Normally, companies with low gross profit percentages will have low asset turnover.
The relative proportion of economic resources and obligations would be shown by the
balance sheet.
The Salaries Expense account is a temporary account.
No journal entry is made on the dividend declaration date.
The audit report in the annual report attests to the fairness of the presentation of the
financial statements.
Customer A. Smith owed Stonebridge Electronics $225. On April 27, 2016, Stonebridge
determined this account receivable to be uncollectible and wrote off the account. The
company uses the direct write-off method. On July 15, 2016, Stonebridge received a
check for $225 from the customer. How should the July 15, 2016 transaction be
recorded?
A)
B)
C)
D)
A journal entry for a $50 payment for rent expense was posted as a debit to Salaries
Expense and a credit to Cash. Which of the following statements correctly states the
effect of the error on the trial balance?
A) The sum of the credits will equal the sum of the debits.
B) The sum of the debits will exceed the sum of the credits by $50.
C) The sum of the debits will exceed the sum of the credits by $100.
D) The sum of the credits will exceed the sum of the debits by $100.
When is a trial balance usually prepared?
A) after each entry is journalized
B) before the financial statements are prepared
C) after the financial statements are prepared
D) at the beginning of an accounting period
A merchandiser returned inventory worth $2,000 that was purchased on account. Under
the periodic inventory system, the journal entry to record the return would include
________.
A) a debit to Purchase Returns and Allowances for $2,000 and a credit to Accounts
Payable for $2,000
B) a debit to Accounts Payable for $2,000 and a $2,000 credit to Purchase Returns and
Allowances
C) a debit to Purchases for $2,000 and a credit to Accounts Payable for $2,000
D) a debit to Accounts Payable for $2,000 and a credit to Purchases for $2,000
Which of the following financial statements would be most useful if an analyst wants to
know the profitability of a company?
A) income statement
B) balance sheet
C) statement of retained earnings
D) statement of cash flows
The following transactions for March have been journalized and posted to the proper
accounts.
What is the ending balance in the Service Revenue account?
A) $15,000
B) $8,000
C) $13,000
D) $7,000
On November 1, 2017, McEwing, Inc. declared a dividend of $5.00 per share.
McEwing, Inc. has 20,000 shares of common stock outstanding and no preferred stock.
The date of record is November 15, and the payment date is November 30, 2017. Which
of the following is the journal entry needed on November 30, 2017?
A) Debit Cash Dividends $100,000, and credit Dividends Payable-Common $100,000.
B) Debit Dividends Payable-Common $100,000, and credit Cash $100,000.
C) Debit Cash $100,000, and credit Dividends Payable-Common $100,000.
D) Debit Cash Dividends $100,000, and credit Cash $100,000.
A business receives $40,000 for services that it will perform over the next four months.
Which of the following accounts is credited?
A) Cash
B) Accounts Payable
C) Service Revenue
D) Unearned Revenue
Mars Chemicals Company uses the indirect method to prepare its statement of cash
flows. Refer to the following portion of the comparative balance sheet:Mars Chemicals
Company
Comparative Balance Sheet
December 31, 2017 and 2016
Net Income for the year was $60,000.
Which of the following statements is true of Taylor’s statement of cash flows for 2016?
A) The company issued stocks for $33,000.
B) The company declared $61,000 as dividends.
C) The company purchased treasury stock for $8,500.
D) The net cash flow from financing activities is $178,500.
One of the purposes of the statement of cash flows is to ________.
A) determine the operating income of a business
B) to calculate inventory turnover
C) evaluate the level of debt and leverage of a company
D) predict the ability of a company to pay debts and dividends
Which of the following sections of the statement of cash flows includes activities that
create revenue and expenses of the business?
A) the investing activities section
B) the financing activities section
C) the operating activities section
D) the non-cash investing and financing section
A merchandiser uses a perpetual inventory system. The third step in the process of
closing the accounts of a merchandiser is to ________.
A) make the revenue accounts equal to zero via the Income Summary account
B) make the Income Summary account equal to zero via the Dividends account
C) make the expense accounts equal to zero via the Income Summary account
D) make the Income Summary account equal to zero via the Retained Earnings account
Pluto Corp. sold goods, with a selling price of $17,221, for cash. The state sales tax rate
is 8%. What amount is credited to the Sales Revenue account?
A) $17,221
B) $18,599
C) $1,378
D) $15,843
The Allowance for Bad Debts account has a credit balance of $4,000 before the
adjusting entry for bad debts expense. The company’s management estimates that 4% of
net credit sales will be uncollectible for the year 2017. Net credit sales for the year
amounted to $250,000. What will be the balance of Allowance for Bad Debts on the
December 31, 2017 balance sheet?
A) $10,000
B) $4,000
C) $14,000
D) $9,840
South Meadows, Inc. sold 500 units of inventory at $25 per unit on account. The
company uses the perpetual inventory system. The cost of the units sold was $10 per
unit. Provide the journal entries to record the sale.
On March 1, 2016, Nortons, Inc. paid $60,000 as office rent covering the three-month
period ending May 31, 2016. Journalize the entry on March 1 by using the alternative
treatment of deferred expenses.
A business hired a repair service to overhaul its plumbing system. The repair service
began work on September 15 and completed it on October 15. The business agreed to
pay the service $4,000 when the work was completed. As of September 30, the work
was 50% complete, and the business made an adjusting entry to accrue repair expense
as of the end of September. On October 15, the work was completed, and the repair
service was paid in full. Provide the journal entry for the cash payment on October 15.
(Ignore explanation).
On January 1, 2017, a corporation acquired a truck for $600,000. The residual value
was estimated to be $20,000. The truck can be driven for 50,000 miles over the next
three years. The actual usage of the truck was 8,640 miles for the first year. Calculate
the rate of depreciation to be applied and depreciation for the first year using the
units-of-production method. (Do not round your intermediate calculations.)
Data for Sherman, Inc. are as follows:2017 2016
Net Sales $850,000 $798,000
Cost of Goods Sold 635,000 580,000
Selling and Administrative Expenses 50,000 35,000
Other Expenses 20,000 15,000
Income Tax 40,000 55,000Prepare a horizontal analysis of the comparative income
statement of Sherman, Inc. (Round to one decimal place.) Use a multi-step income
statement.
Refer to the following bank reconciliation:Bank Book
Balance, June 30, 2017 $11,240 Balance, June 30, 2017 $10,200
Add: Add:
Deposit in transit 3,110 Note collected by bank 2,100
Interest revenue 55
Less: Less:
Outstanding checks #506 1,200 NSF check 85
Outstanding checks #510 900 Bank service charge 20
________ ________
Adjusted balance, Adjusted balance,
June 30, 2017 $12,250 June 30, 2017 $12,250Journalize the adjusting entry for the
second reconciling item: Interest revenue.
The following is the adjusted trial balance as of December 31, 2016 of Mason
Photography:
Provide the closing entry for revenues.
On January 1, 2017, Diagem Services issued $140,000 of four-year, 9% bonds when the
market rate was 8%. The bonds were issued at $144,713. Diagem uses the
effective-interest method to amortize the bond premium. Semiannual interest payments
are made on June 30 and December 31 of each year. Prepare the amortization table for
the first four interest payments. (Round your answers to the nearest dollar number.)
A petty cash fund was established with a $300 balance. It currently has cash of $73 and
petty cash tickets totaling $222 for travel expense. Provide the journal entry to record
the replenishment of the fund.