The most commonly used inventory costing method in the U.S. is:
A) FIFO.
B) specific identification.
C) LIFO.
D) weighted average.
Which of the following statements about the Allowance for Doubtful Accounts is
correct?
A) The Allowance for Doubtful Accounts is credited when a specific write-off is
recorded.
B) Under the aging of accounts receivable method, Bad Debt Expense is calculated and
then added to the beginning balance in the Allowance for Doubtful Accounts.
C) The Allowance for Doubtful Accounts is a contra-revenue account.
D) The Allowance for Doubtful Accounts has a normal credit balance.
In a sense, __________ is to accountants and auditors what the criminal code is to
lawyers and the public.
A) the SEC
B) faithful representation
C) U.S. GAAP
D) the basic accounting equation
Multiple-step income statements:A) separate core results from peripheral results.
B) includes one subtotal for revenues and one for expenses.
C) exclude certain significant items from net income.
D) only report core results.
The right of current stockholders to purchase additional shares of newly issued stock in
order to maintain the same percentage ownership is called:
A) liquidation.
B) preemptive rights.
C) cumulative preference.
D) voting rights.
The types of business activities measured by the statement of cash flows are:
A) selling goods, selling services, and obtaining financing.
B) operating activities, investing activities, and financing activities.
C) hiring, producing, and advertising.
D) generating revenues, paying expenses, and paying dividends.
Consider the following information for Maynor Company, which uses a perpetual
inventory system:
The company sold 25 units on May 1 and 20 units on October 28.
Required:
Calculate the company’s ending inventory and cost of goods sold using the each of
following inventory costing methods.
Part a. FIFO
Part b. LIFO
Part c. Weighted Average
After preparing adjusting entries, the equality of recorded debits and credits is checked
by preparing a(n):
A) post-closing trial balance
B) adjusted trial balance.
C) income statement.
D) balance sheet.
On October 1, 2015, Attra Inc. borrows $200,000 on a three-year note that requires the
company to pay 6% interest on March 31 and September 30. On December 31, 2015,
the adjusting entry to accrue interest on the note should debit:
A) Interest Expense and credit Interest Payable for $3,000.
B) Interest Payable and credit Interest Expense for $3,000.
C) Interest Expense and credit Cash for $6,000.
D) Interest Expense and credit Interest Payable for $6,000.
Typically, a profitable company that pays relatively high dividends:
A) is an attractive investment for those seeking a steady income, like retired people.
B) will reinvest more profit which can lead to smaller growth potential.
C) will experience more growth in stock price over time.
D) is a bad investment.
During the month, a company enters into the following transactions:
Buys $4,000 of supplies on account.
Pays $5,000 cash for new equipment.
Pays off $3,000 of accounts payable.
Pays off $1,500 of notes payable.
Required:
Part a. Show the effect of these transactions on the basic accounting equation.
Part b. Prepare the journal entries that would be used to record the transactions.
A company has a net cash inflow from operating activities of $789,000, a net cash
outflow of $50,000 from investing activities and a net cash inflow of $100,000 from
financing activities. The company paid $124,000 in interest, $186,500 in income taxes,
and $200,000 in cash dividends. Which of the following statements about the statement
of cash flows is not correct?
A) The cash dividends of $200,000 paid will be reported as a cash outflow in the cash
flow from investing activities section.
B) Supplemental disclosures required for a company using the indirect method include
the amount of interest and the amount of income taxes paid.
C) The statement of cash flows will show a net increase in cash and cash equivalents of
$839,000.
D) If the direct method is used, the $124,000 of interest paid and the $186,500 of
income taxes paid will be reported in the cash flows from operating activities.
The use of passcodes is an example of which internal control principle?
A) Segregate duties
B) Restrict access
C) Document procedures
D) Independently verify
Which of the following represents a subtotal rather than an account?
A) Advertising Expense
B) Service Revenue
C) Supplies Expense
D) Total Revenues