The correct journal entry to record the payment of SUTA is:
A) debit SUTA Expense; credit Cash.
B) debit Cash; credit SUTA Expense.
C) debit Cash; credit SUTA Payable.
D) debit SUTA Payable; credit Cash.
Barkley’s Resort had 2,000 shares of $20 par value common stock outstanding. On June
1, Barkley’s purchased 200 shares of treasury stock for $21 per share and later reissued
them for $22 per share. What amount of profit from the re-issuance will be reported on
the income statement?
A) $400
B) $200
C) $100
D) $0
The left column of a financial statement is often used to:
A) show debits.
B) show credits.
C) show totals.
D) subtotal numbers.
The return of merchandise to the supplier for credit using the perpetual inventory
system would include a:
A) debit to Accounts Receivable and a credit to Accounts Payable.
B) debit to Accounts Payable and a credit to Merchandise Inventory.
C) debit to Sales Returns and Allowances and a credit to Merchandise Inventory.
D) debit to Accounts Payable and a credit to Purchases Returns and Allowances.
Treasury stock was sold above cost; the excess was credited to Gain on Sale. This error
would cause:
A) the period end assets to be overstated.
B) the period end liabilities to be overstated.
C) the total period end stockholders’ equity to be overstated.
D) the period’s net income to be overstated.
Partners Ron and Sandra have $3,000 capital balances and share income and losses in a
2:1 ratio for Ron and Sandra, respectively. Cash equals $1,000, noncash assets are
$10,000, and liabilities are $5,000. If all the noncash assets are sold for $5,500, and
each partner agrees to make up any capital deficits with personal cash contributions,
Sandra eventually will receive cash of:
A) $0.
B) $1,000.
C) $1,500.
D) $2,000.
The characteristic that means the actions of one partner are binding on all other partners
is known as:
A) mutual agency.
B) exclusive agency.
C) unlimited life.
D) limited liability.
A company would use a change fund if:
A) there are cash transactions daily.
B) they want to pay the postage expense without writing a check.
C) the owner wants to make personal withdrawals easily.
D) there are supplies purchased for cash.
Sam received $2,000 in advance for renting part of his building for 4 months. What is
the entry to record the adjustment after one month has passed?
A) Debit Cash; credit Rental Income
B) Debit Cash; credit Unearned Rent Revenue
C) Debit Unearned Rent, credit Rental Income
D) Debit Unearned Rent, credit Cash
An account that would be increased by a credit is:
A) Cash.
B) Prepaid Expense.
C) Utilities Expense.
D) Accounts Payable.
The income summary amounts in the income statement columns of the worksheet
represent:
A) income for the period.
B) adjustment for unearned revenue.
C) closing of the Capital account.
D) beginning and ending inventory.
Katie’s Vegetarian Restaurant, with total assets of $100,000, borrows $20,000 from the
bank. Which of the following is a true statement upon borrowing the money?
A) Total assets are now $120,000.
B) Total assets are now $80,000.
C) Total assets are now $30,000.
D) Total assets are now $75,000.
A fund set up so that a bond can be retired at maturity is called a:
A) bond sinking fund.
B) bond payable fund.
C) stock fund.
D) retirement fund.
When preparing the statement of cash flows by the indirect method, if an accrued
payable decreases, the difference is:
A) added to net income.
B) added to investments.
C) deducted from net income.
D) not considered in the statement of cash flows using the indirect method.
Secret Trails received payment in full within the credit period for horse boarding for
$900 plus 6% sales tax. Terms of the sale were 2/10, n/30. Which entry is required to
record this?
A) Debit Cash, $900; credit Sales, $900
B) Debit Cash, $936; debit Sales Discount $18; credit Accounts Receivable, $954
C) Debit Cash, $954; credit Sales, $954
D) Debit Cash, $936; credit Sales, $936
Which of the following is true of a voucher system?
A) All expenditures such as rent and interest would first be credited to Accounts
Payable before payment is made.
B) Transactions are first entered in the voucher register, then payment is made in the
voucher register.
C) The check register replaces the cash payments journal.
D) Either A or B would be correct.
The different partners are taxed on:
A) the gross revenue of the partnership.
B) the amount they withdraw from the partnership.
C) the total amount of the net profit of the partnership.
D) the partners’ share of the net profit of the partnership.
Net Sales – Cost of Goods Sold is equal to:
A) Net Income from Operations.
B) Operating Expenses.
C) Gross Profit.
D) Gross Expenses.
In the last year of useful life, the salvage value was ignored using double
declining-balance depreciation. This error would cause:
A) the period’s end assets to be overstated.
B) the period’s depreciation expense to be understated.
C) the period end assets to be understated.
D) None of these is correct.
A pay period is defined as:
A) weekly.
B) biweekly.
C) monthly.
D) All of the above are correct.
Salvage value was ignored when originally calculating the units-of-production
depreciation. 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 overstated.
D) None of these is correct.
Before the accounts are adjusted and closed at the end of the year, Accounts Receivable
has a normal balance of $210,000 and Allowance for Doubtful Accounts has a credit
balance $3,000. What is the net realizable value of the accounts receivable?
A) $213,000
B) $207,000
C) $210,000
D) $200,000
The following amounts are on the Bear Sporting Goods worksheet for the month ended
October 31. Required: Calculate the following:
a) Net sales
b) Net purchases
c) Net cost of purchases
d) Cost of goods available for sale
e) Cost of goods sold
f) Gross profit
A
Account Income Statement
Debit Credit
Income Summary 14 12
Sales 60
Sales Returns and Allowances 6
Sales Discounts 2
Purchases 30
Purchases Discount 4
Purchases Returns and Allowances 2
Freight-In 4
When interest payments are made on a discounted bond, a portion of the discount is:
A) depreciated.
B) depleted.
C) amortized.
D) transferred to reduce the interest expense.
Under the direct method of the statement of cash flows, cash paid for salaries would
result in:
A) a decrease 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) a decrease of cash flow from financing activities.
Liquidity is:
A) how quickly loans can be paid.
B) how easily an asset can be converted to cash.
C) how much cash a company has on its balance sheet.
D) how quickly customers pay.
Purchases Discount:
A) is a contra-cost account.
B) has a normal debit balance.
C) decreases Net Income.
D) All of the above are correct.
Fit City estimates it will collect $3,300 of the $3,525 owed by customers. The $3,300 or
the estimated collectible amount is called:
A) the Net Realizable Value.
B) the Bad Debts Allowance.
C) the Allowance for Doubtful Accounts.
D) the Gross Accounts Receivable.
The liability account used to record sales tax owed is:
A) Sales Tax Expense.
B) Prepaid Taxes.
C) Sales Tax Payable.
D) Sales.
For which of the following taxes is there a ceiling on the amount of employee annual
earnings subject to the tax?
A) Federal unemployment taxes
B) State unemployment taxes
C) FICA-OASDI
D) All of these answers are correct.