1) A contingent gain that is likely and can be reasonably estimated should be:
A) disclosed in a note to the financial statements
B) accrued with a journal entry
C) either disclosed in a note or accrued with a journal entry
D) ignored until the actual gain materializes
2) Table 11-15
Sally Lee works for a tugboat company. She earns $900 a week for a 40-hour week and
time and a half for anything over 40 hours per week. During the first week of the year,
Sally worked 43 hours. The income tax withholdings are 20% of gross earnings.
Canada Pension Plan deductions are 4.95% of gross earnings and Employment
Insurance deductions are 1.83% of gross earnings. The worker’s compensation premium
is 1.6% of gross earnings. Ignore the basic Canada Pension Plan exemption.
Refer to Table 11-15. What is the amount of the CPP deduction if the basic exemption is
included in the calculation?
A) $0
B) $49.56
C) $52.89
D) $46.23
3) Table 1-2
Following is a list showing the account balances of various assets, liabilities, revenues,
and expenses for Tim’s Landscaping at December 31, 2014, the end of its first year of
operations.
The owner, Tim Brown, invested $45,200 during the year and withdrew $10,000 during
the year for personal use.
Refer to Table 1-2. Total assets at December 31, 2014, were:
A) $65,400
B) $72,400
C) $73,200
D) $63,200
4) Match the following.
A) statement of comprehensive income
B) income statement
The name of the statement that presents revenues and expenses under IFRS
5) Identify all the journals in which the following accounts would be debited or
credited. Use P for purchases journal, S for sales journal, CP for cash payments journal,
CR for cash receipts journal, and G for general journal. Some accounts may be used in
more than one journal. Assume a perpetual inventory system.
a)Cost of goods sold________________
b)Accounts payable________________
c)Amortization expense________________
d)Cash________________
e)Accounts payable________________
f)Sales revenue________________
g)Sales returns and allowances________________
h)Inventory________________
6) All of the following are assets except:
A) land
B) cash
C) merchandise inventory
D) owner withdrawals
7) Lumac Corporation purchased land and a building for $1,500,000. An appraisal
indicates that the land’s value is $650,000 and the building’s value is $975,000. The
amount that would be debited to the building account is:
A) $1,056,250
B) $900,000
C) $975,000
D) $995,000
8) The following data have been gathered for Reynolds Company to assist you in
preparing the July 31, 2014, bank reconciliation:
a) The July 31 bank balance was $4,000.
b) The bank statement included $30 of service charges.
c) There was an EFT deposit of $900 on the bank statement for the monthly rent due
from a tenant.
d) Cheques #541 and #543 for $205 and $320, respectively, were not among the
cancelled cheques returned with the statement.
e) The July 31 deposit of $4,435 did not appear on the bank statement.
f) The bookkeeper had erroneously recorded a $500 cheque as $5,000. The cheque was
written to a vendor to pay off an accounts payable.
g) Included with the cancelled cheques was a cheque written by another company for
$200, which was deducted from Reynolds Company’s account.
h) The bank statement included an NSF cheque written by Maxie Company for a $460
payment on account.
i) The cash account showed a balance of $3,200 on July 31 .
Prepare the July 31, 2014, bank reconciliation for Reynolds Company.
9) A chronological record of an entity’s transactions is called a(n):
A) journal
B) ledger
C) trial balance
D) account
10) Match the following descriptions with the most appropriate caption:
A) tangible capital asset
B) depreciation
C) time-period assumption
D) recognition value
E) recognition criteria for revenues
F) intangible capital asset
G) accrued revenue
H) carrying value
I) matching objective
J) unearned revenue
K) adjusting entry
L) cash-basis accounting
1> Deferred revenue
2> Property, plant, and equipment
3> Amortization
11) Amounts owed to suppliers for products or services purchased on open accounts are
called:
A) notes payable
B) unearned revenues
C) accounts payable
D) accrued expenses
12) Net income is reported on the income statement at $25,000. Adjusting entries for
accrued revenues of $4,000 and unearned revenue earned during the current period of
$1,500 were accidentally omitted. The correct net income is:
A) $27,500
B) $22,500
C) $19,500
D) $30,500
13) Table 10-4
Golden Miners purchased a mine in 2013 for $960,000. It was estimated that the mine
contained 3,000,000 tonnes of ore, and would be totally worthless once all ore was
extracted. Golden Miners extracted 250,000 tonnes in 2013 and 300,000 tonnes in 2014
.
Referring to Table 10-4, the balance in accumulated amortization at the end of 2014
would be:
A) $80,000
B) $96,000
C) $176,000
D) $167,000
14) Unearned revenue was not adjusted to show $3,000 of revenue earned during the
current period. What is the effect of this error on the balance sheet?
