In preparing its bank reconciliation for the month of April 2015, Delano, Inc. has
available the following information.
What should be the adjusted cash balance at April 30, 2015?
a. $77,260.
b. $77,600.
c. $78,020.
d. $78,200.
Answer:
The following information is available for Oakland Company:
The inventory turnover ratio for 2015 is
a. 6.7 times.
b. 5.0 times.
c. 5.4 times.
d. 4.6 times.
Answer:
Bookkeeping differs from accounting in that bookkeeping primarily involves which part
of the accounting process?
a. Identification.
b. Communication.
c. Recording.
d. Analysis.
Answer:
Swiss Clothing Store had a balance in the Accounts Receivable account of $920,000 at
the beginning of the year and a balance of $980,000 at the end of the year. Net credit
sales during the year amounted to $6,650,000. The average collection period of the
receivables in terms of days was
a. 53.7 days.
b. 52.1 days.
c. 30 days.
d. 50.7 days.
Answer:
International standards are referred to as
a. IFRS.
b. GAAP.
c. IASB.
d. FASB.
Answer:
When the effective-interest method of bond premium amortization is used, the
a. amount of premium amortized will get larger with successive amortization.
b. carrying value of the bonds will increase with successive amortization.
c. interest paid to bondholders will increase after each interest payment date.
d. interest rate used to calculate interest expense will be the contractual rate.
Answer:
The final step in the recording process is to transfer the journal information to the
a. trial balance.
b. financial statements.
c. ledger.
d. file cabinets.
Answer:
Lake of Fire Company purchased supplies costing $7,000 and debited Supplies for the
full amount. At the end of the accounting period, a physical count of supplies revealed
$1,900 still on hand. The appropriate adjusting journal entry to be made at the end of
the period would be
a. Debit Supplies Expense, $1,900; Credit Supplies, $1,900.
b. Debit Supplies, $5,100; Credit Supplies Expense, $5,100.
c. Debit Supplies Expense, $5,100; Credit Supplies, $5,100.
d. Debit Supplies, $1,900; Credit Supplies Expense, $1,900.
Answer:
A stockholders’ equity statement shows
a. the names of each stockholder.
b. how profits are distributed to the various classes of stockholders.
c. the number of shares owned by each of the stockholders.
d. the changes in each stockholders’ equity account and in total stockholders’ equity
during the period.
Answer:
When a note receivable is dishonored,
a. interest revenue is never recorded.
b. bad debts expense is recorded.
c. the maturity value of the note is written off.
d. Accounts Receivable is debited if eventual collection is expected.
Answer:
Financial information is presented below:
The gross profit rate would be
a. .363.
b. .400.
c. .456.
d. .503.
Answer:
Which one of the following is a privately held corporation?
a. Intel
b. General Electric
c. Caterpillar Inc.
d. Cargill Inc.
Answer:
If a department store fails to make the entry to accrue the finance charges due from
customers,
a. accounts receivable will be overstated.
b. interest revenue will be understated.
c. interest expense will be overstated.
d. interest expense will be understated.
Answer:
Misra Company compiled the following financial information as of December 31,
2015:
Misra’s assets on December 31, 2015 are
a. $180,000.
b. $250,000.
c. $360,000.
d $490,000.
Answer:
Turturro Department Store utilizes the retail inventory method to estimate its
inventories. It calculated its cost to retail ratio during the period at 75%. Goods
available for sale at retail amounted to $600,000 and goods were sold during the period
for $420,000. The estimated cost of the ending inventory is
a. $135,000.
b. $180,000.
c. $315,000.
d. $450,000.
Answer:
Financial information is presented below:
The amount of net sales on the income statement would be
a. $290,000.
b. $302,000.
c. $308,000.
d. $320,000.
Answer:
The market price of a bond is the
a. present value of its principal amount at maturity plus the present value of all future
interest payments.
b. principal amount plus the present value of all future interest payments.
c. principal amount plus all future interest payments.
d. present value of its principal amount only.
Answer:
Presented below is information related to the operations of Simpson Corporation.
Additional information:
(a) In 2015, Simpson declared and paid a cash dividend.
(b) The company converted $200,000 of bonds into common stock.
(c) Equipment with a cost of $44,000 and a book value of $24,000 was sold for
$20,000. Land was acquired for cash.
Instructions:
Prepare a statement of cash flows in proper form for 2015, using the indirect method.
Answer:
At October 1, Arcade Fire Enterprises reported stockholders’ equity of $72,000. During
October, no stock was issued and the company posted a net loss of $8,000. If
stockholders’ equity at October 31 totals $64,000, what amount of dividends were paid
during the month?
a. $0
b. $4,000
c. $8,000
d. $16,000
Answer:
When an investor owns between 20% and 50% of the common stock of a corporation, it
is generally presumed that the investor
a. has insignificant influence on the investee and that the cost method should be used to
account for the investment.
b. should apply the cost method in accounting for the investment.
c. will prepare consolidated financial statements.
d. has significant influence on the investee and that the equity method should be used to
account for the investment.
Answer:
Failure to prepare an adjusting entry at the end of a period to record an accrued revenue
would cause
a. net income to be overstated.
b. an understatement of assets and an understatement of revenues.
c. an understatement of revenues and an understatement of liabilities.
d. an understatement of revenues and an overstatement of liabilities.
Answer:
The terms 2/10, n/30 state that a 2% discount is available if the invoice is paid within
the first 10 days of the next month.
Answer:
Prepare the necessary journal entry for the following transaction. Linton Company sold
$270,000 of its accounts receivables to a factor. The factor charges a 3% fee.
Answer:
The three main factors that contribute to fraudulent activity are depicted by the
_______________.
Answer:
Identify the impact on the accounting equation of the following transactions.
1> Purchased 36-month insurance policy for cash.
2> Purchased supplies on account.
3> Received utility bill to be paid at later date.
4> Paid utility bill previously accrued.
Answer:
On January 1, 2014, Brenner Company purchased at face value, a $1,000, 8% bond that
pays interest on January 1 and July 1. Brenner Company has a calendar year end.
The adjusting entry on December 31, 2014, is
Answer:
The balances of the Depreciation Expense and the Accumulated Depreciation accounts
should always be the same.
Answer:
Internal control is most effective when several people are responsible for a given task.
Answer:
Prepare the entry to replenish the $200 petty cash fund of Erin Company, assuming the
fund has receipts for: freight-out $60, postage $105, and miscellaneous expense $25.
The fund contains $8 in cash.
Answer:
The ______________ of a company is the average time that it takes to purchase
inventory, sell it on account, and then collect cash from customers.
Answer:
Many companies calculate the future value of the cash flows involved in an investment
in evaluating long-term capital investments.
Answer: