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:
In developing the cash flows from operating activities, most companies in the U. S.
a. use the direct method.
b. use the indirect method.
c. present both the indirect and direct methods in their financial reports.
d. prepare the operating activities section on the accrual basis.
Answer:
Fetherston Company’s goods in transit at December 31 include:
Which items should be included in Fetherston’s inventory at December 31?
a. (2) and (3)
b. (1) and (4)
c. (1) and (3)
d. (2) and (4)
Answer:
Postage stamps on hand are considered to be
a. cash.
b. petty cash.
c. cash equivalents.
d. a prepaid expense.
Answer:
When a seller grants credit for returned goods, the account that is credited is
a. Sales Revenue.
b. Sales Returns and Allowances.
c. Inventory.
d. Accounts Receivable.
Answer:
The following items are taken from the financial statements of the Postal Service for the
year ending December 31, 2015:
The sub-classifications for assets on the company’s classified balance sheet would
include all of the following except
a. Current Assets.
b. Property, Plant, and Equipment.
c. Intangible Assets.
d. Long-term Assets.
Answer:
A company has an average inventory on hand of $60,000 and the days in inventory is
73 days. What is the cost of goods sold?
a. $300,000
b. $4,380,000
c. $600,000
d. $2,190,000
Answer:
The following selected account balances appear on the December 31, 2015 balance
sheet of Superchunk Co.
What is the total amount of property, plant, and equipment that will be reported on the
balance sheet?
a. $1,210,000
b. $1,435,000
c. $1,510,000
d. $1,850,000
Answer:
Spa Company uses the direct method in determining net cash provided by operating
activities. The income statement shows income tax expense $85,000. Income taxes
payable were $35,000 at the beginning of the year and $20,000 at the end of the year.
Cash payments for income taxes are
a. $70,000.
b. $85,000.
c. $100,000.
d. $140,000.
Answer:
The depreciation method that applies a constant percentage to depreciable cost in
calculating depreciation is
a. straight-line.
b. units-of-activity.
c. declining-balance.
d. None of these answers are correct.
Answer:
The final step in solving an ethical dilemma is to
a. identify and analyze the principal elements in the situation.
b. recognize an ethical situation.
c. identify the alternatives and weigh the impact of each alternative on stakeholders.
d. recognize the ethical issues involved.
Answer:
Noble Company had net income of $175,000 and net sales of $625,000 in 2015. The
company’s total assets for 2014/2015 averaged $4,000,000. Its common stockholders’
equity for the period averaged $2,340,000. Calculate (a) profit margin, (b) return on
assets, and (c) return on common stockholders’ equity.
Answer:
An accountant has debited an asset account for $1,200 and credited a liability account
for $500. What can be done to complete the recording of the transaction?
a. Nothing further must be done.
b. Debit a Stockholders’ equity account for $700.
c. Debit another asset account for $700.
d. Credit a different asset account for $700.
Answer:
Under IFRS, comprehensive income may be displayed (reported) in
a. the equity section of the statement of financial position.
b. the one-statement or the two-statement approach.
c. two-statement approach only.
d. the retained earnings statement.
Answer:
When journalizing, the reference column is
a. left blank.
b. used to reference the source document.
c. used to reference the journal page.
d. used to reference the financial statements.
Answer:
Posting is the process of
a. preparing a chart of accounts.
b. adding a column of figures.
c. transferring journal entries to ledger accounts.
d. recording entries in a journal.
Answer:
A company would not acquire treasury stock
a. in order to reissue shares to officers.
b. as an asset investment.
c. in order to increase trading of the company’s stock.
d. to have additional shares available to use in acquisitions of other companies.
Answer:
Each of the following is reported for common stock except the
a. par value.
b. shares issued.
c. shares outstanding.
d. liquidation value.
Answer:
The Duce Company has five plants nationwide that cost a total of $100 million. The
current fair value of the plants is $500 million. The plants will be recorded and reported
as assets at
a. $100 million.
b. $600 million.
c. $400 million.
d. $500 million.
Answer:
The major IFRS requirements related to accounting for and reporting inventories are
a. the same as GAAP.
b. the same as GAAP with a couple of exceptions.
c. completely different from GAAP.
d. not comparable to GAAP.
Answer:
FICA taxes do not provide workers with
a. life insurance.
b. supplemental retirement.
c. employment disability.
d. medical benefits.
Answer:
The cash balance per books for Feagen Company on September 30, 2015 is $10,740.93.
The following checks and receipts were recorded for the month of October, 2015:
In addition, the bank statement for the month of October is presented below:
Check No. 18 was correctly written for $708.62 for a payment on account. The NSF
check was from S. Long, a customer, in settlement of an accounts receivable. An entry
had not been made for the NSF check. The credit memo is for the collection of a note
receivable including interest of $60 which has not been accrued. The bank service
charge is $25.00.
Instructions
(a) Prepare a bank reconciliation at October 31.
(b) Prepare the adjusting journal entries required by the bank reconciliation.
Answer:
The Income statement is
a. required under GAAP but not under IFRS.
b. required under IFRS in the same format as under GAAP.
c. required under IFRS but not under GAAP.
d. required under IFRS with some differences as compared to GAAP.
Answer:
Which of the following companies would be least likely to use a worksheet to facilitate
the adjustment process?
a. Large company with numerous accounts
b. Small company with numerous accounts
c. All companies, since worksheets are required under generally accepted accounting
principles
d. Small company with few accounts
Answer:
The ______________ principle gives accountants guidance as to when revenue is to be
recorded.
Answer:
Under a perpetual inventory system, the cost of goods sold is determined each time a
sale occurs.
Answer:
It is generally recognized that a major objective of accounting for inventory is the
proper determination of ______________.
Answer:
The effective-interest method of amortization results in varying amounts of
amortization and interest expense per period but a constant interest rate.
Answer:
Alistair Corporation sells 500 shares of common stock being held as a short-term
investment. The shares were acquired six months ago at a cost of $55 a share. Alistair
sold the shares for $40 a share. The entry to record the sale is
Answer: