A petty cash fund was established with a $575 balance. It currently has cash of $45 and
petty cash tickets as shown below:
Which of the following would be included in the journal entry to replenish the Petty
Cash fund?
A) debit to Cash Short & Over for $20
B) credit to Cash Short & Over for $20
C) debit to Petty Cash for $20
D) credit to Petty Cash for $20
Which of the following correctly describes the accounting treatment for interest
payable?
A) It is shown on the balance sheet as a current liability.
B) It is shown on the income statement as an operating expense.
C) It is shown on the balance sheet as a current asset.
D) It is shown on the balance sheet as a long-term liability.
Which of the following items are reconciling items on the book side of the
reconciliation?
A) outstanding checks and correction of book error
B) deposit in transit and NSF check
C) bank service charge and outstanding checks
D) bank service charge and correction of book error
In regards to corporate income tax, which of the following statements is incorrect?
A) Federal income taxes are calculated on a corporate tax return.
B) Income Tax Expense is recorded when the federal income tax is paid.
C) When the corporation files its federal corporate tax return and makes payment, the
account Income Tax Payable is credited.
D) The amount income taxes that the corporation owes but has not yet paid is classified
as a current liability.
Danube Corp. purchased a used machine for $17,000. The machine required installation
costs of $7,000 and insurance while in transit of $600. At which of the following
amounts would the be recorded?
A) $17,000
B) $24,000
C) $17,600
D) $24,600
Under the equity method, the investor ________.
A) must debit the Long-term Investments account when a dividend is received
B) must record its share of the investee’s net income
C) must use the LIFO method for tax purposes
D) debits the Revenue from Investments when the investee reports income
The Tarrago Company issues $517,000 of 11%, 10-year bonds at 104 on March 31,
2017. The bond pays interest on March 31 and September 30. Assume that the company
uses the straight-line method for amortization. Calculate the net balance that will be
reported for the bonds on the September 30, 2017 balance sheet.
A) $517,000
B) $537,680
C) $536,646
D) $538,714
Star Homes Corporation just recorded a transaction in its books. If this transaction
increased the total liabilities by $12,000, then ________.
A) assets must increase, or equity must decrease by $12,000
B) either assets or equity must decrease by $12,000
C) both assets and equity must each decrease by $6,000
D) assets must decrease by $12,000
What type of account is Prepaid Rent, and what is its normal balance?
A) It is an expense account and has a debit balance.
B) It is a liability account and has a credit balance.
C) It is a revenue account and has a credit balance.
D) It is an asset account and has a debit balance.
Which of the following is added to operating income to arrive at net income?
A) sales revenue
B) cost of goods sold
C) interest revenue
D) operating expenses
The accounts that are used in a worksheet are taken from and listed in the same order as
the ________.
A) balance sheet
B) audit report
C) journal
D) chart of accounts
A company made net sales revenue of $530,000, and cost of goods sold totaled
$238,500. Calculate its gross profit percentage.
A) 55%
B) 45%
C) 130%
D) 300%
Blandings Glassware Company issues $1,150,000 of 15%, 10-year bonds at 95 on
February 28, 2017. The bonds pay interest on February 28 and August 31. The journal
entry to record the issuance includes a ________.
A) debit to Cash for $1,150,000
B) credit to Bonds Payable for $1,092,500
C) credit to Discount on Bonds Payable for $57,500
D) debit to Cash for $1,092,500
In a perpetual inventory system, when cash sales are recorded, ________.
A) merchandise inventory decreases and cost of goods sold decreases
B) sales revenue increases and cash decreases
C) sales revenue increases and cost of goods sold decreases
D) merchandise inventory decreases and cost of goods sold increases
Which of the following is an asset account?
A) Salaries Expense
B) Accounts Payable
C) Service Revenue
D) Prepaid Expense
Lewis, Inc. had the following balances and transactions during 2016:
What would be reported as Cost of Goods Sold on the income statement for the year
ending December 31, 2016 if the perpetual inventory system and the weighted-average
inventory costing method are used? (Round the unit costs to two decimal places and
total costs to the nearest dollar.)
A) $22,005
B) $32,600
C) $14,595
D) $10,595
Which of the following is included in the entry to record estimated warranty payable?
A) a credit to Estimated Warranty Payable
B) a credit to Merchandise Inventory
C) a credit to Warranty Expense
D) a debit to Estimated Warranty Payable
The first step in the journalizing and posting process is to ________.
A) post the journal entry to the ledger
B) identify the accounts involved and the account type
C) decide whether each account increases or decreases
D) record the transaction in the journal