Which of the following accounts would be used under the accrual basis of accounting,
but not under cash basis accounting?
A) Cash
B) Unearned Revenue
C) Service Revenue
D) Salaries Expense
The cost of an asset is $1,020,000, and its residual value is $160,000. Estimated useful
life of the asset is five years. Calculate depreciation for the second year using the
double-declining-balance method of depreciation. (Do not round any intermediate
calculations, and round your final answer to the nearest dollar.)
A) $204,000
B) $172,000
C) $344,000
D) $244,800
A merchandiser uses a perpetual inventory system. The beginning Retained Earnings
balance of the merchandiser was $95,000. During the year, Sales Revenue amounted to
$75,000, Cost of Goods Sold was $30,000, and all other expenses totaled $12,000. The
company declared and paid $19,000 as dividends. The last step in the closing process
would include ________.
A) a debit to Income Summary for $33,000
B) a credit to Income Summary for $19,000
C) a debit to the Retained Earnings account for $33,000
D) a debit to the Retained Earnings account for $19,000
The debt to equity ratio of four companies is given below.
Which of the following companies has the greatest financial risk?
A) Lewis, Inc.
B) Jackson, Inc.
C) Jones Corp.
D) Roberts Corp.
A corporation has 20,000 shares of 17%, $50 par cumulative preferred stock
outstanding and 25,000 shares of no-par common stock outstanding. Preferred
dividends of $36,000 are in arrears. At the end of the current year, the corporation
declares a dividend of $208,000. How is the dividend allocated between preferred and
common stockholders?
A) The dividend is allocated $2000 to preferred stockholders and $206,000 to common
stockholders.
B) The dividend is allocated $206,000 to preferred stockholders and $2000 to common
stockholders.
C) The dividend is allocated $208,000 to preferred stockholders and no dividend is paid
to common stockholders.
D) The dividend is allocated $170,000 to preferred stockholders and $38,000 to
common stockholders.
Which of the following is the correct formula to calculate the debt ratio?
A) Debt ratio = Total liabilities × Total assets
B) Debt ratio = Total liabilities + Total assets
C) Debt ratio = Total liabilities – Total assets
D) Debt ratio = Total liabilities / Total assets
Tanglewood, Inc. uses the direct method to prepare its statement of cash flows. Refer to
the following financial statement information for the year ended December 31, 2018:
Tanglewood, Inc.
Comparative Balance Sheet
December 31, 2018 and 2017
Tanglewood, Inc.
Income Statement
December 31, 2018
Use the direct method to compute the payments to suppliers for Merchandise Inventory
and other operating expenses. (Accrued Liabilities relate to other operating expense.)
A) $199,400
B) $179,700
C) $19,700
D) $203,400
A business has the following transactions:
The business received $16,000 cash and issued common stock to stockholders.
The business purchases $700 of office supplies on account.
The business purchases $2,000 of furniture on account.
The business performs services to various clients totaling $13,000 on account.
The business pays out $3,000 for salaries expense and $3,500 for rent expense.
The business pays $700 to a supplier for the office supplies purchased earlier.
The business collects $1,000 from one of its clients for services rendered earlier in the
month.
At the end of the month, all journal entries are posted to the ledger. Accounts Payable
will appear as
which of the following?
A) Accounts Payable
B) Accounts Payable
C) Accounts Payable
D) Accounts Payable
Which of the following is an advantage of enterprise resource planning (ERP) systems?
A) It is inexpensive to implement.
B) It provides financial benefits only to small corporations.
C) It replaces separate software systems, such as sales and payroll.
D) Its implementation requires a small commitment of time and people.
In which of the columns of the worksheet would Net Income be found?
A) the unadjusted trial balance credit column, the adjusted trial balance credit column,
and the balance sheet credit column
B) the unadjusted trial balance debit column, the adjusted trial balance debit column,
and the balance sheet debit column
C) the balance sheet debit column and the income statement credit column
D) the balance sheet credit column and the income statement debit column
Logan Sales provides the following information:
Net credit sales: $790,000
Beginning net accounts receivable: $43,000
Ending net accounts receivable: $20,000
Calculate the accounts receivable turnover ratio. (Round your answer to the nearest
whole number.)
A) 18 times
B) 25 times
C) 40 times
D) 37 times
On January 1, 2018, Waller Sales issued $30,000 in bonds for $23,300. These are
eight-year bonds with a stated rate of 11%, and pay semiannual interest. Waller Sales
uses the straight-line method to amortize the bond discount. After the second interest
payment on December 31, 2018, what is the bond carrying amount? (Round your
intermediate answers to the nearest cent, and your final answer to the nearest dollar.)
A) $24,138
B) $23,719
C) $30,000
D) $23,300
Which of the following assumes that the financial statements of a business can be
prepared for specific periods?
A) matching principle
B) revenue recognition principle
C) time period concept
D) adjusting entry principle
The asset account, Office Supplies had a beginning balance of $5,300. During the
accounting period, office supplies were purchased, on account, for $5,500. A physical
count, on the last day of the accounting period, shows $2,800 of office supplies on
hand. What is the amount of Supplies Expense for the accounting period?
A) $5,500
B) $2,600
C) $8,000
D) $2,500
Which of the following securities pay dividends?
A) corporate bonds
B) common stocks
C) debt securities
D) Treasury bills
The balance in the Bonds Payable is a credit of $74,000. The balance in the Premium on
Bonds Payable is a credit of $1600. What is the bond carrying amount?
A) $1600
B) $75,600
C) $74,000
D) $72,400
A(n) ________ represents stock ownership in another company and sometimes pays
dividends.
A) debt security
B) Treasury bill
C) corporate bond
D) equity security
Which of the following statements about the times-interest-earned ratio is true?
A) A lower ratio indicates a higher debt paying ability.
B) Debt reduction leads to an increase in interest expense.
C) The times-interest-earned ratio is also called the interest-coverage ratio.
D) The times-interest-earned ratio is calculated by dividing gross income by interest
expense.
What is the acid-test ratio for a merchant with the following account balances? (Round
your answer to two decimal places.)
A) 0.77
B) 0.44
C) 0.61
D) 0.84
Which of the following depreciation methods always allocates 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
Dental, Inc. uses the direct method to prepare its statement of cash flows. Refer to the
following financial statement information for the year ended December 31, 2019:
Dental, Inc.
Comparative Balance Sheet
December 31, 2019 and 2018
Dental, Inc.
Income Statement
December 31, 2019
Use the direct method to compute the payments made to employees. (Accrued Liabilities
relate to other operating expense.)
A) $71,400
B) $42,700
C) $24,700
D) $46,700
Which of the following statements is true of an income statement?
A) There is net income when total expenses are greater than total revenues.
B) There is a net loss when total expenses are less than total revenue.
C) There is a net loss when total expenses are greater than total liabilities.
D) There is net income when total revenues are greater than total expenses.
When is a trial balance usually prepared?
A) after each entry is journalized
B) before the financial statements are prepared
C) after the financial statements are prepared
D) at the beginning of an accounting period
A customer’s promise to pay in the future for services or goods sold is called a(n)
________.
A) Accounts Receivable
B) Accounts Payable
C) Unearned Revenue
D) Notes Payable
Landon Jewelers uses the perpetual inventory system. On April 2, Landon sold
merchandise with a cost of $2,500 for $7,000 to a customer on account with terms of
3/15, n/30. The journal entry to record the cost of goods sold would be:
A)
B)
C)
D)
The Income Summary account shows:
a. What does this indicate?
b. Prepare the entry to close Income Summary. Omit explanation.
Which of the following taxes has a ceiling on the amount of annual earnings subject to
tax?
A) FICA—OASDI taxes
B) sales tax
C) federal income tax
D) FICA—Medicare taxes
Which of the following inventory costing methods requires the calculation of a new
average cost after each purchase?
A) specific identification
B) weighted-average
C) last-in, first-out
D) first-in, first-out
Which of the following financial statements lists the entity’s assets, liabilities, and
stockholders’ equity as of a specific date?
A) Balance sheet
B) Statement of retained earnings
C) Income statement
D) Statement of cash flows
A petty cash fund was established with a $350 balance. It currently has cash of $45 and
petty cash tickets totaling $305. Which of the following would be included in the entry
to replenish the fund?
A) a credit to Petty Cash for $305
B) a debit to Petty Cash for $45
C) a credit to Cash for $45
D) a debit to various expenses for $305
Which of the following is the most liquid asset?
A) Building
B) Prepaid Expenses
C) Accounts Receivable
D) Cash
The gross profit percentage is one of the most carefully watched measures of ________.
A) profitability
B) liquidity
C) solvency
D) marketability
Match the accounting position to the job description.
A) Performs reviews of companies to ensure compliance to rules and regulations
B) Compiles financial statements, interacts with auditors, oversees regulatory reporting
C) Specializes in accounting and financial management knowledge
D) Serves the general public
Which of the following statements regarding LIFO is incorrect?
A) The last units in are assumed to be the first units sold.
B) Ending inventory comes from the most recent purchases.
C) This method leaves the oldest costs in ending inventory.
D) LIFO is an assumption about how costs flow.