An asset is considered to be obsolete when a newer asset can perform the job more
efficiently.
Inventory turnover measures the number of times a company sells its average level of
merchandise inventory during a period.
The disposal of a business segment is reported as discontinued operations.
Ross Corp. uses the indirect method to prepare the statement of cash flows. Refer to the
following section of the comparative balance sheet:Ross Corp.
Comparative Balance Sheet
December 31, 2017 and 2016
The change in Accrued Liabilities is shown as a negative cash flow in the adjustments
to net income.
Notes receivable represents a written promise that a party will pay a fixed amount of
principal plus interest on a stated maturity date.
The cash ratio helps to determine a company’s ability to meet its short-term obligations
using cash and cash equivalents.
When a corporation issues stock at par value, the Cash account is debited and the
Common Stock account is credited for an amount equal to the number of shares issued
times the par value per share.
Entries in the cash payments journal are posted daily to the accounts payable subsidiary
ledger and monthly to the general ledger.
The entry to accrue the warranty payable includes a credit to Warranty Expense.
Before signing a check, the controller or the treasurer should examine the purchase
order, the invoice, and the receiving report to determine that the company received the
goods and that the company is paying only for the goods received.
Companies use a ledger to show all of the increases and decreases in each account
along with their balances.
For accounting purposes, depreciation refers to the ________.
A) method of allocating the cost of a plant asset to expense it over its useful life
B) method of declining the market value of an asset to its book value
C) method of estimating an asset’s current market value
D) process of selling a used asset
In a cash receipts journal, ________.
A) cash sales are recorded in the Accounts Receivable CR column and the Cash DR
column
B) collections on account are recorded in the Accounts Receivable DR column and the
Cash DR column
C) the miscellaneous cash receipt transactions are ignored
D) the cash sales are recorded in the Sales Revenue CR column
Which of the following is a reason why many companies require a photo ID when
employees pick up their paychecks?
A) to make sure an employee’s work hours have been accurately reported
B) to avoid writing a paycheck to a fictitious person
C) to improve efficiency of the payroll disbursement process
D) to make sure all employees are legal adults
A business has the following transactions:
– The business receives $25,000 cash and issues common stock to stockholders.
– The business purchases $800 of office supplies on account.
– The business purchases $4,000 of furniture on account.
– The business renders services to various clients totaling $17,000 on account.
– The business pays $2,000 for salaries expense and $5,000 for rent expense.
– The business pays $800 to a supplier for the office supplies purchased earlier.
– The business collects $3,000 from one of its clients for services rendered earlier in the
month.
At the end of the month, all journal entries are posted to the ledger. Accounts
Receivable will appear as which of the following?
A)
B)
C)
D)
Which of the following transactions will affect the balance of Retained Earnings?
A) issued common stock for cash
B) paid rent expense for the month
C) purchased land for cash
D) collection on account
Which of the following statements is true of a trial balance?
A) A trial balance has the same format as a balance sheet.
B) A trial balance presents data in debit and credit format.
C) A trial balance shows the total amounts of assets and liabilities, but not equity.
D) A trial balance is prepared after the balance sheet.
O’Brien Coatings Company uses the indirect method to prepare its statement of cash
flows. Refer to the following information for 2017:The beginning balance in the Cash
account was $2,900.
Net cash provided by operating activities: $40,000
Net cash used for investing activities: $(25,500)
Net cash provided by financing activities: $1,700The statement of cash flows will show
________.
A) ending cash of $16,200
B) total net cash flows of positive $65,500
C) total net cash flows of negative $16,200
D) ending cash of $19,100
Jackson & Murphy Enterprises expects the following for 2017:
The business plans to spend $107,000 to purchase equipment.
What is the expected amount of free cash flow for 2017?
A) $109,000
B) $125,000
C) $76,000
D) $60,000
At the beginning of 2017, Brady, Inc. has the following account balances:Accounts
Receivable $43,000 (Debit)
Allowance for Bad Debts $8,000 (Credit)
Bad Debts Expense $0During the year, credit sales amounted to $840,000. Cash
collected on credit sales amounted to $790,000, and $17,000 has been written off. At
the end of the year, the company adjusted for bad debts expense using the
percent-of-sales method and applied a rate, based on past history, of 2.5%. The amount
of bad debts expense for 2017 is ________.
A) $21,000
B) $41,825
C) $17,000
D) $12,000
Which of the following is an external user of a business’s financial information?
A) customers
B) cost accountant
C) company manager
D) the board of directors
Which of the following is an asset account?
A) Cash
B) Notes Payable
C) Dividends
D) Unearned Revenue
Lopez Corp. uses the indirect method to prepare its statement of cash flows. Refer to
the following information for 2017:1. Long-Term Notes Payable, beginning balance,
$85,000
2. Long-Term Notes Payable, ending balance, $71,000
3. Common Stock, beginning balance, $3,100
4. Common Stock, ending balance, $27,000
5. Retained Earnings, beginning balance, $76,000
6. Retained Earnings, ending balance, $120,000
7. Treasury Stock, beginning balance, $5,200
8. Treasury Stock, ending balance, $10,100
9. No stock was retired.
10. No treasury stock was sold.
11. During 2016, the company repaid $37,000 of long-term notes payable.
12. During 2016, the company borrowed $51,000 on a new note payable.
13. Net income for the year was $54,000.
14. Assume all dividends declared during the year were paid.What is the net cash flow
from financing activities?
A) $19,000
B) $9,000
C) ($14,000)
D) $23,000
In which of the columns of a worksheet would a net loss be found?
A) in the balance sheet credit column and the income statement debit column
B) in the balance sheet debit column and the income statement credit column
C) in the unadjusted trial balance credit column, the adjusted trial balance credit
column, and the balance sheet credit column
D) in the unadjusted trial balance debit column, the adjusted trial balance debit column,
and the balance sheet debit column
Vaughn Services hires a new accountant to maintain its petty cash fund. Although the
employee possesses an accounting degree, he/she had been previously convicted of
embezzlement.Which internal control procedure needs to be addressed in the above
situation?
A) assignment of responsibilities
B) competent, reliable, and ethical personnel
C) separation of duties
D) documents
Which of the following is an issue that must be addressed in the internal controls for
e-commerce?
A) burglar alarms
B) tone at the top
C) phishing expeditions
D) need for outside auditors
Partridge, Inc. provides the following information for 2017:
The company has no preferred stock outstanding. Calculate the dividend yield for
common stock. (Round your answer to two decimal places.)
A) 6.92%
B) 1.92%
C) 5.00%
D) 7.44%
Which of the following depreciation methods allocates a higher amount of depreciation
in earlier years than in later years?
A) the units-of-production method
B) the straight-line method
C) the double-declining-balance method
D) the first-in, first-out method