A customer’s check for $25 that had been deposited into the company’s checking
account the previous month was returned stamped “NSF” by the bank. Which of the
following journal entries is required?
a. Cash 25 Accounts Receivable 25
b. Cash 25 Accounts Payable 25
c. Account Receivable 25 Petty Cash 25
d. Accounts Receivable 25 Cash 25
A type of liability which requires the issuing entity to pay the face value to the holder
on the maturity date and to pay interest periodically at a specified rate. Match these
terms with their definitions.
a. Bond i. Lessor
b. Contract, coupon, stated rate j. Leverage
c. Discount k. Long-term debt
d. Effective interest rate method l. Market rate, yield
e. Face value, par value, principal m. Maturity
f. Interest amortization n. Premium
g. Lease o. Straight-line method
h. Lessee
The company purchased a three-year liability insurance policy to cover possible
damage caused by the new equipment at a cost of $6,000.
A construction company purchased a piece of equipment with a price of $100,000 on
March 1, 2013. The amounts are related to the equipment purchase. Match the items
and explain how each item should be accounted for. (Choices may be used more than
once.)
Costs incurred prior to using the asset, such as installation and other costs to prepare the
asset for use.
For each of the following items, indicate whether each would be treated as capital
expenditure or revenue expenditure. (Choices may be used more than once.)
Obligations whose amounts, timing, or recipient depend on future events Match the
following terms with the appropriate definition.
a. Accrued liabilities f. Payroll taxes
b. Contingent liabilities g. Sales taxes
c. Current liabilities h. Warranty
d. Interest rate i. Withholdings
e. Liabilities
Without these, some of the account balances will not be up-to-date at the time financial
statements are prepared
Match each statement to the item listed below
a. Accrual basis accounting f. Depreciation
b. Adjusted trial balance g. Matching principle
c. Adjusting entries h. Revenue recognition principle
d. Cash basis accounting i. Time period assumption
e. Contra accounts j. Worksheet
Refer to Falling Leaves Lawn Care. By what amount would double-declining-balance
depreciation exceed straight-line depreciation over the 5-year life of the equipment?
Falling Leaves Lawn Care This company purchased new excavating equipment at the
beginning of 2013. The equipment has a cost of $37,000, an estimated life of 5 years,
and an estimated residual value of $7,000. A full year’s depreciation expense is to be
recorded in 2013. The equipment was used 20,000 hours during 2012 and 24,000 hours
during 2013. The number of expected hours over 5 years is 100,000. a. the salvage
value of $7,000
b. cost less total depreciation.
c. cost plus total depreciation
d. total depreciation expenses under double-declining-balance and straight-line
depreciation are equal
Consider the following information from the financial statements of a retail company:
Calculate the following financial ratios: A) Return on common equity
B) Earnings per share
C) Dividend yield
D) Dividend payout
E) Total payout
F) Stock repurchase payout
Refer to the information presented above for La Paz Restaurants. The 2015 dividend
yield ratio is reported as
La Paz Restaurants
Selected data from the company’s financial statements are presented below:
a. 1.25%.
b. 1.59%.
c. 0.057%.
d. 2.09%.
A particular company had $2,400 of supplies on hand at January 1. During the year,
supplies with a cost of $4,000 were purchased. At December 31, the actual supplies on
hand amounted to $2,000. After the adjustments are recorded and posted at December
31, what are the ending balances in the Supplies and Supplies Expense accounts?
SuppliesSupplies Expense
a. $4,400 $2,000
b. $2,000 $4,400
c. $2,400 $4,000
d. $4,000 $2,400
Refer to Bay Camera. What is the company’s Net Income for the current year?
Bay Camera
The company reported the following items on its financial statements for the year ended
December 31, 2013:
a. $22,500
b. $32,500
c. $42,500
d. $80,000
Refer to Abundant Returns. The firm estimates that bad debts could be 2% of net sales.
Abundant Returns
This company sells its merchandise only on credit. The following data are available at
December 31, 2013.
The statement of stockholders’ equity shows an $8,000 increase in the common stock
account, a $22,000 increase in the paid-in capital in excess of par-common stock
account, and a $100,000 increase in retained earnings. If the common stock has a par
value of $3 and dividends of $10,000 were declared and paid during the year, what is
the amount of net income for the year?
a. $90,000
b. $100,000
c. $110,000
d. $140,000
The ability of the company to pay its debts as they become due.
Provided is a list of important users of accounting information. Also provided are
descriptions of a major need for accounting information that may be experienced by the
various users. Identify the one user group that is most likely to have the need described.
(Choices may be used more than once.)
a. Investors
b. Management
c. Supplier
d. Banker
e. Government
f. Employees
g. Labor Union
h. Investors and Banker
i. Supplier and Banker
Bonds sell at a premium when the
a. issuing company has a better reputation than other companies in the same business.
b. market rate of interest is less than the stated interest rate at the time of issue.
c. yield rate of interest is more than the stated rate at the time of issue.
d. issuing company agrees to repay the maturity before the due date.
In a periodic inventory system, the cost of purchases is recognized as
a. an integral part of the calculation of cost of goods sold.
b. the only part of the calculation of cost of goods sold.
c. an increase in the inventory account.
d. an increase in an asset account.
Cost of goods sold represents an outflow of a resource, inventory, which is caused by
the sale of products.
An arbitrary monetary amount that has a stated value on each share of stock and
establishes a minimum price for the stock when issued is the ____________________.
The following are selected data from a large company’s financial statements:
California Condos California Condos uses the accrual basis of accounting, and had the
following account balances on its financial statements at December 31, 2013.
Identify the steps in the accounting cycle that must have been completed prior to
determining these amounts.
____________________ analysis compares one corporation to another corporation and
to industry averages.
Various financial ratios, including payout ratios, are categorized as
____________________ ratios.