On December 31, 2015, a company had assets of $16 billion and stockholders’ equity of
$8 billion. That same company had assets of $20 billion and stockholders’ equity of $9
billion as of December 31, 2016. During 2016, the company reported total sales
revenue of $9 billion and total expenses of $7 billion. What is the company’s
debt-to-assets ratio on December 31, 2016?
A) 0.55
B) 0.45
C) 0.035
D) 0.01
One major difference between deferral and accrual adjustments is that:
A) accrual adjustments affect income statement accounts and deferral adjustments
affect balance sheet accounts.
B) deferral adjustments increase net income and accrual adjustments decrease net
income.
C) deferral adjustments are made under the cash basis of accounting and accrual
adjustments are made under the accrual basis of accounting..
D) accounts affected by an accrual adjustment always go in the same direction (i.e.,
both accounts are increased or both accounts are decreased) and accounts affected by a
deferral adjustment always go in opposite directions (one account is increased and one
account is decreased).
On October 10, a company paid $12,000 to a supplier. Of that amount, $2,000 was for
supplies received on October 10 and $10,000 was for supplies that were purchased on
account during September. The journal entry to record the $12,000 payment would
include a debit to:
A) Supplies for $10,000, a debit to Accounts Payable for $2,000, and a credit to Cash
for $12,000.
B) Supplies and a credit to Cash for $12,000.
C) Supplies Expense and a credit to Cash for $12,000.
D) Supplies for $2,000, a debit to Accounts Payable for $10,000, and a credit to Cash
for $12,000.
Leanley Co. issues $100,000 of 10-year, 10% bonds on January 1, 2016.
Required:
Determine the amounts (bonds payable, unamortized premium or discount, and bonds
payable, net) that will be reported on a balance sheet prepared as of the date of issuance
of January 1, 2016 under each of the following assumptions:
Part a. The bonds are sold at 100.
Part b. The bonds are sold at 104.
Part c. The bonds are sold at 98.
Which of the following statements about payroll liabilities is correct?
A) Accrued payroll includes liabilities required by law or voluntarily requested by
employees that have not yet been paid (or remitted).
B) Only employees are required to pay FICA taxes.
C) Both employers and employees are required to pay unemployment taxes.
D) Accrued payroll liabilities do not include any voluntary deductions by employees for
charitable contributions or union dues.
A company’s sales are $285,000 and $200,000 during the current and prior years,
respectively. The percentage change is:
A) 42.5%.
B) 70%.
C) 29.8%.
D) 130%.
When a company records depreciation it debits:
A) a liability account and credits Depreciation Expense.
B) Depreciation Expense and credits Cash.
C) Depreciation Expense and credits a contra-asset account.
D) a long-lived tangible asset account and credits Depreciation Expense.
Match the term and the explanation. There are more definitions than terms.
TERM
1) _____ Cash Basis
2) _____ Net Profit Margin
3) _____ Unadjusted Trial Balance
4) _____ Prepaid Expense
5) _____ Unearned Revenue
6) _____ Revenue Recognition Principle
7) _____ Expense Recognition Principle
DEFINITION
A. Reported when a company sells goods or services in the ordinary course of business
for more than it costs to produce.
B. Reporting expenses and revenue according to the time the underlying activities
occur.
C. A list of account balances when the accounts do not yet include all revenues and
expenses.
D. The concept that expenses should be reported at the same time as the related
revenue.
E. The principle that changes in assets must be matched by changes in liabilities and
equity.
F. Also known as net assets, this is the value of assets minus liabilities.
G. An indication that a company has already paid a cost not yet incurred.
H. A company’s policy on when to report revenue in the financial statements.
I. Reporting expenses and revenues according to the time the money is paid or received.
J. A liability account indicating customers have already paid for services not yet
rendered.
K. A ratio that indicates the percent of each revenue dollar that is left over after
covering costs and expenses.
If a company does not have any accumulated other comprehensive income (loss),
stockholders’ equity is the:
A) amount the company received in exchange for all stock issued plus the amount of
Retained Earnings minus the cost of treasury stock.
B) amount the company received for all stock authorized plus the amount of Retained
Earnings and treasury stock.
C) par value the company received for all stock issued plus the amount of Retained
Earnings minus treasury stock.
D) amount the company received for all stock when issued minus the amount of
Retained Earnings and treasury stock.
Use the information above to answer the following question. What would be the amount
of Darling’s payroll check for the first week of January?
Bobby Darling is the only employee of Atlantic Records, Inc. During the first week of
January, Darling earned $800 and had federal and state income tax withholdings of $40
and $15, respectively. FICA taxes are 7.65% on earnings up to $117,000. State and
federal unemployment taxes for the period are $50 and $8, respectively.
A) $683.80
B) $741.80
C) $628.80
D) $625.80
Operating activities include:
A) interest paid on a bank loan
B) the buying or selling of land, buildings, equipment, and other long-term investments.
C) the repayment of loan proceeds to the bank.
D) obtaining a bank loan to cover the payment of wages, rent and other operating costs.
A company purchased land costing $27,000 by paying cash of $6,750 and signing a
90-day note for the balance. The entry to record this transaction would:
A) increase total assets.
B) decrease total liabilities.
C) decrease Common Stock.
D) increase total assets and decrease total liabilities.
The allocation method used for natural resources is similar to which of the following
depreciation methods?
A) Straight-line
B) Units-of-production
C) Double-declining balance
D) MACRS
The normal balance of any account is the:
A) left side.
B) right side.
C) side which increases that account.
D) side which decreases that account.
If a company receives payment when it provides a service:
A) more than one journal entry is always needed.
B) cash will be credited.
C) a revenue account will be increased with a debit.
D) stockholders’ equity will increase.