A merchandiser’s statement of retained earnings looks exactly like that of a service
business.
Johnson Company purchased land for $30,000. The president of Johnson Company
believes that the land is actually worth $35,000. The land can be recorded at $35,000.
The cash receipts journal is a special journal used to record business transactions of all
cash receipts and credit sales.
When a company receives interest revenue on a bond, total stockholders’ equity remains
unchanged.
Different users of accounting information focus on the information they need to make
the best choices.
In a bank reconciliation, a deposit in transit will be shown on the bank side of the
reconciliation.
A bond is issued at premium ________.
A) when a bond’s stated interest rate is equal to the market interest rate
B) when a bond’s stated interest rate is less than the effective interest rate
C) when a bond’s stated interest rate is less than the market interest rate
D) when a bond’s stated interest rate is higher than the market interest rate
Vista Camera Services started the year with total assets of $110,000 and total liabilities
of $45,000. The revenues and the expenses for the year amounted to $120,000 and
$90,000, respectively. During the year, the company did not issue any common stock,
but it distributed dividends of $50,000. What is the amount of stockholders’ equity at
the end of the year?
A) $90,000
B) $120,000
C) $45,000
D) $50,000
Maurice Corporation invested $100,000 to acquire 20,000 shares of Delta Technologies,
Inc. on March 1, 2017. Delta pays a cash dividend of $0.25 per share on July 2, 2018.
The investment is classified as available-for-sale. Based on these two transactions,
which of the following is true of the accounting equation as of July 2, 2018?
A) Total assets in the balance sheet will remain unchanged.
B) Current assets in the balance sheet will remain unchanged.
C) Equity in the balance sheet will increase.
D) Total liabilities in the balance sheet will increase.
Which of the following describes the financing activities section of the statement of
cash flows?
A) It includes increases and decreases in long-term assets.
B) It includes cash inflows and outflows involved in long-term liabilities and equity.
C) It includes interest and dividend income and cash payments for interest expense.
D) It reports on activities that create revenue or expenses for the entity’s business.
A company issues a 60-day, 13% note for $16,000. What is the principal amount of the
note? (Round your answer to the nearest dollar.)
A) $18,080
B) $16,000
C) $15,653
D) $16,347
A bond is issued at discount when a bond’s stated interest rate is ________.
A) equal to the market interest rate
B) more than the effective interest rate
C) less than the market interest rate
D) more than the market interest rate
Which one of the following account groups normally has a credit balance?
A) assets and liabilities
B) equity and assets
C) liabilities and revenues
D) assets and expenses
Moore Sales purchased equipment for $50,000 by issuing a six-month note payable. On
the statement of cash flows, this transaction would be shown in the ________.
A) non-cash financing and investing activities section
B) investing activities section
C) operating activities section
D) financing activities section
If bonds with a face value of $204,000 are issued at par, the amount of cash proceeds is
________.
A) $203,890
B) $204,000
C) $224,400
D) $244,800
Which of the following states that the business should use the same accounting methods
from period to period?
A) materiality concept
B) consistency principle
C) conservatism
D) disclosure principle
Avery, Inc. uses the periodic inventory system. On February 1, the corporation
purchased inventory on account for $25,000. The terms of invoice were 3/10, n/30. The
amount due was paid on February 9. Which of the following journal entries correctly
records the payment in the books of Avery, Inc.?A)
B)
C)
D)
Cobbe Sales sold 400 units of product to a customer on account. The selling price was
$28 per unit, and the cost, according to the company’s inventory records, was $14 per
unit. Provide the journal entry to record the cost of goods sold. (Assume a perpetual
inventory system.)
Henderson Sales purchased $6,000 of inventory on account. Provide the journal entry.
(Assume a perpetual inventory system.)
“All debits are increases and all credits are decreases.” Is this a correct statement?
Explain your answer.
On November 1, 2016, Everett Janitorial Supply sold merchandise with a cost of $3,200
for $5,000, FOB destination, and payment terms of 2/10, n/30. The company uses a
perpetual inventory system. Give journal entries to record the sales revenue.
Journalize the following sales transactions for Smith Printing Equipment using the
periodic inventory system. Explanations are not required.
Journalize the following transaction for a merchandiser that uses the perpetual
inventory system.
Sold goods for cash, $1,200 (cost $750).
Micro Electronics completed the following stock issuance transactions:
Prepare the journal entries to record these transactions. Explanations are not required.
