300
B) a credit to Merchandise Inventory for our cost.
C) a debit to Cost of Goods Sold for our cost.
D) a credit to Sales Returns and Allowances $300
The maturity value of a $5,000, 10%, 9-month note is:
A) $375.
B) $5,000.
C) $5,375.
D) $4,625.
Accounts in which the balances are carried over from one accounting period to the next
are called:
A) real accounts.
B) nominal accounts.
C) temporary accounts.
D) zero accounts.
When the trial balance includes a debit column total of $10,350 and a credit column
total of $10,950, it is probable that:
A) a transposition error occurred.
B) a $300 debit was recorded twice.
C) a $300 credit was recorded twice.
D) a $300 debit was recorded as a credit.
A promissory note issued when receiving a time extension on an amount owed to a
suppler would have which effect on the categories?
A) Total assets would be increased.
B) Total liabilities would be increased.
C) Owner’s equity would be decreased.
D) None of these answers is correct.
Barry’s Books uses a periodic inventory system. Barry’s Books sold 40 copies of
Helpful Hints during September. Other data for September include:
Ending inventory under the FIFO method is:
A) $480.
B) $515.
C) $590.
D) $500.
In the stockholders’ equity section of a balance sheet:
A) common stock is listed before preferred stock.
B) common stock is listed after preferred stock.
C) common stock is listed after retained earnings.
D) common stock is not listed.
Net Sales + Sales Discounts + Sales Returns and Allowances equals:
A) Net Loss.
B) Gross Sales.
C) Net Income from Operations.
D) None of the above
The check register would contain a column for all except:
A) a credit to Vouchers Payable.
B) a debit to Vouchers Payable.
C) a debit to Cash.
D) a debit to Purchases Discount.
If the allowance method of accounting for uncollectible receivables is used, what
general ledger account is debited to write off a customer’s account as uncollectible?
A) Allowance for Doubtful Accounts
B) Bad Debt Expense
C) Accounts Payable
D) Bad Debts Recovered
Smyth Company borrows $10,000 by giving the bank its own 12%, 60-day note. The
bank discounts the interest. The effective interest rate is
A) 12.84%.
B) 12.24%.
C) 12.00%.
D) 12.42%.
The net income before taxes for the year ended was $320,000. Equity for common
stockholders’ at the end of the year was $1,600,000 and $1,400,000 at the beginning of
the year. The return on common stockholders’ equity would be:
A) 87.50%.
B) 21.43%.
C) 20.00%.
D) 18.75%.
The post-closing trial balance is prepared from:
A) the adjustments column on the worksheet.
B) the balance sheet columns on the worksheet.
C) the trial balance columns on the worksheet.
D) the general ledger.
The twelve-month period a business chooses for its accounting period is a(n):
A) calendar year.
B) accounting period.
C) fiscal year.
D) accounting cycle.
Partners Jessica and Jill receive salary allowances of $5,000 and $10,000, respectively.
They share income and losses in a 3:1 ratio for Jessica and Jill, respectively. If the
partnership suffers a $21,000 loss, by how much would Jessica’s capital decrease?
A) $15,750
B) $10,750
C) $16,000
D) $22,000
The revenue of Carol’s Environmental Services for Years 1, 2, and 3 are $40,000,
$60,000 and $80,000, respectively. Year 1 is the base year. The trend percentage for
Year 3 is:
A) 50%.
B) 150%.
C) 200%.
D) 133%.
Scooters Doll Flower Company on July 1 issued 10% 10 year, $600,000 bonds for
$564,149. This price will yield a market rate of 11%. Interest dates are June 30 and
December 31. Prepare the journal entries to record:
a. Issuance of the bond.
b. Payment for the first semiannual interest period plus amortization of the discount
using the interest method.
c. Payment for the second semiannual interest period plus amortization of the discount
using the interest method.
For the payee, being given additional time to settle an account with issuance of a note
results in a shift of:
A) assets from Notes Receivable to Accounts Receivable.
B) assets from Accounts Receivable to Notes Receivable.
C) liabilities from Notes Payable to Accounts Payable.
D) liabilities from Accounts Payable to Notes Payable.
Residual value is the:
A) estimated value of the asset when it is purchased.
B) estimated value of the asset at the end of its useful life.
C) cost of the asset.
D) same as book value.
When making the adjustment for accrued interest, the Bond Premium account was not
taken into account. This error would cause:
A) the period end assets to be overstated.
B) the period end liabilities to be understated.
C) the period’s net income to be understated.
D) None of the above is correct.
How often is a 940 filed?
A) Monthly
B) Annually
C) Weekly
D) Quarterly