Corporations invest excess cash for short periods of time in each of the following
except
a. equity securities.
b. highly liquid securities.
c. low-risk securities.
d. government securities.
Answer:
Liabilities are generally classified on a balance sheet as
a. small liabilities and large liabilities.
b. present liabilities and future liabilities.
c. tangible liabilities and intangible liabilities.
d. current liabilities and long-term liabilities.
Answer:
Which of the following receivables would not be classified as an “other receivable”?
a. Advance to an employee
b. Refundable income tax
c. Notes receivable
d. Interest receivable
Answer:
The direct write-off method
a. is acceptable for financial reporting purposes.
b. debits Allowance for Doubtful Accounts to record write-offs of accounts.
c. shows only actual losses from uncollectible accounts receivable.
d. estimates bad debt losses.
Answer:
A journal provides
a. the balances for each account.
b. information about a transaction in several different places.
c. a list of all accounts used in the business.
d. a chronological record of transactions.
Answer:
Henson Company incurred $600,000 of research and development costs in its
laboratory to develop a new product. It spent $90,000 in legal fees for a patent granted
on January 2, 2015. On July 31, 2015, Henson paid $60,000 for legal fees in a
successful defense of the patent. What is the total amount that should be debited to
Patents through July 31, 2015?
a. $600,000
b. $150,000
c. $750,000
d. Some other amount
Answer:
From an accounting standpoint, the acquisition of productive facilities can be thought of
as a long-term
a. accrual of expense.
b. accrual of revenue.
c. accrual of unearned revenue.
d. prepayment for services.
Answer:
Common Stock Dividends Distributable is reported in the balance sheet
a. as an addition to retained earnings.
b. as an asset.
c. in paid-in capital as an addition to common stock issued.
d. as a liability.
Answer:
Warren Company’s payroll for the week ending January 15 amounted to $200,000 for
salaries and wages. None of the employees has reached the earnings limits specified for
federal or state employer payroll taxes. The following deductions were withheld from
employees’ salaries and wages:
Federal unemployment tax (FUTA) rate is 6.2% less a credit equal to the rate paid for
state unemployment taxes. The state unemployment tax (SUTA) rate is 5.4%.
Instructions
Prepare the journal entries to record the weekly payroll ending January 15 and also the
employer’s payroll tax expense on the payroll.
Answer:
Which of the following statements reflects the transferability of ownership rights in a
corporation?
a. If a stockholder decides to transfer ownership, he must transfer all of his shares.
b. A stockholder may dispose of part or all of his shares.
c. A stockholder must obtain permission from the board of directors before selling
shares.
d. A stockholder must obtain permission from at least three other stockholders before
selling shares.
Answer:
Internal controls are concerned with
a. only manual systems of accounting.
b. the extent of government regulations.
c. safeguarding assets.
d. preparing income tax returns.
Answer:
Notes or accounts receivables that result from sales transactions are often called
a. sales receivables.
b. non-trade receivables.
c. trade receivables.
d. merchandise receivables.
Answer:
A chart of accounts usually starts with
a. asset accounts.
b. expense accounts.
c. liability accounts.
d. revenue accounts.
Answer:
Saira, Inc. has the following income statement (in millions):
Using vertical analysis, what percentage is assigned to Cost of Goods Sold?
a. 40%
b. 60%
c. 100%
d. None of these answer choices are correct.
Answer:
IFRS
a. implies that receivables with different characteristics should be reported
separately.
b. requires that receivables with different characteristics should be reported
separately.
c. implies that receivables with different characteristics should be reported
as one unsegregated amount.
d. requires that receivables with different characteristics should be reported
as one unsegregated amount.
Answer:
Having one person responsible for the related activities of ordering merchandise,
receiving goods, and paying for them
a. increases the potential for errors and fraud.
b. decreases the potential for errors and fraud.
c. is an example of good internal control.
d. is a good example of safeguarding the company’s assets.
Answer:
Only large companies need to be concerned with a system of internal control.
Answer:
A company receives $371, of which $21 is for sales tax. The journal entry to record the
sale would include a
a debit to Sales Tax Expense for $21.
b. debit to Sales Taxes Payable for $21.
c. debit to Sales Revenue for $371.
d. debit to Cash for $371.
Answer:
Compute the asset turnover based on the following:
Answer:
Identify which of the following are temporary accounts of Sabrina Company.
(1) Retained Earnings
(2) Dividends
(3) Equipment
(4) Accumulated Depreciation
(5) Depreciation Expense
Answer:
Presented below are selected transactions for Werley Company for 2015.
Instructions
Journalize all entries required as a result of the above transactions. Werley Company
uses the straight-line method of depreciation and has recorded depreciation through
December 31, 2014.
Answer:
The adjusting entry at the end of the period to record an expired cost may be different
depending on whether the cost was initially recorded as an asset or an expense.
Answer: