1) Read the information about Webb Company. What is Webbs net income?
A.$ 1,600
B.$ 2,000
C.$ 2,200
D.$ 2,800
2) All of the following events (transactions) would be identified from standard source
documents except for
A.freight charges for merchandise purchased from suppliers
B.the amount to be paid to settle a lawsuit for discrimination in hiring employees
C.wages to be paid to hourly employees
D.commissions earned by sales employees
3) Use the data presented below which Raines Corp. identified in preparing a bank
reconciliation on October 31, 2014, to answer the questions that follow.
What is the adjusted cash balance on October 31, 2014?
A.$29,600
B.$30,100
C.$30,200
D.$30,700
4) On the balance sheet, the cumulative amount of plant and equipment already
expensed is reported in an account called
A.Accumulated Amortization
B.Accumulated Depreciation
C.Amortization Expense
D.Depreciation Expense
5) An entry made to the right side of an account is called a
A.debit
B.credit
C.double-entry system
D.journal entry
6) The accountant for Rogan Corp. was preparing a bank reconciliation as of February
28, 2014. The following items were identified:
What amount will Rogan report as its adjusted cash balance at February 28, 2014?
A.$12,385
B.$12,500
C.$14,885
D.$17,385
7) Which one of the following statements is true?
A.Recognition is concerned with the dollar amount of each economic effect that should
be reported in the financial statements
B.Measurement is concerned with how economic effects should be quantified
C.The stability concept is concerned with identification of the specific entity for which
economic effects are to be recognized and measured
D.The monetary unit assumption is concerned with the valuation of economic effects in
terms of current purchasing power
8) Significant differences exist in terms on financial statements around the world. For
example, another name for what we know as Additional Paid-In Capital in the U.S. is:
A.Share Capital
B.Capital Reserves
C.Provisions for Other Risks
D.Deferred Income
9) Several transactions are listed below, with the accounting equation stated to the right
side of each. Use the following identification codes to indicate the effects of each
transaction on the accounting equation. Write your answers in the space provided under
the accounting equation. You need an identification code for each element of the
accounting equation. An example is given before the first transaction.
Assets = Liabilities + Owners Equity
Example Common stock is issued to investors in the company I NE___ I______
A) Cash sales are made.
B) Equipment is purchased on credit
C) Payment is made for the equipment purchased on credit _____
D) Sales are made on account. _______ _________ _____________
E) Cash is collected from customers for accounts receivable balances. _______
_________ _____________
F) Dividends are declared and paid to stockholders. _______ _________
_____________
G) Land and a building are acquired in exchange for shares of the companys common
stock. _______ _________ _____________
H) Utility bills are received and recorded; payment will be made later. _______
_________ _____________
10) The payment of accounts payable results in a(n)
A.decrease in liabilities and a decrease in assets
B.decrease in liabilities and an increase in assets
C.increase in liabilities and a decrease in owners equity
D.decrease in liabilities and an increase in owners equity
11) When are revenues and expenses recognized in the same accounting period that
cash receipts and payments occur?
A.Under the cash basis of accounting
B.Under the accrual basis of accounting
C.Under the adjusting method of accounting
D.Under both the cash and accrual bases of accounting
12) The dollar change and percentage change in the accounts receivable account from
2013 to 2014 is calculated for Allison Corporation. This is an example of
A.horizontal analysis
B.vertical analysis
C.profitability analysis
D.solvency assessment
13) Grout, Inc. offers terms of 2/10, n/30 to credit customers. Tile Mart Corp. purchased
100 tile cutters with a list price of $20 each on March 5, 2014, on account.
If Tile Mart Corp. pays the amount of the invoice for its purchase on March 14, 2014,
how much cash will Grout receive from Tile Mart Corp.?
A.$1,764
B.$1,800
C.$1,960
D.$2,000
14) Use the information below for Oakland Inc. for 2013 and 2014 to answer the
following question.
During 2014, Oakland Inc. sold equipment with a cost of $30,000 and accumulated
depreciation of $25,000. A gain of $3,000 was recognized on the sale of the equipment
This was the only equipment sale during the year.
What was depreciation expense for 2014?
A.$ 9,000
B.$16,000
C.$21,000
D.$30,000
15) Morton & Associates
Use the following five transactions for Morton & Associates, Inc. to answer the
question(s).
See the transactions for Morton & Associates.
Based only on these transactions, what is the total amount of expenses that should
appear on the income statement for the month of May?
A.$ 430
B.$ 850
C.$ 1,280
D.$ 1,440
16) When using the indirect method, how is the receipt of cash from the sale of
long-term investments treated on the statement of cash flows?
A.Operating activity
B.Investing activity
C.Financing activity
D.Noncash investing or financing activity