1) the receivables turnover and inventory turnover ratios are used to analyze
a.long-term solvency
b.profitability
c.liquidity
d.leverage
2) an annual report includes all of the following except
a.management discussion and analysis section
b.notes to the financial statements
c.an auditors report
d.salary information for all the executives
3) under the corporate form of business organization
a.a stockholder is personally liable for the debts of the corporation
b.stockholders acts can bind the corporation even though the stockholders have not
been appointed as agents of the corporation
c.the corporations life is stipulated in its charter
d.stockholders wishing to sell their corporation shares must get the approval of other
stockholders
4) which of the following are the same under both gaap and ifrs?
a.the account.
b.debit and credit rules.
c.steps in the recording process.
d.all of these answer choices are correct.
5) equipment was purchased for $60,000. freight charges amounted to $2,800 and there
was a cost of $8,000 for building a foundation and installing the equipment. it is
estimated that the equipment will have a $12,000 salvage value at the end of its 5-year
useful life. depreciation expense each year using the straight-line method will be
a.$14,160
b.$11,760
c.$9,840
d.$9,600
6) each of the following companies is a merchandising company except a
a.wholesale parts company
b.candy store
c.moving company
d.furniture store
7) mitchell corporation has current assets of $1,200,000 and current liabilities of
$750,000. if they issue $100,000 of new stock what will their new current ratio be?
(rounded)
a.1.73:1
b.1.53:1
c.1.41:1
d.1.60:1
8) bad debts expense is reported on the income statement as
a.part of cost of goods sold
b.an expense subtracted from net sales to determine gross profit
c.an operating expense
d.a contra revenue account
9) one of the accounting concepts upon which adjustments for prepayments and
accruals are based is:
a.expense recognition
b.cost
c.monetary unit
d.economic entity
10) when a company has performed a service but has not yet received payment, it
a.debits accounts receivable and credits service revenue.
b.debits revenue from services and credits accounts receivable.
c.debits revenue from services and credits accounts payable.
d.makes no entry until the cash is received.
11) an employee authorized to sign checks should not record
a.owner cash contributions
b.mail receipts
c.cash disbursement transactions
d.sales transactions
12) presented below is information for zales company for the month of january 2012.
instructions
(a)prepare a multiple-step income statement.
(b)calculate the profit margin ratio and the gross profit rate.
13) logan corporation issues 40,000 shares of $50 par value preferred stock for cash at
$60 per share. in the stockholders equity section, the effects of the transaction above
will be reported
a.entirely within the capital stock section
b.entirely within the additional paid-in capital section
c.under both the capital stock and additional paid-in capital sections
d.entirely under the retained earnings section
14) before a check authorization is issued, the following documents must be in
agreement, except for the
a.invoice
b.remittance advice
c.receiving report
d.purchase order
15)
16)
the following reconciling items are applicable to the bank reconciliation for the
gunselman company. indicate how each item should be shown on a bank reconciliation.
a.outstanding checks.
b.bank credit memorandum for collecting a note for the depositor.
c.bank debit memorandum for service charge.
d.deposit in transit.
17) eight transactions are recorded in the following t-accounts:
indicate for each debit and each credit: (a) whether an asset, liability, common stock,
dividends, revenue, or expense account was affected and (b) whether the account was
increased (+) or (-) decreased. answers should be presented in the following chart form:
18) a company purchased office equipment for $20,000 and estimated a salvage value
of $4,000 at the end of its 10-year useful life. the constant percentage to be applied
against book value each year if the double-declining-balance method is used is
a.10%
b.15%
c.20%
d.2%
19) during 2012, jennifer industries reported cash provided by operations of
$280,000,000, cash used in investing of $343,000,000, and cash used in financing of
$45,000,000. in addition, cash spent for fixed assets during the period was
$138,000,000. average current liabilities were $325,000,000 and average total liabilities
were $858,000,000. no dividends were paid. based on this information, what was
jennifer’s cash debt coverage ratio?
a.0.38 times
b.0.33 times
c.0.86 times
d.0.40 times
20) the transactions of the stormont store are recorded in the general journal below. you
are to post the journal entries to t-accounts and compute the august 31, 2014 balances.
21) the accounting cycle begins with the journalizing of the transactions.
22) which three types of transactions affect retained earnings, and how do they affect it?
23) revenue received before it is earned and expenses used or consumed before being
paid are both initially recorded as liabilities.
24) to compute the present value of a bond, both the _______________ payments and
the ________________ amount must be discounted.
25) for the items listed below, fill in the appropriate code letter to indicate whether the
item is an asset, liability, or stockholders equity item.
26) journalize the following business transactions in general journal form. identify each
transaction by number. you may omit explanations of the transactions.
1)stockholders invest $40,000 in cash in starting a real estate office operating as a
corporation.
2)purchased $500 of supplies on credit.
3)purchased equipment for $25,000, paying $3,500 in cash and signed a 30-day,
$21,500, note payable.
4)real estate commissions billed to clients amount to $4,000.
5)paid $700 in cash for the current month’s rent.
6)paid $250 cash on account for office supplies purchased in transaction 2 .
7)received a bill for $800 for advertising for the current month.
8)paid $2,500 cash for office salaries.
9)paid $1,200 cash dividends to stockholders.
10)received a check for $2,000 from a client in payment on account for commissions
billed in transaction 4 .
27) the adjusting entry for unearned revenue results in an increase (a debit) to an asset
account and an increase (a credit) to a revenue account.