A Sales Returns and Allowances account is not debited if a customer
a. returns defective merchandise.
b. receives a credit for merchandise of inferior quality.
c. utilizes a prompt payment incentive.
d. returns goods that are not in accordance with specifications.
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:
When bonds are converted into common stock,
a. the market price of the stock on the date of conversion is credited to the Common
Stock account.
b. the market price of the bonds on the date of conversion is credited to the Common
Stock account.
c. the market price of the stock and the bonds is ignored when recording the conversion.
d. gains or losses on the conversion are recognized.
Answer:
IFRS
a. requires a specific format for the balance sheet (statement of financial position) that
is identical to U.S. GAAP.
b. requires a specific format for the balance sheet (statement of financial position) that
is different from U.S. GAAP.
c. requires no specific format for the balance sheet (statement of financial position) but
most companies that follow IFRS prepare the statement identical to U.S. GAAP.
d. requires no specific format for the balance sheet (statement of financial position) but
most companies that follow IFRS prepare the statement in a different format from U.S.
GAAP.
Answer:
Communication of economic events is the part of the accounting process that involves
a. identifying economic events.
b. quantifying transactions into dollars and cents.
c. preparing accounting reports.
d. recording and classifying information.
Answer:
On May 25, Yellow House Company received a $650 check from Grizzly Bean for
services to be performed in the future. The bookkeeper for Yellow House Company
incorrectly debited Cash for $650 and credited Accounts Receivable for $650. The
amounts have been posted to the ledger. To correct this entry, the bookkeeper should:
a. debit Cash $650 and credit Unearned Service Revenue $650.
b. debit Accounts Receivable $650 and credit Service Revenue $650.
c. debit Accounts Receivable $650 and credit Cash $650.
d. debit Accounts Receivable $650 and credit Unearned Service Revenue $650.
Answer:
An error in the physical count of goods on hand at the end of the current period resulted
in a $3,000 understatement of the ending inventory. The effect of this error in the
current period is to
a. overstate cost of goods sold.
b. understate cost of goods available for sale.
c. overstate gross profit.
d. overstate net income.
Answer:
Pappy’s Staff Junkets has the following inventory information.
Assuming that a perpetual inventory system is used, what is the ending inventory on a
LIFO basis?
a. $5,848
b. $5,860
c. $6,068
d. $6,346
Answer:
A bank statement
a. lets a depositor know the financial position of the bank as of a certain date.
b. is a credit reference letter written by the depositor’s bank.
c. is a bill from the bank for services rendered.
d. shows the activity which increased or decreased the depositor’s account balance.
Answer:
Journalizing in a sales journal will not
a. require a debit to Accounts Receivable.
b. show a sales invoice number.
c. affect the reference column of the journal.
d. include a credit to the Sales Revenue account.
Answer:
The following data are taken from the financial statements of Dands Company:
Instructions
(a) Compute the accounts receivable turnover and the average collection period for both
years.
(b) What conclusion can an analyst draw about the management of the accounts
receivable?
Answer:
The revenue recognition principle dictates that revenue should be recognized in the
accounting records
a. when cash is received.
b. when the performance obligation is satisfied.
c. at the end of the month.
d. in the period that income taxes are paid.
Answer:
If the single amount of $3,000 is to be received in 3 years and discounted at 6%, its
present value is
a. $2,519.
b. $2,830.
c. $2,600.
d. $2,820.
Answer:
Liabilities are classified on the balance sheet as current or
a. deferred.
b. unearned.
c. long-term.
d. accrued.
Answer:
The accounting process is correctly sequenced as
a. identification, communication, recording.
b. recording, communication, identification.
c. identification, recording, communication.
d. communication, recording, identification.
Answer:
Priscilla has the following inventory information.
A physical count of merchandise inventory on July 31 reveals that there are 35 units on
hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for
July is
a. $1,280.
b. $1,287
c. $1,306.
d. $1,330.
Answer:
Switzer, Inc. has 8 computers which have been part of the inventory for over two years.
Each computer cost $600 and originally retailed for $900. At the statement date, each
computer has a current replacement cost of $400. How much loss should Switzer, Inc.,
record for the year?
a. $1,600.
b. $2,400.
c. $3,200.
d. $4,000.
Answer:
The financial statements of Danielle Manufacturing Company report net sales of
$750,000 and accounts receivable of $60,000 and $90,000 at the beginning and end of
the year, respectively. What is the accounts receivable turnover for Danielle?
a. 5 times
b. 8.3 times
c. 10 times
d. 12.5 times
Answer:
Cost of debt investments includes the price paid plus ______________
Answer:
The financial statement columns of the worksheet for Booer Company as of December
31, 2015 are as follows:
Instructions
Prepare a classified balance sheet for Booer Company.
Answer:
The receipt of dividends from long-term investments in stock is classified as a cash
inflow from investing activities.
Answer:
An exchange of plant assets has commercial substance if the future cash flows change
as a result of the exchange.
Answer:
An accounts receivable subsidiary ledger has all the detailed information about the cash
sales to individual customers.
Answer:
Cost of goods sold for the year amounted to $130,000, and during the year, accounts
payable ______________ by $9,000 and inventory ______________ by $5,000
resulting in cash paid to suppliers of $116,000.
Answer: