The SEC and FASB are two organizations that are primarily responsible for establishing
generally accepted accounting principles. It is true that
a. they are both governmental agencies.
b. the SEC is a private organization of accountants.
c. the SEC often mandates guidelines when no accounting principles exist.
d. the SEC and FASB rarely cooperate in developing accounting standards.
Answer:
A note receivable is a negotiable instrument which
a. eliminates the need for a bad debts allowance.
b. can be transferred to another party by endorsement.
c. takes the place of checks in a business firm.
d. can only be collected by a bank.
Answer:
A retail store credited the Sales Revenue account for the sales price and the amount of
sales tax on sales. If the sales tax rate is 5% and the balance in the Sales Revenue
account amounted to $294,000, what is the amount of the sales taxes owed to the taxing
agency?
a. $280,000
b. $294,000
c. $14,700
d. $14,000
Answer:
Which of the following is not a significant date with respect to dividends?
a. The declaration date
b. The incorporation date
c. The record date
d. The payment date
Answer:
Any balance in an unearned revenue account is reported as a(n)
a. current liability.
b. long-term debt.
c. revenue.
d. unearned liability.
Answer:
For the basic accounting equation to stay in balance, each transaction recorded must
a. affect two or less accounts.
b. affect two or more accounts.
c. always affect exactly two accounts.
d. affect the same number of asset and liability accounts.
Answer:
When current liabilities are presented under IFRS, they are generally shown
a. alphabetically.
b. in order of magnitude.
c. in order of the dates they become due.
d. in order of liquidity.
Answer:
The balance in the income summary account before it is closed will be equal to
a. the net income or loss on the income statement.
b. the beginning balance in the retained earnings account.
c. the ending balance in the retained earnings account.
d. zero.
Answer:
Tempest Co. purchased 60, 6% Urich Company bonds for $60,000 cash. Interest is
payable semiannually on July 1 and January 1. If 30 of the securities are sold on July 1
for $32,000, the entry would include a credit to Gain on Sale of Debt Investments for
a. $1,600.
b. $1,750.
c. $1,800.
d. $2,000.
Answer:
Blaine Company had these transactions pertaining to stock investments:
The entry to record the sale of the stock would include a
a. debit to Cash for $30,600.
b. credit to Gain on Sale of Stock Investments for $1,200.
c. debit to Stock Investments for $30,600.
d. credit to Gain on Sale of Stock Investments for $1,800.
Answer:
Bargain Company has $1,500,000 of bonds outstanding. The unamortized premium is
$19,600. If the company redeemed the bonds at 101, what would be the gain or loss on
the redemption?
a. $4,600 gain
b. $4,600 loss
c. $15,000 gain
d. $15,000 loss
Answer:
The following information is for Sunny Day Real Estate:
The total dollar amount of assets to be classified as investments is
a. $0.
b. $70,000.
c. $85,000.
d. $155,000.
Answer:
The contractual interest rate is always stated as a(n)
a. monthly rate.
b. daily rate.
c. semiannual rate.
d. annual rate.
Answer:
Presented here is a partial amortization schedule for Roseland Company who sold
$300,000, five year 10% bonds on January 1, 2014 for $318,000 and uses annual
straight-line amortization.
Which of the following amounts should be shown in cell (iv)?
a. $16,200.
b. $10,800.
c. $21,600.
d. $14,400.
Answer:
The income statement for the month of June, 2015 of Camera Obscura Enterprises
contains the following information:
After the revenue and expense accounts have been closed, the balance in Income
Summary will be
a. $0.
b. a debit balance of $1,300.
c. a credit balance of $1,300.
d. a credit balance of $7,000.
Answer:
Goodman Company’s inventory records show the following data:
A physical inventory on December 31 shows 6,000 units on hand. Under the FIFO
method, the December 31 inventory is
a. $42,000.
b. $49,200.
c. $49,392.
d. $54,000.
Answer:
Companies report current liabilities on the balance sheet in
a. alphabetical order.
b. order of maturity.
c. random order.
d. order of magnitude.
Answer:
The concern about international companies adopting SOX-type standards centers on
a. cost-benefit analysis.
b. ethics issues.
c. the governing authorities.
d. comparability.
Answer:
In the bottom portion of the statement of cash flows worksheet,
a. inflows of cash are debits in the reconciling columns.
b. outflows of cash are debits in the reconciling columns.
c. information pertaining to investing and financing activities only is entered.
d. only significant noncash transactions are entered.
Answer:
Distinguishing normal levels of income from irregular items is of interest for the
IFRS:
Answer:
A subsidiary ledger provides up-to-date information on specific account balances.
Answer:
The acquisition of inventory is debited to the ____________ account when a perpetual
inventory system is used.
Answer:
If a certain type of transaction occurs with great frequency, it is more efficient to create
a ______________ to record that type of transaction.
Answer:
The ledger accounts given below, with an identification number for each, are used by
Flynn Company.
Instructions: Indicate the appropriate entries for the month of June by placing the
appropriate identification number(s) in the debit and credit columns provided. Item 0 is
given as an example. Write “none” if no entry is appropriate.
Answer:
A payroll tax expense which is borne entirely by the employer is the federal
_______________ tax.
Answer:
Organizational costs are capitalized by debiting an intangible asset entitled
Organization Costs.
Answer:
Sebastien Company earned net income of $44,000 during 2014. The company paid
dividends totalling $20,000 during the period. Prepare the entries to close Income
Summary and the Dividends account.
Answer:
During the month, a company sells goods for a total of $108,000, which includes sales
taxes of $8,000; therefore, the company should recognize $100,000 in Sales Revenues
and $8,000 in Sales Tax Expense.
Answer: