Monthly and quarterly time periods are called
a. calendar periods.
b. fiscal periods.
c. interim periods.
d. quarterly periods.
Answer:
The interest rate investors demand for loaning funds is the
a. market interest rate.
b. stated rate.
c. contractual interest rate.
d. bond interest rate.
Answer:
The two ways that a corporation can be classified by ownership are
a. publicly held and privately held.
b. stock and non-stock.
c. inside and outside.
d. majority and minority.
Answer:
Maximum benefit from independent internal verification is obtained when
a. it is made on a pre-announced basis.
b. it is done by the employee possessing custody of the asset.
c. discrepancies are reported to management.
d. it is done at the time of the audit.
Answer:
The following information pertains to Ortiz Company. Assume that all balance sheet
amounts represent both average and ending balance figures. Assume that all sales were
on credit.
What is the return on common stockholders’ equity for Ortiz?
a. 25%
b. 50%
c. 12.5%
d. 15.3%
Answer:
At the end of its first year, the trading securities portfolio consisted of the following
common stocks.
In the following year, the Barnes common stock is sold for cash proceeds of $57,000.
The gain or loss to be recognized on the sale is a
a. gain of $1,200.
b. loss of $3,000.
c. Loss of $1,000.
d. loss of $2,000.
Answer:
Bonds that are secured by real estate are termed
a. mortgage bonds.
b. convertible bonds.
c. debentures.
d. bearer bonds.
Answer:
The operating cycle of a company is the average time that is required to go from cash to
a. sales in producing revenues.
b. cash in producing revenues.
c. inventory in producing revenues.
d. accounts receivable in producing revenues.
Answer:
On October 1, 2014, Pennington Company issued a $90,000, 10%, nine-month
interest-bearing note. Assuming interest was accrued in June 30, 2015, the entry to
record the payment of the note on July 1, 2015, will include a:
a. debit to Interest Expense of $2,250.
b. credit to Cash of $90,000
c. debit to Interest Payable of $6,750.
d. debit to Notes Payable of $96,750.
Answer:
At May 1, 2015, Kibbee Company had beginning inventory consisting of 200 units with
a unit cost of $7. During May, the company purchased inventory as follows:
800 units at $7
600 units at $8
The company sold 1,000 units during the month for $12 per unit. Kibbee uses the
average cost method. Kibbee’s gross profit for the month of May is
a. $4,625.
b. $4,571.
c. $4,000.
d. $4,500.
Answer:
Ezra Company has sales revenue of $60,000, cost of goods sold of $36,000 and
operating expenses of $14,000 for the year ended December 31. Ezra’s gross profit is
a. $0.
b. $10,000.
c. $24,000.
d. $46,000.
Answer:
For prepaid expense adjusting entries
a. an expense’”liability account relationship exists.
b. prior to adjustment, expenses are overstated and assets are understated.
c. the adjusting entry results in a debit to an expense account and a credit to an asset
account.
d. none of these answer choices are correct.
Answer:
All of the following are property, plant, and equipment except
a. supplies.
b. machinery.
c. land.
d. buildings.
Answer:
The income summary account
a. is a permanent account.
b. appears on the balance sheet.
c. appears on the income statement.
d. is a temporary account.
Answer:
Given the following account balances at year end, compute the total intangible assets on
the balance sheet of Kepler Enterprises.
a. $10,000,000
b. $6,000,000
c. $4,000,000
d. $8,000,000
Answer:
Which one of the following accounts is not closed at the end of an accounting period?
a. Retained Earnings account
b. Dividends account
c. Service Revenue account
d. Insurance Expense account
Answer:
Stockholders of a company may be reluctant to finance expansion through issuing more
equity because
a. leveraging with debt is always a better idea.
b. their earnings per share may decrease.
c. the price of the stock will automatically decrease.
d. dividends must be paid on a periodic basis.
Answer:
During 2015, Morlan Company had an asset turnover of four times with sales totaling
$1,000,000. If net income was $60,000, Morlan Company’s return on assets in 2015
was
a. 6%.
b. 24%.
c. 30%.
d. 60%.
Answer:
A contingency that is remote
a. should be disclosed in the financial statements.
b. must be accrued as a loss.
c. does not need to be disclosed.
d. is recorded as a contingent liability.
Answer:
The financial statements of Gervais Manufacturing Company report net sales of
$500,000 and accounts receivable of $80,000 and $40,000 at the beginning and end of
the year, respectively. What is the accounts receivable turnover for Gervais?
a. 6.3 times
b. 8.3 times
c. 10 times
d. 12.5 times
Answer:
Instructions: Given the information provided below, prepare (a) a bank reconciliation
in proper format, and (b) the necessary journal entries for the month of September for
Tolan Company.
1> Balance per bank on September 30’”$24,070
2> Balance per books on September 30’”$19,500
3> Total outstanding checks at September 30’”$3,600
4> Debit memoranda:
a. NSF check from Lee Co.’”$540
b. Printing company checks’”$60
c. Payment to bank of $2,400 note owed bank by Tolan plus $200 interest.
5> Credit memorandum: Collection of note receivable for $7,500 plus $560 interest less
$60 collection fee.
6> Errors:
a. A check written this month to Nance Co. for office supplies cleared the bank at the
correct amount of $680, but was recorded by Tolan at $860.
b. The bank charged a $210 check of Thome Company against Tolan’s account this
month.
7> Deposit in transit on September 30’”$3,800.
(a) Bank Reconciliation
(b) Journal Entries (Note: Assume no interest has been accrued on the note.)
Answer:
Two methods of accounting for uncollectible accounts are the
a. allowance method and the accrual method.
b. allowance method and the net realizable method.
c. direct write-off method and the accrual method.
d. direct write-off method and the allowance method.
Answer:
The following items are taken from the financial statements of the Postal Service for the
year ending December 31, 2015:
The current assets should be listed on Postal Service’s balance sheet in the following
order:
a. cash, accounts receivable, prepaid insurance, equipment.
b. cash, prepaid insurance, supplies, accounts receivable.
c. cash, accounts receivable, prepaid insurance, supplies.
d. equipment, supplies, prepaid insurance, accounts receivable, cash.
Answer:
Available-for-sale securities are classified as
a. short-term investments only.
b. long-term investments only.
c. either short-term or long-term investments.
d. current assets only.
Answer:
GAAP, compared to IFRS, tends to be more
a. simple in accounting requirements.
b. rules-based.
c. principles-based.
d. simple in disclosures requirements.
Answer:
Measures of a company’s liquidity are concerned with the frequency and amounts of
dividend payments.
Answer:
Expressing each item within a financial statement as a percentage of a base amount is
called ______________ analysis.
Answer:
Using the following operating data for Complex Corporation, prepare a schedule showing a
vertical analysis for 2015.
Answer:
On January 1, 2014, Zappa Enterprises sold 8%, 20-year bonds with a face amount of
$1,200,000 for $1,140,000. Interest is payable semiannually on July 1 and January
Instructions
Calculate the carrying value of the bond at December 31, 2014 and 2015.
Answer:
The two methods of accounting for uncollectible accounts are the ____________
method and the ______________ method.
Answer:
The Accumulated Depletion account is deducted from the cost of the natural resource in
the balance sheet.
Answer:
Below is a partial listing of the adjusted account balances of Larson Department Store
at year-end on December 31, 2015.
Instructions
Using whatever data you believe appropriate, prepare a multiple-step income statement
for Larson Department Store for the year ended December 31, 2015.
Answer:
A finance company or bank that purchases receivables from businesses is known as a
______________.
Answer: