1) adjusting entries can be classified as:
a.postponements and advances
b.accruals and advances
c.deferrals and postponements
d.accruals and deferrals
2) restoration company issued bonds that had the following data associated with them:
interest to be paid is $40,000.
interest expense to be recorded is $45,000.
which of the following characteristics is true?
a.the bonds are sold at a premium
b.after recording the interest expense, the amortization will decrease the bond carrying
value
c.the difference between the interest expense and the interest to be paid is the bond’s par
value
d.after recording the interest expense, the amortization will increase the bond carrying
value
3) the retained earnings statement shows all of the following except:
a.the amounts of changes in retained earnings during the period
b.the causes of changes in retained earnings during the period
c.the time period following the one shown for the income statement
d.beginning retained earnings on the first line of the statement
4) the cost method of accounting for investments in stock should be employed when the
a.investor owns more than 50% of the investee’s stock
b.investor has significant influence on the investee and the stock held by the investor
are marketable equity securities
c.market value of the shares held is greater than their historical cost
d.investor’s influence on the investee is insignificant
5) bonding involves all of the following except
a.the company obtains insurance protection against misappropriation of assets by a
dishonest employee
b.the insurance company screens employees before they are added to the policy.
c.the company informs employees that the insurance company will vigorously
prosecute all offenders
d.employees do not commit inappropriate acts because of the threat of prosecution and
their loyalty to the employer
6) if a stockholder cannot attend a stockholders meeting, he may delegate his voting
rights by means of a(n)
a.absentee ballot
b.proxy
c.certified letter
d.telegram
7) gross profit equals the difference between
a.net income and operating expenses
b.net sales revenues and cost of goods sold
c.net sales revenues and operating expenses
d.net sales revenues and cost of goods sold plus operating expenses
8) in preparing a bank reconciliation, outstanding checks are
a.added to the balance per bank
b.deducted from the balance per books
c.added to the balance per books
d.deducted from the balance per bank
9) equipment costing $30,000 with a salvage value of $6,000 and an estimated life of 8
years has been depreciated using the straight-line method for 2 years. assuming a
revised estimated total life of 5 years and no change in the salvage value, the
depreciation expense for year 3 would be
a.$3,600
b.$8,000
c.$6,000
d.$4,800
10) at the end of the fiscal year, the usual adjusting entry for accrued salaries owed to
employees was omitted. which of the following statements is true?
a.salary expense for the year is overstated
b.liabilities at the end of the year are understated
c.assets at the end of the year are understated
d.stockholders equity at the end of the year is understated
11) when investing excess cash for short periods of time, corporations invest in
a.stocks of companies in a related industry
b.debt securities
c.low-risk, highly liquid securities
d.stock securities
12) depreciation is a process of
a.asset devaluation
b.cost accumulation
c.cost allocation
d.asset valuation
13) which type of accounts will not appear in the post-closing trial balance?
a.asset accounts
b.permanent accounts
c.liability accounts
d.temporary accounts
14) the following partial amortization schedule is available for courtney company who
sold $300,000, five-year, 10% bonds on january 1, 2012 for $312,000 and uses annual
straight-line amortization.
which of the following amounts should be shown in cell (ii)?
a.$32,400
b.$27,600
c.$31,200
d.$28,800
15) if services are rendered on account, then
a.assets will decrease.
b.liabilities will increase.
c.stockholders equity will increase.
d.liabilities will decrease.