Gross profit is the extra amount the company receives from the customer for
merchandise sold over what the company paid to the vendor.
A natural resource is an asset that comes from the earth and is consumed.
When using a computerized accounting information system, transactions do not need to
be recorded in a debit and credit format.
As long as the same person deposits customer checks and records the deposits into the
journal, there will be good internal control over cash receipts.
An account that normally has a debit balance may occasionally have a credit balance.
A petty cash fund was established with a $600 balance. It currently has cash of $19 and
petty cash tickets as shown below:
Which of the following would be included in the journal entry to replenish the Petty
Cash fund?
A) debit to Cash Short & Over for $115
B) credit to Cash Short & Over for $115
C) debit to Petty Cash for $115
D) credit to Petty Cash for $115
Which of the following accounts increases with a debit?
A) Cash
B) Interest Payable
C) Accounts Payable
D) Common Stock
On July 1, 2017, Adams Company has bonds with balances as shown below.Bonds
Payable
Premium on Bonds Payable
If the company retires the bonds for $74,150, what will be the effect on the income
statement?
A) gain on retirement of $6,950
B) loss on retirement of $6,950
C) gain on retirement of $650
D) loss on retirement of $650
Which of the following accounts decreases with a debit?
A) Accounts Receivable
B) Notes Payable
C) Cash
D) Rent Expense
Which of the following will be classified as a held-to-maturity investment?
A) machinery
B) land
C) bond
D) equity investment
Which of the following depreciation methods allocates a varying amount of
depreciation each year based on an asset’s usage?
A) the straight-line method
B) the annuity method
C) the units-of-production method
D) the double-declining-balance method
Which of the following statements is correct?
A) A bank statement is a document from the bank that reports the activity in the
customer’s account.
B) A bank statement must be mailed to customers each month.
C) The bank statement does not include an ending balance of the customer’s account
because the bank cannot determine which checks have been cashed during the
statement period.
D) Physical copies of canceled checks must be included in the monthly bank statement.
Venus, Inc. paid $12,000 on accounts payable. How does this transaction affect the
accounting equation of Venus?
A) assets decrease by $12,000 and equity increases by $12,000
B) assets decrease by $12,000 and liabilities decrease by $12,000
C) assets increase by $12,000 and equity decreases by $12,000
D) assets increase by $12,000 and liabilities increase by $12,000
The Lakeland Company issues $518,000 of its 10%, 10-year bonds at 106 on March 31,
2017. The bond pays interest on March 31 and September 30. On September 30, 2017,
how much cash did the company pay to the bondholders?
A) $2,590
B) $51,800
C) $25,900
D) $12,950
The accountant for Noble Jewelry Repair Services, Inc. forgot to make an adjusting
entry for Depreciation Expense for the current year. Which of the following is an effect
of this error?
A) Revenues are understated.
B) Total assets are understated.
C) Net income is overstated.
D) Total liabilities are understated.
On November 1, 2017, Archangel Services issued $313,000 of eight-year bonds with a
stated rate of 12% at par. Interest payments occur each April 30 and October 31. On
December 31, 2017, Archangel made an adjusting entry to accrue interest at year-end.
What is the amount of Interest Expense that will be recorded on December 31, 2017?
A) $37,560
B) $6,260
C) $18,780
D) $783
A business purchases equipment by paying $9,087 in cash and issuing a note payable of
$13,264. Which of the following occurs?
A) Cash is credited for $9,087, Equipment is credited for $22,351, and Notes Payable is
debited for $13,264.
B) Cash is credited for $9,087, Equipment is debited for $22,351, and Notes Payable is
credited for $13,264.
C) Cash is debited for $9,087, Equipment is debited for $13,264,and Notes Payable is
credited for $22,351.
D) Cash is debited for $9,087, Equipment is credited for $13,264, and Notes Payable is
debited for $4,177.