1) the two major types of receivables are interest receivable and taxes receivable.
2) qtopia electric company uses the direct method to prepare its statement of cash flows.
it has reported operating expenses of $63,000 on its income statement for the year 2014.
if the balance in accrued liabilities has gone up by $6,000 during the year, then $6,000
will have to be added to $63,000 as part of the process to calculate payments to
suppliers for operating expenses.
3) the process of allocating the cost of a plant asset over its useful life is known as cost
reduction.
4) the higher the debt ratio, the lower the risk.
5) regarding controls over cash receipts by mail, the bank deposit slip should be
compared to the remittance advices by the accounting department.
6) a company purchased 100 units for $20 each on january 31. it purchased 100 units
for $30 on february 28. it sold 150 units for $45 each from march 1 through december
31. if the company uses the last-in, first-out inventory costing method, what is the
amount of cost of goods sold on the income statement for the year ending december 31?
(assume that the company uses a perpetual inventory system.)
a) $4,000
b) $3,000
c) $2,000
d) $5,000
7) in a limited-liability company, the ________.
a) members are personally liable to pay the entity’s debts
b) business pays the tax on earnings
c) members are liable for each other’s actions
d) members pay tax on their share of earnings
8) lerner inc. had the following transactions in 2015, its first year of operations.
issued 20,000 shares of common stock. stock has par value of $1.00 per share and was
issued at $14.00 per share.
issued 1,000 shares of $100 par value preferred stock. shares were issued at par.
earned net income of $35,000.
paid no dividends.
at the end of 2015, what is the total amount of paid-in capital?
a) $415,000
b) $120,000
c) $280,000
d) $380,000
9) maywood inc. has 2,000 shares of common stock outstanding. a stockholder has 100
shares. if the company distributes a 20% stock dividend, how many shares of maywood
will the stockholder have?
a) 120 shares
b) 400 shares
c) 100 shares
d) 20 shares
10) when a loss is recorded on the sale of a significant interest investment, ________.
a) total assets will increase
b) equity will increase
c) total assets will decrease
d) equity will remain unchanged
11) revival corporation’s annual report is follows.
based on the information provided, find the rate of return on common stockholders’
equity on march 31, 2015.
a) 8.28%
b) 9.13%
c) 4.56%
d) 6.81%
12) a $35,000, two-month, 7% note payable was issued on december 1, 2015. what is
the amount of interest expense recorded in the year 2016?
a) $402
b) $204
c) $408
d) $202
13) rocco earns $14.5 per hour with time-and-a-half for hours in excess of 40 per week.
he worked 43 hours at his job during the first week of march, 2015. rocco pays income
taxes at 15% and 5.65% for oasdi and medicare. all of his income is taxable under fica.
determine rocco’s net pay for the week.
a) $548.46
b) $512.00
c) $446.75
d) $483.21
14) the entity that signs the promissory note and promises to pay the required amount is
the ________.
a) maker of the note
b) banker of the note
c) holder of the note
d) payee of the note
15) which of the following describes firewall?
a) a malicious program that enters program code or destroys data without authorization
b) when two or more people cooperate together to defraud a company
c) a technique for protecting data
d) when a company defrauds its suppliers by making false claims
16) treasury stock is a ________.
a) contra equity account
b) contra asset account
c) liability account
d) contra liability account
17) which of the following securities pay a dividend?
a) corporate bonds
b) common stocks
c) debt securities
d) u.s. government bonds
18) which of the following would be considered an operating activity on the statement
of cash flows under the direct method?
a) dividends paid to stockholders
b) sale of inventory for cash
c) payment to purchase equipment
d) the receipt of cash from sale of equipment
19) kostner financial services inc. purchased computers that are to be used in its
consultancy services. as per the matching principle, the related account that should
appear on the income statement for the year ended december 31, 2014 is ________.
a) depreciation expense
b) service revenue
c) accumulated depreciation
d) equipment expense
20) accounts receivable, ending balance, $57,000
in the operating activities section of the statement of cash flows, what amount will be
shown for collections from customers?
a) $550,000
b) $458,000
c) $149,000
d) $366,000
21) where does unearned revenue to be earned in six months appear on the balance
sheet?
a) under long-term investments
b) under current liabilities
c) under current assets
d) under long-term assets
22) jupiter services sells a service plan for commercial computer maintenance. the price
is $1,350 per year, paid in advance. on october 1, 2015, the company sells a service plan
to a new customer for cash, and the plan covers the period october 1, 2015 to september
30, 2016. provide the journal entry to record the adjustment needed on december 31,
2015.
23) pluto inc. purchased 500 units of inventory at $25 per unit by payment of cash.
provide the journal entry to record the purchase of inventory. (assume a perpetual
inventory system.)
24) refer to the following bank reconciliation.
bankbook
balance, june 30, 2014$11,240.00balance, june 30, 2014$10,200.00
add:add:
deposit in transit3,110.00note collected by bank2,100.00
interest revenue55.00
less:less:
outstanding checks #5061,200.00nsf check85.00
outstanding checks #510900.00bank service charge20.00
__________________
adjusted balance, adjusted balance,
june 30, 2014$12,250.00june 30, 2014$12,250.00
journalize the adjusting entry for the fourth reconciling item: bank service charge.
25) on november 1, 2012, everett janitorial supply sold merchandise with a cost of
$3,200 for $5,000, with terms fob destination, and payment terms of 2/10, n/30. the
company uses a perpetual inventory system. give journal entries to record the sales
revenue.
26) on january 1, 2015, paramount inc. issued long-term notes payable for $50,000. the
note will be paid over ten years with payments of $5,000 plus 12% interest due each
january 1, beginning january 1, 2016. prepare the amortization schedule for the first
three payments.