Refer to the following list of liability balances at December 31, 2018.
What is the total amount of current liabilities?
A) $35,380
B) $27,880
C) $27,480
D) $26,280
Converse Florists & Co. reported assets of $1,000 and equity of $450. What is its debt
ratio? (Round your percentage answer to two decimal places.)
A) 55.00%
B) 45.00%
C) 100.00%
D) 60.00%
The Accounts Payable account of Waterford, Inc. has the following postings:
Calculate the ending balance of the account.
A) $12,000 credit
B) $14,000 debit
C) $14,000 credit
D) $8,000 debit
The matching principle ________.
A) guides accounting for revenues and expenses
B) results in the matching of expenses incurred during the period to the cash paid for
expenses
C) ensures that all expenses are recorded when they are incurred during the period
D) results from a natural link between all expenses and revenues
Which of the following journal entries would be recorded if a business purchased $800
of office supplies on account?
A)
B)
C)
D)
Journalizing a transaction involves ________.
A) calculating the balance in an account using journal entries
B) posting the account balances in the chart of accounts
C) preparing a summary of account balances
D) recording the data only in the journal
Which of the following organizations requires publicly owned companies to be audited
by independent accountants (CPAs)?
A) Securities and Exchange Commission (SEC)
B) Public Company Accounting Oversight Board (PCAOB)
C) Financial Accounting Standards Board (FASB)
D) American Institute of Certified Public Accountants (AICPA)
Which of the following accounts will be included in a post-closing trial balance?
A) Service Revenue
B) Rent Expense
C) Interest Expense
D) Unearned Revenue
Which of the following financial statements reports expenses in decreasing order of
their amounts, by stating the largest expense first?
A) Statement of cash flows
B) Income statement
C) Statement of retained earnings
D) Balance sheet
Which of the following accounts decreases with a credit?
A) Cash
B) Common Stock
C) Accounts Payable
D) Unearned Revenue
________ is the equity earned by profitable operations that is not distributed to
stockholders.
A) Assets
B) Dividend
C) Retained earnings
D) Common stock
Durable Plastics Company had the following total assets, liabilities, and equity as of
December 31.
What is the company’s debt ratio as of December 31? (Round your percentage answer to
two decimal places.)
A) 30.47%
B) 69.53%
C) 100.00%
D) 43.81%
At the beginning of 2019, Statewide Delivery, Inc. has the following account balances:
During the year, credit sales amounted to $800,000. Cash collected on credit sales
amounted to $790,000, and $18,000 has been written off. At the end of the year, the
company adjusted for bad debts expense using the percent-of-sales method and applied a
rate, based on past history, of 3.5%. The ending balance of Accounts Receivable is
________.
A) $42,000
B) $34,000
C) $57,120
D) $18,000
Which of the following will be shown under the investing activities section of the
statement of cash flows?
A) purchased treasury stock for cash
B) issued notes payable to purchase equipment
C) paid cash dividends to stockholders
D) loaned money to a third party
In considering whether a company should invest in debt or equity securities of another
company, which of the following statements is incorrect?
A) The company wants to make the best use of its excess cash to generate investment
income.
B) Investment income consists of interest earned from equity securities and dividends
earned from debt investments.
C) Investment income includes increases in the market value of debt or equity
securities.
D) The excess cash that can be invested could be the result of temporary or seasonal
business fluctuations.
The Sales Discounts account __________.
A) is a contra Sales Revenue account
B) represents additional sales revenue
C) is a balance sheet account
D) represents the discount lost when a customer does not pay within the discount period
Which of the following inventory costing methods yields the lowest 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
Which of the following accounts will be closed by debiting the Income Summary
account?
A) Retained Earnings
B) Service Revenue
C) Accounts Receivable
D) Salaries Expense
The activities that are included in the operating activities section of the statement of
cash flows are ________.
A) activities that involve stockholders’ equity
B) activities that create revenue or expenses
C) activities that increase or decrease long-term assets
D) activities that pertain to construction of new facilities
On December 1, 2018, Restaurant Equipment, Inc. sold machinery to a customer for
$23,000. The customer could not pay at the time of sale but agreed to pay 9 months
later and signed a 9-month note at 11% interest. What was the total amount of cash
collected by Restaurant Equipment on the maturity of the note? (Round any
intermediate calculations to two decimal places, and your final answer to the nearest
dollar.)
A) $25,530
B) $24,898
C) $21,103
D) $1,898
Forever Jewelers uses the gross method and a perpetual inventory system. On April 2,
Forever sold merchandise with a cost of $1,700 for $5,600 to a customer on account
with terms of 2/15, n/30. Which of the following would be included in the journal entry
to record the cash receipt on April 10?
A) Credit to Cash for $5,488
B) Credit to Sales Discounts for $112
C) Debit to Cash for $5,600
D) Debit to Sales Discounts for $112
Planned investments and cash dividends are deducted from ________ to arrive at free
cash flow.
A) net cash provided by operating activities
B) net cash provided by investing activities
C) net cash provided by financing activities
D) net income
Metro Services, Inc. reported the following information for the year 2019. Based on the
following information, calculate the rate of return on total assets for Metro Services,
Inc. (Round the percentage to two decimal places.)
A) 11.20%
B) 7.78%
C) 17.21%
D) 7.10%
Which of the following is a control risk related to payroll?
A) theft of inventory by staff
B) a dishonest employee cashing a paycheck that was written to a fictitious person
C) expenses being recorded as assets in order to manipulate earnings
D) contracts being awarded to relatives of employees
Match each term with its description.
A) Sent by the vendor after the inventory has been shipped to the purchaser.
B) Sent to the vendor when goods are ordered.
C) Prepared by the purchaser when the goods are received.
D) Sent to the vendor after all approving documents have been submitted.
Purchase Order
On August 14, Park Avenue Bank lent $240,000 to City Coffee Shop on a 75 day, 2%
note. What is the maturity value of the note? (Use a 360-day year and round answers to
the nearest dollar.)
A) $240,986
B) $241,000
C) $240,000
D) $244,800
Which of the following would be considered the weakest current ratio?
A) 0.55
B) 0.90
C) 1.25
D) 2.30
The maturity date for a six-month note issued on January 15 would be ________.
A) July 15
B) July 14
C) July 16
D) July 10
Which of the following describes a secured bond?
A) a bond that matures in installments at regular intervals
B) a bond that is backed by issuer’s specific assets
C) a bond that matures at one specified time
D) a bond that is not backed by specific assets
Which of the following statements is true if a bond is issued at an amount less than its
face value?
A) The bond’s stated rate is lower than the prevailing market rate at the time of sale.
B) The bond’s stated rate is the same as the prevailing market rate at the time of sale.
C) The bond’s stated rate is higher than the prevailing market rate at the time of sale.
D) The bond is not secured by specific assets of the issuer.
Which financial statement is prepared last?
A) income statement
B) balance sheet
C) statement of retained earnings
D) The financial statements can be prepared in any order.
A company’s Cash account shows an ending balance of $4,600. Reconciling items
included a bookkeeper error of $130 (a $500 check recorded as $630), two outstanding
checks totaling $830, a service charge of $25, a deposit in transit of $250, and interest
revenue of $30. What is the adjusted book balance?
A) $4,465
B) $4,020
C) $4,735
D) $5,180
Companies invest in trading investments with the intent of ________.
A) increasing the amount of long-term assets
B) gaining the controlling rights of the investee
C) holding the investment until maturity
D) generating a profit on a quick sale
Which of the following sections of the statement of cash flows is presented differently
between the direct method and indirect method?
A) investing activities
B) financing activities
C) operating activities
D) non-cash investing and financing activities
Which of the following is the correct formula for calculating gross profit percentage?
A) Net profit / Net sales revenue
B) Gross profit / Net sales revenue
C) Net sales revenue / Net profit
D) Net sales revenue / Gross profit