If the merchandise inventory’s market value is greater than its cost, then it must be
adjusted for the difference.
If a bank reconciliation includes interest revenue, a journal entry is required which
credits Cash and debits Interest Revenue.
Long Company owns a 2% investment in the common stock of Smith Company. The
receipt of a cash dividend from Smith will have no effect on Long’s total equity.
Amortization is the process by which businesses spread the allocation of an intangible
asset’s cost over its useful life.
Accounting starts with economic activities that accountants review and evaluate using
critical thinking and judgment to create useful information that helps individuals make
good decisions.
A chart of accounts is a list of all of a company’s accounts with their account numbers.
When a corporation issues no-par stock, it debits the asset received and credits the stock
account.
When preparing the statement of cash flows using the indirect method, a loss on the
sale of plant assets must be shown as a subtraction from the investing activities section.
On April 1, 2017, Planet Services received $8,000 in advance of performing the
services from a customer for three months of service – April, May and June. What
would be the journal entry to adjust the accounts at the end of May?
A) Debit Service Revenue $2,667, and credit Unearned Revenue $2,667.
B) Debit Unearned Revenue $5,333, and credit Service Revenue $5,333.
C) Debit Unearned Revenue $8,000, and credit Service Revenue $8,000.
D) Debit Service Revenue $5,333, and credit Accounts Receivable $5,333.
The Frozen Lake Company issues $503,000 of 10%, 10-year bonds at 107 on March 31,
2017. The bond pays interest on March 31 and September 30. Assume that the company
uses the straight-line method for amortization. The journal entry to record the first
interest payment on September 30, 2017 includes a ________.
A) debit to Cash for $25,150
B) debit to Interest Expense for $26,911
C) debit to Interest Expense for $23,389
D) credit to Premium on Bonds Payable for $1,761
Which of the following is considered a fiscal year?
A) six months
B) three months
C) twelve months
D) four months
During a period of declining inventory costs, which of the following inventory costing
methods should be used by a company that intends to minimize its income tax
expenses?
A) first-in, first-out
B) last-in, first-out
C) weighted-average
D) specific identification
The purchase of equipment financed by a long-term notes payable is an example of
________.
A) investing activity
B) financing activity
C) operating activity
D) non-cash investing and financing activity
A business has the following transactions:- The business received $20,000 cash and
issued common stock to stockholders.
– The business purchases $500 of office supplies on account.
– The business purchases $4,000 of furniture on account.
– The business renders services to various clients totaling $11,000 on account.
– The business pays out $3,000 for salaries expense and $5,000 for rent expense.
– The business pays $600 to supplier for the office supplies purchased earlier.
– The business collects $1,000 from one of its clients for services rendered earlier in the
month.At the end of the month, all journal entries are posted to the ledger. Accounts
Payable will appear as which of the following?
A)
B)
C)
D)
Which of the following is not a part of a corporation’s annual report?
A) report of independent registered public accounting firm
B) MD&A
C) notes to financial statements
D) horizontal and vertical analysis
A(n) ________ is represented by a certificate and is commonly traded on an exchange.
A) inventory
B) intangible asset
C) interest
D) security
Which of the following describes a serial bond?
A) a bond that matures in installments at regular intervals
B) a bond that gives the bondholder a claim for specific assets
C) a bond that matures at one specified time
D) a bond that is not backed by specific assets
The income statement is also known as the ________.
A) statement of operations
B) statement of cash flows
C) statement of stockholders’ equity
D) statement of financial position
Wash N’ Set Corp. purchased equipment for $45,000. Total depreciation of $36,000 was
recorded. On January 1, 2017, Wash N’ Set exchanges the equipment for new
equipment, paying $54,000 cash. The market value of the new equipment is $65,000.
Prepare the journal entry to record this transaction. Assume the exchange has
commercial substance.
The cost of an asset is $10,000,000, and its residual value is $100,000. Estimated useful
life of the asset is four years. Prepare the schedule of depreciation using the
double-declining-balance method of accounting.
The Family Dental Corporation prepays the rent on its dental office. On July 1, the
corporation paid $18,000 for 6 months of rent. How much Rent Expense should Family
Dental Corporation record the three months ended September 30 under the cash basis?
Why?
What is the difference between cash basis accounting and accrual basis accounting?
Johnson Tires Company uses the indirect method to prepare the statement of cash
flows. Refer to the following comparative balance sheet for Johnson Tires Company
and complete the third column to show the increases or decreases.Johnson Tires
Company
Comparative Balance Sheet
December 31, 2017 and 2016
Increase/
2016 2015 (Decrease)
Cash $39,600 $19,800
Accounts Receivable 26,400 38,500
Merchandise Inventory 204,000 126,500
Total Assets 270,000 184,800Accounts Payable 4,800 6,600
Accrued Liabilities 2,400 1,100
Long-term Notes Payable 100,800 99,000
Total Liabilities 108,000 106,700Common Stock 36,000 2,200
Retained Earnings 135,600 81,400
Treasury Stock (9,600) (5,500)
Total Stockholders’ Equity 162,000 78,100Total Liabilities and Stockholders’ Equity
$270,000 $184,800
