A company has a petty cash fund amount of $200. When replenished, it has petty cash
tickets of $33 for gas expense, $31 for postage expense, $16 for supplies expense, and
$12 for miscellaneous expenses. Assume the cash balance is not over or short. In the
journal entry, Cash would be credited for ________.
A) $92
B) $76
C) $64
D) $80
The following information relates to Sports Bikes, Inc.
Calculate the operating income.
A) $16,000
B) $68,000
C) $240,000
D) $26,000
Expenses that fall outside the regular operations of a business are ________.
A) generally a substantial part of net income
B) recorded in the Retained Earnings account
C) included under the other income and expenses section of the income statement
D) not considered for the calculation of net income
The ________ section of the statement of cash flows includes increases and decreases
in long-term assets.
A) investing activities
B) financing activities
C) operating activities
D) non-cash operating activities
Lawton Corporation records business transactions in dollars and disregards changes in
the value of a dollar over time. Which of the following accounting assumptions does
this represent?
A) economic entity assumption
B) going concern assumption
C) accounting period assumption
D) monetary unit assumption
A corporation has 10,000 shares of 20%, $60 par cumulative preferred stock
outstanding and 32,000 shares of no-par common stock outstanding. Preferred
dividends of $22,000 are in arrears. At the end of the current year, the corporation
declares a dividend of $236,000. What is the dividend per share for preferred stock and
for common stock? (Round your answer to the nearest cent.)
A) The dividend per share is $6.00 for preferred stock and $13.57 per share for
common stock.
B) The dividend per share is $23.60 for preferred stock and $0 per share for common
stock.
C) The dividend per share is $14.20 for preferred stock and $2.94 per share for common
stock.
D) The dividend per share is $23.60 for preferred stock and $2.94 per share for
common stock.
The following transactions for the month of March have been journalized and posted to
the proper accounts.
Mar. 1 The business received $7,000 cash and issued common stock to stockholders.
Mar. 2 Paid the first month’s rent of $700.
Mar. 3 Purchased equipment by paying $3,000 cash and executing a note payable for
$8,000.
Mar. 4 Purchased office supplies for $700 cash.
Mar. 5 Billed a client for $10,000 of design services completed.
Mar. 6 Received $7,800 on account for the services previously recorded.
What is the balance in Cash on March 6?
A) $11,100
B) $10,400
C) $13,400
D) $11,800
Once an accounts receivable is written off ________.
A) the account must be turned over to a collection agency
B) the company continues to pursue the collection
C) the company still expects to be paid
D) the customer’s accounts receivable is removed from the books
Which of the following sections from the statement of cash flows includes the cash paid
for the purchase of Treasury Stock?
A) the financing activities section
B) the operating activities section
C) the investing activities section
D) the non-cash investing and financing section
________ represents a short-term liability created by purchasing “on account.”
A) Accounts Receivable
B) Notes Payable
C) Accounts Payable
D) Expenses
Match each term with its description.
A) Sent by the vendor after the inventory has been shipped to the purchaser.
B) Sent to the vendor when goods are ordered.
C) Prepared by the purchaser when the goods are received.
D) Sent to the vendor after all approving documents have been submitted.
Check
On October 31, a business pays $1,500 cash for television ads that appeared during
October. Which of the following accounts is debited?
A) Cash
B) Accounts Payable
C) Prepaid Advertising
D) Advertising Expense
Maxwell Tax Planning Service bought communications equipment for $10,200 on
January 1, 2019. The equipment has an estimated useful life of five years and zero
residual value. Maxwell uses the straight-line method to calculate depreciation and
records depreciation expense in the books at the end of each month. As of June 30,
2019, the balance in the Accumulated Depreciation account for this equipment is
________.
A) $170
B) $2,040
C) $850
D) $1,020
Westin Delivery Service, Inc. owns a delivery truck. Which of the following costs,
associated with the truck, will be treated as a revenue expenditure?
A) oil change and lubrication
B) major engine overhaul
C) modification for new use
D) addition to storage capacity
Which of the following principles states that a business’s financial statements must
report enough information for outsiders to make knowledgeable decisions about the
company?
A) conservatism
B) materiality concept
C) disclosure principle
D) consistency principle
Patents, copyrights, and trademarks are examples of ________.
A) short-term investments
B) fixed assets
C) long-term investments
D) intangible assets
A ________ is an example of equity securities.
A) preferred stock
B) municipal bond
C) corporate bond
D) Treasury bill
The worksheet helps accountants to ________.
A) prepare the trial balance
B) prepare the financial statements
C) prepare the unadjusted trial balance
D) maintain books of accounts without a journal
The advance cash receipts of future revenues are called ________.
A) accrued revenues
B) deferred expenses
C) deferred revenues
D) accrued expenses
A company received a bank statement showing a balance of $79,000. Reconciling items
included outstanding checks of $2,300 and a deposit in transit of $9,400. What is the
company’s adjusted bank balance?
A) $67,300
B) $71,900
C) $86,100
D) $69,600
The entry to write off an account receivable under the allowance method will
________.
A) reduce net income
B) have no effect on net income
C) increase total assets
D) increase net income
Midtown, Inc. had the following transactions in 2018, its first year of operations:
• Issued 31,000 shares of common stock. Stock has par value of $1.00 per share and
was issued at $20.00 per share.
• Earned net income of $70,000.
• Paid no dividends.
At the end of 2018, what is total stockholders’ equity?
A) $31,000
B) $690,000
C) $620,000
D) $70,000
An adjusting entry that credits Salaries Payable is an example of a(n) ________.
A) accrued expense
B) deferred revenue
C) accrued revenue
D) deferred expense
Which of the following can be an effect of a transaction that increased an asset of a
corporation for the accounting equation to balance?
A) There is an equal decrease in another asset.
B) There is an equal decrease in equity.
C) There is an equal decrease in a liability account.
D) Both liabilities and equity decrease.
Federal income taxes are ________.
A) deducted to arrive at an employee’s gross pay
B) added to arrive at an employee’s net pay
C) deducted to arrive at an employee’s net pay
D) not borne by the employee
On January 1, 2019, Burton Sales issued $23,000 in bonds for $35,800. These are
eight-year bonds with a stated rate of 9% and pay semiannual interest. Burton Sales
uses the straight-line method to amortize the bond premium. Immediately after the issue
of the bonds, the ledger balances are as follows:
Bonds Payable
Premium on Bonds Payable
After the first interest payment on June 30, 2019, what is the balance of Premium on
Bonds Payable? (Round your intermediate answers to the nearest dollar.)
A) debit of $800
B) debit of $14,400
C) credit of $235
D) credit of $12,000
Which of the following sections of the statement of cash flows include activities that
affect current assets and current liabilities on the balance sheet? (Assume the indirect
method is used.)
A) the investing activities section
B) the financing activities section
C) the operating activities section
D) the non-cash investing and financing section
All State Services, Inc. acquired 100,000 shares of Omega Metals, Inc. on January 1,
2018. Omega pays a cash dividend of $0.25 per share on March 2, 2019. With the
current investment, All State Services, Inc. holds 8% of Omega. In the journal entry on
March 2, 2019, ________.
A) Equity Investments is credited
B) Dividend Revenue is credited
C) Equity Investments is debited
D) Cash Dividends is credited
The asset account, Office Supplies, had a beginning balance of $3,700. During the
accounting period, office supplies were purchased, on account, for $2,500. Supplies
Expense for the accounting period is $4,300. What is the ending balance of Office
Supplies?
A) $6,200
B) $1,900
C) $4,300
D) $5,500
Nick’s Landscaping Services incurred $500 as a repair expense and promised to pay the
repair company within 30 days. Which of the following accounts will increase as a
result of this transaction?
A) Accounts Receivable
B) Cash
C) Accounts Payable
D) Retained Earnings
Which of the following is a basic right of stockholders?
A) Stockholders may sell their stock back to the company if they wish.
B) Stockholders may authorize a business contract on behalf of the corporation.
C) Stockholders may receive dividends from corporate earnings.
D) Stockholders may determine the issue price of common stock.
Corporations pay their own income tax on corporate income. Stockholders pay personal
income tax on the dividends received from corporations. This is an example of
________.
A) double taxation
B) continuous life
C) mutual agency
D) a limited liability company
Which of the following financial statements reports cash receipts and cash payments
during a period of time?
A) Statement of cash flows
B) Balance sheet
C) Cash receipts budget
D) Statement of retained earnings
A stream of equal cash payments made at equal time intervals is called a(n) ________.
A) present value
B) annuity
C) compound interest
D) future value