An expense is recorded under the cash basis only when
a. services are performed.
b. it is earned.
c. cash is paid.
d. it is incurred.
Answer:
Which one of the following would not cause a bank to debit a depositor’s account?
a. Bank service charge
b. Collection of a note receivable
c. Wiring of funds to other locations
d. Checks marked NSF
Answer:
The procedures of the closing process are applicable to all companies when they are
using
a. GAAP but not IFRS.
b. IFRS but not GAAP.
c. both IFRS and GAAP.
d. neither IFRS nor GAAP.
Answer:
If a company fails to make an adjusting entry to record supplies expense, then
a. stockholders’ equity will be understated.
b. expense will be understated.
c. assets will be understated.
d. net income will be understated.
Answer:
Shane Company gathered the following reconciling information in preparing its April
bank reconciliation:
The adjusted cash balance per books on April 30 is
a. $12,930.
b. $14,190.
c. $23,730.
d. $24,990.
Answer:
The method of accounting for uncollectible accounts that results in a better matching of
expenses with revenues is the
a. aging accounts receivable method.
b. direct write-off method.
c. percentage of receivables method.
d. percentage of sales method.
Answer:
Short-term investments are listed on the balance sheet immediately below
a. cash.
b. inventory.
c. accounts receivable.
d. prepaid expenses.
Answer:
The cost of land includes all of the following except
a. real estate brokers’ commissions.
b. closing costs.
c. accrued property taxes.
d. parking lots.
Answer:
Which one of the following is not necessary in order for a corporation to pay a cash
dividend?
a. Adequate cash
b. Approval of stockholders
c. Declaration of dividends by the board of directors
d. Retained earnings
Answer:
If a gain of $12,000 is incurred in selling (for cash) office equipment having a book
value of $110,000, the total amount reported in the cash flows from investing activities
section of the statement of cash flows is
a. $98,000.
b. $122,000.
c. $110,000.
d. $12,000.
Answer:
Under IFRS
a. companies can apply fair value to property, plant, and equipment and natural
resources.
b. companies can apply fair value to property, plant, and equipment but not to natural
resources.
c. companies can apply fair value to neither property, plant, and equipment nor natural
resources.
d. companies can apply fair value to natural resources but not to property, plant, and
equipment.
Answer:
Which of the following is not an advantage of issuing bonds instead of common stock?
a. Stockholder control is not affected.
b. Earnings per share on common stock may be lower.
c. Income to common stockholders may increase.
d. Tax savings result.
Answer:
Sources of increases to stockholder’s equity are
a. additional investments by owners.
b. purchases of merchandise.
c. dividends.
d. expenses.
Answer:
The following information is for Sunny Day Real Estate:
The total dollar amount of liabilities to be classified as current liabilities is
a. $15,000.
b. $60,000.
c. $75,000.
d. $160,000.
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:
Sargent Corporation bought equipment on January 1, 2015. The equipment cost
$360,000 and had an expected salvage value of $60,000. The life of the equipment was
estimated to be 6 years. The depreciation expense using the straight-line method of
depreciation is
a. $70,000.
b. $72,000.
c. $50,000.
d. None of these answer choices are correct.
Answer:
The objectives of internal control are to
a. prevent unintentional errors and irregularities.
b. safeguard assets and enhance the accuracy and reliability of the accounting records.
c. enhance the accuracy and reliability of financial statements.
d. safeguard assets and prevent thefts.
Answer:
In 2015, Boyle Company had credit sales of $1,080,000 and granted sales discounts of
$24,000. On January 1, 2015, Allowance for Doubtful Accounts had a credit balance of
$26,400. During 2015, $45,000 of uncollectible accounts receivable were written off.
Past experience indicates that 3% of net credit sales become uncollectible. What should
be the adjusted balance of Allowance for Doubtful Accounts at December 31, 2015?
a. $13,080
b. $13,800
c. $31,680
d. $39,720
Answer:
Alternative adjusting entries do not apply to
a. accrued revenues and accrued expenses.
b. prepaid expenses.
c. unearned revenues.
d. prepaid expenses and unearned revenues.
Answer:
A retained earnings statement shows the same information as a corporation income
statement.
Answer:
The percentage of receivables basis of estimating expected uncollectible accounts
emphasizes income statement relationships.
Answer:
A highly automated computerized system of accounting eliminates the need for internal
control.
Answer:
A contingent liability should be recorded in the accounts if it is ________________ that
the contingency will occur and the amount is ________________.
Answer:
Under GAAP, companies can choose which inventory system?
Answer:
The trial balance will not balance when incorrect account titles are used in journalizing
or posting.
Answer: