Credit terms of 2/10, n/30 mean that
a. a 10% cash discount may be taken if payment is made immediately; a 2% discount if
paid within 30 days.
b. a 2% cash discount may be taken if payment is made within 10 days of the invoice
date; otherwise the full amount is due at the end of the month.
c. an additional amount equal to 2% of the invoice price must be paid if payment is not
received within 10 days; the account is overdue after 30 days.
d. a 2% cash discount may be taken if payment is made within 10 days of the invoice
date; otherwise the full amount is due within 30 days.
Answer:
Which of the following would not be classified as a contra account?
a. Sales Revenue
b. Sales Returns and Allowances
c. Accumulated Depreciation
d. Sales Discounts
Answer:
Significant noncash transactions would not include
a. conversion of bonds into common stock.
b. asset acquisition through bond issuance.
c. treasury stock acquisition.
d. exchange of plant assets.
Answer:
Liabilities are classified on the balance sheet as current or
a. deferred.
b. unearned.
c. long-term.
d. accrued.
Answer:
At June 1, 2015, Larry Levine Company reported Accounts Payable of $15,000. During
the month, the company made purchases on account of $51,000 and payments on
account of $30,000. At June 30, 2015, the balance in Accounts Payable is
a. $15,000 debit.
b. $36,000 credit.
c. $66,000 credit.
d. $30,000 debit.
Answer:
In performing a vertical analysis, the base for sales returns and allowances is
a. sales.
b. sales discounts.
c. net sales.
d. total revenues.
Answer:
Lack of agreement between the cash balance per bank and the cash balance per books is
due to
a. errors and poor internal control.
b. errors and bank memoranda.
c. time lags and poor internal control.
d. time lags and errors.
Answer:
The statement of cash flows is the only required financial statement that is not prepared
from an adjusted trial balance. (a) What are the sources of information for preparing a
statement of cash flows? (b) Explain how the accrual basis of accounting affects the
statement of cash flows.
Answer:
The two key parties to a promissory note are the
a. maker and a bank.
b. debtor and the payee.
c. maker and the payee.
d. sender and the receiver.
Answer:
During 2015, Parker Enterprises generated revenues of $90,000. The company’s
expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000
and a loss on the sale of equipment of $3,000.
Parker’s gross profit is
a. $24,000.
b. $27,000.
c. $45,000.
d. $90,000.
Answer:
A trial balance will not balance if
a. a journal entry is posted twice.
b. a wrong amount is used in journalizing.
c. incorrect account titles are used in journalizing.
d. a journal entry is only partially posted.
Answer:
A company purchased office equipment for $40,000 and estimated a salvage value of
$8,000 at the end of its 5-year useful life. The constant percentage to be applied against
book value each year if the double-declining-balance method is used is
a. 20%.
b. 25%.
c. 40%.
d. 5%.
Answer:
If a business pays rent in advance and debits a Prepaid Rent account, the company
receiving the rent payment will credit
a. Cash.
b. Prepaid Rent.
c. Unearned Rent Revenue.
d. Rent Revenue.
Answer:
On January 1, Sway Corporation had 60,000 shares of $10 par value common stock
outstanding. On March 17, the company declared a 15% stock dividend to stockholders
of record on March 20. Market value of the stock was $13 on March 17. The stock was
distributed on March 30. The entry to record the transaction of March 30 would include
a
a. credit to Cash for $90,000.
b. debit to Common Stock Dividends Distributable for $90,000.
c. credit to Paid-in Capital in Excess of Par for $27,000.
d. debit to Stock Dividends for $27,000.
Answer:
Paid-in capital from treasury stock would appear on a balance sheet under the category
a. capital stock.
b. treasury stock.
c. additional paid-in capital.
d. contra to stockholders’ equity.
Answer:
A company shows a balance in Salaries and Wages Payable of $38,000 at the end of the
month. The next payroll amounting to $48,000 is to be paid in the following month.
What will be the journal entry to record the payment of salaries?
Answer:
The Securities and Exchange Commission oversees U.S. financial markets and
accounting standard-setting bodies.
Answer:
Companies record a gain or loss on the exchange of plant assets because most
exchanges have commercial substance.
Answer:
The post-closing trial balance will contain only retained earnings statement accounts
and balance sheet accounts.
Answer:
The complete effect of a transaction on the accounts is disclosed in the journal.
Answer:
When counting the exact number of days to determine the maturity date of a note, the
date of issue is included but the due date is omitted.
Answer:
Casey Company retired $500,000 face value, 9% bonds on June 30, 2015 at 96. The carrying
value of the bonds at the redemption date was $508,000.
Instructions
Prepare the journal entry to record the redemption of the bonds.
Answer:
Kingery Sales Company has the following selected accounts after posting adjusting
entries:
Instructions
Prepare the current liability section of Kingery Sales Company’s balance sheet,
assuming $16,000 of the mortgage is payable next year.
Answer:
Research and development costs can be classified as a property, plant, and equipment
item or as an intangible asset.
Answer: