A check correctly written and paid by the bank for $271 is incorrectly recorded on the
company’s books for $217. The appropriate adjustment on bank reconciliation would be
to
a. deduct $271 from the book’s balance.
b. deduct $54 from the book’s balance.
c. deduct $54 from the bank’s balance.
d. add $54 to the bank’s balance.
Answer:
Under IFRS, companies can apply revaluation to
a. land, buildings, and intangible assets.
b. land, buildings, but not intangible assets.
c. intangible assets, but not land or buildings.
d. no assets.
Answer:
If disposal of a plant asset occurs during the year, depreciation is
a. not recorded for the year.
b. recorded for the whole year.
c. recorded for the fraction of the year to the date of the disposal.
d. not recorded if the asset is scrapped.
Answer:
Reserves include each of the following except
a. other comprehensive income items.
b. revaluation surplus.
c. share premium.
d. unrealized gains on available-for-sale securities.
Answer:
The December 31, 2014 balance sheet of Barone Company had Accounts Receivable of
$400,000 and a credit balance in Allowance for Doubtful Accounts of $32,000. During
2015, the following transactions occurred: sales on account $1,500,000; sales returns
and allowances, $50,000; collections from customers, $1,250,000; accounts written off
$36,000; previously written off accounts of $6,000 were collected.
Instructions
(a) Journalize the 2015 transactions.
(b) If the company uses the percentage-of-sales basis to estimate bad debt expense and
anticipates 3% of net sales to be uncollectible, what is the adjusting entry at December
31, 2015?
(c) If the company uses the percentage of receivables basis to estimate bad debt expense
and determines that uncollectible accounts are expected to be 8% of accounts
receivable, what is the adjusting entry at December 31, 2015?
(d) Which basis would produce a higher net income for 2015 and by how much?
Answer:
Which of the following may either increase or decrease retained earnings?
a. Stock dividends
b. Disposals of treasury stock
c. Net income
d. Prior period adjustments
Answer:
On January 1, Sway Corporation had 60,000 shares of $10 par value common stock
outstanding. On March 17, the company declared a 10% stock dividend to stockholders
of record on March 20. Market value of the stock was $13 on March 17. The entry to
record the transaction of March 17 would include a
a. credit to Stock Dividends for $18,000.
b. credit to Cash for $78,000.
c. credit to Common Stock Dividends Distributable for $60,000.
d. debit to Common Stock Dividends Distributable for $60,000.
Answer:
FICA taxes do not provide workers with
a. life insurance.
b. supplemental retirement.
c. employment disability.
d. medical benefits.
Answer:
In terms of liquidity, inventory is
a. more liquid than cash.
b. more liquid than accounts receivable.
c. more liquid than prepaid expenses.
d. less liquid than store equipment.
Answer:
An account consists of
a. a title, a debit balance, and a credit balance.
b. a title, a left side, and a debit balance.
c. a title, a debit side, and a credit side.
d. a title, a right side, and a debit balance.
Answer:
Under the equity method, the Stock Investments account is credited when the
a. investee reports net income.
b. investee reports a net loss.
c. investment is originally acquired.
d. investee reports net income and when the investment is originally acquired.
Answer:
On January 2, 2015, Parr Company purchased 100% of the common stock
of Sneed Company for $420,000. The fair value of Sneed Company’s assets
and liabilities are equal to their book values except that land has a fair
value of $120,000 and building have a fair value of $260,000.
Instructions
(a) Complete the worksheet below for preparing a consolidated balance
sheet. You may add accounts to the worksheet if necessary.
(b) Prepare a consolidated balance sheet for Parr Company and Subsidiary
on January 2, 2015.
Answer:
A new average cost is computed each time a purchase is made in the
a. average-cost method.
b. moving-average cost method.
c. weighted-average cost method.
d. All of these choices are correct.
Answer:
Control over cash disbursements is generally more effective when
a. all bills are paid in cash.
b. disbursements are made by the accounts payable subsidiary clerk.
c. payments are made by check.
d. all purchases are made on credit.
Answer:
Allowing only the treasurer to sign checks is an example of
a. documentation procedures.
b. segregation of duties.
c. other controls.
d. establishment of responsibility.
Answer:
Presented here is a partial amortization schedule for Roseland Company who sold
$300,000, five year 10% bonds on January 1, 2014 for $312,000 and uses annual
straight-line amortization.
Which of the following amounts should be shown in cell (v)?
a. $314,400
b. $313,200
c. $309,600
d. $310,800
Answer:
Answer:
Research and development costs should be charged to expense when incurred.
Answer:
A debit to an account indicates an increase in that account.
Answer:
Bill and Ellen Sweatt plan to invest $2,500 a year in an educational IRA for their
granddaughter, Sloane Martin. They will make these deposits on December 31 of each
year. Bill and Ellen feel they can safely earn 8%. How much will be in this account on
December 31 of the 18thyear?
Answer:
An accounting period that is one year in length is referred to as a ______________
year.
Answer: