Preferred stockholders have what right over common stockholders?
A) Voting rights
B) Prior claim to dividends
C) More risk than common stockholders
D) Preemptive rights
If management wishes to measure how effectively the assets were used in generating a
profit, they could use the:
A) rate of return on total assets.
B) rate of return on common stockholders’ equity.
C) return on sales.
D) times interest earned.
Each entry in a voucher register includes a:
A) debit to Cash.
B) credit to Vouchers Payable.
C) debit to Purchases Discounts.
D) debit to Vouchers Payable.
When a 10% stock dividend was declared, only the par value was recorded and the
excess over par value was ignored. This error would cause:
A) the period end assets to be overstated.
B) the period end liabilities to be overstated.
C) the period end stockholders’ equity to be overstated.
D) None of these is correct.
Recording the adjustment for supplies will:
A) increase the total liability and increase the total expenses.
B) increase the total assets and increase the total expenses.
C) decrease the total assets and increase the total expenses.
D) decrease the merchandise inventory and decrease the total expenses.
Outstanding checks:
A) have been deducted from the bank balance but not the checkbook records.
B) have not been presented to the bank for payment and have not been subtracted from
the checkbook.
C) have not been presented to the bank for payment but have been subtracted in the
checkbook.
D) have been returned to the business for nonpayment.
When interest payments are made on a bond issued at face value, the journal entry
would include:
A) a debit to Bond Interest Expense.
B) a credit to Cash.
C) a debit to Cash.
D) Both A and B
The administrative department of a mall is a(n):
A) cost center.
B) profit center.
C) investment center.
D) revenue center.
The side that increases the account balance, by the rules of debit and credit, is said to be
the:
A) debit side.
B) credit side.
C) normal balance.
D) None of these answers is correct.
The entry to record the distribution of the stock dividend would include:
A) a debit to Common Stock.
B) a debit to Common Stock Dividend Distributable.
C) a debit to Retained Earnings.
D) None of these answers is correct.
Voting rights are a characteristic of which type stock?
A) Common but not preferred
B) Preferred but not common
C) Both common and preferred
D) Neither common nor preferred
A company has three departments (A, B, and C) and the net sales are $350,000;
$410,000; and $285,000 respectively. The cost of goods sold per department is
$295,000; $360,000; and $245,000 respectively. What department has the highest gross
profit?
A) A
B) B
C) C
D) Both departments A and B
The correct journal entry to record the payment of FUTA is to:
A) debit Cash; credit FUTA Payable.
B) debit FUTA Expense; credit Cash.
C) debit FUTA Payable; credit Cash.
D) debit Cash; credit FUTA Expense.
Complete the following entries by using a “debit” or “credit.”
a) Received payment from a customer. Cash would have a: ________
b) Owner makes an investment of equipment. Capital would have a: ________
c) Paid rent in advance. Prepaid Rent would have a: ________
d) Billed a customer for services rendered. Revenue would have a: ________
e) Paid an advertising bill received last month. Cash would have a: ________
f) Owner withdrew cash. Withdrawals would have a: ________
Jack’s Online Service on April 30 has the following account balances:
If net purchases for the period are $15,000, what is the amount of gross purchases?
A) $18,500
B) $15,500
C) $17,500
D) $16,500
The sale of common stock was recorded as a sale of preferred stock. This error would
cause:
A) the period end stockholders’ equity to be overstated.
B) the period end stockholders’ equity to be understated.
C) no effect on total stockholders’ equity.
D) None of these is correct.
Gross Accounts Receivable is $20,000. Allowance for Doubtful Accounts has a credit
balance of $400. Net credit sales for the year are $125,000. In the past, 2% of credit
sales had proved uncollectible, and an aging of the receivables indicates $1,500 is
doubtful. Under the income statement approach, Bad Debts Expense for the year is:
A) $1,900.
B) $2,900
C) $2,500.
D) $1,100.
The credit purchase of treasury stock was recorded as a purchase. This error would
cause:
A) the period end assets to be overstated.
B) the period end liabilities to be overstated.
C) the period end stockholders’ equity to be overstated.
D) the period end liabilities to be understated.
The accuracy of the statement of cash flows, regardless of method used, can be verified
by computing the change in the balance of:
A) cash.
B) equity.
C) revenue.
D) liabilities.
Heidi’s Accessories bought 50 necklaces for $10 each on account. The invoice included
a 6% sales tax and payment terms of 2/10, n/30. In addition, 5 necklaces were returned
prior to payment. The entry to record the payment (within the discount period) would
include:
A) a credit to Cash for $477.
B) a credit to Cash for $468.
C) a credit to Accounts Receivable for $477.
D) a credit to Accounts Receivable for $468.
The partnership of Smith and Jones, who have average capital balances of $17,000 and
$23,000, respectively, earned $90,000 net income. Under each of the following
independent situations, calculate the distribution of the $90,000.
a) No agreement was established.
b) Share based on their average capital balances.
Indirect expenses are allocated to departments based on:
A) decisions of the stockholders.
B) directives from the board of directors.
C) some reasonable basis, such as percent of sales.
D) generally accepted accounting principles.
A chart of accounts:
A) is set up in alphabetical order.
B) is a list of customer accounts.
C) is a listing of all the accounts used by a company.
D) All of the above are correct.
A contra-asset is:
A) a liability.
B) an asset with a debit balance.
C) an account with an opposite balance of a normal asset.
D) an account that increases the asset.
A calendar quarter is made up of:
A) 4 months.
B) 13 weeks.
C) 12 weeks.
D) however many weeks are needed to complete the month.
Purchase Discounts are taken on:
A) shipping expense.
B) Purchases Returns and Allowances.
C) Purchases.
D) All of the above except B
The process of endorsing a note and transferring it to a financial institution is known as:
A) dishonoring a note receivable.
B) discounting a note receivable.
C) cosigning a note receivable.
D) collecting a note receivable.
There is a limit on the amount of taxes paid for SUTA.
If gross profit exceeds operating expenses, the company:
A) had a net loss.
B) broke even.
C) had a net income.
D) liabilities are greater than gross profit.
Paid-in capital represents:
A) the cumulative earnings of the company.
B) the investments of the owners into the company.
C) the undistributed earnings of the company.
D) None of the above
An employee has gross earnings of $1,200 with withholdings of 6.2% FICA-OASDI,
1.45% FICA-Medicare, $50 for federal income tax and $10 for state income tax. How
much is the net pay?
A) $900.00
B) $781.15
C) $1,048.20
D) $791.15
An example of a cost center is:
A) a Holiday Inn.
B) the restaurant in a motel.
C) the administrative department in a motel.
D) the catering department in a motel.