Archives: Quiz

A company uses $100,000 in cash to pay off $100,000 in notes payable. This would result in a: A) $100,000 debit to Notes Payable and a $100,000 credit to Cash. B) $100,000 credit to Cash and a $100,000 credit to […]

Use the information above to answer the following question. What journal entry will be recorded by Flynn Company on November 6? A) Debit Inventory and credit Accounts Payable for $5,800 B) Debit Cost of Goods Sold and credit Accounts Payable […]

Worthington Co. issues $500,000 of 5-year, 6% bonds on January 1, 2016. Required: Prepare the journal entry to record the issuance of the bonds under each of the following assumptions: Part a. The bonds are sold at 100. Part b. […]

A company makes a deferral adjustment that decreased a liability. This must mean that a(n): A) expense account was decreased by the same amount. B) expense account was increased by the same amount. C) revenue account was increased by the […]

The specific identification method would probably be most appropriate for which of the following goods? A) Boxes of brass 4-inch drywall screws at Home Depot B) Bottles of suntan lotion in Wal-Mart’s central warehouse C) Sets of tires at the […]

PayPal and national credit card companies charge a fee for their services. How do sellers report these transaction fees on their financial statements? A) In current assets on the balance sheet B) As a deduction from net sales revenue on […]

Liquidity measures the ability of a company to meet its current financial obligations. The Securities and Exchange Commission (SEC) is the government agency that has primary responsibility for setting accounting standards in the U.S. Answer: False Feedback: Currently, the Financial […]

Generally, a physical count of inventory is performed annually in both a perpetual inventory system and a periodic inventory system. Income tax expense would be found on the income statement of a corporation, but not on the income statement of […]

Lower of cost or market can be applied on an item or product category basis. Inventory shrinkage is the difference between inventory recorded and inventory counted. Answer: True Feedback: Any discrepancy that exists between inventory recorded in the accounting records […]

The assignment of costs to cost of goods sold and to inventory using the weighted average method usually yields different results depending on whether a perpetual or a periodic system is used. When costs per unit are increasing, the inventory […]

The Sarbanes-Oxley Act (SOX) requires top management of companies to sign a report certifying that the financial statements are free of error. As a company uses supplies, an adjustment should be made to decrease an asset account and increase an […]

Extraordinary repairs, replacements, and additions are added to the appropriate asset accounts rather than being recorded as expenses. You are pleasantly surprised to discover that a popular actress appears on The Tonight Show wearing your company’s jeans. Later, your company’s […]

The net amount of a bond liability that appears on the balance sheet is equal to the face value of the bond plus any related discount or minus any related premium. Goods placed in inventory are initially recorded at market […]

Journal entries show the effects of transactions on the elements of the accounting equation, as well as the account balances. The reporting of financing activities is identical under the indirect and direct methods for the statement of cash flows on […]

Dividing up the continuing life of a company into shorter periods is called the time period assumption. The allowance method for uncollectible accounts conforms to the expense recognition principle. Answer: True Feedback: The allowance method for uncollectible accounts conforms to […]

If a company uses $100 million of its cash to pay off debt, its stockholders’ equity will increase $100 million. Employee fraud is often grouped into three categories, including corruption, asset misappropriation, and embezzlement. Answer: False Feedback: Employee fraud is […]

If earnings per share (EPS) decreases, it must mean that the company’s net income has fallen. A net profit margin of 15.4% means that the company used 84.6 cents of each sales dollar to cover costs and expenses. Answer: True […]

A contra account is added to the account it offsets. A stock that does not pay a dividend is an undesirable investment. Answer: False Feedback: There are two sources of potential return on an investment in stock: the dividend and […]

The period of time from buying goods and services to collecting cash from customers is the accounting cycle. Contingent liabilities arise from past transactions, but depend on future events. Answer: True Feedback: Contingent liabilities are potential liabilities that have arisen […]

The fixed asset turnover ratio is a profitability ratio. Generally Accepted Accounting Principles (GAAP) require profitable companies to distribute some of their earnings to their stockholders. Answer: False The Basic Accounting Equation Feedback: There is no GAAP requirement that companies […]

In the decline phase, the company continues to enjoy positive operating cash flows but stops spending cash on investing activities and instead uses its cash for financing activities such as repaying lenders and returning excess cash to shareholders. The receivables […]

A classified balance sheet shows a subtotal for current assets and current liabilities. The incentive element of the fraud triangle includes reasons why top management may commit fraud such as enhancing job security and obtaining bigger paychecks. Answer: True Feedback: […]

The payment of salaries and wages would be reported as an operating activity on the statement of cash flows. When the amount of annual depreciation is revised because of a change in the estimated useful life of an asset, prior […]

Goods on consignment are goods shipped by the owner to another company that holds the goods and sells them on behalf of the owner. A company does not need to record the receipt of a bill for utilities used during […]

When cash is paid before the related expense is incurred, an asset is reported on the balance sheet. Intangible assets with limited lives are usually amortized using the straight-line method with no residual value. Answer: True Feedback: The cost of […]

Gross profit is not a ledger account name. Creditors are mainly interested in the profitability of a company. Answer: False Feedback: Creditors are mainly interested in a company’s ability to repay a debt. The carrying value of an asset is […]

A corporation does not have a legal obligation to pay dividends. Sales discounts are discounts that consumers get from buying clearance items at a reduced price. Answer: False Feedback: Sales discounts are deductions from the selling price which are offered […]

Companies within the same industry do not always use the same depreciation method, but will use the same expected useful life for the same piece of equipment. A retailer is a company that buys products from manufacturers and sells them […]

When a company pays its rent in advance, an asset is reported on the balance sheet. Expenses are the costs of operating the business that are paid for in the period covered by the income statement. Answer: False Feedback: Expenses […]

Depreciation Expense is not reported on the statement of cash flows when prepared using the direct method. A transaction is an exchange or event that directly affects the assets, liabilities, or stockholders’ equity of a company. Answer: True Feedback: A […]

To evaluate a company’s net profit margin, it is best to compare it to another company in the same industry. A good voucher system includes procedures and approvals designed to control cash payments. Answer: True Feedback: The voucher system is […]

The components of an internal control system include control environment, risk assessment, control activities, information and communication, and rationalization. Under the indirect method, changes in current assets are used in determining cash flows from operating activities and changes in current […]

Issuing stock to obtain financing is called equity financing. Callable bonds can be converted to stock. Answer: False Feedback: A bond that an issuing corporation can call in and exchange for cash is referred to as a “callable” bond. A […]

Gains or losses from discontinued operations are reported on a separate line on the income statement net of income tax effects. The going-concern assumption is also known as the continuity assumption. Answer: True Feedback: The going-concern (also called the continuity) […]

For empowerment to succeed, managers should: A. micromanage their teams and delegate as much work as possible. B. ensure that communication flows top down from senior management. C. help their teams ensure that communication flows in both directions. D. hold […]

Which of the following is the usual way in which companies first enter foreign markets? A. Importing B. Offshoring C. Exporting D. Outsourcing E. Relocating To make the merit increases consistent, administrators of merit pay programs must closely monitor the […]

Using job experiences for development assumes that: A. development occurs only when job demands involve obstacles. B. development occurs only through promotions. C. development is most likely to occur when employees experience high levels of negative stress in their jobs. […]

While conducting an HRM audit, which of the following will serve as an important customer satisfaction measure in assessing the success of training programs conducted by HR? A. Percentage of employees participating in training programs per job family B. Percentage […]

Using avatars for training purposes would be an example of _____. A. benchmarking B. action learning C. simulation D. adventure learning E. orientation Which of the following training methods uses techniques like lectures, workbooks, video clips, podcasts, and web sites? […]

Which of the following terms would accurately describe an individual who was born in the United States and is currently working in Germany for a company headquartered in China? A. Parent-country national B. Host-country national C. Third-country national D. Home-country […]

Originally, the National Labor Relations Act (NLRA) did not contain a list of any unfair labor practices by unions. In the role analysis technique, role occupant refers to: A. the person who is hiring the employee for a particular role […]

_____ refers to the intentional practice of changing jobs frequently. A. Job hopping B. Moonlighting C. Job enlargement D. Job enrichment E. Freelancing Which of the following training methods represents a real-life situation with trainees making decisions resulting in outcomes […]

When Ulysses Corp., a travel insurance company, introduced new goals for internal management, there was a rift in the management regarding their implementation. Group A emphasized achieving short-term goals, while Group B believed in introducing policies that created a more […]

Christina, an employee at Value Depot, regularly is late for work and takes excessive sick days. In this scenario, which of the following types of job withdrawal is being experienced by Christina? A. Behavior change B. Physical job withdrawal C. […]

Timothy, an employer, allowed employees to picket the manufacturing plant because he believed it would not hamper the productivity within the facility. Zara, his assistant manager, argued that Timothy’s approach to a possible strike was a poor strategy. Which of […]

Discuss the three major provisions of the Fair Labor Standards Act (FLSA). Electrix Inc. is an electrical appliances manufacturing company. It distributes shares of stock to its employees by placing the stock in a trust managed on the employees’ behalf. […]

Which of the following is true of a craft union? A. It represents many different occupations. B. Membership in the union is the result of working for a particular employer in the industry. C. Changing employers is not very common. […]

The distribution of a portion of a company’s earnings to its employees will motivate them to focus more on efficiency and productivity. Which of the following would strengthen this argument? A. It helps create job opportunities. B. It helps avoid […]

Alexander was being interviewed for the position of an entry-level financial analyst at a well-known asset management company. Alexander was asked questions about the current state of the U.S. stock market, the current net worth of certain financial firms, and […]

Identify the right statement regarding the effects of unions on company performance. A. As a result of the type of pay system favored by unions, employees are more inclined to compete than cooperate. B. Most studies show that union workers […]