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When preparing this month's bank reconciliation, you find that you failed to record a
$95 deposit for a payment you received from a customer. You immediately prepare a
journal entry to record the deposit. Which of the following describes the actions to be
taken when preparing next month's bank reconciliation?
A) You must decrease the balance per bank by $95
B) You must increase the balance per bank by $95
C) You must increase the balance per books by $95
D) No further action is necessary.
The table shows financial data for Purrfect Pets, Inc. as of June 30, Year 3.
Required:
Prepare a balance sheet using these data.
Which of the following is an activity in the operations of a manufacturer, but not in the
operations of a merchandising or service company?
A) Selling the good to consumers
B) Receiving cash
C) Selling the good to other firms
D) Buying raw materials
Almost all U.S. companies have used the indirect method of preparing the statement of
cash flows:
A) because most users of the financial statements do not understand the direct method.
B) in spite of the FASB's stated preference for the direct method.
C) because it usually requires less space in the annual report.
D) so that stockholders cannot determine how much cash was spent on executives'
salaries.
You form a partnership with your best friend. You have contributed 65% of the capital
and can claim 65% of the net income. At the end of the first year, you discover that your
partner has run up $40,000 in debt using the business' credit card. The maximum you
could be liable for is:
A) $0.
B) $40,000.
C) $20,000.
D) $26,000.
Pearl Company has a perpetual inventory system. The company uses the FIFO method
to assign costs to inventory and cost of goods sold. Consider the following information:
What amounts would be reported as cost of goods sold and ending inventory for April?
A) Cost of goods sold $6,250; Ending inventory $1,750
B) Cost of goods sold $7,550; Ending inventory $2,250
C) Cost of goods sold $5,500; Ending inventory $2,500
D) Cost of goods sold $6,000; Ending inventory $2,000
If an analyst wanted to assess a company's long-run survival, which of the following
categories of ratios would most likely be used?
A) Liquidity
B) Market share
C) Profitability
D) Solvency
In a common size income statement, each item on the income statement is expressed as
a percentage of:
A) net income.
B) gross profit.
C) total expenses.
D) sales revenue.
Par value of a stock refers to the:
A) issue price of the stock.
B) value assigned to a share of stock in the corporate charter.
C) market value of the stock.
D) maximum selling price of the stock.
PayPal and national credit card companies charge Abbigail Company a 3% fee for their
services. Abbigail Company's net sales revenue was $10,000 on the last weekend of
November. How much cash will be deposited into Abbigail's bank account as a result of
these sales?
A) $30
B) $9,700
C) $10,000
D) $10,030
Which of the following statements is correct?
A) Accrual-based net income can be manipulated because it is based on estimates.
B) Cash flows are easily manipulated because they are based on estimates.
C) Accrual-based net income is not easily manipulated because valuation for such items
as bad debts and inventory are precise and based on objectively verifiable information.
D) Cash flows are not easily manipulated because they are generated by internal
transactions and do not involve external parties.
Find the missing data.
A) Total revenues are $3,810,200, other selling and administrative expenses are
$1,051,500, and net income is $364,600.
B) Total revenues are $2,495,300, other selling and administrative expenses are
$1,051,500, and net income is ($950,300).
C) Total revenues are $364,600, other selling and administrative expenses are
$3,081,000, and net income is $7,255,800.
D) Total revenues are $3,810,200, other selling and administrative expenses are
$364,600, and net income is $7,255,800.
A company incurred $5,000 in wages for employees for the year. Of these wages,
$4,500 was paid by the end of the year. Which of the following statements is correct?
A) Salaries and Wages Payable on the income statement will be $4,500.
B) Salaries and Wages Expense on the income statement will be $500.
C) Salaries and Wages Expense on the balance sheet will be $5,000.
D) Salaries and Wages Payable on the balance sheet will be $500.
Use the information above to answer the following question. Xu sells 300 units during
the quarter. If Xu uses the LIFO method, what is its cost of goods sold?
A) $1,600
B) $1,400
C) $1,500
D) $1,800
Consider the following information:
What is the net cash provided by operating activities?
A) $17,500
B) $18,500
C) $21,500
D) $23,300
Use the information above to answer the following question. If Alphabet Company uses
the weighted average method, what is the cost of its ending inventory? (Round the per
unit cost to two decimal places and then round your answer to the nearest whole
dollar.)
A) $38
B) $48
C) $67
D) $75
At the end of the accounting period, but before the closing entries have been recorded,
Harry, the proprietor of Harry's Bar and Grill, has a debit of $24,500 in his drawing
account and a credit of $126,800 in his capital account. If his capital account has a
credit balance of $137,900 after the closing, what was his net income?
A) $11,100
B) $35,600
C) $113,400
D) $13,400
Hardware Inc. has a periodic inventory system and uses the weighted average method.
The company began the year with 150 large brass switch plates on hand at a cost of
$4.00 each. Purchases of switch plates during the year were as follows:
The switch plates sell for $7.00 each. If Hardware sells 570 switch plates during the
year, what is the company's cost of goods sold?
A) $3,990
B) $2,508
C) $2,480
D) $2,560
The return on equity ratio measures the:
A) return stockholders receive in dividends for each dollar of their investment.
B) return stockholders receive in dividends and stock price growth for each dollar of
their investment.
C) amount of income earned for each dollar of common stockholders' equity.
D) amount earned by the company on each dollar obtained from equity and debt
financing.
Oklahoma Company has a fiscal year ending on December 31, 2015. The following
information has been gathered so that the company could prepare adjustments:
A) The company had $4,000 of office supplies on hand on January 1, 2015, purchased
$6,300 of supplies during the year, and had $1,200 of supplies were on hand on
December 31, 2015.
B) On October 1, 2015, a three-year insurance premium of $27,000 was paid for
coverage beginning on that date. The payment was recorded in the Prepaid Insurance
account.
C) A delivery vehicle was purchased for $30,000 on April 1, 2015. The vehicle has a
5-year useful life and no salvage value. Depreciation is estimated to be $6,000 per year
or $500 per month.
D) The company rents some of its unused factory space to a small manufacturer. The
lease required an advance payment of $18,000 for six months' rent on November 1,
2015, and the lease term began that day. The advance payment received from the tenant
was recorded as Unearned Revenue when it was received.
E) Employees work five days per week and are paid $75,000 every other Friday; each
pay period includes ten week days. The last payday during the company's fiscal year
was properly recorded on Friday, December 26, 2015. The employees worked on
December 29, 30, and 31, 2015; they will not be paid for that work until Friday, January
9, 2016.
F) The Accounting Department sends bills to customers every Friday and records the
revenue earned at that time. Customers were billed and the related revenue was
properly recorded on Friday, December 26, 2015. Since then, services were performed
on December 29, 30, and 31, 2015; those services totaled $29,000. This amount has not
been recorded.
Required:
Prepare the adjusting entry that is required for each of the situations described above.
Assume that you are adjusting the related accounts as of the end of the year and that no
adjustments have been made since the dates provided above.
