Compound interest means that interest is calculated only on the principal amount.
An accounting firm collected cash on account. As a result of this transaction, assets and
revenues increase.
A payable involves a future receipt of cash.
The three types of events that affect retained earnings are dividends, revenues, and
expenses.
The unrealized holding gains and losses on available-for-sale investments are reported
on the income statement.
By looking at a statement of retained earnings, the effect of dividends on the ending
balance of retained earnings can be determined.
The loss of inventory that occurs because of theft, damage, and errors is referred to as
inventory shrinkage.
Dividends and expenses increase equity.
Estimated residual value is not depreciated because the company will receive this
amount when the asset is sold.
The difference between mortgages payable and notes payable is that notes payable are
always secured by specific assets.
An account that normally has a debit balance may occasionally have a credit balance.
When a company makes an accounting change, Generally Accepted Accounting
Principles require that the company make changes to financial statements of prior years.
According to Generally Accepted Accounting Principles, if the fair value of goodwill
decreases below its book value, an impairment loss must be recorded.
The trial balance is also known as the balance sheet.
Whitney Chemicals Company received cash of $40,000 and issued common stock.
Which of the following accounts will be credited?
A) Accounts Receivable
B) Cash
C) Common Stock
D) Accounts Payable
Spencer’s gross pay for the week is $1,600. Spencer’s yearly pay is under the limit for
OASDI. Assume that the rate for state and federal unemployment compensation taxes is
6% and that Spencer’s year-to-date pay has not yet exceeded the $7,000 cap. What is the
amount of state and federal unemployment tax that his employer must record as payroll
tax expense and pay to the federal and state governments?
A) $225.84
B) $215.20
C) $119.20
D) $96.00
Merchandise inventory accounting systems can be broadly categorized into two types.
They are ________.
A) FIFO and LIFO
B) perpetual and periodic
C) wholesale and retail
D) manufacturer and producer
Which one of the following items requires an adjustment on the bank side of the bank
reconciliation?
A) interest earned
B) a bank service charge
C) a note collected by the bank
D) deposits in transit
Which of the following financial statements reports that total assets are equal to total
liabilities plus total stockholders’ equity?
A) Statement of retained earnings
B) Statement of cash flows
C) Income statement
D) Balance sheet
________ are professional accountants who serve the general public, not one particular
company.
A) Certified public accountants
B) Certified financial accountants
C) Audit accountants
D) Controllers
The explanation of why the net income differs from the change in cash balance for the
period is explained in the ________.
A) income statement
B) balance sheet
C) statement of retained earnings
D) statement of cash flows
Angelo Services, Inc. reported the following balance sheet information for the year
2017. Based on the following information, calculate the rate of return on total assets for
Angelo Services, Inc.
A) 11.28%
B) 7.93%
C) 17.07%
D) 7.17%
Orleans, Inc. was incorporated on January 1, 2014. Orleans issued 4,000 shares of
common stock and 1,200 shares of preferred stock on that date. The preferred stock is
cumulative, $100 par, with an 12% dividend rate. Orleans has not paid any dividends
yet. In 2017, Orleans had its first profitable year, and on November 1, 2017, Orleans
declared a total dividend of $63,000. What is the total amount that will be paid to
preferred shareholders?
A) $14,400
B) $57,600
C) $13,200
D) $63,000
Which of the following is an example of exercising internal control over receivables?
A) separating cash collection and credit approval duties
B) extending credit to all customers who apply for credit
C) combining the duties of the credit and accounting departments
D) allowing credit department employees to collect cash from customers
On January 1, 2017, Doyle Manufacturing Corporation purchased a machine for
$40,000,000. The corporation expects to use the machine for 24,000 hours over the next
six years. The estimated residual value of the machine at the end of the sixth year is
$40,000. The corporation used the machine for 3,600 hours in 2017 and 5,000 hours in
2018. Calculate depreciation expense for 2018 if the company uses the
units-of-production method of depreciation.
The following extract was taken from the worksheet of Dutch, Inc. for the year
2016.Dutch, Inc.
Worksheet
December 31, 2016
From the above information, determine the amount of the Rent Expense adjustment.
On January 1, 2015, Alda Solutions paid $200,000 to acquire Fancy Phones, Inc., an
electronic gadget-advertising website. At the time of the acquisition, Fancy Phone’s
balance sheet reported total assets of $200,000 and liabilities of $100,000. The fair
market value of Fancy Phone’s assets was $200,000. The fair market value of its
liabilities was $100,000. At the end of 2018, goodwill was measured, and its fair value
was determined to be $60,000. Record the impairment of goodwill.
What is measured by days’ sales in receivables? Both Smith Enterprises and Jones
Enterprises have credit terms of 2/10, net 30. The days’ sales in receivables are 40 for
Smith Enterprises and 35 for Jones Enterprise. Analyze this information.
An adjusted trial balance of Woods Company as of December 31, 2017 is given below.
Prepare a multi-step income statement for the year for the company.
Use the following information to calculate the free cash flow of Harris, Inc.Net cash
provided by operating activities, $25,000
Net cash provided by financing activities, $35,000
Net cash used for planned investment in long-term assets, $12,000
Net cash used for investing activities, $20,000
Cash dividends paid, $10,000.
For each transaction, identify which account is debited and which account is credited.
Use proper account titles.
Jeffery Company has just completed operations for the year ended December 31, 2016.
This is the second year of operations for the company. The following data have been
assembled for the business.
Prepare the income statement. Use a proper heading.
Wentlent Services, Inc. records deferred expenses as expenses when payment is made in
advance and deferred revenues as revenues when the payment is received in advance.
At the end of the year, Wentlent Services, Inc. makes the necessary adjustments based
on accrual basis accounting. On July 1, it paid rent for an office in the amount of
$24,000 for the period July 1 through June 30 of the following year. Provide the
year-end adjusting entry for rent prepayment.