Cost of goods available for sale includes each of the following except
a. beginning inventory.
b. freight-in.
c. ending inventory.
d. net purchases.
Answer:
A plant asset was purchased on January 1 for $100,000 with an estimated salvage value
of $20,000 at the end of its useful life. The current year’s Depreciation Expense is
$10,000 calculated on the straight-line basis and the balance of the Accumulated
Depreciation account at the end of the year is $50,000. The remaining useful life of the
plant asset is
a. 10 years.
b. 8 years.
c. 5 years.
d. 3 years.
Answer:
Which of the following should be included in the physical inventory of a company?
a. Goods held on consignment from another company.
b. Goods in transit to another company shipped FOB shipping point.
c. Goods in transit from another company shipped FOB shipping point.
d. Goods in transit to or from another company shipped FOB shipping point.
Answer:
Company A sells $2,500 of merchandise on account to Company B with credit terms of
2/10, n/30. If Company B remits a check taking advantage of the discount offered, what
is the amount of Company B’s check?
a. $1,750
b. $2,000
c. $2,250
d. $2,450
Answer:
A petty cash fund is generally established in order to
a. pay for all merchandise purchased on account.
b. pay employees’ wages.
c. make loans internally to employees.
d. pay relatively small expenditures.
Answer:
The consistent application of an inventory costing method is essential for
a. conservatism.
b. accuracy.
c. comparability.
d. efficiency.
Answer:
Which of the following is not one of the main factors that contribute to fraudulent
activity?
a. Opportunity.
b. Incompatible duties.
c. Financial Pressure.
d. Rationalization.
Answer:
Hilton Company issued a four-year interest-bearing note payable for $600,000 on
January 1, 2014. Each January the company is required to pay $150,000 on the note.
How will this note be reported on the December 31, 2015 balance sheet?
a. Long-term debt, $600,000.
b. Long-term debt, $450,000.
c. Long-term debt, $300,000; Long-term debt due within one year, $150,000.
d. Long-term debt, $450,000; Long-term debt due within one year, $150,000.
Answer:
All of the following are intangible assets except
a. patents.
b. land improvements.
c. goodwill.
d. franchises.
Answer:
On January 1, 2014, Doolittle Company purchased furniture for $7,560. The company
expects to use the furniture for 3 years. The asset has no salvage value. The book value
of the furniture at December 31, 2015 is
a. $0.
b. $2,520.
c. $5,040.
d. $7,560.
Answer:
Stahl Consulting started the year with total assets of $60,000 and total liabilities of
$15,000. During the year, the business recorded $48,000 in catering revenues and
$30,000 in expenses. Stahl issued stock of $9,000 and paid dividends of $15,000 during
the year. The net income reported by Stahl Consulting for the year was:
a. $3,000.
b. $12,000.
c. $18,000.
d. $27,000.
Answer:
Outstanding stock of the Core Corporation included 20,000 shares of $5 par common
stock and 10,000 shares of 6%, $10 par noncumulative preferred stock. In 2014, Core
declared and paid dividends of $4,000. In 2015, Core declared and paid dividends of
$12,000. How much of the 2015 dividend was distributed to preferred shareholders?
a. $8,000
b. $4,000
c. $6,000
d. None of these answers are correct
Answer:
The comparative balance sheet of Nathan Company appears below:
Instructions
(a) Using horizontal analysis, show the percentage change for each balance sheet item
using 2015 as a base year.
(b) Using vertical analysis, prepare a common size comparative balance sheet.
Answer:
H. Hunter Company’s records indicate the following information for the year:
On December 31, a physical inventory determined that ending inventory of $500,000
was in the warehouse. H. Hunter’s gross profit on sales has remained constant at 30%.
H. Hunter suspects some of the inventory may have been taken by some new
employees. At December 31, what is the estimated cost of missing inventory?
a. $60,000
b. $100,000
c. $150,000
d. $1,340,000
Answer:
A net loss will result during a time period when
a. liabilities exceed assets.
b. dividends exceed investments.
c. expenses exceed revenues.
d. revenues exceed expenses.
Answer:
REM Real Estate received a check for $27,000 on July 1 which represents a 6 month
advance payment of rent on a building it rents to a client. Unearned Rent Revenue was
credited for the full $27,000. Financial statements will be prepared on July 31. REM
Real Estate should make the following adjusting entry on July 31:
a. Debit Unearned Rent Revenue, $4,500; Credit Rent Revenue, $4,500.
b. Debit Rent Revenue, $4,500; Credit Unearned Rent Revenue, $4,500.
c. Debit Unearned Rent Revenue, $27,000; Credit Rent Revenue, $24,000.
d. Debit Cash, $27,000; Credit Rent Revenue, $27,000.
Answer:
Which board(s) has(have) worked to implement fair value measurement for
financial instruments?
a. FASB, but not IASB.
b. IASB, but not FASB.
c. both FASB and IASB.
d. neither FASB nor IASB.
Answer:
Which of the following should be classified as an extraordinary item?
a. Effects of major casualties not infrequent in the area
b. Write-off of a significant amount of receivables
c. Loss from the expropriation of facilities by a foreign government
d. Losses due to a bitter, lengthy labor strike
Answer:
Winter Company purchased a building on January 2 by signing a long-term $630,000
mortgage with monthly payments of $5,400. The mortgage carries an interest rate of 10
percent.
The entry to record the first monthly payment will include a
a. debit to the Cash account for $5,400.
b. credit to the Cash account for $5,250.
c. debit to the Interest Expense account for $5,250.
d. credit to the Mortgage Payable account for $5,400.
Answer:
Stahl Consulting started the year with total assets of $60,000 and total liabilities of
$15,000. During the year, the business recorded $48,000 in catering revenues and
$30,000 in expenses. Stahl issued stock of $9,000 and paid dividends of $15,000 during
the year. Stockholders’ equity changed by what amount from the beginning of the year
to the end of the year?
a. $3,000.
b. $9,000.
c. $12,000.
d. $45,000.
Answer:
The contractual interest rate is always stated as a(n)
a. monthly rate.
b. daily rate.
c. semiannual rate.
d. annual rate.
Answer:
The cost of land does not include
a. real estate brokers’ commission.
b. annual property taxes.
c. accrued property taxes assumed by the purchaser.
d. title fees.
Answer:
Mother Hips Garment Company purchased equipment on June 1 for $90,000, paying
$20,000 cash and signing a 9%, 2-month note for the remaining balance. The equipment
is expected to depreciate $18,000 each year. Mother Hips Garment Company prepares
monthly financial statements.
Instructions
(a) Prepare the general journal entry to record the acquisition of the equipment on June
1st.
(b) Prepare any adjusting journal entries that should be made on June 30th.
(c) Show how the equipment will be reflected on Mother Hips Garment Company’s
balance sheet on June 30th.
Answer:
XYZ Company accepted a national credit card for a $4,000 purchase. The cost of the
goods sold is $2,400. The credit card company charges a 3% fee. What is the impact of
this transaction on net operating income?
a. Increase by $1,480
b. Increase by $1,552
c. Increase by $1,600
d. Increase by $3,880
Answer:
Using the indirect method, an increase in accounts receivable during a period is
deducted from net income in calculating cash provided by operations.
Answer:
The option to value inventory at fair value exists under
Answer:
The loss on bond redemption is the difference between the cash paid and the carrying
value of the bonds.
Answer:
Consistent use of the same accounting principles and methods is necessary for
meaningful analysis of trends within a company.
Answer:
The recording process becomes more efficient and informative if all transactions are
recorded in one account.
Answer:
Companies frequently issue both preferred stock and common stock. What
are the major differences in the rights of stockholders between these two
classes of stock?
Answer:
At August 31, Coffman Company has this bank information: cash balance per bank
$6,450; outstanding checks $2,762; deposits in transit $1,700; and a bank service
charge $20. Determine the adjusted cash balance per bank at August 31, 2015.
Answer:
On January 1, 2015, Magnus Corporation had 60,000 shares of $1 par value common
stock issued and outstanding. During the year, the following transactions occurred:
Instructions
Prepare journal entries to record the above transactions.
Answer:
Vertical analysis is useful in making comparisons of companies of different sizes.
Answer:
The Sales Returns and Allowances account and the Sales Discount account are both
classified as expense accounts.
Answer: