Under the last-in, first-out (LIFO) method, the cost of goods sold is based on the oldest
purchases.
The maturity value of a note is the sum of the principal minus interest due at maturity.
For the vertical analysis of the balance sheet, the base amount is also the total of
liabilities and stockholders’ equity.
For no-par stock there can be paid-in capital in excess of par.
A payable involves a future receipt of cash.
If treasury stock is resold for more than cost, the difference is debited to the account
Paid-In Capital from Treasury Stock Transactions.
Managerial accounting focuses on information for external decision makers.
Financial statements are business documents used to communicate information needed
to make business decisions.
When preparing the worksheet for a merchandising business using the perpetual
inventory system, the Merchandise Inventory account must be adjusted based on a
physical count due to inventory shrinkage.
The acid-test ratio is a more stringent measure of liquidity than the cash ratio.
The Current Portion of Long-Term Notes Payable would normally be shown on the
balance sheet under current liabilities.
Gross pay is the total amount of compensation earned by an employee after the
deductions are made.
A business can be organized as a sole proprietorship, partnership, corporation, or
limited-liability company (LLC).
The matching principle requires businesses to report Warranty Expense ________.
A) in the same period that the company records the revenue related to that warranty
B) in the period prior to which the company records the revenue related to that warranty
C) in the period after the related revenue is recorded
D) in the long-term assets section of the balance sheet
On October 1, 2017, Hubbard, Inc. made a loan to one of its customers. The customer
signed a 9-month note for $140,000 at 14%. Calculate the total interest earned on the
note. (Round your answer to the nearest dollar.)
A) $14,700
B) $4,899
C) $1,633
D) $19,600
Landon Jewelers uses the perpetual inventory system. On April 2, Landon sold
merchandise with a cost of $3,500 for $8,000 to a customer on account with terms of
1/15, n/30. The journal entry to record the cost of goods sold would be:A)
B)
C)
D)
Which of the following statements is true of the Sarbanes-Oxley Act?
A) Accounting firms are allowed to provide both auditing services and a full range of
consulting services to their public company clients.
B) Those who commit securities fraud must be sentenced to 10 years in prison.
C) All private and foreign companies must issue an internal control report evaluated by
an outside auditor.
D) The Public Company Accounting Oversight Board oversees the work of auditors of
public companies.
The accounts receivable turnover ratio measures ________.
A) a company’s ability to pay its current liabilities with its current assets
B) how many days it takes, on average, to collect receivables
C) how many days it takes, on average, to sell the inventory
D) the number of times a company collects the average accounts receivable balance in a
year
Which of the following is not a decision tool based on working capital?
A) cash ratio
B) acid-test ratio
C) current ratio
D) dividend payout ratio
Larry, an employee of Ramsay’s, Inc., has gross salary for March of $4,000. The entire
amount is under the OASDI limit of $117,000 and thus subject to FICA. He is also
subject to federal income tax at a rate of 18%. Larry has a deduction of $320 for health
insurance and $80 for United Way. Which of the following is included in the entry to
record the liability of payroll withholding deductions?
A) debit to Salaries Payable
B) credit to United Way Payable
C) debit to FICA Taxes Payable
D) debit to Cash
A listing of all accounts in numerical order is called a(n) ________.
A) Ledger
B) Journal
C) Income statement
D) Chart of accounts
Which of the following journal entries would be recorded if a business purchased office
supplies on account in a previous accounting period and now makes a cash payment of
$750 to the supplier to settle the account?
A)
B)
C)
D)
When a bond is issued at a price higher than the face value, the difference is known as a
________.
A) premium
B) discount
C) maturity value
D) face value
A business purchased land for $250,000 cash. Record the transaction in the journal.
The Brighton Dental Corporation prepays the rent on its dental office. On July 1, the
corporation paid $18,000 for 6 months of rent. How much Rent Expense should
Brighton Dental Corporation record the three months ended September 30 under the
accrual basis? Why?
Blue Sky, Inc. sold 500 units of inventory at $25 per unit for cash. The company uses
the perpetual inventory system. The cost of the units sold was $10 per unit. Provide the
journal entries to record the sale.
On January 1, 2017, Damron Services issued $20,000 of 8% bonds that mature in five
years. The bonds were issued for $19,000. Prepare the journal entry to issue bonds.
Anthem Corporation has excess cash to invest and pays $200,000 to buy 7%, five-year
bonds of Richmond Corporation, at face value, on June 30, 2016. The bonds pay
interest on June 30 and December 31. At the date of purchase, Anthem intended to hold
the bonds to maturity. The bonds are disposed of, at face value, on June 30,
2021.Prepare the journal entry for (omit the explanation) June 30, 2021 (assume that the
last interest payment has already been recorded).
List and briefly discuss the three basic components of an accounting information
system.
On January 1, 2016, Amethyst Manufacturing Corporation purchased a machine for
$40,000,000. The corporation expects to use the machine for 24,000 hours over the next
six years. The estimated residual value of the machine at the end of the sixth year is
$40,000. The schedule of usage of the machine is below.
Prepare the depreciation schedule using the units-of-production method of depreciation.
What is net realizable value? How is net realizable value affected when a receivable is
written off under the allowance method?