Which of the following partnership characteristics is an advantage?
A. Mutual agency
B. Ease of dissolution
C. Unlimited liability
D. Limited life
Which of the following is the most useful aid to the accountant in preparing closing
entries?
A. Journal
B. Financial statements
C. Ledger
D. Work sheet
On January 2, 2014, Lionel Company issued $40,000 of notes payable, of which
$10,000 is due on January 2 for each of the next four years. The proper balance sheet
presentation on December 31, 2014, is
A. Current Liabilities, $40,000.
B. Current Liabilities, $10,000; Long-Term Liabilities, $30,000.
C. Long-Term Liabilities, $40,000.
D. Current Liabilities, $30,000; Long-Term Liabilities, $10,000.
When a single-column purchases journal is used,
A. only credit purchases of merchandise for resale to customers are recorded.
B. credit purchases of items other than merchandise are recorded in the general journal.
C. cash purchases of merchandise for resale to customers are recorded in the cash
payments journal.
D. All of these choices.
A bond with a face value of $10,000 has a current price quote of 102.62. The price in
dollars and cents is
A. $10,002.62.
B. $10,200.62.
C. $10,026.20.
D. $10,262.00.
Adobe Corporation had net income of $120,000 in 20×4 and $164,000 in 20×5. Total
stockholders’ equity at the end of 20×4 was $760,000 and total stockholders’ equity at
the end of 20×5 was $820,000. Adobe’s total assets at the end of 20×4 were $1,320,000
and its total assets at the end of 20×5 were $1,410,000. Based on this information, what
is Adobe’s return on equity for 20×5?
A. 20.76%
B. 17.97%
C. 20.00%
D. 12.01%
Which of the following accounts is not closed during the closing process?
A. Owner’s Capital
B. Commissions Earned
C. Income Summary.
D. Withdrawals
Using the following information, calculate for 20×5 (a) net sales, (b) beginning
merchandise inventory, (c) gross margin, and (d) net income.
Use this information to answer the following question.
Panadora Company has the following information for the pay period of January 1-15,
2014. Payment occurs on January 20.
Payroll Taxes and Benefits Expense would be recorded for
A. $1,984.
B. $2,248.
C. $4,432.
D. $8,032.
Which of the following is not a measure of profitability?
A. Current ratio
B. Return on assets
C. Return on equity
D. Debt to equity ratio
In a common-size financial statement, which of the following is given a designation of
100 percent?
A. Cost of goods sold
B. Total assets
C. Total liabilities
D. Net income
Receiving cash from a customer for settlement of an Accounts Receivable will
A. decrease Owner’s Equity.
B. increase net income.
C. increase total assets.
D. not affect total assets.
Use this information to answer the following question.
The general ledger account for Accounts Receivable shows a debit balance of $50,000.
Allowance for Uncollectible Accounts has a credit balance of $1,000. Net sales for the
year were $494,000. In the past, 2 percent of sales have proved uncollectible, and an
aging of accounts receivable accounts results in an estimate of $13,500 of uncollectible
accounts.
Using the percentage of net sales method, the Allowance for Uncollectible Accounts
balance (after adjustment) would be
A. $8,880.
B. $9,880.
C. $10,880.
D. $1,000.
Which of the following would not be found in a good system of internal control?
A. Requiring all employees to take earned vacations
B. Establishing a system of checks and balances
C. Having one person handle all the responsibilities of a department
D. Establishing an internal audit staff
Which of the following is both an estimated liability and a contingent liability?
A. Cosignature on $500 loan
B. Current portion of long-term debt
C. Warranty liability
D. Liability for dividends
a. Marco Corporation has 6,000 shares of $100 par value, 8 percent cumulative
preferred stock and 10,000 shares of $50 par value common stock outstanding. All
shares were issued at par value. In addition, retained earnings total $198,000. If the
preferred stock is callable at $105 per share and one year’s dividends are in arrears,
compute book value per share of preferred stock.
b. Assume the same facts as in a above. Calculate book value per share of common
stock.
c. Assume the same facts as in a above and that Marco Corporation declares a 15
percent stock dividend on its common stock. If the market value on the declaration date
was $60 per share, for what amount will Additional Paid-in Capital, Common be
credited?
d. Assume the same facts as in a above and that Marco Corporation declares a 4-for-1
stock split on its preferred stock. After the split, total par value of preferred stock equals
what amount?
When accounting for property taxes, which of the following accounts normally would
not be credited?
A. Prepaid Property Taxes
B. Cash
C. Estimated Property Taxes Payable
D. Property Taxes Expense
Privately owned companies
A. are required to have an independent CPA audit their financial statements.
B. are required to have their internal control systems audited.
C. are required to have both the financial statements and internal control systems
audited.
D. are not required to do any of these.
A bond premium has the effect of
A. lowering the carrying value of the bond.
B. raising the effective interest rate above the face interest rate.
C. increasing the amount of cash paid for interest each six months.
D. lowering the effective interest rate below the face interest rate.
On a corporate balance sheet, earned capital is also known as
A. common stock.
B. paid-in capital.
C. retained earnings.
D. contributed capital.
Which of the following has an effect on total stockholders’ equity?
A. Conversion of preferred stock into common stock
B. Cash dividend
C. Stock dividend
D. Stock split
Short-term available-for-sale securities are valued on the balance sheet at
A. market value.
B. cost, adjusted for the effects of interest.
C. cost.
D. lower of cost or market.
In a partnership liquidation,
A. creditors should be paid before partners
B. gains and losses on the sale of assets are allocated to the partners on the basis of their
current capital balances
C. the last entry credits the partners’ Capital accounts
D. the partners’ accounts are settled on the basis of the stated ratios
A machine was purchased for $50,000. It has a current carrying value of $32,500 and
had a depreciable cost of $45,000. Its estimated residual value must have been
A. $5,000.
B. $12,500.
C. $17,500.
D. impossible to determine from the facts given.
The debt to equity ratio is expressed in terms of
A. a percentage.
B. dollars.
C. units.
D. times.
On December 31, 20×5, the balance sheet of Gamma Corporation reported bonds
outstanding with a face value of $2,000,000 and a related unamortized premium of
$60,000. Interest is payable semiannually on January 1 and July 1.
a. Prepare an entry in journal form without explanations to record the retirement of
bonds with a face value of $1,200,000 on January 1, 20×6, assuming the bonds were
redeemed at a call price of 104.
b. Prepare an entry in journal form without explanation on January 1, 20×6, to record
the conversion of bonds with a face value of $800,000 into common stock. Each $1,000
bond is convertible into 30 shares of $20 par value common stock.
General-purpose external financial statements are not primarily intended for
A. management.
B. investors.
C. suppliers of goods and services.
D. lending institutions.
To find the most comprehensive information about a company’s performance during the
year, one would look to
A. interim financial statements.
B. the annual report sent to the SEC.
C. The Wall Street Journal.
D. the annual report sent to stockholders.
Which of the following is an example of a deferral?
A. Debit Salaries Expense, credit Salaries Payable
B. Debit Accounts Receivable, credit Service Revenue
C. Debit Property Taxes Expense, credit Property Taxes Payable
D. Debit Insurance Expense, credit Prepaid Insurance
Which of the following could be described as both an advantage and a disadvantage of
incorporation?
A. Continuous existence
B. Limited liability
C. Double taxation
D. Lack of mutual agency