Journal entries are required by the depositor for all of the following except
a. collection of a note receivable.
b. bank errors.
c. bank service charges.
d. an NSF check.
Answer:
IFRS defines market for lower-of-cost-or market as
a. net realizable value.
b. estimated selling price in the ordinary course of business.
c. replacement cost.
d. replacement cost less costs of disposal.
Answer:
Yates Corporation has the following stockholders’ equity accounts on January 1, 2015:
The company uses the cost method to account for treasury stock transactions. During
2015, the following treasury stock transactions occurred:
Instructions
(a) Journalize the treasury stock transactions for 2015.
(b) Prepare the Stockholders’ Equity section of the balance sheet for Yates Corporation
at December 31, 2015. Assume net income was $110,000 for 2015.
Answer:
On January 1, Greene Inc. issued $5,000,000, 9% bonds for $4,685,000. The market
rate of interest for these bonds is 10%. Interest is payable annually on December 31.
Greene uses the effective-interest method of amortizing bond discount. At the end of the
first year, Greene should report unamortized bond discount of
a. $283,500.
b. $296,500.
c. $286,650.
d. $255,650.
Answer:
U.S. standards are referred to as
a. IFRS.
b. GAAP.
c. IASB.
d. FASB.
Answer:
Selected transactions for Good Home, a property management company, in its first
month of business, are as follows:
Jan. 2 Issued stock to investors for $15,000 cash.
3 Purchased used car for $5,200 cash for use in business.
9 Purchased supplies on account for $500.
11 Billed customers $2,100 for services performed.
16 Paid $450 cash for advertising.
20 Received $1,300 cash from customers billed on January 11.
23 Paid creditor $300 cash on balance owed.
28 Paid dividends of $2,000.
Instructions
For each transaction indicate the following.
(a) The basic type of account debited and credited (asset (A), liability (L), stockholders’
equity (SE)).
(b) The specific account debited and credited (cash, rent expense, service revenue, etc.).
(c) Whether the specific account is increased (incr.) or decreased (decr).
(d) The normal balance of the specific account.
Use the following format, in which the January 2 transaction is given as an example.
Answer:
If a company has sales revenue of $630,000, net sales of $600,000, and cost of goods
sold of $390,000, the gross profit rate is
a. 35%.
b. 38%
c. 62%.
d. 65%.
Answer:
Farr Company purchased a new van for floral deliveries on January 1, 2015. The van
cost $56,000 with an estimated life of 5 years and $14,000 salvage value at the end of
its useful life. The double-declining-balance method of depreciation will be used. What
is the balance of the Accumulated Depreciation account at the end of 2016?
a. $8,960
b. $26,880
c. $35,840
d. $13,440
Answer:
During the year 2015, Dilego Company earned revenues of $90,000, had expenses of
$56,000, purchased assets with a cost of $10,000 and paid dividends of $6,000. Net
income for the year is
a. $18,000.
b. $24,000.
c. $28,000.
d. $34,000.
Answer:
Evidence that would not help with determining the effects of a transaction on the
accounts would be a(n)
a. cash register sales tape.
b. bill.
c. advertising brochure.
d. check.
Answer:
Of the following companies, which one would not likely employ the specific
identification method for inventory costing?
a. Music store specializing in organ sales
b. Farm implement dealership
c. Antique shop
d. Hardware store
Answer:
Gross profit for a merchandiser is net sales minus
a. operating expenses.
b. cost of goods sold.
c. sales discounts.
d. cost of goods available for sale.
Answer:
A corporation issues $500,000, 8%, 5-year bonds on January 1, 2015, for $479,000.
Interest is paid annually on January 1. If the corporation uses the straight-line method of
amortization of bond discount, the amount of bond interest expense to be recognized in
December 31, 2015’s adjusting entry is
a. $44,200.
b. $40,000.
c. $35,800.
d. $4,200.
Answer:
Short-term investments are securities held by a company that are
a. readily marketable.
b. intended to be converted into cash within the next year.
c. readily marketable and intended to be converted into cash within the next year or
operating cycle, whichever is longer.
d. readily marketable and intended to be held until maturity.
Answer:
The net income reported on the income statement for the current year was $245,000.
Depreciation was $40,000. Account receivable and inventories decreased by $12,000
and $35,000, respectively. Prepaid expenses and accounts payable increased,
respectively, by $1,000 and $8,000. How much cash was provided by operating
activities?
a. $296,000
b. $339,000
c. $323,000
d. $311,000
Answer:
Additional paid-in capital includes all of the following except the amounts paid in
a. over par value.
b. over stated value.
c. from treasury stock.
d. for the par value of common stock.
Answer:
Ratios that measure the short-term ability of the company to pay its maturing
obligations are
a. liquidity ratios.
b. profitability ratios.
c. solvency ratios.
d. trend ratios.
Answer:
Postretirement benefits consist of payments by employers to retired employees for
a. health care and life insurance only.
b. health care and pensions only.
c. life insurance and pensions only.
d. health care, life insurance, and pensions.
Answer:
When using a worksheet, adjusting entries are journalized
a. after the worksheet is completed and before financial statements are prepared.
b. before the adjustments are entered on to the worksheet.
c. after the worksheet is completed and after financial statements have been prepared.
d. before the adjusted trial balance is extended to the proper financial statement
columns.
Answer:
A company maintains the asset account, Cash in Bank, on its books, while the bank
maintains a reciprocal account which is
a. a contra-asset account.
b. a liability account.
c. also an asset account.
d. a stockholders’ equity account.
Answer:
What is the purpose of a post-closing trial balance?
a. Prove that all income statement accounts have been properly posted.
b. Prove the equality of income statement account balances.
c. Prove the equality of all account balances.
d. Prove the equality of permanent account balances.
Answer:
Which of the following statements concerning bonds is not a true statement?
a. Bonds are generally sold through an investment company.
b. The bond indenture is prepared after the bonds are printed.
c. The bond indenture and bond certificate are separate documents.
d. The trustee keeps records of each bondholder.
Answer:
The economic entity assumption requires that the activities of an entity be kept separate
and distinct from the activities of its owner and all other economic entities.
Answer:
The two criteria necessary for an item to be classified as an extraordinary item are that
the transaction or event must be (1) __________________ and (2)
___________________.
Answer:
The adjusted trial balance columns of a worksheet are obtained by
subtracting the adjustment columns from the trial balance columns.
Answer:
Presented below is information related to Anthony Scalici Company.
Instructions
Prepare the 2015 retained earnings statement for Anthony Scalici Company.
Answer:
In one closing entry, Dividends is credited and Income Summary is debited.
Answer:
A simple journal entry requires only one debit to an account and one credit to an
account.
Answer:
Business documents can provide evidence that a transaction has occurred.
Answer:
To obtain maximum benefit from a bank reconciliation, the reconciliation should be
prepared by an employee who has no other responsibilities pertaining to cash.
Answer:
Receivables may be sold because they may be the only reasonable source of cash.
Answer:
External transactions involve economic events between the company and some other
enterprise or party.
Answer: