The balance in the Bonds Payable account is a credit of $16,500. The balance in the
Premium on Bonds Payable account is a credit of $1,000. The balance sheet will report
the bond balance as $15,500.
A source document provides the evidence and data for accounting transactions.
Gain on Disposal of a trading investment is an equity account and is reported in the
Other Revenues and (Expenses) section of the income statement.
Cost of Goods Sold appears on a multi-step income statement but not on a single-step
income statement.
The gross profit percentage is an indicator of how well a company is positioned to pay
off its short-term liabilities.
A company reports in its financial statements that it uses the FIFO method of inventory
costing. This is an example of the disclosure principle.
The statement of cash flows informs users about how much of the earnings were kept
and reinvested in the company.
The cost of a building depends on whether the company is constructing the building or
is acquiring an existing one.
A pharmaceutical company testing drugs to determine possible side effects is a part of
________.
A) monitoring controls
B) information systems
C) control procedures
D) risk assessment
Which of the following is the correct formula for calculating rate of return on total
assets?
A) (Net income + Interest expense) / Average total assets
B) (Net income – Interest expense) / Average total asset
C) (Net income – Interest expense) / Total assets
D) Total equity / Total assets
Campaign Services hired a new accounting manager. He signed a contract for a new
accounting information system, but his position did not specify whether he was
authorized to do so or not.In the above situation, which internal control procedure needs
strengthening?
A) assignment of responsibilities
B) competent, reliable, and ethical personnel
C) separation of duties
D) documents
________ represents a short-term liability created by purchasing “on account.”
A) Accounts Receivable
B) Notes Payable
C) Accounts Payable
D) Expenses
Which of the following sections of the statement of cash flows includes the issuance of
stock and the payment of cash dividends?
A) the investing activities section
B) the financing activities section
C) the operating activities section
D) the non-cash investing and financing section
Under the perpetual inventory system, discounts taken on an invoice by the buyer
would be ________.
A) debited to Merchandise Inventory
B) credited to Merchandise Inventory
C) debited to Cost of Goods Sold
D) credited to Cost of Goods Sold
When inventory costs are declining, which of the following inventory costing method
will result in the lowest ending merchandise inventory?
A) first-in, first-out
B) last-in, first-out
C) weighted-average
D) specific identification
Which of the following qualifies as an extraordinary item?
A) losses due to employee labor strikes
B) losses due to hurricanes in Florida
C) taking of company assets by an foreign government
D) gain on sale of plant assets
Following is an extract of account balances of Wilson Mowing Services as of December
31 of the first year of operation.
What is the amount of total assets at the end of the year?
A) $12,000
B) $27,300
C) $16,000
D) $23,300
Which of the following is true of dividends?
A) Dividends are a distribution of cash, stock, or other property to stockholders.
B) Dividends increase assets and decrease total stockholders’ equity of a corporation.
C) Dividend payments decrease paid-in capital.
D) Dividend payments increase stockholders’ equity.
The purchases journal is a special journal that ________.
A) has special columns for credits to merchandise inventory
B) is used to record all purchases of merchandise inventory
C) has a special column for debits to accounts payable
D) is used to record merchandise inventory, office supplies, and other assets purchased
on account
Posting a transaction means ________.
A) calculating the balance in an account
B) transferring data from the journal to the ledger
C) preparing a summary of account balances
D) finding the account number in the chart of accounts
Firewood, Inc. signed a three-year note payable for $59,000 at 7% annual interest. What
is the interest expense for 2017 if the note was signed on August 1, 2017?
A) $2,065
B) $1,721
C) $12,390
D) $4,130
Property, plant, and equipment are categorized as ________.
A) current assets
B) plant assets
C) long-term investments
D) short-term investments
The Accumulated Depreciation account is ________.
A) a record of the sum of all the depreciation expense recorded
B) the price quoted to the buyer of a used asset
C) an expense account
D) the expense account used to expense the cost of an asset
In 2017, a corporation purchased a small business for $250,000. The market value of
the small business’s assets was $400,000, and the market value of the liabilities was
$200,000. The corporation recorded goodwill of $50,000 at the time of acquisition. At
the end of 2018, it measured goodwill and found it had a remaining fair value of only
$20,000. At year-end 2018, the corporation will ________.
A) record a loss on sale of assets
B) record an impairment loss
C) record accumulated depletion
D) record a gain in goodwill
The contribution of equipment by a stockholder in exchange for common stock is an
example of ________.
A) investing activity
B) financing activity
C) operating activity
D) non-cash investing and financing activity
Which of the following factors is assessed using the debt ratio?
A) expenses
B) revenues
C) risk
D) income
An accounting entry that is characterized by having multiple debits and/or multiple
credits is called a ________ entry.
A) balanced
B) posted
C) chart of accounts
D) compound journal
Buildings, land, and equipment are classified as ________.
A) current assets
B) long-term assets
C) current liabilities
D) long-term liabilities
On January 1, 2017, NOLA Services issued $20,000 of 8% bonds that mature in five
years. The bonds were issued for $20,750. Prepare the journal entry to issue bonds.
On December 31, 2016, Axle Services, Inc. prepared the following accrual adjustment:
The company paid salaries amounting to $1,500 on January 7, 2017 for the two-week
pay period that ended on January 6, 2017. Journalize the entries for January 1, 2017 and
January 7, 2017, assuming the company uses reversing entries.
On December 31, 2016, Jerry’s, Inc. borrowed $500,000 by signing a five-year, 8% note
payable. The note is payable in five yearly installments of $100,000 plus interest, due at
the end of every year beginning on December 31, 2017. What amount represents the
current portion of Long-term Notes Payable at December 31, 2016?
Describe the calculation of cost of goods sold when using the periodic inventory
system.
Supermart, Inc. completed the following treasury stock transactions in 2016:Mar. 3
Purchased 1,800 shares of the company’s $ 3 par value common stock as treasury stock,
paying cash of $ 10 per share.
Mar. 17 Sold 400 shares of the treasury stock for cash of $ 12 per share.
Mar. 25 Sold 600 shares of the treasury stock for cash of $ 7 per share.
(Assume the balance in Paid-In Capital from Treasury Stock Transactions on March 24
is $ 1,200.)Journalize these transactions. Explanations are not required.
How will Supermart, Inc. report treasury stock on its balance sheet as of December 31,
2016?
Connors, Inc. provides the following information for 2017:Net income $180,000
Market price per share of common stock $20.00/shareCommon stockholders’ equity at
Jan. 1, 2017 $1,100,000
Common stockholders’ equity at Dec. 31, 2017 $1,500,000
12% preferred stock outstanding $100,000Calculate return on common stockholders’
equity. (Round to two decimals.)
Tanglewood Clothing Store reported the following selected items at June 30, 2017 (last
year – 2016 – amounts are also given as needed):
Compute Tanglewood’s days’ sales in receivables for 2017. Show your computations.
Bright Lights Electrical, Inc. performed services of $8,000 on January 24 and invoiced
the customer. Bright Lights received the $8,000 on January 31. Provide the journal
entry on January 31 when the cash was received. (Ignore explanation.)
McFadden Clothing Store reported the following selected items at June 30, 2017 (last
year – 2016 – amounts are also given as needed):
Compute McFadden’s accounts receivable turnover ratio 2017. Show your
computations. (Round the answer to 2 decimal places. )