If a purchaser using a perpetual system agrees to freight terms of FOB shipping point,
then the
a. Inventory account will be increased.
b. Inventory account will not be affected.
c. seller will bear the freight cost.
d. carrier will bear the freight cost.
Answer:
After the adjusting entries are journalized and posted to the accounts in the general
ledger, the balance of each account should agree with the balance shown on the
a. adjusted trial balance.
b. post-closing trial balance.
c. the general journal.
d. adjustments columns of the worksheet.
Answer:
On May 1, 2015, Pinkley Company sells office furniture for $300,000 cash. The office
furniture originally cost $750,000 when purchased on January 1, 2008. Depreciation is
recorded by the straight-line method over 10 years with a salvage value of $75,000.
What depreciation expense should be recorded on this asset in 2015?
a. $22,500.
b. $25,000.
c. $33,750.
d. $67,500.
Answer:
Each payment on a mortgage note payable consists of
a. interest on the original balance of the loan only.
b. reduction of loan principal only.
c. interest on the original balance of the loan and reduction of loan principal.
d. interest on the unpaid balance of the loan and reduction of loan principal.
Answer:
Assuming a FICA tax rate of 7.65% on the first $110,100 in wages and 1.45% in excess
of $110,100 and a federal income tax rate of 20% on all wages, what would be an
employee’s net pay for the year if he earned $180,000? Round all calculations to the
nearest dollar.
a. $135,577
b. $126,141
c. $144,000
d. $134,564
Answer:
Horizontal analysis is appropriately performed
a. only on the income statement.
b. only on the balance sheet.
c. only on the statement of retained earnings.
d. on all three of these statements.
Answer:
The journal entry to record a credit sale of merchandise is
a. Cash
Sales Revenue
b. Cash
Service Revenue
c. Accounts Receivable
Service Revenue
d. Accounts Receivable
Sales Revenue
Answer:
Goodwill
a. is only recorded when generated internally.
b. can be subdivided and sold in parts.
c. can only be identified with the business as a whole.
d. can be defined as normal earnings less accumulated amortization.
Answer:
A bond discount must
a. always be amortized using straight-line amortization.
b. always be amortized using the effective-interest method.
c. be amortized using the effective-interest method if it yields annual amounts that are
materially different than the straight-line method.
d. be amortized using the straight-line method if it yields annual amounts that are
materially different than the effective-interest method.
s
Answer:
The following information pertains to Ortiz Company. Assume that all balance sheet
amounts represent both average and ending balance figures. Assume that all sales were
on credit.
What is the current ratio for Ortiz?
a. 1.90
b. 1.50
c. 1.30
d. .53
Answer:
The balance of Allowance for Doubtful Accounts prior to making the adjusting entry to
record estimated uncollectible accounts
a. is relevant when using the percentage of receivables basis.
b. is relevant when using the percentage of sales basis.
c. is relevant to both bases of adjusting for uncollectible accounts.
d. will never show a debit balance at this stage in the accounting cycle.
Answer:
Parker Paint reported sales of $500,000, total assets of $300,000, total stockholders’
equity of $160,000, current assets of $100,000, current liabilities of $40,000, and cash
of $30,000. In a common size balance sheet, cash would be shown as
a. 6%.
b. 10%.
c. 30%.
d. 50%.
Answer:
The collection of a $1,000 account after the 2 percent discount period will result in a
a. debit to Cash for $980.
b. credit to Accounts Receivable for $1,000.
c. credit to Cash for $1,000.
d. debit to Sales Discounts for $20.
Answer:
An adjusted trial balance
a. is prepared after the financial statements are completed.
b. proves the equality of the total debit balances and total credit balances of ledger
accounts after all adjustments have been made.
c. is a required financial statement under generally accepted accounting principles.
d. cannot be used to prepare financial statements.
Answer:
Which one of the following is primarily interested in the liquidity of a company?
a. Federal government
b. Stockholders
c. Long-term creditors
d. Short-term creditors
Answer:
The “Other Accounts” column in a cash receipts journal is also referred to as the
a. miscellaneous column.
b. excess column.
c. sundry accounts column.
d. compound-entry column.
Answer:
Any item that appears on the income statement would be considered as either a cash
inflow or cash outflow from operating activities.
Answer:
A corporation that issues bonds at a discount will recognize interest expense at a rate
which is greater than the market interest rate.
Answer:
The recording process becomes more efficient and informative if all transactions are
recorded in one account.
Answer:
aIn a worksheet, cost of goods sold will be shown in the trial balance (Dr.), adjusted
trial balance (Dr.) and income statement (Dr.) columns.
Answer:
When purchasing land, the costs for clearing, draining, filling, and grading should be
charged to a Land Improvements account.
Answer:
Thirty $1,000 bonds with a carrying value of $39,600 are converted into 4,000 shares of
$5 par value common stock. The common stock had a market value of $9 per share on
the date of conversion. The entry to record the conversion is
Answer:
The following information is available for Moiz Company:
Instructions
Using the above information, prepare the closing entries for Moiz Company.
Answer:
Debt investments are investments in government and corporation bonds.
Answer:
The adjusted trial balance of Hanson Hawk Company at September 30, 2015 includes
the following accounts: Retained Earnings $27,700; Dividends $9,750; Service
Revenue $46,800; Insurance Expense $1,950; Salaries Expense $18,000; Rent Expense
$3,000; Supplies Expense $650; and Depreciation Expense $1,100. Prepare a retained
earnings statement for the year.
Answer:
Accountants do not have to worry about issues of ethics.
Answer: