Since a company usually does not know the amount of the year-end bonus at year-end,
the company estimates the amount of the bonus based on a percentage.
Sales through credit cards and debit cards are journalized in the same way as sales on
account.
Businesses are required to use Modified Accelerated Cost Recovery System (MACRS)
for tax purposes.
Amounts owed for products or services purchased on account are accounts receivable.
In a computerized accounting information system, all data are contained in paper
documents that are often stored in filing cabinets and off-site document warehouses.
Unexpected or inconsistent movements among sales, merchandise inventory, and
receivables reflect normal market conditions and do not pose red flags in financial
statements.
When a business sells a plant asset for book value, a gain or loss should be recorded.
A cash equivalent is a highly liquid investment that can be converted into cash in three
years or less.
A chart of accounts provides more detail than a ledger.
Which of the following financial statements would be most useful if an analyst wants to
know the likelihood of repayment of business debts?
A) income statement
B) balance sheet
C) statement of retained earnings
D) statement of cash flows
Which of the following concepts represents time value of money?
A) the concept that money becomes obsolete over time
B) the concept that money earns interest over time
C) the concept that money loses its purchasing power over time
D) the concept that money can be converted into other currencies over time
Coleman, Inc. provides the following data from its income statement for 2017:
Calculate the gross profit percentage. (Round your answer to two decimal places.)
A) 150.00%
B) 60.00%
C) 100.00%
D) 40.00%
The amount of net income is transferred from ________ to ________.
A) the income statement; the statement of retained earnings
B) the balance sheet; the statement of cash flows
C) the balance sheet; the income statement
D) the income statement; the statement of expenditures
Kelly Financial Services, Inc. invested $27,000 to acquire 3,750 shares of Mitt
Investments, Inc. on March 15, 2013. This investment represents less than 20% of the
investee’s voting stock. On May 7, 2017, Kelly Financial Services, Inc. sells 2,250
shares for $15,250. In the accounting equation on May 7, 2017, ________.
A) total assets will remain unchanged
B) total assets will decrease
C) total liabilities will decrease
D) total equity will decrease
The petty cash fund had an initial imprest balance of $200. It currently has $17 in cash,
$5 in miscellaneous cash receipts, and an additional $173 in specific cash receipts. The
debit to Cash Short & Over would be ________.
A) $5
B) $17
C) $173
D) $178
Which of the following inventory costing methods is based on the actual cost of each
particular unit of inventory?
A) specific identification
B) weighted-average
C) last-in, first-out
D) first-in, first-out
The interest rate that determines the amount of cash interest the borrower pays and the
investor receives each year is called the ________.
A) amortization rate
B) market interest rate
C) stated interest rate
D) discounting rate
Common-size statements ________.
A) allow the users to compare numbers in relative terms rather than absolute amounts
B) report dollar amounts and percentages
C) create a dollar value bias
D) show the same percentages that appear in a horizontal analysis
The following are the current month’s balances for Global Enterprises.
What is the total amount of debits for the trial balance?
A) $26,000
B) $27,300
C) $31,000
D) $32,300