Vouchers Payable is a liability account on the balance sheet.
A profit center and a cost center both generate costs.
The statement of retained earnings does not include the account Preferred Stock.
Nonparticipating preferred stock allows stockholders an opportunity to share in
additional dividends with common stockholders.
One way to determine an overhead application rate is to divide estimated annual direct
labor hours by estimated annual overhead costs.
Deposits that have been added to the bank balance but not the checkbook balance are
called deposits in transit.
The units-of-production method does not take into account the passage of time.
The federal government is responsible for administering an unemployment program for
each state.
Gross profit equals Net Sales minus Cost of Goods Sold.
The goal of closing is to clear all temporary accounts and update Cash.
Form 940 is used by businesses that employ workers in multiple states.
The discount period begins with the date of discount and ends with the maturity date.
Using just a base year and one additional year is not sufficient to do a long-term trend
analysis of accounts.
In a perpetual inventory system, Cost of Goods Sold is not an account in the general
ledger.
A cost of goods manufactured statement should be prepared before the income
statement has been prepared.
Sales Tax Payable represents an asset on the books of the seller.
A bond’s discount is amortized over the term of the bond.
At maturity, the Premium on Bonds will have a balance equal to the original premium.
Assembly costs, and any other costs necessary to get a machine ready for operation,
including freight costs, would be added to the cost of the machine.
The debit side is always the left side of the account.
The maturity value for a $7500, 78-day note at 8% interest is $130.
The Withdrawals account is closed to the Revenue account.
The seller’s sales invoice is the buyer’s purchase invoice.
A purchase of land and buildings would require the use of only one asset account, Land
and Buildings.
It is the year end, but not the pay period end. How will this affect the balance sheet?
A) Assets will be decreased.
B) Liabilities will be increased.
C) Owner’s equity will be increased.
D) This has no effect on the period end balance sheet.
The Wages and Salaries Expense account would be used to record:
A) net earnings for the office workers.
B) a credit to the amount owed for overtime.
C) gross earnings for the office workers.
D) a debit for the amount of net pay owed to the office workers.
The purpose of the accounting process is to provide financial information about:
A) sole proprietorships.
B) small businesses.
C) large corporations.
D) All of these answers are correct.
A corporation purchased 35 shares of treasury stock for $40. The entry to record the
transaction would include a:
A) debit to Cash for $1400.
B) credit to Treasury Stock for $1400.
C) debit to Treasury Stock for $1400.
D) None of these answers is correct.
The adjustment for accrued wages included the entire pay period, some of which occurs
next month. This would:
A) understate the liabilities.
B) overstate the liabilities.
C) overstate net income.
D) None of these is correct.
The adjusted trial balance columns:
A) help to ensure the ledger is still in balance.
B) help to identify any errors that may have been made during adjustment.
C) show updated account balances to aid in preparation of the financial statements.
D) All of the above are correct.
The due date of a promissory note is known as the:
A) discount date.
B) issue date.
C) interest note.
D) maturity date.
The company returned $400 of damaged merchandise purchased on credit. The entry to
record this under the periodic inventory method is:
A) debit Merchandise Inventory $400; credit Accounts Payable $400.
B) debit Cost of Goods Sold $400; credit Accounts Payable $400.
C) debit Accounts Payable $400; credit Purchases Returns and Allowances $400.
D) debit Accounts Payable $400; credit Merchandise Inventory $400.
Dexter Corporation has total paid-in capital of $140,000 and retained earnings of
$90,000. It has 2,000 shares of $10 preferred stock outstanding with no dividends in
arrears and 4,000 shares of $10 par value common stock outstanding. The book value of
each share of common stock is:
A) $52.50.
B) $5.25.
C) $57.50.
D) $38.33.
RH Corporation Stockholders’ Equity section includes the following information:
Total paid-in capital is:
A) $48,000.
B) $55,000.
C) $27,000.
D) $21,000.
The payroll register:
A) is a worksheet.
B) is a journal for recording payroll entries.
C) keeps track of an individual employee’s payroll history for a calendar year.
D) is a log for employees to sign in and out of work.
The term used when the purchaser is responsible for the cost of freight is:
A) F.O.B. shipping point.
B) F.O.B. destination.
C) Freight-In.
D) Purchases.
Which would go into the operating activities section of a statement of cash flows using
the direct method?
A) Depreciation expense
B) Cash paid for inventory
C) Selling of plant, property and equipment
D) All of the above
Plant and Equipment includes which of the following?
A) Mortgage Payable
B) Accounts Receivable
C) Accumulated Depreciation on Equipment
D) All of these are correct.
How do you close a revenue account?
A) Debit Capital; credit Revenue
B) Credit Capital; debit Revenue
C) Credit Income Summary; debit Revenue
D) Debit Income Summary; credit Revenue
The ratio that measures the productivity of total assets used is the:
A) rate of return on total assets.
B) return on sales.
C) inventory turnover.
D) rate of return on common stockholders’ equity.
Describe (a) the function of a promissory note and (b) explain its various parts and
features.
A contra-revenue account with a debit balance for returned goods is called:
A) Sales Returns and Allowances.
B) Sales Discount.
C) the credit period.
D) the discount period.
Wages and Salaries Payable would be used to record:
A) gross earnings of the employees paid.
B) net earnings of the employees not paid.
C) cumulative earnings of the employees
D) the paid portion of the earnings.
Carla’s building expenses, which are indirect, are based on each department’s square
footage. Department A occupies 35,000 square feet. Department B occupies 55,000
square feet, and Department C occupies 10,000 square feet. If the building expenses
total $250,000, how much is allocated to Department B?
A) $83,333
B) $137,500
C) $87,500
D) $25,000
Bank interest earned on a checking account would be shown on a bank reconciliation
as:
A) added to the balance per bank statement.
B) deducted from the balance per bank statement.
C) added to the balance per books.
D) deducted from the balance per books.
A promissory note from the sales of merchandise (periodic)would have which effect on
the categories?
A) Total assets would be increased.
B) Total liabilities would be increased.
C) Owner’s equity would be decreased.
D) None of these answers is correct.
Interest expense is on a merchandise company’s income statement under the heading:
A) Daily Expenses.
B) Operating Expenses.
C) Borrowing Expenses.
D) Other Expenses or Interest Expense.
Record the following transactions in the basic accounting equation:
a. Brian invests $20,000 cash to begin an accounting service.
b. The company buys office furniture for cash, $800.
c. The company buys additional office furniture on account, $200.
d. The company makes a payment on the office furniture, $100.
Brian’s Accounting Service
The depreciation method that does not base the expense on the passage of time but on
the level of use is:
A) units-of-production.
B) straight-line.
C) modified accelerated cost recovery.
D) double declining-balance.
Unemployment taxes are:
A) based on wages paid to employees.
B) based on employer’s payment history.
C) the same for all employers.
D) Both A and B are correct.
The business provided services to a credit customer. To record this:
A) an asset is debited and a liability is credited.
B) an asset is debited and a revenue is credited.
C) an expense is debited and Capital is credited.
D) None of these is correct.
If the debit and credit totals of a trial balance are not equal, it could be due to the
following type of error:
A) Failure to record a transaction
B) Recording the same erroneous amount for both the debit and the credit sides of a
transaction
C) Incorrectly calculating the debit side of the trial balance
D) Recording the same transaction more than once
The information to prepare the Statement of Owner’s Equity comes from the:
A) income statement columns on the worksheet.
B) adjustments columns on the worksheet.
C) balance sheet columns on the worksheet.
D) general ledger.
A debit to a liability account was posted as a debit to a revenue account. This error
would cause:
A) revenues to be understated.
B) liabilities to be understated.
C) revenue to be overstated.
D) None of the above is correct.
When the bank pays a check written by the company, it would:
A) credit the customer’s bank account.
B) debit the customer’s bank account.
C) debit the cash account on the company’s books.
D) No increase or decrease is made to the company’s bank account.
The goal of closing entries does NOT include:
A) to clear revenue and expense accounts.
B) to update the Capital account balance.
C) to clear the Withdrawals account.
D) to adjust assets and liability accounts to their beginning balances.
For each of the following, identify in column 1 the category to which the account
belongs, in column 2 the normal balance for the account, in column 3 the financial
statement that the account in which the account balance is reported, and in column 4 the
account’s nature.
Below is a list of departments; you are to identify each as either [1] a profit center or [2]
a cost center.
The tax offices of a CPA firm. ________
Using the following accounts:
[1] Cash
[2] Bond Sinking fund
[3] Equipment
[4] Building
[5] Land
[6] Accounts payable
[7] Notes payable
[8] Bond payable
[9] Bond interest payable
[10] Premium on bonds payable
[11] Discount on bonds payable
[12] Common stock
[13] Retained earnings
[14] Sinking fund earned
[15] Bond interest expense
[16] Gain on retirement
[17] Loss on retirement
Indicate the account(s) to be debited and credited to record the following transactions.
Sold bonds at a discount.
Debit ________ & ________ Credit ________
Given the following accounts:
[1] Cash
[2] Accounts receivable
[3] Allowance for doubtful accounts
[4] Merchandise inventory
[5] Store supplies
[6] Store equipment
[7] Accumulated depreciation
[8] Notes payable
[9] Accounts payable
[10] Able Partner’s, Capital
[11] Baker Partner’s, Capital
[12] Able Partner’s, withdrawals
[13] Baker Partner’s, withdrawals
[14] Income summary
[15] Service revenue
[16] Gain on realization
[17] Loss on realization
Indicate the account(s) to be debited and credited to record the following transaction.
Able partner withdrew cash from the business.
Debit ________ Credit ________
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement on which the account balance is reported, and in Column 4 the account’s
nature (permanent/temporary).
For each of the following, identify in Column 1 the balance the account will have in the
adjusted trial balance columns (debit or credit), in Column 2 the financial statement
column(s) in which the account balance will be found (income statement or balance
sheet), and in Column 3 the effect the account will have on the determination of net
income (increase, decrease, or none).
Use the account code numbers to identify how the following transactions would be
journalized.
[1] Cash
[2] Accounts Receivable
[3] Allowance for Doubtful Accounts
[4] Bad Debts Expense,
[5] Bad Debts Recovered
Wrote off an account using the direct write off method.
Debit account ________ Credit account ________
All nine transactions for Ross Realty for June, the first month of operation, are recorded
in the following T accounts:
Prepare a trial balance, listing the accounts and their balance in proper order.
Given the following accounts:
[1] Cash
[2] Accounts receivable
[3] Merchandise inventory
[4] Supplies
[5] Accounts payable
[6] Sales
[7] Sales returns and allowances
[8] Sales discounts
[9] Cost of goods sold
[10] Purchases
[11] Purchase returns and allowances
[12] Purchase discounts
[13] Freight-in
Indicate the account(s) to be debited and credited to record the following transactions.
Paid for merchandise after the discount period expired. – Perpetual
Debit ________ Credit ________
On October 1, Oak Company purchased $10,000 of merchandise from City Seed
Company, terms 2/10, n/30, and prepared voucher #222. Oak paid the invoice on
October 15.
Required: Prepare journal entries to record the above transactions. Assume Oak uses the
net method and the periodic inventory system for recording purchases.
Quinn Corporation has 3,000 shares of common stock issued and outstanding. The
board of directors declared a $2.00 per share cash dividend on January 25, payable on
March 25, to stockholders of record on February 25. Prepare the appropriate journal
entries for the declaration and payment of the dividend.
For each of the following, identify in column 1 the category to which the account
belongs, in column 2 the normal balance for the account, and in column 3 the financial
statement on which the account balance is reported.
For each of the following items, indicate (by placing an X) whether the item would be
found on the statement of cash flows in column 1, the direct approach for determining
the cash flows from operating activities, column 2, the indirect approach for
determining the cash flows from operating activities, column 3, cash flows from
investing activities, column 4, cash flows from financing activities. If you identify that
an item affects the cash flows from operation, indirect method, also indicate whether it
will be increasing (+) or decreasing (-) the cash flows.
On December 31, 2015, Landscape Pros had a balance in Accounts Receivable of
$25,000. Net credit sales for the year were $400,000. The Allowance for Doubtful
Accounts has a debit balance of $500. Journalize the recording of the bad debt expense
under the balance sheet approach if $1,210 is the estimated amount of uncollectible
accounts.
Determine the ending owner’s equity of a business having a beginning owner’s equity of
$8,500, additional investments of $600, withdrawals of $1,000, and net income of
$1,200.
$ ________
Below is a list of expenses; you are to identify each as either [1] a direct expense or [2]
an indirect expense.
Paint used by painting department. ________
From the following information calculate total manufacturing costs and cost of goods
manufactured.
Raw Materials Inventory, Sep. 1 $5,000
Raw Materials Inventory, Sep. 30 2,000
Work-in-Process Inventory, Sep. 1 3,000
Work-in-Process Inventory, Sep. 30 1,000
Raw Materials Purchased 6,000
Direct Labor 8,000
Depreciation Expense 5,000
Factory Utilities 2,000
Use the account code numbers to identify how the following transactions would be
journalized.
[1] Cash
[2] Accounts Receivable
[3] Allowance for Doubtful Accounts
[4] Bad Debts Expense,
[5] Bad Debts Recovered
Wrote off an account using an allowance method.
Debit account ________ Credit account ________