The data processing department of a tax firm would be a cost center.
The income statement reports the work in process inventory.
Trends in the industry, such as advancements in technology, should not be a
consideration in determining whether or not a department is eliminated.
Reversing entries are recorded on the third day of the new accounting period.
If a corporation issues serial bonds, each bond will have different maturity dates.
Accounts Payable appears on the income statement.
There are 7 closing entries.
Finished goods inventory is listed on the schedule of cost of goods sold.
The Withdrawals account is closed to Income Summary.
Copyright protection expires 50 years after the author’s death.
A stock dividend may be distributed even if the company is short of cash.
Partners are not required to report their share of partnership earnings on their personal
tax return.
Payment for merchandise made before approval is given.
Items are listed in the voucher register in the order liabilities are incurred.
When adjustments are made to the bank balance when completing a bank
reconciliation, a journal entry is needed to bring the bank balance up to date.
When a bond is sold at a discount, the person buying the bond receives less interest than
if the bond had been purchased at face value.
During a period of inflation, LIFO will produce the lowest net income.
Land Improvements is an asset account that records improvements to land that have a
limited life.
Hourly wages of production line employees is one of the costs included in the
work-in-process inventory.
One internal control safeguard is to assign all the duties of receiving, depositing, and
recording cash to separate employees.
The use of straight-line depreciation results in equal amounts of depreciation being
taken over a period of time.
Departmental income statements are prepared to indicate how well each department is
performing.
The drawee of the check is the person receiving the money.
If the average collection period has decreased and credit terms remain the same, the
company should put a greater emphasis on collections.
A signature card is kept in the bank files so that possible forgeries could be spotted.
The stockholders of a corporation have no mutual agency.
If a company had a beginning balance of $5,000 in Work-in-Process Inventory, an
ending balance of $7,000 in Work-in-Process Inventory and incurred direct labor costs
of $8,000 and overhead costs of $4,000, then the cost of goods manufactured during the
month was $24,000. Raw Materials used were $10,000.
The entry to record selling a product that cost $14,000 would be a credit to Finished
Goods Inventory $14,000, and a debit to Cost of Goods Sold $14,000.
The left side of the accounting equation shows what is owned by the business.
Double-entry accounting requires transactions to affect two or more accounts, and the
total of the debits and credits must equal.
When the assets are sold at a loss and one partner cannot make up the deficit, the other
partners have no liability to make up the deficit.
The drawee writes the check.
Jack’s Online Service on April 30 has the following account balances:
If net purchases for the period are $15,000, what is the amount in the Purchases
Discounts account?
A) $3,000
B) $4,000
C) $2,000
D) $1,000
An investment by a new partner was debited to existing partners’ capital balances. This
error would cause:
A) the new partner’s capital account to be understated.
B) the period end partners’ equity to be understated.
C) the period end assets to be overstated.
D) None of these is correct.
A credit to a liability account was posted to the capital account. This would cause:
A) assets to be overstated.
B) liabilities to be understated.
C) owner’s equity to be understated.
D) net income to be overstated.
Which of the following is true about retained earnings?
A) Declaring a stock split will decrease retained earnings.
B) Appropriating retained earnings will increase total stockholders’ equity.
C) Distributing stock dividends will decrease retained earnings.
D) Declaring cash dividends will decrease retained earnings.
An account in which the balance is carried over from one accounting period to the next
is called a:
A) permanent account.
B) nominal account.
C) temporary account.
D) zero account.
Checks that have been processed by the bank and are no longer negotiable are:
A) outstanding checks.
B) canceled checks.
C) checks in process.
D) deposits in transit.
A formal account that has columns for date, explanation, posting reference, debit, and
credit is called the:
A) T account.
B) standard account form.
C) ledger.
D) chart of accounts.
A $5,500, 10% note dated May 20 for 78 days was discounted on June 23 at 12%. The
amount of the discount (using a 360-day year) is:
A) $119.16.
B) $191.16
C) $124.89.
D) $82.41.
The board of directors is considering approving a plant expansion which will require a
sizable advance payment to take place early this year. How will this decision affect the
period’s cash flows from investing?
A) It will increase this period’s cash flows from investing.
B) It will decrease this period’s cash flows from investing.
C) It will not affect this period’s cash flows from investing.
D) This is not listed in the statement of cash flows.
Issuance of common stock for cash would result in:
A) an increase of cash flow from operating activities.
B) a decrease of cash flow from investing activities.
C) an increase of cash flow from financing activities.
D) an increase of cash flow from investing activities.
An entry to record the payment to a vendor was correctly recorded and posted to the
general ledger but was not posted to the subsidiary ledger. This error will cause:
A) net income to be overstated.
B) the vendor account total in the subsidiary to be less than control total.
C) the accounts payable control account to not agree with the subsidiary ledger.
D) the accounts receivable control account to not agree with the subsidiary ledger.
Which of the following is the controlling account in the general ledger when using a
voucher system?
A) Cash
B) Accounts Payable
C) Accounts Receivable
D) Vouchers Payable
An account is said to have a debit balance if:
A) the footing of the debits exceeds the footing of the credits.
B) there are more entries on the debit side than on the credit side.
C) its normal balance is debit without regard to the amounts or number of entries on the
debit side.
D) the last entry of the accounting period was posted on the debit side.
The entry to record payment of a voucher for an invoice after the discount period under
the gross method and the periodic method will include:
A) a debit to Vouchers Payable.
B) a credit to Purchase Discounts.
C) a debit to Discounts Lost.
D) None of these is correct.
The depreciation of equipment will require an adjustment that results in:
A) total assets increasing and total expenses increasing.
B) total assets increasing and total expenses decreasing.
C) total assets and revenue decreasing.
D) total assets decreasing and total expenses increasing.
Operating expenses other than depreciation expense for the year were $335,000.
Prepaid expenses increased by $7,000. Cash payments for operating expenses to be
reported on the cash flow statement using the direct method would be:
A) $335,000.
B) $342,000.
C) $328,000.
D) $7,000.
A calendar year is:
A) any 12-month period that a business chooses for its accounting year.
B) the 12-month period beginning with January.
C) the period for when a interim financial statement would be completed.
D) All of these answers are correct.
Which of the following is true of a partnership?
A) Actions of one partner are not binding on all the other partners.
B) Each partner is individually liable for partnership debts.
C) All of the owners always share income and losses equally.
D) Both A and B are correct.
A prior period adjustment would be necessary when:
A) a stock dividend is declared.
B) a stock dividend is paid.
C) depreciation expense was understated the prior year.
D) a cash dividend is declared.
A coal mine was acquired for $4,000,000. No salvage value was expected and the
number of tons of coal is estimated to be 2,000,000 tons. During for first year, 200,000
tons of coal was mined and sold. The depletion expense is:
A) $2,000,000.
B) $200,000.
C) $4,000,000.
D) $400,000.
When selling bonds at a discount, the discount received effectively:
A) reduces the cost of borrowing.
B) increases the cost of borrowing.
C) does not affect the cost of borrowing.
D) increases the amount of cash received when bonds are sold.
A form used to organize and check data before preparing financial reports is known as
a(n):
A) trial balance.
B) income statement.
C) ledger.
D) worksheet.
A transaction involving borrowing cash to buy a piece of equipment would be recorded
as a(n):
A) operating activity.
B) investing activity.
C) financing activity.
D) noncash investing and financing activity.
Which of the following assets would be classified as property, plant, and equipment?
A) Patent
B) Copyright
C) Goodwill
D) Furniture
The beginning inventory of this year is understated. This error would cause:
A) the period’s net income to be overstated.
B) the period’s net income to be understated.
C) the period end assets to be understated.
D) None of these is correct.
Accrued interest on a note payable would have which effect on the categories?
A) Total liabilities would be increased.
B) Total assets would be increased.
C) Owner’s equity would be increased.
D) None of these answers is correct.
The entry to close Income Summary (net loss) to Capital was omitted. This error will
cause:
A) the ending capital to be overstated.
B) the ending capital to be understated.
C) no error in the ending capital balance.
D) None of these is correct.
A prior period adjustment for depreciation would affect what account in the
stockholders’ equity section?
A) Common Stock
B) Paid-in Capital in Excess of Par Value”Common
C) Retained Earnings
D) Appropriations
Carla’s Fashions has an average collection period of 30 days. You could infer that
Carla’s Fashions:
A) bills her customers semi-monthly.
B) bills her customers quarterly.
C) has an accounts receivable turnover of approximately 12.
D) Both A and C can be inferred.
Changes in retained earnings can result from:
A) purchasing equipment.
B) net income or net loss.
C) paying down debt.
D) All of these answers are correct.
Which of the following could appear in an adjusting entry, closing entry, and reversing
entry?
A) Salary Expense
B) Withdrawals
C) Depreciation Expense, Buildings
D) Cash
Calculate the total Assets if the company has: Cash $400, Accounts Receivable $200,
Accounts Payable $500, Equipment $300.
$ ________
Given the following accounts:
[1] Cash
[2] Notes receivable
[3] Accounts receivable
[4] Interest receivable
[5] Notes payable
[6] Accounts payable
[7] Interest payable
[8] Discount on notes payable
[9] Interest expense
[10] Interest income
[11] Sales
Indicate the account(s) to be debited and credited to record the following transactions.
Accrued interest on a note payable.
Debit ________ Credit ________
Use the account code numbers to identify how the following transactions would be
journalized.
[1] Cash
[2] Accounts Receivable
[3] Allowance for Doubtful Accounts
[4] Bad Debts Expense,
[5] Bad Debts Recovered
Collected from a customer previously written off under the direct write off method.
Debit account ________ Credit account ________
Indicate whether each of the following represents (1) Asset, (2) Liability, or (3) Owner’s
Equity:
1. ________ Office Supplies
2. ________ Accounts Payable
3. ________ Capital
4. ________ Cash
5. ________ Withdrawal
6. ________ Land
7. ________ Accounts Receivable
8. ________ Expense
9. ________ Equipment
10. ________ Revenue
The following trial balance has been improperly completed. All the accounts have
normal balances. Prepare a corrected trial balance in good form.
Danielson Online Company
Trial Balance
March 31, 201x
Determine the cash shortage given the following:
The balance per the petty cash account $200
The count of coin and currency amounts to $120
There are receipts: for telephone costs of $25, for supplies of $6, for transportation $6,
for funeral flowers $38
$ ________
Given the following accounts:
[1] Cash
[2] Notes receivable
[3] Accounts receivable
[4] Interest receivable
[5] Notes payable
[6] Accounts payable
[7] Interest payable
[8] Discount on notes payable
[9] Interest expense
[10] Interest income
[11] Sales
Indicate the account(s) to be debited and credited to record the following transactions.
Sold merchandise on account. Assume the periodic method.
Debit ________ Credit ________
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement on which the account balance is reported, and in Column 4 the nature of the
account (permanent/temporary).
Example:
What are the major goals of the closing process?
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement in which the account balance is reported, and in Column 4 the account’s
nature (permanent/temporary).
Alpha-Omega Industries has 20,000 shares of $10 par common stock and 10,000 shares
of $40 par, 5% preferred stock outstanding. Total dividends available are $62,000.
Compute the dividends to be distributed to preferred and common stockholders under
the following condition.
The preferred stock is nonparticipating and non-cumulative with no dividends
distributed last year.
Sue and Jill, who have ending capital balances of $80,000 and $60,000 respectively,
agree to admit two new partners. Carlos will buy 1/2 of Sue’s interest for $20,000 and
1/4 of Jill’s interest for $25,000 directly from the partners. Carmen will invest $40,000
for a $40,000 equity interest. Journalize the entry to admit Carlos and Carmen.
Prepare journal entries for the following for Bartz, Inc.
May 11 Replaced the engine in a Van #1, paying cash of $5,400.
May 18 Paid cash for a tune-up of the engine in Van #2 of $570.
May 29 Paid cash to add a lift to Van #2 of $3,700
On June 1, Mike’s Motorcycle Shop accepted a 90-day, 10%, $8,000 note from a
customer from the sale of a motorcycle. On July 21, after 50 days, Mike discounted the
note at First Bank at 8%. Record the journal entries for Mike’s Motorcycles.
Identify whether the entries below are an adjusting entry (AE) or a closing entry (CE).
________