Which of the following are generally recorded as liabilities on the balance sheet if the
loss can be reasonably estimated?
A) Remote likelihood liabilities
B) Possible contingent liabilities
C) Probable contingent liabilities
D) Immaterial contingent liabilities
A company sells a piece of equipment half-way through the accounting period. The
straight-line rate of depreciation on the equipment is $40,000 per year. Before preparing
the entry to record the sale of the equipment, the company should first debit:
A) Depreciation Expense for $40,000 and credit Accumulated Depreciation for
$40,000.
B) Accumulated Depreciation for $40,000 and credit Cash for $40,000.
C) Depreciation Expense for $20,000 and credit Accumulated Depreciation for $20,000.
D) Cash for $20,000 and credit Depreciation Expense for $20,000.
A company pays salaries and wages every two weeks. Salaries and wages amount to
$100 a day and the company has a seven-day work week. On March 31, the company
pays wages for the two weeks ending March 24 and recorded the related journal entry.
The adjusting journal entry, dated March 31, to record unpaid wages and salaries owed
since March 25 will include a debit to:
A) Salaries and Wages Payable and a credit to Salaries and Wages Expense for $1,400.
B) Salaries and Wage Expense and a credit to Salaries and Wages Payable for $700.
C) Salaries and Wages Payable and a credit to Cash for $700.
D) Salaries and Wages Expense and a credit to Salaries and Wages Payable for $1,400.
A company plans to decrease a $200 petty cash fund to $75. The current balance in the
account includes $35 in receipts and $165 in currency. The entry to reduce the size of
the petty cash fund will include a:A) credit to Cash for $90.B) debit to Cash for $90.C)
debit to Petty Cash for $35.D) debit to Petty Cash for $75.
Which of the following statements about inventory turnover analysis is not correct?
A) In making comparisons of financial statements, it is desirable to compare data
calculated using the same inventory costing methods.
B) The inventory turnover ratio and days to sell measure will be affected by the cost
flow assumptions used, which causes problems for financial statements users.
C) Inventory turnover also can vary significantly between companies within the same
industry.
D) The inventory turnover and days to sell ratios are consistent among companies in
different industries.
Use the information above to answer the following question. What is the missing
amount for Notes Payable?
A) $207,100.
B) $437,800.
C) $1,439,200.
D) $3,347,700.
Assume that the custodian of a $450 petty cash fund has $62.50 in currency and coins
plus $387.50 in receipts at the end of the month. The entry to replenish the petty cash
fund will include a:
A) debit to Cash for $387.50.B) debit to Petty Cash for $387.50.
C) credit to Petty Cash for $387.50.D) credit to Cash for $387.50.
The first year of operations for a company was Year 1. The net income for the year Year
1 was $20,000 and dividends of $12,000 were paid. In Year 2, the company reported net
income of $34,000 and paid dividends of $5,000. At the end of Year 1, the company had
total assets of $150,000. At the end of Year 2, the company had total assets of $240,000.
Use the information above to answer the following question. What is the amount of
retained earnings at the end of Year 2?
A) $37,000.
B) $240,000.
C) $29,000.
D) $269,000.
A company issues 500,000 shares of preferred stock for $30 a share. The stock has a
fixed annual dividend rate of 5% and a par value of $9 per share. The current price of
the preferred stock is $32 a share. If sufficient dividends are declared, preferred
stockholders can anticipate receiving annual dividends of:
A) $0.45 per share.
B) $1.50 per share.
C) $1.60 per share.
D) $1.05 per share.
Which of the following statements about accrual basis accounting is correct?
A) If a company uses accrual basis accounting, the company should not record revenue
until payments is actually received.
B) If a company uses accrual basis accounting, the company should, the company
should record expenses in the same period as the revenues they generate.
C) IFRS does not allow accrual basis accounting for external reporting of income.
D) The items reported on the income statement continue to have an impact beyond the
current period, whereas the items reported on the balance sheet impact just the current
period.
Match the letter and the blank in each transaction description to complete the analysis.
Not all terms will be used and some terms may be used more than once.
TRANSACTION
1> A company pays wages. This is recorded as a(n) ________ to Cash and a(n)
________ to Salaries and Wages Expense.
2> A company is paid for a job completed last month. This is recorded as a debit to
________ and a credit to ________.
3> A restaurant buys and immediately uses ingredients. This is recorded as a(n)
________ to an expense account and a(n) ________ to Cash.
4> A customer pays in advance for services to be performed during the next month.
This is recorded as a ________ to Cash and a ________ to ________.
5> A company receives cash for a job that was completed during the current month.
This is recorded as a debit to ________ and a credit to ________.
TERM
A. debit
B. credit
C. Accounts Payable
D. Accounts Receivable
E. Cash
F. Notes Payable
G. Service Revenue
H. Supplies
I. Unearned Revenue