Which of the following would be listed as a current liability?
A) Cash
B) Notes Payable (due in two years)
C) Supplies
D) Accounts Payable
If Salaries and Wages Expense is $450,000 during the year and the beginning and
ending balances of Salaries and Wages Payable are $18,000 and $16,500, respectively,
the cash paid to employees is:
A) $450,000.
B) $433,500.
C) $448,500.
D) $451,500.
Which of the following applies to Accounts Payable?
A) They can be outstanding for more than one year.
B) They charge interest.
C) It is an amount a business is obligated to repay.
D) They are documented using formal documents.
A company has net income of $5.6 million and earnings per share of $2.00. Average
common stockholders’ equity is $32 million. The company’s current stock price is $10
per share. What is its Price/Earnings (P/E) ratio?
A) 0.2
B) 5.0
C) 0.175
D) 5.7
How competitors calculate depreciation is most likely to affect comparisons between
competitors if property, plant and equipment:
A) makes up a large percentage of assets and average useful lives are fairly different.
B) makes up a small percentage of assets and assets are financed in a different way.
C) makes up a small percentage of assets and average useful lives are fairly similar.
D) is primarily leased in the industry, not purchased.
Which of the following is the correct sequence of steps in the accounting cycle?
A) Preparation of journal entries, posting to T-accounts, preparation of financial
statements, and preparation of unadjusted trial balance.
B) Posting to T-accounts, preparation of journal entries, preparation of unadjusted trial
balance, and preparation of financial statements.
C) Preparation of journal entries, posting to T-accounts, preparation of unadjusted trial
balance, and preparation of financial statements.
D) Preparation of financial statements, preparation of journal entries, posting to
T-accounts, preparation of unadjusted trial balance.
Which of the following statements about a multistep income statement is correct?
A) It groups all revenues together.
B) It reports a different amount of net income than a single-step income statement.
C) It includes expenses that would not appear on a single-step income statement.
D) A key measure available on a multistep income statement is the amount of profit
earned over the cost of goods sold.
Which of the following would cause a trial balance to be out of balance?
A) A transaction was recorded twice.
B) A transaction was not recorded.
C) A transaction was posted to the wrong accounts.
D) Only the credit of a transaction was recorded.
A retail store that drops all of its product prices by 25% will experience a(n) ________
in its overall gross profit percentage but may experience a(n) ________ in sales
volume.
A) increase, increase
B) decrease, decrease
C) increase, decrease
D) decrease, increase
Which of the following is not a commonly used internal control?
A) Mandatory vacations
B) Anonymous hotlines
C) Bonding employees
D) Consolidating duties
Your company rents computers to local businesses and schools. You have 1,000
computers with a book value of $160,000. As a result of changing technology, your
computers are more difficult to rent so you must drastically reduce your rental price,
which causes a decrease in estimated future cash flows. The fair value of the computers
is estimated to be $125,000 because of their outdated technology. Your company should
report an asset impairment loss of:
A) $160,000.
B) $125,000.
C) $35,000.
D) $0.
Companies using a perpetual inventory system:
A) never physically count their inventory.
B) must count their inventory at least once a week.
C) still need to count the inventory at the end of the period.
D) always know the actual amount in inventory from their accounting records.
Flynn Company purchased a building for $400,000. At the end of the current year, the
book value of the building is $220,000 and its fair value is $180,000. Assuming the
building is rented to a tenant, the sum of future cash flows from the rental of the
building is expected to be $160,000. What is the amount of impairment loss?
A) $0
B) $20,000
C) $40,000
D) $120,000
In the U.S., Generally Accepted Accounting Principles (GAAP) are established by the:
A) International Accounting Standards Board (IASB).
B) Public Company Accounting Oversight Board (PCAOB).
C) Financial Accounting Standards Board (FASB).
D) American Institute of Certified Public Accountants (AICPA).
Your company sells $50,000 of one-year, 10% bonds for an issue price of $52,000. The
journal entry to record this transaction will include a credit to Bonds Payable in the
amount of:
A) $50,000.
B) $52,000.
C) $55,000.
D) $57,000.
If a company is paid in full for services provided this month, how will the basic
accounting equation be affected?
A) Liabilities will decrease.
B) Stockholders’ equity will increase as revenue is recorded.
C) Liabilities will increase.
D) Assets will decrease.
Features of common stock usually include all of the following except:
A) voting rights.
B) dividends.
C) primary claim to the company’s assets in case of liquidation.
D) preemptive rights.
If a company’s P/E ratio is 12.5 and the company’s stock price is $17.50 per share then
the company’s EPS is:
A) $0.71.
B) $1.40.
C) $5.00.
D) $0.40.
Company X has net sales revenue of $1,250,000, cost of goods sold of $760,000, and
all other expenses of $290,000. The beginning balance of stockholders’ equity is
$400,000 and the beginning balance of fixed assets is $361,000. The ending balance of
stockholders’ equity is $600,000 and the ending balance of fixed assets is $389,000. The
fixed asset turnover ratio is closest to:
A) 0.53.
B) 2.50.
C) 3.33.
D) 0.80.