Archives: Quiz

A corporation had several transactions affecting its stockholders’ equity accounts during the year. In the space provided, show the impact on the accounting equation by placing a plus sign (+) for an increase, a minus sign (-) for a decrease, […]

Rhodes Bakery The balance sheet taken from the company’s 2015 10-K is provided below: December 31 Assets: 2015 2014 Current Assets: Cash $ 61,100 $54,000 Accounts Receivable 22,500 17,500 Inventory 8,500 7,000 Other Current Assets 6,500 5,500 Total Current Assets […]

For liabilities, stockholders’ equity, and revenue accounts, debits will _____________ the account balance. If a corporation desires to reacquire some of its issued shares of stock, how would it accomplish this, i.e., how would the corporation determine which of its […]

A(n) ____________________ is the process used by an accountant to ensure consistency between the balance shown on the bank statement for a particular account and the balance shown on the accounting records. Show the effect of each of the transactions […]

What is meant by the term “current maturities of long-term debt” in the current liabilities section of a balance sheet? A stock split has the effect of reducing the par value per share and the number of shares outstanding. Answer: […]

The T-accounts presented below are taken from the general ledger of Health Force Corporation on March 31, 2013. Determine the balance of each account and present them in proper trial balance format. Cash Accounts Payable Common Stock 5,000 12,000 3,200 […]

Refer to the information provided for Yancey Company. How much is cost of goods sold assuming that Yancey Company takes advantage of one-half of the cash discount? Match the inventory-related accounts to costs that may be included in inventories for […]

A company provides a one-year warranty for its products. The estimated cost of parts and labor required to satisfy warranty claims should be recorded as a current liability in the period the products are sold. Two reasons why a company […]

The ____________________ right provides that common stockholders may keep the same percentage of ownership if new stock is issued. Marvin’s Manufacturing can invest in a new process, but will need to purchase new equipment. The cost of the equipment is […]

Strategic risk assessment is designed to identify, analyze, and manage possible threats to the organization’s success concerning ____________________ forces such as competitors, customers, suppliers, and PEST factors. A probable loss from a lawsuit that can be reasonably estimated should notbe […]

“You Decide” Essay You are an entrepreneur with a great idea for a new business. In order to obtain financing, the loan officer at First Second Third National Bank has requested a budgeted set of financial statements. An accountant friend […]

Mary Kay Cosmetics Selected data and additional information from the company’s records are presented below: Balance Sheet Data 2014 2013 Cash $235,000 246,000 Accounts receivable $120,000 $150,000 Inventories 56,000 50,000 Accounts payable 38,000 70,000 Salaries payable 10,000 5,000 Equipment 110,000 […]

If the balance of prepaid insurance was the same on January 1, 2014, and December 31, 2014, then the insurance expense must have been ____________________ the cash payments made for insurance during the year. Distinguish between capital and revenue expenditures. […]

A contingent liability must be recorded if it is reasonably possible and the amount can be reasonably estimated. ____________________ is the name given to revenue, expense, and dividend accounts because they are closed at the end of the period. Answer: […]

Restricted earnings are usually disclosed in the footnotes to the financial statements, but may sometimes be disclosed in a reserve account in the equity section of the balance sheet. A contra account called ____________________ is used to depreciate property, plant, […]

If bonds were initially issued at a discount, the interest expense on the bonds calculated using the effective interest method will a. decrease as the bonds approach their maturity date. b. increase as the bonds approach their maturity date. c. […]

A customer returned damaged goods for credit. Under a perpetual system, which of the seller’s accounts decreases? a. purchase returns b. accounts receivable c. sales returns d. sales revenue The following stockholders’ equity appeared on a balance sheet at December […]

A manufacturing company reported total inventory of $75,000. Assuming the following account balances, what is this company’s work in process inventory? Finished goods $15,000 Merchandise inventory $10,000 Raw materials $40,000 a. $10,000 b. $20,000 c. $60,000 d. $65,000 Research and […]

Which of the following is an example of a credit memo? a. notice of a bank service charge b. notice of interest earned on a checking account c. outstanding checks d. a company’s transposition error in the recording of a […]

A company has property, plant, and equipment of $500,000, current liabilities of $70,000, and long-term liabilities are $300,000. If the company’s current ratio is 3.0, what are current assets? a. $900,000 b. $690,000 c. $430,000 d. $210,000 A company has […]

Qualls Department Store counted some of its inventory items twice. As a result, its operating expenses will be a. correct assuming the company calculates its cost of goods sold correctly. b. correct since operating expenses are not affected by inventory […]

Which of the following statements is falsewith respect to the qualitative characteristics of useful accounting information? a. Comparability is concerned with different companies using the same accounting methods; whereas, consistency is concerned with a single company using the same accounting […]

A company increased its dollar amount of working capital over the past several years. Which one of the following measures should be used to further evaluate the company’s short-run liquidity? a. The Asset Ratio b. An analysis of the company’s […]

The result of using the effective interest method of amortization for bond discounts is that the a. interest expense for each amortization period is constant. b. effective interest rate for each amortization period is constant. c. amount of interest expense […]

The list below contains several items that appear on a multiple-step income statement. Select the choice that lists the items in the order they would appear on a multiple-step income statement. a. 6, 5, 4, 7, 1, 2, 3 b. […]

Refer to Ladder Distributors. Suppose the company reissued 1,000 shares of its treasury stock on June 1, 2015, for $39 each. Which of the following is true regarding the entry required to record this transaction? a. A debit to treasury […]

Which method of preparing the operating activities section of a statement of cash flows reports major classes of gross cash receipts and cash payments for revenues and expenses? a. the direct method b. the indirect method c. Both the direct […]

Each of the following transactions would be classified as an investing activity except: a. Acquiring an investment in the stock of another company. b. Lending money to a supplier. c. Receiving dividends on an investment in the stock of another […]

A convertible bond is one where a. the issuer can convert from a fixed interest rate to a floating rate. b. the issuer can convert the bond from long-term to short-term. c. the issuer can retire the bond before its […]

Tom Nelson invested $9,000 into an account yielding 6%. How long must he leave the money in the account to obtain $12,060.90? a. 2 years b. 3 years c. 4 years d. 5 years A company paid off a $100,000 […]

A list of all active accounts and their balances at a particular date, which is used to prove the equality of debits and credits, is a a. Chart of Accounts. b. General Ledger. c. Journal. d. Trial Balance. Refer to […]

Which of the following is an assumption made in the preparation of the financial statements? a. Financial statements are prepared for a specific entity that is distinct from the entity’s owners. b. The current market value is assumed to be […]

Match these terms with their definitions. a. Bond i. Lessor b. Contract, coupon, stated rate j. Leverage c. Discount k. Long-term debt d. Effective interest rate method l. Market rate, yield e. Face value, par value, principal m. Maturity Answer: […]

At the year-end inventory count, if goods in transit are shipped FOB shipping point, they should be included in the inventory count of: a. the seller. b. the buyer. c. the shipping company. d. both the seller and the buyer. […]

Credit entries are used to a. increase asset accounts. b. increase liability accounts. c. increase expense accounts. d. increase dividends. Presented below are selected data from the accounting records for 2013: A) Calculate the net income or loss for the […]

Refer to Delco Construction. What is the company’s unadjusted cash balance in its accounting records at March 31st before the reconciliation was completed? a. $28,700 b. $29,100 c. $28,300 d. $29,600 When the market value of inventory items has declined […]

You are a potential creditor and are concerned that a particular company you are ready to give a loan to might have too much debt. Which financial statement would provide you information needed in order to evaluate your concern? a. […]

Refer to Rio Imports. The operating margin percentage for 2015 is an indicator that the company has a. experienced setbacks concerning the effectiveness of its purchasing, production, pricing, and marketing activities. b. increased profits by $33,000. c. improved profitability in […]

Earnings per share is an indication of how much a. cash the company has for each share of all outstanding stock. b. earnings the company has for each share of outstanding common stock. c. earnings the company has for each […]

Many companies use MACRS (Modified Accelerated Cost Recovery System) depreciation for a. financial reporting purposes and a different method for tax purposes. b. financial reporting purposes because depreciation is not allowed for tax purposes. c. tax purposes because it results […]

How should intangible assets be disclosed on the balance sheet? a. as a reduction of stockholders’ equity b. at cost in the current assets section c. at the estimated market value at the balance sheet date d. net of the […]

The current assets of Rock Garden Gifts were considered very liquid at December 31, 2015. This means that the company a. has a larger quick ratio than current ratio. b. must decrease its liquidity in order to appear more favorable […]

Liquidity a. measures the ability of the firm to pay financial obligations as they become due. b. can be measured in terms of working capital. c. can be assessed by the current ratio. d. All of the above. For each […]

Rent-a-Center Selected data from the financial statements are provided below: 2015 2014 Current Assets $12,000 $6,000 Long-Term Assets 14,000 8,000 Current Liabilities 4,000 6,000 Long-Term Liabilities 14,000 0 Stockholders’ Equity 8,000 8,000 Net Sales 19,000 18,200 Net Income 2,000 1,000 […]

The operating cycle is the elapsed time between the a. purchase of goods or services and the ultimate collection of cash from customers related to the sale of those goods. b. sale of goods or services to customers and the […]

Refer to Lakeshore Industries. What is the effect of a 2-for-1 stock split if the market value of the common stock is $20 per share at the time the stock split is declared? a. A stock split has no impact […]

Rainsoft Company Selected data from the financial statements are provided below: 2015 2014 2013 Cash $ 44,000 $ 28,000 $ 14,000 Accounts Receivable 84,000 32,000 114,400 Inventory 44,000 166,000 100,000 Prepaid Expenses 46,000 36,000 41,600 Total Current Assets $218,000 $262,000 […]

In the reconciliation of a bank statement, deposits in transit should be a. added to the unadjusted balance per the company’s records. b. subtracted from the unadjusted balance per the company’s records. c. added to the unadjusted bank statement balance. […]

A company employs 10 workers in its manufacturing facility. Each employee is paid $10 per hour and works 8 hours per day, Monday through Friday. Employees are paid every Wednesday for the previous Monday through Friday workweek. The last payday […]

A company issued $10,000,000 of bonds. Assuming the most common denomination of bonds, the number of bonds sold was a. 10,000. b. 100,000. c. 1,000,000. d. 10,000,000. Carolina Truck Lines purchased a truck at a cost of $22,000 in 2008. […]