A company reported the following information:
How much cash was paid for insurance during 2014?
a. $22,700
b. $27,700
c. $39,200
d. $36,700
Used to encourage prompt payment
Select the term that matches each of the following descriptions.
a. Sales Discount
b. Trade Discount
c. Sales Allowance
d. Sales Returns
An investor’s available-for-sale securities had increased in market value from $50,000
to $55,000 as of the balance sheet date. Which of the following journal entries would be
required?
a. Realized gain on investments 5,000 Allowance to adjust investments to market 5,000
b. Allowance to adjust investments to market 5,000 Realized gain on investments 5,000
c. Unrealized gain on investments 5,000 Allowance to adjust investments to market
5,000
d. Allowance to adjust investments to market 5,000 Unrealized gain on investments
5,000
The sales taxes paid related to a machine purchased.
Select the account to which each of the following costs would be debited. (Choices may
be used more than once.)
a. Land
b. Land Improvements
c. Buildings
d. Machinery and Equipment
e. An Expense Account
Which financial statement would you refer to in order to determine how much resources
(assets) the company owned?
a. Balance Sheet
b. Statement of Retained Earnings
c. Income Statement
d. Statement of Cash Flows
During 2013, Gardner Home Center sold 800 power washers for $350 each. The power
washers carry a 2-year warranty for repairs. Estimates indicate that repair costs will
average 2% of sales. How much warranty expense should be accrued as a result of the
2013 sales of this product?
a. $8,400
b. $5,600
c. $2,800
d. No liability should be recorded until units are brought in for repairs.
Some of the steps in the accounting cycle are listed below. Select the choice that places
these steps in the correct order.
a. 2, 3, 4, 5, 1
b. 3, 2, 4, 5, 1
c. 3, 2, 4, 1, 5
d. 3, 2, 5, 4, 1
Plant assets are depreciated because
a. the accrual basis of accounting requires matching of costs to revenues.
b. cash basis of accounting requires depreciation.
c. the book values equal market values.
d. the replacement cost of plant assets may fluctuate over time.
Refer to Falling Leaves Lawn Care. The company is comparing the straight-line and
double-declining-balance depreciation methods. Of these two methods, which method
creates the larger expense and larger tax savings in 2013?
Falling Leaves Lawn Care This company purchased new excavating equipment at the
beginning of 2013. The equipment has a cost of $37,000, an estimated life of 5 years,
and an estimated residual value of $7,000. A full year’s depreciation expense is to be
recorded in 2013. The equipment was used 20,000 hours during 2012 and 24,000 hours
during 2013. The number of expected hours over 5 years is 100,000. a. Straight-line
depreciation creates the larger expense, while double-declining-balance depreciation
creates the larger tax savings.
b. Straight-line depreciation creates both the larger expense and the larger tax savings.
c. Double-declining-balance depreciation creates both the larger expense and the larger
tax savings.
d. Double-declining-balance depreciation creates the larger expense, while straight-line
depreciation creates the larger tax savings.
Which of the following is true for a corporation that issues 1,000 shares of $2 par
common stock at $5 per share?
a. The common stock account will increase by $5,000.
b. $2 per share is the maximum selling price for these shares of stock.
c. Total stockholders’ equity will increase by $5,000.
d. The per share dividend amount on these shares is $2.
The sequence of procedures used by companies to transform the effects of business
activities into financial statements.
Match the following terms with their correct definition.
a. Account f. Debit
b. Accounting cycle g. Event
c. Chart of accounts h. General ledger
d. Cost vs. benefit i. Journal
e. Credit j. Trial balance
The elapsed time between the purchase of goods for resale and the collection of cash
from customers is referred to as the ____________________ cycle.
Refer to Cabana Club. What impact will an adjustment to the Income Tax Expense
account on December 31, 2013 have on the accounting equation?
Cabana Club The company’s consolidated statement of income is provided below:
Selected data from the financial statements of Mars & Venus Counseling Center for the
years ended December 31, 2014 and 2013, are presented below:
What is the amount of cash and cash equivalents at the end of 2014?
The fair value method should be used to account for stock investments of less than 20%
of the outstanding shares.
Plant assets, current assets, property, plant and equipment, and fixed assets are all
tangible assets.
Refer to Merry Maids Company. In 2014, why are depreciation and amortization
expenses added back to net income in the operating activities section of the statement of
cash flows?
Merry Maids Company
Merry Maids Company began 2013 with a cash and cash equivalents balance of $7,670.
Consolidated statements of cash flows for the years ended December 31, 2014 and
2013, are presented below:
Refer to H&R Clock Company. Record each transaction in proper journal entry format
in the journal provided. A written explanation for each journal entry is not required.
When an investor is able to exert significant influence over another company, the
____________________ method of accounting is used for the investment.
Refer to the partial balance sheet presented above for Gibraltar, Inc. Compute the total
current liabilities for December 31, 2013, and December 31, 2012. Gibraltar, Inc. A
partial balance sheet for the company is provided below. Assume that all of the account
balances on the balance sheet are normal balances.
A(n) ____________________ is the buyer of receivables, who acquires the right to
collect the receivables and assumes the risk of uncollectibility.