The current source of “GAAP” in the private sector is the
a. Accounting Principles Board.
b. Internal Revenue Service.
c. Financial Accounting Standards Board.
d. Securities Exchange Commission.
Answer:
Jack’s, a popular pizza hang-out, has a thriving delivery business. Jack’s has a fleet of
three delivery automobiles. Prior to making the entry for this year’s depreciation
expense, the subsidiary ledger for the fleet is as follows:
Instructions
(a) Determine the depreciation rates per mile for each car.
(b) Determine the depreciation expense for each car for the current year.
(c) Make one compound journal entry to record the annual depreciation expense for the
fleet.
Answer:
All of the following are parties to a check except the
a. bank.
b. Federal Reserve.
c. maker.
d. payee.
Answer:
McGoff Company deposits $20,000 in a fund at the end of each year for 5 years. The
fund pays interest of 4% compounded annually. The balance in the fund at the end of 5
years is computed by multiplying
a. $20,000 by the future value of 1 factor.
b. $100,000 by 1.04.
c. $100,000 by 1.20.
d. $20,000 by the future value of an annuity factor.
Answer:
When the allowance method of accounting for uncollectible accounts is used, Bad Debt
Expense is recorded
a. in the year after the credit sale is made.
b. in the same year as the credit sale.
c. as each credit sale is made.
d. when an account is written off as uncollectible.
Answer:
The use of IFRS results in more transactions affecting
a. net income but not other comprehensive income.
b. other comprehensive income, but not net income.
c. but net income and other comprehensive income.
d. neither net income nor other comprehensive income.
Answer:
The best interpretation of the word credit is the
a. offset side of an account.
b. increase side of an account.
c. right side of an account.
d. decrease side of an account.
Answer:
Match the items below by entering the appropriate code letter in the space provided.
A. Compound interest
B. Future value of a single amount
C. Future value of an annuity
D. Present value of a single amount
E. Present value of an annuity
_____ 1> The value today of a future amount to be received or paid.
_____ 2> The value at a future date of a given amount invested.
_____ 3> Return on principal plus interest for two or more periods.
_____ 4> Value today of a series of future amounts to be received or paid.
_____ 5> The sum of all the payments or receipts plus the accumulated compound
interest on them.
Answer:
As an indicator of financial health, a low ratio is desirable for the
a. asset turnover ratio.
b. return on assets ratio.
c. acid-test ratio.
d. debt to assets ratio.
Answer:
The acquisition of land by issuing common stock is
a. a noncash transaction which is not reported in the body of a statement of cash flows.
b. a cash transaction and would be reported in the body of a statement of cash flows.
c. a noncash transaction and would be reported in the body of a statement of cash flows.
d. only reported if the statement of cash flows is prepared using the direct method.
Answer:
Which of the following depicts the proper sequence of steps in the accounting cycle?
a. Journalize the transactions, analyze business transactions, prepare a trial balance
b. Prepare a trial balance, prepare financial statements, prepare adjusting entries
c. Prepare a trial balance, prepare adjusting entries, prepare financial statements
d. Prepare a trial balance, post to ledger accounts, post adjusting entries
Answer:
The adjustments entered in the adjustments columns of a worksheet are
a. not journalized.
b. posted to the ledger but not journalized.
c. not journalized until after the financial statements are prepared.
d. journalized before the worksheet is completed.
Answer:
Jungle Corporation’s stockholders’ equity section at December 31, 2014 appears below:
On June 30, 2015, the board of directors of Kenner Corporation declared a 15% stock
dividend, payable on July 31, 2015, to stockholders of record on July 15, 2015. The fair
value of Kenner Corporation’s stock on June 30, 2015, was $15.
On December 1, 2015, the board of directors declared a 2 for 1 stock split effective
December 15, 2015. Jungle Corporation’s stock was selling for $20 on December 1,
2015, before the stock split was declared. Par value of the stock was adjusted. Net
income for 2015 was $190,000 and there were no cash dividends declared.
Instructions
(a) Prepare the journal entries on the appropriate dates to record the stock dividend and
the stock split.
(b) Fill in the amount that would appear in the stockholders’ equity section for Jungle
Corporation at December 31, 2015, for the following items:
Answer:
Jack Company provides for bad debt expense at the rate of 2% of credit sales. The
following data are available for 2015:
The Allowance for Doubtful Accounts balance at December 31, 2015, should be
a. $3,000.
b. $21,000.
c. $24,000.
d. $27,000.
Answer:
Inventoriable costs include all of the following except the
a. freight costs incurred when buying inventory.
b. costs of the purchasing and warehousing departments.
c. cost of the beginning inventory.
d. cost of goods purchased.
Answer:
Short-term notes receivable are reported at
a. cash (net) realizable value.
b. face value.
c. gross realizable value.
d. maturity value.
Answer:
A current liability is a debt that can reasonably be expected to be paid
a. within one year or the operating cycle, whichever is longer.
b. between 6 months and 18 months.
c. out of currently recognized revenues.
d. out of cash currently on hand.
Answer:
Norton Company has accounts receivable of $40,000 in its general ledger at July 31:
During August, the following transactions occurred.
Instructions
(a) Journalize the transactions.
(b) Indicate the statement presentation of finance and service charges.
Answer:
The following transactions took place for Xiu Xiu Company:
(a) Purchased equipment on account for $9,000.
(b) Billed customers $5,000 for services performed.
(c) Made payment of $2,300 on account for equipment purchased earlier in month.
(d) Collected $2,900 on customer accounts.
1> What is the balance in Accounts Payable at June 30, 2015?
2> What is the balance in Accounts Receivable at June 30, 2015?
Answer:
Accounts receivable arising from sales to customers amounted to $40,000
and $55,000 at the beginning and end of the year, respectively. Income
reported on the income statement for the year was $180,000. Exclusive of
the effect of other adjustments, the cash flows from operating activities to
be reported on the statement of cash flows is
1. $180,000.
2. $195,000.
3. $220,000.
4. $165,000.
Answer:
Only large companies need to be concerned with a system of internal control.
Answer:
Greene Corporation had the information listed below available in preparing an income
statement for the year ended December 31, 2015. All amounts are before income taxes.
Assume a 30% income tax rate for all items.
Instructions
Prepare a multiple-step income statement in good form which takes into account
intraperiod income tax allocation. Ignore EPS computations.
Answer:
Give the definition of current assets and current liabilities and provide two examples of
each.
Answer:
Bakesale Enterprises purchased equipment on May 1, 2015 for $6,300. The company
expects to use the equipment for 5 years. It has no salvage value.
1> What adjusting journal entry should the company make at the end of each month if
monthly financials are prepared (annual depreciation is $1,260)?
2> What is the book value of the equipment at May 31, 2015?
Answer: