Which of the following statements about liabilities in incorrect?
Under IFRS, companies sometimes show
a. liabilities before assets.
b. long-term liabilities before current assets.
c. current liabilities netted against current assets.
d. liabilities in order of magnitude.
Answer:
Goods in transit should be included in the inventory of the buyer when the
a. public carrier accepts the goods from the seller.
b. goods reach the buyer.
c. terms of sale are FOB destination.
d. terms of sale are FOB shipping point.
Answer:
The acid-test ratio is also known as the
a. current ratio.
b. quick ratio.
c. fast ratio.
d. times interest earned ratio.
Answer:
On January 1, Boswell borrowed $20,000 at 6% interest for 1 year. Boswell accrues
interest on the note monthly. If no adjusting entry is made at the end of January, what
will be the impact on the financial statements for January?
a. Revenues will be overstated by $100
b. Expenses will be understated by $1,200
c. Liabilities will be understated by $2,000
d. Net Income will be overstated by $100
Answer:
A 30-day note dated June 18 has a maturity date of
a. July 19.
b. July 18.
c. July 17.
d. July 16.
Answer:
The statement of cash flows reports each of the following except
a. cash receipts from operating activities.
b. cash payments from investing activities.
c. the net change in cash.
d. cash sales.
Answer:
On January 1, 2014, Doolittle Company purchased furniture for $7,560. The company
expects to use the furniture for 3 years. The asset has no salvage value. The book value
of the furniture at December 31, 2015 is
a. $0.
b. $2,520.
c. $5,040.
d. $7,560.
Answer:
Ale Company has other operating expenses of $80,000. There has been a decrease in
prepaid expenses of $6,000 during the year, and accrued liabilities are $5,000 larger
than in the prior period. What were Ale’s cash payments for operating expenses?
a. $81,000
b. $82,000
c. $69,000
d. $80,000
Answer:
Beethoven Company provided consulting services and billed the client $3,100. As a
result of this event,
a. assets remained unchanged.
b. assets increased by $3,100.
c. stockholders’ equity increased by $3,100.
d. assets and stockholders’ equity both increased by $3,100.
Answer:
Notification by the bank that a deposited customer check was returned NSF requires
that the company make the following adjusting entry:
a. Accounts Receivable
Cash
b. Cash
Accounts Receivable
c. Miscellaneous Expense
Accounts Receivable
d. No adjusting entry is necessary.
Answer:
When a company holds stock of several different corporations, the group of securities is
identified as a(n)
a. affiliated investment.
b. consolidated portfolio.
c. investment portfolio.
d. controlling interest.
Answer:
In preparing closing entries for a merchandising company, the Income Summary
account will be credited for the balance of
a. sales revenue.
b. inventory.
c. sales discounts.
d. freight-out.
Answer:
Fess Hardware Store had net credit sales of $8,500,000 and cost of goods sold of
$5,000,000 for the year. The Accounts Receivable balances at the beginning and end of
the year were $600,000 and $760,000, respectively. The accounts receivable turnover
was
a. 7.4 times.
b. 5.9 times.
c. 11.2 times.
d. 12.5 times.
Answer:
At January 1, 2014, the available-for-sale securities portfolio held by Hyde Corporation
consisted of the following investments:
1> 2,500 shares of Park common stock purchased for $42 per share.
2> 1,500 shares of Grace common stock purchased for $60 per share.
At December 31, 2014, the market values per share were Park $36 and Grace $68.
Instructions
(a) Prepare a schedule showing the cost and fair value of the portfolio at December 31,
2014.
(b) Prepare the adjusting entry to report the portfolio at fair value at December 31,
2014.
Answer:
Closing entries are made
a. in order to terminate the business as an operating entity.
b. so that all assets, liabilities, and stockholders’ equity accounts will have zero balances
when the next accounting period starts.
c. in order to transfer net income (or loss) and dividends to the retained earnings
account.
d. so that financial statements can be prepared.
Answer:
In Alona Company, net income is $285,000. If accounts receivable increased $140,000
and accounts payable decreased $40,000, net cash provided by operating activities
using the indirect method is:
a. $105,000.
b. $185,000.
c. $385,000.
d. $465,000.
Answer:
The economic entity assumption states that economic events
a. of different entities can be combined if all the entities are corporations.
b. must be reported to the IASB.
c. of a sole proprietorship cannot be distinguished from the personal economic events of
its owners.
d. of every entity can be separately identified and accounted for.
Answer:
Which of the following is false with regard to a general journal?
a. It tracks the increases and decreases in an individual account.
b. It provides a chronological record of transactions.
c. It discloses in one place the complete effects of a transaction.
d. It helps to prevent errors since the debit and credit amounts in an individual entry can
be readily compared.
Answer:
The basic accounting equation states that Assets = Liabilities.
Answer:
At the beginning of the year, Price Corporation acquired 25% of Cooper Company
common stock for $400,000. Cooper Company reported net income for the year of
$85,000 and paid $25,000 cash dividends during the year. The balance of the Stock
Investments account on the books of Price Corporation at the end of the year should be
$___________.
Answer:
Compound interest is computed on the principal and any interest earned that has not
been paid or received.
Answer:
An account is an important accounting record where financial information is stored
until needed. Briefly explain (1) the nature of an account, (2) the different types of
accounts, and (3) the manner in which an account is increased and decreased and its
normal balance.
Answer:
FICA taxes and federal income taxes are levied on employees’ earnings without limit.
Answer:
Pro forma income usually excludes items that the company thinks are unusual or
nonrecurring.
Answer:
Goods that have been purchased FOB destination but are in transit, should be excluded
from a physical count of goods.
Answer: