Which of the following statements is true?
A) The indirect method and the direct method will produce a different amount of net
cash flow from investing activities.
B) The indirect method starts with net income and adjusts it to cash provided by (used
for) operating activities.
C) The direct and indirect methods include different types of cash flows in the investing
activities section.
D) The indirect method includes all non-cash activities, whereas the direct method
includes only the cash activities.
Glendale Corporation had the following transactions in August:
Earned $5,000 of revenues on account; collected $5,000 from a customer for services
provided last month; incurred $500 of repair expense and paid cash; paid $600 for rent
that it owed from the previous month.
What is the net income in August?
A) $500
B) $5,000
C) $9,500
D) $4,500
On October 1, 2017, Ealys Jewelers accepted a 4-month, 11% note for $6,000 in
settlement of an overdue account receivable. The accounting period ends on December
31. Calculate the accrued interest on the note at December 31, 2017. (Round your
answer to the nearest dollar.)
A) $165
B) $220
C) $660
D) $330
If a bond’s stated interest rate is lower than the market rate, which of the following is
true?
A) The bond will be issued at a premium.
B) The bond will be issued at par.
C) The bond will be issued at a discount.
D) The bond will be issued for an amount higher than the maturity value.
Which of the following is true of internal control?
A) A company’s outside auditor is responsible for the company’s internal control
system.
B) One of the major purposes of internal control is to ensure that the assets are
safeguarded.
C) Internal control procedures tend to diminish the importance of operational efficiency.
D) Internal controls are only necessary for public companies.
The bank charged a service fee of $55. How would this information be included on the
bank reconciliation?
A) a deduction on the bank side
B) an addition on the book side
C) a deduction on the book side
D) an addition on the bank side
Unearned Revenue is a(n) ________ account and carries a normal ________ balance.
A) liability; credit
B) asset; credit
C) revenue; debit
D) asset; debit
The following is a summary of information presented on the financial statements of a
company on December 31, 2017.
With respect to net sales revenue, a horizontal analysis reveals ________.
A) a 19.84% increase in net sales revenue
B) a 238.48% decrease in net sales revenue
C) a decrease of $53,000 in net sales revenue
D) a $53,000 increase in net sales revenue
Evaluated Receipts Settlement is ________.
A) a streamlined process that bypasses paper documents altogether
B) a process that eliminates the need for separation of duties
C) a procedure that compresses the payment approval process into a single step by
comparing the receiving report to the purchase order
D) an organizational plan and all the related measures adopted by an entity to safeguard
assets, encourage employees to follow company policies, promote operational
efficiency, and ensure accurate and reliable accounting records
The following information is needed to reconcile the cash balance for Johnson Catering
Services.- A deposit of $5,800 is in transit.
– Outstanding checks total $1,100.
– The book balance is $6,000 at February 28, 2017.
– The bookkeeper recorded a $1,700 check as $17,300 in payment of the current
month’s rent.
– The bank balance at February 28, 2017 was $17,230.
– A deposit of $400 was credited by the bank for $4,000.
– A customer’s check for $3,200 was returned for nonsufficient funds.
– The bank service charge is $70.What was the adjusted book balance?
A) $18,400
B) $18,330
C) $18,470
D) $17,300
The adjusted trial balance shows ________.
A) account balances after adjustments
B) revenue and expense accounts only
C) account balances before adjustments
D) balance sheet accounts only
The following information is from the 2017 records of Albert Book Shop:
Bad debts expense is estimated by the aging-of-receivables method. Management
estimates that $5,500 of accounts receivable will be uncollectible. Calculate the amount
of bad debts expense for 2017.
A) $5,500
B) $7,400
C) $3,600
D) $5,750
Which of the following is the correct formula to calculate the debt ratio?
A) Debt ratio = Total liabilities x Total assets
B) Debt ratio = Total liabilities + Total assets
C) Debt ratio = Total liabilities – Total assets
D) Debt ratio = Total liabilities / Total assets
Which of the following steps must be completed before preparing the adjusted trial
balance?
A) preparing the post-closing trial balance
B) posting of journal entries to the accounts
C) preparation of the closing entries
D) preparation of the financial statements
Which of the following statements about internal control is true?
A) Internal auditors ensure that the employees follow company policies.
B) The treasurer and controller have the same responsibilities.
C) External auditors are employees of the company.
D) The internal control procedures are known as the “tone at the top.”
Common Stock is a separate account in the ________ category of the accounting
equation.
A) equity
B) asset
C) liability
D) revenue
Which of the following is the correct journal entry for freight paid on goods purchased
by a merchandiser using the periodic inventory system?A)
B)
C)
D)