Langston Company updates its inventory periodically. The company’s cost of goods
sold was $2,700 and purchases were $5,600 during the year. The company’s ending
inventory count was $5,000. What was the amount of beginning inventory?
A) $3,300
B) $13,300
C) $7,900
D) $2,100
A company lends its supplier $150,000 for 3 years at a 6% annual interest rate. Interest
payments are to be made twice a year. Each interest payment will be for:
A) $9,000
B) $13,500
C) $4,500
D) $27,000
Which of the following statements about the recording of interest on notes receivable is
correct?
A) Interest on notes receivable is recorded as revenue only when the cash is received.
B) When a company makes an interest payment on a note, the payment is debited to
Interest Receivable.
C) Interest on notes receivable is recognized when it is earned, which is not necessarily
when the interest is received in cash.
D) Interest earned but not yet received must be recorded in an adjusting entry which
includes a debit to Interest Revenue.
A company reports Equipment on its classified balance sheet. The balance of the
Accumulated Depreciation account appears on a classified balance sheet as:
A) an addition to arrive at the amount of Equipment, Net.
B) a subtraction to arrive at the amount of Equipment, Net
C) part of Total Liabilities section.
D) a subtraction in the Total Liabilities section.
Which of the following statements about an adjusted trial balance is correct?
A) Debits should equal credits both before and after adjustments are made.
B) Debits will equal credits after adjustments are made but not necessarily before.
C) Debits will equal credits before adjustments are made but not necessarily after.
D) Debits do not have to equal credits in the adjusted trial balance but they must be
equal in the post-closing trial balance.
Companies using a perpetual inventory system:
A) never physically count their inventory.
B) must count their inventory at least once a week.
C) still need to count the inventory at the end of the period.
D) always know the actual amount in inventory from their accounting records.
Which of the following statements about revenues and expenses is correct?
A) If revenues are less than expenses, the company has a net loss and Retained
Earnings decreases.
B) If revenues are greater than expenses, the company has net income and Common
Stock increases.
C) If revenues are less than expenses, the company has a net loss and Common Stock
increases to balance off the loss.
D) If revenues are greater than expenses, the company has net income and Retained
Earnings decreases.
Cash flows from operating activities include all of the following except:
A) a purchase of land.
B) collections from customers on account.
C) payments to employees for hours worked.
D) receipt of cash dividends.
Which of the following groups of accounts contains only those that normally have
credit balances?
A) Accounts Payable, Service Revenue, and Retained Earnings
B) Cash, Equipment, and Common Stock
C) Notes Payable, Salaries and Wages Payable, and Rent Expense
D) Cash, Accounts Receivable, and Retained Earnings
The services provided by banks help businesses to control cash by meeting all of the
following control objectives except:
A) document procedures.
B) independently verify.
C) segregate duties.
D) restrict access.
If a company’s ending inventory count was $50,000, cost of goods sold was $27,000,
and purchases were $56,000, its beginning inventory must have been:
A) $33,000.
B) $133,000.
C) $79,000.
D) $21,000.