Use the information above to answer the following question. What is the amount of
retained earnings on the Balance Sheet at the end of Year 4?
A) $7,725.
B) $6,725.
C) $4,800.
D) $4,725.
A company has a loan that accrues interest at a rate of $20 a day. The company pays the
interest once a quarter. Which of the following adjustments would be made at the end of
a month in which no payment for interest was made?
A) Debit Interest Payable and credit Interest Expense
B) Debit Notes Payable and credit Cash
C) Debit Interest Expense and credit Interest Payable
D) Debit Cash and credit Notes Payable
Inventory shipped FOB shipping point and in transit on the last day of the year should
be included in:
A) the inventory balance of the seller.
B) the inventory balance of the buyer.
C) neither the inventory balance of the buyer or the seller.
D) both the inventory balance of the buyer and the seller.
Use the information above to answer the following question. Which of the following is
the journal entry that will be used to record activity #3?
The following account balances are taken from the December 31, 2015, financial
statements of ABZ Advertising Company. The company uses accrual basis accounting.
The following activities occurred in 2016:
1) Performed advertising services on account, $55,000.
2) Received cash payments on account, $10,400.
3) Received deposits from customers for advertising services to be performed in 2017,
$2,500.
4) Made payments to suppliers on account, $5,000.
5) Incurred $45,000 of operating expenses; $39,000 was paid in cash and $6,000 was on
account and unpaid as of the end of the year.
A) Debit Cash and credit Unearned Revenue for $2,500
B) Debit Unearned Revenue and credit Advertising Revenue for $2,500
C) Debit Cash and credit Accounts Receivable for $2,500
D) Debit Unearned Revenue and credit Receivable for $2,500
An outdoor water park that has a calendar year-end and is located in an area of the
country that has warmer weather during April through September and colder weather
during the rest of the year is likely to have:
A) unpredictable fluctuations in cash flow from quarter to quarter.
B) the largest cash inflow from operating activities in the second and third quarters
(April through September).
C) a fairly stable cash flow across all four quarters.
D) the largest cash inflow from operating activities in the fourth and first quarters
(October through March).
On October 1, Robertson Company sold inventory in the amount of $5,800 to Alberta,
Inc. with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses
a periodic inventory system. The journal entry (or entries) prepared by Robertson on
October 1 is (are):
A) Debit Sales Revenue and credit Accounts Receivable for $5,800.
B) Debit Sales Revenue and credit Accounts Receivable for $5,800; debit Cost of
Goods Sold and credit Inventory for $4,000.
C) Debit Accounts Receivable and credit Sales Revenue for $5,800.
D) Debit Accounts Receivable and credit Sales Revenue for $5,800; Debit Cost of
Goods Sold and credit Inventory for $4,000.
Because interest rates have fallen, a company retires bonds which had been issued at
their face value of $200,000. The company bought the bonds back at 97. The journal
entry to record this retirement includes a debit of:
A) $200,000 to Bonds Payable, a credit of $6,000 to Gain on Bond Retirement, and a
credit of $194,000 to Cash.
B) $194,000 to Bonds Payable, a debit to Gain on Bond Retirement of $6,000, and a
credit of $200,000 to Cash.
C) $200,000 to Bonds Payable, a credit of $6,000 to Interest Expense, and a credit of
$194,000 to Cash.
D) $194,000 to Bonds Payable and a credit of $194,000 to Cash.
The following information is available:
The days to collect for 2016 is closest to:
A) 40 days.
B) 41 days.
C) 43 days.
D) 42 days.
A company would most likely choose the double-declining balance depreciation
method for which of the following long-lived tangible assets?
A) Vehicles
B) Office buildings
C) Warehouses
D) Land improvements
During March, the Long Life Consulting Company provides $23,000 in consulting
services for a customer. The customer paid $12,000; the other $11,000 was on account.
Which of the following statements about these transactions is correct?
A) Cash increases by $12,000, Consulting Revenue increases by $11,000, and Accounts
Receivable increases by $23,000.
B) Cash increases by $12,000, Accounts Receivable increases by $11,000, and
Consulting Revenue increase by $23,000.
C) Accounts Receivable increases by $11,000, Liabilities decrease by $12,000, and
Stockholders’ Equity increases by $1,000.
D) Revenues increase by $12,000, liabilities decrease by $12,000, and stockholders’
equity is unchanged.
Which one of the following is not a current asset?
A) Cash
B) Supplies
C) Equipment
D) Prepaid Insurance
Use the information above to answer the following question. What is the net cash
provided by (used in) investing activities?
A) ($200,000)
B) $420,000
C) $410,000
D) ($190,000)
A company’s number of days to collect is higher than the length of credit period.
Analysts might conclude:
A) customers are dissatisfied with the product or service they bought.
B) the company is effectively managing its receivables.
C) the company’s payment terms have been relaxed and customers are taking advantage
of those new terms.
D) the company’s payment terms have been tightened and customers are paying within
the payment period granted.