Any person or business to whom a business owes money is called the business’s
creditor.
Under the perpetual inventory system, purchase returns or allowances are debited to the
Merchandise Inventory account by the purchaser.
The journal entry to open a new petty cash fund includes a debit to the Petty Cash
account and a credit to the Cash account.
The price/earnings ratio shows the market price of $1 of earnings.
Given the same purchase and sales data, and assuming the cost of inventory is rising,
the costing methods for inventory will result in different amounts for net income.
If the current replacement cost of inventory is less than its historical cost, the business
must adjust the inventory value.
Journal entries that are necessitated by reconciling items on the book side of the
reconciliation include either a debit to Cash or a credit to Cash.
Defective, damaged, or otherwise unsuitable merchandise that is returned to the seller is
referred to as purchase allowances by the purchaser.
The direct write-off method of accounting for uncollectible receivables is primarily
used by small, nonpublic companies.
If bonds with a face value of $209,000 are issued at 93, the amount of cash proceeds is
________.
A) $208,907
B) $209,000
C) $194,370
D) $179,740
A business purchases $3,500 of office supplies for cash. Which of the following sets of
ledger accounts reflects the posting of this transaction?
A)
B)
C)
D)
Blanchard, Inc. provided the following for 2017:
Calculate the company’s inventory turnover ratio for the year. (Round your answer to
two decimal places.)
A) 3.94 times per year
B) 3.82 times per year
C) 3.71 times per year
D) 1.91 times per year
Delivery expense is a(n) ________.
A) administrative expense
B) part of Cost of Goods Sold
C) operating expense
D) overhead expense
Diamond Investments, Inc. purchased 40% of the common stock of Ivory Corporation
on March 1, 2016. Ivory Corporation reports a net income of $675,000 for the year
2017. Which of the following is true of the balance sheet on December 31, 2017?
A) Total assets will remain unchanged.
B) Total liabilities will decrease.
C) Total equity will increase.
D) Cash will increase.
The activities that are included in the operating activities section of the statement of
cash flows are ________.
A) activities that involve stockholders’ equity
B) activities that create revenue or expenses
C) activities that increase or decrease long-term assets
D) activities that pertain to construction of new facilities
The vertical analysis statement of Bateman, Inc. is as shown below:Bateman, Inc.
Comparative Income Statement
Years Ended December 31, 2017 and 2016
The figure 47.0% shown for gross profit in 2017 signifies that the gross profit is
________.
A) equal to 47.0% of net income
B) increased by 47.0% over the previous year
C) 47.0% of net sales revenue
D) 47.0% of cost of goods sold
At the beginning of 2017, Smoothie Town, Inc. has the following account
balances:Accounts receivable $44,000 (Debit)
Allowance for Bad Debts $7,000 (Credit)During the year, credit sales were $820,000.
Cash collected on credit sales was $750,000, and $18,000 was written off. Smoothie
Town uses the aging-of-receivables method to record bad debts expense. The amount
estimated as uncollectible was $26,000. The amount of Bad Debts Expense for 2017 is
________.
A) $37,000
B) $26,000
C) $11,000
D) $8,000
A security is a ________.
A) regulation dealing with the transactions of investments
B) system aimed at protecting the interests of the market participants
C) share or interest representing financial value
D) process related to the valuation of a financial instrument
On January 1, 2016, Alldredge Company purchased equipment and signed a six-year
mortgage note for $186,000 at 15%. The note will be paid in equal annual installments
of $49,148, beginning January 1, 2017. Calculate the portion of interest expense paid on
the third installment. (Round your answer to the nearest whole number.)
A) $49,148
B) $21,048
C) $27,900
D) $164,752
Castle, Inc. had the following transactions in 2017, its first year of operations:- Issued
20,000 shares of common stock. The stock has a par value of $3.00 per share and was
issued at $19.00 per share.
– Issued 2,000 shares of $200 par value preferred stock at par.
– Earned net income of $40,000.
– Paid no dividends.At the end of 2017, what is the total amount of paid-in capital?
A) $820,000
B) $460,000
C) $380,000
D) $780,000
The financial statements for Myers Service Company include the following items:
Compute the acid-test ratio for 2016. (Round your answer to two decimal places)
A) 0.88
B) 0.80
C) 0.92
D) 0.71