When making the adjustment for prepaid insurance, instead of writing off only the time
that has passed, the entire policy was written off. This would:
A) overstate the assets.
B) overstate the liabilities.
C) understate net income.
D) None of these is correct.
An adjustment for Prepaid Rent Expense would indicate:
A) the amount originally paid.
B) the amount expired.
C) the amount of the ending balance.
D) the amount of the trial balance.
The following data are available for Starbrite Corporation:
If overhead is applied based on direct labor hours, the predetermined overhead rate is:
A) $45.
B) $36.
C) $450.
D) $360.
In the dividend process, the liability Dividend Payable is recognized on the:
A) date of declaration.
B) date of record.
C) date of payment.
D) date of stock issue.
Equipment with a cost of $500,000 has an accumulated depreciation of $400,000. What
is the book value of the equipment?
A) $150,000
B) $50,000
C) $200,000
D) $100,000
Applegate Corporation sells $150,000, 5%, 10-year bonds for 96 on January 1. Interest
is paid on January 1 and July 1. Straight-line amortization is used. The amount of
interest expense recorded on July 1, six months after issuance is:
A) $4,050.
B) $4,250.
C) $3,750.
D) $8,500.
On a worksheet, the income statement debit column totals $10,500 and the credit
column totals $10,300. Which of the following statements is correct?
A) The company had a net loss of $200.
B) The company had a net income of $200.
C) The company’s revenues were greater than expenses.
D) None of the above is correct.
Steadman’s Computer endorses a customer’s note dated June 17 to the bank on August
6. The interest rate on the note is 10%, and the bank discount rate is 12%. The note
matures on September 6. The discount period is:
A) 31 days.
B) 60 days.
C) 81 days.
D) 0 days.
A credit to an asset account was posted to a liability account. This would cause:
A) assets to be overstated.
B) liabilities to be understated.
C) capital to be overstated.
D) revenue to be overstated.
If total stockholders’ equity is $120,000 with 8,000 common shares outstanding, what is
the book value per share of common stock? (Assume no preferred stock is outstanding)
A) $18.00
B) $45.00
C) $15.00
D) $12.00
The type of preferred stock that entitles its holders to any undeclared dividends that
have accumulated before common stockholders receive their dividends is known as:
A) non-participating.
B) participating.
C) cumulative.
D) All of these answers are correct.
The second entry to adjust Merchandise Inventory includes:
A) a debit to Merchandise Inventory.
B) a credit to Merchandise Inventory.
C) a debit to Income Summary.
D) None of these is correct.
Paid vouchers may be filed in the paid voucher file according to:
A) check number.
B) creditor’s name.
C) voucher number.
D) Both B and C
A company can deem an employee as salaried:
A) if they do not want to pay overtime wages.
B) if the employee meets the salaried laws under the Fair Labor Standards Act.
C) if the employee works at least 40 hours a week for a month.
D) if they have been employed at the company for 1 year or longer.
What would be the accumulated depreciation at the end of year 6 for a piece of
equipment using the straight-line method when the cost is $11,000, residual value is
$1,000, and the expected life is 10 years?
A) $6,600
B) $6,000
C) $1,000
D) $3,000
A tractor costing $180,000 is depreciated using MACRS. The tractor qualifies as a
3-year property, and has a scrap value of $20,000. The depreciation rates are:
What is the depreciation expense for year 3?
A) $27,000
B) $35,560
C) $26,670
D) $23,696
Tim’s Electrical Service purchased tools for $6,000. They have an expected life of 20
months and no residual value. The adjusting journal entry for the month is:
A)
B)
C)
D)
Brooke’s Company purchased $5,000 of merchandise with terms of 5/10, n/60 and paid
the invoice within the discount period. Brooke uses the periodic and voucher systems. If
Brooke’s uses the net method of recording merchandise purchases, the $250 purchases
discount is recorded in:
A) the voucher register.
B) the check register.
C) the general journal.
D) None of these answers is correct.
If the business records a number as 179 and it should be 197, this error would be called:
A) a rearrangement.
B) a slide.
C) a transposition.
D) None of the above
On November 6, an 10%, 90-day, $4,000 note was accepted by Carmen in exchange for
merchandise. What entry does Carmen make on December 31 to recognize the interest?
A) Credit Interest Receivable; debit Interest Income $61.11
B) Debit Interest Receivable; credit Interest Income for $61.11
C) Debit Interest Receivable; credit Interest Income for $100.00
D) None of these answers is correct.
Record in the general journal the payroll tax entry for the week ended August 31. Use
the following information gathered to make the entry.
a) FICA tax rate is: OASDI 6.2% on a limit of $106,800, and Medicare is 1.45%
b) Federal Unemployment is 0.8% on a limit of $7,000
c) State Unemployment is 2% on a limit of $7,000
A characteristic of Purchases is:
A) it has a debit normal balance.
B) it increases net income.
C) that it is used to record the purchase of merchandise to be resold.
D) A and C are correct.
Plaza Corporation issued $350,000 of 8%, 10-year bonds for 102. The entry to record
the issuance of the bonds includes a:
A) debit to Discount on Bonds Payable for $7,000.
B) credit to Bonds Payable for $343,000.
C) debit to Bonds Payable for $350,000.
D) credit to Premium on Bonds Payable for $7,000.
The company uses the periodic inventory system and the voucher system. If the net
method is applied, the purchase of $3,000 of merchandise with terms 2/10, n/30 is
recorded by:
A) debit Cash $3,000; credit Accounts Payable $3,000.
B) debit Accounts Payable $3,000; credit Purchases $3,000.
C) debit Purchases $3,000; credit Accounts Payable $3,000.
D) debit Purchases $2,940; credit Vouchers Payable $2,940.
Omega.com sold 25 jet skis on account for $7,000 which cost $5,000. The entry to
record the sale would include:
A) credit to Finished Goods Inventory $5,000.
B) credit to Account Receivable for $7,000.
C) debit to Cost of Goods Sold for $7,000.
D) all of the above.
The adjustment for supplies used would be to:
A) debit Supplies Expense; credit Supplies.
B) debit Supplies; credit Cash.
C) debit Supplies; credit Supplies Expense.
D) debit Inventory; credit Supplies.
Madison Manufacturing is using a manufacturing overhead application rate of 130% of
direct labor dollars. A job uses 10 direct labor hours at $20 per hour. How much
overhead should be applied to the job?
A) $235
B) $265
C) $260
D) $250
Which of the following statements is false?
A) Payroll Tax Expense is an expense account.
B) FICA-OASDI Payable increases on the credit side of the account.
C) Payroll Tax Expense increases on the debit side of the account.
D) FUTA Tax Payable increases on the debit side of the account.
What would be the effect on the accounts if the owner withdrew cash?
A) An asset would be credited and an expense credited.
B) Withdrawals would be debited and an asset credited.
C) An asset would be debited and a revenue credited.
D) An expense would be debited and Capital credited.
On October 6, Mark purchased merchandise for his electric store. The invoice was for
$35,000 plus freight of $750, terms 1/15, n/30. The freight was included on the invoice.
On October 10, Mark returned merchandise for $5,000 credit. On October 19, Mark
paid the amount owed. Fill in the blanks below.
a) The credit to Accounts Payable on October 6 is ________.
b) The debit to Freight-In on October 6 is ________.
c) The debit to Accounts Payable on October 10 is ________.
d) The credit to Purchases Discount on October 19 is ________.
e) The credit to Cash on October 19 is ________.
Advertising expense totaled $40,000. If indirect advertising costs are allocated based on
gross sales per department, what amount would be allocated to the Jewelry department
if $10,000 of advertising is indirect?
Gross Sales: Jewelry, $60,000; Glassware, $50,000; Watches, $40,000.
A) $16,000
B) $4,000
C) $20,000
D) $3,333
Kathy Jenkins earns $75,000 per year. What is her net pay for the month ended January
31, if FICA tax rates are: 6.2% for OASDI and 1.45% for Medicare; federal income tax
is 20%; and union dues are $100 per month?
A) $4,100
B) $4,421.87
C) $4,326
D) $4,293
Sweetman’s Recording Studio payroll records show the following information:
Assume the following:
a) FICA: OASDI, 6.2% on a limit of $117,000; Medicare, 1.45%.
b) Each employee contributes $40 per week for union dues.
c) State income tax is 5% of gross pay.
d) Federal income tax is 20% of gross pay.
Prepare a general journal payroll entry.
Chuck Company has a beginning Accounts Receivable balance of $85,000 and an
ending balance of $50,000. Net credit sales are $300,000. The company’s accounts
receivable turnover ratio is:
A) 4.444.
B) 4.167.
C) 4.000.
D) None of the above