Each of the following decreases total stockholders’ equity except a
a. cash dividend.
b. liquidating dividend.
c. stock dividend.
d. All of these decrease total stockholders’ equity.
Answer:
Equipment that cost $420,000 and on which $200,000 of accumulated depreciation has
been recorded was disposed of for $180,000 cash. The entry to record this event would
include a
a. gain of $40,000.
b. loss of $40,000.
c. credit to the Equipment account for $220,000.
d. credit to Accumulated Depreciation for $200,000.
Answer:
In general, the shorter the time period, the difficulty of making the proper adjustments
to accounts
a. is increased.
b. is decreased.
c. is unaffected.
d. depends on if there is a profit or loss.
Answer:
On March 31, 2015, $6,000,000 of 6%, 10-year bonds payable, dated December 31,
2014, are issued. Interest on the bonds is payable semiannually each June 30 and
December 31. The total amount received (including accrued interest) by the issuing
corporation is $6,072,000. Which of the following is correct?
a. The bonds were issued at a premium.
b. The amount of cash paid to bondholders on the next interest date, June 30, 2015, is
$360,000.
c. The amount of cash paid to bondholders on the next interest date, June 30, 2015, is
$60,000.
d. The bonds were issued at a discount.
Answer:
Most companies are required to compute overtime at
a. the worker’s regular hourly wage.
b. 1.25 times the worker’s regular hourly wage.
c. 1.5 times the worker’s regular hourly wage.
d. 2.5 times the worker’s regular hourly wage.
Answer:
Logan Company owns equipment that cost $140,000 when purchased on January 1,
2012. It has been depreciated using the straight-line method based on estimated salvage
value of $14,000 and an estimated useful life of 5 year.
Instructions
Prepare Logan Company’s journal entries to record the sale of the equipment in five
independent situations. Update depreciation on assets disposed of at time of sale.
(a) Sold for $65,000 on January 1, 2015.
(b) Sold for $65,000 on April 1, 2015.
(c) Sold for $35,000 on January 1, 2015.
(d) Sold for $35,000 on September 1, 2015.
(e) Repeat (c), assuming Logan uses double-declining balance depreciation.
Answer:
Bates Company has a $300,000 balance in Accounts Receivable and a $1,000 debit
balance in Allowance for Doubtful Accounts. Credit sales for the period totaled
$1,800,000. What is the amount of the bad debt adjusting entry if Bates uses a
percentage of receivables basis at 5%?
a. $15,000
b. $14,000
c. $16,000
d. $15,050
Answer:
The income statement for the year 2015 of Fugazi Co. contains the following
information:
The entry to close the revenue account includes a
a. debit to Income Summary for $7,500.
b. credit to Income Summary for $7,500.
c. debit to Revenues for $70,000.
d. credit to Revenues for $70,000.
Answer:
Allowance for Doubtful Accounts on the balance sheet
a. is offset against total current assets.
b. increases the cash realizable value of accounts receivable.
c. appears under the heading “Other Assets.”
d. is offset against accounts receivable.
Answer:
Squeeze Company reports the following:
If cost of goods sold for the year is $220,000, the amount of cash paid to suppliers is
a. $227,000.
b. $205,000.
c. $193,000.
d. $247,000.
Answer:
Financial information is presented below:
The gross profit rate would be
a. .363.
b. .400.
c. .456.
d. .503.
Answer:
Related selling activities do not include
a. ordering the merchandise.
b. making a sale.
c. shipping the goods.
d. billing the customer.
Answer:
In recording an accounting transaction in a double-entry system
a. the number of debit accounts must equal the number of credit accounts.
b. there must always be entries made on both sides of the accounting equation.
c. the amount of the debits must equal the amount of the credits.
d. there must only be two accounts affected by any transaction.
Answer:
The procedure of transferring journal entries to the ledger accounts is called
a. journalizing.
b. analyzing.
c. reporting.
d. posting.
Answer:
Win, Inc. has 10,000 shares of 7%, $100 par value, cumulative preferred stock and
100,000 shares of $1 par value common stock outstanding at December 31, 2015. If the
board of directors declares a $70,000 dividend, the
a. preferred shareholders will receive 1/10th of what the common shareholders will
receive.
b. preferred shareholders will receive the entire $70,000.
c. $70,000 will be held as restricted retained earnings and paid out at some future date.
d. preferred shareholders will receive $35,000 and the common shareholders will
receive $35,000.
Answer:
The maturity value of a $70,000, 8%, 3-month note receivable is
a. $70,467.
b. $70,560.
c. $71,400.
d. $75,600.
Answer:
Income from operations appears on
a. both a multiple-step and a single-step income statement.
b. neither a multiple-step nor a single-step income statement.
c. a single-step income statement.
d. a multiple-step income statement.
Answer:
Preparing a worksheet involves
a. two steps.
b. three steps.
c. four steps.
d. five steps.
Answer:
The dividends account is closed to the Income Summary account in order to properly
determine net income (or loss) for the period.
Answer:
Medaid is a medical office management franchise. There are currently twenty-five
medical offices managed by a Medaid franchisee. One of the services provided to
franchisees is assistance in training various staff members.
Medaid is preparing a manual for the front office staff to use as a reference guide. It
will be used in training new employees as well. One of the reasons the manual is being
prepared is to stress the importance of strong internal controls.
Answer:
The ledger accounts given below, with an identification number for each, are used by
Flynn Company.
Instructions: Indicate the appropriate entries for the month of June by placing the
appropriate identification number(s) in the debit and credit columns provided. Item 0 is
given as an example. Write “none” if no entry is appropriate.
Answer:
A disbursement system that uses wire, telephone, computers, etc., to transfer cash from
one location to another is referred to as ______________.
Answer:
Indicate whether each of the following expenditures should be classified as land (L),
land improvements (LI), buildings (B), equipment (E), or none of these (X).
_____ 1> Parking lots
_____ 2> Electricity used by a machine
_____ 3> Excavation costs
_____ 4> Interest on building construction loan
_____ 5> Cost of trial runs for machinery
_____ 6> Drainage costs
_____ 7> Cost to install a machine
_____ 8> Fences
_____ 9> Unpaid (past) property taxes assumed
_____10> Cost of tearing down a building when land and a building on it are purchased
Answer:
Pavement Company purchased a truck from Bee Thousand Corp. by issuing a 6-month,
8% note payable for $90,000 on November 1. On December 31, the accrued expense
adjusting entry is
Answer:
The three main factors that contribute to fraudulent activity are depicted by the
_______________.
Answer: