The goods a company has available to sell to customers are called:
A) Supplies.
B) Sales.
C) Cost of Goods Sold.
D) Merchandise Inventory.
Under MACRS, which of the following classes uses the straight-line method?
A) 10-year property
B) 15-year property
C) 24.5-year property
D) All of the above are correct.
Which of the following entries would record the payment of a utility bill?
A) Utilities Expense, debit; Cash, credit
B) Cash, debit; Utilities Expense, credit
C) Utilities Expense, debit; Accounts Payable, credit
D) Accounts Receivable, debit; Utilities Expense, credit
In the normal accounting cycle the:
A) financial statements are prepared after the adjusting entries are posted.
B) financial statements are prepared before the adjusting entries are posted.
C) adjusting and closing entries are journalized before the financial statements are
prepared.
D) post-closing trial balance is prepared before the closing entries are posted.
A bond sinking fund is a:
A) short-term investment.
B) long-term investment.
C) current liability.
D) long-term liability.
An acid test (quick) ratio of 0.75 to 1 would indicate:
A) a ratio that would not allow a company to pay off all current liabilities with quick
assets.
B) for every $0.75 of short-term debt there is $1.00 of quick assets to meet short-term
obligations.
C) for every $1 of current assets there is $0.75 of short-term debt.
D) Both A and B are correct.
At December 31, 201X, Brooke’s Horse Stable unadjusted Allowance for Doubtful
Accounts showed a credit balance of $432. An aging of the Accounts Receivable
indicates probable uncollectible accounts of $1,000. The year-end adjusting entry for
Bad Debts Expense:
A) includes a credit to the Allowance account for $568.
B) includes a debit to the Allowance account for $42.
C) includes a debit to the Allowance account for $822.
D) includes a credit to the Allowance account for $1,432.
Net pay equals:
A) gross pay less all deductions.
B) regular earnings + overtime earnings.
C) gross earnings.
D) net earnings + overtime earnings greater than the amount withheld from the
employee.
When a partnership is liquidated, the assets are sold and the cash realized is applied first
to the:
A) claims of creditors.
B) partner with the largest investment.
C) partners’ equity accounts.
D) partners according to their ownership interests.
The ending inventory for raw materials was overstated. This error will cause:
A) the cost of goods manufactured to be understated.
B) the cost of goods sold to be overstated.
C) the net income to be understated.
D) Answers A and B are correct.
The informal listing of the ledger accounts and their balances in the ledger to aid in
proving the equality of debits and credits is the:
A) journal.
B) balance sheet.
C) income statement.
D) trial balance.
The bank charged another company’s deposit to our account. This would be included on
the bank reconciliation as a(n):
A) addition to the balance per books.
B) subtraction from the balance per books.
C) subtraction from the balance per bank.
D) addition to the balance per bank.
Bond certificates state the:
A) market value and contract rate.
B) face value and contract rate.
C) market value and current interest rate.
D) face value and current interest rate.
Indicate the effect that each of the following transactions has on the cash balance. Use
(I) for increase, (D) for decrease, and (N) for no change.
a) ________ Increase in inventory, paid with cash
b) ________ Sale of common stock for cash
c) ________ Payment of dividends
d) ________ Depreciation expense for the period
e) ________ Payment of long-term debt
f) ________ Loan of money to another company
g) ________ Increase in Accounts Payable
h) ________ Purchase of equipment on account
The depreciation method which charges more expense in earlier years than in later
years is the:
A) straight-line method.
B) double declining-balance method.
C) units-of-production method.
D) All of the above are correct.
Calculate the missing figures (a-k) in each of the following independent scenarios.
The normal balance for Unearned Rent Revenue is:
A) a credit.
B) a debit.
C) zero.
D) dependent on circumstances.
Ken Applegate owned equipment with an original cost of $45,000 with $38,000 of
accumulated depreciation. The equipment was traded in on new equipment costing
$55,000 with a trade-in allowance of $6,000 and the balance in cash. Determine the
following.
a. The book value of the old machine was ________.
b. The loss on the exchange was ________.
c. The cost basis on the books for the new machine, assuming accounting rules, is
________.
Maria’s Blankets and Bedding had a sale of $450 to a charge customer, terms 1/15,
n/30. Maria should record this transaction as follows:
A) debit Accounts Receivable $450; credit Sales $450.
B) debit Cash $450; credit Sales $450.
C) debit Accounts Receivable $346.50; debit Sales Discounts $4.50; credit Sales $450.
D) debit Sales $450; credit Accounts Receivable $450.
All of the following are reasons to adjust the account balances at the end of the period,
except:
A) to accurately report the assets on the balance sheet.
B) to report all revenues earned during the period.
C) to report all expenses incurred during the period.
D) to correct any errors made during the period.
After payment is made, a notation is made on the:
A) check register.
B) voucher register.
C) back of the voucher.
D) All of these answers are correct.
Monica’s Closet received payment in full within the discount period for goods sold on a
$600 sales invoice, terms 2/10, n/30. Which entry records this payment?
A) Debit Accounts Receivable $600; credit Sales $600
B) Debit Cash $600; credit Accounts Receivable $600
C) Debit Cash $588, debit Sales Discount $12; credit Sales $600
D) Debit Cash $588, debit Sales Discount $12; credit Accounts Receivable $600
Owner’s Withdrawals would be found on the worksheet in the:
A) income statement debit column.
B) income statement credit column.
C) balance sheet debit column.
D) balance sheet credit column.
A debit to an asset account was posted as a debit to a liability account. This error would
cause:
A) assets to be understated.
B) liabilities to be overstated.
C) capital to be understated.
D) None of the above is correct.
If a loss of $70,000 is incurred in selling equipment having a book value of $225,000,
cash flow will increase:
A) $295,000.
B) $155,000.
C) $70,000.
D) by some other number.
Laura’s investment in a new partnership includes $2,000 cash and equipment at a fair
value of $7,000. The new partnership is assuming $1,500 of Laura’s accounts payable.
The partnership entry should be to:
A) debit Laura, Capital $7,500; debit Accounts Payable $1,500; credit Cash $2,000;
credit Equipment $7,000.
B) debit Cash $2,000; debit Equipment $7,000; credit Laura Capital, $9,000.
C) debit Cash $2,000; debit Equipment $7,000; credit Accounts Payable $1,500; credit
Laura, Capital, $7,500.
D) debit Laura, Investment $9,000; credit Capital $9,000.
Manufacturing costs do NOT include:
A) raw material.
B) selling expenses.
C) manufacturing overhead.
D) All of these answers are correct.
Sold merchandise subject to a sales tax, accepting cash. This will be recorded with:
A) a credit to an asset account.
B) a credit to a liability account.
C) a debit to Sales.
D) None of these is correct.
The financial statement on which Rental Income would appear is the:
A) income statement.
B) owner’s equity statement.
C) balance sheet.
D) trial balance.
The entry to record the payment of a cash dividend would include a:
A) debit to Dividends Payable.
B) debit to Retained Earnings.
C) credit to Cash.
D) Both A and C
Both employees and employers pay which of the following taxes?
A) FICA taxes (OASDI and Medicare)
B) FUTA tax
C) Federal income tax
D) Worker’s Compensation
Form 941 is filed:
A) monthly.
B) annually.
C) weekly.
D) quarterly.
What financial statement shows the amount for Freight-In?
A) Balance Sheet
B) Statement of Owner’s Equity
C) Income Statement
D) Trial balance
Mark’s Tree Service depreciation for the month is $500. The adjusting journal entry is:
A)
B)
C)
D)