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The process of recording transactions has become more efficient because
a. fewer events can be quantified in financial terms.
b. computers are used in processing business events.
c. more people have been hired to record business transactions.
d. business events are recorded only at the end of the year.
Answer:
A bond trustee does not
a. issue the bonds.
b. keep a record of each bondholder.
c. hold conditional title to pledged property.
d. maintain custody of unsold bonds.
Answer:
Lake of Fire Company purchased supplies costing $7,000 and debited Supplies for the
full amount. At the end of the accounting period, a physical count of supplies revealed
$1,900 still on hand. The appropriate adjusting journal entry to be made at the end of
the period would be
a. Debit Supplies Expense, $1,900; Credit Supplies, $1,900.
b. Debit Supplies, $5,100; Credit Supplies Expense, $5,100.
c. Debit Supplies Expense, $5,100; Credit Supplies, $5,100.
d. Debit Supplies, $1,900; Credit Supplies Expense, $1,900.
Answer:
On June 1, 2015, Portugal Inc. reported a cash balance of $12,000. During June,
Portugal made deposits of $5,000 and made disbursements totalling $14,000. What is
the cash balance at the end of June?
a. $3,000 debit balance
b. $17,000 debit balance
c. $3,000 credit balance
d. $2,000 credit balance
Answer:
A $600,000 bond was retired at 102 when the carrying value of the bond was $622,000.
The entry to record the retirement would include a
a. gain on bond redemption of $12,000.
b. loss on bond redemption of $10,000.
c. loss on bond redemption of $12,000.
d. gain on bond redemption of $10,000.
Answer:
The basic issues in accounting for notes receivable include each of the following except
a. analyzing notes receivable.
b. disposing of notes receivable.
c. recognizing notes receivable.
d. valuing notes receivable.
Answer:
During 2015, Parker Enterprises generated revenues of $90,000. The company's
expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000
and a loss on the sale of equipment of $3,000.
Parker's net income is
a. $24,000.
b. $27,000.
c. $45,000.
d. $90,000.
Answer:
The effective-interest method for amortization of bond discounts is required under
a. GAAP only.
b. IFRS only.
c. Both GAAP and IFRS.
d. Neither GAAP or IFRS.
Answer:
In most companies, current liabilities are paid within
a. one year through the creation of other current liabilities.
b. the operating cycle through the creation of other current liabilities.
c. one year or the operating cycle out of current assets.
d. the operating cycle out of current assets.
Answer:
In a perpetual inventory system, a return of defective merchandise by a purchaser is
recorded by crediting
a. Purchases.
b. Purchase Returns.
c. Purchase Allowance.
d. Inventory.
Answer:
On the statement of cash flows using the indirect method, patent amortization expense
will
a. be added to net income in the operating section.
b. be deducted from net income in the operating section.
c. appear as an inflow of cash in the investing section.
d. appear as an outflow of cash in the investing section.
Answer:
The adjusted trial balance of the Victoria Lane Paving Company includes the following
balance sheet accounts that frequently require adjustment. For each account, indicate (a)
the type of adjusting entry (prepaid expenses, unearned revenues, accrued revenues, or
accrued expenses) and (b) the related account in the adjusting entry.
Answer:
When stock dividends are distributed,
a. Common Stock Dividends Distributable is decreased.
b. Retained Earnings is decreased.
c. Paid-in Capital in Excess of Par is debited if it is a small stock dividend.
d. no entry is necessary if it is a large stock dividend.
Answer:
On October 1, 2015, Greer Company signed a $20,000 six-month note payable that
bears interest at a rate of 6%. Since no interest has been previously accrued on this note,
the total interest to be accrued on this note at December 31, 2015, is
a. $100.
b. $300.
c. $600.
d. $1,200.
Answer:
Credit terms of 2/10, n/30 mean that
a. a 10% cash discount may be taken if payment is made immediately; a 2% discount if
paid within 30 days.
b. a 2% cash discount may be taken if payment is made within 10 days of the invoice
date; otherwise the full amount is due at the end of the month.
c. an additional amount equal to 2% of the invoice price must be paid if payment is not
received within 10 days; the account is overdue after 30 days.
d. a 2% cash discount may be taken if payment is made within 10 days of the invoice
date; otherwise the full amount is due within 30 days.
Answer:
In preparing its bank reconciliation for the month of April 2015, Delano, Inc. has
available the following information.
What should be the adjusted cash balance at April 30, 2015?
a. $77,260.
b. $77,600.
c. $78,020.
d. $78,200.
Answer:
Horizontal analysis is appropriately performed
a. only on the income statement.
b. only on the balance sheet.
c. only on the statement of retained earnings.
d. on all three of these statements.
Answer:
A problem with the monetary unit assumption is that
a. the dollar has not been stable over time.
b. the dollar has been stable over time.
c. the dollar is a common medium of exchange.
d. it is impossible to account for international transactions.
Answer:
All major financing and investing activities affect cash.
Answer:
Organizational costs are capitalized by debiting an intangible asset entitled
Organization Costs.
Answer:
A debit memorandum issued by the bank ______________ the cash balance in the
depositor's account.
Answer:
A compound journal entry requires several debits to one account and several credits to
one account.
Answer:
Record the following transactions for Lett Company.
1> On August 4, Lett sold merchandise on account to Smiley Company for $610, terms
2/10, n/30.
2> On August 7, Lett granted Smiley a sales allowance and reduced the cost of the
merchandise by $60 because some of the goods were slightly damaged.
3> On August 12, Smiley paid the account in full.
Answer:
Listed below are items that may be useful in preparing the March 2015, bank
reconciliation for Walker Machine Works.
Using the following code, insert in the space before each item the letter where the
amount would be located or otherwise treated in the bank reconciliation process.
1> Included with the bank statement materials was a check from Bob Simpson for $40
stamped "account closed."
2> A personal deposit by Annie Walker to her personal account in the amount of $300
for dividends on her General Electric common stock was credited to the company
account.
3> The bank statement included a debit memorandum for $22.00 for two books of
blank checks for Walker Machine Works.
4> The bank statement contains a credit memorandum for $24.75 interest on the
average checking account balance.
5> The daily deposits of March 30 and March 31, for $3,362 and $3,125 respectively,
were not included in the bank statement postings.
6> Two checks totaling $316.86, which were outstanding at the end of February, cleared
in March and were returned with the March statement.
7> The bank statement included a credit memorandum dated March 28, 2015, for
$45.00 for the monthly interest on a 6-month, $15,000 certificate of deposit that the
company owns.
8> Four checks, #8712, #8716, #8718, #8719, totaling $5,369.65, did not clear the bank
during March.
9> On March 24, 2015, Walker Machine Works delivered to the bank for collection a
$2,500, 3-month note from Don Decker. A credit memorandum dated March 29, 2015,
indicated the collection of the note and $90.00 of interest.
10> The bank statement included a debit memorandum for $25.00 for the collection
service on the above note and interest.
Answer:
The three major services rendered by a certified public accountant are
______________, ________________, and management ________________.
Answer:
The custodian of the petty cash fund has the responsibility of recording a journal entry
every time cash is used from the fund.
Answer:
Jean's Vegetable Market had the following transactions during 2014:
1> Issued $50,000 of par value common stock for cash.
2> Repaid a 6 year note payable in the amount of $22,000.
3> Acquired land by issuing common stock of par value $100,000.
4> Declared and paid a cash dividend of $2,000.
5> Sold a long-term investment (cost $3,000) for cash of $8,000.
6> Acquired an investment in IBM stock for cash of $15,000.
What is the net cash provided (used) by investing activities?
a. $21,000
b. $67,000
c. $28,000
d. $0
Answer:
