Use this information to answer the following question.
What is the present value of receiving $800 at the end of each year for three years,
assuming an APR of 7 percent?
A. $652.80
B. $1,952.40
C. $2,099.20
D. $2,244.00
Which of the following will not result in dissolution of a partnership?
A. Incapacitation of a partner
B. Negative capital balance of a partner
C. Bankruptcy of a partner
D. Admission of a new partner
During the most recent month, Ostriker Company began operations with a cash balance
of $0 and made made cash sales of $81,000. During this same time period, the company
paid $32,000 in cash expenses. Additionally, the company purchased supplies on
account, $34,000, made sales on account, $90,000, and received cash on the credit sales
$52,000.
a. If cash at the end of the month totals $74,000, how much cash was paid on account?
b. What is the total amount still to be paid?
c. What is the total amount still to be received?
Use this balance sheet and income statement to answer the following question. Use
ending balances whenever average balances are required for computing ratios.
The return on assets for National Textile is
A. 30 percent.
B. 150 percent.
C. 33-1/3 percent.
D. 24 percent.
The statement of cash flows would disclose the purchase of a building for cash
A. nowhere on the statement.
B. in the operating activities section.
C. in the investing activities section.
D. in the financing activities section.
Use this information to answer the following question.
The total dollar amount of assets to be classified as current assets is
A. $105,000.
B. $145,000.
C. $95,000.
D. $120,000.
Gomez Company purchases a piece of equipment on Jan. 2, 2014, for $30,000. The
equipment has an estimated life of eight years or 50,000 units of production and an
estimated residual value of $3,000. Lester uses a calendar fiscal year. The entry to
record the amount of depreciation for 2014, using the production method and assuming
8,000 units are produced, is
A. debit to Depreciation Expense, 4,000; credit to Cash, 4,000
B. debit to Cash, 4,160; credit to Accumulated Depreciation, 4,160
C. debit to Depreciation Expense, 4,320; credit to Accumulated Depreciation, 4,320
D. debit to Depreciation Expense, 4,800; credit to Accumulated Depreciation, 4,800
Which of the following are required to swear that financial reports are accurate and
complete?
A. accountants
B. managers
C. chief executives
D. board of directors
Compare and contrast the following terms:
a)Trade discount and sales discount.
b) FOB shipping point and FOB destination
The cost principle relates most closely to the
A. recognition point.
B. recognition issue.
C. valuation issue.
D. classification issue.
Prepare year-end adjusting entries for each of the following situations.
a. The Office Supplies account showed a beginning debit balance of $800 and
purchases of $1,000. The ending debit balance was $400.
b. Depreciation on buildings is estimated to be $7,600.
c. A one-year insurance policy was purchased for $6,000. Five months have passed
since the purchase.
d. Accrued interest on notes payable amounted to $1,500.
e. The company received a $14,400 advance payment during the year on services to be
performed. By the end of the year, one-third of the services had been performed.
Which of the following classifications represents the largest number of shares?
A. Authorized shares.
B. Outstanding shares.
C. Treasury shares.
D. Issued shares.
Companies listed on the stock exchanges must file financial statements with the
A. Financial Accounting Standards Board.
B. American Institute of Certified Public Accountants.
C. Securities and Exchange Commission.
D. Internal Revenue Service.
In 20×5, Horwitz Corporation issued ten-year, 9 percent bonds when the market interest
rate was 11 percent. Interest is payable annually. During 20×8, the market rate of
interest for similar bonds was 12 percent. Using the effective interest method of
amortization, what interest rate will be used to calculate interest expense for 20×8?
A. 12 percent
B. 9 percent
C. 6 percent
D. 11 percent
An asset that cost $24,000 and has accumulated depreciation of $18,000 is sold for
$5,200. The entry to record the sale includes
A. no gain or loss.
B. a debit to Loss on Sale of Asset for 800.
C. a credit to Loss on Sale of Asset for 18,800.
D. a credit to Gain on Sale of Asset for 800.
Which of the following accounts could decrease as a result of adjusting entries?
