1) benefits are extra compensationitems that are not paid directly to an employee.
2) if a merchandiser uses the periodic inventory system, it is necessary to conduct a
physical count of inventory to determine the quantity of inventory on hand.
3) the times-interest-earned ratio is also called the short interest ratio.
4) while preparing the statement of cash flows using the indirect method, a loss on the
sale of plant assets must be shown as a subtraction from the investing activities section.
5) bonds are short-term debt issued to multiple lenders called bondholders, usually in
increments of $1,000.
6) a company has net credit sales of $95,000, beginning net accounts receivable of
$20,000 and ending net accounts receivable of $18,000. calculate the days’ sales in
receivables.
a) 60 days
b) 48 days
c) 58 days
d) 73 days
7) which of the following is an important internal control over payroll?
a) separating the duties of the disbursement of paychecks from the recording of payroll
transactions in the ledger
b) separating the duties of safeguarding property from record-keeping of property
c) separating the duties of approving invoices from signing disbursement checks
d) separating the duties of cash disbursement from bank reconciliations
8) a business repays the amount borrowed on a note payable by cash. which of the
following accounts will be debited?
a) cash
b) bank
c) notes payable
d) notes receivable
9) the employees of kostner financial services inc. worked the last two weeks of
december, 2014. they received their paychecks on january 2. which of the following
accounts should appear on the income statement for the year ended december 31, 2014,
as per the matching principle?
a) salary expense
b) prepaid expense
c) salaries payable
d) unearned revenue
10) which of the following liabilities is created when a company receives cash for
services to be provided in the future?
a) unearned revenue
b) accrued liability
c) accounts payable
d) estimated warranty payable
11) which of the following items is a measure of a company’s ability to collect
receivables?
a) inventory turnover ratio
b) current ratio
c) days’ sales in receivables
d) account receivable balance
12) on the first day of january, maywood inc. borrowed $2,000 on a one-year note
payable bearing interest at 4% per year. the note specifies that principal and interest
must be paid in full at the end of the one-year period. on june 30, the adjusted trial
balance will show interest payable of ________.
a) $40 credit
b) $40 debit
c) $80 credit
d) $80 debit
13) on the ________, cash dividends become a liability of a corporation.
a) declaration date
b) date of record
c) end of the fiscal year
d) payment date
14) a company purchased inventory for $2,000 from a vendor on account, fob shipping
point, with terms of 2/10, n/30. the company paid the shipper $100 cash for freight in.
the company then returned damaged goods worth $200. the invoice has been paid 8
days after the sale. assuming that there was no beginning inventory balance, the cost of
inventory would be: (assume a perpetual inventory system)
a) $1,764
b) $1,864
c) $2,100
d) $1,900
15) the time period concept states that ________.
a) financial statements can be prepared for specific periods
b) all expenses should be recorded when they are incurred during the period
c) companies should record revenue when it has been earned
d) expenses incurred during a period should be matched against the revenues of the
period
16) which of the following is an issue that must be addressed in the internal controls for
e-commerce?
a) encryption
b) firewall
c) phishing expeditions
d) separation of duties
17) which of the following depreciation methods writes off a higher amount of
depreciation in earlier years than in later years?
a) the units-of-production method
b) the straight-line method
c) the double-declining-balance method
d) the first-in, first-out method
18) which of the following is an intangible asset?
a) copyright
b) building
c) land
d) equipment
19) revival corporation’s annual report is as follows.
based on the information provided above, find the earnings per share of revival
corporation as of march 31, 2015.
a) $-2.20
b) $2.20
c) $1.81
d) $1.49
20) henderson sales sold 400 units of product to a customer on account. the selling price
was $28 per unit, and the cost, according to the company’s inventory records, was $14
per unit. provide the journal entry to record the cost of goods sold. (assume a perpetual
inventory system.)
21) iverycoast inc. purchased a van on january 1, 2015, for $800,000. estimated life of
the van was 5 years, and its estimated residual value was $90,000. iverycoast uses the
straight-line method of depreciation. give journal entry to record the purchase of van for
cash.
22) on january 1, 2015, zade manufacturing corporation purchased a machine for
$40,000,000. the corporation expects to use the machine for 24,000 hours over the next
6 years. the estimated residual value of the machine at the end of the sixth year is
$40,000. the schedule of usage of the machine is as below.
prepare the depreciation schedule using the units-of-production method of depreciation.
23) applied foods corp. had cash sales of $598,000 during the month of august. sales
taxes of 6.5% were collected on the sales. prepare a compound journal entry to record
the sales revenue and sales tax for the month.
24) pluto inc. purchased inventory on account for $6,500. provide the journal entry to
record the purchase of inventory on account. (assume a perpetual inventory system.)
25) on january 1, 2015, anderson tools company purchases property of $300,000 by
paying $50,000 in cash and signing a 10-year mortgage note at 13% for the balance. the
amortization schedule shows that the company will pay $46,072 per year. journalize the
first yearly payment on january 1, 2016.
26) the balance sheet of atlantis inc. is below:
atlantis inc.
comparative balance sheet
december 31, 2016 and 2015
20162015
assets
total current assets$200,000$100,000
property, plant, and equipment, net550,000500,000
other assets50,00050,000
total assets$800,000$650,000
liabilities
total current liabilities$150,000$100,000
long-term debt350,000250,000
total liabilities500,000350,000
stockholders’ equity
total stockholders’ equity300,000300,000
total liabilities and stockholders’ equity$800,000$650,000
calculate working capital for both years.
27) rodriguez tint inc. uses the indirect method to prepare its statement of cash flows.
refer to the following portion of the comparative balance sheet:
rodriguez inc.
comparative balance sheet
december 31, 2014 and 2013
28) portian merchandisers has purchased merchandise on account and paid $450 for
freight in. give the journal entry for freight paid. (assume a perpetual inventory system)
