Petty cash is a fund containing a small amount of cash that is used to pay for minor
expenditures.
The process by which businesses allocate a natural resource’s cost over its usage is
known as depreciation.
Data from a trial balance is used to prepare the income statement, statement of retained
earnings, and the balance sheet.
The Dividends account is a permanent account.
Since a computerized system uses software to process transactions, employees are no
longer required to manually journalize and post transactions to the accounts.
Stockholders of a corporation are not personally liable for the corporation’s debt.
When using the effective-interest amortization method, the amount of the interest
expense is calculated using the face value of the bonds and the stated interest rate.
Benefitsare extra compensation-items that are not paid directly to an employee.
A contra account’s normal balance (debit or credit) is the opposite of the normal balance
of the related account.
Which of the following inventory costing methods yields the highest net income during
a period of rising inventory costs?
A) specific identification
B) weighted-average
C) last-in, first-out
D) first-in, first-out
Becker Technologies invests $50,000 to acquire $50,000 face value, 8%, five-year
corporate bonds on January 2, 2012. The bonds will mature on January 2, 2017. The
bonds pay interest semiannually on January 2 and July 2 each year until maturity. When
Becker Technologies receives interest payments, how is the accounting equation
affected?
A) assets will decrease
B) total assets will remain unchanged
C) liabilities will decrease
D) equity will increase
From the following details, calculate net sales revenue.
A) $392,000
B) $398,000
C) $414,000
D) $434,000
For Office Supplies, the category of account and its normal balance is ________.
A) liabilities and a debit balance
B) assets and a debit balance
C) liabilities and a credit balance
D) assets and a credit balance
Elmore Company uses the direct method to prepare its statement of cash flows. Refer to
the following financial statement information for the year ended December 31,
2017:Elmore Company
Comparative Balance Sheet
December 31, 2017 and 2016
Elmore Company
Income Statement
December 31, 2017 and 2016
Use the direct method, to compute the total net cash flow from operating activities.
(Accrued Liabilities relate to other operating expense.)
A) $(54,200)
B) $38,200
C) $(38,200)
D) $54,200
The following information is needed to reconcile the cash balance for Baker’s Dry
Cleaning, Inc.- A deposit of $5,700 is in transit.
– Outstanding checks total $1,300.
– The book balance is $6,400 at February 28, 2017.
– The bookkeeper recorded a $1,500 check as $17,300 in payment of the current
month’s rent.
– The bank balance at February 28, 2017 was $16,930.
– A deposit of $300 was credited by the bank for $3,000.
– A customer’s check for $3,500 was returned for nonsufficient funds.
– The bank service charge is $70.What was the adjusted book balance?
A) $18,700
B) $17,000
C) $18,630
D) $18,770
Which of the following users would rely on managerial accounting information for
decision-making purposes?
A) potential investors
B) creditors
C) customers
D) company managers
The bank statement reveals an EFT payment made to one of the company’s suppliers
that has not yet been recorded in the ledger. How would this information be included on
the bank reconciliation?
A) an addition on the bank side
B) a deduction on the bank side
C) a deduction on the book side
D) an addition on the book side
Which of the following appears on both the statement of retained earnings and the
balance sheet?
A) Ending retained earnings
B) Total assets
C) Total revenues
D) Net income
Classic Car Parts, Inc. uses a periodic inventory system. From the following details,
calculate net purchases.
A) $23,300
B) $18,700
C) $20,700
D) $20,000
The reason investors buy bonds is to ________.
A) earn interest
B) own controlling interest in the company
C) exercise voting rights in a company
D) receive dividend payments
On October 1, 2017, Miller, Inc. made a loan to one of its customers. The customer
signed a 4-month note for $130,000 at 12%. How much interest revenue did the
company record in 2018 for this note? (Round your answer to the nearest dollar.)
A) $2,600
B) $3,900
C) $1,300
D) $5,200
Dividends in arrears are ________.
A) a liability on the balance sheet
B) passed dividends on noncumulative preferred stock
C) passed dividends on cumulative preferred stock
D) passed dividends on common stock
Refer to the following list of liability balances at December 31, 2017.
What is the total amount of current liabilities?
A) $35,380
B) $27,880
C) $27,480
D) $26,280
Federal unemployment compensation tax (FUTA) is not withheld from employees’
gross earnings.
For Office Supplies, the category of account and its normal balance is ________.
A) liabilities and a debit balance
B) assets and a debit balance
C) liabilities and a credit balance
D) assets and a credit balance
Which of the following sections of the statement of cash flows includes activities that
affect net income on the income statement?
A) the financing activities section
B) the operating activities section
C) the investing activities section
D) the non-cash investing and financing section
Assume MetAmbit Corporation had a net income of $2,300 for the year ending
December 2016. Its beginning and ending total assets were $33,500 and $18,000,
respectively. Calculate MetAmbit’s return on assets (ROA). (Round your percentage
answer to two decimal places.)
A) 6.87%
B) 12.78%
C) 8.93%
D) 4.47%
Exchange Corporation collected $8,000 from one of its customers, the amount owed
from the previous month. How does this affect the accounting equation for Exchange?
A) assets increase by $8,000; liabilities decrease by $8,000
B) assets increase by $8,000; assets decrease by $8,000
C) assets increase by $8,000; liabilities increase by $8,000
D) assets increase by $8,000; equity increases by $8,000
Perez Biofuels Company is preparing its statement of cash flows using the indirect
method. Refer to the following information:1. Repayments on Long-term Notes
Payable $58,000
2. New borrowing on Long-term Notes Payable $19,000Which of the following
statements is correct?
A) Net cash used for financing activities is $(39,000).
B) Net cash used for investing activities will is $58,000.
C) Net cash provided by financing activities is $39,000.
D) Net cash provided by investing activities is to $39,000.
What does the gross profit percentage measure? How is it computed?
Mitchell Corporation’s accounting records include the following items for the year
ending December 31, 2017:Gain on Sale of Equipment $12,000 Gain on Discontinued
Operations $75,000
Loss on Disposal of Equipment 5,000 Extraordinary Loss 15,000
Net Sales 650,000 Cost of Goods Sold 285,000
Operating Expenses 120,000The income tax rate for the company is 45%. The company
had 15,000 shares of common stock outstanding during 2017 and no preferred stock.
Prepare Mitchell’s income statement for the year ending December 31, 2017. Show how
Mitchell reports EPS data on its 2017 income statement.
What does inventory turnover measure? What does a low rate of inventory turnover
indicate?
Melody Instruments, Inc. sells musical instruments. On December 31, 2017, after its
first month of business, Melody Instruments, Inc. had the following balances in its
accounts, listed alphabetically.
Determine the balance in the cash account and prepare the trial balance.
On June 30, 2017, Adilide, Inc. discarded equipment costing $40,000. Accumulated
Depreciation as of December 31, 2016, was $25,000. Assume annual depreciation on
the equipment is $2,500. Prepare the journal entries for the 2017 depreciation expense
and for the disposal of the equipment.
Westwood Clothing Store reported the following selected items at June 30, 2017 (last
year – 2016 – amounts are also given as needed):
Compute Westwood’s acid-test ratio for 2017. Show your computations. (Round the
answer to 2 decimal places.)
On December 31, 2016, $2,500 of salaries have been earned but not yet paid to
employees. If the business failed to make an adjusting entry on December 31, 2016,
indicate the effect on assets, liabilities, equity, and net income.
Safari Corporation has acquired a property that included both land and a building for
$500,000. The corporation paid cash. The corporation hired an appraiser who has
determined that the market value of the land is $300,000 and that of the building is
$400,000. Journalize the lump-sum purchase.
On January 1, 2017, Anderson Tools Company purchases machinery with a fair value of
$300,000 by paying $50,000 in cash and signing a 10-year mortgage note at 13% for
the balance. Prepare the journal entry for January 1, 2017.
Data for Nobell, Inc. follow:
Nobell, Inc.
Comparative Balance Sheet
December 31, 2017 and 2016
2017 2016
Assets
Current Assets:
Cash $121,000 $100,000
Accounts Receivables, Net 117,000 125,000
Merchandise Inventory 70,000 85,000
Total Assets $308,000 $310,000
Liabilities
Total Current Liabilities $63,500 $50,000
Long-term Liabilities 100,000 100,000
Total Liabilities 163,500 150,000
Stockholders’ Equity
Retained Earnings 94,500 110,000
Common Stockholders’ Equity 50,000 50,000
Total Liabilities and Stockholders’ Equity $308,000 $310,000Prepare a horizontal
analysis of the comparative balance sheet of Nobell, Inc. (Round to one decimal place.)
