An accounting device used to record increases and decreases in individual assets,
liabilities, capital, revenue, expenses, and withdrawals is a(n):
A) chart of accounts.
B) account.
C) trial balance.
D) footing.
If treasury stock is sold for less than cost, the entry to record the transaction would
include a:
A) debit to Treasury Stock.
B) credit to Treasury Stock.
C) debit to Common Stock.
D) None of these answers is correct.
Joe’s Auto Repair estimates that approximately 3% of net credit sales are uncollectible.
Joe’s calculates Bad Debts Expense using the:
A) direct write-off method.
B) income statement method.
C) gross method.
D) balance sheet method.
There are two parts to FICA:
A) old age benefits and workers’ compensation.
B) retirement and income tax withholdings.
C) OASDI and Medicare.
D) defined pension and Medicare.
The section of the statement of cash flows from investing activities includes:
A) cash paid for inventory.
B) collecting loans and/or interest.
C) cash received from customers.
D) All of the above
During the week ended November 30, total factory payroll incurred was $8,000. Of this
total, 80% was for direct labor. The entry to record the payroll distribution would
include:
A) debit Work-in-Process Inventory for $6,400 and Manufacturing Overhead-Control
for $1,600.
B) debit Work-in-Process Inventory for $8,000.
C) debit Work-in-Process Inventory for $6,400 and Manufacturing Overhead-Applied
for $1,600.
D) debit Work-in-Process Inventory for $6,400 and Indirect Labor Expense for $1,600.
Martin Corporation sells $300,000, 10%, 10-year bonds at face value on January 1.
Interest is paid on January 1 and July 1. The entry to record the issuance of the bonds
on January 1 is:
A)
B)
C)
D)
When a customer’s account is written off:
A) net realizable value of the Accounts Receivable remains the same.
B) net realizable value of the Accounts Receivable decreases.
C) net realizable value of the Accounts Receivable increases.
D) None of the above
A $200,000, 8% bond issue was sold at face value and later redeemed at 110. The
corporation would have a:
A) gain of $20,000.
B) loss of $20,000.
C) gain of $8,000.
D) loss of $8,000.
A new partner was admitted but the assets weren’t revalued. A revaluation would have
decreased the equity of the partner and partnership. This error would cause:
A) future periods’ net income to be understated.
B) future periods’ net income to be overstated.
C) this period’s end assets to be understated.
D) new partner’s capital to be overstated.
The Allowance for Doubtful Accounts is listed on the balance sheet under the caption:
A) owner’s equity.
B) current liabilities.
C) current assets.
D) fixed assets.
For vertical analysis purposes, the base item on an income statement is:
A) net income.
B) net sales.
C) total expenses.
D) total sales.
The entry to record selling 100 shares of no-par common stock with a stated value of
$30 for $40 would be to:
A) debit Common Stock for $4,000; credit Cash for $4,000.
B) debit Cash for $4,000; credit Common Stock for $4,000.
C) debit Cash for $4,000; credit Common Stock for $3,000; credit Paid-In Capital in
Excess of Stated Value-Common for $1,000.
D) debit Cash for $4,000; credit Common Stock for $1,000; credit Paid-In Capital in
Excess of Par Value-Common for $3,000.
Which is NOT an example of a source document?
A) Clock card
B) Bill of lading
C) Lot ticket
D) All are source documents.
A $1,000 bond quoted at 105 would sell for:
A) $1,105.
B) $1,050.
C) $105.
D) $1,000.
Seascape Interiors produces artist supplies. Listed below are the costs of production and
inventory.
Direct Labor $60,000
Raw Materials Inventory, Aug. 1 45,000
Raw Materials Purchases 75,000
Raw Materials Inventory, Aug. 31 25,000
Overhead 50,000
Work-in-Process Inventory Aug. 1 21,000
Work-in-Process Inventory Aug. 31 27,000
Finished Goods Inventory Aug. 31 18,000
Compute:
a. Cost of raw materials used in production
b. Total manufacturing costs
c. Total cost of goods manufactured
Which of the following ratios helps evaluate how well a company is earning profit for
the common stockholders?
A) Times interest earned ratio
B) Return on sales ratio
C) Return on total assets
D) Rate of return on common stockholders’ equity
The first step in the closing process is to:
A) close all balances on the income statement debit column of the worksheet except
Income Summary.
B) transfer the balance from the Income Summary Account to the Capital Account.
C) close all balances on the income statement credit column of the worksheet except
Income Summary.
D) transfer the balance of the Owner’s Withdrawals Account to Capital.
In a voucher system, the cash payments journal:
A) is replaced by a check register.
B) is used to record payments by check.
C) is used to record the information found in the check register.
D) supplements the check register.
The Allowance for Doubtful Accounts is adjusted:
A) each time a customer is granted credit
B) each time a customer’s debt is satisfied.
C) within one year of granting credit to a customer.
D) at the end of each accounting period.
After Crowe purchased $4,000 of merchandise from Hanks, Crowe discovered $200 of
defective merchandise. Record the entry for the return (assume the gross method). The
company uses the periodic method and the voucher system.
A)
B)
C)
D) None of these answers is correct.
On February 12, Clare purchased $400 of merchandise on account from Larsen’s
Accessories, terms 2/10, n/30. The goods were shipped F.O.B. destination. The freight
charge was $40. The amount to be recorded in the Accounts Payable Subsidiary ledger
is:
A) $392.
B) $408.
C) $400.
D) $440.
Why would a company use a separate payroll cash account?
A) Provides for better internal control
B) Ease of account reconciliation
C) Determine whether or not the employee has cashed their check
D) All of the above are correct.
If Rick’s sales increased from $40,000 to $80,000 and its cost of goods sold increased
from $25,000 to $60,000, then vertical analysis based on sales would show the
following for cost of goods sold for the two periods:
A) 75% and 62.5%.
B) 62.5% and 75%
C) 133.33% and 160%
D) 160% and 133.33%.
If Accounts Receivable has been credited, it is most likely that:
A) the company collected a payment from a customer.
B) the company made a payment on account.
C) the company made a purchase on account.
D) None of these is possible.
James wants to invest cash so that he will have a one-third interest in Thomas and
Stanley’s company. The capital balances are $6,000 Thomas, $9,000 Stanley. The
admission of James would be to:
A) debit Cash $3,000; credit James, Capital $3,000.
B) debit Cash $4,500; credit James, Capital $4,500.
C) debit Cash $7,500; credit James, Capital $7,500.
D) debit Cash $12,000; credit James, Capital $12,000
Dave Brown’s cumulative earnings are $73,000, and his gross pay for the week is
$6,200. If the FICA rates are: OASDI 6.2% on a limit of $117,000 and Medicare is
1.45%, what are his FICA-OASDI and FICA-Medicare taxes for the week?
A) $0; $89.90
B) $384.00; $0
C) $384.40; $89.90
D) $3,844; $899.00
On June 15, Bob Love earned $5,000 and has the following deductions: FICA-OASDI
6.2%, FICA-Medicare 1.45%; federal income tax of $300; and state income tax $40.
What is his net pay?
A) $3,400
B) $4,277.50
C) $4,454
D) $$5,000
David and Daniel formed a partnership. David invested $12,000, cash; Daniel invested
$7,000 cash and equipment with a fair value of $5,000. The proper entry to record this
is to:
A) debit Cash $19,000; debit Equipment $5,000; credit Capital $24,000.
B) debit Cash $19,000; debit Equipment $5,000; credit Accounts Payable $24,000.
C) debit Cash $19,000; debit Equipment $5,000; credit David’s Capital $12,000; and
credit Daniel’s Capital $12,000.
D) debit Cash $19,000; credit David’s Capital $12,000; and credit Daniel’s Capital
$7,000.
The allocation of the cost of a intangible asset is known as:
A) depreciation.
B) depletion.
C) amortization.
D) accrual.
If a company does not pay its note payable on the agreed upon date, the note:
A) is renewed automatically for the same period of time.
B) is discounted at a higher rate of interest.
C) is dishonored by the vendor.
D) is automatically placed in collection with an outside agency.
A debit to a liability account was posted to a revenue account. This would cause:
A) assets to be overstated.
B) liabilities to be understated.
C) capital to be overstated.
D) revenue to be understated.
Which of the following transactions would be recorded in an auxiliary petty cash
record?
A) Purchase of first aid supplies
B) Payment of Salaries Expense
C) Owner Withdrawal of $1,000
D) Purchase of a $2,000 piece of Equipment
The May bank statement for Legal Services shows a balance of $6,000, but the balance
per books shows a cash balance of $7,680. Other information includes:
1. A check for $200 to pay the electric bill was recorded on the books as $20.
2. Included on the bank statement was a note collected by the bank for $400 plus
interest of $30
3. Checks outstanding totaled $260.
4. Bank service charges were $50.
5. Deposits in transit were $2,140.
The adjusted cash balance at the end of May should be:
A) $9,810.
B) $7,620.
C) $7,150.
D) $7,880.
The entry to record the cash received on a customer’s note discounted at less than face
value would include a:
A) credit to interest income.
B) debit to notes receivable.
C) debit to interest expense.
D) All of the above