An aging of a company’s accounts receivable indicates that $7,000 are estimated to be
uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance, the
adjustment to record bad debts for the period will require a
a. debit to Bad Debts Expense for $7,000.
b. debit to Allowance for Doubtful Accounts for $5,900.
c. debit to Bad Debts Expense for $5,900.
d. credit to Allowance for Doubtful Accounts for $7,000.
Answer:
For the income statement, IFRS requires
a. single-step approach.
b. multiple-step approach.
c. single-step approach or multiple-step approach.
d. no specific income statement approach.
Answer:
Fugazi City College sold season tickets for the 2015 football season for $240,000. A
total of 8 games will be played during September, October and November. In
September, two games were played. In October, three games were played. The balance
in Unearned Ticket Revenue at October 31 is
a. $0.
b. $60,000.
c. $90,000.
d. $150,000.
Answer:
Which of the following is in accordance with generally accepted accounting principles?
a. Accrual-basis accounting
b. Cash-basis accounting
c. Both accrual-basis and cash-basis accounting
d. Neither accrual-basis nor cash-basis accounting
Answer:
A loss on disposal of a plant asset is reported in the financial statements
a. in the Other Revenues and Gains section of the income statement.
b. in the Other Expenses and Losses section of the income statement.
c. as a direct increase to the capital account on the balance sheet.
d. as a direct decrease to the capital account on the balance sheet.
Answer:
In analyzing financial statements, horizontal analysis is a
a. requirement.
b. tool.
c. principle.
d. theory.
Answer:
In recording an accounting transaction in a double-entry system
a. the number of debit accounts must equal the number of credit accounts.
b. there must always be entries made on both sides of the accounting equation.
c. the amount of the debits must equal the amount of the credits.
d. there must only be two accounts affected by any transaction.
Answer:
A review of the November 30 bank statement and other data of James Company reveals
the following:
Instructions: Prepare the November 30 (a) bank reconciliation (omit heading) and (b)
related journal entries.
(b)
Answer:
Ramos Corporation sold 400 shares of treasury stock for $45 per share. The cost for the
shares was $35. The entry to record the sale will include a
a. credit to Gain on Sale of Treasury Stock for $14,000.
b. credit to Paid-in Capital from Treasury Stock for $4,000.
c. debit to Paid-in Capital in Excess of Par for $4,000.
d. credit to Treasury Stock for $18,000.
Answer:
The ledger accounts should be arranged in
a. chronological order.
b. alphabetical order.
c. financial statement order.
d. order of appearance in the journal.
Answer:
If employees are bonded
a. it means that they are not allowed to handle cash.
b. they have worked for the company for at least 10 years.
c. they have been insured against misappropriation of assets.
d. it is impossible for them to steal from the company.
Answer:
The formula for horizontal analysis of changes since the base period is the current year
amount
a. divided by the base year amount.
b. minus the base year amount divided by the base year amount.
c. minus the base year amount divided by the current year amount.
d. plus the base year amount divided by the base year amount.
Answer:
A petty cash fund should not be used for
a. postage due.
b. loans to the petty cash custodian.
c. taxi fares.
d. customer lunches.
Answer:
The gross profit rate is computed by dividing gross profit by
a. cost of goods sold.
b. net income.
c. net sales.
d. sales revenue.
Answer:
When an account is written off using the allowance method, the
a. cash realizable value of total accounts receivable will increase.
b. cash realizable value of total accounts receivable will decrease.
c. allowance account will increase.
d. cash realizable value of total accounts receivable will stay the same.
Answer:
If an adjusting entry is not made for an accrued expense,
a. expenses will be overstated.
b. liabilities will be understated.
c. net income will be understated.
d. stockholders’ equity will be understated.
Answer:
Which of the following pairs of terms in the area of financial statement analysis are
synonymous?
a. Ratio ‘” Trend
b. Horizontal ‘” Trend
c. Vertical ‘” Ratio
d. Horizontal ‘” Ratio
Answer:
The following information is available for Yancey Company:
Assume that Yancey uses a periodic inventory system and that there are 700 units left at
the end of the month.
Instructions
Compute each of the following under the average-cost method:
(a) Cost of ending inventory.
(b) Cost of goods sold.
Answer:
Long-term creditors are usually most interested in evaluating
a. liquidity and solvency.
b. solvency and marketability.
c. liquidity and profitability.
d. profitability and solvency.
Answer:
Accounting is an information system that identifies, _____________, and
_____________ the economic events of an organization.
Answer:
Bookkeeping and accounting are one and the same because the bookkeeping function
includes the accounting process.
Answer:
An accounts receivable subsidiary ledger has all the detailed information about the cash
sales to individual customers.
Answer:
Presented below is the Trial Balance and Adjusted Trial Balance for Morning Jacket
Company on December 31.
Instructions
Prepare in journal form, with explanations, the adjusting entries that explain the
changes in the balances from the trial balance to the adjusted trial balance.
Answer:
On January 1, Oetry Corporation purchased a 35% equity in Selig Company for
$190,000. At December 31, Selig declared and paid a $50,000 cash dividend and
reported net income of $80,000.
Instructions
Prepare the necessary journal entries for Oetry Corporation.
Answer:
Desert Corporation has the following capital stock outstanding at December 31, 2015:
The preferred stock was issued at $130 per share. The common stock was issued at an
average per share price of $14.
Instructions
Prepare the paid-in capital section of the balance sheet at December 31, 2015.
Answer:
FICA taxes withheld and federal income taxes withheld are mandatory payroll
deductions.
Answer:
When an asset is purchased during the year, it is not necessary to record depreciation
expense in the first year under the declining-balance depreciation method.
Answer:
It is not necessary to prepare formal financial statements if a worksheet has been
prepared because financial position and net income are shown on the worksheet.
Answer:
If a plant asset is sold at a gain, the gain on disposal should reduce the cost of goods
sold section of the income statement.
Answer: