If partial payment is made and installment payments are set up after the voucher is
prepared for the total amount owed:
A) the old voucher is cancelled and a new voucher is prepared for the new amount
owed.
B) the old voucher is credited for the entire amount.
C) Vouchers Payable is debited; Purchases Returns and Allowances is credited.
D) None of these answers is correct.
Gross Accounts Receivable is $17,000. Allowance for Doubtful Accounts has a credit
balance of $100. Net credit sales for the year are $120,000. In the past, 2% of credit
sales had proved uncollectible, and an aging of the receivables indicates $2,100 as
uncollectible. What would be the adjusted balance of the Allowance account under the
balance sheet approach?
A) $2,000
B) $2,500
C) $2,100
D) $2,200
The declaration of a stock dividend was credited to Dividends Payable and debited to
Retained Earnings. This error would cause:
A) the period end assets to be overstated.
B) the period end liabilities to be overstated.
C) the period end stockholders’ equity to be overstated.
D) the period’s net income to be overstated.
If the written amount on the check does NOT match the amount expressed in figures,
the bank may:
A) pay the amount written in words.
B) return the check unpaid.
C) contact the drawer to see what was meant.
D) All of the above are correct choices.
How do you close the expense accounts?
A) Debit Capital; credit the expense accounts
B) Credit Capital; debit the expense accounts
C) Credit Income Summary; debit the expense accounts
D) Debit Income Summary; credit the expense accounts
If a credit memorandum is issued, what account will be increased on the seller’s books?
A) Accounts Receivable
B) Accounts Payable
C) Sales Discount
D) Sales Returns and Allowances
A bonus paid by an incoming partner to the old partners is shared:
A) equally.
B) by the salary method.
C) on the basis of profit and loss ratio.
D) by the interest method.
An exclusive right to the owner to sell or produce his or her discovery or invention is
known as a:
A) franchise.
B) trademark.
C) patent.
D) copyright.
If an asset is being sold or exchanged, the gain or loss is always computed by
comparing the:
A) market value and cost.
B) book value and salvage value.
C) market value and salvage value.
D) market value and book value.
One asset would be debited and another credited if:
A) the business provided services to a cash customer.
B) the business paid a creditor.
C) the business bought supplies paying cash.
D) the business provided services to a credit customer.
The beginning balance in the Computers account was $3,000. The company purchased
an additional $1000 worth of computers. The ending balance in the account is:
A) debit of $2,000.
B) credit of $3,000.
C) debit of $4,000.
D) credit of $2,000.
A nonsufficient funds check was returned to your company. How does the bank treat
this on your bank statement?
A) It is added to the bank balance.
B) It is shown as a debit memo.
C) It is shown as a credit memo.
D) None of these answers is correct.
Greetings Online disposed of a van that cost $22,000 with accumulated depreciation of
$15,000. The journal entry would include a:
A) credit to Van $22,000.
B) debit to Accumulated Depreciation $15,000.
C) debit to Loss on Disposal of Plant Asset $7,000.
D) All of these answers are correct.
A bond is issued for less than its face value. Which of the following statements most
likely would explain why?
A) The bond’s contract rate is lower than the market rate at the time of the issue.
B) The bond’s contract rate is the same as the market rate at the time of the issue.
C) The bond’s contract rate is higher than the market rate at the time of the issue.
D) The bond is secured by specific assets of the corporation.
Bob’s Auction House’s payroll for June includes the following data:
What is the net pay?
A) $2,568.40
B) $1,942.40
C) $3,000.00
D) $2,798.40
A loss on the sale of an asset would occur when:
A) the cash received is less than the book value of the asset.
B) the cash received is equal to the book value of the asset.
C) the cash received is greater than the book value of the asset.
D) None of these answers is correct.
The cost of equipment is expensed:
A) at the time it is paid.
B) over the periods that benefit the company.
C) in the period it is purchased.
D) in the period it is sold.
The Capital account debited and the withdrawals credited would be the result of:
A) closing the Income Summary accountthere is a net income.
B) closing the withdrawal account.
C) closing the Income Summary accountthere is a net loss.
D) closing the expense accounts.
Calculate the ending inventory under each of the following methods given the
information below about purchases and sales during the year. Assume a periodic
inventory system. Round to four decimal places.
April 1 Beginning inventory 60 units @ $30
11 Purchases 80 units @ $32
21 Purchases 30 units @ $35
Sales for April: 115 units
a) ________ FIFO
b) ________ LIFO
c) ________ Weighted-average
If total liabilities increased by $2,000 and the assets increased by $2,000 during the
accounting period, what is the change in the owner’s equity amount?
A) No effect on owner’s equity
B) Decrease of $4,000
C) Increase of $8,000
D) Decrease of $8,000
A credit to an asset account was posted as a credit to a revenue account. This error
would cause:
A) assets to be overstated.
B) revenue to be overstated.
C) expenses to be overstated.
D) Both A and B are correct.
A stock-split journal entry would include a:
A) debit to Retained Earnings and a credit to Common Stock.
B) debit to Common Stock and a credit to Cash.
C) debit to Common Stock Dividend Distributable and a credit Common Stock.
D) memorandum notation only.
A customer returned merchandise that had been paid for within a discount period for
credit. The entry was recorded with a debit to Sales Returns and Allowances and a
credit to Accounts Receivable for the net amount. This error would cause:
A) the period end assets to be understated.
B) the period end liabilities to be understated.
C) the period’s net income to be understated.
D) None of these is correct.
Insurance paid in advance by employers to protect their employees against loss due to
injury or death incurred during employment is:
A) life insurance.
B) worker’s compensation insurance.
C) liability insurance.
D) health insurance.
Compute employee FICA taxes for the year on earnings of $108,000 at 6.2% on a limit
of $117,000 for OASDI and 1.45% for Medicare.
A) $8,187.60
B) $8,262.00
C) $8,170.20
D) $6,621.60
The amount for withdrawals, to be used on the Statement of Owner’s Equity, would be
obtained from:
A) the worksheet in the balance sheet debit column.
B) the worksheet in the income statement credit column.
C) the worksheet in the income statement debit column.
D) the worksheet in the balance sheet credit column.
The board of Bogswell, Inc. declared a $2 per share cash dividend on common stock.
The corporation has 4,000 shares of common stock outstanding. The entry required to
declare the dividend is:
A) debit Cash; credit Common Dividends Payable.
B) debit Common Dividends Payable; credit Cash.
C) debit Retained Earnings; credit Dividends Payable.
D) debit Cash Dividends; credit Common Dividends Payable.
Jefferson Tutoring had the following payroll information on February 28:
Assume:
FICA tax rates are: OASDI 6.2% on a limit of $117,000 and Medicare 1.45%.
State Unemployment tax rate is 2% on the first $7,000.
Federal Unemployment tax rate is 0.8% on the first $7,000.
Using the information above, the journal entry to record the payroll tax expense for
Jefferson Tutoring would include:
A) a debit to Payroll Tax Expense in the amount of $390.
B) a credit to FUTA Payable for $24.
C) a credit to SUTA Payable for $60.
D) All of the above are correct.
The entry to record a payment on a $650 account within the 2% discount period would
include a:
A) debit to Accounts Payable for $637.
B) debit to Accounts Payable for $650.
C) credit to Purchases for $637.
D) debit to Cash for $650.
As supplies are used, they become:
A) inventory.
B) a liability.
C) an expense.
D) a revenue.
The post-closing trial balance contains:
A) assets and liabilities.
B) all accounts with balances.
C) only permanent accounts.
D) All of these answers are correct.