Internal control is an organizational plan that ensures that the financial statements are
prepared and submitted on time.
The specific identification method of inventory costing is recommended when a
business deals in unique and high-priced inventory items.
A trademark represents distinctive identifications of products or services.
The financing activities section of the statement of cash flows includes paying
dividends and making payments on long-term liabilities.
Stock issued at amounts in excess of par value results in a gain that is reported on the
income statement.
Companies may choose to report plant assets as a single amount, with a note to the
financial statements that provides detailed information, or companies may provide
detailed information on the face of the statement.
Rubin Installations Company uses the direct method to prepare its statement of cash
flows. Rubin has reported cost of goods sold of $95,000 on its income statement for
2017. If the balance in the Merchandise Inventory account decreased by $6,000 during
the year, then $6,000 needs to be added to $95,000 to calculate payments to suppliers
for inventory purchases.
Dividends and expenses increase equity.
Simple interest means that interest is calculated on the principal andon all previously
earned interest.
Where does net income appear on a worksheet?
A) Net income appears only in the income statement debit column.
B) Net income appears in the balance sheet credit column and in the income statement
debit column.
C) Net income appears in the income statement credit column and in the balance sheet
debit column.
D) Net income appears only in the balance sheet credit column.
A petty cash fund was established with a $390 balance. It currently has cash of $45 and
petty cash tickets totaling $345. Which of the following would be included in the entry
to replenish the fund?
A) a credit to Petty Cash for $345
B) a debit to Petty Cash for $45
C) a credit to Cash for $45
D) a debit to various expenses for $345
Regarding discontinued operations, which of the following statements is incorrect?
A) Gain and losses on the sale of plant assets are not reported as discontinued
operations.
B) A loss on discontinued operations is reported with an addition for the applicable
income tax.
C) Most analysts do not include the results of discontinued operations in financial
analysis.
D) The discontinued operations heading of the income statement includes segments of
the business that have been sold.
An electronic funds transfer system ________.
A) does not include debit card transactions
B) is seldom used by businesses
C) transfers cash by electronic communication rather than by paper documents
D) uses forms such as checks and deposit tickets to transfer cash
No journal entries are required for the reconciling items on the bank side because
________.
A) those transactions have already been recorded in the company’s ledger
B) the adjusted balances on both sides are the same amounts
C) the amounts are immaterial
D) those transactions are already included in the bank balance
A petty cash fund was established with a $600 balance. It currently has cash of $130
and petty cash tickets as shown below:
Which of the following would be the journal entry to replenish the Petty Cash account?
A) debit various expenses $470; credit Cash $470
B) debit various expenses $470; credit Petty Cash $470
C) debit Cash $130; credit various expenses $130
D) credit Petty Cash $470; debit Cash $470
Adjusting journal entries are prepared ________.
A) after preparing the adjusted trial balance
B) after preparing the unadjusted trial balance
C) after posting the closing entries
D) after preparing the financial statements
Which of the following is an output device in an accounting information system?
A) keyboard
B) internet protocol
C) printer
D) mouse
Better Buy, Inc. has 8 units in inventory on December 31. The units were purchased in
November for $160 each. The price lists from the suppliers indicate that the same items
would now cost the company a total of $1,320. What would be the amount reported as
Ending Merchandise Inventory on the balance sheet?
A) $2,600
B) $325
C) $1,280
D) $1,320
Corporations pay their own income tax on corporate income. Stockholders pay personal
income tax on the dividends received from corporations. This is an example of
________.
A) double taxation
B) continuous life
C) no mutual agency
D) a limited liability company
Felix Skateboards Company uses the indirect method to prepare the statement of cash
flows. Refer to the following income statement:Felix Company
Income Statement
Year Ended December 31, 2017
Additional information provided by the company includes the following:
1. Current assets, other than cash, increased by $20,000.
2. Current liabilities decreased by $1,500.Compute the net cash provided by (used for)
operating activities.
A) $26,700
B) $40,700
C) $35,600
D) $11,700
Which of the following financial statements reports an increase or decrease in net cash
during the time period covered?
A) Income statement
B) Statement of retained earnings
C) Statement of cash flows
D) Cash budget
A business borrows cash by signing a note payable. Which of the following accounts is
debited?
A) Notes Payable
B) Accounts Payable
C) Notes Receivable
D) Cash
On January 1, Davidson Services has the following balances:Accounts Receivable
$23,000
Bad Debts Expense $0Davidson has the following transactions during January: Credit
sales of $120,000, collections of credit sales of $84,000, and write-offs of $18,000.
Davidson uses the direct write-off method. The amount of Bad Debts Expense for
January is ________.
A) $23,000
B) $25,714
C) $12,600
D) $18,000
For the following situation, state whether it represents a strength or weakness in internal
control and give the reason for your answer.Baker Auto Supply purchases merchandise
inventory from A & B Company. The accountant places the order, verifies receipt of the
merchandise, and records the transaction in the general journal.