The income statement for the month of June, 2015 of Camera Obscura Enterprises
contains the following information:
The entry to close the expense accounts includes a
a. debit to Income Summary for $1,300.
b. credit to Rent Expense for $1,500.
c. credit to Income Summary for $5,700.
d. debit to Salaries and Wages Expense for $3,000.
Answer:
The basic accounting entries for merchandising are
a. the same under GAAP and under IFRS.
b. required under GAAP but not under IFRS.
c. required under IFRS but not under GAAP.
d. required under IFRS with some differences as compared to GAAP.
Answer:
The chart of accounts is a
a. list of accounts and their balances at a given time.
b. device used to prove the mathematical accuracy of the ledger.
c. listing of the accounts and the account numbers which identify their location in the
ledger.
d. required step in the recording process.
Answer:
The order of presentation of activities on the statement of cash flows is
a. operating, investing, and financing.
b. operating, financing, and investing.
c. financing, operating, and investing.
d. financing, investing, and operating.
Answer:
Karl Corporation was organized on January 2, 2015. During 2015, Karl issued 40,000
shares at $24 per share, purchased 6,000 shares of treasury stock at $26 per share, and
had net income of $600,000. What is the total amount of stockholders’ equity at
December 31, 2015?
a. $1,280,000
b. $1,404,000
c. $1,416,000
d. $1,440,000
Answer:
Accumulated Depreciation is
a. an expense account.
b. a stockholders’ equity account.
c. a liability account.
d. a contra asset account.
Answer:
If bonds are issued at a discount, it means that the
a. financial strength of the issuer is suspect.
b. market interest rate is higher than the contractual interest rate.
c. market interest rate is lower than the contractual interest rate.
d. bondholder will receive effectively less interest than the contractual interest rate.
Answer:
On December 1, 2014, Crawley Corporation incurs a 15-year $600,000 mortgage
liability in conjunction with the acquisition of an office building. This mortgage is
payable in monthly installments of $7,200, which include interest computed at the rate
of 12% per year. The first monthly payment is made on December 31, 2014. The
portion of the second monthly payment made on January 31, 2015, which represents
repayment of principal is:
a. $1,200.
b. $1,212.
c. $7,200.
d. $5,988.
Answer:
Camper Van Company purchased equipment for $2,600 cash. As a result of this event,
a. stockholders’ equity decreased by $2,600.
b. total assets increased by $2,600.
c. total assets remained unchanged.
d. stockholders’ equity decreased and total assets increased by $2,600.
Answer:
Most companies that follow IFRS present balance sheet (statement of financial
position) information in this order:
a. current assets; investments; property, plant and equipment; intangible assets; current
liabilities; long term liabilities; equity.
b. intangible assets; property, plant and equipment; investments; current assets; current
liabilities; equity; long term liabilities.
c. current assets; noncurrent assets; current liabilities; noncurrent liabilities; equity.
d. noncurrent assets; current assets; equity; noncurrent liabilities; current liabilities.
Answer:
Prior period adjustments are reported
a. in the footnotes of the current year’s financial statements.
b. on the current year’s balance sheet.
c. on the current year’s income statement.
d. on the current year’s retained earnings statement.
Answer:
Inventories are defined by IFRS as
a. held-for-sale in the ordinary course of business.
b. in the process of production for sale in the ordinary course of business.
c. in the form of materials or supplies to be consumed in the production process or in
the providing of services.
d. All of these answer choices are correct.
Answer:
The tax that is paid equally by the employer and employee is the
a. federal income tax.
b. federal unemployment tax.
c. state unemployment tax.
d. FICA tax.
Answer:
The following amounts were taken from the financial statements of Leaf Company:
The price-earnings ratio for 2015 is
a. 21.5 times.
b. 36 times.
c. 4.5 times.
d. 3.0 times.
Answer:
The usual sequence of steps in the recording process is to analyze each transaction,
enter the transaction in the
a. journal, and transfer the information to the ledger accounts.
b. ledger, and transfer the information to the journal.
c. book of accounts, and transfer the information to the journal.
d. book of original entry, and transfer the information to the journal.
Answer:
At March 31, account balances after adjustments for Vizzini Cinema are as follows:
Instructions
Prepare the closing journal entries for Vizzini Cinema.
Answer:
Net purchases plus freight-in determines
a. cost of goods sold.
b. cost of goods available for sale.
c. cost of goods purchased.
d. total goods available for sale.
Answer:
Answer:
The separate balance sheets of Platt Company and its wholly owned subsidiary, Speer
Company, as of the date of acquisition are shown below.
Instructions
(Provide the amount that should appear in the Consolidated Data column for each of the
selected accounts. If the accounts should not appear in the Consolidated Data column,
indicate ‘None’. Assume that all accounts have normal balances and that Speer
Company stock was acquired for cash at a price equal to its book value.
Answer:
Two widely used methods of estimating inventories are the ______________ method
and the _____________ method.
Answer:
A prior period adjustment is occasionally reported in company financial statements.
What is a prior period adjustment, and how is it reported in the financial statements?
Answer:
On January 1, 2015, Ralph Corporation had $2,000,000 of $10 par value common stock
outstanding that was issued at par and retained earnings of $1,000,000. The company
issued 200,000 shares of common stock at $12 per share on July On December 15, the
board of directors declared a 15% stock dividend to stockholders of record on
December 31, 2015, payable on January 15, 2016. The market value of Ralph
Corporation stock was $14 per share on December 15 and $16 per share on December 3
Net income for 2015 was $500,000.
Instructions
(1) Journalize the issuance of stock on July 1 and the declaration of the stock dividend
on December 15.
(2) Prepare the stockholders’ equity section of the balance sheet for Ralph Corporation
at December 31, 2015.
Answer:
On January 1, Skills Company purchased as a short-term investment a $1,000, 6% bond
for $1,000. The bond pays interest on January 1 and July 1. The bond is sold on October
1 for $1,200 plus accrued interest. Interest has not been accrued since the last interest
payment date. What is the entry to record the cash proceeds at the time the bond is sold?
Answer:
The ending retained earnings balance is reported on both the retained earnings
statement and the balance sheet.
Answer:
Saint, Inc. declares a 15% common stock dividend when it has 30,000 shares of $10 par
value common stock outstanding. If the market value of $24 per share is used, the
amounts debited to Stock Dividends and credited to Paid-in Capital in Excess of Par
are:
Answer: