A statement presenting data from two or more consecutive periods is called a:
A) comparative statement.
B) compromising statement.
C) common-size statement.
D) Both A and C
The risk of creditors in relation to the risk taken by stockholders is measured by:
A) debt to stockholders’ equity ratio.
B) gross profit ratio.
C) rate of return to stockholders.
D) None of these answers is correct.
If Accounts Payable has been credited, it is most likely that:
A) a collection from a customer was made.
B) a service was provided on account.
C) the company made a purchase on account.
D) None of these is possible.
The adjusted trial balance on the worksheet shows Accumulated Depreciation, $1,200,
and Depreciation Expense, $900. What was the balance in the Accumulated
Depreciation account before the adjustment?
A) $2,100
B) $300
C) $900
D) $1,200
When Income Summary has a credit balance and the account is closed:
A) Capital is decreased.
B) Capital is increased.
C) Withdrawals is increased.
D) Revenue is increased.
Online Service received its telephone bill for January, but is not going to pay the bill
until February. What adjustment is needed to record the transaction?
A) Debit Telephone Expense; credit Cash
B) Debit Accounts Payable; credit Telephone Expense
C) Debit Telephone Expense; credit Accounts Payable
D) Debit Accounts Payable; credit Cash
Miranda Corporation issued $200,000 of 12%, 10-year bonds for $180,000. The entry
to record the issuance of the bonds includes a:
A) debit to Bonds Payable for $200,000.
B) credit to Premium on Bonds Payable for $20,000.
C) credit to Bonds Payable for $220,000.
D) debit to Discount on Bonds Payable $20,000.
The income before taxes and interest expense of Barry Builders for the year just ended
is $210,000. Their interest expense is $20,000 and their income taxes are $80,500. The
number of times interest would be earned is:
A) 22.0.
B) 10.5.
C) 11.5.
D) 0.5.
In a perpetual inventory system:
A) Merchandise Inventory is credited every time inventory is purchased.
B) Cost of Goods Sold is debited every time inventory is sold.
C) a physical inventory is never taken performed.
D) all of the above take place.
Which of the following sequences of events is in the correct order for a voucher
system?
A) Recording, preparing, posting, and paying the voucher
B) Posting, preparing, paying, and recording the voucher
C) Preparing, paying, posting, and recording the voucher
D) None of the above is the correct order.
Mary and Jeff entered into a partnership agreement. However, the agreement did not
state how income and losses would be divided. The law states that income will be
divided:
A) equally.
B) according to investments.
C) according to abilities.
D) None of these answers is correct.
Accounts Payable had a normal starting balance of $500. There were debit postings of
$200 and credit postings of $100 during the month. The ending balance is:
A) $400 credit.
B) $800 debit.
C) $400 debit.
D) $800 credit.
Washington Corporation issued 5,000 shares of its $20 par value common stock for $23
per share. The entry to record the issuance would include a:
A) credit to Cash for $115,000.
B) credit to Common Stock for $15,000.
C) credit to Common Stock for $100,000.
D) debit to Paid-in Capital in Excess of Par Value-Common for $15,000.
Before a three-for-one stock split, the shares outstanding were 4,000 shares at $9 par.
After the split, what was the par value per share and number of shares?
A) 12,000 shares at $9 per share
B) 12,000 shares at $3 per share
C) 12,000 shares at $6 per share
D) 4,000 shares at $27 per share
Katelyn purchased $10,000 of new electronic equipment for her DJ Company on
account. The effect on the basic accounting equation was to:
A) decrease Cash $10,000 and increase Equipment $10,000.
B) increase Equipment $10,000 and increase Accounts Payable $10,000.
C) decrease Cash $10,000 and increase Accounts Payable $10,000.
D) increase Cash $10,000 and increase Equipment $10,000.
A method that uses average gross profit rate and net sales to compute inventory is:
A) the retail method.
B) the gross profit method.
C) the weighted-average method.
D) None of these answers is correct.
Gross sales equals:
A) net sales minus sales discount.
B) sales discount less net income.
C) the total of cash sales and credit sales.
D) supplies minus inventory.
Which allocation base is best used to allocate building depreciation?
A) Square feet of space used
B) Number of employees
C) Hours used
D) Building depreciation can be separately traced to each department.
To close the Fees Earned account:
A) debit Income Summary; credit Fees Earned.
B) debit Fees Earned; credit Withdrawals.
C) debit Fees Earned; credit Income Summary.
D) debit Capital; credit Fees Earned.
From the following transactions, prepare the appropriate general journal entries for the
month of April.
a. Raw materials costing $60,000 were issued from the storeroom.
b. Direct labor of $53,000 was charged to production.
c. Indirect labor costs of $17,000 were incurred.
d. Overhead was applied at the rate of 40% of direct labor dollars.
e. Completed products costing $42,000 were transferred to finished goods.
f. Products costing $32,000 were sold for $50,000 on account.
The general journal entry to record the earning of revenue would most commonly
include:
A) a debit to Accounts Receivable and a credit to Capital.
B) a debit to Cash and a credit to Capital.
C) a debit to Fees Earned and a credit to Cash.
D) a debit to Accounts Receivable and a credit to Fees Earned.
Which of the following taxes has a maximum amount an employee must pay in a year?
A) Federal income tax
B) FICA-Medicare tax
C) FICA-OASDI tax
D) Federal Unemployment tax
Supporting documents for a voucher system are:
A) filed in a tickler file.
B) attached to the invoice.
C) attached to the purchase order.
D) attached to the voucher.
Metal used in construction of a tank is part of:
A) raw material costs.
B) labor costs.
C) manufacturing overhead.
D) None of these answers is correct.
Which of the following would require a debit to the Retained Earnings account for a
corporation?
A) The initial investment of stockholders
B) Net income of the period
C) Net loss of the period
D) Contributions by new stockholders
Harry’s Hardware estimates that approximately $1.75 out of every $100 of credit sales
proves to be uncollectible. Harry calculates Bad Debts Expense using the:
A) aging the Accounts Receivable approach.
B) direct write-off method.
C) balance sheet approach.
D) income statement approach.
The Brad and Marcia partnership agree to admit Fred with a one-third interest for
$10,000. Brad and Marcia’s capital balances are $12,000, and $8,000, respectively, and
they share profits and losses equally. The entry to admit Fred would include:
A) debit Cash $10,000; credit Fred, Capital $10,000.
B) debit Cash $10,000; credit Brad, Capital $2500; debit Marcia, Capital $2500; credit
Fred, Capital $5,000.
C) debit Cash $10,000; credit Brad, Capital $5,000; credit Marcia Capital $5,000.
D) debit Cash $10,000; debit Brad, Capital $2,500; credit Marcia, Capital $2,500; credit
Fred, Capital $10,000.
Interest income is on a merchandise company’s income statement under the heading:
A) Sales Revenue.
B) Other Income or Interest Income.
C) Unearned Revenue.
D) Notes Receivable.
On October 1, Allan Company issued 8%, 10-year, $300,000 bonds at 105. Interest
dates are April 1 and October 1. The amount of cash paid out for interest during the
current calendar year is:
A) $0.
B) $24,000.
C) $12,000.
D) $6,000.
Net Purchases + Purchases Returns and Allowances + Purchase Discount equals:
A) Net Loss.
B) Net Income.
C) Gross Profit.
D) Gross Purchases.
When the maturities of a bond issue are spread over a several dates, the bonds are
called:
A) term bonds.
B) bearer bonds.
C) debenture bonds.
D) serial bonds.
Barry’s Books uses a periodic inventory system. Barry’s Books sold 40 copies of
Helpful Hints during September. Other data for September include:
Cost of goods sold under the FIFO method is:
A) $920.
B) $845.
C) $1,020.
D) some other number.
Compute the gross profit rate when net sales are $350,000 and gross profits are
$189,000.
A) 51:10
B) 54%
C) 51%
D) 54:10
Victoria received $200 from customers in partial payment for accounting services
performed previously. The recording of this transaction would:
A) increase Cash and Victoria’s Capital $200.
B) increase Cash and decrease Accounts Receivable $200.
C) increase Cash and increase Accounts Receivable $200.
D) decrease Accounts Receivable and increase Victoria’s Capital $200.
Bernstein is brought into the partnership. His capital is equal to his net assets that he
brings to the partnership. He brings assets of $167,000 and liabilities of $30,000. His
capital balance will be:
A) $30,000 (cash invested).
B) $167,000 (total of all assets invested).
C) $140,000.
D) $137,000.
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement on which the account balance is reported, and in Column 4 the account’s
nature (permanent/temporary).
For each of the following items, indicate by placing an X in the appropriate column
whether it is a measure of: (column 1) liquidity, (column 2) asset management, (column
3) debt, or (column 4) profitability.
Below is a list of departments; you are to identify each as either [1] a profit center or [2]
a cost center.
The repair center of a car dealership. ________
For each of the following, identify in column 1 the category to which the account
belongs, in column 2 the normal balance for the account, and in column 3 the financial
statement on which the account balance is reported.
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement on which the account balance is reported, and in Column 4 the nature of the
account (permanent/temporary).
Example:
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement on which the account balance is reported, and in Column 4 the account’s
nature (permanent/temporary).
The Dairy Co. had the following transactions involving the sale of merchandise. You
are to prepare the necessary general journal entries. All sales are subject to a 6% sales
tax. Terms of sale were n/30.
April 13 Sold merchandise priced at $500 to Jan Ellsworth on account.
April 14 Sold merchandise priced at $350 to a cash customer.
April 15 Sold merchandise priced at $150 to Dana Carter on account.
April 16 Sold merchandise priced at $700 to a cash customer.
April 20 The customer of April 14 returned $50 worth of merchandise for a cash refund.
April 25 Received full payment from Dana Carter.
April 30 Paid the amount of sales tax to the state.
Prepare the necessary general journal entry for April 13.
__________________________________________ __________ __________
__________________________________________ __________ __________
__________________________________________ __________ __________
Given the following accounts:
[1] Cash in bank
[2] Petty cash
[3] Supplies
[4] Equipment
[5] Notes payable
[6] Vouchers payable
[7] FICA payable
[8] Wages payable
[9] Purchases
[10] Purchase discounts
[11] Discounts lost
[12] Repairs expense
[13] Interest expense
[14] Delivery expense
Indicate the account(s) to be debited and credited to record the following transactions.
The company uses the periodic inventory method.
Prepared voucher #424 in the amount of $6,240 in reply to the payroll department’s
request for payment of last week’s wages.
Debit ________ Credit ________
Given the following payroll items you are to identify whether they are the responsibility
of the employer and/or the employee by placing an X in the appropriate column.
Prepare the general journal entry to record the payment of the employees.
___________________________________________ _________ _________
___________________________________________ _________ _________
___________________________________________ _________ _________
___________________________________________ _________ _________
Alpha-Omega Industries has 20,000 shares of $10 par common stock and 10,000 shares
of $40 par, 5% preferred stock outstanding. Total dividends available are $62,000.
Compute the dividends to be distributed to preferred and common stockholders under
the following condition.
The preferred stock is nonparticipating and cumulative with no dividends distributed
last year.
Prepare a statement of retained earnings in proper form for Gray Corporation for the
year ended December 31, 20XX, from the following:
Retained Earnings, January 1, 20XX $7,700
Dividends declared during the year 1,400
Net income for the year 10,000
Correction of prior year error, Sales overstated 3,000
Why will the Income Summary account never appear on a financial statement?
Identify whether a debit or credit would be correct for each of the following account
changes. Use a Dr. (debit) or Cr. (credit) in the space provided.
________ 1. Increase Delivery Van
________ 2. Increase Accounts Receivable
________ 3. Increase Accounts Payable
________ 4. Increase Salaries Expense
________ 5. Increase Service Fees Earned
________ 6. Decrease Cash
________ 7. Increase S. McCrae, Capital
________ 8. Increase S. McCrae, Withdrawals
________ 9. Increase Rent Expense
________ 10. Increase Equipment
Emerald Corporation uses a voucher system and completed the following transactions:
Dec. 31 Prepared voucher #422 to replenish the petty cash fund based on the
following receipts: supplies $47, postage $48, and cash over $2.
31 Issued check #1003 in payment of voucher #422.
Required: Prepare general journal entries to record the above transactions. Omit
explanations.
Explain the purpose of workers’ compensation, and discuss the premium cost to the
employer.
Given the following payroll items you are to identify whether they are the responsibility
of the employer and/or the employee by placing an X in the appropriate column.