Under IFRS, equity investments are generally recorded and reported at
a. amortized cost.
b. fair value.
c. original cost.
d. maturity value.
Answer:
Dividends are predominantly paid in
a. earnings.
b. property.
c. cash.
d. stock.
Answer:
A company uses a sales journal, cash receipts journal, purchases journal, cash payments
journal, and a general journal. A cash sales return would be recorded in the
a. sales journal.
b. cash receipts journal.
c. cash payments journal.
d. general journal.
Answer:
Common Stock Dividends Distributable is classified as a(n)
a. asset account.
b. stockholders’ equity account.
c. expense account.
d. liability account.
Answer:
Dreamtime Laundry purchased $7,000 worth of supplies on June 2 and recorded the
purchase as an asset. On June 30, an inventory of the supplies indicated only $1,000 on
hand. The adjusting entry that should be made by the company on June 30 is
a. Debit Supplies Expense, $1,000; Credit Supplies, $1,000.
b. Debit Supplies, $1,000; Credit Supplies Expense, $1,000.
c. Debit Supplies, $6,000; Credit Supplies Expense, $6,000.
d. Debit Supplies Expense, $6,000; Credit Supplies, $6,000.
Answer:
A liability’”revenue relationship exists with
a. prepaid expense adjusting entries.
b. accrued expense adjusting entries.
c. unearned revenue adjusting entries.
d. accrued revenue adjusting entries.
Answer:
The classified balance sheet is
a. required under GAAP but not under IFRS.
b. required under IFRS in the same format as under GAAP.
c. required under IFRS but not under GAAP.
d. required under IFRS with certain variations in format as compared to GAAP.
Answer:
Nicholson Company purchased equipment on January 1, 2013, for $80,000 with an
estimated salvage value of $20,000 and estimated useful life of 8 years. On January 1,
2015, Nicholson decided the equipment will last 12 years from the date of purchase.
The salvage value is still estimated at $20,000. Using the straight-line method the new
annual depreciation will be:
a. $4,500.
b. $5,000.
c. $6,000.
d. $6,667.
Answer:
Beethoven Company provided consulting services and billed the client $3,100. As a
result of this event,
a. assets remained unchanged.
b. assets increased by $3,100.
c. stockholders’ equity increased by $3,100.
d. assets and stockholders’ equity both increased by $3,100.
Answer:
Yankee Hotel Foxtrot initiated operations on July 1, 2015. To manage the company
officers and managers have requested monthly financial statements starting July 31,
2015. The adjusted trial balance amounts at July 31 are shown below.
(a) Determine the net income for the month of July.
(b) Determine the total assets and total liabilities at July 31, 2015 for Yankee Hotel
Foxtrot.
(c) Determine the amount that appears for Retained Earnings at July 31, 2015.
Answer:
An auto manufacturer would classify vehicles in various stages of production as
a. finished goods.
b. merchandise inventory.
c. raw materials.
d. work in process.
Answer:
Which of the following is false about a journal?
a. It discloses in one place the complete effects of a transaction.
b. It provides a chronological record of transactions.
c. It helps to prevent or locate errors because debit and credit amounts for each entry
can be readily compared.
d. It keeps in one place all the information about changes in specific account balances.
Answer:
An aging of a company’s accounts receivable indicates that $3,000 are estimated to be
uncollectible. If Allowance for Doubtful Accounts has a $800 debit balance, the
adjustment to record bad debts for the period will require a
a. debit to Bad Debt Expense for $2,200.
b. debit to Bad Debt Expense for $3,000.
c. debit to Bad Debt Expense for $3,800.
d. credit to Allowance for Doubtful Accounts for $800.
Answer:
The acquisition of treasury stock by a corporation
a. increases its total assets and total stockholders’ equity.
b. decreases its total assets and total stockholders’ equity.
c. has no effect on total assets and total stockholders’ equity.
d. requires that a gain or loss be recognized on the income statement.
Answer:
The chief accounting officer in a corporation is the
a. treasurer.
b. president.
c. controller.
d. vice-president of finance.
Answer:
Under the direct write-off method of accounting for uncollectible accounts
a. the allowance account is increased for the actual amount of bad debt at the time of
write-off.
b. a specific account receivable is decreased for the actual amount of bad debt at the
time of write-off.
c. balance sheet relationships are emphasized.
d. bad debt expense is always recorded in the period in which the revenue was recorded.
Answer:
Financial accounting provides economic and financial information for all of the
following except
a. creditors.
b. investors.
c. managers.
d. other external users.
Answer:
Which of the following expressions is incorrect?
a. Gross profit ‘“ operating expenses = net income
b. Sales revenue ‘“ cost of goods sold ‘“ operating expenses = net income
c. Net income + operating expenses = gross profit
d. Operating expenses ‘“ cost of goods sold = gross profit
Answer:
In performing a vertical analysis, the base for prepaid expenses is
a. total current assets.
b. total assets.
c. total liabilities and stockholders’ equity.
d. prepaid expenses.
Answer:
A company has a accounts receivable turnover of 10 times. The average accounts
receivable during the period are $400,000. What is the amount of net credit sales for the
period?
a. $40,000
b. $4,000,000
c. $400,000
d. Cannot be determined from the information given
Answer:
The convergence issue that will be most difficult to resolve in the area of inventory
accounting is:
a. FIFO.
b. LIFO.
c. ownership of goods.
d. costs to include in inventory.
Answer:
A stock split
a. may occur in the absence of retained earnings.
b. will increase total paid-in capital.
c. will increase the total par value of the stock.
d. will have no effect on the par value per share of stock.
Answer:
Under IFRS, there is no classification for
a. changes in accounting estimates.
b. changes in accounting principles.
c. discontinued operations.
d. extraordinary items.
IFRS:
Answer:
Under IFRS, companies can choose which inventory system?
Answer:
Notes payable usually require the borrower to pay interest.
Answer:
Expense recognition is tied to revenue recognition.
Answer:
Maxim Corporation had the following transactions pertaining to debt investments.
Instructions
Prepare journal entries for the purchase and sale of the Woodrow Company bonds.
Answer:
In order to possess future service potential, an asset must have physical substance.
Answer:
Accounts receivable are the result of cash and credit sales.
Answer: