The trial balance is an internal document used only by employees of the company.
The direct method restates the income statements in terms of cash.
The third section presented on the statement of cash flows is the non-cash operating
activities section.
Under accrual basis accounting, an expense is recorded only when cash is paid.
A liability account is increased by a debit.
Revenues and contributions of the stockholders in the business increase equity.
Retired shares of treasury stock may later be reissued.
A corporation issues 16,000 shares of its $3 stated value common shares. The issue
price is $9 per share. The credit to the Common Stock account is $144,000.
In cloud computing, the software and data are stored on the company’s server instead of
a third-party server.
Horizontal analysis is the study of percentage changes in comparative financial
statements.
U. S. Generally Accepted Accounting Principles permits the presentation of plant assets
at their fair market value.
A business purchases $500 of office supplies on account. Which of the following
accounts is credited?
A) Cash
B) Accounts Payable
C) Office Supplies
D) Service Revenue
Liberty Corporation sells a product for $500 cash to Sarah Lewis. This transaction will
be recorded in the ________.
A) cash payments journal
B) sales journal
C) cash receipts journal
D) purchase journal
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
On November 1, 2017, Austin Services issued $305,000 of five-year bonds with a
stated rate of 12%. The bonds were issued at par, and Austin makes semiannual
payments on April 30 and October 31. On December 31, 2017, Austin made an
adjusting entry to accrue interest at year-end. No further entries were made until April
30, 2018, when the first payment was made. What amount of interest expense was
recorded for the period of January 1 to April 30, 2018?
A) $12,200
B) $36,600
C) $18,300
D) $29,280
Equity securities in which the investor owns less than 20% ownership in the voting
stock of the investee can be ________.
A) significant interest investments
B) controlling interest investments
C) held-to-maturity investments
D) either trading investments or available-for-sale investments
Which one of the following account groups will decrease with a debit?
A) assets and expenses
B) revenues and expenses
C) liabilities and revenues
D) assets and liabilities
When does a company account for revenue if it uses cash basis accounting?
A) when services are performed, even though cash may be received at a later date
B) when cash is received after the service is performed
C) when the services are being performed
D) when cash is received, either prior to, at the time of, or after the services are
performed
Dallkin Corporation issued 10,000 shares of common stock on January 1, 2017. The
stock has no par value and was issued at $17 per share. The journal entry for this
transaction includes a ________.
A) debit to Cash for $170,000 and a credit to Common Stock-No-Par Value for
$170,000
B) debit to Cash for $170,000 and a credit to Paid-In Capital in Excess of Par-Common
for $170,000
C) credit to Cash for $170,000 and a debit to Common Stock-No-Par Value for
$170,000
D) credit to Cash for $170,000, a debit to Paid-In Capital in Excess of Par-Common for
$10,000, and a debit to Common Stock-No-Par Value for $160,000
On July 10, a hardware retailer purchased merchandise inventory on account for
$1,700. The company plans to pay $900 the following week and the remaining amount
the week after. Which of the following is the correct entry to record this transaction in a
purchases journal? Assume a perpetual inventory system is used.
A) $850 will be recorded in the Accounts Payable CR and Merchandise Inventory CR
column.
B) $2,600 will be recorded in the Accounts Payable DR and Merchandise Inventory DR
column.
C) $1,700 will be recorded in the Merchandise Inventory CR and Accounts Payable DR
column.
D) $1,700 will be recorded in the Accounts Payable CR and Merchandise Inventory DR
column.
The entity that signs the promissory note and promises to pay the required amount is the
________.
A) maker of the note
B) banker of the note
C) holder of the note
D) payee of the note
Which of the following is an asset account?
A) Wages Payable
B) Notes Payable
C) Unearned Revenue
D) Accounts Receivable
State unemployment compensation tax (SUTA) is paid by the employer and is not
deducted from an employee’s gross earnings.
Which of the following is an advantage of the corporate form of business?
A) less degree of government regulation
B) limited liability of stockholders
C) separation of ownership and management
D) low start-up costs
Preferred stockholders ________.
A) are guaranteed that they will not have a loss on their investment
B) are guaranteed to receive an annual dividend payment
C) receive a set percentage of corporation net income
D) receive a dividend preference over common stockholders
Newbury Office Supply reported the following gross profit percentages: 2014: 37.5%;
2015: 36.2%; 2016: 20.8%. The industry average is 35%. What are some possible
reasons for the decline in 2016?
A business purchased land for $250,000 cash. Record the transaction in the journal.
Applied Foods Corp. had cash sales of $598,000 during the month of August. Sales
taxes of 6.5% were collected on the sales. Prepare the journal entry to record the sales
revenue and sales tax for the month.
Equipment was purchased for $24,000 on January 1, 2016. The equipment’s estimated
useful life was five years, and its residual value was $4,000. The straight-line method of
depreciation was used. Prepare the journal entry to record the sale of the equipment for
$25,000 on January 3, 2017. The company has a calendar year accounting period.
When computing the present value of a bond, which interest rate is used? Why?
Refer to the following bank reconciliation:Bank Book
Balance, June 30, 2017 $11,240 Balance, June 30, 2017 $10,200
Add: Add:
Deposit in transit 3,110 Note collected by bank 2,100
Interest revenue 55
Less: Less:
Outstanding checks #506 1,200 NSF check 85
Outstanding checks #510 900 Bank service charge 20
________ ________
Adjusted balance, Adjusted balance,
June 30, 2017 $12,250 June 30, 2017 $12,250Journalize the adjusting entry for the
first reconciling item: Note collected by bank.
List the three ways to analyze financial statements. State what each of these ways
provides to investors and creditors.