A. Prepaid Insurance.
B. Accumulated Depreciation–Buildings.
C. Rent Expense.
D. Service Revenue.
Which costing method tends to level out the effects of cost increases or decreases?
A. Specific identification
B. FIFO
C. Average-cost
D. LIFO
For which of the following errors should the appropriate amount be added to the
balance per bank on a bank reconciliation?
A. Deposit of $250 recorded by the bank as $25
B. Deposit of $25 recorded by the bank as $250
C. Check for $25 recorded as $52
D. Check for $52 recorded as $25
All of the following are ways one corporation could affect the operating and financial
policies of another corporation except
A. analysis of data regarding profitability.
B. material transactions between the companies.
C. representation on the board of directors.
D. exchange of managerial personnel.
Which of the following is not considered a long-term obligation?
A. Contributed capital.
B. Deferred income taxes.
C. Capital lease.
D. Pension liabilities.
Compute the correct amount for each letter in the following table:
(a) $8,700 ($6,900 – $1,200 + $3000)
In conducting horizontal analysis, it is important to focus attention on the changes in
A. the composition of the statements.
B. dollar amounts and their percentages.
C. dollar amounts.
D. percentages.
Which of the following accounting principles best justifies accelerated depreciation
accounting?
A. Materiality
B. Matching
C. Full disclosure
D. Consistency
In a liquidation, the liabilities of the partnership should be paid
A. after a revaluation of assets
B. before any sales of assets
C. before the distribution of cash to partners
D. before the distribution of gains and losses on the disposal of assets
Copper, Inc. purchased merchandise worth $1,800 on credit, terms n/30. What is the
required journal entry to record the transaction under the periodic inventory system?
A. Accounts Receivable 1,800
Purchases 1,800
B. Purchases 1,800
Accounts Payable 1,800
C. Merchandise Inventory 1,800
Accounts Payable 1,800
D. Accounts Payable 1,800
All of the following are conditions that could affect the valuation of investments on the
balance sheet except
A. changes in the general purchasing power of the dollar.
B. changes in the operations of investee companies.
C. changes in the market value or fair value of the investments.
D. changes caused by the passage of time.
Which of the following pairs of accounts could not be included in the same adjusting
entry?
A. Unearned Revenue and Service Revenue
B. Wages Expense and Wages Payable
C. Interest Expense and Interest Receivable
D. Rent Expense and Rent Payable
A company performs the aging of accounts receivable calculation and arrives at an
estimate for uncollectible accounts of $900. If Allowance for Uncollectible Accounts
has a debit balance of $200 prior to the year-end adjustment, for how much should the
adjustment be journalized?
A. $200
B. $700
C. $900
D. $1,100
Calculate answers to the following using future value and/or present value tables:
a. If an accumulation of $1,000 is desired at the end of 4 years, what bank deposit must
be made now to accomplish that goal, assuming 10 percent interest compounded
annually?
b. A deposit of $600 made at the end of every 6 months for 5 years would grow to what
amount, assuming 8 percent interest compounded semiannually.
Use this information to answer the following question.
The trial balance for Nowwick Company appears as follows:
If the estimated depreciation for office equipment were $350, the adjusting entry would
contain a
A. debit to Accumulated Depreciation–Office Equipment for $350.
B. credit to Office Equipment for $350.
C. credit to Accumulated Depreciation–Office Equipment for $350.
D. credit to Depreciation Expense–Office Equipment for $350.
Neville Co. issued 20-year term bonds at a discount in 20×5. Interest is payable
semiannually. Which of the following statements is true, assuming that the effective
interest method of amortization is used for the bond discount?
A. Interest expense decreases each six-month interest period.
B. Interest expense as a percentage of the bond’s book value changes from period to
period.
C. Interest expense increases each six-month interest period.
D. Interest expense remains constant in amount for each interest period.