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Which of the following is calculated by dividing net sales revenue by average net
receivables?
A) Days to sell ratio
B) Current ratio
C) Profit margin
D) Receivables turnover ratio
A deposit in transit on last month's bank reconciliation is shown as a deposit on the
bank statement this month. As a result, in preparing this period's reconciliation, the
amount of this deposit should:
A)be added to the book balance of cash.
B)be deducted from the book balance of cash.
C)be added to the bank balance of cash.
D)not be included as a reconciling item.
Use the information above to answer the following question. What is the amount of the
change in stockholders' equity during the year?
A) $3,000 increase
B) $21,000 increase
C) $21,000 decrease
D) $3,000 decrease
Zorn Inc. makes a sale for $300. The company is required to collect sales taxes
amounting to 9%. What is the amount that will be credited to the Sales Tax Payable
account?
A) $27
B) $273
C) $300
D) $327
What is the minimum number of accounts that must be involved in any transaction?
A) One
B) Two
C) Three
D) There is no minimum.
The Publish or Perish Printing Company paid a dividend to stockholders. This will be
reported on the:
A) audit report.
B) income statement.
C) balance sheet.
D) statement of retained earnings.
An understatement of the beginning inventory balance causes cost of goods sold to be:
A) understated and net income to be understated.
B) understated and net income to be overstated.
C) overstated and net income to be understated.
D) overstated and net income to be correct.
Match the letter and the blank in each transaction description to complete the analysis.
Not all terms will be used and some terms may be used more than once.
TRANSACTION
1) A company pays wages. This is recorded as a(n) ________ to Cash and a(n)
________ to Salaries and Wages Expense.
2) A company is paid for a job completed last month. This is recorded as a debit to
________ and a credit to ________.
3) A restaurant buys and immediately uses ingredients. This is recorded as a(n)
________ to an expense account and a(n) ________ to Cash.
4) A customer pays in advance for services to be performed during the next month. This
is recorded as a ________ to Cash and a ________ to ________.
5) A company receives cash for a job that was completed during the current month. This
is recorded as a debit to ________ and a credit to ________.
TERM
A. debit
B. credit
C. Accounts Payable
D. Accounts Receivable
E. Cash
F. Notes Payable
G. Service Revenue
H. Supplies
I. Unearned Revenue
Which of the following items would be reported on a statement of cash flows using the
indirect method, but not on a statement prepared using the direct method?
A) Cash paid for dividends
B) Cash received from stock issuances
C) Depreciation
D) Cash paid for purchase of treasury stock
Treasury stock:
A) does not appear on the balance sheet.
B) is a contra-equity account.
C) is an asset account.
D) is recorded as additional paid-in capital.
A company's income statement for the year shows a net loss of $90,000. Additional
information for the year follows:
What is the net cash provided by (used in) operating activities?
A) ($99,000)
B) $27,000
C) $13,000
D) ($45,000)
