1) Table 5-4
The following data is for the Atlantis Merchandising, which uses a periodic inventory
system:
Refer to Table 5-4. The operating income for Atlantis Merchandising is:
A) $(11,000)
B) $63,000
C) $51,000
D) $60,000
2) If a company uses a perpetual inventory system, it will maintain all the following
accounts except:
A) cost of goods sold
B) inventory
C) sales
D) purchases
3) Parker Industrial Corp. uses a sales journal to record each sale transaction. At the end
of January, the sales journal was as you see below:
Sales Journal
When the sales journal is posted to the general ledger, which entries are made?
A) Debit Accounts receivable $4,565; credit Inventory $2,327
Debit Sales revenue $4,565; credit COGS $2,327
B) Debit Sales revenue $4,565; credit Accounts receivable $4,565
Debit Inventory $2,327; credit COGS $2,327
C) Debit Accounts receivable $4,565; credit Sales revenue $4,565;
Debit COGS $2,327; credit Inventory $2,327
D) Debit Accounts receivable $2,327; credit Inventory $2,327
Debit COGS $4,565; credit Inventory $4,565
4) A petty cash fund was established with a $400 balance. It currently has cash of $15
and petty cash tickets as shown below.
The journal entry to replenish the account would be which of the following:
A) Debit to Cash Short & Over for $5
B) Credit Cash Short & Over for $5
C) Debit Petty Cash for $5
D) Credit Petty Cash for $5
5) In a bank reconciliation, an EFT cash receipt is:
A) added to the bank balance
B) deducted from the bank balance
C) added to the book balance
D) deducted from the book balance
6) Paying top salaries to attract top-quality employees is a part of which characteristic
of internal control?
A) competent, reliable, and ethical personnel
B) assignment of responsibilities
C) proper authorization
D) separation of duties
7) The amortization method that initially ignores residual value in the initial calculation
is:
A) double-declining-balance
B) straight-line
C) both double-declining-balance and straight-line
D) units-of-production
8) When a discount is taken for prompt payment under a periodic inventory system, the
purchaser would credit:
A) Accounts Payable
B) Accounts Receivable
C) Purchases Discounts
D) Inventory
9) Lee Enterprises received payment within the discount period from a customer who
had purchased merchandise on account. The sales invoice was for $2,000, and credit
terms were 3/15 n/30. In the cash receipts journal, $1,940 will appear under the:
A) sales revenue credit column
B) accounts receivable credit column
C) cash debit column
D) cash credit column
10) For the items listed below, choose the appropriate code letter to indicate whether the
item is an asset, liability, or owner’s equity item:
AssetA
LiabilityL
Owner’s EquityOE
A) L
B) A
C) OE
1> Accounts receivable
2> Office supplies
3> Truck
4> Don Smith, Capital
5> Salary payable
6> Note payable
7> Cash
8> Land
9> Accounts payable
10> Office furniture
11) If amortization expense for an asset is the same every year, which method is being
used?
A) straight-line
B) units-of-production
C) double-declining-balance
D) either units-of-production or double-declining-balance
12) Table 10-6
On January 1, 2013, Grant Transport purchased a $120,000 truck for hauling cattle
across the border. Grant plans on driving the truck for eight years or 400,000
kilometres. Expected residual value for the truck is $30,000.
Referring to Table 10-6, the amortizable cost of the truck is:
A) $120,000
B) $90,000
C) $400,000
D) $150,000
13) The cost of a building would include all of the following except:
A) architectural fees
B) clearing and grading the land prior to construction of the building
C) cost of repairs made to an old building to get it ready for occupancy
D) costs of construction
14) Given the following data, what is cost of goods sold?
A) $870,000
B) $640,000
C) $570,000
D) $510,000
15) Every subsidiary ledger must have its own:
A) control account
B) subsidiary account
C) general account
D) general ledger
16) Under the direct write-off method, the entry to estimate the bad-debt expense
includes a:
A) debit to the customer’s account receivable
B) credit to allowance for doubtful accounts
C) debit to bad-debt expense
D) No entry is made to estimate uncollectible accounts.
17) Match the following:
A) amortization
B) cash-basis accounting
C) accrual accounting
D) unearned revenue
E) accrued expense
F) contra account
G) book value
H) recognition criteria for revenues
I) accrued revenue
J) matching objective
1> A revenue that has been earned but not yet received in cash
2> An asset’s cost less accumulated amortization
3> An account that always has a companion account, and whose normal balance is
opposite that of the companion account
4> A liability created when a business collects cash from customers in advance of doing
work for a customer
5> Expense associated with allocating the cost of a property, plant, and equipment asset
over its useful life
18) With respect to current liabilities, in what area is the main difference between
international financial reporting standards (IFRS) and accounting standards for private
enterprises (ASPE)?
A) terminology
B) valuation
C) presentation
D) measurement
19) The normal balance of notes payable is a ________ because it is a(n) ________
account.
A) debit, expense
B) credit, revenue
C) debit, asset
D) credit, liability
20) Table 1-1
Following is a random list showing the account balances of various assets, liabilities,
revenues, and expenses for Spiffy’s Garage at December 31, 2014, the end of its first
year of operations.
The owner, Spiffy Sloan, invested $22,600 at the beginning of the year and withdrew
$5,000 during the year for personal use.
Refer to Table 1-1. Total expenses for the year were:
A) $5,300
B) $7,700
C) $7,800
D) $6,900
21) Table 10-2
On January 1, 2013, Homes Realty Ltd. purchased a $45,000 vehicle to chauffeur
clients to prospective homes. Homes plans on driving the vehicle for five years or
100,000 kilometres. Expected residual value is $10,000.
Refer to Table 10-2. Homes Realty Ltd. drove the vehicle 25,000 kilometres in 2013 .
The amortization expense for 2010 using the units-of-production method is:
A) $6,480
B) $8,750
C) $6,200
D) $2,880
22) Match the following.
A) account
B) ledger
C) journal
D) chart of accounts
1> The basic summary device of accounting
2> The book of accounts
3> The chronological record of an entity’s transactions
4> A list of all an entity’s accounts and their account numbers
23) Earning a revenue on account would:
A) have no effect on liabilities
B) decrease owner’s equity
C) increase accounts receivable
D) decrease total assets
24) A merchandiser received payment in full within the discount period on a $5,000
sales invoice, terms 2/15 n/30. The journal entry would include a:
A) debit to Cash for $5,000
B) credit to Accounts Receivable for $5,000
C) credit to Accounts Receivable for $5,900
D) credit to Sales Discounts for $100
25) Interest payable is classified as a(n):
A) contra asset
B) asset
C) long-term liability
D) current liability
26) The following items were taken from the records of Slow Boat Company, which
uses a periodic inventory system:
Salary payable $1,100
Sales revenue480,000
Freight in20,000
Beginning inventory35,000
Purchases of inventory 240,000
Purchase returns and allowances 35,000
Purchase discounts 10,000
Sales returns and allowances 35,000
Ending inventory 80,000
Operating expenses 85,000
Prepare the cost of goods sold section for the Slow Boat Company’s income statement.
27) Refer to Table 1-2. Prepare a balance sheet dated December 31, 2014, for Tim’s
Landscaping
28) Romeo Merchandising had the following transactions in June. Prepare journal
entries for these transactions assuming Romeo uses a periodic inventory system.
June 2Romeo received an $18,000 invoice from one of its suppliers. Terms
were 2/10 n/30, FOB shipping point. Romeo paid the freight bill
amounting to $2,000.
4Romeo returned $2,500 of the merchandise billed on June 2 because it
was defective.
5Romeo sold $8,000 of merchandise on account, terms 3/15 n/30.
10Romeo paid the invoice dated June 2, less the return and the discount.
15A customer returned $2,500 of merchandise sold on June 5 .
19Britt received payment on the remaining amount due from the sale of
June 5, less the return and the discount.
29) The following data are available for the month of April for Gore Company:
April 1 inventory120 units at $8.15 each
April 10 purchase200 units at $8.20 each
April 20 purchase410 units at $8.40 each
April 25 purchase310 units at $8.50 each
Gore sold 630 units during April.
Compute the value of ending inventory under FIFO. Assume a periodic inventory
system.
30) Table 11-8
BCN Bank agrees to lend Samson Company $80,000 on January 1 . Samson Company
signs an $80,000, 5%, 9-month note.
Refer to Table 11-8. Prepare the entry that Samson Company will make to pay off the
note and interest at maturity assuming that interest has been accrued to June 30 .
31) Determine the expenses for the current period based on the following data:
Net income for the current period$15,000
Ending owner’s equity45,000
Beginning owner’s equity40,000
Owner withdrawals10,000
Revenue for the current period90,000
32) Table 5-8
Marvelous Merchandising charges GST on all its sales at the rate of 5% and pays GST
on all its purchases at the rate of 5%. For purposes of this question, any applicable PST
is ignored. The following are transactions for the month of May. Marvelous uses a
perpetual inventory system.
May 8Purchased inventory, on account, FOB destination, from Stranhern Wholesale,
$1,000 plus applicable GST.
10Returned defective merchandise to Stranhern, $300 plus applicable GST.
12Sold merchandise to Dainty Store on account for $3,000 plus applicable GST.
FOB shipping point. Cost of the merchandise sold was $2,500.
28Collected balance on account from Dainty Store.
30Paid balance on account to Stranhern.
General Journal
Refer to Table 5-8. Prepare the remittance payment of GST on June 15, based on the
assumption that the only transactions for May are those listed in Table 5-8.