A receiving report should be matched with the supplier invoice before a payment to the
supplier is approved.
The trial balance is one of the three basic financial statements that are issued to external
users of the business.
When using the allowance method, Allowance for Bad Debts is debited when an
account receivable is written off.
Operating income is gross profit minus operating expenses.
International Financial Reporting Standards (IFRS) is the main U.S. accounting rule
book and is currently created and governed by the Financial Accounting Standards
Board.
An asset account is increased by a debit.
A point-of-sale terminal provides control over cash receipts over the counter.
The permanent accounts-assets, liabilities, and stockholders’ equity-are closed to the
Common Stock account.
The entry to close Cost of Goods Sold includes a debit to Income Summary.
Outside investors would ordinarily use managerial accounting information to decide
whether or not to invest in a business.
Interest on a $100,000 note at 4% for 45 days is $493. (Use a 360 day year. Round your
answer to the nearest dollar.)
The normal balance of an account is the increase side of the account.
Separate customer accounts receivable are called subsidiary accounts.
In a period of rising costs, the first-in, first-out (FIFO) method results in higher cost of
goods sold and lower gross profit than the last-in, first-out (LIFO) method.
In an accounting information system, outputs are the reports used for decision making,
which include the financial statements.
Which of the following is true of consolidated statements?
A) They combine the balance sheets, income statements, and statements of cash flows
of the parent company with those of its peer group firms.
B) They combine the balance sheets, income statements, but not the statements of cash
flows of the subsidiary company using the consolidation method.
C) They combine the balance sheets, income statements, and statements of cash flows
of the subsidiary company with those of its investee firms.
D) They combine the balance sheets, income statements, and statements of cash flows
of the parent company with those of its controlling interest affiliates.
The Amazing Widget Company issues $539,000 of 7%, 10-year bonds at 104 on March
31, 2017. The bonds pay interest on March 31 and September 30. Assume that the
company uses the straight-line method for amortization. The journal entry to record the
issuance includes a ________.
A) debit to Cash for $539,000
B) credit to Bonds Payable for $560,560
C) debit to Premium on Bonds Payable for $21,560
D) debit to Cash for $560,560
Josiah, Inc. provides the following information for 2017:
The company has no preferred stock outstanding. Calculate the earnings per share for
2017. (Round your answer to two decimal places.)
A) $0.83 per share
B) $2.19 per share
C) $1.71 per share
D) $1.40 per share
Which of the following is true of debt securities?
A) Debt securities entitle the holder to receipt of a share of profit in the form of
dividends.
B) Debt securities typically pay interest for a fixed period.
C) Debt securities include preferred stocks.
D) Debt securities represent ownership interests of the investors.
Dan Jones and Pat Smith are two employees of Lone Star, Inc. In January 2017, Dan’s
gross pay was $11,500, and Pat’s gross pay was $15,400. All earnings are subject to
FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%. Which of the following
would be included in the entry to record the payroll tax expense to be paid out by Lone
Star, Inc. for January?
A) a debit to Salaries Payable to employees for $390.05
B) a debit to FICA-OASDI Taxes Payable for $390.05
C) a credit to FICA-Medicare Taxes Payable for $390.05
D) a credit to Salaries Expense for $390.05
Which of the following is an example of hardware?
A) monitor
B) malware
C) firewall
D) operating system
Tangent Corporation sold a product for $7,150 to Michael Cardon on credit. The cost of
goods sold is $5,650. Assuming the firm is following a perpetual inventory system and
using a sales journal, it will record $5,650 in the ________.
A) Accounts Receivable DR, Sales Revenue CR column
B) Cost of Goods Sold DR, Merchandise Inventory CR column
C) Merchandise Inventory DR, Cost of Goods Sold CR column
D) Sales Revenue DR, Accounts Receivable CR column
Significant interest investments are reported as ________ on the balance sheet.
A) current assets
B) either current assets or current liabilities
C) long-term assets
D) either current assets or long-term assets
A company that uses the periodic inventory provides the following information:1.
Beginning Inventory $15,000
2. Net Purchases $94,000At the end of the period, the company does an inventory count
and finds $12,000 of inventory on hand.
What is the amount of cost of goods sold?
A) $94,000
B) $121,000
C) $97,000
D) $82,000
Westland, Inc. owns a delivery truck. Which of the following costs, associated with the
truck, will be treated as a revenue expenditure?
A) oil change and lubrication
B) major engine overhaul
C) modification for new use
D) addition to storage capacity
Which of the following is the major difference between the accounting for equity
securities and debt securities?
A) Debt securities are classified as liabilities, while equity securities are classified as
assets.
B) Debt securities are classified as trading investments, while equity securities are
classified as held-to-maturity investments.
C) Debt securities earn interest revenue, while equity securities earn dividend revenue.
D) Debt securities of all types have a maturity date, while only a few equity securities
have a maturity date.
An equity security ________.
A) represents a credit relationship with another company or governmental entity
B) is a standardized contract between two parties to acquire various forms of
investments
C) represents stock ownership in another company and sometimes pays dividends
D) is a financial instrument that entitles the holder to receive periodic interest
Which of the following is an asset account?
A) Wages Payable
B) Notes Payable
C) Unearned Revenue
D) Accounts Receivable