A) liabilities are overstated
B) liabilities are understated
C) assets are overstated
D) assets are understated
15) Table 6-3
Ending inventory at selling price (retail) $ 53,500
Referring to Table 6-3, in arriving at the estimated ending inventory at cost, using the
retail method, the retail ratio to be used is:
A) 75%
B) 78%
C) 133%
D) 68%
16) A FIFO perpetual inventory system:
A) assigns the most recent costs to ending inventory
B) assigns the most recent costs to cost of goods sold when goods are sold
C) reports the oldest costs for ending inventory values
D) does not match the typical physical flow of goods
17) Failure to record an accrued expense:
A) overstates expenses
B) overstates liabilities
C) understates liabilities
D) overstates assets
18) Receiving a $350 payment on an account with a current balance of $800 would
include a:
A) debit to cash and a credit to accounts payable for $350
B) debit to cash and a credit to accounts receivable for $350
C) credit to cash and a credit to accounts receivable for $350
D) debit to accounts receivable and a credit to cash for $350
19) Table 5-1
Referring to Table 5-1, what is the net income?
A) $60,000
B) $65,000
C) $55,000
D) $180,000
20) Match the following.
A) HST Payable
B) HST Recoverable
The tax account debited when goods are purchased
21) Which of the following transactions would have no effect on total assets, total
liabilities, or owner’s equity?
A) payment of a liability
B) borrowing cash by issuing a note payable
C) purchasing supplies for cash
D) purchasing supplies on account
22) Table 11-2
A $6,000, 120-day, 8% note payable is signed at the bank on October 2, 2013 to borrow
cash for the purchase of a car.
Referring to Table 11-2, what is the amount of cash that is payable at the maturity of the
note?
A) $6,157.81
B) $5,921.16
C) $5,842.19
D) $6,000.00
23) Which of the following appears in the income statement credit column of a
worksheet?
A) service revenue
B) income summary
C) owner withdrawals
D) accounts receivable
24) State whether the following accounts would appear on an income statement,
balance sheet, or statement of owner’s equity.
a)________Equipment
b)________Owner’s withdrawals
c)________Utilities expense
d)________Accounts payable
e)________Accounts receivable
f)________Service revenue
g)________Cash
h)________Beginning owner’s equity
25) Day Company purchased $3,000 of merchandise on credit, terms 3/15 n/30. The
entry to record payment for the merchandise within the discount period under a
perpetual inventory system would include a:
A) debit to Inventory of $1,940
B) debit to Accounts Payable of $1,940
C) credit to Purchase Discounts of $90
D) credit to Inventory of $90
26) Callahan Computers stores its inventory in a warehouse that burned to the ground in
late November, 2012 . Their sales office was at a different location. In order to file a
claim with their insurance, the owners ask you to estimate the inventory in the
warehouse. The following information is available:
The company’s gross profit has historically been 40% of Net sales revenue. Estimate the
value of the inventory destroyed in the fire using the gross profit method.
A) $369,950
B) $528,550
C) $410,000
D) $388,450
27) The payment of rent each month for office space would:
A) increase total assets
B) increase owner’s equity
C) decrease liabilities
D) increase expenses
28) State the effect on net income of each of the following independent transactions.
State your answer as: increase, decrease, or no effect.
29) Transferring the amount from the journal to the ledger
30) Mars Company Ltd. acquired equipment on January 1, 2013, for $300,000. The
equipment has an estimated useful life of five years and an estimated residual value of
$30,000. Calculate amortization expense for 2013 and 2014 under each of the following
methods. The equipment is estimated to produce 150,000 units. During 2013 and 2014,
the equipment produced 25,000 and 40,000 units, respectively. Round to the nearest
dollar where necessary.
2013 2014
Straight-line ________________________
Double-declining-balance________________________
Units-of-production________________________
31) Table 9-8
The following information is available for Beauchemin Merchandising for the year
ended December 31, 2014 .
Accounts receivable Bal. Jan. 1, 2014$19, 500
Allowance for doubtful accounts,
Jan 1, 2014 1,040Cr.
Sales Revenue for 2014 (30% on credit)520,000
Bad debt write-offs during 20141,690
Collections on account during 2014 159,900
Refer to Table 9-8. Assume that Beauchemin uses the percent-of-sales method of
estimating bad debts, at the rate of 0.5% of net sales, calculate the amount of the
bad-debt expense for Beauchemin for the year ended December 31, 2014 .
32) Following is the adjusted trial balance for Simcoe Fishing Cabin:
Calculate the current ratio and the debt ratio, then comment on the firms liquidity and
capital structure.