Identify the classifications of the following accounts as either current or long-term
liabilities for the December 31, 2014 balance sheet.
a. Current liability
b. Long-term liability
An amount of money owed to a supplier based on the terms 2/20, n/40, for which no
note was executed.
Indicate whether each should be (a) included or (b) excluded from the line item titled
Cash and cash equivalents on the balance sheet.
a. Included
b. Excluded
Checking account
Which of the following statements best describes one effect of recognizing expenses
incurred by a business entity?
a. Assets will increase.
b. Liabilities will decrease.
c. Stockholders’ equity will increase.
d. Stockholders’ equity will decrease.
At the year end inventory count, if goods in transit are shipped FOB shipping point,
they should be included in the inventory count of
a. The seller
b. The buyer
c. Both the seller and the buyer
d. Neither the seller no the buyer
Cerrato Company has assets of $350,000, liabilities of $130,000, and retained earnings
of $180,000. How much is
total owners’ equity?
a. $ 40,000
b. $ 170,000
c. $ 220,000
d. $ 350,000
Which of the following statements is true with regard to contributed capital?
a. Preferred stock is stock that has been retired.
b. It is very unlikely corporations may have more than one class of stock outstanding.
c. The outstanding number of shares is the maximum number of shares that can be
issued by a corporation.
d. The shares that are in the hands of the stockholders are said to be outstanding.
Bing’s Export Co. Bing’s Export Co. purchased a new delivery truck at the beginning of
2015. The truck has a cost of $37,000, an estimated life of 5 years, and an estimated
residual value of $7,000. A full year’s depreciation expense is to be recorded in 2015.
The truck was driven 20,000 miles during 2015 and 24,000 miles during 2016. The
number of expected miles over five years is 100,000.
Refer to information for Bing’s Export Co. Bing’s is comparing the straightÂline and
doubleÂdecliningÂbalance depreciation methods. Of these two methods, which method
creates the larger expense and larger tax savings in 2015?
a. Straight-line depreciation creates the larger expense, while double-declining-balance
depreciation creates the larger tax savings.
b. Straight-line depreciation creates both the larger expense and the larger tax savings.
c. Double-declining-balance depreciation creates both the larger expense and the larger
tax savings.
d. Double-declining-balance depreciation creates the larger expense, while straight-line
depreciation creates the larger tax savings.
Webb Company
Selected data from the accounting records of Webb Company are listed below:
Read the information about Webb Company. What is Webb’s net income?
a. $ 1,600
b. $ 2,000
c. $ 2,200
d. $ 2,800
An entry made to the right side of an account is called a
a. debit
b. credit
c. double-entry system
d. journal entry
Which one of the following could never be considered to be cash equivalents?
a. Common stock issued by a corporation
b. Money market funds
c. Corporate commercial paper
d. U.S. Treasury bills
Proctor Inc. has a weekly payroll of $8,000 for a 5-day workweek, Monday through
Friday. If December 31, the last day of the accounting year, falls on Wednesday, Proctor
would make an adjusting entry that would
a. increase wages expense $4,800.
b. decrease wages payable $4,800.
c. decrease cash $4,800.
d. increase wages payable $8,000.
Which of the following items is added to net income to determine cash flows from
operating activities when the indirect method is used to prepare the Operating Activities
category of the statement of cash flows?
a. Accumulated depreciation
b. Cash from note payable related to truck acquired
c. Cost of plant assets acquired during the year
d. Depreciation expense