Electronic funds transfer moves cash by electronic communications.
A preferred stock is an example of a debt security.
In a computerized environment, the posting process is completed automatically when
the user enters the journal entry.
A company should not change the inventory costing method each period in order to
maximize net income. This is an example of the disclosure principle.
An adverse opinion is issued if the auditor finds that the financial statements are not
presented fairly.
Legal capital refers to the portion of stockholders’ equity that cannot be used for
dividends.
The heading of a balance sheet will show the date as a specific date, not a period of
time.
The balance sheet of a business summarizes an entity’s revenues and expenses.
Prenumbered source documents provide necessary control in a system by automatically
assigning a sequential number to each new transaction.
The bank statement reports the activity in the customer’s account and issued on an
annual basis.
On January 1, Unearned Revenue of Grossman, Inc. had a beginning balance of $1,400.
During January, the company earned $700 of the deferred revenue. The company also
collected $6,000 from a new customer for services to be performed the following
month. At the end of January, the Unearned Revenue account should have a balance of
$6,000.
When a company acquires a long-term bond investment, by paying cash, total assets
remain unchanged.
The dividend payout ratio measures the annual dividend per share as a proportion of the
market price per share.
Gains and losses on the normal sale of plant assets are reported as discontinued
operations.
The direct write-off method for uncollectible accounts violates the matching principle.
Gitis, Inc. uses the direct method to prepare its statement of cash flows. Use the
following information reported for 2017:Sales Revenue, $43,000
Interest Revenue, $600
Accounts Receivable, beginning balance, $13,400
Accounts Receivable, ending balance, $26,000
There were no amounts reported for Interest Receivable.Compute the total cash
receipts.
A) $26,000
B) $56,400
C) $31,000
D) $13,400
A check was written by a business for $507 but was recorded in the journal as $705.
How would this error be included on the bank reconciliation?
A) a deduction on the bank side
B) an addition on the book side
C) an addition on the bank side
D) a deduction on the book side
For the year ending December 31, 2017, Rodgers Electric expects net cash provided by
operations of $328,000, net cash used by investing activities of $141,000, and net cash
provided by financing activities of $50,000. Rodgers plans to spend $259,000 to add a
warehouse for its operations and pays $35,000 in cash dividends. What is the amount of
free cash flow?
A) $237,000
B) $34,000
C) $69,000
D) $(72,000)
Classic Artists’ Services signed a contract with a maintenance service company to
maintain a building that Classic will use for office purposes. The contract states that the
work will begin work on February 1 and end on May 31. Classic Artists’ will pay the
maintenance service company $2,000 at the end of May. It accrues Maintenance
Expense at the end of every month. What is the balance in the Accounts Payable
account for amounts owed to the maintenance service company at the end of March?
A) Debit balance of $2,000
B) Credit balance of $1,000
C) Debit balance of $1,000
D) Credit balance of $2,000
________ refers to purchasing software and data storage from a third party.
A) Cloud computing
B) Resource planning
C) Networking
D) Entry-level software
A business renders services to a client and issues a sales invoice. The amount will be
collected from the customer at a later time. Which of the following is true at the time
the invoice is issued?
A) Equity will decrease.
B) Total liabilities will increase.
C) Total assets will decrease.
D) Net income will increase.
The statement of cash flows helps users ________.
A) predict future net income
B) evaluate management decisions
C) evaluate the company’s earnings per share
D) predict the growth of a company’s assets
Which of the following is included in the entry to record accrual of warranty expense?
A) a debit to Warranty Expense
B) a credit to Merchandise Inventory
C) a credit to Warranty Expense
D) a debit to Estimated Warranty Payable
On July 7, Landview Bank lent $530,000 to Classical Music Shop on a 60 day, 4%
note. What is the maturity value of the note? (Use a 360-day year and round answers to
the nearest dollar.)
A) $530,000
B) $551,200
C) $533,485
D) $533,533
Which of the following is an important aspect of control over payroll?
A) controls to limit salaries and wages so that they are no higher than competitors
B) controls for efficiency in payroll procedures
C) controls to screen potential employees for criminal records
D) controls to monitor employee behavior, such as use of security cameras
Under the perpetual inventory system, the journal entry to record the freight paid by the
seller on goods sold is:A)
B)
C)
D)
Under which of the following terms will the buyer be required to pay transportation
costs?
A) FOB destination
B) FOB shipping point
C) freight out
D) freight in
Which of the following describes a firewall?
A) a malicious program that enters program code or destroys data without authorization
B) when two or more people cooperate together to defraud a company
C) a technique for protecting data
D) when a company defrauds its suppliers by making false claims
The following information relates to Nebula, Inc.
Calculate the operating income.
A) $13,000
B) $70,000
C) $240,000
D) $23,000
Accord Corporation purchased land for $100,000 by making a cash payment of $30,000
and promising to pay the remaining amount in a later accounting period. What is the net
effect of this transaction on Accord’s accounting equation?
A) assets increase by $100,000 and liabilities decrease by $30,000
B) assets increase by $100,000 and liabilities decrease by $70,000
C) assets and equity increase by $70,000
D) assets and liabilities increase by $70,000
Martin Ceramics Company sold equipment for cash. The income statement shows a
gain on the sale of $1,020. The net book value of the asset was $3,810. Which of the
following statements describes the cash effect of the transaction?
A) negative cash flow of $4,830 for financing activities
B) negative cash flow of $2,790 for operating activities
C) positive cash flow of $4,830 from investing activities
D) positive cash flow of $2,790 from investing activities
Ariel Tax Planning Service has the following plant assets: Communications equipment:
Cost, $8,640 with useful life of 8 years; Furniture: Cost, $18,000 with useful life of 12
years; and Computer: Cost, $13,440 with useful life of 4 years. Assume the residual
value of all the assets is zero and the straight-line method is used.Ariel’s monthly
depreciation journal entry will include a ________.
A) debit to Depreciation Expense of $5,940
B) credit to Depreciation Expense of $5,940
C) debit to Accumulated Depreciation of $495
D) credit to Accumulated Depreciation of $495
On December 1, 2016, Gardner Products borrowed $92,000 on a 5%, 10-year note with
annual installment payments of $9,200 plus interest due on December 1 of each
subsequent year. Which of the following describes the first installment payment made
on December 1, 2017? (Round your answer to the nearest whole number.)
A) $9,200 principal plus $4,600 interest
B) $9,200 principal plus $460 interest
C) $9,200 principal plus $9,200 interest
D) $4,600 interest only
Which of the following requires businesses to record depreciation?
A) revenue recognition principle
B) matching principle
C) cost principle
D) going concern principle