On the statement of cash flows worksheet,
a. significant noncash investing and financing activities are not entered in the
reconciling columns.
b. a decrease in cash will be offset by a debit in the reconciling items columns at the
bottom of the worksheet.
c. an increase in cash will be offset by a debit in the reconciling items column at the
bottom of the worksheet.
d. income statement accounts are listed after balance sheet accounts in the top half of
the worksheet under the indirect method.
Answer:
The interest charged on a $90,000, 3-month note payable, at the rate of 8%, would be
a. $7,200.
b. $3,600.
c. $1,800.
d. $1,200.
Answer:
Merriweather Post Pavillion received a $820 check from a customer for the balance
due. The transaction was erroneously recorded as a debit to Cash $280 and a credit to
Service Revenue $280. The correcting entry is
a. debit Cash, $820; credit Accounts Receivable, $820.
b. debit Cash, $540 and Accounts Receivable, $280; credit Service Revenue, $820.
c. debit Cash, $540 and Service Revenue, $280; credit Accounts Receivable, $820.
d. debit Accounts Receivable, $820; credit Cash, $540 and Service Revenue, $280.
Answer:
Allowance for Doubtful Accounts on the balance sheet
a. is offset against total current assets.
b. increases the cash realizable value of accounts receivable.
c. appears under the heading “Other Assets.”
d. is offset against accounts receivable.
Answer:
Remington Company discovered the following errors made in January 2015
1> A payment of salaries and wages of $1,000 was debited to Equipment and credited
to Cash, both for $1,000. Remington recorded $200 of depreciation on this
“equipment”.
2> A collection of $3,000 from a client on account was debited to Cash $300 and
credited to Service Revenue $300.
3> The purchase of supplies on account for $840 was debited to Supplies $480 and
credited to Accounts Payable $480.
4> The purchase of short-term investments for $1,500 cash was debited to Prepaid Rent
and credited to Cash. At year end, $500 of the “prepaid rent” was recorded as rent
expense.
Instructions
[a) Correct the errors by reversing the incorrect entry and preparing the correct entry.
[b) Correct the errors without reversing the incorrect entry.
Answer:
A dividend is
a. a distribution of the company’s earnings to its stockholders.
b. equal to liabilities minus stockholders’ equity.
c. equal to assets minus stockholders’ equity.
d. equal to revenues less expenses
Answer:
Outstanding stock of the Core Corporation included 20,000 shares of $5 par common
stock and 10,000 shares of 6%, $10 par noncumulative preferred stock. In 2014, Core
declared and paid dividends of $4,000. In 2015, Core declared and paid dividends of
$12,000. How much of the 2015 dividend was distributed to preferred shareholders?
a. $8,000
b. $4,000
c. $6,000
d. None of these answers are correct
Answer:
Intangible assets include each of the following except
a. copyrights.
b. goodwill.
c. land improvements.
d. patents.
Answer:
If bonds are originally sold at a discount using the straight-line amortization method:
a. Interest expense in the earlier years of the bond’s life will be less than the interest to
be paid.
b. Interest expense in the earlier years of the bond’s life will be the same as interest to
be paid.
c. Unamortized discount is subtracted from the face value of the bond to determine its
carrying value.
•Unamortized discount is added to the face value of the bond to determine its
carrying value.
•
Answer:
The right side of an account is always
a. the debit side.
b. the credit side.
c. the balance of that account.
d. carried forward to the next accounting period.
Answer:
Match the following terms and definitions.
a. Accounts receivable
b. Creditor
c. Accounts payable
d. Note payable
_______ (1) Amounts due from customers
_______ (2) Amounts owed to suppliers for goods and services purchased
_______ (3) Amounts owed to bank
_______ (4) Party to whom money is owed
Answer:
All revenue and expense items are considered ordinary in nature under
a. both IFRS and GAAP.
b. GAAP.
c. IFRS.
d. neither IFRS or GAAP.
Answer:
If a corporation has only one class of stock, it is referred to as
a. classless stock.
b. preferred stock.
c. solitary stock.
d. common stock.
Answer:
Additional paid-in capital includes all of the following except
a. paid-in capital from treasury stock.
b. paid-in capital in excess of par.
c. paid-in capital in excess of stated value.
d. paid-in capital in excess of book value.
Answer:
The income statement and balance sheet columns of Iron and Wine Company’s
worksheet reflect the following totals:
To enter the net income (or loss) for the period into the above worksheet requires an
entry to the
a. income statement debit column and the balance sheet credit column.
b. income statement credit column and the balance sheet debit column.
c. income statement debit column and the income statement credit column.
d. balance sheet debit column and the balance sheet credit column.
Answer:
An unrealized loss on trading securities is reported under Other
____________________ on the income statement.
Answer:
To be faithfully representative, accounting information should predict future events,
confirm prior expectations, and be reported on a timely basis.
Answer:
An effective system of internal control requires that at least two individuals be assigned
to one cash drawer so that each can serve as check on the other.
Answer:
The adjusted trial balance of Dailey Music Company appears below. Dailey Music
Company prepares monthly financial statements and uses the perpetual inventory
method.
Instructions
Complete the worksheet below.
Answer:
The ledger account balances for Galaxie 500 Company are listed below.
Instructions
Prepare a trial balance in proper form for Galaxie at December 31, 2015.
Answer:
The trial balance of Red House Painters shown below does not balance.
An examination of the ledger and journal reveals the following errors:
1> Each of the above listed accounts has a normal balance per the general ledger.
2> Cash of $270 received from a customer on account was debited to Cash $720 and
credited to Accounts Receivable $720.
3> A dividend of $400 was posted as a credit to Dividends $400 and credit to Cash
$400.
4> A debit of $300 was not posted to Salaries and Wages Expense.
5> The purchase of equipment on account for $700 was recorded as a debit to
Maintenance and Repairs Expense and a credit to Accounts Payable for $700.
6> Services were performed on account for a customer, $510, for which Accounts
Receivable was debited $510 and Service Revenue was credited $51.
7> A payment on account for $235 was credited to Cash for $235 and credited to
Accounts Payable for $253.
Instructions
Prepare a correct trial balance.
Answer:
If a revenue account is credited, the revenue account is increased.
Answer:
The safeguarding of assets is an objective of a company’s system of internal control.
Answer:
A survey of major U.S. companies revealed that 77% of those
companies used either LIFO or FIFO cost !ow methods, while 19%
used average cost, and only 4% used other methods.
Answer: