A voucher is an internal file that:A)is prepared after an invoice is received.B)is used as
a substitute for an invoice.C)is a collection of documents prepared at each step in the
voucher system.D)takes the place of a bank check.E)is prepared before the company
orders goods.
The Tuck Shop began the current month with inventory costing $10,000, then
purchased inventory at a cost of $35,000. The perpetual inventory system indicates that
inventory costing $30,000 was sold during the month for $40,000. If an inventory count
shows that inventory costing $14,500 is actually on hand at month-end, what amount of
shrinkage occurred during the month?
A) $500
B) $5,000
C) $14,495
D) $15,000
Which of the following statements about net income and net losses is not correct?
A) Net income implies that revenues are greater than expenses.
B) A net loss causes Retained Earnings to decrease.
C) Net income causes stockholders’ equity to increase.
D) A net loss increases the balance in Retained Earnings.
Which one of the following statements regarding sales discounts is correct?
A) If a company offers a discount to encourage prompt payment and the discount is
taken, the discount reduces the amount of net sales.
B) Credit terms of “2/10, n/30” mean that if payment is made in two days, a 10%
discount may be taken; if not paid within two days, the full invoice price will be due in
thirty days.
C) The terms ‘sales discounts” and ‘sales credits” are used interchangeably by a
company.
D) The Sales Discounts account is an expense account.
A toy store with a calendar year-end is likely to have:
A) unpredictable fluctuations in cash flow from quarter to quarter.
B) the largest cash inflow from operating activities in the second and third quarters
(April – September).
C) a fairly stable cash flow across all four quarters.
D) the largest cash inflow from operating activities in the fourth and firstquarters
(October – March).
The customer typically explains the purpose of the payment using a(n):
A) remittance advice.
B) invoice.
C) purchase order.
D) check.
In January, the Caribbean Dream Resort books and accepts a cash payment for $32,000
for vacation services to be provided during spring break in March. The journal entry
recorded in January will include a debit to:
A) Cash and a credit to Unearned Revenue.
B) Accounts Payable and a credit to Service Revenue.
C) Accounts Receivable and a credit to Service Revenue.
D) Prepaid Expenses and a credit to Service Revenue.
A company uses the direct write-off method. The company writes off a $3,000 customer
account balance when it becomes clear that the particular customer will never pay.
What is the journal entry that would be prepared to record this write-off?
A) Debit Bad Debt Expense and credit Accounts Receivable for $3,000
B) Debit Allowance for Doubtful Accounts and credit Bad Debt Expense for $3,000
C) Debit Bad Debt Expense and credit Allowance for Doubtful Accounts for $3,000
D) Debit Accounts Receivable and credit Bad Debt Expense for $3,000
Using straight-line amortization, when a bond is sold at a discount:
A) Bonds Payable declines by a constant amount each year.
B) Interest Expense declines by a constant amount each year.
C) the carrying value of the bonds declines by a constant amount each year.
D) Interest Expense is a constant amount each year.
Which of the following is not a term for the value at which an asset is reported on a
financial statement?
A) Carrying value
B) Book value
C) Equipment, net
D) Accrual value
A company ‘s trial balance included the following account balances:
Use the information above to answer the following question. What is the amount of
Total Assets on the balance sheet?
A) $240,116.
B) $214,300.
C) $442,924.
D) $480,232.
IBM signs an agreement to lend one of its customers $200,000 to be repaid in one year
at 5% interest. IBM would record this loan as:
A) Notes Payable.
B) Accounts Receivable.
C) Notes Receivable.
D) Unearned Revenue.
Which account would be decreased with a credit?
A) Cash
B) Accounts Payable
C) Common Stock
D) Retained Earnings
Which of the following ratios is used to evaluate solvency?
A) Earnings per share (EPS)
B) Fixed asset turnover
C) Debt-to-assets
D) Current ratio