A trial balance is a list of all of the accounts of a company with their balances at a point
in time.
The balance in the Bonds Payable account is a credit of $77,000. The balance in the
Discount on Bonds Payable is a debit of $3,600. The balance sheet will report the bond
balance as $80,600.
In a manual accounting information system, reports and financial statements must be
created using Word documents, Excel spreadsheets, or PowerPoint.
The Long-term Investments account is debited for the receipt of a dividend on an equity
method investment because the dividend increases the investee’s equity.
FICA-OASDI Taxes Payable would normally be shown on the balance sheet under
long-term liabilities.
A chart of accounts is a detailed record of the changes in a particular asset, liability, or
equity account during a specified period.
The interest period extends from the original date of the note to the maturity date.
Accountants can prepare the statement of cash flows directly from the lower part of the
spreadsheet.
Eliasen, Inc. invests its excess cash in Creative Technologies, Inc. and acquires 3,300
shares for $32.50 per share. Eliasen, Inc. owns less than 2% of Creative’s voting stock
and plans to hold the stock for two years. Which of the following is the correct journal
entry for the transaction?
A)
B)
C)
D)
Reversing entries are used in conjunction with ________.
A) accrual-type adjustments
B) closing entries
C) GAAP
D) Unearned Revenue and Prepaid Rent
Which of the following formulae is used to calculate average total assets for the return
on assets ratio?
A) Average total assets = (Beginning total assets + Ending total assets) x 2
B) Average total assets = (Beginning total assets – Ending total assets) x 2
C) Average total assets = (Beginning total assets – Ending total assets) / 2
D) Average total assets = (Beginning total assets + Ending total assets) / 2
The purchases journal of a business that uses the periodic inventory system will include
a column titled ________.
A) Cost of Goods Sold DR
B) Purchases DR
C) Accounts Payable DR
D) Merchandise Inventory DR
An automobile parts retailer purchases merchandise inventory on account. When using
a manual accounting information system, this transaction is recorded in the ________.
A) purchases journal
B) general journal
C) cash payments journal
D) sales journal
Which of the following is a cash outflow for a financing activity on the statement of
cash flows?
A) purchase of long-term investments, such as the stock of another company
B) loans made to another party
C) purchase of treasury stock
D) purchase of land
Mei Company uses the direct method to prepare its statement of cash flows. Refer to
the following information reported for 2017:Cost of Goods Sold, $150,000
Merchandise Inventory, beginning balance, $26,000
Merchandise Inventory, ending balance, $64,000
Accounts Payable, beginning balance, $8,100
Accounts Payable, ending balance, $5,000
Operating expenses, $31,000
Accrued Liabilities, beginning balance, $2,500
Accrued Liabilities, ending balance, $6,400Use the direct method to compute the cash
paid to suppliers. (Accrued Liabilities relate to operating expenses.)
A) $162,800
B) $164,000
C) $191,100
D) $218,200
Which of the following is affected as a result of an error in performing the physical
count of inventory at the end of the accounting period?
A) sales revenue
B) operating expenses
C) net income
D) net cost of purchases
Which of the following is true of an accounts receivable subsidiary ledger?
A) It does not include a receivable account for each customer, but includes a cumulative
account for all customers.
B) It contains information about the amount each customer purchased on credit, but
excludes the customer name.
C) The total of the accounts in the accounts receivable subsidiary ledger must equal the
accounts receivable balance in the general ledger.
D) Companies keep an accounts payable subsidiary ledger that is entirely different from
the accounts receivable subsidiary ledger.
Bright Eyes Paints Company uses the direct method for preparing its statement of cash
flow. Bright Eyes reports the following information regarding 2017:From the income
statement:
Sales Revenues, $266,000
Cost of Goods Sold, $212,000
Operating Expenses, $37,000
Net Income $17,000From the balance sheet:
Assume that there were no sales of long-term assets, no interest revenue, and no
expenses other than the expenses shown above. Also, assume that Accounts Payable are
for purchases of merchandise inventory only. What amount will be shown for the net
cash flow from operating activities?
A) $64,300
B) $24,300
C) $17,000
D) $9,300
In a limited-liability company, the ________.
A) members are personally liable to pay the entity’s debts
B) business pays income tax on earnings
C) members are liable for each other’s actions
D) members pay income tax on their share of earnings
Which of the following is a financial statement that presents a business’s accounting
equation?
A) Chart of Accounts
B) Trial Balance
C) Income Statement
D) Balance Sheet
A machine that was purchased for $120,000 has accumulated depreciation of $90,000.
The business exchanges the machine for a new one. The new machine has a market
value of $130,000, and the business pays $120,000 cash. Assume the exchange has
commercial substance. This exchange results in a ________.
A) gain of $20,000
B) gain of $10,000
C) loss of $20,000
D) loss of $30,000