Using MACRS rates for a 15 and 20-year property, what is the percentage for the
depreciable rate?
A) 200 percent
B) 150 percent
C) 125 percent
D) 100 percent
A purchase of a vehicle for cash would have what effect on the accounting equation?
A) Total asset amount remains the same.
B) Total liabilities are overstated.
C) Total owner’s equity is overstated.
D) Both A and B are correct.
The entry to record completing a financial lecture and immediately collecting payment
from customers would be:
A)
B)
C)
D)
If Accounts Receivable increases on a comparative balance sheet, this means:
A) collections were more than sales.
B) credit sales are decreasing.
C) credit sales are increasing more than collections.
D) None of these answers is correct.
Double declining balance depreciation is used in the first year when straight line
depreciation should be used. This error would cause:
A) the period’s net income to be overstated.
B) the period’s net income to be understated.
C) the period end assets to be overstated.
D) None of these is correct.
The employer’s annual Federal Unemployment Tax Return is:
A) Form 940.
B) Form 941.
C) Form W-6.
D) Form 8109.
When closing the Withdrawal account:
A) Capital would increase.
B) Capital would decrease.
C) Income Summary will be debited.
D) None of these is correct.
When calculating declining balance depreciation, the straight-line rate was used instead
of double the straight-line rate. In the first year of ownership, this error would cause:
A) the period end assets to be overstated.
B) the period’s depreciation expense to be overstated.
C) the period end assets to be understated.
D) None of these is correct.
Discuss the following characteristics of partnerships:
a) Limited life
b) Mutual agency
c) Unlimited liability
It’s the end of the accounting period and no electric bill has been received (but the
expense has been incurred); you should record an entry that:
A) increases the total assets and increases the total expenses.
B) decreases the total assets and increases the total expenses.
C) increases the total liabilities and increases the total expenses.
D) decreases the total liabilities and increases the total expenses.
Under the periodic inventory method, indicate the financial statement(s) on which you
would find the following items:
a) Cost of goods sold
b) Freight-In
c) Ending Inventory
d) Beginning Inventory
e) Sales Discount
If there is a total of 50,000 square feet of floor space, and the hardware department
utilizes 20,000 square feet, what percent of the total square footage is in hardware?
A) 20%
B) 25%
C) 40%
D) 80%
Merchandise is:
A) the same as inventory.
B) an asset.
C) the same as supplies.
D) Both A and B are correct.
Which of the following indirect expenses would most likely be allocated on the basis of
gross sales?
A) Rent expense
B) Utilities expense
C) Miscellaneous expense
D) None of the above
When recording a transaction in a journal, the account listed first is always the:
A) debit.
B) credit.
C) increase.
D) decrease.
An employee has gross earnings of $1000 and withholdings of $60 FICA (OASDI and
Medicare), and $50 for income taxes (FIT and SIT). The employer pays $60 FICA
(OASDI and Medicare), $10 for SUTA, and $5.60 FUTA. What is the employer’s total
cost of the employee?
A) $915.60
B) $1,075.60
C) $975.60
D) $1,035.60
Which of the following is an incorrect step in the process of partnership liquidation?
A) Pay any liabilities
B) Sell the assets
C) Allocate gains and losses to partners
D) None of the above
A bonus is paid to the old partners when:
A) the old partner believes the business is worth less than the amounts recorded in the
accounting records.
B) the equity of a partnership is worth more than what is recorded in the accounting
records.
C) the company’s earnings records are less than expected.
D) None of these answers is correct.
When the balance of the Income Summary account is a debit, the entry to close this
account is:
A) debit Capital; credit Income Summary.
B) debit Income Summary; credit Revenue.
C) debit Revenue; credit Income Summary.
D) debit Income Summary; credit Capital.
The accounts payable subsidiary ledger:
A) lists accounts alphabetically.
B) lists accounts for which the company owes money.
C) has a controlling account in the general ledger.
D) All of the above are correct.
The discount period on a discounted note is:
A) the same as the original period of the note.
B) the time between the original date and the discount date.
C) the time between the discount date and the maturity date.
D) the original note period minus 10 days.
Katie’s Wedding Planning Service completed the following transactions:
a. Billed clients for service, $1,250.
b. Completed work for clients $200 on account.
c. Received a bill for utilities to be paid later, $120.
d. Collected $700 cash for services performed.
e. Paid the amount due for utilities.
f. Withdrew $500 cash for personal use.
Required: Record the above transactions in the expanded accounting equation. Note
that the items have beginning balances.
Katie’s Wedding Planning Service
The Zonga Corporation Stockholders’ Equity section includes the following:
Total paid-in capital is:
A) $83,730.
B) $76,380.
C) $70,000.
D) $77,350.
If current assets were $140,000, merchandise inventory was $50,000, and current
liabilities were $15,000, the acid test ratio is:
A) 6:1.
B) 4:1.
C) 2:1.
D) 1:2.
Bill pays Steve $12,000 for his $9,000 interest in a partnership. On the partnership
books:
A) Bill will have capital of $9,000.
B) Bill will have capital of $12,000.
C) Bill will have capital of $4,000.
D) None of these answers is correct.
Identify the category(s) of each of the accounts below.
Current Asset
Plant and Equipment
Current Liabilities
Long-Term Liabilities
Item Category
0. Cash Current Asset
a) Equipment ________
b) Accumulated Depr. ________
c) Mortgage Payable ________
d) Unearned Revenue ________
e) Merchandise Inventory ________
Partner A invested furniture that was recorded at a value above the fair market value.
This error would cause:
A) the period’s net income to be overstated.
B) the period end capital to be understated.
C) the period end assets to be overstated.
D) the period end assets to be understated.
When stock is exchanged for non-cash assets:
A) debit the asset for prior book value; credit Common Stock for cash received.
B) debit assets for market value; credit Common Stock for par value and, if needed,
Paid-in Capital in Excess of Par Value-Common.
C) debit assets for market value; credit Common Stock for market value.
D) debit assets for par value; credit Common Stock for par value.
On October 1, 2015, German Company issued 12%, 10-year, $400,000 bonds at 105.
Interest dates are April 1 and October 1. The amount of straight-line amortization for
2015 is:
A) $250.
B) $1000.
C) $2,000.
D) $500.
Which of the following statements is false as it relates to direct and indirect expenses?
A) Building expense is an indirect expense.
B) Indirect expenses cannot be assigned to different departments based on an allocation
such as square feet.
C) If an expense is traceable to a particular department, it is a direct expense.
D) Advertising expense can be both a direct and an indirect expense.
The ratio that indicates the amount of assets that are financed by creditors is:
A) debt to stockholders’ equity.
B) debt to total retained earnings ratio.
C) debts to total assets ratio.
D) None of the above
The adjustment for depreciation was credited to Equipment and debited to Depreciation
Expense. This would:
A) overstate the assets.
B) understate the assets.
C) overstate net income.
D) None of these is correct.
Evans Corporation sells $100,000, 10%, 10-year bonds for 97 on January 1. Compute
the semiannual interest expense recorded on July 1 using the interest method. The
market rate is 12%.
A) $5,820
B) $20,000
C) $10,000
D) $11,640
Why are the employee deductions recorded as payables on the employer’s books?
For each of the following, identify in column 1 the category to which the account
belongs, in column 2 the normal balance for the account, in column 3 the financial
statement that the account in which the account balance is reported, and in column 4 the
account’s nature (permanent/temporary).
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement that the account in which the account balance is reported, and in Column 4
the account’s nature (temporary/permanent).
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement in which the account balance is reported, and in Column 4 the account’s
nature (permanent/temporary).
The partnership of Rick and Allan is being liquidated. All gains and losses are shared in
a 3:5 ratio, respectively. Before liquidation, their balance sheet balances are as follows:
Cash $10,000
Other Assets 8,000
Liabilities 4,000
Rick, Capital 7,000
Allan, Capital 7,000
If the Other Assets are sold for $9,000, how much will each partner receive upon
liquidation?
Compute the net pay for each employee listed below. Assume the following rates:
FICA-OASDI 6.2% on a limit of $117,000; Medicare is 1.45%; federal income tax is
20%; state income tax is 5%; and union dues are $10.
A budgeted item such as a building is listed as a ________.
Prepare journal entries for the following petty cash fund transactions:
Sept. 1 Established a $250 petty cash fund.
30 Replenished the petty cash fund. Currency and coins remaining was $128; approved
paid vouchers were: $12 donation expense; $18 postage; $24 office supplies expense;
and $26 miscellaneous expense.
For each of the following, identify in column 1 the category to which the account
belongs, in column 2 the normal balance for the account, in column 3 the financial
statement that the account in which the account balance is reported, and in column 4 the
account’s nature (permanent/temporary).
Define and compare the accounts receivable subsidiary ledger with the controlling
account, Accounts Receivable.
Using the following accounts:
[1] Cash
[2] Bond Sinking fund
[3] Equipment
[4] Building
[5] Land
[6] Accounts payable
[7] Notes payable
[8] Bond payable
[9] Bond interest payable
[10] Premium on bonds payable
[11] Discount on bonds payable
[12] Common stock
[13] Retained earnings
[14] Sinking fund earned
[15] Bond interest expense
[16] Gain on retirement
[17] Loss on retirement
Indicate the account(s) to be debited and credited to record the following transactions.
Retired bonds plus interest previously accrued when the book value was above the cost
of retirement, cash was paid.
Debit ________ & ________ Credit ________ & ________
For each of the following, identify in column 1 the category to which the account
belongs, in column 2 the normal balance for the account, and in column 3 the financial
statement on which the account balance is reported.
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, and in Column 3 the financial
statement that the account in which the account balance is reported.
Describe the difference in information contained in the general journal vs. the general
ledger.
Determine the amount to be paid within the discount period for purchase with an
invoice price of $20,000, subject to credit terms of 2/10, n/30.
$ ________
Calculate the total Liabilities if the company has: Assets totaling $800 and Capital of
$450.
$ ________
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement in which the account balance is reported, and in Column 4 the account’s
nature (permanent/temporary).
