The selection of an appropriate inventory cost flow assumption for an individual
company is made by
a. the external auditors.
b. the SEC.
c. the internal auditors.
d. management.
Answer:
The historical cost principle requires that when assets are acquired, they be recorded at
a. appraisal value.
b. cost.
c. market price.
d. book value.
Answer:
Common Stock Dividends Distributable is reported in the balance sheet
a. as an addition to retained earnings.
b. as an asset.
c. in paid-in capital as an addition to common stock issued.
d. as a liability.
Answer:
Liabilities of a company would not include
a. notes payable.
b. accounts payable.
c. salaries and wages payable.
d. cash.
Answer:
Hogan Company uses the direct method in determining net cash provided by operating
activities, During the year, operating expenses were $295,000, prepaid expenses
increased $23,000, and accrued expenses payable increased $33,000. Cash payments
for operating expenses were
a. $39,000.
b. $51,000.
c. $305,000.
d. $285,000.
Answer:
Posting a sales journal to the accounts in the general ledger requires a
a. debit to Cash and a credit to Sales Revenue.
b. debit to Sales Revenue and a credit to Inventory.
c. debit to Accounts Receivable and a credit to Inventory.
d. debit to Accounts Receivable and a credit to Sales Revenue.
Answer:
Which one of the following is not a tool in financial statement analysis?
a. Horizontal analysis
b. Circular analysis
c. Vertical analysis
d. Ratio analysis
Answer:
Effie Company uses a periodic inventory system. Details for the inventory account for
the month of January, 2015 are as follows:
An end of the month (1/31/15) inventory showed that 160 units were on hand. If the
company uses FIFO, what is the value of the ending inventory?
a. $800
b. $832
c. $848
d. $868
Answer:
For accounting purposes, the method used to account for long-term investments in
common stock is determined by
a. the amount paid for the stock by the investor.
b. the extent of an investor’s influence on the operating and financial affairs of the
investee.
c. whether the stock has paid dividends in past years.
d. whether the acquisition of the stock by the investor was ‘friendly’ or ‘hostile.’
Answer:
A worksheet is a multiple column form that facilitates the
a. identification of events.
b. measurement process.
c. preparation of financial statements.
d. analysis process.
Answer:
Each of the following items may be classified as operating or financing activities under
IFRS except
a. dividends paid.
b. dividends received.
c. interest paid.
d. All of these answers are correct.
Answer:
Financing activities involve
a. lending money to other entities and collecting on those loans.
b. cash receipts from sales of goods and services.
c. acquiring and disposing of productive long-lived assets.
d. long-term liability and stockholders’ equity items.
Answer:
Glaser Company paid $48,000 to buy 3,000 shares of its $5 par value common stock for
the treasury. The stock was originally sold for $36,000. The entry to record the purchase
includes a
a. debit to Treasury Stock for $36,000.
b. credit to Treasury Stock for $20,000.
c. debit to Treasury Stock for $48,000.
d. credit to Common Stock for $36,000.
Answer:
Sunset Corporation stockholders’ equity consisted of the following on January 1, 2015:
Note A: Preferred dividends are in arrears for 2014.
Instructions
Prepare the appropriate journal entries, if any, for the following transactions in 2015.
You may omit journal entry explanations but you should show computations.
1/25/15 Issued 20,000 shares of common stock for $40 per share.
2/18/15 The Board of Directors declared an annual cash dividend on preferred and
common stock totaling $700,000, payable on March 15, to stockholders of record on
February 28. (Record dividends payable on preferred and common stock in separate
accounts.)
2/28/15 Date of record for cash dividends on preferred and common stock.
3/15/15 Paid the cash dividend to preferred and common stockholders.
5/20/15 Declared a 10% stock dividend on the common stock, distributable on June 15,
to stockholders of record on May 31. The market value of Sunset Corporation’s
common stock was $40 per share.
6/15/15 Distributed stock dividend to common stockholders.
7/10/15 Purchased 40,000 shares of common stock for the treasury at $44 per share.
Answer:
On January 1, Sway Corporation had 60,000 shares of $10 par value common stock
outstanding. On March 17, the company declared a 10% stock dividend to stockholders
of record on March 20. Market value of the stock was $13 on March 17. The entry to
record the transaction of March 17 would include a
a. credit to Stock Dividends for $18,000.
b. credit to Cash for $78,000.
c. credit to Common Stock Dividends Distributable for $60,000.
d. debit to Common Stock Dividends Distributable for $60,000.
Answer:
With an interest-bearing note, the amount of cash received upon issuance of the note
generally exceeds the note’s face value.
Answer:
Prepare the necessary closing entries based on the following selected accounts.
Answer:
A note receivable is a written promise by the maker to the payee to pay a specified
amount of money at a definite time.
Answer:
Place each of the items listed below in the appropriate subdivision of the stockholders’
equity section of a balance sheet.
Common stock, $10 stated value
Retained earnings
8% Preferred stock, $100 par value
Paid-in capital in excess of par
Paid-in capital in excess of stated value
Treasury stock’”Common
Paid-in capital from treasury stock
Answer:
The cost of a depreciable asset less accumulated depreciation reflects the book value of
the asset.
Answer:
Bank returns deposited check marked NSF.
6> Bank collects notes receivable and interest for depositor.
7> Bank debit memorandum for check printing fees.
8> Petty cash custodian has $91 in paid petty cash vouchers that have not been
reimbursed.
9> Bank charged a check against the company which should have been charged to
another company.
10> A check for $246 was correctly paid by the bank but was incorrectly entered in the
cash payments journal for $264.
Answer:
Indicate the proper sequence of the steps in the accounting cycle by placing numbers
1-8 in the blank spaces.
____ a> Analyze business transactions.
____ b> Journalize and post adjusting entries.
____ c> Journalize and post closing entries.
____ d> Journalize the transactions.
____ e> Prepare a post-closing trial balance.
____ f> Prepare a trial balance.
____ g> Prepare financial statements.
____ h> Post to ledger accounts.
Answer:
Windsor Service had the following financial information at the end of 2015.
Instructions:
Prepare a 2015 income statement, 2015 retained earnings statement, and a 12/31/15
balance sheet for Windsor Service.
Answer:
The post-closing trial balance is entered in the first two columns of a worksheet.
Answer:
The book value of a plant asset is the amount originally paid for the asset less
anticipated salvage value.
Answer: