Wiggly Pet Store had $6,000 of supplies at the end of October. During November, the
company bought $2,000 of supplies. At the end of November, the company had $1,000
of supplies remaining. Which of the following statements is not correct?
A) During November, the company used $7,000 of supplies.
B) Supplies should be reported at $1,000 on the balance sheet.
C) An expense should be debited for $7,000 in November.
D) An asset should be debited for $1,000 in November.
Which of the following statements about financial statement information is correct?
A) If a company has total revenues of $80,000, total expenses of $50,000 and dividends
of $10,000, they will have net income of $20,000.
B) A company with total stockholders’ equity of $45,000 and total assets of $75,000
must have total liabilities of $120,000.
C) A company with liabilities of $80,000 and stockholders’ equity of $50,000 will have
Assets of $30,000.
D) A company with total stockholders’ equity of $120,000 and common stock of
$75,000 must have total retained earnings of $45,000.
Beginning inventory plus purchases minus ending inventory equals:
A) net sales.
B) cost of goods sold.
C) goods available for sale.
D) net purchases.
A company purchases software; it has an estimated useful life of three years. The
adjustment to recognize amortization for the use of software would cause which of the
following?
A) An increase in liabilities, an increase in expenses, and a decrease in stockholders’
equity
B) A decrease in assets, a decrease in stockholders’ equity, and an increase in expenses
C) A decrease in assets, an increase in liabilities, and an increase in expenses
D) An increase in assets, an increase in liabilities, and a decrease in expenses
Use the information above to answer the following question. If Bailey Company uses
the weighted average inventory costing method, what is the cost of its ending
inventory? (Round the per unit cost to two decimal places and then round your answer
to the nearest whole dollar.)
A) $4,200
B) $2,700
C) $1,400
D) $1,365
Which of the following statements about the statement of retained earnings is correct?
A) Dividends increase net income and are added to calculate the ending balance of
Retained Earnings.
B) Dividends are subtracted to calculate the ending balance of Retained Earnings.
C) Dividends are not used to calculate the ending balance of Retained Earnings.
D) Dividends are not reported on the statement of retained earnings.
The book value of a depreciable asset can never be less than its:
A) historical cost.
B) market value.
C) capitalized cost.
D) residual value.
Amiable Inc. uses a perpetual inventory system. The following transactions took place
during the month of August:
If Amiable uses the LIFO method, what is the ending inventory at August 31?
A.$496.00
B.$486.00
C.$492.57
D.$300.00
E.$510.00
On July 1, Darin Company sold inventory costing $4,500 to Dee Company for $6,000,
terms 2/10, n/30. Both companies use the perpetual inventory system. Dee Company
pays the invoice on July 8 and takes the appropriate discount. What journal entry will
be recorded by Dee Company on July 8?
A) Debit Accounts Payable and credit Cash for $6,000
B) Debit Accounts Payable for $5,880, credit Inventory for $120, and credit Cash for
$6,000
C) Debit Accounts Payable for $6,000, credit Cash for $5,880, and credit Inventory for
$120
D) Debit Cost of Goods Sold and credit Cash for $4,500
On January 1, your company issues a 5-year bond with a face value of $10,000 and a
stated interest rate of 7%. The market interest rate is 5%. The issue price of the bond
was $10,866. Your company used the effective-interest method of amortization. At the
end of the first year, your company should:
A) debit Interest Expense for $543, debit Premium on Bonds Payable for $157, and
credit Interest Payable for $700.
B) debit Interest Expense for $700, credit Premium on Bonds Payable for $157, and
credit Interest Payable for $543.
C) debit Interest Expense for $700, debit Premium on Bonds Payable for $157, and
credit Interest Payable for $543.
D) debit Interest Expense for $543 and credit Interest Payable for $543.