Accrued revenue represents the receipt of cash before the revenue has been earned.
When a corporation sells 9,000 shares of $12 par value common stock for $159,000,
Common Stock is credited for $108,000.
When using a four-column account, the posting reference column allows the user of the
financial data to trace the amounts in the journal back to the ledger.
The ending balances in the Common Stock and Dividend accounts are shown on the
income statement columns of the worksheet.
The double-declining-balance method ignores the residual value until the depreciation
expense takes the book value below the residual value.
Revenues and contributions of the stockholders in the business increase equity.
On the maturity date of a bond investment, the journal entry includes ________.
A) a debit to Cash and a credit to Long-term Investments – Held-to-Maturity
B) a debit to Long-term Investments – Held-to-Maturity and a credit to Cash
C) a debit to the Interest Revenue and a credit to Cash
D) a debit to Cash and a credit to Interest Revenue
A lower days’ sales in inventory for Moonshine, Inc., when compared to other
companies, indicates that it is ________.
A) selling its inventory more quickly
B) spending more on inventory storage
C) incurring higher insurance costs
D) holding excess obsolete inventory
A company check for payment must be signed by ________.
A) any employee of the company
B) a bank employee
C) an employee specifically authorized by the company
D) the external auditor
A newly created design business, Rhodes Art, is finishing its first year of operations.
During the year, credit sales were $45,000 and collections of credit sales were $33,000.
One account for $675 was written off. Smart Art uses the aging-of-receivables method
to account for bad debts expense. It has estimated $200 as uncollectible at year-end.
What is the amount of the Bad Debts Expense for the first year of operations?
A) $11,125
B) $675
C) $200
D) $875
Smart Art is a new business. During its first year of operations, credit sales were
$44,000 and collections from credit sales were $32,000. One account for $625 was
written off. Management uses the percent-of-sales method to account for bad debts
expense and estimates 2% of credit sales to be uncollectible. What is the balance of
Accounts Receivable at the end of the first year?
A) $12,000
B) $10,495
C) $11,375
D) $11,120
Jack, an employee of Desert Sky, Inc., has gross salary for May of $16,000. The entire
amount is under the OASDI limit of $117,000 and thus subject to FICA. He is also
subject to federal income tax at a rate of 24%. Which of the following is a part of the
journal entry for accrual of the employer payroll taxes? (Assume a FICA-OASDI Tax
of 6.2% and FICA-Medicare Tax of 1.45%.) Jack’s income to date exceeds the FUTA
and SUTA tax income limits.
A) credit to Salaries Payable for $16,000
B) debit to Cash for $11,256.00
C) debit to Employee Income Taxes payable of $3,840.00
D) credit to FICA-Medicare Taxes Payable of $232.00
On January 1, 2017, Henry Manufacturing Corporation purchased a machine for
$40,600,000. Henry’s management expects to use the machine for 34,000 hours over the
next six years. The estimated residual value of the machine at the end of the sixth year
is $47,000. The machine was used for 4,000 hours in 2017 and 5,400 hours in 2018.
Calculate the book value of the machine at the end of 2018 if the company uses the
units-of-production method of depreciation. (Round any intermediate calculations to
two decimal places, and your final answer to the nearest dollar.)
A) $29,388,244
B) $40,600,000
C) $29,375,272
D) $35,829,040
Clayton, Inc. purchased a van on January 1, 2016, for $850,000. Estimated life of the
van was five years, and its estimated residual value was $91,000. Clayton uses the
straight-line method of depreciation. At the beginning of 2018, the company revised the
total estimated life of the asset from five years to four years. The estimated residual
value remained the same as estimated earlier. Calculate the depreciation expense for
2018.
A) $273,200
B) $227,700
C) $113,850
D) $136,600
________ is a pay amount stated at an hourly rate.
A) Salary
B) Wage
C) Commission
D) Bonus
From the following details of a merchandiser, calculate the Cost of Goods Sold.
(Assume the merchandiser uses the periodic inventory system.)
A) $116,150
B) $62,800
C) $114,800
D) $54,150
Which of the following is an asset that represents distinctive identifications of a product
or service?
A) license
B) copyright
C) franchise
D) trademark
State unemployment compensation tax (SUTA) is not withheld from employees’ gross
earnings.
A business pays $500 cash for office supplies. Which of the following accounts is
credited?
A) Cash
B) Accounts Payable
C) Office Supplies
D) Utilities Expense
The financial statements of Clearwater Furniture Company include the following items:
What is 2017 cash ratio? (Round your answer to two decimal places)
A) 0.19
B) 0.10
C) 0.35
D) 0.24
Which of the following is true of data processing and storage in a computerized
information system?
A) In a computerized accounting information system, processing includes manually
journalizing transactions and posting to the accounts.
B) In a computerized accounting information system, there will be a main centralized
computer where data is stored, which cannot be accessed from any other computers.
C) In both computerized and manual systems, all data are contained in paper documents
and are often stored in filing cabinets and off-site document warehouses.
D) In a computerized accounting information system, companies need to spend large
amounts of cash to ensure that their data and information are secure.
Which of the following statements describes an invoice from a supplier?
A) It is an order to purchase goods from a supplier.
B) It is a statement from the supplier showing the goods purchased and the amount due.
C) It is a report showing that the goods have been received in good condition, as
ordered.
D) It is a document authorizing a payment to a supplier.
The tracking of inventory shrinkage due to theft, damage, or errors is done with the help
of a (n) ________ of inventory.
A) authorization
B) sale
C) physical count
D) delivery
Which of the following items are reconciling items on the bank side of the
reconciliation?
A) outstanding checks and correction of book error
B) deposit in transit and NSF check
C) deposit in transit and outstanding checks
D) bank service charge and correction of book error
An adjusting entry that debits Accounts Receivable is an example of a(n) ________.
A) deferred expense
B) accrued revenue
C) accrued expense
D) deferred revenue
On April 1, 2017, Banne Services received a 7-month note for $12,000 at 12%.
Calculate the amount of interest due at maturity. (Round your answer to the nearest
dollar.)
A) $756
B) $924
C) $1,440
D) $840