Archives: Quiz

During tough economic times, many companies rely on memories of “the good old days” to help advertise their products. Looking for a bit of a jump-start itself, PepsiCo turned to nostalgia-heavy advertisements late in 2009, which were then carried into […]

Scheduled to be released in the first quarter of 2011, Nintendo’s portable 3DS gaming system will likely revolutionize the video game industry. The 3DS is the newest in a long line of portable gaming systems made by Nintendo, but will […]

(Scenario 14-2) You open up your laptop to begin writing a term paper for your English literature class. You do a quick Google search on a few key phrases involving Shakespeare, Dickens, and Hemingway. But before you go further, you […]

Scenario 15-2 The Sounds Good recording company is getting ready to release the first compact disc from its newest band, Planet Moon. Sounds Good’s last three releases have been dismal failures, and the struggling company needs a quick influx of […]

Scenario 1-1 In 1996, University of Maryland grad Kevin Plank founded Under Armour, a performance apparel company that now competes with some of the top apparel brands in the industry. During its first ten years of operations, the company was […]

Following the announcement that the world’s largest e-tailer, Amazon.com, made a profit for the first time since it started business in the early 1990s, the company saw more than 90 percent of its market value disappear as part of the […]

Which element of advertising involves “the structure itself and the plan behind the structure”? a. layout b. design c. copy d. illustration How might the establishment of a marketing database create problems between a company and its advertising agency? a. […]

Howard Gardner discovered a number of positive traits that the greatest creative minds of the 20th century shared. But he found that these individuals were not necessarily a. self-confident. b. easygoing. c. hardworking. d. unconventional. Overall, computer media-planning models a. […]

A consumer survey finds that many dog owners purchase a premium brand of dog food because of its functional benefits. Which of the following qualifies as a functional benefit? a. It is promoted in an emotional commercial showing an adorable […]

A manufacturer of high-end hiking boots, rugged walking sandals, and specialized athletic shoes has hired your agency to run a print campaign. You tell him that a full-page, black-and-white ad in Hiking and Biking magazine will cost him $1,650 to […]

Which of the following organizations is responsible for the creation and governance of accounting standards in the United States? A) Financial Accounting Standards Board B) Institute of Management Accountants C) American Institute of Certified Public Accountants D) Securities and Exchange […]

In a multi-step income statement, which of the following items is excluded from the calculation of operating income? A) sales revenue B) interest expense C) selling expense D) administrative expense Which of the following is true of source documents in […]

Dividends is a(n) ________ account that has a normal ________ balance. A) liability; credit B) equity; debit C) liability; debit D) equity; credit For Expenses, the category of account and its normal balance is ________. A) equity and a credit […]

On January 1, 2017, Everlight Corp. has the following account balances:Accounts Receivable Allowance for Bad Debts Bad Debts ExpenseDuring the year, Everlight has $155,000 of credit sales, collections of credit sales of $143,000, and write-offs of $3,300. It records bad […]

A petty cash fund was established with a $575 balance. It currently has cash of $45 and petty cash tickets as shown below: Which of the following would be included in the journal entry to replenish the Petty Cash fund? […]

Which of the following organizations requires publicly owned companies to be audited by independent accountants (CPAs)? A) Securities and Exchange Commission (SEC) B) Public Company Accounting Oversight Board (PCAOB) C) Financial Accounting Standards Board (FASB) D) American Institute of Certified […]

Markus Company maintains a separate accounts receivable account for each customer. On June 18, Markus sells $6,400 services on account to customer Anthony and $1,000 services on account to customer Walker. How will these two transactions affect the control and […]

A control account ________. A) does not appear on the balance sheet B) has a balance that equals the sum of the balances in a group of related accounts in a subsidiary ledger C) is equivalent to a contra account […]

GAAP refer to guidelines for accounting information in the United States. The acronym GAAP in this statement refers to ________. A) Globally Accepted and Accurate Policies B) Global Accommodation Accounting Principles C) Generally Accredited Accounting Policies D) Generally Accepted Accounting […]

Which of the following statements is true? A) The indirect method and the direct method will produce a different amount of net cash flow from investing activities. B) The indirect method starts with net income and adjusts it to cash […]

Your Best Advisors, a service company, uses reversing entries. On March 31, 2016, they journalized and posted the following adjusting entry to accrue Utilities Expense: Which of the following entries is the correct reversing entry to be prepared on April […]

Two or more people working together to circumvent internal controls and defraud a company is known as ________. A) encryption B) firewall C) collusion D) separation of duties When applying the rules of the equity method, the Long-term Investments account […]

The advance cash receipts of future revenues are called ________. A) accrued revenues B) deferred expenses C) deferred revenues D) accrued expenses Days’ sales in receivables measures ________. A) how many days it takes to order and receive inventory B) […]

Which of the following statements is true of the direct and indirect methods of preparing the statement of cash flows? A) The indirect method and the direct method will produce the same amount of net cash flow from operating activities. […]

Regarding gross and net pay, which of the following statements is correct? A) Gross pay minus all deductions such as income tax withheld equals net pay. B) Net pay represents the total salaries and wages expense to the employer. C) […]

Any person or business to whom a business owes money is called the business’s creditor. Under the perpetual inventory system, purchase returns or allowances are debited to the Merchandise Inventory account by the purchaser. Answer: FALSE The journal entry to […]

Gross profit is the extra amount the company receives from the customer for merchandise sold over what the company paid to the vendor. A natural resource is an asset that comes from the earth and is consumed. Answer: TRUE When […]

The issue price is the price the stock initially sells for the first time it is sold. A high current ratio indicates that current liabilities are greater than current assets. Answer: FALSE A vertical analysis would be used if an […]

Journal entries are required if the bank reconciliation includes a book error. The creation of a corporation begins when its incorporators obtain a charter from the state. Answer: TRUE The major difference between a cash basis accounting system and an […]

Only permanent accounts appear on the post-closing trial balance. Freight out is an addition to the Merchandise Inventory account if the seller uses the perpetual inventory system. Answer: FALSE Consolidated statements combine the balance sheets, income statements, and statements of […]

A debtor of Adams Company owes $500,000 but does not have enough cash to repay the debt. Following lengthy negotiations, the parties agreed that the debtor will issue 200,000 shares of common stock to settle the debt. This transaction will […]

In a periodic inventory system, a sale of inventory involves two entries, one to record Sales Revenue and one to record Cost of Goods Sold. If the maker of the note fails to pay on the maturity date, the note […]

Electronic funds transfer moves cash by electronic communications. A preferred stock is an example of a debt security. Answer: FALSE In a computerized environment, the posting process is completed automatically when the user enters the journal entry. Answer: TRUE A […]

In a bank reconciliation, outstanding checks will be shown on the bank side of the reconciliation. In reviewing the T-account for Accounts Receivable, you find that the beginning balance is zero, the total increases are $5,400 and the total decreases […]

The current ratio is calculated as total current assets divided by total current liabilities. When a business records an accrued utility liability, the Utilities Expense account is credited. Answer: FALSE The Accumulated Depreciation account is a permanent account. Answer: TRUE […]

The Cash account is a temporary account. A payment of an expense in advance is called a prepaid expense. Answer: TRUE When a business collects cash, the Cash account is debited. Answer: TRUE The rate of return on total assets […]

A trial balance is a list of all of the accounts of a company with their balances at a point in time. The balance in the Bonds Payable account is a credit of $77,000. The balance in the Discount on […]

In reviewing the T-account for Accounts Receivable, you find that the beginning balance is zero, the total increases are $5,400 and the total decreases are $2,100. This means that the ending balance of the account is a credit balance of […]

In the case of a deferred expense, the adjusting entry required at the end of a period will consist of a debit to the Prepaid Expense account. Assume the deferred expense was initially recorded as an asset. Laramie, Inc. signed […]

An asset is considered to be obsolete when a newer asset can perform the job more efficiently. Inventory turnover measures the number of times a company sells its average level of merchandise inventory during a period. Answer: TRUE The disposal […]

Generally accepted accounting principles require that interest expense be measured using the effective-interest amortization method, unless the straight-line amounts are similar. The Sarbanes-Oxley Act requires all private companies in the United States to maintain an internal control system. Answer: FALSE […]

A receiving report should be matched with the supplier invoice before a payment to the supplier is approved. The trial balance is one of the three basic financial statements that are issued to external users of the business. Answer: FALSE […]

The T-account is a summary device that is shaped like a capital T with debits posted on the right side of the vertical line and credits posted on the left side of the vertical line. Accountants assume that the dollar’s […]

The expense associated with the cost of uncollectible accounts receivable is known as bad debts expense. A purchase discount is the amount offered to the purchaser for delaying the payment to the seller. Answer: FALSE For the year ended December […]

Depending on the maturity date, held-to-maturity investments are categorized as current assets or long-term assets on the balance sheet. The beginning balance in the Retained Earnings account of a company was $11,000. The revenues and expenses were $220,000 and $170,000, […]

Weighted average cost per unit is determined by dividing the cost of goods available for sale by the number of units available. The Common Stock account is a permanent account. Answer: TRUE Income taxes are withheld from the employee’s paycheck. […]

The investing activities section of the statement of cash flows reports cash receipts and payments that increase or decrease long-term liabilities. The guidelines for accounting information are called Generally Accepted Accounting Principles (GAAP). Answer: TRUE A common-size statement reports the […]

The indirect and direct methods use different computations but produce the same amount of net cash flow from operating activities. Warranty Expense is shown on the income statement at the estimated amount. Answer: TRUE The Other Accounts DR columns of […]

Money earns income over time, a fact called the time value of money. Debits in the journal are always posted as debits in the ledger. Answer: TRUE All items on the book side of the bank reconciliation require journal entries. […]

A company changes its inventory costing method each period in order to maximize net income. This is a violation of the consistency principle. Ordinary repairs to plant assets are referred to as revenue expenditures. Answer: TRUE The trial balance verifies […]