Ending finished goods inventory is subtracted from cost of goods available for sale to
get:
A) cost of goods manufactured.
B) cost of goods sold.
C) net purchases.
D) None of the above
The separation of duties among the employees of the accounting department is an
example of a(n):
A) internal control system.
B) document system.
C) voucher system.
D) check paying system.
Gross Earnings are the same as:
A) regular earnings only.
B) regular earnings + overtime earnings.
C) net earnings.
D) net earnings + overtime earnings.
Merchandise inventory turnover measures the relationship between:
A) cost of goods sold and merchandise inventory.
B) expenses and merchandise inventory.
C) merchandise inventory and current liabilities.
D) assets and current liabilities.
If the ending inventory is overstated in period 1:
A) beginning inventory in period 2 is overstated.
B) goods available for sale in period 2 are overstated.
C) cost of goods sold in period 2 is overstated.
D) All of these answers are correct.
Which of the following is NOT a type of business organization?
A) Corporation
B) Partnership
C) Sole proprietorship
D) Information Technology
A company incorrectly records revenue expenditures as capital expenditures on its
books. As a result, which of the following will be true?
A) Net income will be overstated for the year.
B) Owner’s equity will be understated at year-end.
C) Total assets will be understated at year-end.
D) None of the above will occur.
How are explanations distinguished in the journal?
A) They are underlined.
B) They are marked with an X before and after the explanation.
C) They are indented below the credit entries.
D) They are written at the margin, in line with the debit entries.
A payment for $46 is incorrectly recorded on the checkbook stub as $64. The $18 error
should be shown on the bank reconciliation as:
A) added to the balance per bank statement.
B) deducted from the balance per bank statement.
C) added to the balance per books.
D) deducted from the balance per books.
The balance in the J. Higgins, Withdrawals account was $3,000. The entry to close the
account would include a:
A) debit to Income Summary, $3,000.
B) credit to Income Summary, $3,000.
C) debit to J. Higgins, Capital, $3,000.
D) debit to J. Higgins, Withdrawals, $3,000.
Mountain Site discounts a customer’s 10%, $7,000, 90-day note dated August 1, on
September 20. The discount period is 40 days, and the bank discount rate is 18%. The
maturity value of the note is $7,175. The bank discount is $143.50. The proceeds of the
note are:
A) $7,041.50.
B) $7,031.50.
C) $6,856.50.
D) $7,000.00.
The entry to record the disposal of a laptop computer with a cost of $2,500 and an
accumulated depreciation of $1,500 would be:
A) debit Depreciation Expense $2,500; credit Equipment $2,500.
B) debit Accumulated Depreciation $1,500; debit Loss on Disposal of an Asset $1,000;
credit Equipment $2,500.
C) debit Equipment $2,500; credit Accumulated Depreciation $2,500.
D) debit Cash $2,500; credit Equipment $2,500.
The balance in the Rent Expense account on the worksheet was $150. The journal entry
to close the Rent Expense account is:
A)
B)
C)
D)
Purchases is a(n):
A) cost.
B) asset.
C) liability.
D) contra-asset.
The major difference on the balance sheet of a manufacturing company when compared
to a merchandise company is to include:
A) a retained earnings section.
B) three inventory accounts, rather than one.
C) prepaid expenses.
D) accrued payroll.
Which if the following would NOT be an example of an intangible asset?
A) A copyright
B) A patent
C) A franchise
D) Land
All assets held by a partnership are:
A) co-owned by all partners.
B) owned by the partner(s) who purchased the assets.
C) owned by the partners based on investment percentage.
D) owned by the partnership.
Indicate what effect each situation will have on the bank reconciliation process. Place
the number of your choice beside the items listed.
1. Add to bank balance
2. Deduct from bank balance
3. Add to checkbook balance
4. Deduct from checkbook balance
________ a. deposit in transit
________ b. bank service charge
________ c. NSF check
________ d. Check written for $95 recorded on the company’s ledger as $59
________ e. Outstanding checks
________ f. Check written for $80 recorded as $800
________ g. Check printing charges
________ h. Interest earned on checking account
Which of the following adjustments may be reversed?
A) The adjustment to Record Depreciation Expense
B) The adjustment to Allocate Prepaid Insurance to the current period
C) The adjustment to Accrue Salaries Payable
D) The adjustment for Petty Cash replenishment
Accumulated Depreciation – Buildings should be shown on the:
A) income statement.
B) post-closing trial-balance.
C) statement of owner’s equity.
D) The account does not appear on a financial statement since it is a temporary account.
Which of the following accounts is NOT a liability?
A) Accounts Payable
B) Salaries Payable
C) Unearned Rent
D) All of the above answers are liabilities.
A revenue should be recorded when:
A) it is earned.
B) payment is received.
C) the invoice is sent to the customer.
D) All of the above are correct.
The liabilities of a company at the end of the year are $500,000 and the total
stockholders’ equity at the end of the year is $1,000,000. The debt to stockholders’
equity ratio is:
A) 0.50 to 1.
B) 0.33 to 1.
C) 0.67 to 1.
D) 3.00 to 1.
How is Income Summary closed if the company had a net income?
A) Debit Capital; credit Income Summary
B) Debit Income Summary; credit Capital
C) Debit Capital; credit Withdrawals
D) Debit Withdrawals; credit Capital
On October 1, Indiana Company issued $10,000, 8%, 5-year bonds at 102. What is the
adjusting entry on December 31 using the straight-line method?
A)
B)
C)
D)
Allan Corporation issued 300, 8%, 10-year, $1,000 bonds on Jan. 1. The annual bond
interest date is June 30, and the bonds were issued at face value. The amount of interest
expense reported for the current year is:
A) $0.
B) $24,000.
C) $12,000.
D) None of the above is correct.
Capital stock sold to stockholders is known as:
A) issued capital stock.
B) outstanding capital stock.
C) authorized capital stock.
D) treasury capital stock.
The accounting department forgot to adjust for interest on the note payable. This error
would cause:
A) the period end assets to be understated.
B) the period end liabilities to be understated.
C) the period’s net income to be understated.
D) None of these answers is correct.
The entry to replenish the petty cash fund included a debit to Equipment instead of
Supplies for the purchase of supplies. This would cause:
A) petty cash to be overstated.
B) petty cash to be understated.
C) equipment is understated.
D) supplies to be understated.
Vic’s Mart collects $200 of its accounts receivable. The expanded accounting equation
impact is:
A) Cash and Capital increase $200.
B) Cash and Revenue increase $200.
C) Cash increases and Accounts Receivable decreases $200.
D) Accounts Receivable decreases and Capital increases $200.