The sale of assets for liquidation purposes of a partnership is called:
A) a sheriff’s sale.
B) dissolution.
C) net liquidation.
D) None of the above
The entry to close the Fees Earned account would cause:
A) the Capital account balance to increase.
B) the Capital account balance to decrease.
C) the Fees Earned account to decrease.
D) None of these is correct.
Sold merchandise (perpetual) on account would have which effect on the following
categories?
A) Total Accounts Receivable would increase.
B) Total revenues would be increased.
C) Total liabilities would increase.
D) A and B would definitely occur.
The net income reported on the income statement for the current year was $40,000.
Depreciation Expense recorded on fixed assets was $21,000. What is the net cash flow
from operations that would appear on a cash flow statement using the indirect method?
A) $40,000
B) $61,000
C) $21,000
D) $19,000
If a credit memorandum is issued, what account will be decreased on the seller’s books?
A) Accounts Receivable
B) Accounts Payable
C) Sales
D) Sales Returns and Allowances
A voucher is made for every:
A) cash receipt.
B) cash payment.
C) accounts payable transaction.
D) accounts receivable transaction.
Todd earns an hourly rate of $20 and had taxes withheld totaling $200. What would his
net earnings be if he worked 44 hours (assuming double time over 40 hours)?
A) $760
B) $780
C) $720
D) $860
Net income before taxes – preferred dividends divided by common stockholders’ equity
is the calculation for:
A) earnings per share.
B) rate of return on stockholders’ equity.
C) rate of return on total assets.
D) return on sales.
Cox Corporation has issued 2,000 shares of stock. Janis owns 500 shares. If the
corporation issues an additional 500 shares, how many shares does Janis have the
preemptive right to purchase?
A) 100 shares
B) 125 shares
C) 250 shares
D) 500 shares
On a worksheet, the balance sheet debit column total is $1,000 and the credit column
total is $2,000. Which of the following statements is correct?
A) The company had a net income of $1,000.
B) The company had a loss of $1,000.
C) The company’s expenses were greater than revenues.
D) None of the above is correct.
Tim and Bev are partners who share profits and losses in the ratio of 6:4 for Tim and
Bev, respectively. Their capital balances are $45,000 and $25,000, respectively. If Jenny
is admitted to the partnership for $25,000 for a one-fourth interest, her capital balance
will be:
A) $26,667.
B) $20,000.
C) $25,000.
D) $23,750.
The exclusive right to produce and sell musical work is called a:
A) copyright.
B) franchise.
C) patent.
D) goodwill.
Dave Brown’s cumulative earnings are $108,000, and his gross pay for the week is
$6,200. If the FICA rates are: OASDI 6.2% on a limit of $117,000 and Medicare is
1.45%, what are his FICA-OASDI and FICA-Medicare taxes for the week?
A) $0; $89.90
B) $0; $0
C) $384.40; $89.90
D) $384.40; $0
Which statement below best describes the quick (acid test) ratio?
A) The acid test ratio considers only the most liquid assets: cash, accounts receivable,
and temporary investments.
B) The current ratio includes only the assets most easily converted into cash.
C) The acid test adds merchandise inventory and prepaid expenses in the computation
of current assets.
D) None of these answers is correct.
What inventories are included in determining the cost of goods sold?
A) Beginning and ending finished goods
B) Beginning and ending raw materials
C) Beginning and ending work-in-process
D) None of these answers is correct.
Which is an advantage of a sole proprietorship form of business?
A) There is limited personal risk.
B) The business can continue indefinitely.
C) The owner makes all the decisions.
D) None of these answers is correct.
A corporation:
A) can continue indefinitely.
B) is owned by stockholders.
C) has limited risk to stockholders.
D) All of the above
Mount Company purchased a machine at an invoice cost of $25,000 subject to terms of
2/10, n/30. The discount was taken. Additional costs were installation, $1000; insurance
on the machine after it was in operation, $500. The total cost to be added to the
machinery account is:
A) $24,500.
B) $25,500.
C) $26,500.
D) $26,000.
