Interest expense on an interest-bearing note is
a. always equal to zero.
b. accrued over the life of the note.
c. only recorded at the time the note is issued.
d. only recorded at maturity when the note is paid.
Answer:
The LIFO inventory method assumes that the cost of the latest units purchased are
a. the last to be allocated to cost of goods sold.
b. the first to be allocated to ending inventory.
c. the first to be allocated to cost of goods sold.
d. not allocated to cost of goods sold or ending inventory.
Answer:
Of the following companies, which one would not likely employ the specific
identification method for inventory costing?
a. Music store specializing in organ sales
b. Farm implement dealership
c. Antique shop
d. Hardware store
Answer:
In performing a vertical analysis, the base for sales revenues on the income statement is
a. net sales.
b. sales.
c. net income.
d. cost of goods available for sale.
Answer:
The comparative condensed income statements of Marks Corporation are shown below.
Instructions
(a) Prepare a horizontal analysis of the income statement data for Marks Corporation
using 2015 as a base. (Show the amounts of increase or decrease.)
(b) Prepare a vertical analysis of the income statement data for Marks Corporation in
columnar form for both years.
Answer:
A debit memorandum would not be issued by the bank for
a. a bank service charge.
b. the issuance of traveler’s checks.
c. the wiring of funds.
d. the collection of a notes receivable.
Answer:
Accrued expenses are
a. paid and recorded in an asset account before they are used or consumed.
b. paid and recorded in an asset account after they are used or consumed.
c. incurred but not yet paid or recorded.
d. incurred and already paid or recorded.
Answer:
Andre Dickinson, owner of Andre’s Fine Wines, also owns a personal residence that
costs $475,000. The market value of his residence is $625,000. During preparation of
the financial statements for Andre’s Fine Wines, the accounting concept most relevant to
the presentation of Andre’s home is
a. the economic entity assumption.
b. the fair value principle.
c. the monetary unit assumption.
d. convergence.
Answer:
Identify the item below where the terms are not related.
a. Equipment’”depreciation
b. Franchise’”depreciation
c. Copyright’”amortization
d. Oil well’”depletion
Answer:
The following financial statement information is available for James Corporation:
The profit margin ratio for 2015 is
a. 15.4%.
b. 47.9%.
c. 32.1%.
d. 13.5%.
Answer:
Securities bought and held primarily for sale in the near term to generate income on
short-term price differences are
a. trading securities.
b. available-for-sale securities.
c. never-sell securities.
d. held-to-maturity securities.
Answer:
Presented below are selected transactions of Palmer Company. Palmer sells in large
quantities to other companies and also sells its product in a small retail outlet.
Instructions
(a) Prepare journal entries for the transactions above.
(b) What is the balance from credit card transactions in Accounts Receivable after the
April 10 transaction?
Answer:
These are selected account balances on December 31, 2015.
What is the total amount of property, plant, and equipment that will appear on the
balance sheet?
a. $975,000
b. $1,125,000
c. $1,175,000
d. $1,400,000
Answer:
Which of the following activities is excluded from the statement of cash flows under
IFRS?
a. Financing activities
b. Investing activities
c. Noncash investing and financing activities
d. Operating activities
Answer:
Under IFRS, the components of other comprehensive income can be
reported in each of the following ways except
a. the one-statement approach.
b. the two-statement approach.
c. the statement of stockholders’ equity approach.
d. All of these answer choices are correct.
Answer:
Accounts receivable, which are also referred to as ______________ receivables, are
amounts owed by customers on account.
Answer:
A note which is not paid on the maturity date is said to be ______________.
Answer:
Employees who handle cash should be ______________ in order to protect against
misappropriation of assets by dishonest employees.
Answer:
Ann Hech’s regular hourly wage is $18 an hour. She receives overtime pay at the rate of
time and a half. The FICA tax rate is 7.65%. Ann is paid every two weeks. For the first
pay period in January, Ann worked 86 hours of which 6 were overtime hours. Ann’s
federal income tax withholding is $400 and her state income tax withholding is $170.
Ann has authorized that $50 be withheld from her check each pay period for savings
bonds.
Instructions
Compute Ann Hech’s gross earnings and net pay for the pay period showing each
payroll deduction in arriving at net pay.
Answer:
For each of the independent events listed below, analyze the impact on the indicated
items at the end of the current year by placing the appropriate code letter in the box
under each item.
Code: O = item is overstated
U = item is understated
NA = item is not affected
Answer:
If ending inventory is understated, net income and assets will be
Answer:
On April 30, the bank reconciliation of Baxter Company shows three outstanding
checks: no. 354, $650, no. 355, $820, and no. 357, $615. The May bank statement and
the May cash payments journal show the following.
Instructions
Using step 2 in the reconciliation procedure, list the outstanding checks at May 31.
Answer:
Why is it important to report discontinued operations separately from income from
continuing operations?
Answer:
The balance of the depreciation expense account will appear in the income statement
debit column of a worksheet.
Answer: