Archives: Quiz

Logan Company debited Prepaid Insurance for $1,080 on July 1, 2015, for a one-year fire insurance policy. If the company prepares monthly financial statements, failure to make an adjusting entry on July 31 for the amount of insurance that has […]

Given the following information, compute the amount of cash finally remitted by the customer. Oct. 22’”Sale on credit, terms of 2/10, n/30’”$6,000 Oct. 27’”Allowance granted due to some items being damaged’”$600 Oct. 31’”Payment in full received from customer’”$? a. $5,292. […]

The subtotal net assets is used in a. both GAAP and IFRS. b. GAAP but not IFRS. c. IFRS but not GAAP. d. neither IFRS nor GAAP. Answer: Interest may be included in the acquisition cost of a plant asset […]

Selected financial statement data for Homer Company are presented below. Total assets at the beginning of the year were $800,000; total common stockholders’ equity was $500,000 at the beginning of the period. Instructions Compute each of the following: (a) Asset […]

Dividends in arrears on cumulative preferred stock a. are shown in stockholders’ equity of the balance sheet. b. must be paid before common stockholders can receive a dividend. c. should be recorded as a current liability until they are paid. […]

Useful life is expressed in terms of use expected from the asset under the a. declining-balance method. b. straight-line method. c. units-of-activity method. d. none of these answer choices are correct. Answer: Inventory is a. reported under the classification of […]

In recording business transactions, evidence that an accounting transaction has taken place is obtained from a. business documents. b. the Internal Revenue Service. c. the public relations department. d. the SEC. Answer: Hull Company acquires land for $86,000 cash. Additional […]

GAAP, compared to IFRS, tends to be more a. simple in accounting requirements. b. rules-based. c. principles-based. d. simple in disclosure requirements. Answer: The steps in preparing a trial balance include all of the following except a. listing the account […]

Either the straight-line method or the effective-interest method of amortization will always result in a. the same amount of interest expense being recognized over the term of the bonds. b. the same amount of interest expense being recognized each year. […]

The adjusted trial balance is prepared a. after financial statements are prepared. b. before the trial balance. c. to prove the equality of total assets and total liabilities. d. after adjusting entries have been journalized and posted. Answer: The daily […]

Tangible frauds include a. asset misappropriation. b. false pretenses. c. counterfeiting. d. all of the above. Answer: Most companies that follow IFRS present balance sheet (statement of financial position) information in this order: a. current assets; investments; property, plant and […]

An asset that cannot be sold individually in the market place is a. a patent. b. goodwill. c. a copyright. d. a trade name. Answer: Under IFRS, comprehensive income may be displayed (reported) in a. the equity section of the […]

The asset turnover is computed by dividing a. net income by average total assets. b. net sales by average total assets. c. net income by ending total assets. d. net sales by ending total assets. Answer: In the Papyrus Corporation, […]

In the stockholders’ equity section of the balance sheet, the classification of capital stock consists of a. additional paid-in capital and common stock. b. common stock and treasury stock. c. common stock, preferred stock, and treasury stock. d. common stock […]

Which of the following would not be considered internal users of accounting data for a company? a. The president of a company. b. The controller of a company. c. Creditors of a company. d. Salesmen of the company. Answer: Vega […]

Cost of goods available for sale includes each of the following except a. beginning inventory. b. freight-in. c. ending inventory. d. net purchases. Answer: A plant asset was purchased on January 1 for $100,000 with an estimated salvage value of […]

Sales taxes collected by a retailer are expenses a. of the retailer. b. of the customers. c. of the government. d. that are not recognized by the retailer until they are submitted to the government. Answer: On January 1, 2014, […]

Each of the following decreases total stockholders’ equity except a a. cash dividend. b. liquidating dividend. c. stock dividend. d. All of these decrease total stockholders’ equity. Answer: Equipment that cost $420,000 and on which $200,000 of accumulated depreciation has […]

The ending retained earnings amount is shown on a. the balance sheet only. b. the retained earnings statement only. c. both the income statement and the retained earnings statement. d. both the balance sheet and the retained earnings statement. Answer: […]

An aging of a company’s accounts receivable indicates that $7,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a a. debit to […]

The information to prepare the statement of cash flows usually comes from each of the following except a. the comparative balance sheet. b. the prior year’s income statement. c. additional information. d. the current income statement. Answer: Which one of […]

Trudy, Inc. had the following bank reconciliation at March 31, 2015: All reconciling items at March 31, 2015 cleared the bank in April. Outstanding checks at April 30, 2015 totaled $6,000. There were no deposits in transit at April 30, […]

Farris Company borrowed $800,000 from BankTwo on January 1, 2014 in order to expand its mining capabilities. The five-year note required annual payments of $208,349 and carried an annual interest rate of 8.5%. What is the amount of expense Farris […]

Which of the following presents key aspects of the process of accounting in the correct chronological order? a. Totaling, auditing, and budgeting b. Budgeting, recording, and communicating c. Recording, totaling, and auditing d. Identifying, recording, and communicating Answer: Instructions: Present […]

The current portion of long-term debt should a. be paid immediately. b. be reclassified as a current liability. c. be classified as a long-term liability. d. not be separated from the long-term portion of debt. Answer: Eneri Company’s inventory records […]

The information for preparing a trial balance on a worksheet is obtained from a. financial statements. b. general ledger accounts. c. general journal entries. d. business documents. Answer: IFRS requires the use of a. the term balance sheet. b. the […]

Nord Company had $375,000 of current assets and $150,000 of current liabilities before borrowing $70,000 from the bank with a 3-month note payable. What effect did the borrowing transaction have on the amount of Nord Company’s working capital? a. No […]

Turnbull Department Store had net credit sales of $18,000,000 and cost of goods sold of $15,000,000 for the year. The average inventory for the year amounted to $2,500,000. The average number of days in inventory during the year was a. […]

At the time of acquisition of a debt investment, a. no journal entry is required. b. the historical cost principle applies. c. the Stock Investments account is debited when bonds are purchased. d. the Investment account is credited for its […]

Lakeland, Inc. has 25,000 shares of 6%, $100 par value, noncumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2015. There were no dividends declared in 2014. The board of directors declares and […]

The basic issues in accounting for notes receivable include each of the following except a. analyzing notes receivable. b. disposing of notes receivable. c. recognizing notes receivable. d. valuing notes receivable. Answer: Proving the equality of the totals in the […]

Hoppmann Company wrote checks totaling $25,620 during October and $27,975 during November. $24,360 of these checks cleared the bank in October, and $27,330 cleared the bank in November. What was the amount of outstanding checks on November 30? a. $645 […]

Hungh Company had the following transactions pertaining to short-term investments in equity securities. Instructions (a) Journalize the transactions. (b) Indicate the income statement effects of the transactions. Answer: Newton Company has recorded the following items in its financial records. (a) […]

The best managed companies will have a. no uncollectible accounts. b. a very strict credit policy. c. a very lenient credit policy. d. some accounts that will prove to be uncollectible. Answer: An accounting record of the balances of all […]

Corporations invest in other companies for all of the following reasons except to a. house excess cash until needed. b. generate earnings. c. meet strategic goals. d. increase trading of the other companies’ stock. Answer: Use the following information to […]

Mt. Zion Inc. pays its employees twice a month, on the 7thand the 21st. On June 21, Mt. Zion Inc. paid employee salaries of $5,000. This transaction would a. increase stockholders’ equity by $5,000. b. decrease the balance in Salaries […]

In the first month of operations, the total of the debit entries to the cash account amounted to $1,200 and the total of the credit entries to the cash account amounted to $800. The cash account has a(n) a. $800 […]

Which of the following is true regarding the corporate form of business organization? a. Corporations are the most prevalent form of business organization. b. Corporate businesses are generally smaller in size than partnerships and proprietor-ships. c. The revenues of corporations […]

Which of the following statements concerning taxation is accurate? a. Partnerships pay state income taxes but not federal income taxes. b. Corporations pay federal income taxes but not state income taxes. c. Corporations pay federal and state income taxes. d. […]

Bank errors a. occur because of time lags. b. must be corrected by debits. c. are infrequent in occurrence. d. are corrected by making an adjusting entry on the depositor’s books. Answer: Which of the following is not a true […]

If a company acquires a 40% common stock interest in another company, a. the equity method is usually applicable. b. all influence is classified as controlling. c. the cost method is usually applicable. d. the ability to exert significant influence […]

Eneri Company’s inventory records show the following data: A physical inventory on December 31 shows 4,000 units on hand. Eneri sells the units for $13 each. The company has an effective tax rate of 20%. Eneri uses the periodic inventory […]

Equipment was purchased for $96,000 and has a book value of $32,000 and a depreciable cost of $80,000. The estimated salvage value is a. $32,000. b. $64,000. c. $48,000. d. $16,000. Answer: The major IFRS requirements related to accounting for […]

The functions of the National Transportation Safety Board, like those of other federal adminisÂtrative agencies, include a. adjudication. c. declaration. b. enunciation. d. pronunciation. Answer: Sales & Revenue, Inc., discovers that defamatory statements about its policies and products are being […]

Toro, S.A., which is based in Mexico, enters into a contract for the purchase of portable livestock fencing from United Fencing Company, which is based in the United States. This contract is governed by a. Mexican law. b. the provisions […]

Seiko works for TallTales Publishing, Inc. The basis for Seiko’s contribution under the Federal Insurance Contribution Act to help pay for benefits that will partially make up for her loss of income on retirement is her a. seniority at TallTales. […]

Employees at Resource Industries, Inc., want to form into a single union. To constitute an appropriate bargaining unit, a group of workers must have a. a mutuality of interest. b. at least one member of management willing to join the […]

Grid Tool Company makes and sells tools. One of the tools is believed to be hazÂ- ardous. The appropriate government agency may require Grid to a. export the tool and sell it only abroad. b. increase the price to cover […]

State and federal transportation agencies may issue regulations that conflict. When a state regulation conflicts with a federal regulation a. the federal regulation takes precedence. b. the state regulation takes precedence. c. the regulations are mutually void. d. the regulations […]

Business Enterprise Company agrees to sell a commercial office building and parking garage to City Investments, Inc., which assigns the rights to the realty to Downtown Properties, LLC. Downtown Properties does not yet exist, but once it is created and […]