A credit is not the normal balance for which account listed below?
a. Common stock account
b. Revenue account
c. Liability account
d. Dividends account
Answer:
Each of the following is correct regarding bonds except they are
a. a form of interest-bearing notes payable.
b. attractive to many investors.
c. issued by corporations and governmental agencies.
d. sold in large denominations.
Answer:
Trading on the equity (leverage) refers to the
a. amount of working capital.
b. amount of capital provided by owners.
c. use of borrowed money to increase the return to owners.
d. number of times interest is earned.
Answer:
A corporation issues $500,000, 8%, 5-year bonds on January 1, 2015, for $479,000.
Interest is paid annually on January 1. If the corporation uses the straight-line method of
amortization of bond discount, the amount of bond interest expense to be recognized in
December 31, 2015’s adjusting entry is
a. $44,200.
b. $40,000.
c. $35,800.
d. $4,200.
Answer:
Jerri Rice has worked 44 hours this week. She worked at least of 8 hours each day. Her
regular hourly wage is $12 per hour with one and one-half times her regular rate for any
hours which exceed 40 hours per week. What are Jerri’s gross wages for the week?
a. $528
b. $552
c. $792
d. $576
Answer:
In the stockholders’ equity section of the balance sheet,
a. Common Stock Dividends Distributable will be classified as part of additional
paid-in capital.
b. Common Stock Dividends Distributable will appear in its own subsection of the
stock- holders’ equity.
c. Additional Paid-in Capital appears under the subsection Paid-in Capital.
d. Dividends in arrears will appear as a restriction of Retained Earnings.
Answer:
Tangible frauds include
a. asset misappropriation.
b. false pretenses.
c. counterfeiting.
d. all of the above.
Answer:
Prepare the necessary journal entries to record the following transactions, assuming
Dakin Company uses a perpetual inventory system.
(a) Purchased $35,000 of merchandise on account, terms 2/10, n/30.
(b) Returned $700 of damaged merchandise for credit.
(c) Paid for the merchandise purchased within 10 days.
Answer:
Which of the following is not a common time period chosen by businesses as their
accounting period?
a. Daily
b. Monthly
c. Quarterly
d. Annually
Answer:
Brown Company has 1,000 shares of 5%, $100 par cumulative preferred stock
outstanding at December 31, 2015. No dividends have been paid on this stock for 2014
or 2015. Dividends in arrears at December 31, 2015 total
a. $0.
b. $500.
c. $5,000.
d. $10,000.
Answer:
On January 1, 2015, Donahue Company, a calendar-year company, issued $600,000 of
notes payable, of which $150,000 is due on January 1 for each of the next four years.
The proper balance sheet presentation on December 31, 2015, is
a. Current Liabilities, $600,000.
b. Long-term Debt , $600,000.
c. Current Liabilities, $150,000; Long-term Debt, $450,000.
d. Current Liabilities, $450,000; Long-term Debt, $150,000.
Answer:
A correcting entry
a. must involve one balance sheet account and one income statement account.
b. is another name for a closing entry.
c. may involve any combination of accounts.
d. is a required step in the accounting cycle.
Answer:
Internal users of accounting information include all of the following except
a. company officers.
b. investors.
c. marketing managers.
d. production supervisors.
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:
In the first month of operations for Gallowsbird Industries, the total of the debit entries
to the cash account amounted to $36,000 ($16,000 investment by stockholders and
revenues of $20,000). The total of the credit entries to the cash account amounted to
$22,000 (purchase of equipment $8,000 and payment of expenses $14,000). At the end
of the month, the cash account has a(n)
a. $6,000 credit balance.
b. $6,000 debit balance.
c. $14,000 debit balance.
d. $14,000 credit balance.
Answer:
Match each of the following principles of internal control with the appropriate
description below.
A. Establishment of responsibility
B. Segregation of duties
C. Documentation procedures
D. Physical controls
E. Independent internal verification
F. Human resource controls
_____ 1> Involves the review, comparison, and reconciliation of data prepared by other
employees.
_____ 2> Provide evidence that transactions and events have occurred.
_____ 3> Includes the authorization and approval of transactions.
_____ 4> Rotating employees’ duties and requiring employees to take vacations.
_____ 5> Related activities should be assigned to different individuals.
_____ 6> Using garment sensors to deter theft.
Answer:
If a company has both an inflow and outflow of cash related to property, plant, and
equipment, the
a. two cash effects can be netted and presented as one item in the investing activities
section.
b. cash inflow and cash outflow should be reported separately in the investing activities
section.
c. two cash effects can be netted and presented as one item in the financing activities
section.
d. cash inflow and cash outflow should be reported separately in the financing activities
section.
Answer:
If a company fails to record estimated bad debts expense,
a. cash realizable value is understated.
b. expenses are understated.
c. revenues are understated.
d. receivables are understated.
Answer:
All of the following are necessary to compute the future value of a single amount
except the
a. interest rate.
b. number of periods.
c. principal.
d. maturity value.
Answer:
Control over timekeeping does not include
a. having one employee punch the time cards for several employees in the same work
area.
b. time clock procedure monitoring by a supervisor.
c. pay period time reports kept by a supervisor for salaried personnel.
d. overtime approval by a supervisor.
Answer:
Instructions: Match the account titles given below with the appropriate balance sheet
classifi-cation. An individual classification may be used more than once, or not at all.
An account may also not appear in the balance sheet.
Classifications
A. Current Assets E. Current Liabilities
B. Long-term Investments F. Long-term Liabilities
C. Property, Plant, and Equipment G. Stockholders’ Equity
D. Intangible Assets H. Not separately presented on the balance sheet
Account Titles
Answer:
Iverson Company purchased a delivery truck for $45,000 on January 1, 2015. The truck
was assigned an estimated useful life of 100,000 miles and has a residual value of
$10,000. The truck was driven 18,000 miles in 2015 and 22,000 miles in 2016.
Compute depreciation expense using the units-of-activity method for the years 2015
and 2016.
Answer:
Distinguish between a reversing entry and an adjusting entry. Are reversing entries
required?
Answer:
Fraud experts often say that there are three primary factors that contribute to employee
fraud. Identify the three factors and explain what is meant by each.
Answer:
Below is a partial listing of accounts in the general ledger of Denton Co.
Instructions: Place an X in the appropriate column to designate whether the account
should be closed at year-end and, if so, whether the appropriate closing entry would
require a debit or credit to the account.
Answer:
Preferred stock has contractual provisions that give it a preference over common stock
as to ___________________ and to ___________________ in the event of liquidation.
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:
Specific Identification must be used for inventory valuation where the inventory items
are not interchangeable under
Answer:
How is it possible for a company to suffer a net loss for a given year, yet produce a
positive net cash flow from operating activities?
Answer:
Record the following transactions in general journal form for Karen Heller Company.
Answer: