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1) The law requires most employers to provide a minimum number of weeks holiday
per year.
2) The current ratio is the ratio of an entity's current assets to owner's equity.
3) Under the perpetual system, ending inventory and cost of goods sold will be the
same when FIFO inventory costing method is used.
4) The treatment of inventories under accounting standards for private enterprises
(ASPE) is significantly different than for companies reporting under international
financial reporting standards (IFRS).
5) Using the double-declining method of amortization means that the book value should
not be reduced below the residual value.
6) The Cash Short and Over account is debited when sales revenue exceeds cash
receipts.
7) A single-step format of the income statement will always have fewer sub-totals than
the multi-step income statement format.
8) The duties of hiring and terminating employees should be separated from payroll
accounting and from access to pay cheques.
9) In a manual accounting system the posting from a sales journal includes daily
posting for cash transactions.
10) The inventory costing method used must match the physical flow of goods in and
out of inventory.
11) Notes payable normally require the borrower to pay interest.
12) Separation of authorization of transactions from custody of related assets is related
to proper separation of duties.
13) The cost of land improvements includes fencing, paving, sprinkler systems, and
lighting.
14) An owner investment would increase the assets and decrease the liabilities of the
firm.
15) The entry to record the salary owed to employees and corresponding deductions
includes a debit to salary payable.
16) The two main types of inventory systems are the perpetual system and the periodic
system.
17) In a periodic inventory system, the closing entries include a debit to the Inventory
account in an amount that equals the ending inventory, and a credit to the Inventory
account in an amount that equals the beginning inventory.
18) Purchasing supplies for cash would:
A) decrease total assets and decrease owner's equity
B) increase total assets and increase liabilities
C) decrease liabilities and decrease total assets
D) have no effect on total assets
19) Mandy Smith's account was written off last year. She owed City Company $5,000.
Using the allowance method, the journal entry to receive the cash after her account has
been reinstated involves:
A) a debit to cash and a credit to Smith's account receivable
B) a debit to allowance for doubtful accounts and a credit to Smith's account receivable
C) a debit to cash and a credit to bad-debt expense
D) a debit to Smith's account receivable and a credit to allowance for doubtful accounts
20) All of the following are optional deductions except:
A) charitable contributions
B) medical insurance
C) payroll savings programs
D) employee income taxes
21) Clooney Enterprises received a tax refund cheque in the mail and immediately
deposited it in the bank. Assuming the use of special journals, this entry would be
recorded in the:
A) general journal
B) cash payments journal
C) cash receipts journal
D) sales journal
22) Table 4-5
Selected accounting data for Dustman Consulting follows:
Current assets $74,000
Current liabilities44,000
Property, plant and equipment95,000
Long-term liabilities60,000
Total revenues50,000
Total expenses30,000
Referring to Table 4-5, the debt ratio is:
A) 1.41
B) 1.62
C) 1.09
D) 0.62
23) Interest revenue appears on a bank reconciliation as a(n):
A) deduction from the book balance
B) deduction from the bank balance
C) addition to the book balance
D) addition to the bank balance
24) When an unearned revenue is initially recorded as a revenue, the adjusting entry
would include a:
A) debit to a liability
B) credit to a liability
C) debit to an asset
D) credit to revenue
25) Table 11-15
Sally Lee works for a tugboat company. She earns $900 a week for a 40-hour week and
time and a half for anything over 40 hours per week. During the first week of the year,
Sally worked 43 hours. The income tax withholdings are 20% of gross earnings.
Canada Pension Plan deductions are 4.95% of gross earnings and Employment
Insurance deductions are 1.83% of gross earnings. The worker's compensation premium
is 1.6% of gross earnings. Ignore the basic Canada Pension Plan exemption.
Refer to Table 11-15. What is the correct journal entry to record the salary expense?
A)
B)
C)
D)
26) The sales journal is used for the sale of:
A) merchandise for cash
B) merchandise on account
C) assets other than merchandise for cash
D) assets other than merchandise on account
27) Table 1-1
Following is a random list showing the account balances of various assets, liabilities,
revenues, and expenses for Spiffy's Garage at December 31, 2014, the end of its first
year of operations.
The owner, Spiffy Sloan, invested $22,600 at the beginning of the year and withdrew
$5,000 during the year for personal use.
Refer to Table 1-1. The net income or loss for the year was:
A) $12,800
B) $5,100
C) $5,900
D) $7,700
28) Martin Manufacturing held three interest-bearing notes during 2013 and 2014:
Note 1 issued September 25, 2013, $6,000, 10%, 60 days
Note 2 issued November 20, 2013, $12,000, 12%, 90 days
Note 3 issued December 30, 2013, $4,000, 9%, 30 days
Compute for each note:
a) the maturity date
b) the maturity value
c) interest revenue to be reported on the 2013 income statement (round to the nearest
cent)
29) Unearned service revenue has a balance that is $2,800 less in the worksheet's
balance sheet credit column than in the worksheet's trial balance credit column. From
this data, it can be determined that:
A) unearned service revenue was credited for $2,800 in the adjustments columns
B) service revenue was debited for $2,800 in the adjustments columns
C) service revenue was credited for $2,800 in the adjustments columns
D) unearned service revenue was credited for $2,800 in the adjusted trial balance
columns
30) What are two key criteria that merchandisers who report under international
financial reporting standards (IFRS) must follow?
A) Revenue-recognition criteria and time-allotment assumption
B) Revenue-recognition criteria and matching objective
C) Revenue-recognition criteria and economic-period assumption
D) Revenue-recognition criteria and time-concern assumption
31) All accounts in the general ledger appear on a company's:
A) income statement
B) balance sheet
C) adjusted trial balance
D) statement of owner's equity
32) Which of the following is TRUE about freight in?
A) Freight in is added to the cost of merchandise inventory
B) Freight in is a selling expense
C) Freight in is an operating expense
D) Freight in is deducted from Accounts payable
33) The payment of an amount owed to a supplier would:
A) have no effect on total assets or liabilities
B) increase owner's equity and liabilities
C) decrease net income and increase assets
D) decrease assets and liabilities
34) Table 11-16
Sandra Singh works as the manager for the Shmenge Brothers music store. She earns
$1,200 a week for a 40-hour week and time and a half for anything over 40 hours per
week. During the first week of the year, Sandra worked 46 hours. The income tax
withholdings are 20% of gross earnings. Canada Pension Plan deductions are 4.95% of
gross earnings and Employment Insurance deductions are 1.83% of gross earnings. The
worker's compensation premium is 1.6% of gross earnings. Ignore the basic Canada
Pension Plan exemption.
Refer to Table 11-16. What is the amount of the CPP deduction if the basic exemption is
included in the calculation?
A) $0
B) $72.77
C) $76.11
D) $69.43
35) All of the following are property, plant and equipment except:
A) land
B) prepaid taxes
C) a building
D) equipment
36) Deferrals involve the recording of an expense or a revenue account:
A) either before or after the cash is paid or received
B) after the cash is paid or received
C) before the cash is paid or received
D) either before or at the same time the cash is paid or received
37) Match the following.
A) componentization
B) revaluation model
C) segregated amortization
D) impairment
1> Depreciating parts of assets separately
2> The IFRS method of restating property, plant, and equipment at market value
38) The following data are available for the month of March:
March 1 balance20 units at $15 each
March 10 purchase40 units at $16 each
March 17 purchase30 units at $17.50 each
March 30 purchase25 units at $18 each
On March 31, 35 units are on hand.
Calculate cost of goods sold under the following methods:
a) FIFO b) weighted-average (round per unit cost to the nearest cent, round final answer
to the nearest dollar, assume periodic inventory system)
39) A cash payment of an account payable would:
A) decrease total assets and decrease owner's equity
B) increase total assets and decrease liabilities
C) have no effect on total assets
D) decrease liabilities and decrease assets
40) When is the trial balance usually prepared?
A) after each entry is journalized
B) before financial statements are prepared
C) after financial statements are published
D) at the beginning of an accounting period
41) The provincial securities commissions oversee operations of:
A) all publicly accountable enterprises
B) banks and other federally constituted financial institutions
C) large investors from foreign counties
D) companies with publicly traded stock
42) If a cash register tape totalled $18,600 and the cash received was $18,570, the entry
to Sales Revenue would be:
A) $18,570
B) $18,630
C) $18,600
D) $18,540
43) The bank statement lists a $700 deposit as $70. On a bank reconciliation, this will
appear as a(n):
A) addition to the bank balance
B) deduction from the book balance
C) addition to the book balance
D) deduction from the bank balance
44) In a periodic inventory system, the entry to record the payment of shipping costs by
the company buying the merchandise when the terms are FOB shipping point would
include a:
A) debit to Freight In
B) debit to Delivery Expense
C) credit to Cost of Goods Sold
D) credit to Freight Out
45) A revision of an estimate that extends the asset's useful life:
A) requires restatement of prior years' financial statements
B) is ignored until the last year of the asset's life
C) decreases amortization expense per year for the remaining years of the asset's life
D) increases amortization expense per year for the remaining years of the asset's life
46) Table 9-5
The Ritchie Company gathered the following information pertaining to its year ended
December 31, 2014, prior to any adjustments:
Aging of accounts receivable at December 31, 2014:
Refer to Table 9-5. Assume Ritchie uses the percent-of-sales method for estimating
uncollectible accounts. Ritchie estimates that bad-debt expense will be 1.3% of net
credit sales. After the adjustment for uncollectible accounts is made, the net realizable
value of accounts receivable will be:
A) $156,660
B) $170,000
C) $159,860
D) $163,060
47) The account credited when cash is received from a customer on account is:
A) cash
B) accounts payable
C) accounts receivable
D) service revenue
48) The process of allocating a property, plant, and equipment asset's cost to expense
over the period the asset is used is called:
A) cash-basis accounting
B) amortization
C) accruing
D) direct write-off
49) Amortizable cost equals cost minus:
A) residual value
B) book value
C) accumulated amortization
D) current year's amortization expense
50) Monroe company holds a $20,000, 10% 120 day note receivable from INX Ltd.
Prior to maturity, Monroe discounts the note and sells it for proceeds of $20,500. The
journal entry to record the discounting of the note would include:
A) debit to interest expense of $500
B) credit to interest revenue of $500
C) debit to notes receivable of $20,000
D) credit to notes receivable of $20,500
51) Table 9-9
The following information is available for Martin Services for the year for the year
ended December 31, 2014 .
Accounts receivable Bal. Jan. 1, 2014$20, 500
Allowance for doubtful accounts,
Jan 1, 2014 1,000Cr.
Sales Revenue for 2014 (40% on credit)600,000
Bad debt write-offs during 20141,500
Bad debt recoveries during 2014600
Collections on account during 2014 230,000
Refer to Table 9-9. Assume that Martin Services uses the
percent-of-accounts-receivable method of estimating bad debts, at the rate of 4%.
Calculate the amount of the bad-debt expense for Martin Services for the year ended
December 31, 2014 .
52) Table 6-5
Assume the following data for Kruger Sales for November 2013:
Beginning inventory Nov. 15 units at $90 each
Sale Nov. 33 units at $120 each
Nov. 6 purchase11 units at $95 each
Sale Nov. 84 units at $120 each
Sale Nov. 93 units at $120 each
On November 30, a physical count reveals 6 units on hand.
Refer to Table 6-5. Calculate gross margin for Kruger Sales assuming the perpetual
FIFO cost method is being used.
53) Table 6-5
Assume the following data for Kruger Sales for November 2013:
Beginning inventory Nov. 15 units at $90 each
Sale Nov. 33 units at $120 each
Nov. 6 purchase11 units at $95 each
Sale Nov. 84 units at $120 each
Sale Nov. 93 units at $120 each
On November 30, a physical count reveals 6 units on hand.
Refer to Table 6-5. Calculate ending inventory for Kruger Sales assuming the perpetual
moving-weighted-average-cost method is being used.
54) Table 10-9 Sandu Trucking
On July 1, 2013, Sandu Trucking bought a truck for $42,000 cash. It has estimated
residual value of $6,000, and an estimated life of 4 years, or 300,000 kilometres. The
truck drove 80,000 kilometres in 2013, 90,000 kilometres in 2014, 100,000 kilometres
in 2015, and 50,000 kilometres in 2016 . Sandu Trucking has a December 31st year end.
Refer to Table 10-9. Prepare the journal entry to record the amortization expense in
2015 if Sandu Trucking uses the double-declining balance method to determine
amortization.
55) Table 5-6
The following are transactions for Latest Fashions for the month of June.
June 2Purchased $2,000 of inventory under terms 1/10, n/60 and FOB shipping point
from Trendy Manufacturing. The merchandise had cost Trendy $1,800
June 7Returned defective merchandise to Trendy Manufacturing with invoice price of
$400.
June 8Paid the freight charges on the purchase from Trendy Manufacturing in cash for
$100.
June 9Sold merchandise to New Miss Store on account for $5,000 with terms 2/15, n/60
FOB
shipping point. Cost of the merchandise sold was $4,000.
June 10Paid Trendy Manufacturing the balance on account.
June 12Granted sales allowance of $300 to New Miss Store for defective merchandise.
June 23Collected balance owing from New Miss Store.
Refer to table 5-6. Prepare the journal entries for Trendy Manufacturing for the
transactions listed, assuming that Trendy uses a perpetual inventory system.
