In the balance sheet the account Premium on Bonds Payable is
a. added to Bonds Payable.
b. deducted from Bonds Payable.
c. classified as a stockholders’ equity account.
d. classified as a revenue account.
Answer:
On January 1, Runner Corporation issued $2,000,000, 13%, 5-year bonds with interest
payable on July 1 and January 1. The bonds sold for $2,197,080. The market rate of
interest for these bonds was 11%. On the first interest date, using the effective-interest
method, the debit entry to Interest Expense is for:
a. $130,000.
b. $142,810.
c. $120,839.
d. $241,679.
Answer:
Which of the following would not appear in the operating activities section of a
statement of cash flows prepared under the direct method?
a. Cash receipts from customers
b. Cash paid for income taxes
c. Gain on sale of equipment
d. Cash paid to employees
Answer:
As an incentive for customers to pay their accounts promptly, a business may offer its
customers
a. a sales discount.
b. free delivery.
c. a sales allowance.
d. a sales return.
Answer:
After a business transaction has been analyzed and entered in the book of original entry,
the next step in the recording process is to transfer the information to
a. the company’s bank.
b. stockholders’ equity.
c. ledger accounts.
d. financial statements.
Answer:
In the Garnet Company, the beginning and ending balances in Land were $198,000 and
$240,000 respectively. During the year, land costing $50,000 was sold for $50,000 cash,
and land costing $92,000 was purchased for cash. The entries in the reconciling
columns of the worksheet will include a:
a. credit to Land $50,000 and a debit to Sale of Land $50,000 under investing activities.
b. debit to Land $92,000 and a credit to Purchase of Land $92,000 under financing
activities.
c. net debit to Land $42,000 and a credit to Purchase of Land $42,000 under investing
activities.
d. credit to Land $50,000 and a debit to Sale of Land $50,000 under financing activities.
Answer:
Jerri Rice has worked 44 hours this week. She worked at least of 8 hours each day. Her
regular hourly wage is $12 per hour with one and one-half times her regular rate for any
hours which exceed 40 hours per week. What are Jerri’s gross wages for the week?
a. $528
b. $552
c. $792
d. $576
Answer:
Under which of the following cases may a percentage change be computed?
a. The trend of the balances is decreasing but all balances are positive.
b. There is no balance in the base year.
c. There is a positive balance in the base year and a negative balance in the subsequent
year.
d. There is a negative balance in the base year and a positive balance in the subsequent
year.
Answer:
The most important element of the fraud triangle is
a. financial pressure.
b. incompatible duties.
c. opportunity.
d. rationalization.
Answer:
Under the equity method, the investor records dividends received by crediting
a. Dividend Revenue.
b. Investment Income.
c. Revenue from Investment.
d. Stock Investments.
Answer:
A debit balance in the Allowance for Doubtful Accounts
a. is the normal balance for that account.
b. indicates that actual bad debt write-offs have exceeded previous provisions for bad
debts.
c. indicates that actual bad debt write-offs have been less than what was estimated.
d. cannot occur if the percentage of sales method of estimating bad debts is used.
Answer:
Mehring Company reported net sales of $540,000, net income of $72,000, beginning
total assets of $240,000, and ending total assets of $360,000. What was the company’s
asset turnover?
a. 2.3 times
b. 0.6 times
c. 1.8 times
d. 1.5 times
Answer:
Last Inc., has 2,000 shares of 6%, $50 par value, cumulative preferred stock and
100,000 shares of $1 par value common stock outstanding at December 31, 2015, and
December 31, 2014. The board of directors declared and paid a $4,000 dividend in
2014. In 2015, $24,000 of dividends are declared and paid. What are the dividends
received by the preferred stockholders in 2015?
a. $16,000
b. $12,000
c. $8,000
d. $6,000
Answer:
Natural resources are generally shown on the balance sheet under
a. Intangibles.
b. Investments.
c. Property, Plant, and Equipment.
d. Stockholders’ Equity.
Answer:
Dart Company issued $600,000 of 8%, 5-year bonds at 105, with interest paid annually.
Assuming straight-line amortization, what is the carrying value of the bonds after one
year?
a. $630,000
b. $627,000
c. $624,000
d. $633,000
Answer:
What percentage of companies worldwide have experienced fraud in a recent two-year
period?
a. 1%
b. 10%
c. 50%
d. 100%
Answer:
When three or more accounts are required in one journal entry, the entry is referred to
as a ________________ entry.
Answer:
In order to prevent a transaction from being recorded more than once, a company
should maintain only one book of original entry.
Answer:
The acquisition of treasury stock by a corporation increases total assets and total
stockholders’ equity.
Answer:
Sigur Ros Company is a newly organized business. The list of accounts to be opened in
the general ledger is as follows:
Instructions
Organize the accounts into the order in which they should appear in the ledger of Sigur
Ros Company and assign account numbers. Use the following system to assign account
numbers.
Answer:
The income statement for Pepe Serna Company for the year ended December 31, 2015
is as follows:
Prepare the entries to close the revenue and expense accounts at December 31, 2015.
You may omit explanations for the transactions.
Answer:
Admire County Bank agrees to lend Givens Brick Company $600,000 on January 1.
Givens Brick Company signs a $600,000, 8%, 9-month note. What entry will Givens
Brick Company make to pay off the note and interest at maturity assuming that interest
has been accrued to September 30?
Answer:
The following ratios have been computed for Mason Company for 2016.
Mason Company’s 2016 financial statements with missing information follow:
Instructions
Use the above ratios and information from the Mason Company financial statements to
fill in the missing information on the financial statements. Follow the sequence
indicated. Show computations that support your answers.
Answer:
Inventory is reported as a long-term asset on the balance sheet.
Answer:
Book value per share of common stock is the same amount as the market value per
share.
Answer: