Generally accepted accounting principles require that interest expense be measured
using the effective-interest amortization method, unless the straight-line amounts are
similar.
The Sarbanes-Oxley Act requires all private companies in the United States to maintain
an internal control system.
The Supplies Expense account is a temporary account.
Permanent accounts are not closed at the end of the accounting period.
Capitalizing a cost involves crediting the asset account.
The Financial Accounting Standards Board is a U.S. governmental agency that oversees
the creation and governance of accounting standards.
The process of allocating the cost of a plant asset over its useful life is known as cost
reduction.
The balance sheet section of the worksheet includes the asset and liability accounts and
all equity accounts.
Estimated residual value can be zero if the company does not expect to receive anything
when disposing of the asset.
Which of the following describes the operating activities section of the statement of
cash flows?
A) It reports cash receipts and cash payments that increase or decrease long-term assets.
B) It includes cash inflows and outflows involved in long-term liabilities and equity.
C) It reports on activities that create revenue or expenses for the entity’s business.
D) It reports on how cash flows affect the total assets and total liabilities.
A business makes a cash payment to a supplier for office supplies that were purchased
earlier on account. Which of the following accounts is debited?
A) Cash
B) Accounts Payable
C) Office Supplies
D) Utilities Expense
A $54,000, four-month, 12% note payable was issued on October 1, 2017. Which of the
following would be included in the journal entry required on the note’s maturity date by
the borrower? (Round your answer to the nearest whole number.)
A) a credit to Note payable for $56,160
B) a credit to Cash for $54,000
C) a debit to Interest expense for $540
D) a debit to Interest payable for $540
On March 1, 2016, Hughes Services issued a 6% long-term notes payable for $18,000.
It is payable over a 3-year term in $6,000 principal installments on March 1 of each
year, beginning March 1, 2017. Which of the following entries needs to be made on
March 1, 2016?
A)
B)
C)
D)
Which of the following statements is true if a bond is issued at an amount less than its
face value?
A) The bond’s stated rate is lower than the prevailing market rate at the time of sale.
B) The bond’s stated rate is the same as the prevailing market rate at the time of sale.
C) The bond’s stated rate is higher than the prevailing market rate at the time of sale.
D) The bond is not secured by specific assets of the issuer.
Which of the following statements is not correct?
A) In a perpetual inventory system, the “cash register” at the store is a computer
terminal that records sales and updates inventory records.
B) Even in a perpetual inventory system, a business must count inventory at least one a
year.
C) Restaurants and small retail stores often use the periodic inventory system.
D) In a periodic inventory system, merchandise inventory and purchasing systems are
integrated with the records for Accounts Receivable and Sales Revenue.
Nuptial, Inc. paid the rent for the current month in cash. Which of the following
accounts will be used to record the transaction?
A) Prepaid Rent
B) Rent Payable
C) Rent Revenue
D) Rent Expense
Which of the following would be included in the journal to record an NSF check?
A) a debit to Accounts Payable and a credit to Cash
B) a debit to Accounts Receivable and a credit to Cash
C) a debit to Cash and a credit to Accounts Receivable
D) a debit to Bank Expense and a credit to Cash
The Income Summary account has a credit balance of $20,000 after the revenue and
expense accounts have been closed. Which of the following is to be credited to close the
Income Summary account?
A) Dividends
B) Sales Revenue
C) Cost of Goods Sold
D) Retained Earnings
A liability created when a business collects cash from customers in advance of
providing services or delivering goods is called a(n) ________.
A) notes receivable
B) unearned revenue
C) accrued liability
D) service revenue
Which of the following is included in the denominator of the acid-test ratio?
A) total current liabilities less accounts payable
B) total liabilities
C) total current liabilities
D) total current assets
The bank recorded a $3,000 deposit as $300. How would this information be included
on the bank reconciliation?
A) a deduction on the bank side
B) a deduction on the book side
C) an addition on the book side
D) an addition on the bank side
Saturn, Inc. signed a one-year $24,000 note payable at 8% interest on May 1, 2017.
How much interest expense must be accrued on May 31, 2017?
A) $1,920
B) $12,800
C) $160
D) $80
Statewide Sales, Inc. has gross pay for March of $45,000. Which of the following is
included in the journal entry to record salaries expense?
A) credit Salaries and Wages Expense
B) debit Cash
C) debit Salaries and Wages Payable
D) debit Salaries and Wages Expense