The carrying value of bonds will equal the market price
a. at the close of every trading day.
b. at the end of the fiscal period.
c. on the date of issuance.
d. every six months on the date interest is paid.
Answer:
A worksheet can be thought of as a(n)
a. permanent accounting record.
b. optional device used by accountants.
c. part of the general ledger.
d. part of the journal.
Answer:
In a recent year Joey Corporation had net income of $150,000, interest expense of
$40,000, and tax expense of $20,000. What was Joey Corporation’s times interest
earned for the year?
a. 5.25
b. 4.75
c. 3.75
d. 4.25
Answer:
If a stockholder receives a dividend that reduces retained earnings by the fair value of
the stock, the stockholder has received a
a. large stock dividend.
b. cash dividend.
c. contingent dividend.
d. small stock dividend.
Answer:
A prior period adjustment for understatement of net income will
a. be credited to the Retained Earnings account.
b. be debited to the Retained Earnings account.
c. show as a gain on the current year’s Income Statement.
d. show as an asset on the current year’s Balance Sheet.
Answer:
On January 1, Gage Corporation issues $1,000,000, 5-year, 12% bonds at 95 with
interest payable on July 1 and January 1. The carrying value of the bonds, using
straight-line amortization, at the end of the third interest period is:
a. $965,000.
b. $970,000.
c. $930,000.
d. $938,000.
Answer:
Which of the following would not be an appropriate heading for a column in the cash
receipts journal?
a. Cash
b. Accounts Payable
c. Sales Discounts
d. Sales Revenue
Answer:
Drago Company purchased equipment on January 1, 2015, at a total invoice cost of
$1,200,000. The equipment has an estimated salvage value of $30,000 and an estimated
useful life of 5 years. What is the amount of accumulated depreciation at December 31,
2016, if the straight-line method of depreciation is used?
a. $240,000
b. $480,000
c. $234,000
d. $468,000
Answer:
When using a worksheet, adjusting entries are journalized
a. after the worksheet is completed and before financial statements are prepared.
b. before the adjustments are entered on to the worksheet.
c. after the worksheet is completed and after financial statements have been prepared.
d. before the adjusted trial balance is extended to the proper financial statement
columns.
Answer:
Accountants do not attempt to measure the change in a plant asset’s fair value during
ownership because
a. the assets are not held for resale.
b. plant assets cannot be sold.
c. losses would have to be recognized.
d. it is management’s responsibility to determine fair values.
Answer:
If a company records merchandise it returns to suppliers in the general journal, then
a. a posting must be made only to the accounts payable control account.
b. a posting must be made only to the accounts payable subsidiary ledger account.
c. a dual posting must be made.
d. there will be a debit to Inventory.
Answer:
A system of internal control
a. is infallible.
b. can be rendered ineffective by employee collusion.
c. invariably will have costs exceeding benefits.
d. is premised on the concept of absolute assurance.
Answer:
Manufacturers usually classify inventory into all the following general categories
except
a. work in process
b. finished goods
c. merchandise inventory
d. raw materials
Answer:
Owners enjoy limited liability in a
a. proprietorship.
b. partnership.
c. corporation.
d. sole proprietorship.
Answer:
A company has net credit sales of $750,000 for the year and it estimates that
uncollectible accounts will be 2% of sales. If Allowance for Doubtful Accounts has a
credit balance of $2,000 prior to adjustment, its balance after adjustment will be a credit
of
a. $13,000.
b. $15,000.
c. $15,040.
d. $17,000.
Answer:
Of the various dividends types, the two most common types in practice are
a. cash and large stock.
b. cash and property.
c. cash and small stock.
d. property and small stock.
Answer:
A net loss
a. occurs if operating expenses exceed cost of goods sold.
b. is not closed to Retained Earnings if it would result in a debit balance.
c. is closed to Retained Earnings even if it would result in a debit balance.
d. is closed to the paid-in capital account of the stockholders’ equity section of the
balance sheet.
Answer:
Intangible assets include each of the following except
a. copyrights.
b. goodwill.
c. land improvements.
d. patents.
Answer:
The retained earnings account had a beginning balance of $40,000 and an ending
balance of $50,000. If $10,000 of dividends were paid during the period, net income
must have been
a. $20,000.
b. $40,000.
c. $10,000.
d. $30,000.
Answer:
The following amounts were taken from the financial statements of Leaf Company:
The return on assets ratio for 2015 is
a. 15.8%.
b. 15%.
c. 14.3%.
d. 14.5%.
Answer:
A company stamps checks received in the mail with the words “For Deposit Only”. This
endorsement is called a(n)
a. blank endorsement.
b. rubber stamp.
c. restrictive endorsement.
d. operational endorsement.
Answer:
A transaction involving a loss on the sale of equipment affects cash provided (used) by
a. operations and investing activities.
b. operations and financing activities.
c. financing activities and investing activities.
d. operations, financing activities, and investing activities.
Answer:
Each of the following decreases retained earnings except
a. stock splits.
b. large stock dividends.
c. small stock dividends.
d. cash dividends.
Answer:
Merchandisers apply the revenue recognition principle by recognizing sales revenues
when the performance obligation is satisfied.
Answer:
Every sales transaction should be supported by a ________________ that provides
written evidence of the sale.
Answer:
On January 1, 2014, Zappa Enterprises sold 8%, 20-year bonds with a face amount of
$1,200,000 for $1,140,000. Interest is payable semiannually on July 1 and January
Instructions
Calculate the carrying value of the bond at December 31, 2014 and 2015.
Answer:
Presented below is information related to Anthony Scalici Company.
Instructions
Prepare the 2015 retained earnings statement for Anthony Scalici Company.
Answer:
Journalize the following business transactions in general journal form. Identify each
transaction by number. You may omit explanations of the transaction.
1> Andrew Bird invested $35,000 cash in exchange for stock.
2> Hired an employee to be paid $400 per week, starting tomorrow.
3> Paid two years’ rent in advance, $7,440.
4> Paid the worker’s weekly wage.
5> Recorded revenue earned and received for the week, $1,900.
Answer:
Charlie Company uses a perpetual inventory system. During May, the following
transactions and events occurred.
Instructions
Journalize the May transactions for Charlie Company (seller) assuming that Charlie
uses a perpetual inventory system. You may omit explanations. Round amounts to
nearest dollar.
Answer:
For external reporting, a company must prepare either an income statement or a
statement of cash flows, but not both.
Answer:
Salvage value is not subtracted from plant asset cost in determining depreciation
expense under the declining-balance method of depreciation.
Answer: