1) russel company assembled the following information in completing its march bank
reconciliation:
as a result of this reconciliation, perkins will
a.reduce its cash account by $475
b.reduce its cash account by $25
c.increase its cash account by $55
d.reduce its cash account by $105
2) a company sells a plant asset that originally cost $300,000 for $100,000 on december
31, 2012. the accumulated depreciation account had a balance of $120,000 after the
current year’s depreciation of $30,000 had been recorded. the company should
recognize a
a.$200,000 loss on disposal
b.$80,000 gain on disposal
c.$80,000 loss on disposal
d.$50,000 loss on disposal
3) watson, inc. has 5,000 shares of 6%, $100 par value, cumulative preferred stock and
20,000 shares of $1 par value common stock outstanding at december 31, 2012. there
were no dividends declared in 2010. the board of directors declares and pays a $50,000
dividend in 2011 and in 2012. what is the amount of dividends received by the common
stockholders in 2012?
a.$10,000
b.$30,000
c.$50,000
d.$0
4) the collection of a $500 account beyond the 2 percent discount period will result in a
a.debit to cash for $490
b.credit to accounts receivable for $500
c.credit to cash for $500
d.debit to sales discounts for $10
5) the sale or transfer of accounts receivable in order to raise funds is called
a.pledging
b.factoring
c.leasing
d.collateralizing
6) reporting a net income of $95,000 will
a.increase retained earnings
b.decrease retained earnings
c.increase common stock
d.decrease common stock
7) an adjusting entry:
a.affects two balance sheet accounts
b.affects two income statement accounts
c.affects a balance sheet account and an income statement account
d.is always a compound entry
8) which of the following expressions is incorrect?
a.gross profit – operating expenses = net income
b.sales – cost of goods sold – operating expenses = net income
c.net income + operating expenses = gross profit
d.operating expenses – cost of goods sold = gross profit
9) which one of the following items is not considered a part of the cost of a truck
purchased for business use?
a.sales tax
b.truck license
c.freight charges
d.cost of lettering on side of truck
10) which of the following is not an intangible asset that is reported on the balance
sheet?
a.goodwill
b.trademarks
c.employees
d.copyrights
11) which of the following is not a basic principle of cash management?
a.increase collection of receivables
b.keep inventory levels low
c.pay all liabilities early
d.invest idle cash
12) roberts department store had net credit sales of $9,000,000 and cost of goods sold of
$6,000,000 for the year. the average inventory for the year amounted to $2,500,000. the
average days in inventory during the year was approximately
a.101 days
b.114 days
c.122 days
d.152 days
13) an overstatement of the beginning inventory results in
a.no effect on the periods net income
b.an overstatement of net income
c.an understatement of net income
d.a need to adjust purchases
14) mantle publications publishes a golf magazine for women. the magazine sells for
$4.00 a copy on the newsstand. yearly subscriptions to the magazine cost $36 per year
(12 issues). during december 2011, expert publications sells 4,000 copies of the golf
magazine at newsstands and receives payment for 5,000 subscriptions for 2012.
financial statements are prepared monthly.
instructions
(a)prepare the december 2011 journal entries to record the newsstand sales and
subscriptions received.
(b)prepare the necessary adjusting entry on january 31, 2012. the january 2012 issue has
been mailed to subscribers.
15) on march 1, cooper company borrows $90,000 from new national bank by signing a
6-month, 8%, interest-bearing note.
instructions
prepare the necessary entries below associated with the note payable on the books of
cooper company.
(a)prepare the entry on march 1 when the note was issued.
(b)prepare any adjusting entries necessary on june 30 in order to prepare the semiannual
financial statements. assume no other interest accrual entries have been made.
(c)prepare the entry to record payment of the note at maturity.
16) hermann corporation had net income of $200,000 and paid dividends to common
stockholders of $50,000 in 2012. the weighted average number of shares outstanding in
2012 was 50,000 shares. hermann corporation’s common stock is selling for $50 per
share on the new york stock exchange. hermann corporation’s price-earnings ratio is
a.3 times
b.10 times
c.12.5 times
d.4 times
17) the balance in the unrealized lossequity account will
a.appear on the balance sheet as a contra asset
b.appear on the income statement under other expenses and losses
c.appear as a deduction in the stockholders’ equity section
d.not be shown on the financial statements until the securities are sold