Which of the following users would rely on managerial accounting information for
decision-making purposes?
A) potential investors
B) creditors
C) customers
D) company managers
Which of the following occurs when a 2-for-1 stock split is declared?
A) The balance in Common Stock remains the same.
B) The balance in Common Stock is reduced to half the original amount.
C) The balance in Common Stock doubles.
D) The balance in Paid-in Capital in Excess of Par—Common doubles.
Marcus has decided to open an auto-detailing business. He will pick up an automobile
from the client, take it to his parents’ garage, detail it, and return it to the client. If he
does all of the work himself and takes no legal steps to form a special organization,
which type of business organization, in effect, has he chosen?
A) A limited-liability company
B) A partnership
C) A corporation
D) A sole proprietorship
Which of the following is included on the balance sheet?
A) Revenues
B) Expenses
C) Assets
D) Dividends
The following are the current month’s balances for ABC Financial Services, Inc. before
preparing the trial balance.
What amount should be shown for Common Stock on the trial balance?
A) $50,000
B) $26,000
C) $13,500
D) $27,000
A company receives payment from one of its customers on August 5 for services
performed on July 21. Which of the following entries would be recorded if the company
uses accrual basis accounting?
A)
B)
C)
D)
Gardens, Inc. invests its excess cash in Innovative Technologies, Inc. and acquires 4300
shares for $28.00 per share. Garden, Inc. owns less than 3% of Innovative’s voting stock
and plans to hold the stock for two years. Which of the following is the correct journal
entry for the transaction?
A)
B)
C)
D)
Wisconsin Farm Equipment Company sold equipment for cash. The income statement
shows a loss on the sale of $6000. The net book value of the asset was $30,900. Which
of the following statements describes the cash effect of the transaction?
A) positive cash flow of $36,900 from financing activities
B) negative cash flow of $24,900 for operating activities
C) negative cash flow of $24,900 for financing activities
D) positive cash flow of $24,900 from investing activities
Long-term investments ________.
A) include all trading debt investments and held-to-maturity debt investments
B) are investments in debt and equity securities that are readily marketable and that the
investor intends to sell in one year or less
C) include debt and equity securities that the investor expects to hold longer than one
year or debt or equity securities that are not readily marketable
D) are investments in debt securities or equity securities in which the investor holds less
than 20 percent of the voting stock and that the investor plans to sell in the very near
future
Which of the following statements is true of the corporate form of business?
A) The board of directors sets policy for the corporation and appoints the officers.
B) Changes in the ownership of stock have a negative effect on the continuity of the
corporation.
C) Any stockholder may commit the corporation to a contract.
D) It is easy for stockholders to lodge an effective protest against management.
A CR.5 posting reference in a subsidiary ledger signifies that the ________.
A) posting is transferred from the cash receipts journal, page 5
B) transaction on page number 5 is credited
C) amount credited is after a 5% discount
D) sales on credit is expected to be paid within five days
Triangle Corporation sold a product on credit for $2,235 to Hexagon Sales. The cost of
goods sold was $1,324. Assuming Triangle is following a perpetual inventory system
and using a sales journal, it will record $2,235 in the ________.
A) Accounts Receivable CR, Sales Revenue DR column
B) Cost of Goods Sold DR, Merchandise Inventory CR column
C) Merchandise Inventory DR, Cost of Goods Sold CR column
D) Accounts Receivable DR, Sales Revenue CR column
Princeton Financial Services, Inc. purchased computers that are to be used in its
consulting services. Based on the matching principle, what account, other than
Computers, should appear on the balance sheet as of December 31, 2018?
A) Depreciation Expense – Equipment
B) Service Revenue
C) Accumulated Depreciation – Equipment
D) Equipment Expense
On the date of record for a dividend, the company ________.
A) issues new shares of stock on that date
B) disburses dividend payments to stockholders on that date
C) records the dividend payable amount on that date
D) determines who owns the shares of stock on that date
A company that uses the periodic inventory system provided the following information:
1. Beginning inventory $4,000
2. Purchases $150,000
3. Purchase discounts $2,300
4. Purchase returns and allowances $700
At the end of the period, the physical count of inventory reveals that $17,000 worth of
inventory is on hand. What is the amount of cost of goods sold?
A) $134,000
B) $151,000
C) $168,000
D) $147,000
Which of the following is a liability account?
A) Service Revenue
B) Building
C) Prepaid Rent
D) Unearned Revenue
A business receives $40,000 for services that it will perform over the next four months.
Which of the following accounts is credited?
A) Cash
B) Accounts Payable
C) Service Revenue
D) Unearned Revenue
A business purchases equipment by paying $6,276 in cash and issuing a note payable of
$19,177. Which of the following occurs?
A) Cash is credited for $6,276, Equipment is credited for $25,453, and Notes Payable is
debited for $19,177.
B) Cash is credited for $6,276, Equipment is debited for $25,453, and Notes Payable is
credited for $19,177.
C) Cash is debited for $6,276, Equipment is debited for $19,177,and Notes Payable is
credited for $25,453.
D) Cash is debited for $6,276, Equipment is credited for $19,177, and Notes Payable is
debited for $12,901.
Which of the following correctly describes the accounting treatment for interest
payable?
A) It is shown on the balance sheet as a current liability.
B) It is shown on the income statement as an operating expense.
C) It is shown on the balance sheet as a current asset.
D) It is shown on the balance sheet as a long-term liability.
The assets of Star Company are $120,000 and the total liabilities are $10,000. The
equity is ________.
A) $120,000
B) $130,000
C) $10,000
D) $110,000
The horizontal analysis is computed by which of the following formulas?
A) ((earlier period amount – later period amount)/base period amount) × 100
B) (later period amount/earlier period amount) × 100
C) (base period amount/dollar amount of change) × 100
D) (dollar amount of change/base period amount) × 100
Briefly discuss each of the following corporate characteristics.
A. Corporate taxation
B. Separate legal entity
C. No mutual agency
Georgia Corp. uses the indirect method to prepare the statement of cash flows. Refer to
the following section of the comparative balance sheet:
Georgia Corp.
Comparative Balance Sheet
December 31, 2019 and 2018
How will the change in Accounts Receivable be shown on the statement of cash flows?
A) addition to net income under the operating activities section
B) subtraction from net income under the operating activities section
C) positive cash flow under the financing activities section
D) negative cash flow under the investing activities section
The Accumulated Depreciation account is ________.
A) a record of the sum of all the depreciation expense recorded to date for a depreciable
asset
B) the price quoted to the buyer of a used asset
C) a liability account
D) the expense account used to allocate the depreciable cost of an asset
