During the year, Salaries Payable decreased by $5,000. If Salary Expense amounted to
$174,000 for the year, the cash paid to employees (including deductions from gross
pay) is
a. $179,000.
b. $174,000.
c. $169,000.
d. $184,000.
Answer:
A statement of comprehensive income is presented in
a. a single-statement format only.
b. a two-statement format only.
c. an operating format.
d. either a one- or two-statement format.
Answer:
Romanoff Industries had the following inventory transactions occur during 2015:
The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a
periodic inventory system is used, what is the company’s after-tax income using FIFO?
(rounded to whole dollars)
a. $2,322
b. $2,486
c. $3,318
d. $3,552
Answer:
The private sector organization involved in developing accounting principles is the
a. Feasible Accounting Standards Body.
b. Financial Accounting Studies Board.
c. Financial Accounting Standards Board.
d. Financial Auditors’ Standards Body.
Answer:
Which of the following is not a reason one set of international accounting standards are
needed?
a. multinational corporations.
b. mergers and acquisitions.
c. information technology.
d. all of these answer choices are correct.
IFRS.
Answer:
All of the following are services offered by public accountants except
a. budgeting.
b. auditing.
c. tax planning.
d. consulting.
Answer:
Scott Company purchased merchandise with an invoice price of $3,000 and credit terms
of 1/10, n/30. Assuming a 360 day year, what is the implied annual interest rate inherent
in the credit terms?
a. 20%
b. 24%
c. 18%
d. 36%
Answer:
The necessity of making adjusting entries relates mostly to the
a. economic entity assumption.
b. time period assumption.
c. going concern assumption.
d. monetary unit assumption.
Answer:
The income statement for the year 2015 of Fugazi Co. contains the following
information:
After all closing entries have been posted, the revenue account will have a balance of
a. $0.
b. $70,000 credit.
c. $70,000 debit.
d. $7,500 credit.
Answer:
A remittance advice attached to a company check provides
a. details about the running cash balance in the checking account.
b. the magnetic bank routing numbers.
c. the explanation of the purpose of the check.
d. the signature space for the maker.
Answer:
An (x) below the “Other Accounts” column in a cash receipts journal indicates the
a. total has been posted to the general ledger.
b. total is not posted to the general ledger.
c. column has been footed.
d. column has been cross-footed.
Answer:
The following items are taken from the financial statements of the Postal Service for the
year ending December 31, 2015:
What is the amount that would be reported for stockholders’ equity at December 31,
2015?
a. $158,000
b. $144,000
c. $130,000
d. $102,000
Answer:
If the market interest rate is 10%, a $10,000, 12%, 10-year bond, that pays interest
semiannually would sell at an amount
a. less than face value.
b. equal to face value.
c. greater than face value.
d. that cannot be determined.
Answer:
The adjusted trial balance for Molina Company is presented below.
Molina made an error during year when they debited Utilities Expense for $2,000
instead of Equipment for a cash purchase of equipment. In addition, Molina failed to
accrue $4,000 of Service Revenue.
Instructions
[a) Prepare an income statement and a retained earnings statement for the year.
[b) Prepare a classified balance sheet at July 31.
Answer:
The independent internal verification principle involves each of the following except
the ______________ of data prepared by other employees.
a. comparison
b. reconciliation
c. review
d. segregation
Answer:
In order to close the dividends account, the
a. income summary account should be debited.
b. income summary account should be credited.
c. retained earnings account should be credited.
d. retained earnings account should be debited.
Answer:
Which of the following statements about a cash dividend is incorrect?
a. The legality of a cash dividend depends on state corporation laws.
b. The legality of a dividend does not indicate a company’s ability to pay a dividend.
c. Dividends are not a liability until declared.
d. Shareholders usually vote to determine the amount of income to be distributed in the
form of a dividend.
Answer:
Comparisons of data within a company are an example of the following comparative
basis:
a. Industry averages
b. Intercompany
c. Intracompany
d. Interregional
Answer:
A company has an average inventory on hand of $60,000 and the days in inventory is
73 days. What is the cost of goods sold?
a. $300,000
b. $4,380,000
c. $600,000
d. $2,190,000
Answer:
Selected data for Irma’s Store appear below.
Instructions
Compute the following for 2016:
(a) Gross profit rate.
(b) Inventory turnover.
(c) Receivables turnover.
Answer:
Jukebox Company had checks outstanding totaling $10,800 on its June bank
reconciliation. In July, Jukebox Company issued checks totaling $77,800. The July
bank statement shows that $76,600 in checks cleared the bank in July. A check from one
of Jukebox Company’s customers in the amount of $1,000 was also returned marked
“NSF.” The amount of outstanding checks on Jukebox Company’s July bank
reconciliation should be
a. $1,200.
b. $11,000.
c. $12,000.
d. $13,000.
Answer:
The entries in a sales journal will show
a. all sales of merchandise.
b. the cash sales of the company.
c. the credit sales of merchandise.
d. all sales of the company.
Answer:
Which one of the following is not a primary problem associated with accounts
receivable?
a. Depreciating accounts receivable
b. Recognizing accounts receivable
c. Valuing accounts receivable
d. Disposing of accounts receivable
Answer:
All of the following are stockholders’ equity accounts except
a. Dividends.
b. Common Stock.
c. Investment in Stock.
d. Retained Earnings.
Answer:
Salem Company hired Kirk Construction to construct an office building for
£6,400,000 on land costing £1,600,000, which Salem Company owned. The
building was complete and ready to be used on January 1, 2015 and it has a useful life
of 40 years. The price of the building included land improvements costing £480,000
and personal property costing £600,000. The useful lives of the land improvements
and the personal property are 10 years and 5 years, respectively. Salem Company uses
component depreciation, and the company uses straight-line depreciation for other
similar assets. What is the net amount reported for the building on Salem Company’s
December 31, 2015 statement of financial position?
a. £6,132,000
b. £6,059,000
c. £5,187,000
d. £6,240,000
IFRS:
Answer:
Identify whether the following items would be reported on the income statement (IS) or
balance sheet (BS).
1> Cash
2> Service Revenue
3> Notes Payable
4> Interest Expense
5> Accounts Receivable
Answer:
If the proceeds from the sale of a plant asset exceed its book value, a gain on disposal
occurs.
Answer:
Research and development costs can be classified as a property, plant, and equipment
item or as an intangible asset.
Answer:
Gross profit is obtained by subtracting ________________ from ________________.
Answer:
The cost of a patent must be amortized over a 20-year period.
Answer:
The economic entity assumption requires that the activities of an entity be kept separate
and distinct from the activities of its owner and all other economic entities.
Answer:
Meaningful analysis of financial statements will include either horizontal or vertical
analysis, but not both.
Answer:
On February 1, Brutus Company purchased 1,000 shares (2% ownership) of Wynne
Company common stock for $25 per share. On March 20, Brutus Company sold 200
shares of Wynne stock for $4,700. Brutus received a dividend of $20 per share on April
25. On June 15, Marcus sold 300 shares of Wynne stock for $8,500.
Instructions
Prepare the journal entries to record the transactions described above.
Answer:
The process of determining the present value is referred to as discounting the future
amount.
Answer: