Which of the following organizations requires publicly owned companies to be audited
by independent accountants (CPAs)?
A) Securities and Exchange Commission (SEC)
B) Public Company Accounting Oversight Board (PCAOB)
C) Financial Accounting Standards Board (FASB)
D) American Institute of Certified Public Accountants (AICPA)
Which of the following accounts would appear in the balance sheet credit column?
A) Prepaid Insurance
B) Buildings
C) Unearned Revenue
D) Service Revenue
Which of the following statements is true of accrual basis accounting?
A) Accrual basis accounting is required by Generally Accepted Accounting Principles
(GAAP).
B) Accrual basis accounting records expenses only when cash has been paid for them.
C) Accrual basis accounting records revenue only when cash is received.
D) Accrual basis accounting always results in greater net income than cash basis
accounting.
A shortened form of the ledger is called a ________.
A) trial balance
B) balance sheet
C) chart of accounts
D) T-account
The formation of a partnership firm requires a minimum of ________.
A) four partners
B) three partners
C) one partner
D) two partners
The trend analysis report of Doppler, Inc. is given below (in millions):
Which of the following is a correct conclusion from the above analysis?
A) Net income for 2018 is 175% of that for 2014.
B) Net income for 2017 is 151% of the previous year.
C) Net income for 2017 decreased by 151% from 2016.
D) Net income for 2018 increased by 175% from 2017.
Regarding impairment of intangible assets, which of the following statements is
incorrect?
A) Impairment occurs when the fair value of an intangible asset is less than the book
value.
B) Intangible assets are impaired when there has been a permanent decline in the value
of the asset.
C) Intangible assets are tested for impairment annually.
D) If any impairment occurs, the company records a loss in the period in which the
intangible asset was acquired.
Baker, Inc. had reported the following details for the year ended December 31, 2017:
The company’s beginning total assets and liabilities were $14,400,000 and $9,200,000,
respectively. Calculate the asset turnover ratio for 2017.
A) 2.10 times
B) 1.20 times
C) 1.56 times
D) 1.59 times
Osbourne, Inc. issued 60,000 shares of common stock in exchange for manufacturing
equipment. The equipment has a fair value of $1,420,000. The stock has a par value of
$0.05 per share. The journal entry to record this transaction includes a ________.
A) debit to Cash for $14,170,000
B) credit to Gain on Sale of Common Stock for $1,480,000
C) credit to Paid-In Capital in Excess of Par-Common for $1,417,000
D) credit to Common Stock-$0.05 Par Value for $1,420,000
Which of the following accounting methods is generally used to compute amortization
expense?
A) declining-balance
B) units-of-production
C) straight-line
D) first-in, first-out
Owens Jewelers uses the perpetual inventory system. On April 2, Owens sold
merchandise with a cost of $2,500 for $7,000 to a customer on account with terms of
2/15, n/30. Which of the following journal entries correctly records the sales revenue?
A)
B)
C)
D)
Which of the following securities pay dividends?
A) corporate bonds
B) common stocks
C) debt securities
D) Treasury bills
Which of the following is described as a system where customers send their checks
directly to a post office box that belongs to a bank?
A) an encryption system
B) an imprest system
C) a lock-box system
D) a firewall system
A truck costs $303,000 and is expected to be driven 115,000 miles during its five-year
life. Residual value is expected to be zero. If the truck is driven 29,000 miles during the
first year, how much depreciation should the business record under the
units-of-production method? (Round any intermediate calculations to two decimal
places, and your final answer to the nearest dollar.)
A) $97,750
B) $25,423
C) $76,270
D) $47,520
On September 1, Peterson Maintenance Company contracted to provide monthly
maintenance services for the next eight months at a rate of $2,600 per month. The client
paid Peterson $20,800 on September 1. Assuming Peterson records deferred revenues
using the alternative treatment, what would be the entry on September 1?
A) Debit Cash and credit Unearned Revenue for $20,800
B) No entry is needed until the services are performed
C) Debit Cash and credit Service Revenue for $20,800
D) Debit Prepaid Maintenance and credit Cash for $20,800