Langley Company uses the allowance method. During January 2016, Langley writes off
a $500 customer account balance when it becomes clear that the customer will never
pay. The entry to record the write-off will:
A) decrease total assets by $500.
B) decrease net income for 2016 by $500.
C) decrease net accounts receivable by $500.
D) not increase the expenses for 2016.
Negative operating cash flow may indicate all of the following except:
A) the company may not be able to replace property, plant and equipment.
B) stockholders may not receive a dividend.
C) the company may be in the introductory phase of its life cycle.
D) the company did not earn a profit from its core business activity.
Which of the following would not be recorded as an accounting transaction?
A) Putting a deposit down on a new vehicle
B) Hiring a new employee
C) Receiving cash upon signing a note
D) Receiving a deposit from a customer
Which of the following is performed first at the end of each accounting period?
A) Prepare adjusting entries.
B) Prepare a post-closing trial balance.
C) Prepare closing journal entries.
D) Prepare the statement of retained earnings.
All of the following bank reconciliation items would result in a journal entry on the
company’s books except:
A) interest earned.
B) deposits in transit.
C) service charge.
D) a customer’s check returned NSF.
McEnroe Inc. has outstanding 10 million shares of $2 par value common stock and 1
million shares of $4 par value preferred stock. The preferred stock has a 7% cumulative
dividend preference. The company declares total dividends amounting to $50,000,
$250,000, and $600,000 during 2015, 2016, and 2017, respectively.
Required:
Part a. Compute the amount of dividends to be distributed to preferred and common
shareholders during 2015.
Part b. Compute the amount of dividends to be distributed to preferred and common
shareholders during 2016.
Part c. Compute the amount of dividends to be distributed to preferred and common
shareholders during 2017.
The entry to record a recovery causes:
A) an increase in net accounts receivable.
B) a decrease in net accounts receivable.
C) net accounts receivable to stay the same.
D) an increase in total revenues.
If the market value of goods in inventory is $26,000 below its cost, the company
should:
A) do nothing, because assets are reported at their original purchase price.
B) credit Inventory for $26,000.
C) debit Inventory for $26,000.
D) use the weighted average cost method since that method provides a more accurate
indicator of current value.
An internal report prepared to verify the accuracy of both the bank statement and the
cash accounts of a business or individual is a (n):
A)internal audit.
B) bank reconciliation.
C) bank audit.
D) trial reconciliation.
A voucher is an internal file that:
A)is prepared after an invoice is received.
B)is used as a substitute for an invoice.
C)is a collection of documents prepared at each step in the voucher system.
D)takes the place of a bank check.
E)is prepared before the company orders goods.
The customer typically explains the purpose of the payment using a(n):
A) remittance advice.
B) invoice.
C) purchase order.
D) check.
Some analysts compare companies by focusing on earnings before interest, taxes,
depreciation, and amortization (EBITDA), rather than net income.
During 2010, a company paid $1,200,000 to acquire a roller coaster. The estimated
useful life of the roller coaster was estimated at ten years and its residual value was
expected to be $200,000. As of December 31, 2015, Accumulated Depreciation in the
amount of $500,000 had been recorded on the roller coaster. Management estimates that
other amusement parks and scrap dealers would currently pay $600,000 for the roller
coaster.
Required:
Part a. Determine the asset impairment loss, if any, on the roller coaster at December
31, 2015.
Part b. Prepare the journal entry to record the asset impairment loss on this roller
coaster as of December 31, 2015.
A corporation prepared its statement of cash flows for the year. The following
information is taken from that statement:
What is the cash balance at the beginning of the year?
A) $5,600
B) $2,800
C) $6,300
D) $15,400
Inventory costing $3,000 is sold for $4,000 on terms 2/10, n/30. If the buyer pays
within the discount period, what amount will be reported on the income statement as net
sales?
A) $3,920
B) $4,000
C) $1,000
D) $3,200
Fronthouse Corp. issues 10,000 shares of no-par value preferred stock for cash at $60
per share. The journal entry to record the transaction will consist of a debit to Cash for
$600,000 and a credit (or credits) to:
A) Preferred Stock for $600,000.
B) Preferred Stock for $20,000 and Additional Paid-in Capital for $580,000.
C) Preferred Stock for $20,000 and Retained Earnings for $580,000.
D) Retained Earnings for $600,000.
Use the information above to answer the following question. What is the total amount
of noncurrent assets?
A) $493,590.
B) $824,310.
C) $649,540.
D) $305,950.
Which account would be decreased with a credit?
A) Cash
B) Accounts Payable
C) Common Stock
D) Retained Earnings
A piece of equipment was acquired on January 1, 2015, at a cost of $22,000, with an
estimated residual value of $2,000 and an estimated useful life of four years. The
company uses the double-declining-balance method. What is its book value at
December 31, 2016?
A) $5,500
B) $10,000
C) $11,000
D) $12,000
Use the information above to answer the following question. The EPS is approximately:
A) $0.40
B) $1.76.
C) $1.86.
D) $2.00.