The sale of receivables by a business
a. indicates that the business is in financial difficulty.
b. is generally the major revenue item on its income statement.
c. is an indication that the business is owned by a factor.
d. can be a quick way to generate cash for operating needs.
Answer:
A measure of the percentage of each dollar of sales that results in net income is
a. profit margin.
b. return on assets.
c. return on common stockholders’ equity.
d. earnings per share.
Answer:
Realistic Corporation’s December 31, 2015 balance sheet showed the following:
Realistic’s total paid-in capital was
a. $43,760,000.
b. $44,390,000.
c. $43,130,000.
d. $24,060,000.
Answer:
A company has a accounts receivable turnover of 10 times. The average accounts
receivable during the period are $400,000. What is the amount of net credit sales for the
period?
a. $40,000
b. $4,000,000
c. $400,000
d. Cannot be determined from the information given
Answer:
The operating expense section of an income statement for a wholesaler would not
include
a. freight-out.
b. utilities expense.
c. cost of goods sold.
d. insurance expense.
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 gross profit using LIFO?
(rounded to whole dollars)
a. $3,318
b. $3,552
c. $6,948
d. $7,182
Answer:
Net sales are $8,000,000, beginning total assets are $2,500,000, and the asset turnover
is 4.0 times. What is the ending total asset balance?
a. $2,000,000
b. $1,500,000
c. $2,800,000
d. $2,500,000
Answer:
A new average cost is computed each time a purchase is made in the
a. average-cost method.
b. moving-average cost method.
c. weighted-average cost method.
d. All of these choices are correct.
Answer:
Which of the following is not a true statement about the daily posting of the sales
journal?
a. There is a debit posting to accounts in the accounts receivable subsidiary ledger.
b. There is no credit posting.
c. The reference column in the sales journal is checked when the posting is complete for
each entry in the journal.
d. The invoice number supporting the sales transaction is posted to the reference
column in the subsidiary ledger.
Answer:
Saira, Inc. has the following income statement (in millions):
Using vertical analysis, what percentage is assigned to Net Income?
a. 625%
b. 40%
c. 25%
d. None of these answer choices are correct.
Answer:
Disclosure of a contingent liability is usually made
a. parenthetically, in the body of the balance sheet.
b. parenthetically, in the body of the income statement.
c. in a note to the financial statements.
d. in the management discussion section of the financial statements.
Answer:
On January 1, a machine with a useful life of five years and a residual value of $30,000
was purchased for $90,000. What is the depreciation expense for year 2 under the
double-declining-balance method of depreciation?
a. $21,600
b. $36,000
c. $28,800
d. $17,280
Answer:
Equipment was purchased for $96,000 and has a book value of $32,000 and a
depreciable cost of $80,000. The estimated salvage value is
a. $32,000.
b. $64,000.
c. $48,000.
d. $16,000.
Answer:
Under IFRS, companies can apply revaluation to
a. land, buildings, and intangible assets.
b. land, buildings, but not intangible assets.
c. intangible assets, but not land or buildings.
d. no assets.
Answer:
Two bases for estimating uncollectible accounts are:
a. percentage of assets and percentage of sales.
b. percentage of receivables and percentage of total revenue.
c. percentage of current assets and percentage of sales.
d. percentage of receivables and percentage of sales.
Answer:
In the balance sheet, mortgage notes payable are reported as
a. a current liability only.
b. a long-term liability only.
c. both a current and a long-term liability.
d. a current liability except for the reduction in principal amount.
Answer:
Vega Corporation’s December 31, 2015 balance sheet showed the following:
Vega’s total paid-in capital was
a. $21,480,000.
b. $21,795,000.
c. $21,165,000.
d. $11,530,000.
Answer:
Which one of the following would not be considered a liquidity ratio?
a. Current ratio
b. Inventory turnover
c. Acid-test ratio
d. Return on assets
Answer:
The amount you must deposit now in your savings account, paying 5% interest, in order
to accumulate $10,000 for your first tuition payment when you start college in 3 years
is
a. $8,500.
b. $7,830.
c. $8,638.
d. $8,860.
Answer:
Sales taxes collected by the retailer are recorded as a(n)
a. revenue.
b. liability.
c. expense.
d. asset.
Answer:
If errors occur in the recording process, they
a. should be corrected as adjustments at the end of the period.
b. should be corrected as soon as they are discovered.
c. should be corrected when preparing closing entries.
d. cannot be corrected until the next accounting period.
Answer:
A trial balance is a listing of
a. transactions in a journal.
b. the chart of accounts.
c. general ledger accounts and balances.
d. the totals from the journal pages.
Answer:
Goods in transit should be included in the inventory of the
a. buyer when the terms are FOB destination.
b. buyer when the terms are FOB shipping point.
c. transportation company when the terms are FOB destination.
d. seller when the terms are FOB shipping point.
Answer:
Which one of the following is an optional step in the accounting cycle of a business
enterprise?
a. Analyze business transactions
b. Prepare a worksheet
c. Prepare a trial balance
d. Post to the ledger accounts
Answer:
The two ways that a corporation can be classified by purpose are
a. general and limited.
b. profit and not-for-profit.
c. state and federal.
d. publicly held and privately held.
Answer:
The monetary unit assumption requires that all dollar amounts be rounded to the nearest
dollar.
Answer:
The process of determining the present value is referred to as discounting the future
amount.
Answer:
At December 31, 2015, Wynne Company reported Accounts Receivable of $45,000 and
Allowance for Doubtful Accounts of $3,500. On January 7, 2016, Brown Enterprises
declares bankruptcy and it is determined that the receivable of $1,200 from Brown is
not collectible.
1> What is the cash realizable value of Accounts Receivable at December 31, 2015?
2> What entry would Wynne make to write off the Brown account?
3> What is the cash realizable value of Accounts Receivable after the Brown account is
written off?
Answer:
The ______________ method tracks the actual physical flow of each unit of inventory
available for sale; however, management may be able to manipulate ______________
by using this method.
Answer:
Answer:
Stock can be issued only in exchange for cash.
Answer:
During the year, Income Tax Expense amounted to $30,000 and Income Taxes Payable
increased by $4,000; therefore, the cash paid for income taxes was $26,000.
Answer:
The two key parties to a note are the maker and the payee.
Answer:
Compute Whiz Company’s adjusted cash balance per books based on the following
information:
Answer:
In the case of an exchange of plant assets resulting in a loss on disposal, the cost of the
new asset acquired is equal to the ______________ of the asset given up plus any cash
paid by the purchaser.
Answer: