The amount shown in the balance sheet debit column of worksheet for Merchandise
Inventory is:
A) the Cost of Goods Sold.
B) net purchases + beginning merchandise inventory.
C) the ending inventory.
D) the beginning inventory.
The cash flows from operating activities are reported by the direct method on the
statement of cash flows. Determine the following:
a. If sales for the current year were $700,000 and accounts receivable increased $25,000
during the year, what was the amount of cash received from customers?
b. If sales salaries expense for the current years was $70,000 and sales salaries payable
increased $25,000 during the year, what was the amount of cash payments for sales
salaries?
Which accounts are affected when the company provides services to a cash customer?
A) Assets and Capital
B) Liabilities and revenue
C) Assets and Revenue
D) None of the above is correct.
The purchase of equipment with both cash and on account was recorded as only a credit
purchase. Due to this error:
A) assets would be understated.
B) liabilities would be overstated.
C) owner’s equity would be overstated.
D) None of the above is correct.
Brooke Company grants James Decorating additional time to pay its past due account.
James makes a written promise to pay Brooke the amount on a certain date. Brooke
Company records this transaction as follows:
A) debit Notes Receivable; credit Accounts Receivable.
B) debit Cash; credit Accounts Receivable.
C) debit Accounts Receivable; credit Notes Receivable.
D) debit Accounts Payable; credit Notes Payable.
When a partnership is liquidated, the journal entry to pay the claims of creditors would
include:
A) a debit to Cash.
B) a debit to each individual creditor.
C) a credit to cash.
D) Both B and C
The entry to close the owner’s Withdrawals account will include which of the
following?
A) A debit to Income Summary
B) A credit to Capital
C) A credit to Withdrawals
D) A debit to Withdrawals
Alcatraz Boat Tours showed store supplies available during the year, $600. If at the end
of the month supplies used were $200, the adjusting entry would include a:
A) debit to Supplies Expense for $200.
B) debit to Supplies Expense for $350.
C) credit to Supplies Expense for $200.
D) credit to Supplies Expense for $350.
In a common-size income statement, advertising expenses are 10%. This means that
they are 10% of:
A) net income.
B) net sales.
C) gross profit.
D) net profit.
A partnership can be terminated by which of the following?
A) Bankruptcy
B) Death of a partner
C) Agreement by partners
D) All of the above
A $1,000 bond quoted at 98 would sell for:
A) $1,000.
B) $98.
C) $980.
D) None of the above
An exchange of one share of an old issue of stock for a multiple number of shares of a
new issue of stock with reduced par value is known as a:
A) property dividend.
B) stock dividend.
C) stock split.
D) liquidating dividend.
The account for Payroll Tax Expense includes all of the following except:
A) federal unemployment taxes.
B) FICA taxes (OASDI and Medicare) paid by the employer for the latest payroll
period.
C) state unemployment taxes.
D) federal income tax.
The Collins Corporation Stockholders’ Equity section includes the following:
What was the total amount preferred stock was sold for?
A) $12,000
B) $14,700
C) $16,100
D) $20,200
Which of the following statements is false?
A) Bondholders would be paid before stockholders in a liquidation.
B) Dividends are not required to be paid to stockholders.
C) Bondholders are owners while stockholders are creditors.
D) Bondholders receive a fixed interest while stockholders are paid only if earnings are
sufficient.
A partner that is personally liable for all of the debts of the partnership is known as:
A) a limited partner.
B) a general partner.
C) a mutual partner.
D) None of these answers is correct.
Of the following, which has a negative effect on the computation of cash flow from
operations using the indirect method?
A) Decrease in Inventory
B) Increase in Accounts Payable
C) Increase in Accounts Receivable
D) Decrease in Prepaid Insurance
The Federal Insurance Contributions Act is better known as:
A) FIT.
B) overtime laws.
C) FUTA.
D) FICA.
Mary sold Jill her equity in the Mary and Jill partnership for $23,000. If both Mary and
Jill had a $15,000 capital balance, the entry to record this transaction would be to:
A) debit Cash $23,000; credit Jill, Capital $23,000.
B) debit Mary, Capital $15,000; credit Jill, Capital $15,000.
C) debit Cash $15,000; credit Mary, Capital $15,000.
D) debit Jill, Capital $15,000; credit Mary, Capital $15,000.
The interest paid to bondholders is determined by:
A) multiplying the bond’s annual rate of interest by the face value.
B) multiplying the market rate of interest by the face value.
C) dividing the bond’s annual rate of interest by the face value.
D) dividing the face value by the bond’s annual rate of interest.
Which of the following accounts is a temporary account?
A) Withdrawals
B) Accounts Receivable
C) Cash
D) Accounts Payable
What would be the basis for the following entry on a firm’s records?
A) The firm is using the direct write-off method.
B) The firm is writing off an uncollectible account.
C) The firm is using the allowance method for estimating bad debt.
D) All of these answers are correct.
A company paid next month’s rent in advance. This would be classified as a(n):
A) current asset.
B) Expense.
C) Revenue.
D) Contra-Asset.
Which of the following is a non-depreciable asset?
A) Desk chairs
B) Land
C) Computer
D) Building
A maintenance department would be an example of a:
A) cost center.
B) direct expense.
C) profit center.
D) None of these answers is correct.
The carrying value for bonds sold at a premium:
A) equals face value at all times.
B) increases as time passes until it matures at face value.
C) decreases as time passes until it matures at face value.
D) None of these answers is correct.
Josh Kindel purchased equipment for $50,000 on January 1. Its residual value is $5,000
with a useful life of 10 years. The amount of depreciation expense in the first year
under the double declining-balance method is:
A) $9,000.
B) $10,000.
C) $5,000.
D) $4,500.
The Rent Expense account had a normal balance of $1,100. The entry to close the
account would include a:
A) debit to Rent Expense, $1,100.
B) debit to Income Summary, $1,100.
C) debit to Capital, $1,100.
D) credit to Income Summary, $1,100.
The records of Ashley Boutique showed Net Loss, $25,000; Depreciation Expense,
$35,000; and decrease in Supplies on Hand, $8,000. The amount of Net Cash Flow
from Operating Activities using the indirect method is:
A) $18,000.
B) $2,000.
C) ($18,000).
D) ($2,000).
The journal entry to record the estimate of uncollectible accounts includes a:
A) debit Bad Debts Expense; credit Allowance for Doubtful Accounts.
B) debit Bad Debts Expense; credit Accounts Receivable.
C) debit Allowance for Doubtful Accounts; credit Bad Debts Expense.
D) debit Sales; credit Bad Debt Expense.
Last year, Congo Corporation had net credit sales of $690,000 and it had uncollectible
accounts of $31,050. Based on last year, what would the percent of estimated
uncollectible accounts be this year?
A) 7.10%
B) 3.55%
C) 4.50%
D) 45.00%