The purchase of supplies for cash would affect which account category?
A) Assets
B) Liabilities
C) Capital
D) Expense
When an interest-bearing note comes due and is uncollectible, the journal entry
includes:
A) debiting Notes Receivable; crediting Accounts Receivable.
B) debiting Notes Receivable; crediting Accounts Receivable and Interest Revenue.
C) debiting Accounts Receivable; crediting Interest Revenue.
D) debiting Accounts Receivable; crediting Notes Receivable and Interest Revenue.
Net pay is equal to gross pay less the amount withheld for FICA.
One reason a corporation might issue bonds rather than selling stock is that:
A) bond interest is a tax-deductible expense.
B) interest rates are high.
C) dividends will lower the amount of tax due.
D) bondholders have claims at liquidation.
Office Supplies had a normal starting balance of $75. There were debit postings of $80
and credit postings of $60 during the month. The ending balance of the account is:
A) $55 debit.
B) $55 credit.
C) $95 debit.
D) $95 credit.
Expenditures for changing oil in a machine or repainting a car would be:
A) added to the cost of the asset.
B) added as a capital expenditure.
C) charged to an expense account.
D) added as a betterment.
Karen’s cumulative earnings before this pay period were $5,340, and gross pay for the
week is $600. Assuming the wage base limit is $7,000, how much of this week’s pay is
subject to taxes for SUTA and FUTA?
A) $600
B) $0
C) $1,550
D) $550
The following transactions occurred during June for Campus Cycle Shop. Record the
transactions below in the T accounts. Place the letter of the transaction next to the entry.
Foot and calculate the ending balances of the T accounts where appropriate.
a. Tyler invested $6500 in the bike service from his personal savings account.
b. Bought office equipment for cash, $900.
c. Performed bike service for a customer on account, $1,000.
d. Company cell phone bill received, but not paid, $80.
e. Collected $500 from customer in transaction c.
f. Tyler withdrew $300 for personal use.
Items owned by the business such as land, supplies and equipment are:
A) assets.
B) liabilities.
C) owner’s equity.
D) expense.
Which of the following is an example of a land improvement?
A) Shrubbery
B) Fences
C) Paving a parking lot
D) All of these answers are correct.
The Accounts Payable balance has decreased during the year. How would this event
affect the statement of cash flows operations sectionindirect method?
A) It is already included in the net income.
B) It would affect the operations section positively.
C) It would affect the operations section negatively.
D) Does not affect the cash flow from operations.
The journal entry to record an investment by the owner would most commonly include:
A) a debit to Cash and a credit to Fees Earned.
B) a debit to Capital and a credit to Cash.
C) a debit to Fees Earned and a credit to Capital.
D) a debit to Cash and a credit to Capital.
The entry to record payment of a voucher for an invoice within the discount period
under the gross method will include:
A) a debit to Purchase Discounts.
B) a credit to Purchase Discounts.
C) a debit to Cash.
D) Both B and C would be in the entry.
Officers of the corporation are:
A) appointed by the stockholders.
B) stockholders of the corporation.
C) appointed by the board of directors.
D) None of these answers is correct.
The proper format for a journal entry includes all of the following, except:
A) the total amounts of debits must equal the total amount of credits.
B) skip a line between transactions.
C) the credit portion of the transaction is always first.
D) listed in chronological order.
Sales Tax Payable is a:
A) liability account with a debit balance.
B) liability account with a credit balance.
C) contra-asset account with a debit balance.
D) contra-asset account with a credit balance.
The net sales for James, Inc. were $4,000,000; net income before taxes was $810,000;
and gross profit was $1,300,000. The return on sales ratio would be:
A) 12.75%.
B) 32.50%.
C) 45.25%.
D) 20.25%.
The income statement contains:
A) liabilities.
B) revenues.
C) assets.
D) Both B and C are correct.
The Sarbanes-Oxley Act was passed to:
A) prevent fraud at public companies.
B) replace all of the old accounting procedures with new ones.
C) improve the accuracy of the company’s financial reporting.
D) Both A and C are correct.
Under the allowance method, Bad Debt Expense is recorded:
A) as an estimate.
B) when an individual account is written off.
C) several times during the year as needed.
D) None of these answers is correct.
In the basic formula for calculating interest, rate refers to:
A) percent per day.
B) percent per year.
C) percent per quarter.
D) percent per month.
The higher the times interest earned ratio, the more likely:
A) a default in payment will occur.
B) a business needs to borrow money.
C) a business will suffer a loss.
D) interest payments can be made.
Bob’s earnings during the month of June were $1,100. His earnings for the year prior to
June were $15,300. Bob’s employer is subject to state unemployment of 2.0% and
federal unemployment taxes of 0.6% on the first $7,000. The employer’s unemployment
payroll tax expense for June is:
A) $8.80.
B) $22.00.
C) $0.
D) $30.80.
Allowance for Doubtful Accounts is reported in which financial statement?
A) Statement of owner’s equity
B) Income statement
C) Balance Sheet
D) None of these answers is correct.
The normal balance for Purchases Returns and Allowances is:
A) a debit.
B) a credit.
C) zero.
D) It does not have a normal balance.
NOT recording the Prepaid Rent Expense used causes:
A) assets to be too low.
B) liabilities to be too high.
C) expenses to be too low.
D) revenue to be too high.
In comparison with the proprietorship form of business organization, forming a
partnership offers which of the following advantages?
A) Limited life
B) Legal liability of each partner for all of the debts
C) Combination of ability and experience of the partners
D) Simple transfer of interest in the partnership to outsiders
The Manufacturing Overhead-Control account is used for the:
A) application of overhead to production and it has a debit balance.
B) accumulation of all actual overhead costs and it has a credit balance.
C) application of overhead to production and it has a credit balance.
D) accumulation of all actual overhead costs and it has a debit balance.
The Owner’s Equity of Logan’s Company is equal to one-half of the total assets.
Liabilities equal $40,000. What is the amount of Owner’s Equity?
A) $20,000
B) $40,000
C) $30,000
D) None of these answers is correct.
Aging Accounts Receivable measures:
A) months a bill has been due but not paid.
B) days a bill has been due but not paid.
C) sales for the year.
D) All of these answers are correct.
Payroll taxes include all of the following except:
A) federal income tax.
B) state income tax.
C) FICA-OASDI.
D) All of the above are payroll taxes.
If total liabilities are $2,000 and total assets are $10,000, owner’s equity must be:
A) $8,000.
B) $6,000.
C) $10,000.
D) $12,000.
If the gross sales for the computer department are $4,000 and the book department
gross sales are $16,000, what is the allocation for advertising expense of $1,000 to these
departments, based on gross sales?
A) Computer department $200; book department $800
B) Computer department $500; book department $500
C) Computer department $800; book department $200
D) Computer department $250; book department $750
FICA taxes provide funding to the government to pay:
A) monthly retirement benefits for persons over age 62.
B) medical benefits for persons over age 65.
C) benefits for persons who have become disabled.
D) All of the above are correct.
For each of the following, identify in Column 1 the balance the account will have in the
adjusted trial balance columns (debit or credit), in Column 2 the financial statement
column(s) in which the account balance will be found (income statement or balance
sheet), and in Column 3 the effect the account will have on the determination of net
income (increase, decrease, or none).
Post the following transactions to the ledger of Jason Company. The partial chart of
accounts of Jason Company is as follows:
100 Cash
120 Equipment
210 Accounts Payable
300 Jason, Capital
GENERAL JOURNAL Page 1
Cash Account 100
Equipment Account 120
Accounts Payable Account 210
Jason, Capital Account 300
Journalize the following assuming periodic inventory.
June 20 Made purchases of inventory for $4,500 on account.
June 21 Made sales of $3,500 cash and $2,500 credit.
June 22 Returned $2,000 of purchases for defects.
Compute the net pay for each employee. The FICA tax rate is: OASDI 6.2% on a limit
of $117,000; Medicare is 1.45%; federal income tax is 15%; state income tax is 5%; and
medical insurance is $100 per employee.
Show which columns would contain the adjusted balances by placing an “x” in the
appropriate column. Assume all accounts have normal balances.
Income Statement
Balance Sheet
Debit Credit
Debit Credit
Cash (example) ________ ________ x
________
Accounts Receivable ________ ________
________ ________
Office Supplies ________ ________
________ ________
Prepaid Rent ________ ________
________ ________
Word Processing Equipment ________ ________ ________
________
Accounts Payable ________ ________
________ ________
M. Bryant, Capital ________ ________
________ ________
M. Bryant, Withdrawals ________ ________ ________
________
Word Processing Fees ________ ________
________ ________
Office Salaries Expense ________ ________
________ ________
Supplies Expense ________ ________
________ ________
Accumulated Depreciation ________ ________ ________
________
Rent Expense ________ ________
________ ________
Discuss the purpose of a detailed income statement. Briefly describe the major kinds of
business activities covered on a detailed income statement.
Explain the difference between expenses and withdrawals.
Given the following accounts:
[1] Cash
[2] Accounts receivable
[3] Allowance for doubtful accounts
[4] Merchandise inventory
[5] Store supplies
[6] Store equipment
[7] Accumulated depreciation
[8] Notes payable
[9] Accounts payable
[10] Able Partner’s, Capital
[11] Baker Partner’s, Capital
[12] Able Partner’s, withdrawals
[13] Baker Partner’s, withdrawals
[14] Income summary
[15] Service revenue
[16] Gain on realization
[17] Loss on realization
Indicate the account(s) to be debited and credited to record the following transaction.
During liquidation realized less than book value for the store equipment.
Debit ________ & ________ & ________ Credit ________
From the following accounts, prepare in proper form a post-closing trial balance for
Matison Company on December 31.
The following accounts are on the Balance Sheet section of Great Lakes Camping
worksheet for the month ended January 31, 201x. Required: Prepare a classified
balance sheet.
Additional information: Withdrawals for the period are $2, and Net Income is $3.
Prepare general journal entries to record the following transactions for the Swanson
Company. (The company uses the income statement approach for recording bad debts
expense.)
2015
Dec. 31 Recorded Bad Debts Expense, $ 995
2016
Jan. 3 Wrote off Tom’s account as uncollectible, $195
Mar. 4 Wrote off Green’s account as uncollectible, $160
Jul. 5 Recovered $60 from Green
Aug. 19 Wrote off M. Moss’ account as uncollectible, $375
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement in which the account balance is reported, and in Column 4 the account’s
nature (permanent/temporary).
Joe owns an auto parts store called Joe’s Auto Care. The following transactions took
place during September of the current year.
September 9 Purchased merchandise on account from Wheeler Auto for $6,000.
September 10 Paid freight charges of $300 on merchandise purchased on the 9th.
September 13 Sold merchandise on account to Lancaster Auto Sales for $5,500.
The cost of the merchandise was $3,500.
September 15 Received a credit memo from Wheeler for merchandise returned, $900
September 25 Issued a credit memo to Lancaster Auto Sales for merchandise returned,
$1,000.
The cost of the merchandise is $550.
Journalize the above transactions using the periodic inventory system.
The difference between the item’s cost and accumulated depreciation is the ________.
Determine the amount to be paid within the discount period for a previous sale with an
invoice price of $10,000, subject to credit terms of 2/10, n/30.
$ ________
For each of the following items, indicate (by placing an X) whether the item would be
found on the statement of cash flows in column 1, the direct approach for determining
the cash flows from operating activities, column 2, the indirect approach for
determining the cash flows from operating activities, column 3, cash flows from
investing activities, column 4, cash flows from financing activities. If you identify that
an item affects the cash flows from operation, indirect method, also indicate whether it
will be increasing (+) or decreasing (-) the cash flows.
Record in general journal form the following transactions for Marble Manufacturing:
Feb. 4 Raw materials of $10,000 were issued from the storeroom.
Feb. 7 Charged $20,000 of direct labor to production.
Feb. 10 Supplies costing $6,000 were issued from the storeroom.
Feb. 15 The following expenses were charged to overhead: depreciation $5,000,
rent $4,000, and electricity $1,500.
Feb. 20 Overhead was applied at 80% of direct labor dollars.
Feb. 21 Transferred completed goods costing $8,000 to finished goods.