Net pay is the total amount of compensation that an employee takes home after the
deductions are made.
When a corporation retires its shares of treasury stock, the stock certificates are
canceled.
Debit refers to the right side of the T-account, and credit refers to the left side.
When a business uses the straight-line method of depreciation, the amount of
depreciation is reduced from year to year.
In a sole proprietorship, the owner is personally liable for the debts of the business.
When a bond is issued, the issue price is the present value of the interest payments the
bondholder will receive while holding the bond plus the present value of the bond
principal that will be received at maturity.
Nurix, Inc. sold goods on credit terms n/20 to Jelly Harper, Inc. This means no
discounts are offered, and the amount of the invoice is due 20 days after the invoice
date.
A note payable can either be classified as a long-term liability or a short-term liability,
depending on the discretion of the accountant.
Sierra Event Planning Services, Inc. records deferred expenses and deferred revenues
using alternative treatments. It makes adjusting entries as needed to bring its books to
the full accrual basis once a year at the end of the year. On December 15, it collected
$1,000 from a customer in advance for a series of events that will start late December
and end in March. At the end of the year, it had performed approximately 10% of the
services for its customer. The adjusting entry on December 31 will include a debit to
Service Revenue for $900.
In a trial balance, total debits must always equal total credits.
A company that reports a discontinued operation or an extraordinary item must also
report earnings per share for each of these line items in the notes to the financial
statements.
The cost principle requires a business to record the assets acquired, or services received,
at their actual cost.
On the income statement, a service company reports the cost of merchandise inventory
that has been sold to customers.
The goal of the time period concept is to compute an accurate net income or net loss.
Which of the following is the correct order of preparation of financial statements?
A) Income statement statement of retained earnings balance sheet statement of cash
flows
B) Statement of retained earnings balance sheet income statement statement of cash
flows
C) Balance sheet statement of retained earnings income statement statement of cash
flows
D) Balance sheet income statement statement of retained earnings statement of cash
flows
Lerner, Inc. had the following transactions in 2017, its first year of operations:- Issued
22,000 shares of common stock. The stock has a par value of $3.00 per share and was
issued at $16.00 per share.
– Issued 1,800 shares of $160 par value preferred stock at par.
– Earned net income of $37,000.
– Paid no dividends.At the end of 2017, what is total stockholders’ equity?
A) $677,000
B) $354,000
C) $286,000
D) $640,000
Assume the following information for Petra Sales, Inc.:- Common Stock, $1.00 par,
232,000 shares issued, 186,000 shares outstanding
– Paid-In Capital in Excess of Par-Common: $1,770,000
– Retained Earnings: $2,450,000
– Treasury Stock: 26,000 shares purchased at $12 per shareIf Petra Sales purchases an
additional 13,000 shares of treasury stock at $18 per share, what number of shares will
be shown as issued and outstanding?
A) 18 issued; 186,000 outstanding
B) 219,000 issued; 186,000 outstanding
C) 232,000 issued; 173,000 outstanding
D) 232,000 issued; 186,000 outstanding
Happy Farmer, Inc. has 44,000 shares of common stock outstanding and 3,000 shares of
preferred stock outstanding. The common stock is $0.08 par value; the preferred stock
is 8% noncumulative with a $100.00 par value. On October 15, 2017, the company
declares a total dividend payment of $56,000. What is the total amount of dividends that
will be paid to the common stockholders?
A) $56,000
B) $32,000
C) $3,520
D) $24,000
The maturity date for a six-month note issued on January 15 would be ________.
A) July 15
B) July 14
C) July 16
D) July 10
A company has net credit sales of $91,000, beginning net accounts receivable of
$24,000 and ending net accounts receivable of $16,000. Calculate the days’ sales in
receivables. (Round any intermediate calculations to two decimal places, and your final
answer to the nearest whole day.)
A) 61 days
B) 50 days
C) 91 days
D) 80 days
Aurum Services, Inc. acquired 100,000 shares of Gamma Metals, Inc. on January 1,
2017. Gamma pays a cash dividend of $0.25 per share on March 2, 2017. With the
current investment, Aurum Services, Inc. holds 8% of Gamma. In the journal entry on
March 2, 2017, ________.
A) Long-term Investments-Available-for-Sale is credited
B) Dividend Revenue is credited
C) Long-term Investments-Held-to-Maturity is debited
D) Long-term Investments-Available-for-Sale is debited
A posting reference column is used ________.
A) while preparing the trial balance using the ledger
B) when the information is transferred from the journal to the ledger
C) when the information is transferred from the ledger to the post-closing trial balance
D) while preparing the balance sheet using the trial balance
Overton, Inc. had the following transactions in 2017, its first year of operations:- Issued
8,000 shares of common stock. Stock has par value of $0.01 per share and was issued at
$40.00 per share.
– Earned net income of $200,000.
– Paid dividends of $8.00 per share.At the end of 2017, what is total stockholders’
equity?
A) $320,000
B) $456,000
C) $136,000
D) $584,000
When a company collects the face value of a long-term investment in bonds at maturity,
________.
A) total assets and equity of the firm remains unchanged
B) both assets and liabilities of the firm increase
C) both assets and equity of the firm increase
D) liabilities decrease and equity increases
Pluto, Inc. sells tickets in advance for its weekly productions and records the proceeds
as Unearned Revenue. At the end of each month, the company makes an adjusting entry
to account for the tickets used during the month (ticket revenue.) On March 1, the
Unearned Revenue account had a credit balance of $5,000. During March, it sold 600
tickets at $40 each, and 550 tickets were used during the month. What is the balance in
Unearned Revenue at the end of March?
A) credit balance of $7,000
B) debit balance of $5,000
C) credit balance of $5,000
D) debit balance of $7,000
Dividends is a(n) ________ account that has a normal ________ balance.
A) liability; credit
B) equity; debit
C) liability; debit
D) equity; credit
The materiality concept states that a company must ________.
A) report only such information that enhances the financial position of the company
B) perform strictly proper accounting only for significant items
C) report enough information for outsiders to make knowledgeable decisions about the
company
D) use the same accounting methods and procedures from period to period