Which account below is not a subdivision of retained earnings?
a. Dividends
b. Revenues
c. Expenses
d. Common stock
Answer:
At January 31, 2015, the balance in Aislers Inc.’s supplies account was $750. During
February, Aislers purchased supplies of $900 and used supplies of $1,125. At the end of
February, the balance in the supplies account should be
a. $525 debit.
b. $975 debit.
c. $525 credit.
d. $775 debit.
Answer:
If a transaction cannot be recorded in a special journal
a. the company must refuse to enter into the transaction.
b. it is recorded in the general journal.
c. it is recorded directly in the accounts in the general ledger.
d. it is recorded as an adjustment on the worksheet.
Answer:
Which one of the following affects cash during a period?
a. Recording depreciation expense
b. Declaration of a cash dividend
c. Write-off of an uncollectible account receivable
d. Payment of an accounts payable
Answer:
A company shows the following balances:
What is the gross profit percentage?
a. 30%
b. 44%
c. 56%
d. 70%
Answer:
The following information is available for Yancey Company:
Assume that Yancey uses a periodic inventory system and that there are 700 units left at
the end of the month.
Instructions
Compute the cost of ending inventory under the
(a) FIFO method.
(b) LIFO method.
Answer:
The net income reported on the income statement for the current year was $245,000.
Depreciation was $40,000. Account receivable and inventories decreased by $12,000
and $35,000, respectively. Prepaid expenses and accounts payable increased,
respectively, by $1,000 and $8,000. How much cash was provided by operating
activities?
a. $296,000
b. $339,000
c. $323,000
d. $311,000
Answer:
Pixies Inc. pays its rent of $54,000 annually on January 1. If the February 28 monthly
adjusting entry for prepaid rent is omitted, which of the following will be true?
a. Failure to make the adjustment does not affect the February financial statements.
b. Expenses will be overstated by $4,500 and net income and stockholders’ equity will
be understated by $4,500.
c. Assets will be overstated by $9,000 and net income and stockholders’ equity will be
understated by $9,000.
d. Assets will be overstated by $4,500 and net income and stockholders’ equity will be
overstated by $4,500.
Answer:
Failure to prepare an adjusting entry at the end of the period to record an accrued
expense would cause
a. net income to be understated.
b. an overstatement of assets and an overstatement of liabilities.
c. an understatement of expenses and an understatement of liabilities.
d. an overstatement of expenses and an overstatement of liabilities.
Answer:
When the selling price of treasury stock is greater than its cost, the company credits the
difference to
a. Gain on Sale of Treasury Stock.
b. Paid-in Capital from Treasury Stock.
c. Paid-in Capital in Excess of Par.
d. Treasury Stock.
Answer:
If a company has net sales of $700,000 and cost of goods sold of $455,000, the gross
profit percentage is
a. 25%.
b. 35%.
c. 65%.
d. 100%.
Answer:
Which one of the following inventory methods is often impractical to use?
a. Specific identification
b. LIFO
c. FIFO
d. Average cost
Answer:
The basic accounting equation may be expressed as
a. Assets = Equities.
b. Assets ‘“ Liabilities = Stockholders’ Equity.
c. Assets = Liabilities + Stockholders’ Equity.
d. All of these answers are correct.
Answer:
A stockholder is interested in the ability of a firm to
a. pay consistent dividends.
b. appreciate in share price.
c. survive over a long period.
d. All of these answer choices are correct.
Answer:
At January 1, 2015, Alligator Industries reported retained earnings of $150,000. During
2015, Alligator had a net loss of $30,000 and paid dividends of $15,000. At December
31, 2015, the amount of retained earnings is
a. $105,000.
b. $120,000.
c. $135,000.
d. $165,000.
Answer:
On January 1, 2015, Bottle Rockets Corp. purchased a general liability insurance policy
for $9,000 to provide coverage for the calendar year.
1> If the company recorded the policy as an asset when purchased, what is the monthly
adjusting journal entry that should be recorded at January 31, 2015?
*2> If the company expensed the cost of the policy on January 1, 2015, what is the
monthly adjusting entry that should be recorded at January 31, 2015?
Answer:
Inventory on hand can be obtained from detailed inventory records when a
________________ inventory system is maintained.
Answer:
Prepare the necessary closing entries based on the following selected accounts.
Answer:
The Accumulated Depletion account is deducted from the cost of the natural resource in
the balance sheet.
Answer:
The hiring of a new company president is an economic event recorded by the financial
information system.
Answer:
Winsor Company uses the perpetual inventory system and the LIFO method. The
following information is available for the month of May:
Instructions
Prepare a schedule to show cost of goods sold and the value of the ending inventory for
the month of May.
Answer:
Asset prepayments become expenses when they expire.
Answer:
The days in inventory is computed by multiplying inventory turnover by 365.
Answer: