Which of the following is not an external user of accounting data?
a. Company officers
b. Regulatory agency
c. Labor union
d. Taxing authority
Answer:
Which of the following is false?
a. Current assets are listed in the order of magnitude.
b. Obligations expected to be paid after one year are classified as long-term liabilities.
c. Intangible assets are non-current resources that do not have physical substance.
d. Property, plant, and equipment are tangible resources of a relatively permanent nature
that are used in the business and not intended for sale.
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:
Sarbanes Oxley applies to
a. U.S companies but not international companies.
b. international companies but not U.S. companies.
c. U.S. and Canadian companies but not other international companies.
d. U.S and international companies.
Answer:
Under IFRS
a. comparative prior-period information must be presented, but financial statements
need not be provided annually.
b. comparative prior-period informaton must be presented, and financial statements
must be provided annually.
c. comparative prior-period information is not required, and financial statements need
not be provided annually.
d. comparative prior-period information is not required, but financial statements must
be provided annually.
Answer:
Short-term investments are
a. (1) readily marketable and (2) intended to be converted into cash after the current
year or operating cycle, whichever is shorter.
b. (1) readily marketable and (2) intended to be converted into cash within the current
year or operating cycle, whichever is longer.
c. (1) readily marketable and (2) intended to be converted into cash after the current
year or operating cycle, whichever is longer.
d. (1) readily marketable and (2) intended to be converted into cash within the current
year or operating cycle, whichever is shorter.
Answer:
If expenses are paid in cash, then
a. assets will increase.
b. liabilities will decrease.
c. stockholders’ equity will increase.
d. assets will decrease.
Answer:
Indicate whether the following items would be reported as an ordinary or an
extraordinary item in Mallak Corporation’s income statement.
(a) Loss attributable to labor strike.
(b) Gain on sale of fixed assets.
(c) Loss from fire. Mallak is a chemical company.
(d) Loss from sale of short-term investments.
(e) Expropriation of property by a foreign government.
(f) Loss from hurricane damage. Mallak Corporation is located in the New Orleans
area.
(g) Loss from government condemnation of property through newly enacted law.
Answer:
Under the equity method, the Stock Investments account is increased when the
a. investee company reports net income.
b. investee company pays a dividend.
c. investee company reports a loss.
d. stock investment is sold at a gain.
Answer:
Stockholders’ equity is decreased by
a. assets.
b. revenues.
c. expenses.
d. liabilities.
Answer:
The ledger should be arranged in
a. alphabetical order.
b. chronological order.
c. dollar amount order.
d. financial statement order.
Answer:
When valuing ending inventory under a perpetual inventory system, the
a. valuation using the LIFO assumption is the same as the valuation using the LIFO
assumption under the periodic inventory system.
b. moving average requires that a new average be computed after every sale.
c. valuation using the FIFO assumption is the same as under the periodic inventory
system.
d. earliest units purchased during the period using the LIFO assumption are allocated to
the cost of goods sold when units are sold.
Answer:
The income statement for the month of June, 2015 of Camera Obscura Enterprises
contains the following information:
The entry to close Income Summary to Retained Earnings includes
a. a debit to Revenues for $7,000.
b. credits to Expenses totalling $5,700.
c. a credit to Income Summary for $1,300
d. a credit to Retained Earnings for $1,300.
Answer:
The respective normal account balances of Purchases, Purchase Discounts, and
Freight-in are
a. credit, credit, debit.
b. debit, credit, credit.
c. debit, credit, debit.
d. debit, debit, debit.
Answer:
Moroni Industries has the following inventory information.
Assuming that a periodic inventory system is used, what is the amount allocated to
ending inventory on a LIFO basis?
a. $11,500
b. $11,520
c. $33,960
d. $33,980
Answer:
Sales taxes collected by a retailer are expenses
a. of the retailer.
b. of the customers.
c. of the government.
d. that are not recognized by the retailer until they are submitted to the government.
Answer:
The term residual claim refers to a stockholders’ right to
a. receive dividends.
b. share in assets upon liquidation.
c. acquire additional shares when offered.
d. exercise a proxy vote.
Answer:
The time period assumption is also referred to as the
a. calendar assumption.
b. cyclicity assumption.
c. periodicity assumption.
d. fiscal assumption.
Answer:
The two ways that a corporation can be classified by purpose are
a. general and limited.
b. profit and not-for-profit.
c. state and federal.
d. publicly held and privately held.
Answer:
Effie Company uses a periodic inventory system. Details for the inventory account for
the month of January, 2015 are as follows:
An end of the month (1/31/15) inventory showed that 160 units were on hand. If the
company uses FIFO and sells the units for $10 each, what is the gross profit for the
month?
a. $1,120
b. $1,188
c. $1,532
d. $1,600
Answer:
When recording exchanges of assets that have commercial substance,
a. both gains and losses are recognized immediately.
b. the gain or loss on the old asset is the difference between its cost and its fair market
value.
c. gains are treated as increases in the cost of the new asset.
d. none of these answer choices are correct.
Answer:
Given the following account balances at year end, compute the total intangible assets on
the balance sheet of Kepler Enterprises.
a. $10,000,000
b. $6,000,000
c. $4,000,000
d. $8,000,000
Answer:
Legal capital per share cannot be equal to the
a. par value per share of par value stock.
b. total proceeds from the sale of par value stock above par value.
c. stated value per share of no-par value stock.
d. total proceeds from the sale of no-par value stock.
Answer:
Land improvements are generally charged to the Land account.
Answer:
An adjusting entry always involves two balance sheet accounts.
Answer:
Accrued revenues are revenues which have been received but not yet recognized.
Answer:
If $800,000, 6% bonds are issued on January 1, and pay interest semiannually, the
amount of interest paid on July 1 will be $24,000.
Answer:
Preferred stockholders generally do not have the right to vote for the board of directors.
Answer:
McIntyre Company made a purchase of merchandise on credit from Marvin Company
on August 8, for $9,000, terms 3/10, n/30. On August 17, McIntyre makes the
appropriate payment to Marvin. The entry on August 17 for McIntyre Company is:
Answer: