Replenishing the petty cash fund requires
a. a debit to Cash.
b. a credit to Petty Cash.
c. a debit to various expense accounts.
d. no accounting entry.
Answer:
Which of the following receivables would not be classified as an “other receivable”?
a. Advance to an employee
b. Refundable income tax
c. Notes receivable
d. Interest receivable
Answer:
For each of the following accounts, indicate the effects of (a) a debit and (b) the normal
account balance.
1> Notes Payable
2> Prepaid Insurance
3> Salaries and Wages Expense
4> Service Revenue
5> Equipment
6> Common Stock
Answer:
Valerie’s Salon has total receipts for the month of $20,670 including sales taxes. If the
sales tax rate is 6%, what are Valerie’s sales for the month?
a. $19,637
b. $21,910
c. $19,500
d. It cannot be determined.
Answer:
In converting net income to net cash provided by operating activities, under the indirect
method:
a. decreases in accounts receivable and increases in prepaid expenses are added.
b. decreases in inventory and increases in accrued liabilities are added.
c. decreases in accounts payable and decreases in inventory are deducted.
d. increases in accounts receivable and increases in accrued liabilities are deducted.
Answer:
Outstanding stock of the Zone Corporation included 20,000 shares of $5 par common
stock and 5,000 shares of 6%, $10 par noncumulative preferred stock. In 2014, Zone
declared and paid dividends of $2,000. In 2015, Zone declared and paid dividends of
$6,000. How much of the 2015 dividend was distributed to preferred shareholders?
a. $2,000
b. $4,000
c. $3,000
d. None of these answers are correct
Answer:
A voucher system is a series of prescribed control procedures
a. to check the credit worthiness of customers.
b. designed to assure that disbursements by check are proper.
c. which eliminates the need for a sales journal.
d. specifically designed for small firms who may not have checking accounts.
Answer:
In an exchange of plant assets that has commercial substance
a. neither gains nor losses are recognized immediately.
b. gains, but not losses, are recognized immediately.
c. losses, but not gains, are recognized immediately.
d. both gains and losses are recognized immediately.
Answer:
An accounting time period that is one year in length, but does not begin on January 1, is
referred to as
a. a fiscal year.
b. an interim period.
c. the time period assumption.
d. a reporting period.
Answer:
Under IFRS, the components of other comprehensive income can be
reported in each of the following ways except
a. the one-statement approach.
b. the two-statement approach.
c. the statement of stockholders’ equity approach.
d. All of these answer choices are correct.
Answer:
Marin Company sells 9,000 units of its product in 2015 for $500 each. The selling price
includes a one-year warranty on parts. It is expected that 3% of the units will be
defective and that repair costs will average $50 per unit. In the year of sale, warranty
contracts are honored on 180 units for a total cost of $9,000.
What amount will be reported on Marin Company’s balance sheet as Warranty Liability
on December 31, 2015?
a. $9,000.
b. $13,500.
c. $4,500.
d. Cannot be determined.
Answer:
Quasar Corporation had net income of $300,000 and paid dividends to common
stockholders of $40,000 in 2015. The weighted average number of shares outstanding in
2015 was 60,000 shares. Quasar Corporation’s common stock is selling for $35 per
share on the New York Stock Exchange.
Quasar Corporation’s price-earnings ratio is
a. 5.7 times.
b. 7 times.
c. 14 times.
d. 8.1 times.
Answer:
Which of the following would not be classified a long-term liability?
a. Current maturities of long-term debt
b. Bonds payable
c. Mortgage payable
d. Lease liabilities
Answer:
Investing activities include
a. collecting cash on loans made.
b. obtaining cash from creditors.
c. obtaining capital from owners.
d. repaying money previously borrowed.
Answer:
Which of the following economic events would not be recorded in the cash receipts
journal?
a. Cash sales of merchandise
b. Collections of accounts receivable
c. Cash from sale of land
d. Cash purchases of merchandise
Answer:
Treasury stock should be reported in the financial statements of a corporation as a(n)
a. investment.
b. liability.
c. deduction from total paid-in capital.
d. deduction from total paid-in capital and retained earnings.
Answer:
A business pays weekly salaries of $30,000 on Friday for a five-day week ending on
that day. The adjusting entry necessary at the end of the fiscal period ending on a
Thursday is
a. debit Salaries and Wages Payable, $24,000; credit Cash, $24,000.
b. debit Salaries and Wages Expense, $24,000; credit Cash, $24,000.
c. debit Salaries and Wages Expense, $24,000; credit Salaries and Wages Payable,
$24,000.
d. debit Salaries and Wages Expense, $6,000; credit Salaries and Wages Payable,
$6,000.
Answer:
Priscilla has the following inventory information.
A physical count of merchandise inventory on July 31 reveals that there are 35 units on
hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for
July is
a. $1,280.
b. $1,287
c. $1,306.
d. $1,330.
Answer:
Depreciable cost is the
a. book value of an asset less its salvage value.
b. cost of an asset less its salvage value.
c. cost of an asset less accumulated depreciation.
d. book value of an asset.
Answer:
A 60-day note receivable dated July 13 has a maturity date of
a. September 12.
b. September 11.
c. September 10.
d. September 13.
Answer:
Short-term creditors are usually most interested in evaluating
a. solvency.
b. liquidity.
c. marketability.
d. profitability.
Answer:
An accumulated depreciation account
a. is a contra-liability account.
b. increases on the debit side.
c. is offset against total assets on the balance sheet.
d. has a normal credit balance.
Answer:
Notson Textile purchased machinery for $60,000 eight years ago. It was expected to
have a useful life of ten years, no salvage value, and was depreciated using the
straight-line method. At the end of its eighth year of use, it was retired from service and
given to a junk dealer. The entry to record the retirement includes a
a. debit to Loss on Disposal of Plant Assets for $12,000.
b. credit to Depreciation Expense for $6,000.
c. debit to Equipment for $60,000.
d. credit to Accumulated Depreciation’”Equipment for $48,000.
Answer:
Notes payable usually require the borrower to pay interest.
Answer:
L. Phair and Associates is a financial planning service. The account balances at
December 31, 2015 are shown by the following alphabetical list:
Instructions
Prepare a trial balance with the accounts arranged in financial statement order.
Answer:
Your roommate is uncertain about the advantages of a promissory note. Compare the
advantages of a note receivable with those of an account receivable.
Answer:
Ward Company uses a single-column purchases journal, a cash payments journal, and a
general journal to record transactions with its suppliers and others. Record the
following transactions in the appropriate journals.
Answer:
Bill Cigarettes acquired a bad habit of smoking in high school. Bill spends
approximately $70 a month or $840 a year on cigarettes. He is not concerned with
health issues, but he is keenly aware of financial issues. Show Bill how much he would
have at retirement in 20 years if he invested $840 a year at 8% instead of smoking.
Answer:
Shanrock Company uses the periodic inventory method and had the following inventory
information available:
A physical count of inventory on December 31 revealed that there were 400 units on
hand.
Instructions
Answer the following independent questions and show computations supporting your
answers.
1> Assume that the company uses the FIFO method. The value of the ending inventory
at December 31 is $__________.
2> Assume that the company uses the Average-Cost method. The value of the ending
inventory on December 31 is $__________.
3> Assume that the company uses the LIFO method. The value of the ending inventory
on December 31 is $__________.
4> Determine the difference in the amount of income that the company would have
reported if it had used the FIFO method instead of the LIFO method. Would income
have been greater or less?
Answer:
After a worksheet has been completed, the statement columns contain all data that are
required for the preparation of financial statements.
Answer:
Torres Wholesale Merchandise had 20,000 shares of 4%, $20 par value preferred stock
and 15,000 shares of $25 par value common stock outstanding throughout 2015. These
data apply to each of the independent situations below.
1> Assuming that total dividends declared in 2015 were $25,000 and that the preferred
stock is noncumulative, common stockholders should receive total 2015 dividends of
$.
2> Assuming that total dividends declared in 2015 were $80,000 and that the preferred
stock is cumulative with two years’ preferred dividends in arrears, the preferred
stockholders should receive 2015 dividends totaling
$.
3> Assuming that total dividends declared in 2015 were $30,000 and that the preferred
stock is cumulative with two years’ preferred dividends in arrears, the preferred
stockholders should receive 2015 dividends totaling
$.
4> Assuming that total dividends declared in 2015 were $45,000 and that the
cumulative preferred stock was issued on January 1, 2014, and that $8,000 of preferred
dividends were declared and paid in 2014, the common stockholders should receive
2015 dividends totaling
$.
Answer:
Discount on bonds is an additional cost of borrowing and should be recorded as interest
expense over the life of the bonds.
Answer: