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The combined effect of the declaration and payment of a cash dividend on a company's
financial statements is to:
A) increase total liabilities and decrease stockholders' equity.
B) increase total expenses and decrease assets.
C) increase total assets and increase stockholders' equity.
D) decrease total assets and decrease stockholders' equity.
Assume the Murtha Company reported the following adjusted account balances at
year-end.
Assume the company recorded no write-offs or recoveries during 2016. What was the
amount of Bad Debt Expense reported in 2016?
A) $79,000
B) $64,600
C) $28,800
D) $14,400
For both accounts and amounts, the standard formatting for a journal entry lists:
A) credits first and then debits, both aligned to the left.
B) credits first and then debits, indented underneath.
C) debits first and then credits, both aligned to the right.
D) debits first and then credits, indented to the right underneath.
Which of the following represents a subtotal rather than an account?
A) Advertising Expense
B) Service Revenue
C) Supplies Expense
D) Total Revenues
Which of the following statements about bond terminology is correct?
A) The face value of a bond is what it is currently worth in the market.
B) The stated interest rate is expressed as an annual interest rate even if the bonds pay
semiannual interest payments.
C) The stated rate of interest always presents the amount that investors are willing to
pay for the bond on the issue date.
D) The carrying value of the bond is always equal to the face value of the bond.
Maxell Company uses the FIFO method to assign costs to inventory and cost of goods
sold. The company uses a periodic inventory system. Consider the following
information:
What amounts would be reported as the cost of goods sold and ending inventory
balances for the year?
A) Cost of goods sold $625; Ending inventory $175
B) Cost of goods sold $755; Ending inventory $225
C) Cost of goods sold $550; Ending inventory $250
D) Cost of goods sold $600; Ending inventory $200
When several parties can reach similar values in financial statements by using similar
methods, the information is said to be:
A) comparable.
B) understandable.
C) verifiable.
D) timely.
Wechsler Company uses the aging of accounts receivable method. The company
performed an aging of accounts receivable on December 31 and gathered the following
information:
What is the amount of Accounts Receivable, Net that will be reported on the balance
sheet at December 31?
A) $505,000
B) $496,000
C) $467,000
D) $516,000
If you own 200,000 shares of stock in a company with 8 million shares outstanding and
the company issues an additional 2 million shares to its employees through a stock
purchase plan, your ownership percentage:
A) remains the same because the company now has more assets.
B) falls from 2.5% to 2%.
C) remains the same because the company now has fewer liabilities.
D) increases because the company now has more stock outstanding.
Which of the following would be reported on the income statement for Year 2?
A) Supplies that were purchased and used in Year 1 but paid for in Year 2.
B) Supplies that were purchased in Year 1, but used in Year 2.
C) Dividends that were paid in Year 2.
D) Accounts Receivable as of December 31, Year 2.
In October, you sign a note for $50,000 in order to buy new equipment. The note is due
in five years, at 8% annual interest. Semiannual interest payments are due each March
and September. Assuming no other long-term debt, what is the initial balance in the
related long-term debt account?
A) $46,000
B) $50,000
C) $52,000
D) $54,000
On January 1, a company lends a customer $90,000 for one year at a 7% annual interest
rate. The note requires the payment of interest twice each year on June 30 and
December 31. An adjusting entry to accrue interest is recorded at the end of every
month. On July 2, a check for the interest payment for January through June comes in
the mail. What journal entry will the company record on July 2?
A) Debit Interest Receivable for $3,150 and credit Interest Revenue for $3,150
B) Debit Cash for $3,150 and credit Notes Receivable for $3,150
C) Debit Interest Revenue for $3,150 and credit Cash for $3,150
D) Debit Cash for $3,150 and credit Interest Receivable for $3,150
Which of the following depreciation methods is used by most corporations to calculate
depreciation expense for their tax returns?
A) MACRS
B) Straight-line
C) Units-of-production
D) Double-declining balance
Which of the following statements about the unadjusted trial balance is not correct?
A) It might only include a preliminary amount for income tax expense.
B) It might balance even if there is a mistake.
C) It does not yet include end-of-the-accounting period adjustments.
D) It is part of the financial statements issued to external decision makers.
Which of the following statements is not correct about sales returns and allowances?
A) Sales returns and allowances can provide useful information about the quality of
inventory and the possibility of unsatisfied customers.
B) Sales returns and allowances are recorded in a separate contra-revenue account.
C) Sales returns and allowances are always disclosed in external financial statements.
D) Sales returns and allowance are subtracted to determine net sales.
A company began the year with assets of $100,000, liabilities of $20,000, and
stockholders' equity of $80,000. During the year assets increased $55,000 and
stockholders' equity increased $20,000. What was the change in liabilities for the year?
A) Increase of $75,000
B) Increase of $35,000
C) Decrease of $75,000
D) Decrease of $35,000
Complete the last two columns in the following table by indicating whether each
transaction would be reported:
Part a. In the operating (O), investing (I), or financing (F) activities section of the
statement of cash flows or if the transaction would be reported instead as a noncash
investing and/or financing transaction (Noncash).
Part b. As a cash inflow (+) or a cash outflow (-) on the statement of ash flows. (Leave
this cell blank if you entered €Noncash€ for part a.)
Use the information above to answer the following question. What is the amount of
retained earnings at the end of Year 2?
A) $37,000.
B) $240,000.
C) $29,000.
D) $269,000.
