John contributed $6,000 to the business by opening a bank account in the name of the
business, United Internists. The corporation issued common stock to John. This
transaction results in an increase in the assets of the business.
Most corporations set par value low and issue common stock at a premium.
When using the effective-interest amortization method, the amount of the interest
expense is calculated using the face value of the bonds and the market interest rate.
Dividends received from available-for-sale investments are recorded with a debit to the
Dividend Revenue account.
Discontinued operations and extraordinary items are reported without consideration of
the income tax effects.
The liability created when a business collects cash from its customers before
completing a service or delivering a product is called ________.
A) accrued revenue
B) accrued expense
C) deferred revenue
D) deferred expense
Sharon Foods, Inc. reported the following transactions for September 2017.a) The
business received $22,000 cash and issued common stock. It was credited to Common
Stock.
b) The business purchased office equipment for $9,000 for which $2,500 cash was paid
and the balance was put on a note payable.
c) Paid insurance expense of $1,500 cash.
d) Paid the September utility bill for $900 cash.
e) Paid $1,500 cash for September rent.
f) The business had sales of $11,000 in September. Of these sales, 60% were cash sales,
and the balance was credit sales.
g) The business paid $8,000 cash for office furniture.What are the total liabilities at the
end of September, 2017?
A) $11,000
B) $1,500
C) $6,500
D) $9,000
Up-to-date Merchandisers has the following transactions for the month of July.
Calculate Gross Profit.
A) $54,000
B) $97,000
C) $115,000
D) $140,000
Jenkins Realty, Inc. issued 7,000 shares of $9 stated value common stock for $16 per
share. The journal entry to record this transaction includes a credit to ________.
A) Common Stock for $112,000
B) Paid-In Capital in Excess of Stated – Common for $63,000
C) Common Stock – $9 Stated Value for $49,000
D) Paid-In Capital in Excess of Stated – Common for $49,000
A business renders services to a customer for $26,000 on account. Which of the
following accounts is credited?
A) Cash
B) Accounts Receivable
C) Service Revenue
D) Accounts Payable
A business renders services for $26,000 and collects cash from the customer. Which of
the following accounts will be debited?
A) Cash
B) Accounts Receivable
C) Service Revenue
D) Accounts Payable
Neutral Paints Company uses the direct method for preparing its statement of cash flow.
Neutral reports the following information regarding 2017:From the income statement:
Sales Revenues, $266,000
Cost of Goods Sold, $215,000
Operating Expenses, $37,000From the balance sheet:
What amount will be shown for payments to suppliers for operating expenses?
(Accounts Payable are for purchases of merchandise inventory only, and Accrued
Liabilities relate to operating expenses.)
A) $39,900
B) $37,000
C) $35,500
D) $41,400
Which of the following is a characteristic of a corporation?
A) A corporation is owned by stockholders.
B) Lenders of a corporation do not have the right to claim the corporation’s assets to
satisfy their obligations.
C) All shares of a corporation must be held by a single individual.
D) Each stockholder has the authority to commit the corporation to a binding contract
through his/her actions.
An oil well cost $2,020,000 and is calculated to hold 260,000 barrels of oil. There is no
residual value. Which journal entry is needed to record the expense for the extraction of
45,000 barrels of oil during the year? All 45,000 barrels were sold ding the year.
(Round any intermediate calculations to the nearest cent, and your final answer to the
nearest dollar.)A)
B)
C)
D)
Which of the following statements is true if a bond is issued for an amount higher than
face value?
A) The bond’s stated interest rate is less than the prevailing market interest rate at time
of sale.
B) The bond’s stated interest rate is the same as the prevailing market interest rate at
time of sale.
C) The bond’s stated interest rate is more than the prevailing market interest rate at time
of sale.
D) The bond is not secured by specific assets of the issuer.
Which of the following accounts increases with a debit?
A) Cash
B) Interest Payable
C) Accounts Payable
D) Common Stock
On January 1, 2017, Walker Sales issued $30,000 in bonds for $23,300. These are
eight-year bonds with a stated rate of 11%, and pay semiannual interest. Walker Sales
uses the straight-line method to amortize the bond discount. After the second interest
payment on December 31, 2017, what is the bond carrying amount? (Round your
intermediate answers to the nearest cent, and your final answer to the nearest dollar.)
A) $24,138
B) $23,719
C) $30,000
D) $23,300
Bliss Corporation settles a liability by making a payment in cash. How does paying this
liability affect the accounting equation of the business?
A) assets and liabilities decrease
B) liabilities decrease and equity increases
C) assets and liabilities increase
D) assets increase and equity decreases
The balance in the Bonds Payable account is a credit of $67,000. The balance in the
Discount on Bonds Payable account is a debit of $3,350. What is the bond’s carrying
amount?
A) $3,350
B) $70,350
C) $67,000
D) $63,650
The ________ is a set of programs or instructions that drive the computer to perform
the work desired.
A) network
B) hardware
C) software
D) router
Analyze each of the following transactions in terms of their effects on the accounting
equation of Hawkins Delivery Service. Enter the correct amounts in the columns of the
spreadsheet.
a) James Hawkins contributes $75,000 to the business. The business issues common
stock to James.
b) The business purchases $750 of office supplies on account.
c) The business pays cash to purchase a delivery van for $25,000.
d) Services are performed for clients and $5,000 cash is received.
e) Cash is paid for office rent expense, $800 and utilities expense, $400.
f) Cash dividends of $1,000 are paid to stockholders.