A balance sheet prepared in the account form lists the assets at the top and the liabilities
and stockholders’ equity below.
A trial balance is a list of all of the accounts of a company with their balances at a point
in time.
When using the effective-interest amortization method, the discount amortization is the
excess of the calculated interest payment over the interest payment.
An accounts receivable turnover that is too high may indicate that credit is too tight,
causing the loss of sales to good customers.
An amortization schedule details each loan payment’s allocation between principal as
well as interest and the beginning and ending balances of the loan.
If bonds with a face value of $205,000 are issued at 110, the amount of cash proceeds is
________.
A) $225,390
B) $205,000
C) $186,364
D) $225,500
Kittery Services, Inc. purchased computers that are to be used in its consultancy
services. Based on the matching principle, the related account that should appear on the
income statement for the year ended December 31, 2016 is ________.
A) Depreciation Expense
B) Service Revenue
C) Accumulated Depreciation
D) Equipment Expense
The payment of interest on a loan is considered a ________ on a statement of cash
flows prepared using the direct method.
A) cash outflow for operating activities
B) cash outflow for investing activities
C) cash outflow for financing activities
D) non-cash activity
Bradley Corporation received cash from issuing 17,000 shares of common stock at par
on January 1, 2017. The stock has a par value of $0.05 per share. Which is the correct
journal entry to record this transaction?
A) Cash is debited for $850, and Common Stock-$0.05 Par Value is credited for $850.
B) Cash is credited for $17,000 and Common Stock-$0.05 Par Value is debited for
$17,000.
C) Paid-In Capital in Excess of Par-Common is debited for $16,150, and Common
Stock-$0.05 Par Value is credited for $16,150.
D) Cash is debited for $17,000, Common Stock-$0.05 Par Value is credited for $850,
and Paid-In Capital in Excess of Par-Common credited for $16,150.
________ are the expenses that occur in an entity’s major line of business.
A) Interest expense
B) Interest revenue
C) Operating expenses
D) Loss on sale of plant asset
If a business uses the periodic inventory system, the sales journal will ________.
A) record both the cash and credit sales
B) include a Purchase DR and Account Receivable CR column
C) exclude the Accounts Receivable DR and Sales Revenue CR column
D) exclude the Cost of Goods Sold DR and Merchandise Inventory CR column
Which of the following is used by both internal and external users?
A) Chart of Accounts
B) Trial Balance
C) Balance Sheet
D) Costing Reports
Which of the following will be categorized as a financing activity on the statement of
cash flows?
A) Cash received by selling old equipment
B) Cash paid for purchase of new machinery
C) Cash paid for purchase of office supplies
D) Cash received from issuance of shares of common stock
Which of the following is true of posting entries from a cash payments journal?
A) Entries in the cash payments journal are posted monthly to the accounts payable
subsidiary ledger and daily to the general ledger.
B) The postings of accounts payable are credits and increase the balance in the
individual accounts payable account.
C) After posting the payment of accounts payable, a checkmark is entered in the cash
payments journal and the posting reference is printed in the subsidiary ledger.
D) At the end of the month, each column is totaled and the totals, including the Other
Accounts DR column, are posted to the specific general ledger accounts.
Which of the following is not an appropriate internal control for cash receipts over the
counter?
A) A receipt is issued for each transaction to ensure that each sale is recorded.
B) The store clerk deposits the cash in the bank.
C) At the end of the day, the manager proves the cash by comparing the cash in the
drawer against the machine’s record of cash sales.
D) The cash draw opens after the store clerk enters a transaction.