Stable Company issued $500,000 of 6%, 5-year bonds at 98, with interest paid annually.
Assuming straight-line amortization, what is the total interest cost of the bonds?
a. $150,000
b. $160,000
c. $145,000
d. $140,000
Answer:
Stanley Company had inventory of $660,000 and $540,000 on December 31, 2014, and
December 31, 2015, respectively. Cost of goods sold for 2015 was $4,200,000. Average
days to sell the inventory is approximately
a. 52.1.
b. 6.4.
c. 46.9.
d. 57.4.
Answer:
Penner, Inc. has 15,000 shares of 6%, $100 par value, noncumulative preferred stock
and 30,000 shares of $1 par value common stock outstanding at December 31, 2015.
There were no dividends declared in 2014. The board of directors declares and pays a
$170,000 dividend in 2015. What is the amount of dividends received by the common
stockholders in 2015?
a. $0
b. $80,000
c. $170,000
d. $90,000
Answer:
The credit terms offered to a customer by a business firm are 2/10, n/30, which means
that
a. the customer must pay the bill within 10 days.
b. the customer can deduct a 2% discount if the bill is paid between the 10th and 30th
day from the invoice date.
c. the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice
date.
d. two sales returns can be made within 10 days of the invoice date and no returns
thereafter.
Answer:
All of the following statements are correct except
a. Good decision-making depends on good information.
b. A vital element in communicating economic events is the accountant’s ability to
analyze and interpret reported information.
c. The origins of accounting are generally attributed to Socrates, a classical Greek
philosopher, who promoted accounting as a social contract.
d. The information that a user of financial information needs depends upon the kinds of
decisions the user makes.
Answer:
If merchandise from a cash sale is returned by a customer for a refund, the sales return
is recorded in the
a. general journal.
b. cash receipts journal.
c. cash payments journal.
d. sales journal.
Answer:
During 2015, its first year of operations, Neko’s Bakery had revenues of $60,000 and
expenses of $35,000. The business paid dividends of $20,000. What is the amount of
stockholders’ equity at December 31, 2015?
a. $0
b. $5,000 credit
c. $25,000 credit
d. $20,000 debit
Answer:
If a company purchases merchandise for cash, the transaction should be recorded in the
a. purchases journal.
b. general journal.
c. cash payments journal.
d. sales journal.
Answer:
The initials ‘CPA’ stand for
a. Certified Practical Auditor.
b. Chartered Public Auditor.
c. Certified Public Accountant.
d. Can’t Pass Accounting.
Answer:
A debit to an asset account indicates
a. an error.
b. a credit was made to a liability account.
c. a decrease in the asset.
d. an increase in the asset.
Answer:
Shown below is a page from a special journal.
1> What is the name of this journal?
2> Give an explanation for each of the transactions in this journal.
3> Explain the following:
(a) the numbers under the bottom lines.
(b) the checks entered into the Ref. column.
(c) the numbers 113 and 416 in the Ref. column.
(d) the (x) below the Other Accounts column.
Answer:
Which of the following is not an accounting assumption?
a. Integrity.
b. Going concern.
c. Periodicity.
d. Economic entity.
Answer:
Which of the following is usually not an accrued liability?
a. Interest payable
b. Wages payable
c. Taxes payable
d. Notes payable
Answer:
All of the following statements regarding changes in accounting principles are true
except:
a. Most changes in accounting principles are only reported in current periods when the
principle change takes place.
b. Changes in accounting principles are allowed when new principles are preferable to
old ones.
c. Most changes in accounting principles are retroactively reported.
d. Consistency is one of the biggest concerns when a change in accounting principle is
undertaken.
Answer:
The following items are taken from the financial statements of the Postal Service for the
year ending December 31, 2015:
What are total current liabilities at December 31, 2015?
a. $18,000
b. $70,000
c. $88,000
d. $120,000
Answer:
Sebastian Belle, CPA, has billed her clients for services performed. She subsequently
receives payments from her clients. What entry will Sebastian make upon receipt of the
payments?
a. Debit Unearned Service Revenue and credit Service Revenue
b. Debit Cash and credit Accounts Receivable
c. Debit Accounts Receivable and credit Service Revenue
d. Debit Cash and credit Service Revenue
Answer:
An asset that cannot be sold individually in the market place is
a. a patent.
b. goodwill.
c. a copyright.
d. a trade name.
Answer:
The balance in the Accumulated Depreciation account represents the
a. cash fund to be used to replace plant assets.
b. amount to be deducted from the cost of the plant asset to arrive at its fair market
value.
c. amount charged to expense in the current period.
d. amount charged to expense since the acquisition of the plant asset.
Answer:
Listed below are various column headings that may appear in special journals. Using
the following code letters, identify for each column heading (1) the special journal
where the column heading would appear, and (2) whether the amounts entered under
the column heading would be posted in total, individually, or both in total and
individually. (Note: column headings may appear in more than one special journal)
Answer:
Flaherty Company had beginning inventory on May 1 of $12,000. During the month,
the company made purchases of $40,000 but returned $2,000 of goods because they
were defective. At the end of the month, the inventory on hand was valued at $15,500.
Calculate cost of goods available for sale and cost of goods sold for the month.
Answer:
Presented below is information related to Pickett Real Estate Agency.
Instructions
1> Journalize the transactions. (You may omit explanations.)
2> What balance would Pickett Real Estate Agency report for Accounts Payable in its
October 31 financial statements? In which category of which financial statements
would it be found?
3> What balance would Pickett Real Estate Agency report for Accounts Receivable in
its October 31 financial statements? In which category of which financial statements
would it be found?
Answer:
If fully depreciated equipment that cost $10,000 with no salvage value is retired, the
entry to record the retirement requires a debit to the ___________________________
account and a credit to the _____________________ account.
Answer:
One part of eight adjusting entries is given below.
Instructions
Indicate the account title for the other part of each entry.
1> Unearned Service Revenue is debited.
2> Prepaid Rent is credited.
3> Accounts Receivable is debited.
4> Depreciation Expense is debited.
5> Salaries and Wages Expense is debited.
6> Interest Payable is credited.
7> Service Revenue is credited (give two possible debit accounts).
8> Supplies Expense is debited.
Answer:
The income statement of Reagan Inc. for the year ended December 31, 2015, reported
the following condensed information:
Roman’s balance sheet contained the following comparative data at December 31:
Reagan has no depreciable assets. Accounts payable pertains to operating expenses.
Instructions
Prepare the operating activities section of the statement of cash flows using the direct
method.
Answer:
If accounts receivable increase during a period, revenues on an accrual basis are
______________ than revenues on a cash basis.
Answer: