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:
Effie Company uses a periodic inventory system. Details for the inventory account for
the month of January, 2015 are as follows:
An end of the month (1/31/15) inventory showed that 160 units were on hand. How
many units did the company sell during January, 2015?
a. 60
b. 160
c. 200
d. 240
Answer:
A check returned by the bank marked “NSF” means
a. no service fee.
b. no signature found.
c. not satisfactorily filled-out.
d. not sufficient funds.
Answer:
As interest is recorded on an interest-bearing note, the Interest Expense account is
a. increased; the Notes Payable account is increased.
b. increased; the Notes Payable account is decreased.
c. increased; the Interest Payable account is increased.
d. decreased; the Interest Payable account is increased.
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 LIFO 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:
The account, Stock Investments, is
a. a subsidiary ledger account.
b. a long-term liability account.
c. a long-term investment account.
d. another name for Debt Investments.
Answer:
The Sales Returns and Allowances account does not provide information to
management about
a. possible inferior merchandise.
b. the percentage of credit sales versus cash sales.
c. inefficiencies in filling orders.
d. errors in overbilling customers.
Answer:
Which of the following accounts is not closed to Income Summary?
a. Cost of Goods Sold
b. Inventory
c. Sales Revenue
d. Sales Discounts
Answer:
Mofro’s Computer Repair Shop started the year with total assets of $300,000 and total
liabilities of $200,000. During the year, the business recorded $500,000 in computer
repair revenues, $300,000 in expenses, and Mofro paid dividends of $50,000. The net
income reported by Mofro’s Computer Repair Shop for the year was
a. $100,000.
b. $150,000.
c. $200,000.
d. $250,000.
Answer:
Items waiting to be used in production are considered to be
a. raw materials.
b. work in progress.
c. finished goods.
d. merchandise inventory.
Answer:
Jason Thomas has invested $200,000 in a privately held family corporation. The
corporation does not do well and must declare bankruptcy. What amount does Thomas
stand to lose?
a. Up to his total investment of $200,000.
b. Zero.
c. The $200,000 plus any personal assets the creditors demand.
d. $100,000.
Answer:
A merchandising company using a perpetual system may record an adjusting entry by
a. debiting Income Summary.
b. crediting Income Summary.
c. debiting Cost of Goods Sold.
d. debiting Sales Revenue.
Answer:
Keeping a systematic, chronological diary of events that are measured in dollars and
cents is called
a. communicating.
b. identifying.
c. processing.
d. recording.
Answer:
Under the perpetual system, freight costs incurred by the buyer for the transporting of
goods is recorded in
a. Freight Expense.
b. Freight – In.
c. Inventory.
d Freight – Out.
Answer:
Eneri Company’s inventory records show the following data:
A physical inventory on December 31 shows 4,000 units on hand. Eneri sells the units
for $13 each. The company has an effective tax rate of 20%. Eneri uses the periodic
inventory method. Under the LIFO method, cost of goods sold is
a. $28,000.
b. $169,200.
c. $173,040.
d. $178,000.
Answer:
A company whose current liabilities exceed its current assets may have a liquidity
problem.
Answer:
For the items listed below, fill in the appropriate code letter to indicate whether the item
is an asset, liability, or stockholders’ equity item.
Answer:
At December 31, 2014, Delta Inc. has these data on its security investments:
If the available-for-sale securities are held as long-term investments, which of the
following will be recorded to adjust the securities to fair value?
Answer:
Hayden Company purchased a machine on January 1, 2015, at a cost of $90,000. It is
expected to have an estimated salvage value of $5,000 at the end of its 5-year life. The
company capitalized the machine and depreciated it in 2015 using the
double-declining-balance method of depreciation. The company has a policy of using
the straight-line method to depreciate equipment but the company accountant neglected
to follow company policy when he used the double-declining-balance method. Net
income for the year ended December 31, 2015 was $55,000 as the result of depreciating
the machine incorrectly.
Instructions
Using the method of depreciation which the company normally follows, prepare the
correcting entry and determine the corrected net income. (Show computations.)
Answer:
______________ is calculated as cost of goods sold divided by average inventory.
Answer:
When constructing a building, a company is permitted to include the acquisition cost
and certain interest costs incurred in financing the project.
Answer:
Asset prepayments become expenses when they expire.
Answer: