When the direct write-off method is used:
A) the estimated amount of bad debts is debited to Bad Debt Expense.
B) the estimated amount of bad debts is debited to Allowance for Doubtful Accounts.
C) the estimated amount of bad debts is debited to which account Accounts Receivable.
D) bad debts are not estimated.
Which of the following is the primary goal of internal controls for cash payments?
A) Ensure that the business pays only for properly authorized transactions
B) Confirm that the request for payments is made by someone who is approved to order
goods or services of the type and amount requested
C) Ensure that the supplier charges only for items received at approved prices
D) Make payments only when a purchase is supported by complete voucher
documentation
On October 31, 2015, the bank statement shows that your company has $12,956.73 in
its checking account. You are aware of three outstanding checks for a total of $2,112.19.
During October, 2015, the bank rejected two deposited checks from customers totaling
$654.19 because of insufficient funds and charged you $12.00 in service fees. You had
not yet received notice about the bad checks, but you were aware of and have recorded
the $12.00 of service fees. Prior to adjustment on October 31, 2015, your Cash account
would have a balance of:
A) $14,402.73.
B) $15,711.11.
C) $11,498.73.
D) $10,202.35.
The net cash flow provided by operating activities is an inflow of $37,042, the net cash
flow used in investing activities is $16,831, and the net cash flow used in financing
activities is $26,397. If the beginning cash account balance is $11,283, what is the
ending cash account balance?
A) $5,097
B) ($6,186)
C) $38,759
D) $27,476
Which of the following groups of accounts contains only those that normally have
credit balances?
A) Accounts Payable, Service Revenue, and Retained Earnings
B) Cash, Equipment, and Common Stock
C) Notes Payable, Salaries and Wages Payable, and Rent Expense
D) Cash, Accounts Receivable, and Retained Earnings
A piece of equipment was acquired on January 1, 2015, at a cost of $22,000, with an
estimated residual value of $2,000 and an estimated useful life of four years. The
company uses the double-declining-balance method. What is its book value at
December 31, 2016?
A) $5,500
B) $10,000
C) $11,000
D) $12,000
Which one of the following events would not require a journal entry on a corporation’s
books?
A) 2-for-1 stock split
B) 100% stock dividend
C) 2% stock dividend
D) $1 per share cash dividend
Which of the following could indicate bad news?
A) An increase in fixed asset turnover ratio
B) A decrease in days to sell
C) A decrease in EPS
D) A decrease in the debt-to-assets ratio
Which of the following measures would assist in assessing the profitability of a
company?
A) Debt-to-assets ratio
B) Fixed asset turnover ratio
C) Receivables turnover ratio
D) Current ratio
Which of the following measures would assist in assessing the liquidity of a company?
A) Return on equity
B) Fixed asset turnover ratio
C) Receivables turnover ratio
D) Times interest earned
The company has $10,000 in its checking account, $20,000 in its savings account,
$1,000 in petty cash, $25,000 in one-year Treasury bills, and $15,000 in a money
market fund. What amount should be reported as cash and cash equivalents on the
balance sheet?
A) $30,000
B) $31,000
C) $46,000
D) $71,000
Which of the following depreciation methods is used by most corporations to calculate
depreciation expense for their tax returns?
A) MACRS
B) Straight-line
C) Units-of-production
D) Double-declining balance
The following information is taken from the income statement of Muir Company:
Based on this information, what is the amount of net cash flow provided by operating
activities?
A) $149,000
B) $140,000
C) $146,000
D) $134,000
Which of the following items is not a specific account in a company’s chart of
accounts?
A) Income Tax Expense
B) Sales Revenue
C) Unearned Revenue
D) Net Income
If a company did not extend credit to customers:
A) gross revenue would increase.
B) costs would increase but so would sales revenue.
C) costs would decrease but so would sales revenue.
D) gross profit would increase.
If the total amount that should have been debited to Insurance Expense is mistakenly
debited instead to Prepaid Insurance, what will be the effect on the financial statements
for the year?
A) Revenues will be overstated.
B) Assets will be overstated.
C) Stockholders’ equity will be understated.
D) Expenses will be overstated.
A corporate charter specifies that the company may sell up to 20 million shares of
stock. The company sells 12 million shares to investors and later buys back 3 million
shares. The current number of outstanding shares after these transactions have been
accounted for is:
A) 8 million shares.
B) 20 million shares.
C) 10 million shares.
D) 9 million shares.
Which of the following items appear on more than one financial statement?
A) Ending Cash and ending Retained Earnings
B) Ending Cash and beginning Retained Earnings
C) Sales Revenue and ending Retained Earnings
D) Beginning Cash and Sales Revenue
To determine net cash provided by or used in financing activities, one must analyze the:
A) Notes Receivable and Bonds Payable accounts.
B) Cash account.
C) Common Stock and Retained Earnings accounts.
D) Interest Expense and Dividend Income accounts.