A company purchased machinery by issuing a long-term note payable. This is an
example of a non-cash investing and financing activity for the statement of cash flows.
Enterprise resource planning systems are software systems that can integrate all of a
company’s functions, departments, and data into a single system.
Prepaid Insurance is an asset account that appears on the balance sheet.
The Allowance for Bad Debts is a contra account to Accounts Receivable.
When using the allowance method, the receipt of a payment on receivables that have
been written-off requires an entry to reverse the write-off to the Allowance for Bad
Debts account and an entry to record the receipt of cash.
Trend analysis is a form of horizontal analysis.
For an accounting equation to balance, a transaction must affect both sides of the
equation.
Horizontal analysis compares each item in the income statement to the net sales
amount.
When a company uses idle cash to invest in equity securities with less than 20%
ownership, its total equity will increase.
Cash and cash equivalents are divided by ________ to determine the cash ratio.
A) total current liabilities
B) fixed assets
C) equity
D) total long-term liabilities
On a multi-step income statement, the operating expenses are subtracted from
________ to arrive at operating income.
A) net sales
B) cost of goods sold
C) net profit
D) gross profit
A merchandiser sold merchandise inventory on account. The journal entry to record
sales allowances in the books of the merchandiser, using the perpetual inventory system
would be:A)
B)
C)
D)
Ronald, Inc. had the following balances and transactions during 2017:
What is the amount of the company’s Merchandise Inventory, as disclosed in the
December 31, 2017 balance sheet, using the periodic weighted-average inventory
costing method? (Round the unit costs to two decimal places and total costs to the
nearest dollar.)
A) $104
B) $87
C) $373
D) $616
When a check is issued, the party being paid the cash is referred to as the ________.
A) payee
B) maker
C) bank signatory
D) depositor
Financial statements are prepared after an entity’s transactions are analyzed and
recorded. Which of the following reports is one of the required financial statements?
A) Statement of cash flows
B) Statement of return on assets
C) Statement of dividends
D) Expense statement
Which of the following is the final step in the journalizing and posting process?
A) Posting the accounts to the ledger.
B) Identifying each account affected and its type.
C) Determining whether the accounting equation is in balance.
D) Determining whether each account has increased or decreased.
Which of the following statements is true of the worksheet?
A) Net income is recorded in the income statement credit column.
B) Net income is recorded in the adjusted trial balance debit column.
C) Net income is recorded in the income statement debit column.
D) Net income is recorded in the balance sheet debit column.
Amounts earned from delivering goods or services to customers are called ________.
A) notes receivable
B) unearned revenues
C) equity
D) revenues
Unearned revenue, for services to be performed in six months, appears on the balance
sheet as ________.
A) long-term investments
B) current liabilities
C) current assets
D) long-term assets
A six-month note receivable for $8,000 at 12%, dated September 1, 2017, has accrued
interest revenue of ________ as of December 31, 2017. (Round your answer to the
nearest dollar.)
A) $960
B) $480
C) $320
D) $160
Amounts earned from delivering goods or services to customers are called ________.
A) notes receivable
B) unearned revenues
C) equity
D) revenues
The following transactions for the month of March have been journalized and posted to
the proper accounts.
What is the balance in Accounts Receivable?
A) $9,000
B) $3,000
C) $6,000
D) $12,000
Beige Corporation pays $536,000 to acquire 40% of the equity securities of Olive
Technologies, Inc. on May 5, 2017. In the journal entry to record this transaction
________.
A) Long-term Investments-Trading Investments will be debited for $536,000
B) Long-term Investments-Olive Technologies, Inc. will be debited for $536,000
C) Long-term Investments-Available-for-Sale will be debited for $536,000
D) Long-term Investments-Available-for-Sale will be credited for $536,000
When performing vertical analysis of an income statement, the base amount is
________.
A) total expenses
B) net sales
C) sales revenue
D) gross profit
Ashbrook Services, Inc. acquired 128,000 shares of Gamma Metals, Inc. on January 1,
2017. Gamma declares a cash dividend of $2.00 per share on February 15, 2017 and
pays the cash dividend on March 2, 2017. With the current investment, Ashbrook
Services, Inc. holds 11% of Gamma’s voting stock. Which of the following will be the
correct journal entry for the day when the dividend payment is made (March 2, 2017)?
A)
B)
C) No EntryD)
Under the perpetual inventory system, the journal entries to record sales returns (the
original sale was on account) would be:A)
B)
C)
D)
Cash borrowed on a mortgage note is a(n) ________ activity on the statement of cash
flows.
A) operating
B) investing
C) financing
D) non-cash investing and financing
Donald Corp. reported the following on its comparative income statement (in
millions):2017 2016 2015
Revenue $728 $675 $500
Cost of goods sold 312 258 220Prepare a horizontal analysis of revenues and cost of
goods sold, both in dollar amounts and in percentages, for 2016 and 2017. (Round your
percentage answers to two decimal places.)
On October 1, 2017, Nurix, Inc. purchased a patent for $100,000 cash. Although the
patent gives legal protection for 20 years, it is expected to be used for only eight years.
Journalize the purchase of the patent.
Explore, a travel magazine, collected $500,000 in subscription revenue in May. Each
subscriber will receive an issue of the magazine for each of the next 12 months,
beginning with the June issue. The company uses the accrual method of accounting.
Provide the journal entry for collection of cash in May. (Ignore explanation). Assume
the magazine initially records a liability for the subscription revenue.
Deborah Consultants had the following accounts and account balances after adjusting
entries. Assume all accounts have normal balances. Calculate the amount of service
revenue and prepare the adjusted trial balance for Deborah Consultants as of December
31, 2017.Cash $6,000 Dividends $3,000
Accounts Receivable 2,000 Service Revenue ?
Office Supplies 1,800 Salaries Expense 4,000
Equipment 15,000 Rent Expense 800Accumulated Depreciation- 9,000 Depreciation
Expense- 1,500
Equipment Equipment
Common Stock 15,000 Supplies Expense 500
Use the following purchases journal to record the preceding transactions.