Blank checks
a. should be safeguarded.
b. should be pre-signed.
c. do not need to be safeguarded since they must be signed to be valid.
d. should not be prenumbered.
Answer:
For companies that use a perpetual inventory system, all of the following are purposes
for taking a physical inventory except
a. to check the accuracy of the records.
b. to determine the amount of wasted raw materials.
c. to determine losses due to employee theft.
d. to determine ownership of the goods.
Answer:
Soundgarden Company collected $18,200 in May of 2015 for 5 months of service
which would take place from October of 2015 through February of 2016. The revenue
reported from this transaction during 2015 would be
a. $0.
b. $7,280.
c. $10,920.
d. $18,200.
Answer:
The current ratio is
a. current assets plus current liabilities.
b. current assets minus current liabilities.
c. current assets divided by current liabilities.
d. current assets multiplied by current liabilities.
Answer:
Which of the following statements concerning taxation is accurate?
a. Partnerships pay state income taxes but not federal income taxes.
b. Corporations pay federal income taxes but not state income taxes.
c. Corporations pay federal and state income taxes.
d. Only the owners must pay taxes on corporate income.
Answer:
Prepare the journal entries to record the following transactions for Ogleby Company
which has a calendar year end and uses the straight-line method of depreciation.
a) On September 30, 2015, the company exchanged old delivery equipment and
$36,000 for new delivery equipment. The old delivery equipment was purchased on
January 1, 2013, for $126,000 and was estimated to have a $18,000 salvage value at the
end of its 5-year life. Depreciation on the delivery equipment has been recorded
through December 31, 2014. It is estimated that the fair value of the old delivery
equipment is $54,000 on September 30, 2015.
(b) On June 30, 2015, the company exchanged old office equipment and $40,000 for
new office equipment. The old office equipment originally cost $80,000 and had
accumulated depreciation to the date of disposal of $35,000. It is estimated that the fair
market value of the old office equipment on June 30 was $60,000. The transaction has
commercial substance.
Answer:
All of the following are reported as current liabilities except
a. accounts payable.
b. bonds payable.
c. notes payable.
d. unearned revenues.
Answer:
If stock is issued for less than par value, the account
a. Paid-In Capital in Excess of Par is credited.
b. Paid-In Capital in Excess of Par is debited if a debit balance exists in the account.
c. Paid-In Capital in Excess of Par is debited if a credit balance exists in the account.
d. Retained Earnings is credited.
Answer:
Under IFRS, equity is described as each of the following except
a. retained equity.
b. shareholders’ funds.
c. owners’ equity.
d. capital and reserves.
Answer:
The accounts receivable turnover is computed by dividing
a. total sales by average net accounts receivable.
b. net credit sales by average net accounts receivable.
c. total sales by ending net accounts receivable.
d. net credit sales by ending net accounts receivable.
Answer:
TNT has the following transactions during April of the current year. Indicate
(a) the effect on the accounting equation and (b) the debit-credit analysis.
Answer:
Each of the following are particularly interested in the statement of cash flows except
a. creditors.
b. employees.
c. shareholders.
d. government agencies.
Answer:
Flite Corporation has issued common stock only. The company has been successful and
has a gross profit rate of 20%. The information shown below was taken from the
company’s financial statements.
Instructions
Compute the following:
(a) Accounts receivable turnover and the average collection period.
(b) Inventory turnover and the days in inventory.
(c) Return on common stockholders’ equity.
Answer:
Inventory items on an assembly line in various stages of production are classified as
a. Finished goods.
b. Work in process.
c. Raw materials.
d. Merchandise inventory.
Answer:
Rooney Company incurred $560,000 of research and development cost in its laboratory
to develop a patent granted on January 1, 2015. On July 31, 2015, Rooney paid $84,000
for legal fees in a successful defense of the patent. The total amount debited to Patents
through July 31, 2015, should be:
a. $560,000.
b. $84,000.
c. $644,000.
d. $476,000.
Answer:
Which of the following statements is true?
a. Trading securities are debt securities that the investor has the intent to hold to
maturity.
b. Trading securities are securities bought and held primarily for sale in the near term.
c. Trading securities are securities that may be sold in the future.
d. Trading securities are reported at cost in the balance sheet.
Answer:
A company purchased factory equipment on April 1, 2015 for $160,000. It is estimated
that the equipment will have a $20,000 salvage value at the end of its 10-year useful
life. Using the straight-line method of depreciation, the amount to be recorded as
depreciation expense at December 31, 2015 is
a. $16,000.
b. $14,000.
c. $10,500.
d. $12,000.
Answer:
If Vickers Company issues 5,000 shares of $5 par value common stock for $175,000,
a. Common Stock will be credited for $175,000.
b. Paid-In Capital in Excess of Par will be credited for $25,000.
c. Paid-In Capital in Excess of Par will be credited for $150,000.
d. Cash will be debited for $150,000.
Answer:
Which of the following adjustments to convert net income to net cash provided by
operating activities is not added to net income?
a. Gain on Sale of Equipment
b. Depreciation Expense
c. Patent Amortization Expense
d. Depletion Expense
Answer:
The IFRS standard dealing specifically with revenue recognition is based on
a. whether the revenue is realized or realizable.
b. whether the revenue is earned.
c. whether the revenue is realized or realizable, and earned.
d. the probability that economic benefits will flow to the company, and reliability of
measurement.
Answer:
The statement of cash flows
a. is prepared instead of an income statement under generally accepted accounting
principles.
b. is used to assess an entity’s ability to pay dividends and meet obligations.
c. is prepared from comparative income statements.
d. reflects earnings per share figures on a cash basis and on an accrual basis in the body
of the statement.
Answer:
A post-closing trial balance should be prepared
a. before closing entries are posted to the ledger accounts.
b. after closing entries are posted to the ledger accounts.
c. before adjusting entries are posted to the ledger accounts.
d. only if an error in the accounts is detected.
Answer:
Inventoriable costs may be thought of as a pool of costs consisting of which two
elements?
a. The cost of beginning inventory and the cost of ending inventory
b. The cost of ending inventory and the cost of goods purchased during the year
c. The cost of beginning inventory and the cost of goods purchased during the year
d. The difference between the costs of goods purchased and the cost of goods sold
during the year
Answer:
(a) Identify the three activities that pertain to a petty cash fund, and indicate an internal
control principle that is applicable to each activity. (b) When are journal entries required
in the operation of a petty cash fund?
Answer:
The resale of treasury stock for an amount greater than its cost
a. increases net income.
b. increases total assets and decreases total stockholders’ equity.
c. decreases total assets and increases total stockholders’ equity.
d. increases total assets and increases total stockholders’ equity.
Answer:
Venti Corporation had income from continuing operations of $420,000 for the year
ended December 31, 2015. It also had the following items (before income taxes):
1> Extraordinary flood loss of $100,000.
2> Loss of $50,000 on discontinuance of a division.
All items are subject to income taxes at a 25% tax rate.
Instructions
Prepare a partial income statement, beginning with income from continuing operations.
Answer:
The ledger is merely a bookkeeping device and therefore does not provide much useful
data for management.
Answer:
Instructions: Place a check in the appropriate columns to designate whether each of the
following accounts: (1) has a debit or credit normal balance; and (2) is an asset,
liability, or stockholders’ equity account.
Answer:
Accounting communicates financial information about a business enterprise to both
internal and external users.
Answer:
Dividends may be declared and paid in cash or stock.
Answer: