Which of the following time periods would not be referred to as an interim period?
a. Monthly
b. Quarterly
c. Semi-annually
d. Annually
Answer:
A company just starting business made the following four inventory purchases in June:
A physical count of merchandise inventory on June 30 reveals that there are 250 units
on hand. Using the average-cost method, the amount allocated to the ending inventory
on June 30 is
a. $683.
b. $755.
c. $825.
d. $1,360.
Answer:
Brandy Corporation’s trading portfolio at the end of the year is as follows:
At the end of the year, Brandy Corporation should
a. set up a Fair Value Adjustment account for Stock D.
b. set up a Fair Value Adjustment account for the portfolio.
c. recognize an Unrealized Gain or Loss’”Income for $4,000.
d. report a loss on the income statement for $4,000 under ‘Other expenses and losses.’
Answer:
The periodicity assumption states
a. the business will remain in operation for the foreseeable future.
b. the life of a business can be divided into artificial time periods and that useful reports
covering those periods can be prepared.
c. every economic entity can be separately identified and accounted for.
d. only those things that can be expressed in money are included in the accounting
records.
Answer:
Accounts receivable arising from sales to customers amounted to $86,000 and $77,000
at the beginning and end of the year, respectively. Income reported on the income
statement for the year was $290,000. Exclusive of the effect of other adjustments, the
cash flows from operating activities to be reported on the statement of cash flows is
a. $290,000.
b. $299,000.
c. $213,000.
d. $280,000.
Answer:
Which one of the following would be classified as an extraordinary item?
a. Expropriation of property by a foreign government
b. Losses attributed to a labor strike
c. Write-down of inventories
d. Gains or losses from sales of equipment
Answer:
Crue Company had the following transactions during 2015:
ï€ Sales of $4,500 on account
ï€ Collected $2,500 for services to be performed in 2016
ï€ Paid $1,625 cash in salaries
ï€ Purchased airline tickets for $250 in December for a trip to take place in 2016
What is Crue’s 2015 net income using cash basis accounting?
a. $625.
b. $875.
c. $5,125.
d. $5,375.
Answer:
Which of the following would not be considered a merchandising company?
a. Retailer
b. Wholesaler
c. Service firm
d. All of these are considered a merchandising company.
Answer:
At October 1, Arcade Fire Enterprises reported stockholders’ equity of $70,000. During
October, no stock was issued and the company earned net income of $18,000. If
stockholders’ equity at October 31 totals $78,000, what amount of dividends were paid
during the month?
a. $0
b. $8,000
c. $10,000
d. $26,000
Answer:
Presented here is a partial amortization schedule for Roseland Company who sold
$300,000, five year 10% bonds on January 1, 2014 for $312,000 and uses annual
straight-line amortization.
Which of the following amounts should be shown in cell (v)?
a. $314,400
b. $313,200
c. $309,600
d. $310,800
Answer:
The process of totaling the columns of a journal is termed
a. ruling.
b. columnizing.
c. sizing.
d. footing.
Answer:
Internal control consists of the plan of organization and all of the related methods and
measures adopted within a business to (a) safeguard its assets, and (b) enhance the
accuracy and reliability of its accounting records.
Answer:
The cost of goods available for sale is allocated to the cost of goods sold and the
a. beginning inventory.
b. ending inventory.
c. cost of goods purchased.
d. gross profit.
Answer:
Under the gross profit method, each of the following items are estimated except for the
a. cost of ending inventory.
b. cost of goods sold.
c. cost of goods purchased.
d. gross profit.
Answer:
Intangible assets are the rights and privileges that result from ownership of long-lived
assets that
a. must be generated internally.
b. are depletable natural resources.
c. have been exchanged at a gain.
d. do not have physical substance.
Answer:
Detailed records of goods held for resale are not maintained under a
a. perpetual inventory system.
b. periodic inventory system.
c. double entry accounting system.
d. single entry accounting system.
Answer:
The worksheet does not show
a. net income or loss for the period.
b. revenue and expense account balances.
c. the ending balance in the retained earnings account.
d. the trial balance before adjustments.
Answer:
Jake’s Market recorded the following events involving a recent purchase of
merchandise:
Received goods for $60,000, terms 2/10, n/30.
Returned $1,200 of the shipment for credit.
Paid $300 freight on the shipment.
Paid the invoice within the discount period.
As a result of these events, the company’s inventory increased by
a. $57,624.
b. $57,918.
c. $57,924.
d. $59,100.
Answer:
If a company uses the allowance method to account for uncollectible accounts, the entry
to write off an uncollectible account only involves balance sheet accounts.
Answer:
The trial balance of Timlin Company shows the following balances for selected
accounts on November 30, 2015
Instructions: Using the additional information given below, prepare the appropriate
monthly adjusting entries at November 30. Show computations.
A> Revenue for services rendered to customers, but not yet billed, totaled $6,000 on
November 30.
B> The note payable is a 6%, 1-year note issued September 1, 2015.
C> The equipment was purchased on January 2, 2014, for $60,000 with an estimated
life of 10 years and an estimated salvage value of $12,000. Timlin uses the straight-line
depreciation method.
D> An insurance policy was acquired on June 30, 2015; the premium paid for 2 years
was $12,000
E> Timlin received $4,800 fees in advance from a customer on November 1, 2015.
Three-fourths of this amount was earned by November 30.
Answer:
Current liabilities are expected to be paid within one year or the operating cycle,
whichever is longer.
Answer:
Stock dividends and stock splits have the following effects on retained earnings:
Answer:
Under GAAP, companies can choose which inventory system?
Answer:
Accrued revenues are revenues which have been received but not yet recognized.
Answer:
The financial statements of Lowz Company appear below:
The following additional data were provided:
1> Dividends declared and paid were $35,000.
2> During the year, equipment was sold for $17,000 cash. This equipment cost $28,000
originally and had a book value of $17,000 at the time of sale.
3> All depreciation expense is in the operating expenses.
4> All sales and purchases are on account.
5> Accounts payable pertain to merchandise suppliers.
6> All operating expenses except for depreciation were paid in cash.
Instructions
Prepare a statement of cash flows for Lowz Company using the direct method.
Answer:
Sam Myers sells televisions with a 2-year warranty. Past experience
indicates that 2% of the units sold will be returned during the warranty
period for repairs. The average cost of repairs under warranty is estimated
to be $75 per unit. During 2015, 9,000 units were sold at an average price
of $400. During the year, repairs were made on 50 units at a cost of $3,900.
Instructions
Prepare journal entries to record the repairs made under warranty and
estimated warranty expense for the year.
Answer:
The cost of a patent must be amortized over a 20-year period.
Answer:
The adjusted trial balance of Sodajerk Company at December 31, 2015 includes the
following accounts: Retained Earnings $12,600; Dividends $7,000; Service Revenue
$38,000; Salaries and Wages Expense $13,000; Insurance Expense $2,000; Rent
Expense $3,500; Supplies Expense $2,500; and Depreciation Expense $2,000. Prepare a
retained earnings statement for the year.
Answer: