Which of the following items are on both the balance sheet and the statement of owner’s
equity?
A) Net loss
B) Capital
C) Additional owner’s investments
D) Owner’s withdrawals
Which of the following could be recorded as a reversing entry?
A) Depreciation of building
B) Accrual of interest expense
C) Allocation of prepaid rent in the current period
D) Cash
Dennis, owner of Dennis’s Golf Center, withdrew $900 in cash from the business.
Record the transaction by:
A) debiting Dennis, Withdrawals, $900; crediting Cash, $900.
B) debiting Accounts Receivable, $900; crediting Cash, $900.
C) debiting Expense, $900; crediting Cash, $900.
D) debiting Dennis, Withdrawals, $900; crediting Dennis, Capital, $900.
A corporation may issue a stock dividend for which of the following reasons?
A) May want to increase permanent capital in the business
B) May want to decrease market value
C) May be short of cash and unable to pay a cash dividend
D) All of the above are correct.
The employer’s total FICA, SUTA, and FUTA tax is recorded as:
A) a debit to Payroll Tax Expense.
B) a credit to Payroll Tax Expense.
C) a credit to Accounts Payable.
D) a debit to Payroll Tax Payable.
Under a perpetual inventory system, freight costs to bring the raw materials in should
be charged to:
A) Work-in-Process Inventory.
B) Cost of Goods Sold.
C) Raw Materials Inventory.
D) Manufacturing overhead.
Which of the following would result if a business purchased Equipment with a 40%
down payment and the rest on account?
A) Equipment would increase and Cash would decrease.
B) Accounts Payable would increase.
C) Since the equipment has not been paid in full, there is nothing to record.
D) Both A and B are correct.
Bonds are issued for $20,000 at face value with 6% interest on October 1. What is the
adjusting entry on December 31?
A)
B)
C)
D)
Cash flows from financing activities would include:
A) cash from equipment sold.
B) cash purchase of land.
C) cash from sale of common stock.
D) All of these answers are correct.
A cash withdrawal of a partner was recorded the same as paying payroll. This error
would cause:
A) the period’s net income to be understated.
B) the period’s net income to be overstated.
C) the period end assets to be overstated.
D) the period end assets to be understated.
Myers Corporation exchanged an old machine costing $20,000, with an accumulated
depreciation of $17,000, and trade-in value of $5,000 for a new machine cash price of
$24,000. What is the journal entry?
A) Debit Machinery $22,000; debit Accumulated Depreciation $17,000; credit
Machinery $20,000; credit Cash $19,000
B) Debit Machinery $19,000; debit Accumulated Depreciation $17,000; credit Gain on
Disposal of Plant Asset $3,000; credit Machinery $20,000; credit Cash $19,000
C) Debit Machinery $24,000; debit Accumulated Depreciation $17,000; credit
Machinery $20,000; credit Cash $19,000; credit Gain on Disposal $3,000
D) None of these answers is correct.
Indirect costs were understated. This error will cause:
A) the cost of goods manufactured to be overstated.
B) the cost of goods sold to be overstated.
C) the net income to be understated.
D) None of these answers is correct.
Most employers are levied a payroll tax for:
A) state and federal income taxes.
B) only FICA taxes.
C) FICA taxes, federal and state unemployment taxes.
D) only state and federal unemployment taxes.
Joyce’s Accessories bought 60 necklaces for $10 each on account. The invoice included
a 5% sales tax and payment terms of 2/10, n/30. In addition, 5 necklaces were returned
prior to payment. The entry to record the purchase would include:
A) a debit to Accounts Payable for $530.
B) a debit to Accounts Payable for $500.
C) a debit to Purchases for $630.
D) a debit to Purchases for $500.
Nature’s Honey Corporation received the final installment of $1,000 on a stock
subscription for 20 shares of $100 par value common stock. After recording the cash
receipt, the entry to issue the stock would include a:
A) debit to Paid-in Capital in Excess of Par ValueCommon for $2,000.
B) credit to Paid-in Capital in Excess of Par ValueCommon for $2,000.
C) debit to Common Stock for $2,000.
D) debit to Common Stock Subscribed for $2,000.
The journal entry to record an shift of assets would include:
A) a debit to Cash and a credit to Fees Earned.
B) a debit to Supplies and a credit to Accounts Payable.
C) a debit to Cash and a credit to Accounts Receivable.
D) a debit to Fees Earned and a credit to Accounts Receivable.
Which of the following errors would cause the trial balance to be out of balance?
A) An entry is posted twice.
B) An entry is not posted at all.
C) A debit is entered as $500 and the credit is entered at $5,000.
D) None of these answers is correct.
When treasury stock was sold below cost, the decrease was debited to Loss on Sale.
This error would cause:
A) the period end assets to be overstated.
B) the period end liabilities to be overstated.
C) the period’s end net income to be understated.
D) Both A and C are correct.
Bob purchased a new computer for the company for cash. The transaction will:
A) increase Computer; increase Capital.
B) decrease Cash; increase Accounts Payable.
C) decrease Cash; increase Computer.
D) increase Computer; increase Accounts Payable.
The PPC department of Ajax shows gross sales of $730,600 for computer supplies and
$934,900 for office supplies. The cost of the computer supplies was $534,000 and the
cost of the office supplies was $491,400. Direct expenses were $75,200 for the
company and indirect expenses were $75,200. What was the contribution margin for the
company?
A) $640,100
B) $583,500
C) $489,700
D) $564,900
When closing sales, which of the following accounts will also be closed?
A) Sales Returns and Allowances
B) Purchases Discount
C) Purchases
D) Unearned Revenue
Which of the following statements is false as it pertains to a voucher system?
A) The purchase order must be completed and approved before the goods are
purchased.
B) A receiving report is completed when goods are received and is checked against the
purchase order.
C) Someone in the receiving department checks the purchase order and sales invoice for
accuracy.
D) After all the steps are complete, payment is issued in the form of a check.
Eileen’s Corner Shoppe purchases a desk for cash. This causes:
A) Cash and Capital to increase.
B) Furniture and Cash to increase.
C) Furniture to increase and Cash to decrease.
D) Accounts Payable to increase and Capital to increase.
The look-back period is used to determine whether:
A) a business should make its Form 941 tax deposits on a monthly or semiweekly basis.
B) an employer will use Form 940.
C) an employer has sent the W-2s to their employees on timely basis.
D) an employer must pay unemployment taxes.
Common stock was sold in excess of par; the excess was credited to Sales. This error
would cause:
A) the period’s net income to be understated.
B) the period’s net income to be overstated.
C) the period end assets to be overstated.
D) None of these is correct.
A petty cash fund is set up:
A) to pay for office supplies only.
B) to pay for small expenses.
C) for the owner to withdraw money for personal use conveniently.
D) None of these answers is correct.
Which of the following transactions would cause an asset to decrease and the owner’s
equity to decrease?
A) The owner invested cash in the business.
B) The business incurred an expense on credit.
C) The business bought supplies on account.
D) The owner withdrew cash from the business.
Which of the following accounts would most likely be depreciated?
A) Equipment
B) Office Supplies
C) Investments
D) Accounts Payable
Which of the following accounts will be directly closed to Capital at the end of the
fiscal year?
A) Salaries Expense
B) Fees Revenue
C) Withdrawals
D) Depreciation Expense
A task station that originally cost $5,000 has no estimated salvage value and was
depreciated at the rate of 20% per year (straight-line depreciation). At the end of the
second year, it was sold for $2,500 cash. The transaction would result in a:
A) loss of $250.
B) gain of $250.
C) loss of $500.
D) gain of $500.
General expenses are:
A) indirect expenses.
B) direct expenses.
C) not broken down by department.
D) All of these answers are correct.
The adjustment for salaries is necessary:
A) because the employer did not have enough cash to write the paychecks.
B) to recognize the revenue in the period earned.
C) to recognize the expense in the period incurred.
D) only in the month of a holiday.