The three sections of the statement of cash flows report only activities that involve cash.
Using the effective-interest amortization method, the calculation for the amount of
premium amortization is the difference between the cash paid and the calculated interest
expense.
A single-step income statement shows subtotals for gross profit and operating income.
The use of computer firewalls is an essential element of good internal controls for
e-commerce.
Accounts receivable are also known as trade receivables.
The amortization of bond premium increases interest expense over the life of the bonds.
When a business pledges its accounts receivable, it transfers the right to collect cash
from customers to the bank.
The account Paid-In Capital from Treasury Stock Transactions has a credit balance of
$2,000. The corporation resells 450 shares of its treasury stock. These shares were
acquired for $10 per share and sold for $3 per share. The entry to record the sale of
treasury stock includes a debit to Retained Earnings of $3,150.
On July 1, 2016, Sharon Equipment Dealer issued $590,000 of 6% bonds payable that
mature in seven years. These bonds were issued at face value and pay interest each June
30 and December 31. Each semiannual interest payment will be higher than the amount
of cash paid to the bondholders.
Accounting is referred to as the language of business because it is the method of
communicating business information to decision makers.
A trademark should not be amortized over its useful life.
A business, which has a calendar year accounting period, purchased an asset on March
1, 2016. The business disposed of the asset on August 31, 2017. For the calendar year
2017, depreciation should be calculated from January 1 to August 31.
Under the periodic inventory system, which of the following amounts will always stay
the same regardless of the inventory valuation method used?
A) ending merchandise inventory
B) cost of goods sold
C) gross profit
D) purchases
Mars Services, Inc. pays $700,000 to acquire 35% (200,000 shares) of voting stock of
Grey Investments, Inc. on January 5, 2017. Grey Investments, Inc. declares and pays a
cash dividend of $2.4 per share on June 14, 2017. Which of the following is the correct
journal entry for the transaction on June 14, 2017?A)
B)
C)
D)
The accounting records for Patricia Event Planning Services include the following
select unadjusted balances on December 31, 2016: Salaries Expense, $6,000; Service
Revenue: $19,000; Unearned Revenue, $400; Supplies Expense, $600; Rent Expense,
$300; Depreciation Expense-Equipment, $200.During December, the company worked
with a new client and provided event planning services for an upcoming event. It will
receive the full amount of $2,400 when the event is completed in January 2017. As of
the end of December 2016, it performed one-third of the services covered by the
contract. The company made the accrual adjustments. The balance of Service Revenue,
as shown on the adjusted trial balance, should be a ________.
A) debit balance of $21,400
B) credit balance of $19,000
C) debit balance of $2,400
D) credit balance of $19,800
The total assets and the total liabilities of Smart Financial Services are shown below.
The company issued no common stock and paid no dividends during the year.
What was the amount of net income for the year?
A) $50,000
B) $30,000
C) $20,000
D) $80,000
Which of the following accounts will be included in a post-closing trial balance?
A) Accumulated Depreciation-Building
B) Rent Expense
C) Interest Expense
D) Service Revenue
Which of the following statements regarding vacation benefits is correct?
A) No entry is needed until the employee takes paid vacation.
B) The account, Vacation Expense is debited when the employee takes paid vacation.
C) Health and pension benefits are recorded in the same manner as vacation benefits.
D) When an employee takes paid vacation, the account, Vacation Benefits Payable is
credited.
Charms, Inc. has determined that an account receivable of $125 is uncollectible. The
company uses the direct write-off method. Which of the following entries is required to
record the write-off?A)
B)
C)
D)
A company purchased 300 units for $60 each on January 31. It purchased 150 units for
$25 each on February 28. It sold a total of 250 units for $70 each from March 1 through
December 31. If the company uses the weighted-average inventory costing method,
calculate the amount of ending inventory on December 31. (Assume that the company
uses a perpetual inventory system. Round any intermediate calculations two decimal
places, and your final answer to the nearest dollar.)
A) $21,750
B) $9,666
C) $12,084
D) $8,500
Closing entries are journalized and posted ________.
A) throughout the accounting period
B) before posting the adjusting entries
C) after preparing the post-closing trial balance
D) after preparing the financial statements
Which of the following is not included in continuing operations?
A) gain on sale of machinery
B) a segment of a business that has been discontinued
C) cost of goods sold
D) losses due to lawsuits
The following information is available for Jade Company for the month ending June 30,
2017.- Balance as per the bank statement is $12,000.
– Balance as per books is $10,300.
– Check #506 for $1,200 and check #510 for $800 were not shown on the June 30, bank
statement.
– A deposit in transit of $3,000 had not been received by the bank when the bank
statement was generated.
– A bank debit memo indicated an NSF check for $100 written by Jane Smith to Jade
Company on June 13.
– A bank credit memo indicated a note collected by the bank of $2,100 and interest
revenue of $51 on June 20.
– The bank statement indicated service charges of $30.What is the adjusted book
balance?
A) $12,351
B) $12,321
C) $8,351
D) $8,300
Journalizing a transaction involves ________.
A) calculating the balance in an account using journal entries
B) posting the account balances in the chart of accounts
C) preparing a summary of account balances
D) recording the data only in the journal
Significant interest investments must be accounted for using the ________.
A) equity method
B) consolidation method
C) discounted cash flow method
D) acquisition method
Which of the following principles states that a business should not report anticipated
gains?
A) conservatism
B) materiality concept
C) disclosure
D) consistency
Which of the following is used by companies to separate cash duties and establish
stronger control over cash receipts?
A) an encryption system
B) an imprest system
C) a lock-box system
D) a firewall system
Which of the following accounts will have an ending balance after the closing process
is completed?
A) Dividends
B) Rent Expense
C) Accumulated Depreciation
D) Service Revenue
The return on assets is calculated by ________.
A) subtracting net income from average total assets
B) adding net income and average total assets
C) dividing net income by average total assets
D) multiplying net income and average total assets
Following is a list of account balances of Surburban Lawn Services as of December 31
of the first year of operation.
What is the amount of total liabilities at the end of the year?
A) $14,600
B) $26,800
C) $23,700
D) $14,300
Refer to the following adjusted trial balance.
What will the final ending balance in the Retained Earnings account be after posting the
closing entries?
A) $24,250
B) $25,250
C) $29,150
D) $26,250
Define assets. Provide three examples of assets.
During December 2016, Carroll Service Company performed $1,500 of services, but as
of December 31, 2016, Carroll has not yet billed the clients. If Carroll fails to make an
adjusting entry on December 31, 2016, indicate the effect on assets, liabilities, equity,
and net income.
List and discuss three ways in which the statement of cash flows helps financial
statement users.
Samuel Corp. has provided the following information for the year ended December 31,
2017.Samuel Corp
Comparative Balance Sheet
December 31, 2017 and 2016
Increase
2017 2016 (Decrease)Cash $33,000 $13,000 $20,000
Accounts Receivable 29,000 36,000 (7,000)
Merchandise Inventory 56,000 29,000 27,000
Plant Assets, net 126,000 92,000 34,000
Total Assets $244,000 $170,000 $74,000Accounts Payable $9,000 $13,000 $(4,000)
Accrued Liabilities 7,000 3,000 4,000
Long-term Notes Payable 70,000 79,000 (9,000)
Total Liabilities 86,000 95,000 (9,000)Common Stock 55,000 3,000 52,000
Retained Earnings 115,000 78,000 37,000
Treasury Stock (12,000) (6,000) (6,000)
Total Stockholders’ Equity 158,000 75,000 83,000
Total Liabilities and Stockholders’ Equity $244,000 $170,000 $74,000Samuel Corp
Income Statement
Year ended December 31, 2017
Sales Revenue $291,300
Interest Revenue 1,000
Gain on Sale of Plant Assets 6,000
Total Revenues and Gains $298,300
Cost of Goods Sold 145,000
Salaries and Wages Expense 49,000
Depreciation Expense-Plant Assets 16,000
Other Operating Expense 25,000
Interest Expense 3,500
Income Tax Expense 7,800
Total Expenses 246,300
Net Income $52,000Additional information provided by the company includes the
following:
Equipment costing $60,000 was purchased for cash.
Equipment with a net book value of $10,000 was sold for $16,000.
Depreciation expense of $16,000 was recorded during the year.
During 2017, the company repaid $43,000 of long-term notes payable.
During 2017, the company borrowed $34,000 on a new long-term note payable.
There were no stock retirements during the year.
There were no sales of treasury stock during the year.
All sales are on credit.Prepare the 2017 statement of cash flows, using the indirect
method.
Journalize the following transactions for a merchandiser that uses the perpetual
inventory system.
On January 8, inventory was sold for $6,000 on account. Credit terms were 3/15, n/30
(cost $4,500). On January 17, cash was received in full settlement of the January 8 sale.
Dyer Service Company had the following unadjusted balances at December 31, 2016:
Salaries Payable, $0; Salaries Expense, $12,000. The following transactions took place
on December 31, 2016:
Accrued Salaries Expense, $5,000
Closed the Salaries Expense account.The following transaction took place on January 4,
2017:
Paid salaries of $6,000. This payment included $5,000 that was accrued on December
31, 2016 and $1,000 for the first few days in January 2017.Prepare the journal entries
for January 1, 2017 and January 4, 2017, assuming that reversing entries were made.