Assume the following account balances immediately after an interest payment date:
If the bonds are retired immediately at a total cost of $205,000, the journal entry to
record this event is:
A)
B)
C)
D) None of these answers is correct.
J&L Lumber reports Purchases of $66,000. If Purchases Returns and Allowances are
$6,000 and Purchases Discounts are $1,500, what are the net Purchases?
A) $54,000
B) $52,500
C) $67,500
D) $58,500
The change fund is what type of account?
A) Expense
B) Contra-asset
C) Asset
D) Liability
The Accounts Receivable account has total debit postings of $2,000 and credit postings
of $1,200. The balance of the account is:
A) $800 debit.
B) $800 credit.
C) $2,600 credit.
D) $2,600 debit.
What is X-cel Company’s net income or net loss if it had Revenue of $1,800, Salary
Expense of $500, Utility Expense of $250, and Withdrawals of $5,000 during October?
A) $50 net income
B) $1,050 net loss
C) $1,050 net income
D) $50 net loss
A summary record of each person’s earnings, deductions, and net pay is called a(n):
A) payroll register.
B) W-4.
C) employee individual earnings record.
D) general journal.
A list of creditors with balances owed is called:
A) a schedule of accounts receivable.
B) a schedule of accounts payable.
C) a list of suppliers.
D) a trade list.
If Rick’s sales decreased from $90,000 (year 1) to $45,000 (year 2) and its cost of goods
sold decreased from $40,000 (year 1) to $15,000 (year 2), then vertical analysis based
on sales would show the following for cost of goods sold for the two periods:
A) 33.33% and 44.44%.
B) 44.44% and 33.33%.
C) 300% and 225%.
D) None of the above
To directly write off an account would require a debit to:
A) Allowance for Doubtful Accounts.
B) Accounts Receivable.
C) Bad Debts Expense.
D) Cash.
Incidental costs or assessments that should be charged to the Land account include:
A) installing a fence.
B) installing sewers.
C) clearing the property.
D) Both B and C are correct.
The business incurred an expense and paid it immediately. To record this:
A) an expense is debited and a liability is credited.
B) an expense is debited and an asset is credited.
C) an asset is debited and asset is credited.
D) None of these is correct.
A journal entry affecting three or more accounts is called a:
A) multi-level entry.
B) multi-step entry.
C) compound entry.
D) double entry.
Unlimited Doors showed supplies available during the year of $1,900. A count of the
supplies on hand as of October 31 is $800. The adjusting entry for Store Supplies would
include:
A) a debit to Store Supplies Expense for $800.
B) a credit to Store Supplies Expense for $800.
C) a debit to Store Supplies for $1,100.
D) a debit to Store Supplies Expense for $1,100.
Discuss the purpose of a classified balance sheet. Include a description of the major
balance sheet classifications including: current assets, plant and equipment, current
liabilities, and long-term liabilities.
Indicate which effect(s) each situation will have:
1. New check written
2. Recorded in the general journal
3. Recorded in auxiliary petty cash record
4. Petty cash voucher prepared
________ Bought coffee and rolls for a business meeting and used cash
Describe a stock subscription plan.
For each of the following, identify in Column 1 the balance the account will have in the
adjusted trial balance columns (debit or credit), in Column 2 the financial statement
column(s) in which the account balance will be found (income statement or balance
sheet), and in Column 3 the effect the account will have on the determination of net
income (increase, decrease, or none).
For each of the following, identify in column 1 the category to which the account
belongs, in column 2 the normal balance for the account, and in column 3 the financial
statement on which the account balance is reported.
From the following, calculate the cost of raw materials used and total manufacturing
costs:
Raw Materials Inventory, Sep. 1 $4,000
Raw Materials Inventory, Sep. 30 5,000
Work-in-Process Inventory, Sep. 1 6,000
Work-in-Process Inventory, Sep. 30 5,000
Raw Materials Purchased 8,000
Direct Labor 9,000
Depreciation Expense 7,000
Factory Utilities 3,000
Using the following accounts:
[1] Cash
[2] Bond Sinking fund
[3] Equipment
[4] Building
[5] Land
[6] Accounts payable
[7] Notes payable
[8] Bond payable
[9] Bond interest payable
[10] Premium on bonds payable
[11] Discount on bonds payable
[12] Common stock
[13] Retained earnings
[14] Sinking fund earned
[15] Bond interest expense
[16] Gain on retirement
[17] Loss on retirement
Indicate the account(s) to be debited and credited to record the following transactions.
Retired bonds plus interest previously accrued when the book value was beneath the
cost of retirement, cash was paid.
Debit ________ & ________ & ________ Credit ________
You have been hired by Jones to allocate his utilities to each department based on space
(in square footage).
Complete the assignment.
Shoe Dept. Jewelry Dept. Clothing
Dept. Total
Space (square feet) 25,000 5,000
70,000 100,000
Utilities
Cost
$50,000
Using the following accounts:
[1] Cash
[2] Bond Sinking fund
[3] Equipment
[4] Building
[5] Land
[6] Accounts payable
[7] Notes payable
[8] Bond payable
[9] Bond interest payable
[10] Premium on bonds payable
[11] Discount on bonds payable
[12] Common stock
[13] Retained earnings
[14] Sinking fund earned
[15] Bond interest expense
[16] Gain on retirement
[17] Loss on retirement
Indicate the account(s) to be debited and credited to record the following transactions.
Paid the bondholders the amount due, face value plus accrued interest, using the sinking
fund.
Debit ________ & ________ Credit ________
Assume that in Year 1, the ending merchandise inventory is overstated by $30,000. If
this is the only error in Year 1, fill in the items below, indicating which items will be
understated(U), overstated(O), or correctly(C) stated for Year 1.
Ending merchandise inventory Year 1 ________
Beginning merchandise inventory Year 1 ________
Cost of goods sold Year 1 ________
Gross profit Year 1 ________
Net income Year 1 ________
Ending owner’s capital Year 1 ________
For each of the following items, indicate (by placing an X) whether the item would be
found on the statement of cash flows in column 1, the direct approach for determining
the cash flows from operating activities, column 2, the indirect approach for
determining the cash flows from operating activities, column 3, cash flows from
investing activities, column 4, cash flows from financing activities. If you identify that
an item affects the cash flows from operation, indirect method, also indicate whether it
will be increasing (+) or decreasing (-) the cash flows.
If a plant asset is fully depreciated and discarded, no ________ or ________ will be
realized.
Given the following accounts:
[1] Cash in bank
[2] Petty cash
[3] Supplies
[4] Equipment
[5] Notes payable
[6] Vouchers payable
[7] FICA payable
[8] Wages payable
[9] Purchases
[10] Purchase discounts
[11] Discounts lost
[12] Repairs expense
[13] Interest expense
[14] Delivery expense
Indicate the account(s) to be debited and credited to record the following transactions.
The company uses the periodic inventory method.
Paid voucher #425.
Debit ________ Credit ________
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement on which the account balance is reported, and in Column 4 the account’s
nature (permanent/temporary).
Given the following accounts:
[1] Cash
[2] Accounts receivable
[3] Merchandise inventory
[4] Supplies
[5] Accounts payable
[6] Sales
[7] Sales returns and allowances
[8] Sales discounts
[9] Cost of goods sold
[10] Purchases
[11] Purchase returns and allowances
[12] Purchase discounts
[13] Freight-in
Indicate the account(s) to be debited and credited to record the following transactions.
Customer returned goods purchased on credit – Perpetual
Debit ________ & ________ Credit ________ & ________
The following data applies to the July 15 payroll for the Woodard Research Firm
(overtime is paid at 1 1/2)
Assume:
FICA-OASDI is 6.2% based on a limit of $117,000.
FICA-Medicare is 1.45%.
FUTA is .8% based on a limit of $7,000.
SUTA is 5.6% based on a limit of $7,000.
State income tax is 2.8%.
Compute the employer’s payroll tax.
Below is a list of departments; you are to identify each as either [1] a profit center or [2]
a cost center.
The snack shop for a ski resort. ________
