Double Nickels Company purchased equipment for $9,000 on January 1, 2015. The
company expects to use the equipment for 3 years. It has no salvage value. Monthly
depreciation expense on the asset is
a. $0.
b. $250.
c. $3,000.
d. $9,000.
Answer:
Income from operations appears on
a. both a multiple-step and a single-step income statement.
b. neither a multiple-step nor a single-step income statement.
c. a single-step income statement.
d. a multiple-step income statement.
Answer:
The cost of goods sold during the year was $183,000. Merchandise inventory decreased
by $8,000 during the year and accounts payable decreased by $4,000 during the year.
Using the direct method of reporting cash flows from operating activities, cash
payments for merchandise total
a. $187,000.
b. $179,000.
c. $171,000.
d. $195,000.
Answer:
A journal is not useful for
a. disclosing in one place the complete effect of a transaction.
b. preparing financial statements.
c. providing a record of transactions.
d. locating and preventing errors.
Answer:
The name given to entering transaction data in the journal is
a. chronicling.
b. listing.
c. posting.
d. journalizing.
Answer:
Which of the following is not true regarding a promissory note?
a. Promissory notes may not be transferred to another party by endorsement.
b. Promissory notes may be sold to another party.
c. Promissory notes give a stronger legal claim to the holder than accounts receivable.
d. Promissory notes may be bearer notes and not specifically identify the payee by
name.
Answer:
Powell’s Courier Service recorded a loss of $9,000 when it sold a van that originally
cost $84,000 for $15,000. Accumulated depreciation on the van must have been
a. $78,000.
b. $24,000.
c. $75,000.
d. $60,000.
Answer:
Nord Company had $375,000 of current assets and $150,000 of current liabilities before
borrowing $70,000 from the bank with a 3-month note payable. What effect did the
borrowing transaction have on Nord Company’s current ratio?
a. The ratio remained unchanged.
b. The change in the current ratio cannot be determined.
c. The ratio decreased.
d. The ratio increased.
Answer:
Fat Possum’s Service Shop started the year with total assets of $330,000 and total
liabilities of $240,000. During the year, the business recorded $630,000 in revenues,
$420,000 in expenses, and paid dividends of $60,000.
Stockholders’ equity at the end of the year was
a. $90,000.
b. $240,000.
c. $300,000.
d. $360,000.
Answer:
The per share amount normally assigned by the board of directors to a large stock
dividend is
a. the market value of the stock on the date of declaration.
b. the average price paid by stockholders on outstanding shares.
c. the par or stated value of the stock.
d. zero.
Answer:
Jean’s Vegetable Market had the following transactions during 2014:
1> Issued $50,000 of par value common stock for cash.
2> Repaid a 6 year note payable in the amount of $22,000.
3> Acquired land by issuing common stock of par value $100,000.
4> Declared and paid a cash dividend of $2,000.
5> Sold a long-term investment (cost $3,000) for cash of $8,000.
6> Acquired an investment in IBM stock for cash of $15,000.
What is the net cash provided (used) by investing activities?
a. $15,000
b. $33,000
c. ($7,000)
d. $8,000
Answer:
A proprietorship is a business
a. owned by one person.
b. owned by two or more persons.
c. organized as a separate legal entity under state corporation law.
d. owned by a governmental agency.
Answer:
A list of accounts and their balances at a given time is called a(n)
a. journal.
b. posting.
c. trial balance.
d. income statement.
Answer:
Asset turnover measures
a. how often a company replaces its assets.
b. how efficiently a company uses its assets to generate sales.
c. the portion of the assets that have been financed by creditors.
d. the overall rate of return on assets.
Answer:
The periodicity assumption states that the economic life of a business can be divided
into
a. equal time periods.
b. cyclical time periods.
c. artificial time periods.
d. perpetual time periods.
Answer:
Stewart Corporation’s balance sheet at December 31, 2013, showed the following:
Stewart Corporation’s trading portfolio of stock investments consisted of the following
at December 31, 2013:
During 2014, the following transactions took place:
At year end on December 31, 2014, the fair values per share were:
Instructions
(a) Prepare the journal entries to record the 2014 stock transactions.
(b) On December 31, 2014, prepare any adjusting entry that might be necessary relative
to the trading portfolio.
(c) Show how the stock investments will appear on Stewart Corporation’s balance sheet
at December 31, 2014.
Answer:
Each of the following is a liquidity ratio except the
a. acid-test ratio.
b. current ratio.
c. debt to assets ratio.
d. inventory turnover.
Answer:
If a parent company has two wholly owned subsidiaries, how many legal and economic
entities are there from the viewpoint of the shareholders of the parent company?
Answer:
An accounting record where transactions are initially recorded in chronological order is
called a ________________.
Answer:
Match the items below by entering the appropriate code letter in the space provided.
1> Measures the number of times the inventory sold during the period.
2> Tracks the actual physical flow for each inventory item available for sale.
3> Goods that are only partially completed in a manufacturing company.
4> Cost of goods sold consists of the most recent inventory purchases.
5> Goods ready for sale to customers by retailers and wholesalers.
6> Title to the goods transfers when the public carrier accepts the goods from the seller.
7> Ending inventory valuation consists of the most recent inventory purchases.
8> The same unit cost is used to value ending inventory and cost of goods sold.
9> Title to goods transfers when the goods are delivered to the buyer.
10> The amount that would be paid at the present time to acquire an identical item.
Answer:
Depletion expense is reported in the income statement as an operating expense.
Answer:
Sold a long-term investment (cost $3,000) for cash of $6,000.
Answer: