The current portion of long-term debt should
a. be paid immediately.
b. be reclassified as a current liability.
c. be classified as a long-term liability.
d. not be separated from the long-term portion of debt.
Answer:
Eneri Company’s inventory records show the following data:
A physical inventory on December 31 shows 4,000 units on hand. Eneri sells the units
for $13 each. The company has an effective tax rate of 20%. Eneri uses the periodic
inventory method. What is the cost of goods available for sale?
a. $169,200
b. $178,000
c. $206,000
d. $325,000
Answer:
Hogan Company uses the direct method in determining net cash provided by operating
activities, During the year, operating expenses were $295,000, prepaid expenses
increased $23,000, and accrued expenses payable increased $33,000. Cash payments
for operating expenses were
a. $39,000.
b. $51,000.
c. $305,000.
d. $285,000.
Answer:
Losses on an exchange of plant assets that has commercial substance are
a. not possible.
b. deferred.
c. recognized immediately.
d. deducted from the cost of the new asset acquired.
Answer:
The economic entity assumption states that economic events
a. of different entities can be combined if all the entities are corporations.
b. must be reported to the IASB.
c. of a sole proprietorship cannot be distinguished from the personal economic events of
its owners.
d. of every entity can be separately identified and accounted for.
Answer:
In the balance sheet the account Premium on Bonds Payable is
a. added to Bonds Payable.
b. deducted from Bonds Payable.
c. classified as a stockholders’ equity account.
d. classified as a revenue account.
Answer:
What is ordinarily the first step in the formation of a corporation?
a. Development of by-laws for the corporation
b. Issuance of the corporate charter
c. Application for incorporation to the appropriate Secretary of State
d. Registration with the SEC
Answer:
Inventories are estimated
a. more frequently under a periodic inventory system than a perpetual inventory system.
b. using the wholesale inventory method.
c. more frequently under a perpetual inventory system than the periodic inventory
system.
d. using the net method.
Answer:
Corporations invest in other companies for all of the following reasons except to
a. house excess cash until needed.
b. generate earnings.
c. meet strategic goals.
d. increase trading of the other companies’ stock.
Answer:
If total liabilities increased by $8,000, then
a. assets must have decreased by $8,000.
b. stockholders’ equity must have increased by $8,000.
c. assets must have increased by $8,000, or stockholders’ equity must have decreased by
$8,000.
d. assets and stockholders’ equity each increased by $4,000.
Answer:
Trudy, Inc. had the following bank reconciliation at March 31, 2015:
All reconciling items at March 31, 2015 cleared the bank in April. Outstanding checks
at April 30, 2015 totaled $6,000. There were no deposits in transit at April 30, 2015.
What is the cash balance per books at April 30, 2015?
a. $25,900
b. $31,900
c. $34,200
d. $38,500
Answer:
The statement of cash flows is prepared from all of the following except
a. the adjusted trial balance.
b. comparative balance sheets.
c. selected transaction data.
d. the current income statement.
Answer:
The following information is for Bright Eyes Auto Supplies:
The total dollar amount of assets to be classified as property, plant, and equipment is
a. $390,000.
b. $450,000.
c. $570,000.
d. $630,000.
Answer:
Presented here is a partial amortization schedule for Roseland Company who sold
$300,000, five year 10% bonds on January 1, 2014 for $318,000 and uses annual
straight-line amortization.
Which of the following amounts should be shown in cell (iv)?
a. $16,200.
b. $10,800.
c. $21,600.
d. $14,400.
Answer:
In Ramon Company, Treasury Stock increased $20,000 from a cash purchase, and
Retained Earnings increased $80,000 as a result of net income of $120,000 and cash
dividends paid of $40,000. Net cash used by financing activities is:
a. $20,000.
b. $40,000.
c. $120,000.
d. $60,000.
Answer:
Adjustments would not be necessary if financial statements were prepared to reflect net
income from
a. monthly operations.
b. fiscal year operations.
c. interim operations.
d. lifetime operations.
Answer:
A company had net income of $210,000. Depreciation expense is $27,000. During the
year, Accounts Receivable and Inventory increased $17,000 and $42,000, respectively.
Prepaid Expenses and Accounts Payable decreased $5,000 and $6,000, respectively.
There was also a loss on the sale of equipment of $2,000. How much cash was provided
by operating activities?
a. $175,000
b. $179,000
c. $241,000
d. $271,000
Answer:
Which of the following transactions does not affect cash during a period?
a. Write-off of an uncollectible account
b. Collection of an accounts receivable
c. Sale of treasury stock
d. Exercise of the call option on bonds payable
Answer:
Proponents of LIFO, as opposed to FIFO, point out that LIFO results in
a. lower income taxes in a period of deflation.
b. a more current cost of goods sold.
c. lower net income in a period of deflation.
d. higher net income in periods of inflation.
Answer:
As a result of a thorough physical inventory, Horace Company determined that it had
inventory worth $320,000 at December 31, 2015. This count did not take into
consideration the following facts: Herschel Consignment currently has goods worth
$47,000 on its sales floor that belong to Horace but are being sold on consignment by
Herschel. The selling price of these goods is $75,000. Horace purchased $22,000 of
goods that were shipped on December 27, FOB destination, that will be received by
Horace on January 3. Determine the correct amount of inventory that Horace should
report.
a. $320,000.
b. $340,000.
c. $367,000.
d. $387,000.
Answer:
(a) On January 6, Whitson Co. sells merchandise on account to Garcia Inc. for $7,000,
terms 2/10, n/30. On January 16, Garcia Inc. pays the amount due. Prepare the entries
on Whitson’s books to record the sale and related collection.
(b) On January 10, Jill Hoyle uses her Berkman Co. credit card to purchase
merchandise from Berkman Co. for $9,000. On February 10, Hoyle is billed for the
amount due of $9,000. On February 12, Hoyle pays $4,000 on the balance due. On
March 10, Hoyle is billed for the amount due, including interest at 2% per month on the
unpaid balance as of February 12. Prepare the entries on Berkman Co.’s books related to
the transactions that occurred on January 10, February 12, and March 10.
Answer:
The heading for a post-closing trial balance has a date line that is similar to the one
found on
a. a balance sheet.
b. an income statement.
c. a retained earnings statement.
d. the worksheet.
Answer:
The account, Supplies, will appear in the following debit columns of the worksheet.
a. Trial balance
b. Adjusted trial balance
c. Balance sheet
d. All of these answer choices are correct
Answer:
Trane Corporation has the following stockholders’ equity accounts:
Preferred Stock
Paid-in Capital in Excess of Par’”Preferred Stock
Common Stock
Paid-in Capital in Excess of Stated Value’”Common Stock
Paid-in Capital from Treasury Stock’”Common
Retained Earnings
Treasury Stock’”Common
Instructions
Classify each account using the following tabular alignment.
Answer:
Ryan Adams, an employee of Heartbreaker Corp., will not receive his paycheck until
April 2. Based on services performed from March 15 to March 31, his salary was
$1,000. The adjusting entry for Heartbreaker Corp. on March 31 is
Answer:
The double-entry system of accounting refers to the placement of a double line at the
end of a column of figures.
Answer:
Jenner Company had the following transactions pertaining to its short-term stock
investments.
Instructions
Journalize the transactions.
Answer:
A subsidiary ledger provides up-to-date information on specific account balances.
Answer:
When vacant land is acquired, expenditures for clearing, draining, filling, and grading
should be charged to the ______________ account.
Answer: