Calculate, from the following information accumulated by Bob Clark, the adjusted cash
balance at the end of April.
A) $4,000
B) $4,250
C) $4,205
D) $5,500
An employee has gross earnings of $2,000 with withholdings of 6.2% FICA-OASDI,
1.45 % FICA-Medicare, $100 for federal income tax and $30 for state income tax. How
much is the gross pay?
A) $2000.00
B) $781.15
C) $771.15
D) $791.15
Which of the following accounts would appear on the income statement?
A) Accumulated Depreciation
B) Depreciation Expense
C) Fees Earned
D) Both B and C.
Bank service charges would be shown on a bank reconciliation as:
A) addition to the balance per bank statement.
B) deduction from the balance per bank statement.
C) addition to the balance per books.
D) deduction from the balance per books.
Redemption Value is defined as:
A) the price a corporation pays when it reserves the right to retire or redeem stock at a
specific price.
B) the price at which shares are bought and sold on the open market.
C) the total stockholders’ equity minus total amount assigned to preferred stock.
D) the total of stockholders’ equity (when only common stock exists) divided by the
number of shares issued.
Market Value is defined as:
A) the price a corporation pays when it reserves the right to retire or redeem stock at a
specific price.
B) the price at which shares are bought and sold on the open market.
C) the total stockholders’ equity minus total amount assigned to preferred stock
D) the total of stockholders’ equity (when only common stock exists) divided by the
number of shares issued.
A dividend is declared by:
A) the board of directors.
B) president of the corporation.
C) CFO of the corporation.
D) stockholders.
A bond payable:
A) is special type of long-term interest-bearing note payable issued by a corporation to
raise capital.
B) is the annual interest rate based on face value.
C) is the amount to be paid on the maturity date of a bond.
D) is the information on the bond certificate written by the corporation in a formal
agreement.
Gross profit by department appears on the:
A) balance sheet.
B) statement of retained earnings.
C) statement of cash flows.
D) income statement.
There was no accrual for interest on a promissory note receivable; this error would
cause:
A) the period end assets to be overstated.
B) the period end liabilities to be understated.
C) the period’s net income to be overstated.
D) the period’s net income to be understated.
Bob’s Cake House’s payroll for April includes the following data:
The employer’s payroll tax for the period would be:
A) $1,558.
B) $1,434.
C) $1,935.
D) $2,090.
The following normal account balances were found on the general ledger before closing
entries were prepared:
After closing entries are posted, what is the balance in the Cash account?
A) $800
B) $0
C) $300
D) $500.
The ratios that measures a company’s mix of debt and equity financing are known as:
A) Liquidity Ratios.
B) Debt Management Ratios.
C) Profitability Ratios.
D) None of the above
Which tax does not have a wage base limit?
A) State unemployment tax
B) Federal unemployment tax
C) FICA-Medicare
D) FICA-OASDI
Which of the following goods should Pin Department Store include in its December 31
count?
A) Goods available for sale in the warehouse
B) Goods in transit purchased F.O.B. shipping point
C) Goods that have been consigned to Dalton Brothers
D) All of the Above.
The owner of BobCats R Us paid his personal MasterCard bill using a company check.
The correct entry to record the transaction is:
A) credit Cash; debit Capital.
B) credit Cash; debit Supplies Expense.
C) credit Cash; debit Withdrawals.
D) credit Cash; debit Accounts Receivable.
Accumulated Depreciation is found on which of the following financial statements?
A) Balance sheet
B) Income statement
C) Statement of Owner’s Equity
D) All of these answers are correct.
On November 10, Twister Rides issued a 12%, 60-day, $10,000 promissory note.
Twister should record the payment of the note on the maturity day as:
A) debit Notes Payable $10,200; credit Cash $10,200.
B) debit Notes Payable $10,000; debit Interest Expense $200; credit Cash $10,200.
C) debit Notes Payable $10,000; debit Interest Payable $200; credit Cash $10,200.
D) debit Notes Payable $10,000; credit Cash $10,000.
If the overhead applied rate based on direct labor hours is $7.00 and the actual labor
hours are 500, what is the amount credited to Manufacturing Overhead-Applied?
A) $3,500
B) $350
C) $35,000
D) None of the above
Bonds are issued for $80,000 at 12% face value on September 1. The stated interest is
12% and interest is paid on September 1 and March 1. What is the adjusting entry on
December 31?
A)
B)
C)
D)
An overpayment was discovered in computing and paying the wages of a Plum Hollow
Country Club employee. When the employee returns the amount of the overpayment,
Plum Hollow should make which of the following entries?
A) Cash, debit; Wages Expense, credit
B) Wages Payable, debit; Wages Expense, credit
C) Wages Expense, debit; Cash, credit
D) Cash, debit; Wages Payable, credit
If Ol’ Fashioned Toys’ revenues are greater than its expenses during the accounting
period:
A) assets will increase more than liabilities.
B) liabilities will increase more than assets.
C) the business will incur a loss.
D) the business will earn a net income.
The claims of creditors against the assets are:
A) expenses.
B) revenues.
C) liabilities.
D) owner’s equity.
A payment for $51 is incorrectly recorded on the checkbook stub as $15. The $36 error
should be shown on the 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.
If the direct write-off method is used, the debit account to write off an uncollectible is:
A) Accounts Receivable.
B) Bad Debt Expense.
C) Allowance for Doubtful Accounts.
D) Sales.
What would the depreciation expense be in year 5 for a computer system using the
straight-line method when cost is $16,000, residual value is $2,000, and the expected
life is 7 years?
A) $2,000
B) $1,500
C) $1,250
D) $1,000
Credit terms of 2/10, n/30 mean that:
A) a 2% discount is allowed if the bill is paid within between 10 and 30 days.
B) a 2% discount is allowed if the bill is paid within 30 days.
C) a 2% discount is allowed if the bill is paid after 10 days.
D) a 2% discount is allowed if the customer pays the bill within 10 days, or the entry
amount is due within 30 days.
Calculate the cost of goods sold under each of the following methods given the
information below about purchases and sales during the year. Assume a periodic
inventory system. Use four decimal places.
April 1 Beginning inventory 60 units @ $30
11 Purchases 80 units @ $32
21 Purchases 30 units @ $35
Sales for April: 115 units
a) ________ FIFO
b) ________ LIFO
c) ________ Weighted-average
The reversing entry for Salaries is:
A) debit Salaries Expense; credit Salaries Payable.
B) debit Salaries Payable; credit Income Summary.
C) debit Salaries Payable; credit Salaries Expense.
D) debit Salaries Expense; credit Accounts Payable.
The primary difference between the gross method and the net method of recording
invoices is:
A) when the invoice is paid.
B) when the discount is recognized.
C) the gross method is only used when there are no discounts available.
D) the net method does not use a voucher system.
Below is a list of expenses; you are to identify each as either [1] a direct expense or [2]
an indirect expense.
Electricity for the stove in a restaurant. ________
Below is a list of departments; you are to identify each as either [1] a profit center or [2]
a cost center.
The meat department for a food store. ________
Prepare the journal entries for Mayhem Manufacturing:
July 21 Issued 7,000 shares of $10 par common stock for $85,000.
July 29 Issued 2,500 shares of 7%, $35 par preferred stock for equipment with a fair
market value of $95,000.
Prepare the general journal entries to record the following transaction. All purchases are
on account and subject to terms of 2/10, n/30. The perpetual inventory method is in use.
May 5 Purchased merchandise from the Anderson Inc. with a price of $15,000.
May 9 Returned $1,500 worth of merchandise to Anderson Inc.
May 14 Paid the amount due to Anderson Inc.
Prepare the general journal entry for the May 5 transaction.
__________________________________________ __________ __________
__________________________________________ __________ __________
__________________________________________ __________ __________
List and describe some of the electronic conveniences that we are now provided when
doing our banking.
Indicate which effect(s) each situation will have:
1. New check written
2. Recorded in the general journal
3. Recorded in auxiliary petty cash record
4. Petty cash voucher prepared
________ Owner withdrew $1,000 from the company for personal use
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 nature of the
account (permanent/temporary).
Prepare closing entries from the following information on the Warner Books worksheet
income statement columns. Additional information: Withdrawals equal $25 for the
period.
Income Statement
Debit Credit
Income Summary 16 22
Sales 90
Sales Ret. and Allow. 8
Purchases 50
Pur. Ret. and Allow. 8
Sales Salaries Expense 12
Office Salaries Expense 4
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. – Periodic
Debit ________ Credit ________
List four of the six source documents covered in this unit, and explain the function of
each in the accounting process.
Using the following accounts:
[1] Cash
[2] Subscription receivable-common stock
[3] Machinery
[4] Building
[5] Land
[6] Organization costs
[7] Preferred stock
[8] Common stock
[9] Paid in capital in excess of par value – preferred
[10] Paid in capital in excess of par value – common
[11] Common stock subscribed
[12] Discount on common stock
[13] Organization Expense
Indicate the account(s) to be debited and credited to record the following transaction.
Purchased land by exchanging common stock (valuation is above par).
Debit ________ Credit ________ & ________
Prepare journal entries for the following transactions for HO Train Shop applying the
perpetual inventory system. Omit explanations.
Nov. 2 Purchased on account 300 model engines for $3,000.
12 Returned 30 engines for full credit.
19 Sold 40 of the engines to R. Holmes for $800 cash.
25 Paid the balance due on the engines.
Using the following accounts:
[1] Cash
[2] Dividends payable
[3] Preferred stock
[4] Common stock
[5] Common Stock dividend distributable
[6] Paid-in capital in excess of par value-common
[7] Paid-in capital in excess of par value – preferred
[8] Paid-in capital from treasury stock
[9] Retained earnings
[10] Appropriation for plant expansion
[11] Treasury stock
[12] Income summary
[13] Paid-in capital in excess of par value-Stock dividend
Indicate the account(s) to be debited and credited to record the following transactions.
Paid a cash dividend.
Debit ________ Credit ________
Bonds that are unsecured and are issued only on the general credit of a corporation are
called ________ bonds.
Plymouth Sharks Hockey Accessories had the following transactions involving the sale
of merchandise. You are to prepare the necessary general journal entries. All sales are
subject to a 6% sales tax and have a 2/10, n/30 discount terms.
December 2 Sold merchandise priced at $100 to Cathy Norton on account.
December 4 Sold merchandise priced at $125 to a cash customer.
December 10 Payment from Cathy Norton received.
December 16 Cash customer returned $40 worth of merchandise.
Prepare the necessary general journal entry for December 4.
__________________________________________ __________ __________
__________________________________________ __________ __________
__________________________________________ __________ __________