Which of the following is described as a system where customers send their checks
directly to a post office box that belongs to a bank?
A) an encryption system
B) an imprest system
C) a lock-box system
D) a firewall system
An invoice of $600 for merchandise purchased is showing 2/15, n/30 as terms of credit.
If the invoice is paid on or before the fifteenth day after the invoice date, the amount to
be paid is ________.
A) $588
B) $600
C) $612
D) $615
The three major categories included on the statement of cash flows are ________.
A) investing, operating, and financing activities
B) investing, capital, and financing activities
C) investing, operating, and contracting activities
D) financial, operating, and internal control activities
The balances of select accounts of Sandra, Inc. as of December 31, 2018 are given
below:
The insurance has been prepaid until June 30, 2019. Determine the amount of total current
assets reported on the balance sheet at December 31, 2018.
A) $12,300
B) $5,800
C) $8,550
D) $6,250
Which of the following accounts will have an ending balance after the closing process
is completed?
A) Dividends
B) Rent Expense
C) Accumulated Depreciation
D) Service Revenue
Which of the following is NOT an internal control over the petty cash fund?
A) Petty cash tickets are sequentially numbered.
B) A specific amount of cash is designated to be kept in the petty cash fund.
C) Petty cash tickets serve as the authorization voucher and explanation.
D) Two custodians should be assigned responsibility for the petty cash fund.
On July 7, A-1 Credit Union loaned $440,000 to Bridal Retail Shop on a 90 day, 8%
note. What is the maturity date of the note?
A) October 7
B) October 5
C) October 6
D) October 8
When inventory costs are declining, which of the following inventory costing method
will result in the lowest ending merchandise inventory?
A) first-in, first-out
B) last-in, first-out
C) weighted-average
D) specific identification
Angie Pereira and Ferro Schwartz are employees of Free Star, Inc. In February 2019,
Angie’s gross pay was $6000, and Ferro’s gross pay was $7400. All earnings are subject
to FICA—OASDI Tax of 6.2% and FICA—Medicare Tax of 1.45%. Which of the
following would be included in the entry to record the salaries expense for February?
A) a debit to Salaries Payable to employees for $830.80
B) a debit to FICA—Medicare Taxes Payable for $830.80
C) a credit to FICA—OASDI Taxes Payable for $830.80
D) a credit to Salaries Expense for $830.80
During the accounting period, office supplies were purchased on account for $3,200. A
physical count, on the last day of the accounting period, shows $1,100 of office supplies
on hand. Supplies Expense for the accounting period is $3,300. What was the beginning
balance of Office Supplies?
A) $4,400
B) $2,100
C) $1,200
D) There is not enough information to answer this question.
Earning more income on borrowed money than the related interest expense is called
________.
A) operating leverage
B) financial leverage
C) annuity
D) amortization
Regarding the inventory system used by small retailers, which of the following
statements is incorrect?
A) Some small retailers find it too expensive to invest in a perpetual inventory system.
B) To be competitive, small retailers must use a perpetual inventory system.
C) In a periodic inventory system, businesses must obtain a physical count of inventory
to determine quantities on hand.
D) Small retailers can use either the periodic or perpetual inventory system.
Goldman Services hired a new clerk to keep custody of and maintain all the equipment
in the equipment yard. The clerk has not yet been adequately trained on the
maintenance needs of the equipment. Which internal control procedure needs
strengthening?
A) assignment of responsibilities
B) competent, reliable, and ethical personnel
C) separation of duties
D) documents
National Mining Corp. purchased a mine, which holds an estimated 36,000 tons of iron
ore, on January 1, 2018, for $526,000. The mine is expected to have zero residual value.
The business extracted and sold 7500 tons of ore in 2018 and 15,800 tons of ore in
2019. What is the depletion expense for 2018? (Round any intermediate calculations to
two decimal places, and your final answer to the nearest dollar.)
A) $230,838
B) $109,575
C) $194,838
D) $416,385
On January 1, Southwest Corp. accepted a one-year note for $70,000 at 5% from one of
its customers. When the note matured on December 31, the customer was unable to pay,
and the company recorded the dishonor. The amount of the debit recorded on December
31 is ________.
A) $66,500
B) $3,500
C) $70,000
D) $73,500
Which of the following is NOT a type of adjusting entry?
A) deferred expenses
B) accrued revenues
C) unearned expenses
D) deferred revenues
Newton Corporation settles a liability by making a payment in cash. How does paying
this liability affect the accounting equation of the business?
A) Assets and liabilities decrease.
B) Liabilities decrease and equity increases.
C) Assets and liabilities increase.
D) Assets increase and equity decreases.
York Merchandising Company uses a perpetual inventory system. At the end of the
accounting period, a physical count of merchandise inventory reveals a balance of
$76,500. The books show a balance of $78,200.
(a) Prepare the adjusting entry. Omit explanation.
(b) Discuss the possible causes for the difference between the physical count and the
balance in the books.
(c) How does this affect net income?
Pearlman, Inc. provides the following information for 2019:
The company has no preferred stock outstanding. Calculate the dividend payout ratio.
(Round any intermediate calculations and your final answer to two decimal places.)
A) 45.66%
B) 24.32%
C) 40.00%
D) 47.39%
A company purchased inventory for $74,000 from a vendor on account, FOB shipping
point, with terms of 3/10, n/30. The company paid the shipper $1,600 cash for freight
in. The company paid the vendor nine days after the invoice date. If there was no
beginning inventory, the cost of inventory would be ________. (Assume a perpetual
inventory system.)
A) $73,380
B) $75,600
C) $70,180
D) $72,400
The four-column account ________.
A) is an alternative to using the ledger
B) includes the Post. Ref. column which allows a user of the financial data to trace the
amount in the journal back to the ledger
C) is not frequently used in practice because it provides less information than
T-accounts
D) adds two additional columns that are used to determine a running balance
Which of the following inventory costing methods yields the highest net income during
a period of rising inventory costs?
A) specific identification
B) weighted-average
C) last-in, first-out
D) first-in, first-out
Better Deals, Inc. has 6 units in inventory on December 31. The units were purchased in
November for $165 each. The price lists from the suppliers indicate that the same items
would now cost the company a total of $1,020. What would be the amount reported as
ending Merchandise Inventory on the balance sheet?
A) $2,010
B) $335
C) $990
D) $1,020
The following contains information from the records of Bourne Engineers and
Architects.
Bourne Engineers and Architects
Selected Financial Information
December 31, 2019
Calculate the current ratio. (Round your answer to two decimal places.)
A) 1.51
B) 2.25
C) 0.59
D) 1.90
The entries that transfer the revenue, expense, and dividends balances to the Retained
Earnings account to prepare the company’s books for the next period are called
________ entries.
A) closing
B) opening
C) adjusting
D) end of period
Accounts Receivable is a(n) ________ account and has a normal ________ balance.
A) liability; debit
B) asset; debit
C) liability; credit
D) asset; credit
Which of the following is the typical order of the sections on a statement of cash flows?
A) operating, financing, investing
B) financing, investing, operating
C) investing, operating, financing
D) operating, investing, financing
Littlefield Industries purchased a bond on September 1 of the current year for $200,000
and classified the investment as trading debt. The market value of the trading debt
investment at year-end is $196,000. The adjustment is ________.
A) reported as a separate component of stockholders’ equity
B) added to the Trading Debt Investments account
C) not reported on the income statement because the bond has not been disposed of
D) reported as a $4,000 unrealized holding loss in the Other Income and (Expenses)
section of the income statement
Which of the following statements is true of a corporation?
A) Corporations pay the same variety of taxes as partnerships.
B) Although a corporation is a separate legal entity, it cannot be sued.
C) Any stockholder of a corporation can commit the corporation to a binding contract.
D) The owners of a corporation are called stockholders.
Which of the following accounts would appear in the balance sheet credit column of the
worksheet?
A) Prepaid Insurance
B) Buildings
C) Unearned Revenue
D) Service Revenue
In a multi-step income statement, which of the following items is excluded from the
calculation of operating income?
A) gross profit
B) interest expense
C) selling expense
D) administrative expense
Ratio analysis ________.
A) cannot be used to evaluate a company’s financial condition
B) is used most effectively to compare a company against other companies in the same
industry and to denote trends within the company
C) cannot be used to compare a company against other companies in the same industry
because the necessary information is not available
D) cannot be used to evaluate a company’s performance
Journal entries are required for the reconciling items on the book side because
________.
A) those transactions have not yet been recorded by the bank
B) the adjusted balances on both sides are the same amounts
C) the amounts are immaterial
D) those transactions have not yet been recorded on the company’s books
When a company receives a dividend payment on investments in equity securities with
no significant influence, the ________.
A) total assets will remain unaffected
B) long-term assets will decrease
C) total equity will increase
D) total liabilities will decrease