A marine company pays its sales personnel 6% commission of the selling price of each
yacht. During November 2013, yacht sales totaled $20,400,000. During December
2013, sales totaled $25,100,000. Because its policy is to pay commissions only in the
month after the sales, the company paid commissions during December for November
2013. During January 2014, the company paid its sales people commissions on
December 2013 sales.
A measure of the proportion of common stock dividends to the stock price. Match the
terms to the definitions.
Each of the following documents is used in the control of cash disbursements except
a. canceled checks.
b. outstanding checks.
c. bank credit memos.
d. bank debit memos.
Below is information from the stockholders’ equity section of a balance sheet:
Additional Information:
Calculate the following financial ratios: A) Return on common equity
B) Earnings per share
C) Dividend yield
D) Dividend payout
E) Total payout
F) Stock repurchase payout
Alpha Company’s accounts receivable and allowance for doubtful accounts balances
were $100,000 and $14,000 (credit) respectively, at the beginning of 2014. During
2013, a customer defaults on a $12,000 balance related to goods purchased during 2011.
By the end of the year, the company had made credit sales of $2,400,000 and collected
$2,200,000 on account. It now estimates that 1 percent of its credit sales will default. A)
Prepare the journal entry to record the write off the bad debt.
B) Prepare the adjusting entry to record bad debt expense for 2013.
C) What is the net accounts receivable balance at the end of the year?
A company borrowed $100,000 from Better Bank on November 1, 2013. The terms of
the loan (note) is 6% interest due in 4 months.
Has the ultimate authority to set accounting standards, but has allowed the profession to
do so.
Organizations important to accounting are listed. Select the organization that most
closely achieves the role described. (Choices may be used more than once.)
a. Financial Accounting Standards Board (FASB)
b. International Accounting Standards Board (IASB)
c. Securities and Exchange Commission (SEC)
Which of the following is a transposition error?
a. writing $89 as $98
b. writing $10 as $100
c. debiting or crediting an amount to the wrong account
d. debiting or crediting the right account with the wrong amount
An accounting period that may or may not cover January 1 – December 31
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
While preparing the April 30th bank reconciliation, the accountant identified the
following items:
What is the company’s adjusted cash balance at April 30th?
a. $12,385
b. $12,500
c. $14,885
d. $17,385
Refer to Lanier Tech. What is the amount of the company’s total capital stock at
December 31, 2015?
Lanier Tech
This company was incorporated as a new business on January 1, 2015. The company is
authorized to issue 50,000 shares of $5 par common stock and 10,000 shares of 6%,
$10 par, cumulative, participating preferred stock. On January 1, 2015, the company
issued 8,000 shares of the common stock for $15 per share and 2,000 share of the
preferred stock for $30 per share. Net income for the year ended December 31, 2015
was $375,000. a. $ 60,000
b. $120,000
c. $180,000
d. $350,000
Refer to Hesson Properties. What journal entry is required to record the services
provided to customers?
Hesson Properties, Inc.
The following transactions occurred during June:
a. Cash 1,500 Accounts Receivable 1,500
b. Accounts Receivable 1,500 Service Revenue 1,500
c. Service Revenue 1,500 Cash 1,500
d. Service Revenue 1,500 Accounts Payable 1,500
Which of the following does not occur during the closing process?
a. Journal entries are made to return the balance in all nominal accounts to zero.
b. Journal entries are made to transfer the net income or loss to retained earnings.
c. Journal entries are made to return the balance in all real accounts to zero.
d. Journal entries are made to transfer the dividends to retained earnings.
Which of the following preferred stock features authorizes the corporation to redeem
shares at a fixed price on or after a specified date?
a. the call provision
b. the preemptive right
c. the conversion privilege
d. the residual claim
When computing earnings per share, the numerator includes net income minus any
dividends paid to common stockholders.
“You Decide” Essay You are the Controller for McBride & Associates. Your
accounting intern from the local university has been assigned the task of preparing your
company’s statement of cash flows. The intern has come to you with a question. She is
not sure how to report some dividends the company had received during the year. She
explains that on first thought, it seems like dividends represent a financing activity
since they are related to shares of stock that companies issue to finance their businesses.
But she is having second thoughts. Explain to your intern how dividends (both received
and paid) should be classified on the cash flow statement.
A loss in inventory value caused by application of the lower of cost or market (LCM)
rule is recorded in a “Loss from Impairment” account.
An advantage of the equity method over the fair value method is that it prevents an
investor from manipulating its own income by exerting influence over the amount and
timing of investee dividends.
Refer to Hatcher Tool Service. Indicate the economic effects of each transaction above
on the accounting equation. Use the following format for your answers. Show the dollar
amounts in the appropriate columns and use a plus (+) sign to indicate an increase and a
minus (-) sign to indicate a decrease.
Hatcher Tool Service
The following transactions occurred during June 2013:
A LIFO liquidation occurs when a company sells more units than it buys during the
period.
assess the likelihood that a company will be able to pay its current obligations as they
come due.
Match these terms to their correct definition