Archives: Quiz

Empire has a credit balance of $450 in its Allowance for Doubtful Accounts. The balance in the Accounts Receivable account is $92,500, with $2,015 estimated to be uncollectible after aging the accounts. Under the balance sheet approach, the debit to […]

Indicate the normal balance of each of the following accounts: a) Purchases Returns and Allowances b) Merchandise Inventory c) Freight-In d) Sales Returns and allowances e) Unearned Revenue When closing the expense account, which of the following accounts will also […]

The correct journal entry to record the payment of SUTA is: A) debit SUTA Expense; credit Cash. B) debit Cash; credit SUTA Expense. C) debit Cash; credit SUTA Payable. D) debit SUTA Payable; credit Cash. Barkley’s Resort had 2,000 shares […]

When a bond issued at face value is retired, the journal entry would include: A) debit Bond Interest Expense. B) debit Bonds Payable. C) credit Cash. D) Both B and C The write-off of an intangible asset is called: A) […]

J. Long purchased computer equipment for $7,000 on January 1, 2015. It has a residual value of $700 with a useful life of 5 years. After the appropriate adjusting entry is made, the book value of the asset on December […]

An accounting device used to record increases and decreases in individual assets, liabilities, capital, revenue, expenses, and withdrawals is a(n): A) chart of accounts. B) account. C) trial balance. D) footing. If treasury stock is sold for less than cost, […]

Which of the following items are on both the balance sheet and the statement of owner’s equity? A) Net loss B) Capital C) Additional owner’s investments D) Owner’s withdrawals Which of the following could be recorded as a reversing entry? […]

A debit to a liability account was posted as a debit to the Capital account. This error would cause: A) assets to be overstated. B) liabilities to be overstated. C) capital to be overstated. D) None of the above is […]

Estimated manufacturing overhead costs were $60,000 and the number of estimated machine hours was 20,000. Actual overhead costs were $61,000 and the actual number of machine hours used was 20,500. Based on machine hours, the overhead application rate per hour […]

The Petty Cash account is debited when: A) the account is being replenished. B) the account balance is being decreased. C) the account balance is being increased. D) the account is closed. Casey issued bonds for $20,000 at 12% face […]

The amount shown in the balance sheet debit column of worksheet for Merchandise Inventory is: A) the Cost of Goods Sold. B) net purchases + beginning merchandise inventory. C) the ending inventory. D) the beginning inventory. The cash flows from […]

When making the adjustment for prepaid insurance, instead of writing off only the time that has passed, the entire policy was written off. This would: A) overstate the assets. B) overstate the liabilities. C) understate net income. D) None of […]

Financial statements that are prepared for a period shorter than a year are called: A) accounting period statements. B) fiscal year statements. C) interim statements. D) operating statements. The two methods of accounting for uncollectible receivables are the direct write-off […]

The ending merchandise inventory was overstated. This error would cause: A) net income to be understated. B) revenue to be understated. C) net income to be overstated. D) expense to be overstated. Corbin Corporation issued 300, $1,000, 11% bonds at […]

When two proprietors decide to combine their businesses and form a partnership, GAAP usually requires that noncash assets be taken over at their: A) residual value on the date of the partnership. B) book value on the date of the […]

The goods a company has available to sell to customers are called: A) Supplies. B) Sales. C) Cost of Goods Sold. D) Merchandise Inventory. Under MACRS, which of the following classes uses the straight-line method? A) 10-year property B) 15-year […]

Preferred stockholders have what right over common stockholders? A) Voting rights B) Prior claim to dividends C) More risk than common stockholders D) Preemptive rights If management wishes to measure how effectively the assets were used in generating a profit, […]

Which of the following transactions would most likely NOT be recorded in an auxiliary petty cash record? A) Purchase of first aid supplies B) Purchase of postage stamps C) Payment on a $400 rent bill D) Payment of gas for […]

If partial payment is made and installment payments are set up after the voucher is prepared for the total amount owed: A) the old voucher is cancelled and a new voucher is prepared for the new amount owed. B) the […]

Income Summary, before closing to Capital, contains a debit balance of $110 and a credit balance of $200. What is the entry to close Income Summary to Capital? A) Debit Income Summary $100; credit Capital $200 B) Debit Income Summary […]

The final step in the accounting cycle is: A) preparing the post-closing trial balance. B) preparing the financial statements. C) posting the closing entries. D) posting the adjusting entries. When the balance of the Income Summary account is a credit, […]

Under the direct method of the statement of cash flows, a sale of merchandise inventory for cash is a(n): A) managing activity. B) investing activity. C) financing activity. D) operating activity. The ratios that measure a company’s ability to pay […]

The sale of assets for liquidation purposes of a partnership is called: A) a sheriff’s sale. B) dissolution. C) net liquidation. D) None of the above The entry to close the Fees Earned account would cause: A) the Capital account […]

If the company uses special journals, all payments should be recorded on a: A) cash receipts journal. B) cash payments journal. C) purchases journal. D) sales journal. Other Expense is used to record: A) selling expenses. B) administrative expenses. C) […]

From the following items, which would most likely cause the recording of unearned revenue? A) Potential sale of merchandise B) Purchase of merchandise on account C) Legal fees collected after work is performed D) Subscriptions collected in advance for a […]

A company has four departments (A, B, C and D) and the net sales are $35,000; $40,000; $60,000 and $25,000 respectively. The cost of goods sold per department is $25,000; $15,000; $30,000 and $15,000 respectively. What department has the highest […]

Returned merchandise paid for within the discount period for a Cash refund. This will be recorded with: A) a credit to a liability. B) a credit to an asset. C) a debit to a liability. D) a debit to an […]

From the following data, make the following adjustments, and complete the worksheet for the month. a. Depreciation Expense is $350. b. Supplies remaining at end of period $75. c. Prepaid Insurance balance $400, $100 has expired. d. Wages for the […]

A statement presenting data from two or more consecutive periods is called a: A) comparative statement. B) compromising statement. C) common-size statement. D) Both A and C The risk of creditors in relation to the risk taken by stockholders is […]

What would be the depreciation expense in year 1, using units-of-production, for a molding machine that cost $22,000, had a useful life of 7 years, and an estimated total machine hours of 40,000? The salvage value is $2,000 and production […]

A business issues 10-year bonds payable in exchange for common stock. This transaction would be reported on the statement of cash flows in: A) operating activities. B) financing activities. C) investing activities. D) a separate schedule. A wholesale customer returned […]

Journalize the following independent transactions: a) Casey Company sells 300 shares of $20 par-value common stock at $20. b) Jacob Corporation sells 100 shares of $20 par-value common stock at $30. c) Moss Inc. sells 40 shares of no-par common […]

A document submitted by incorporators when applying for a charter is known as: A) articles of incorporation. B) charter. C) proxy. D) stock certificate. Boxes R’ Us paid $5,000 in salaries and wages for February. This transaction will: A) increase […]

Calculate, from the following information accumulated by Bob Clark, the adjusted cash balance at the end of April. A) $4,000 B) $4,250 C) $4,205 D) $5,500 An employee has gross earnings of $2,000 with withholdings of 6.2% FICA-OASDI, 1.45 % […]

Important control features provided by a voucher system: A) assure only approved invoices are paid. B) centralize the recording of all expenditures in one placethe voucher register. C) include using the check register along with the voucher register. D) All […]

Which of the following accounts would most likely NOT need to be adjusted at the end of the year? A) Office Supplies B) Prepaid Insurance Expense C) Accumulated Depreciation D) Cash Record the following transactions into the expanded accounting equation […]

The amount of FICA-OASDI and FICA-Medicare withheld from the employee’s check is determined by the employee’s: A) W-2. B) net pay. C) earnings for the period and cumulative earnings. D) W-4. Under the perpetual system, when merchandise is sold the […]

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) […]

Using MACRS rates for a 15 and 20-year property, what is the percentage for the depreciable rate? A) 200 percent B) 150 percent C) 125 percent D) 100 percent A purchase of a vehicle for cash would have what effect […]

The entry to record the incurrence of an expense will include: A) a debit to Capital and a credit to Cash. B) a debit to the expense and a credit to Vouchers Payable. C) a debit to the expense and […]

Vouchers Payable is a liability account on the balance sheet. A profit center and a cost center both generate costs. Answer: TRUE The statement of retained earnings does not include the account Preferred Stock. Answer: TRUE Nonparticipating preferred stock allows […]

Overhead includes labor costs of assembly line supervisors but not the assembly workers. The income statement is completed after the statement of owners equity. Answer: FALSE When merchandise is sold, the periodic inventory system requires a debit to Cost of […]

The payroll information for a pay period is found in the payroll register. To calculate gross profit, subtract operating expenses from net sales. Answer: FALSE Debits must exceed credits on the Statement of Owner’s equity. Answer: FALSE Sales is a […]

Of two departments, the men’s department has 8,000 square feet and the women’s department has 22,000 square feet. Depreciation is divided by square footage. If total depreciation is $50,000, the total amount allocated to the men’s department would be approximately […]

When a corporation has only one class of stock, it will be preferred stock. The Purchases Discount account normally has a debit balance and is a contra-cost account. Answer: FALSE Under the accrual method of accounting, the allowance method is […]

A signature card shows the signature of only the person who authorizes others in the company to sign checks. Beginning inventory is adjusted by debiting Income Summary and crediting Merchandise Inventory. Answer: TRUE A purchases journal may be used to […]

A work week is 180 hours in length. If ending inventory is overstated this period, beginning inventory will be overstated in the next period. Answer: TRUE Under the indirect method, net income is considered the primary source of cash from […]

When the amount received for the bond is less than the face value, the difference is written off over time in an account called Premium on Bonds Payable. Nominal accounts are called temporary accounts because their balances are carried forward […]

To distinguish the total on a financial statement, use single underline. Retained Earnings is the account in which the stockholders’ investments are placed. Answer: FALSE A bond that pays interest on February 28 and October 31 will have to be […]

The data processing department of a tax firm would be a cost center. The income statement reports the work in process inventory. Answer: FALSE Trends in the industry, such as advancements in technology, should not be a consideration in determining […]