Small expenditures for what ordinarily are considered capital expenditures frequently
are treated as revenue expenditures.
The acquisition of treasury stock with cash is shown as a financing activity on the
statement of cash flows.
After all closing entries have been entered and posted, the balance of the Income
Summary account will be zero.
A reversing entry will include either a debit to a revenue account or a credit to an
expense account.
When managing the production process in a just-in-time environment, the manager’s
focus is on the quantity of raw material used to produce a product.
The lower the interest rate, the higher the present value factor.
Job costs in a service organization end up in the Finished Goods Inventory account
when a job is completed.
The declaration of a cash dividend causes an increase in a corporation’s liabilities at the
date of declaration.
A capital expenditure will result in an immediate increase in long-term assets.
Under securitization, a company sells individual receivables with recourse at a large
discount.
The purchase of trading securities with cash is considered an investing activity.
Cash equivalents are defined as investments that carry terms of 90 days or less.
The responsibility of a production manager is limited to direct materials used.
The primary purpose of the trial balance is to test the
A.recording of transactions.
B.analysis of transactions.
C.equality of debit and credit balances in the ledger.
D.equality of debit and credit balances in the journal.
Use this inventory information for the month of May to answer the following questions.
Assuming that a perpetual inventory system is used, what is ending inventory on a
LIFO basis?
A.More information is needed.
B.$10,240
C.$5,440
D.$5,760
Inventory turnover is expressed in terms of
A.days.
B.a percentage.
C.dollars.
D.times.
When fixed costs are $18,000 and the contribution margin per unit is $4, the breakeven
point is
A.4,500 units.
B.2,230 units.
C.$22,300.
D.$72,000.
On its December 31, 20×4 , balance sheet, Bronco Corporation reported its
stockholders’ equity as follows:
During 20×5 , the following transactions occurred:
Reacquired 2,500 shares at $7 per share.
Sold 1,200 shares of treasury stock at $8 per share.
Sold 500 shares of treasury stock at $6 per share.
Net income for 20×5 amounted to $80,000.
a. Prepare the entries in journal form for the three transactions involving treasury stock.
(Omit explanations.)
b. Compute the amount of total contributed capital to be reported on the December 31,
20×5 , balance sheet.
The primary objective of reversing entries is to
A.place the expenses for the current period in the proper accounts.
B.simplify the bookkeeping associated with accruals from the prior period.
C.transfer the balance of the expense accounts to the owner’s Capital account and set
the accounts equal to zero.
D.correct errors.
Which of the following documents would not originate with the purchasing company?
A.Purchase order
B.Receiving report
C.Check
D.Invoice
On July 1, 20×5, Benchley Corporation issued bonds with a face value of $600,000. The
bonds carry a face interest rate of 8 percent that is payable each June 1 and December 1.
a. Prepare an entry in journal form without explanations to record the issuance
assuming the bonds are issued at 100.
b. Prepare an entry in journal form without explanations to record the issuance
assuming the bonds are issued at 97.
c. Prepare an entry in journal form without explanations to record the issuance
assuming the bonds are issued at 103.
The owner’s Capital, Withdrawals, and Income Summary accounts for Harmon Repair
Company for the accounting period are presented below in T account form after the
recording and posting of closing entries:
The total amount of revenue earned for the period is
A.$300.
B.$600.
C.$700.
D.$900.
A work sheet is useful for all except which of the following?
A.Preparing financial statements
B.Recording closing entries
C.Recording adjusting entries
D.Recording transactions from source documents
Posting is performed by transferring information from the
A.source documents to the journal.
B.source documents to the ledger.
C.journal to the ledger.
D.ledger to the journal.
Use this information pertaining to Tucson Company to answer the following question.
1) The corporation’s Supplies account showed a beginning debit balance of $400 and
supplies purchased of $1,600. There were $600 of supplies on hand at year end.
2)Depreciation on a building being depreciated over 5 years is estimated to be $10,000
per year. The building was purchased at the beginning of the prior year for $50,000.
3)A one-year insurance policy was purchased for $4,800. Five months have passed
since the purchase.
4)Accrued interest on a note receivable amounted to $200.
5)The company received a $3,600 advance payment during the year on services to be
performed. By the end of the year, one-third of the services had been performed.
Which of the following statements is correct regarding the building?
A.The adjusting entry to record depreciation will include a credit to Accumulated
Depreciation – Building $10,000.
B.The book value of the building at the end of the current year is $30,000.
C.The Accumulated Depreciation – Building account will have a balance of $20,000 at
the end of the current year.
D.All of these choices.
Use the following adjusted trial balance to answer the question below.
Which account bypasses the Income Summary account in the closing process?
A.John Clair, Withdrawals
B.Jet Ski Rentals
C.Depreciation Expense’“Building
D.Wages Expense
A performance management and evaluation system is a set of procedures that account
for and report on
A.qualitative performance.
B.standard performance.
C.employee performance.
D.financial and nonfinancial performance.
Many organizations utilize responsibility accounting
A.to increasing the responsibilities of the accountants.
B.to assist in performance management and evaluation.
C.as a substitute to performance measurement.
D.as an alternative to generally accepted accounting principles.
Using the accounts receivable aging method, estimated uncollectible accounts are
$40,000. If the balance of the Allowance for Uncollectible Accounts is an $8,000 debit
before adjustment, what is the balance after adjustment?
A.$8,000
B.$32,000
C.$40,000
D.$48,000
An accounting measurement is concerned with all except which of the following?
A.Money measure
B.Financial position
C.Separate entity
D.Business transaction
For which of the following can a standard cost accounting system be used?
A.Direct materials
B.Overhead
C.Direct labor
D.All of these
Ben & Harry Co. sold 100,000 units last year with the following results:
a. Management thinks that a 5 percent reduction in the unit sales price and a $31,000
increase in fixed advertising costs will create a 30 percent increase in unit sales. Assess
this proposal and make a recommendation on what action should be taken.
b. Assume that the marketing manager thinks that the unit sales price and advertisement
costs should not be changed. Instead, he recommends a $0.40 per unit increase in sales
commissions to generate the 30 percent increase in unit sales and a 20 percent increase
in operating income. This results in reduction of fixed costs to a certain extent.
Assess this proposal.
The operating cycle for a merchandiser is
A.the period of time it takes to sell a unit of inventory.
B.the same for all companies.
C.most generally a year.
D.the time to buy, hold, sell, and collect payment for a sale.
The entry to record the declaration of a cash dividend will
A.not affect working capital.
B.reduce working capital.
C.not affect total stockholders’ equity.
D.increase total stockholders’ equity.
In preparing a statement of cash flows using the indirect method, a decrease in an
unearned revenue account should
A.be shown as a financing activity.
B.be shown as a deduction from net income in computing net cash flows from operating
activities.
C.not be shown on the statement of cash flows.
D.be shown as an addition to net income in computing net cash flows from operating
activities.
The contributed capital of a corporation does not include
A.additional paid-in capital.
B.preferred stock.
C.the stated value of common stock issued.
D.retained earnings.
What would be the adjusting entry for a note payable whose interest is not included in
the face amount of the note?
A.Debit Interest Receivable and credit Interest Income.
B.Debit Interest Expense and credit Cash.
C.Debit Interest Expense and credit Interest Payable.
D.Debit Cash and credit Notes Payable.