The trial balance is an internal document used only by employees of the company.
Prepaid Rent is always classified as a long-term asset.
The market rate is the rate used to calculate the actual cash payments made to
bondholders.
In reviewing the T-account for Accounts Payable, you find that the beginning balance is
zero, the total increases are $7,200 and the total decreases are $4,000. This means that
the ending balance of the account is a credit balance of $3,200.
The dividend yield provides information for both common and preferred stockholders.
All asset accounts and equity accounts increase with a debit.
Avalon Event Planning Services, Inc. records deferred expenses and deferred revenues
using the alternative treatments. It makes adjusting entries as needed to bring its books
to the full accrual basis once a year at the end of the year. On October 1, it paid $3,600
for insurance for a one-year period. At the end of the year, it will make an adjusting
entry that debits Insurance Expense for $1,200.
Which of the following statements is true of a bond that is issued at a premium?
A) The bond will be issued at an amount above face value.
B) The stated interest rate is lower than the prevailing market interest rate.
C) At maturity, the bond will repay an amount that is greater than the face value.
D) The bond will be issued at par.
Which of the following is the record holding all the accounts, the changes in those
accounts, and their balances?
A) Source document
B) Journal
C) Ledger
D) Trial balance
Which of the following is included in the internal control procedure-documents?
A) Mandatory vacations will improve internal control.
B) Separate the custody of assets from accounting.
C) The invoices and orders must be pre-numbered.
D) A company should purchase a fireproof vault to protect legal documents.
Jason Retail had the following balances and transactions during 2017.
The company maintains its records of inventory on a perpetual basis using the FIFO
inventory costing method. Calculate the amount of ending Merchandise Inventory at
December 31, 2017 using the lower-of-cost-or-market rule.
A) $810
B) $830
C) $1,660
D) $2,490
Sales revenue for a sporting goods store amounted to $526,000 for the current period.
All sales are on account and are subject to a sales tax of 10%. Which of the following
would be included in the journal entry to record the sales transaction?
A) a debit to Sales Revenue for $526,000
B) a credit to Accounts Receivable for $526,000
C) a debit to Sales Tax Payable for $52,600
D) a debit to Accounts Receivable for $578,600
The goal of reporting realistic figures and never overstating assets or net income applies
to the ________.
A) conservatism principle
B) materiality concept
C) disclosure principle
D) consistency principle
Managerial accounting provides information to ________.
A) internal decision makers
B) outside investors and lenders
C) creditors
D) taxing authorities
On December 2, 2017, Ewell, Inc. purchases land. In payment for the land, Ewell, Inc.
issues 6,000 shares of common stock with $6 par value. The land has been appraised at
a market value of $430,000. Which of the following is included in the journal entry to
record this transaction?
A) debit Common Stock-$6 Par Value for $36,000 and debit Paid-In Capital in Excess
of Par
-Common $394,000
B) credit Common Stock-$6 Par Value for $36,000 and credit Paid-In Capital in Excess
of Par-Common $394,000
C) credit Common Stock-$6 Par Value for $430,000
D) debit Cash $430,000
At the beginning of the year, Joan Steel, Inc. purchased 10,000 shares of Smith Metals,
Inc. for $34,000 in exchange for cash and now holds 3.2% of the voting stock of Smith
Metals, Inc. The management of Joan Steel intends to hold this stock for two years.
Assuming no other transaction happened during the year, the ________ in the balance
sheet will increase.
A) long-term investments
B) cash
C) total assets
D) current assets
David has decided to open an auto-detailing business. He will pick up an automobile
from the client, take it to his parents’ garage, detail it, and return it to the client. If he
does all of the work himself and takes no legal steps to form a special organization,
which type of business organization, in effect, has he chosen?
A) A limited-liability company
B) A partnership
C) A corporation
D) A sole proprietorship