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1) when the allowance method is used, the write-off of an account receivable results in
an expense at the time of write-off.
2) a journal is an accounting record in which transactions are initially recorded.
3) an effective system of internal control requires that at least two individuals be
assigned to one cash drawer so that each can serve as check on the other.
4) proprietorships in the united states generate more revenue than the other two forms
of business enterprise.
5) if a corporation issued bonds at an amount less than face value, it indicates that the
corporation has a weak credit rating.
6) using the direct method, major classes of investing and financing activities are listed
in the operating activities section.
7) the responsibility for ordering, receiving, and paying for merchandise should be
assigned to different individuals.
8) a trial balance does not prove that all transactions have been recorded or that the
ledger is correct.
9) a loss on disposal of a plant asset occurs if the cash proceeds received from the asset
sale is less than the asset's book value.
10) a decline in the fair value of a trading security is recorded by debiting an unrealized
loss account and crediting the market adjustment account.
11) smithson corporations unadjusted trial balance includes the following balances
(assume normal balances):
bad debts are estimated to be 6% of outstanding receivables. what amount of bad debts
expense will the company record?
a.$134,280
b.$ 91,680
c.$ 89,124
d.$136,836
12) days in inventory is calculated by dividing 365 days by
a.average inventory
b.beginning inventory
c.ending inventory
d.the inventory turnover ratio
13) financial information is presented below:
the gross profit rate would be
a..45
b..55
c..50
d..54
14) working capital is
a.calculated by dividing current assets by current liabilities
b.used to evaluate a companys liquidity and short-term debt paying ability
c.used to evaluate a companys solvency and long-term debt paying ability
d.calculated by subtracting current assets from current liabilities
15) acquired land by issuing common stock of par value $50,000.
4>declared and paid a cash dividend of $1,000.
5>sold a long-term investment (cost $3,000) for cash of $3,000.
6>recorded cash sales of $20,000.
7>bought inventory for cash of $2,000.
8>acquired an investment in ibm stock for cash of $6,000.
9>converted bonds payable to common stock in the amount of $10,000.
10>repaid a 6 year note payable in the amount of $11,000.
what is the net cash provided by operating activities?
a.$20,000
b.$18,000
c.$10,000
d.$8,000
16) here are selected 2012 transactions of howe corporation.
instructions
journalize all entries required on the above dates, including entries to update
depreciation on assets disposed of, where applicable. howe corporation uses
straight-line depreciation.
17) in addition to the three basic financial statements, which of the following is also a
required financial statement?
a.the cash budget
b.statement of cash flows
c.statement of cash inflows and outflows
d.the cash reconciliation
18) the trial balance for greenway corporation appears as follows:
if service for $125 had been performed but not billed, the adjusting entry to record this
would include a:
a.debit to service revenue for $125
b.credit to unearned service revenue for $125
c.credit for service revenue for $125
d.debit to unearned revenue for $125
19) a truck costing $42,000 and on which $35,000 of accumulated depreciation has
been recorded was discarded as having no value. the entry to record this event would
include a
a.gain of $7,000
b.loss of $7,000
c.credit to accumulated depreciation for $35,000
d.credit to accumulated depreciation for $42,000
20) which financial statement is used to determine cash generated from operations?
a.income statement
b.statement of operations
c.statement of cash flows
d.retained earnings statement
21) an adjusting entry can include a:
a.debit to an asset and a credit to a liability
b.debit to a revenue and a credit to an asset
c.debit to a liability and a credit to a revenue
d.debit to an expense and a credit to a revenue
22) which of the following journal entries is recorded correctly and in the basic format?
23) revson corporation purchased land adjacent to its plant to improve access for trucks
making deliveries. expenditures incurred in purchasing the land were as follows:
purchase price, $50,000; brokers fees, $6,000; title search and other fees, $5,000;
demolition of an old building on the property, $5,700; grading, $1,200; digging
foundation for the road, $3,000; laying and paving driveway, $25,000; lighting $7,500;
signs, $1,500. list the items and amounts that should be included in the land account.
instructions
determine the depreciation expense for 2012
24) for analysis of the financial statements, ratios can be classified into three types:
(1)_____________ ratios, (2)_____________ ratios, and (3)______________ ratios.
25) unsecured bonds that are issued against the general credit of the borrower are called
________________ bonds.
26) don foyle deposited $3,000 in an account paying interest of 5% compounded
annually. what amount would be in the account at the end of 4 years?
27) grey boat company often requires customers to sign promissory notes for major
credit purchases. journalize the following transactions for grey boat company.
28) the market adjustment account is a balance sheet account. identify the asset account
it is related to. explain how this account is increased and describe the procedure
followed when its related asset account is disposed of.
29) a plant asset originally cost $48,000 and was estimated to have a $3,000 salvage
value at the end of its 5-year useful life. if at the end of three years, the asset was sold
for $12,000, and had accumulated depreciation recorded of $27,000, the company
should recognize a ______________ on disposal in the amount of $____________.
30) you are provide with the following information for trent company, effective as
of its april 30, 2012, year-end.
accounts payable$ 834
accounts receivable810
buildings, net of accumulated depreciation3,537
cash770
common stock900
cost of goods sold1,500
current portion of long-term debt450
depreciation expense335
dividends paid during the year475
equipment, net of accumulated depreciation1,220
income tax expense265
income taxes payable265
interest expense400
inventory967
land1,600
long-term debt3,500
prepaid expenses12
retained earnings, beginning1,600
revenues7,600
selling expenses310
short-term investments1,200
salaries and wages expense700
salaries and wages payable222
instructions
prepare an income statement and a retained earnings statement for trent company for
the year ended april 30, 2012.
31) hutton company prepared the tabulation below at december 31, 2012.
adjustments to reconcile net income to net cash provided by operating activities:
instructions
show how each item should be reported in the statement of cash flows. use parentheses
for deductions.
