At June 30, Yaddof Company has the following bank information: cash balance per
bank $1,800; outstanding checks $340; deposits in transit $275; credit memo for
interest $75; bank service charge $10. What is Mareska’s adjusted cash balance on June
30?
a. $1,735
b. $1,800
c. $1,810
d. $1,865
Answer:
Revenue is recognized when cash dividends are received under
a. the controlling interest method.
b. the cost method.
c. the equity method.
d. both the cost and equity methods.
Answer:
For each of the following accounts, indicate (a) the type of adjusting entry (prepaid
expense, accrued revenue, etc.) and (b) the related account in the adjusting entry.
1> Depreciation Expense
2> Salaries and Wages Payable
3> Service Revenue
4> Supplies
5> Unearned Service Revenue
Answer:
Financing activities involve
a. lending money.
b. acquiring investments.
c. issuing debt.
d. acquiring long-lived assets.
Answer:
Inventories are estimated
a. more frequently under a periodic inventory system than a perpetual inventory system.
b. using the wholesale inventory method.
c. more frequently under a perpetual inventory system than the periodic inventory
system.
d. using the net method.
Answer:
The debt to assets ratio is computed by dividing
a. long-term liabilities by total assets.
b. total liabilities by total assets.
c. total assets by total liabilities.
d. total assets by long-term liabilities.
Answer:
Freight terms of FOB shipping point mean that the
a. buyer must bear the freight costs.
b. seller must debit freight out.
c. goods are placed free on board at the buyer’s place of business.
d. seller must bear the freight costs.
Answer:
Mofro’s Computer Repair Shop started the year with total assets of $300,000 and total
liabilities of $200,000. During the year, the business recorded $500,000 in computer
repair revenues, $300,000 in expenses, and Mofro paid dividends of $50,000.
Stockholders’ equity at the end of the year was
a. $200,000.
b. $100,000.
c. $250,000.
d. $300,000.
Answer:
On October 1, 2015, Holt Company places a new asset into service. The cost of the
asset is $120,000 with an estimated 5-year life and $30,000 salvage value at the end of
its useful life. What is the depreciation expense for 2015 if Holt Company uses the
straight-line method of depreciation?
a. $4,500
b. $24,000
c. $6,000
d. $12,000
Answer:
The comparative condensed income statements of Marks Corporation are shown below.
Instructions
(a) Prepare a horizontal analysis of the income statement data for Marks Corporation
using 2015 as a base. (Show the amounts of increase or decrease.)
(b) Prepare a vertical analysis of the income statement data for Marks Corporation in
columnar form for both years.
Answer:
During 2015, Parker Enterprises generated revenues of $90,000. The company’s
expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000
and a loss on the sale of equipment of $3,000.
Parker’s net income is
a. $24,000.
b. $27,000.
c. $45,000.
d. $90,000.
Answer:
Dixon Company purchases 1,000 shares of its common stock for $20,000. The $20,000
amount should be debited to
a. an asset account.
b. Treasury Stock.
c. Common Stock.
d. Retained Earnings.
Answer:
Which one of the following is not necessary in order for a corporation to pay a cash
dividend?
a. Adequate cash
b. Approval of stockholders
c. Declaration of dividends by the board of directors
d. Retained earnings
Answer:
The statement of cash flows should help investors and creditors assess each of the
following except the
a. entity’s ability to generate future income.
b. entity’s ability to pay dividends.
c. reasons for the difference between net income and net cash provided by operating
activities.
d. cash investing and financing transactions during the period.
Answer:
“GAAP” refers to
a. General Accounting and Auditing Principles.
b. Guidelines for American Accounting Procedures.
c. General Association of Accounting Practitioners.
d. None of these answer choices are correct.
Answer:
Which one of the following is not an enhancing quality of useful information?
a. Timeliness
b. Understandability
c. Materiality
d. Comparability
Answer:
A corporation issues $500,000, 8%, 5-year bonds on January 1, 2015 for $479,000.
Interest is paid semiannually on January 1 and July 1. If the corporation uses the
straight- line method of amortization of bond discount, the amount of bond interest
expense to be recognized on July 1, 2015 is
a. $42,100.
b. $20,000.
c. $22,100.
d. $17,900.
Answer:
Lifetime sells softball equipment. On November 14, they shipped $3,000 worth of
softball uniforms to Palos Middle School, terms 2/10, n/30. On November 21, they
received an order from Tinley High School for $1,800 worth of custom printed bats to
be produced in December. On November 30, Palos Middle School returned $300 of
defective merchandise. Lifetime has received no payments from either school as of
month end. What amount will be recognized as net accounts receivable on the balance
sheet as of November 30?
a. $2,700
b. $3,000
c. $4,500
d. $4,800
Answer:
Assume the following sales data for a company:
If 2014 is the base year, what is the percentage increase in sales from 2014 to 2015?
a. 76.9%
b. 30%
c. 40%
d. 71.4%
Answer:
Jenner Company had the following transactions pertaining to its short-term stock
investments.
Instructions
Journalize the transactions.
Answer:
The four subdivisions of stockholders’ equity are: ________________,
________________, ________________, and ________________.
Answer:
Omission of a prepaid expense adjusting entry will have the following effects:
Answer:
Six internal control principles related to cash transactions are discussed in the textbook.
These principles, with code letters, are:
Instructions: Match the above principles to the following applications related to cash
receipts and cash disbursements by placing the code in the space provided. Each code
letter can be used once, more than once, or not at all.
____ 1> Cash is received by one employee and recorded in the accounting records by
another.
____ 2> Daily cash counts should be made by cashier department supervisors.
____ 3> Payments are approved by one employee while the disbursement is made by
another.
____ 4> All checks are pre-numbered.
____ 5> Only the treasurer is authorized to sign checks.
____ 6> Cash register tapes are used for over-the-counter receipts.
____ 7> Each check is compared with an approved invoice before being issued.
____ 8> Employee hours are tracked using a time clock.
____ 9> All personnel who handle cash should be bonded.
____ 10> Inventory is stored in a locked warehouse with restricted access.
Answer:
These financial statement items are for Rugen Company at year-end, July 31, 2015.
Instructions
[a] Prepare an income statement and a retained earnings statement for the year.
Stockholders not make any new investments during the year.
[b] Prepare a classified balance sheet at July 31.
Answer:
When the disposal of a significant component occurs, the income statement should
report both income from continuing operations and income (loss) from discontinued
operations.
Answer: