On January 2, Alfredo Corporation sold merchandise with a gross price of $100,000 to
a customer with terms of 2/10, n/30. How much Sales Discounts would be recorded if
payment was received from the customer on January 8? Assume the company uses the
Gross Method of recording receivables.
a. $0
b. $2,000
c. $98,000
d. $100.000
No service charge expense is incurred by the issuer when this card is used.
Match each statement to the item listed below
a. Bank credit card c. Sears card
b. Debit card d. American Express
Returned goods to the seller.
Match the costs that might be included as part of the cost of inventory to the listed
accounting treatment. (Choices may be used more than once.)
a. Add to inventory cost c. Not an inventory cost
b. Subtract from inventory cost
Cash collected and recorded by a company but not yet reflected in a bank statement are
known as
a. debit memos.
b. credit memos.
c. outstanding checks.
d. deposits in transit.
If a corporation issues cumulative, participating preferred stock, which of the following
is true regarding the rights of the preferred stockholders?
a. They must forego dividends for any periods when no dividends are declared.
b. They will share in the dividends that exceed a specified amount.
c. They will received a fixed dividend regardless of the amount of dividends declared.
d. They will have an option to convert their shares to common stock at a specified date.
The accountant preparing the January bank reconciliation identified the following
items:
There was also an error in the accounting records whereby a customer’s check for $101
was recorded as $110. What is the company’s adjusted cash balance at January 31st?
a. $23,591
b. $35,641
c. $35,659
d. $47,691
Accumulated depreciation Identify where each of the following accounts would be
reported on the financial statements. (Choices may be used more than once.)
a. Balance Sheet-Property, Plant, and Equipment
b. Balance Sheet-Intangible Assets
c. Balance Sheet-Current Assets
d. Balance Sheet-Other Assets
e. Income Statement-Operating Section
f. Income Statement-Other Revenue and Expense Section
Appropriations of retained earnings must be reported
a. in a separate account within the equity section of the balance sheet.
b. within “unrestricted retained earnings” on the balance sheet, with footnote disclosure
to describe the appropriation.
c. as a prior period adjustment on the statement of changes in retained earnings.
d. only within the footnotes accompanying the financial statements.
Providing services for customers for credit
Several transactions are listed. Use the choices to identify the effect on the accounting
equation for each transaction listed. (Choices may be used more than once.)
a. Assets and liabilities increase
b. Assets and contributed capital increase
c. Assets and retained earnings increase
d. Two asset accounts are impacted, but there is no net effect on total assets
e. Assets and liabilities decrease
f. Assets and retained earnings decrease
g. Liabilities increase and retained earnings decrease
h. Liabilities decrease and retained earnings increase
The only essential element of internal control from the following is
a. Computerized accounting systems
b. An outsourced internal audit function
c. Procedures for proper authorization of transactions
d. Verification by government agencies
Action that reduces the likelihood that records could be used to conceal intentional
misstatements, theft, or fraud
Match the following terms with their correct definitions.
a. Accounting system e. Internal control system
b. Business process risks f. Safeguarding
c. Control activities g. Segregation of duties
d. Control environment h. Strategic risks
Refer to HVAC Service. The journal entry to record payment for the office equipment
and supplies will include a debit to
HVAC Service
The following transactions occurred during November:
a. salary expense.
b. salaries payable.
c. prepaid expenses.
d. accounts payable.
The following information was taken from the records of Alphabet Soup at the end of
2013:
Determine the following:
A) Gross sales
B) Net sales
C) Gross profit Assuming the company uses the income statement approach to
estimating uncollectibles:
D) Bad debt estimate percentage
E) Year-end adjusting entry to record bad debt expense
F) Ending balance in Allowance for Doubtful Accounts after adjustment
G) Net realizable value of receivables after adjustment for bad debts Assuming the
company uses the balance sheet approach to estimating uncollectibles:
H) Gross receivables
I) Ending balance in Allowance for Doubtful Accounts after adjustment
J) Net realizable value of receivables after adjustment for bad debts
Section in the annual report that highlights favorable or unfavorable trends and
significant risks facing the company
Match each statement to the item listed below.
a. Audit report
b. Fiscal year
c. Financial statements
d. Management’s discussion and analysis
e. Notes to the financial statements
Collecting cash from customers who had previously made credit purchases
Several transactions are listed. Use the choices to identify the effect on the accounting
equation for each transaction listed. (Choices may be used more than once.)
a. Assets and liabilities increase
b. Assets and contributed capital increase
c. Assets and retained earnings increase
d. Two asset accounts are impacted, but there is no net effect on total assets
e. Assets and liabilities decrease
f. Assets and retained earnings decrease
g. Liabilities increase and retained earnings decrease
h. Liabilities decrease and retained earnings increase
Determine the amount of inventory on the balance sheet of a manufacturing company
from the following account balances:
a. $24,000
b. $60,000
c. $74,000
d. $104,000
How will the lender of the promissory note record the note on its books?
a. The promissory note will be recorded as an asset.
b. The promissory note will be recorded as a contra asset.
c. The promissory note will be recorded as revenue.
d. The promissory note will be recorded as an expense.
The income statement summarizes the assets, liabilities and stockholders’ equity for a
period of time.
Refer to Recovery Solutions, Inc. Evaluate the company’s asset efficiency ratios,
including accounts receivable turnover, inventory turnover, and asset turnover.
Recovery Solutions, Inc.
Comparative financial statements are provided below:
Listed below are selected accounts. In the blank spaces provided for each account,
indicate what type of account it is, its normal balance, and the debit/credit rules for
increasing and decreasing it. Use the following abbreviations for your answer:
A company provides a one-year warranty for its products. The estimated cost of parts
and labor required to satisfy warranty claims should be recorded as a current liability in
the period the products are sold.
To be classified as a cash equivalent, an item must be readily convertible to a known
amount of cash and have an original maturity to the investor of 3 months or more.
From 2012 to 2014, Lumber Liquidators had the following capital structure:
The board of directors determined the total amount available for dividends in each year
from 2012 through 2014 as shown in the following table. Complete the table to indicate
the portion of the dividend allocated to preferred and common stockholders in each
year. Assume that the preferred stock is noncumulative and nonparticipating.
