In a period of rising costs, the last-in, first-out (LIFO) method results in lower cost of
goods sold and higher net income than the first-in, first-out (FIFO) method.
If treasury shares are sold for less than their cost, the difference is recorded as a loss.
A company that is controlled by another corporation is called a parent company.
A subsidiary ledger is a record of accounts that provides supporting details on
individual balances, the total of which appears in a general ledger account.
Local, state, and federal governments use accounting information to calculate income
taxes.
The current ratio shows the profitability of a firm.
FICA tax is paid by the employee only.
The total cost spent on inventory that was available to be sold during a period is called
the cost of goods sold.
Free cash flow is calculated by adding cash payments planned for investments in
long-term assets and cash dividends to the amount of net cash provided by operating
activities.
At the end of each accounting period, trading securities must be adjusted and reported
at fair value.
Net income is entered as the balancing amount on the debit side of the income
statement columns and the credit side of the balance sheet columns of the worksheet.
Under U.S. GAAP, which of the following is not an acceptable way to report plant
assets?
A) at fair market value
B) at book value
C) as a single amount, with a note to the financial statements that provides detailed
information
D) with detailed information on the face of the balance sheet
Which of the following statements is true of a sole proprietorship?
A) A sole proprietorship joins two or more individuals as co-owners.
B) The sole proprietor is personally liable for the liabilities of the business.
C) A sole proprietorship is taxed separately from the owner.
D) A sole proprietorship has to pay business income taxes.
A company sold merchandise with a cost of $231 for $480 on account. The seller uses
the perpetual inventory system. The entry to record the cost of merchandise sold would
include ________.
A) a debit to Sales Revenue and a credit to Cash for $480
B) a debit to Cash and a credit to Sales Revenue for $480
C) a debit to Cost of Goods Sold and a credit to Merchandise Inventory for $231
D) a debit to Merchandise Inventory for $231 and a credit to Cost of Goods Sold for
$231
Rearranging plain-text messages by a mathematical process is known as ________.
A) password
B) phishing
C) encryption
D) virus
Atlantis, Inc. reported the following data:
The horizontal analysis shows that cost of goods sold has ________. (Round your
answer to two decimal places.)
A) increased by 29.35%
B) decreased by 29.35%
C) increased by 42.08%
D) decreased by 42.08%
Accounts Payable is a(n) ________ account and has a normal ________ balance.
A) liability; debit
B) asset; debit
C) liability; credit
D) asset; credit
A check of $300,000, deposited by a company, was returned to the bank for
nonsufficient funds. How would this information be included on the bank
reconciliation?
A) a deduction on the bank side
B) an addition on the bank side
C) an addition on the book side
D) a deduction on the book side
Which of the following describes a secured bond?
A) a bond that matures in installments at regular intervals
B) a bond that is backed by issuer’s specific assets
C) a bond that matures at one specified time
D) a bond that is not backed by specific assets
On January 1, 2017, Agee Company issued $85,000 of five-year, 8% bonds when the
market interest rate was 12%. The issue price of the bonds was $62,401. Agee uses the
effective-interest method of amortization for bond discount. Semiannual interest
payments are made on June 30 and December 31 of each year. Which of the following
is the correct journal entry to record the first interest payment? (Round all amounts to
the nearest whole dollar.)A)
B)
C)
D)
A company that uses the perpetual inventory system sold goods to a customer on
account for $2,100. The cost of the goods sold was $1,050. Which of the following
journal entries correctly records this transaction?A)
B)
C)
D)
On March 1, 2016, Baker Services issued a 5% long-term notes payable for $21,000. It
is payable over a 3-year term in $7,000 annual principal payments on March 1 of each
year plus interest, beginning March 1, 2017. How will the notes payable be shown on
the balance sheet dated December 31, 2016?
A) $21,000 shown as current liability only
B) $7,000 shown as current liability and $21,000 shown as long-term liability
C) $7,000 shown as current liability and $14,000 shown as long-term liability
D) the entire $21,000 shown as long-term liability
At the beginning of 2017, Elixir, Inc. has the following account balances:Accounts
Receivable $40,000 (debit balance)
Allowance for Bad Debts $5,000 (credit balance)
Bad Debts Expense $0During the year, credit sales amounted to $850,000. Cash
collected on credit sales amounted to $760,000, and $18,000 has been written off. At
the end of the year, the company adjusted for bad debts expense using the
percent-of-sales method and applied a rate, based on past history, of 2.5%. The ending
balance in the Allowance for Bad Debts is ________.
A) $5,000
B) $3,250
C) $6,000
D) $8,250
Which of the following assumes that financial statements of a business can be prepared
for specific periods?
A) matching principle
B) revenue recognition principle
C) time period concept
D) adjusting entry principle
Under the perpetual inventory system, what is the difference between a sales return and
a sales allowance?
A) A sales return reduces the amount receivable from the customer, but a sales
allowance does not.
B) A sales return involves an adjustment to Merchandise Inventory, but a sales
allowance does not.
C) A sales return requires a debit to Sales Returns and Allowances, but a sales
allowance does not.
D) A sales return is not deducted from sales revenue to calculate net sales, but a sales
allowance is deducted from sales revenue.
Camile Plastics Company had the following total assets, liabilities, and equity as of
December 31.
What is the company’s debt ratio as of December 31? (Round your percentage answer
to two decimal places.)
A) 30.70%
B) 69.30%
C) 100.00%
D) 44.30%
What is the acid-test ratio for a merchant with the following account balances? (Round
your answer to two decimal places.)
A) 0.75
B) 0.41
C) 0.60
D) 0.81
Revenues and expenses are transferred to the ________ account before their final
transfer into the Retained Earnings account.
A) Net Income
B) Income Summary
C) Dividends
D) Assets