Which of the following is the correct description of dividends in arrears?
A) the cumulative amount of dividends that were not paid in previous years
B) the cumulative amount of dividends that were paid in previous years
C) the amount of dividends that were paid after the payment date
D) the amount of dividends that will be paid in the next year
Mason Painting Services has a weekly payroll of $28,000. December 31 falls on
Wednesday and Mason will pay its employees the following Monday (January 5) for
the previous full week. Assume that Mason has a five-day workweek and has an
unadjusted balance in Salaries Expense of $800,000 at December 31. What amount
should be debited to Salaries Expense on December 31?
A) $800,000
B) $11,200
C) $28,000
D) $16,800
Which of the following is a true statement?
A) Stockholders are guaranteed annual dividends.
B) Stockholders receive their proportionate share of any assets remaining after the
corporation pays its debts and liquidates.
C) Stockholders may authorize a business contract on behalf of the corporation.
D) Stockholders may vote only if they physically attend the annual stockholders’
meeting.
A business purchases equipment in exchange for a note payable. This transaction results
in ________.
A) no journal entry because no cash has been paid
B) a debit to Notes Payable and a credit to Equipment
C) an increase in liabilities
D) a debit to Equipment and a credit to Accounts Payable
Kim’s Retail had 800 units of inventory on hand at the end of the year. These were
recorded at a cost of $15 each using the last-in, first-out (LIFO) method. The current
replacement cost is $11 per unit. The selling price charged by Kim’s Retail for each
finished product is $18. In order to record the adjusting entry needed under the
lower-of-cost-or-market rule, the Merchandise Inventory will be ________.
A) debited by $8,800
B) credited by $8,800
C) debited by $3,200
D) credited by $3,200
A company originally issued 14,000 shares of $5 par value common stock at $12 per
share. The board of directors declares a 14% stock dividend when the market price of
the stock is $25 a share. Which of the following is included in the entry to record the
declaration of a stock dividend?
A) Stock Dividends is debited for $24,500.
B) Common Stock—$5 Par Value is credited for $47,040.
C) Common Stock is credited for $49,000.
D) Stock Dividends is debited for $49,000.
Which of the following accounting terms assumes that a business’s activities can be
divided into small segments and that financial statements can be prepared for specific
periods, such as a month, quarter, or year?
A) adjusting entry concept
B) economic entity concept
C) matching principle
D) time period concept
An oil well cost $2,030,000 and is calculated to hold 250,000 barrels of oil. There is no
residual value. Which journal entry is needed to record the expense for the extraction of
55,000 barrels of oil during the year? All 55,000 barrels were sold during the year.
(Round any intermediate calculations to the nearest cent, and your final answer to the
nearest dollar.)
A)
B)
C)
D)
The debt to equity ratio of four companies is given below.
Based on the debt to equity ratio, which of the following companies has the least financial
risk?
A) Lewis, Inc.
B) Jackson, Inc.
C) Jones Corp.
D) Roberts Corp.
Which of the following is true of an effective accounting information system?
A) It has little influence in improving a company’s internal control activities.
B) The cost of using an accounting information system is the same for both small and
large businesses.
C) A compatible accounting information system works smoothly with the business’s
employees and organizational structure.
D) Large private companies prefer a manual accounting information system since their
financial statements are not audited.
If the Fair Value Adjustment – Trading account for trading debt investments has a debit
balance, it is ________.
A) considered to be a contra account
B) subtracted from the Trading Debt Investment account to determine carrying value
C) added to the Trading Debt Investment account to determine carrying value
D) reported in the other income and expenses section of the income statement
To fill in the unadjusted trial balance columns in a worksheet, the account balances
before adjustments are copied directly from the ________.
A) ledger
B) adjusted trial balance
C) chart of accounts
D) balance sheet of previous year
Which of the following statements is true of the accounting cycle?
A) It takes place only at the end of an accounting period.
B) It involves preparation of adjusting entries after the closing entries.
C) It ignores the beginning balances of accounts.
D) It is a process by which financial statements for a period are produced.
Australia Corporation sells a product for $500 cash to Martin and Lewis Enterprises.
This transaction will be recorded in the ________.
A) cash payments journal
B) sales journal
C) cash receipts journal
D) purchase journal
Joel, an employee of Cruise Travel, Inc., has gross salary for March of $5,200. The
entire amount is under the OASDI limit of $118,500, and thus subject to FICA. He is
also subject to federal income tax at a rate of 29%. His year-to-date pay has already
exceeded the $7,000 cap for FUTA and SUTA. The journal entry to record employer’s
payroll tax expense includes a credit to FICA–Medicare Taxes Payable for $150.80.
(Assume a FICA–OASDI Tax of 6.2% and FICA–Medicare Tax of 1.45%.)
It is mandatory for both the employer and employee to pay ________.
A) FICA
B) SUTA
C) employee income tax
D) federal unemployment tax
Refer to the following adjusted trial balance after the first year of operations.
What will the balance of the Retained Earnings account be after the closing entries are
posted?
A) $25,450
B) $28,450
C) $32,050
D) $31,450
Which of the following describes a serial bond?
A) a bond that matures in installments at regular intervals
B) a bond that gives the bondholder a claim for specific assets
C) a bond that matures at one specified time
D) a bond that is not backed by specific assets
Regarding impairment of intangible assets, which of the following statements is
incorrect?
A) Impairment occurs when the fair value of an intangible asset is less than the book
value.
B) Intangible assets are impaired when there has been a permanent decline in the value
of the asset.
C) Intangible assets with an indefinite life are tested for impairment annually.
D) If any impairment occurs, the company records a loss in the period in which the
intangible asset was acquired.
On January 1, 2018, McHenry Manufacturing Corporation purchased a machine for
$40,600,000. McHenry’s management expects to use the machine for 26,000 hours over
the next six years. The estimated residual value of the machine at the end of the sixth
year is $45,000. The machine was used for 3700 hours in 2018 and 5200 hours in 2019.
Calculate the book value of the machine at the end of 2019 if the company uses the
units-of-production method of depreciation. (Round any intermediate calculations to
two decimal places, and your final answer to the nearest dollar.)
A) $26,717,691
B) $40,600,000
C) $26,702,294
D) $34,828,703
Which of the following occurs when a corporation’s board of directors declares a 10%
stock dividend?
A) Stock Dividends will be credited for the new shares times the current market value
of the stock.
B) Stock Dividends will be debited for the new shares times the current market value of
the stock.
C) Stock Dividends will be debited for the new shares times the par value of the stock.
D) Stock Dividends will be credited for the new shares times the par value of the stock.
The financial statements of Island Furniture Company include the following items:
What is the 2019 acid-test ratio? (Round your answer to two decimal places.)
A) 0.27
B) 1.11
C) 1.67
D) 0.60
The matching principle states that ________.
A) financial statements can be prepared for specific periods
B) a business’s activities can be sliced into small time segments
C) all expenses should be recorded when they are incurred during the period
D) companies should record revenue when it has been earned
Jacob, Inc. had the following balances and transactions during 2019:
What is the amount of the company’s ending Merchandise Inventory, as disclosed in the
December 31, 2019 balance sheet, using the periodic weighted-average inventory costing
method? (Round the unit costs to two decimal places and total costs to the nearest dollar.)
A) $109
B) $89
C) $326
D) $808
Mercer, Inc. provides the following data for 2019:
The gross profit as a percentage of net sales is ________. (Round your answer to two
decimal places.)
A) 35.24%
B) 36.88%
C) 63.12%
D) 38.21%
________ is pay stated as a percentage of a sale amount.
A) Salary
B) Wage
C) Commission
D) Bonus
Which of the following is a benefit of using a computerized accounting information
system?
A) The software can accurately measure the intrinsic value of the firm using the built-in
simulation techniques.
B) There is no need to review the financial statements for accuracy.
C) The software is easy to use and thus no training or financial statement review is
necessary.
D) The software automatically transfers the amounts from the general ledger to the
financial statements.
The Sarbanes-Oxley Act (SOX) ________.
A) requires independent accountants to take responsibility for the accuracy and
completeness of the financial reports
B) created the SEC
C) ensures that financial scandals will no longer occur
D) requires companies to take responsibility for the accuracy and completeness of their
financial reports
According to the ________, acquired assets should be recorded at the amount actually
paid rather than at the estimated market value.
A) going concern assumption
B) economic entity concept
C) cost principle
D) monetary unit assumption
Regarding a classified balance sheet, which of the following statements regarding
liabilities is incorrect?
A) Many Notes Payable are long-term.
B) Current liabilities include Accounts Payable and Unearned Revenue.
C) Long-term liabilities must be paid either with cash or with goods and services within
one year or the entity’s operating cycle, if the cycle is longer than one year.
D) Liabilities are listed in the order in which they must be paid.
Maple Corp. had net sales of $204,550 for the year ended December 31, 2017. Its
beginning and ending total assets were $83,200 and $116,500, respectively. Determine
Maple’s asset turnover ratio for the year ended December 31, 2017. (Round your answer
to two decimal places.)
A) 0.49 times
B) 2.46 times
C) 1.16 times
D) 2.05 times