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The entry to record the incurrence of an expense will include:
A) a debit to Capital and a credit to Cash.
B) a debit to the expense and a credit to Vouchers Payable.
C) a debit to the expense and a credit to Accounts Payable.
D) a debit to Vouchers Payable and a credit to the expense.
An expression of the amount of each item in a statement shown as a percentage of some
designated total for purposes of comparison is called:
A) horizontal analysis.
B) earnings per share analysis.
C) return on total assets.
D) vertical analysis.
The beginning capital balance used on the Statement of Owner's Equity is obtained
from:
A) the worksheet in the balance sheet credit column.
B) the worksheet in the income statement credit column.
C) the amount calculated on the statement of owner's equity.
D) the general ledger.
After having written off a customer under the direct write-off method, the account will
be reopened when the customer:
A) sends the full amount to pay off the account.
B) sends any amount to pay on their account.
C) pays the collection bureau.
D) None of the above
Which of the following ratios measures the earnings of a company on each sales dollar?
A) Return on assets
B) Return on sales
C) Return on inventory
D) Return on stockholders' equity
The entry to record the declaration of a stock dividend would include:
A) a debit to Retained Earnings.
B) a credit to Cash.
C) a credit to Common Stock.
D) None of these answers is correct.
The process of initially recording business transactions in a journal is:
A) sliding.
B) posting.
C) journalizing.
D) kiting.
Buying stocks of other companies for cash would result in:
A) an increase of cash flow from investing activities.
B) a decrease of cash flow from investing activities.
C) an increase of cash flow from financing activities.
D) a decrease of cash flow from financing activities.
Eagle Works traded a plant asset with a cost of $25,000 and accumulated depreciation
of $22,000 for a similar asset priced at $65,000. Assuming a trade-in of $3,500, the cost
basis of the new asset under income tax rules is:
A) $62,500.
B) $65,000.
C) $68,000.
D) $64,500.
Bailey Corporation has decided to issue bonds that can be converted into stock at a
specified exchange rate. What type of bonds is it offering?
A) Secured bonds
B) Debenture bonds
C) Convertible bonds
D) Serial bonds
Which of the following is not a part of internal control?
A) Separation of duties
B) Purchases are made without approval.
C) A voucher system is used.
D) None of these answers is correct.
If Ol' Fashioned Toys' revenues are less than its expenses during the accounting period:
A) owner's withdrawals increase net income.
B) net income causes liabilities to decrease.
C) the business will incur a net loss.
D) owner's withdrawals increase owner's equity.
Which of the following is a characteristic of a corporation?
A) The stockholders have unlimited liability.
B) Ease of transferring ownership interest.
C) A corporation cannot own property in its name.
D) Cash dividends to the stockholders are nontaxable.
How is Income Summary closed if the company had a net loss?
A) Credit Income Summary; debit Capital
B) Debit Income Summary; credit Capital
C) Debit Capital; credit Revenue
D) Debit Withdrawals; credit Capital
During the month of January, Katelyn invested $9,000 in starting her legal practice. The
proper journal entry would be:
A) Cash, debit $9,000; Katelyn, Capital, credit $9,000
B) Accounts Payable, debit $9,000; Cash, credit $9,000
C) Cash, debit $9,000; Revenue, credit $9,000
D) Katelyn's Capital, debit $9,000; Cash, credit $9,000
Which of the following journal entries would be made to apply the cost of indirect labor
to production?
A)
B)
C)
D)
Land costing $60,000 was sold for $50,000. What was the effect on the investing
activities?
A) Increase $50,000
B) Decrease $10,000
C) Decrease $70,000
D) Increase $10,000
Under a voucher system, every liability is recorded at the time:
A) of requisition of goods.
B) of receipt of goods.
C) of order placement.
D) the liability is incurred.
Merchandise sold on credit was returned for credit and recorded with a debit to Sales
Returns and Allowances and a credit to Accounts Payable. This error will cause:
A) the net income for the period to be overstated.
B) the net income for the period to be understated.
C) the assets to be overstated.
D) the accounts payable to be understated.
Shayla's Design uses a periodic inventory system. Shayla sold 33 artist kits during
January. Other data for January includes:
Ending Inventory under the FIFO method is:
A) $1,219.
B) $1,055.
C) $950.
D) $789.
A material requisition is a:
A) document prepared to show the movement of materials or products between
departments.
B) document used to order materials or supplies from the vendor or supplier.
C) document used for charging material to production.
D) document used to record receipt of materials or supplies from the vendor or supplier.
Operating expenses other than depreciation expense for the year were $400,000.
Accrued expenses payable decreased by $35,000. Cash payments for operating
expenses to be reported on the cash flow statement using the direct method would be:
A) $400,000.
B) $435,000.
C) $365,000.
D) $35,000.
Accounts Receivable amounted to $215,000 at the beginning of the year and $215,000
at the end of the year. Net income reported on the income statement for the year was
$300,000. The net cash flow from operating activities on the cash flow statement using
the indirect method is:
A) $300,000.
B) $330,000.
C) $270,000.
D) None of these answers is correct.
Grant's Hardware bought $7,500 of merchandise, terms 1/10, n/30. The journal entry to
record the transaction under the net approach method would be to:
A) debit Purchases $7,425; credit Accounts Payable $7,425.
B) debit Purchases $7,425; credit Vouchers Payable $7,425.
C) debit Purchases $7,500; credit Vouchers Payable $7,425; credit Discounts Lost $75.
D) debit Purchases $7,500; credit Cash $7,500.
The following normal account balances were found on the general ledger before closing
entries were prepared:
After closing entries are posted, what is the balance in the Capital account?
A) $8,000
B) $7,500
C) $7,000
D) Closing entries do not affect the Capital account.
Using the straight-line method, the semiannual bond interest expense of a 10%,
$200,000, 10-year bond issued at 95 is:
A) $20,000.
B) $10,500.
C) $9,500.
D) $9,800.
From the bank reconciliation, no entry was recorded for a debit memo for a new check
fee expense. This would cause:
A) liabilities to be understated.
B) liabilities to be overstated.
C) expenses to be understated.
D) expenses to be overstated.
The women's shoe department shows gross sales of $260,000 with the cost of the shoes
$140,000. The men's shoe department shows gross sales of $170,000 with the cost of
the shoes $110,000. What is the gross profit for each department respectively?
A) $430,000 and $250,000
B) $90,000 and $30,000
C) $120,000 and $60,000
D) $390,000 and $310,000
Which of the following is prepared first?
A) Balance sheet
B) Income statement
C) Statement of owner's equity
D) Trial balance
Identify each of the following transactions as an operating activity (O), an investing
activity (I), a financing activity (F), or a transaction that is not reported on the statement
of cash flows (N).
a) ________ Receipt of interest
b) ________ Increase of accounts payable
c) ________ Borrowed money from a bank
d) ________ Purchase of building for cash
e) ________ Declaration of cash dividends
f) ________ Sold plant equipment for cash
g) ________ Increase of accounts receivable
h) ________ Payment on principal of a note
FUTA taxes are paid:
A) by the end of January of the following year if the amount owed is less than $500.
B) by the end of the month following the end of the calendar quarter if the amount
owed is more than $500.
C) at the same time as the Form 941 taxes.
D) Both A and B are correct.
The entry to record the issuance of a bond between interest payment dates would
include a:
A) debit to Cash.
B) credit to Bonds Payable.
C) credit to Bonds Interest Payable.
D) All of the above
From the following balance sheet for Bricks Corporation, compute the common-size
balance sheet amounts. (Round all percentages to nearest tenth of a percent.)
Amount Percent
Current Assets $80,000 ________
Plant and Equipment 320,000 ________
Total Assets $400,000 ________
Current Liabilities $150,000 ________
Long-term Liabilities 120,000 ________
Common Stock 100,000 ________
Retained Earnings 30,000 ________
Total Liabilities and
Stockholders' Equity $400,000 ________
On December 31, 2015, Landscape Pros had a balance in Accounts Receivable of
$25,000. Net credit sales for the year were $400,000. The Allowance for Doubtful
Accounts has a credit balance of $500. Journalize the recording of the bad debt expense
under the balance sheet approach if $1,280 is the estimated amount of uncollectible
accounts.
The Dairy Co. had the following transactions involving the sale of merchandise. You
are to prepare the necessary general journal entries. All sales are subject to a 6% sales
tax. Terms of sale were n/30.
April 13 Sold merchandise priced at $500 to Jan Ellsworth on account.
April 14 Sold merchandise priced at $350 to a cash customer.
April 15 Sold merchandise priced at $150 to Dana Carter on account.
April 16 Sold merchandise priced at $700 to a cash customer.
April 20 The customer of April 14 returned $50 worth of merchandise for a cash refund.
April 25 Received full payment from Dana Carter.
April 30 Paid the amount of sales tax to the state.
Prepare the necessary general journal entry for April 14.
__________________________________________ __________ __________
__________________________________________ __________ __________
__________________________________________ __________ __________
The Bixby Co. had the following transactions involving the purchase of merchandise.
Prepare the necessary general journal entries. Any applicable freight costs are prepaid
by the seller. The perpetual inventory method is in use.
June 16 Purchased merchandise having a price of $6,000 from the Shelby
Manufacturing Co.
on account with credit terms 2/10, n/30. Transportation terms F.O.B destination.
June 16 Purchased merchandise having a price of $9,000 from the Ajax Supply House
on account with credit terms 2/10, n/30. Transportation terms F.O.B shipping point.
The freight costs of $175 were added to the invoice. Merchandise was shipped June 16.
June 17 Received the goods from Shelby.
June 17 Received the goods from Ajax.
June 20 Returned for credit merchandise with an invoice price of $800 to Ajax.
June 25 Paid Shelby the amount owed.
June 28 Paid Ajax the amount owed.
June 30 Returned for cash, merchandise with an invoice price of $400 to Shelby.
Prepare the necessary general journal entry for June 30.
__________________________________________ __________ __________
__________________________________________ __________ __________
__________________________________________ __________ __________
For each of the following, identify in Column 1 the balance the account will have in the
adjusted trial balance columns (debit or credit), in Column 2 the financial statement
column(s) in which the account balance will be found (income statement or balance
sheet), and in Column 3 the effect the account will have on the determination of net
income (increase, decrease, or none).
For each of the following, identify in column 1 the category to which the account
belongs, in column 2 the normal balance for the account, in column 3 the financial
statement that the account in which the account balance is reported, and in column 4 the
account's nature (permanent/temporary).
Identify whether the entries below are an adjusting entry (AE) or a closing entry (CE).
________
The Dairy Co. had the following transactions involving the sale of merchandise. You
are to prepare the necessary general journal entries. All sales are subject to a 6% sales
tax. Terms of sale were n/30.
April 13 Sold merchandise priced at $500 to Jan Ellsworth on account.
April 14 Sold merchandise priced at $350 to a cash customer.
April 15 Sold merchandise priced at $150 to Dana Carter on account.
April 16 Sold merchandise priced at $700 to a cash customer.
April 20 The customer of April 14 returned $50 worth of merchandise for a cash refund.
April 25 Received full payment from Dana Carter.
April 30 Paid the amount of sales tax to the state.
Prepare the necessary general journal entry for April 16.
__________________________________________ __________ __________
__________________________________________ __________ __________
__________________________________________ __________ __________
Given the following, calculate contribution margin and net income:
Indirect
DVD CD
Expense
Net Sales $10,000 $5,000
Cost of Goods Sold 5,500 2,300
Operating Expenses (Indirect) $3,000
Using the following accounts:
[1] Cash
[2] Bond Sinking fund
[3] Equipment
[4] Building
[5] Land
[6] Accounts payable
[7] Notes payable
[8] Bond payable
[9] Bond interest payable
[10] Premium on bonds payable
[11] Discount on bonds payable
[12] Common stock
[13] Retained earnings
[14] Sinking fund earned
[15] Bond interest expense
[16] Gain on retirement
[17] Loss on retirement
Indicate the account(s) to be debited and credited to record the following transactions.
Recorded the interest earned on the bond sinking fund.
Debit ________ Credit ________
Joe owns an auto parts store called Joe's Auto Care. The following transactions took
place during July of the current year.
July 8 Purchased merchandise on account from Wheeler Auto for $6,000
July 10 Paid freight charges of $400 on merchandise purchases on the 8th.
July 12 Sold merchandise on account to Lancaster Auto Sales for $5,500.
The cost of the merchandise was $3,500
July 16 Received a credit memo from Wheeler for merchandise returned, $900
July 22 Issued a credit memo to Lancaster Auto Sales for merchandise returned, $1,000.
The cost of the merchandise is $550.
Journalize the above transactions using the perpetual inventory system.
Construct the bank reconciliation for Bob's Tutoring, as of October 31, from the
following information:
Ending checkbook balance $940
Ending bank statement balance 540
Deposits in transit 640
Outstanding checks 280
Bank service charge (debit memo) 40
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement in which the account balance is reported, and in Column 4 the account's
nature (permanent/temporary).
Using the following accounts:
[1] Cash
[2] Subscription receivable-common stock
[3] Machinery
[4] Building
[5] Land
[6] Organization costs
[7] Preferred stock
[8] Common stock
[9] Paid in capital in excess of par value - preferred
[10] Paid in capital in excess of par value - common
[11] Common stock subscribed
[12] Discount on common stock
[13] Organization Expense
Indicate the account(s) to be debited and credited to record the following transaction.
Exchanged common stock for machinery when the stock was selling at a premium.
Debit ________ Credit ________ & ________
For each of the following, identify in column 1 the category to which the account
belongs, in column 2 the normal balance for the account, in column 3 the financial
statement that the account in which the account balance is reported, and in column 4 the
account's nature (permanent/temporary).
Determine the ending Capital amount of a business having:
Beginning Capital amount of $20,000
Withdrawals of $ 2,500
Net sales of $200,000
Net purchases of $80,000
Freight-in of $2,000
Beginning inventory of $6,000
Ending inventory of $7,000
Operating expenses of $ 30,000
$ ________
The Bixby Co. had the following transactions involving the purchase of merchandise.
Prepare the necessary general journal entries. Any applicable freight costs are prepaid
by the seller. The perpetual inventory method is in use.
June 16 Purchased merchandise having a price of $6,000 from the Shelby
Manufacturing Co.
on account with credit terms 2/10, n/30. Transportation terms F.O.B destination.
June 16 Purchased merchandise having a price of $9,000 from the Ajax Supply House
on account with credit terms 2/10, n/30. Transportation terms F.O.B shipping point.
The freight costs of $175 were added to the invoice. Merchandise was shipped June 16.
June 17 Received the goods from Shelby.
June 17 Received the goods from Ajax.
June 20 Returned for credit merchandise with an invoice price of $800 to Ajax.
June 25 Paid Shelby the amount owed.
June 28 Paid Ajax the amount owed.
June 30 Returned for cash, merchandise with an invoice price of $400 to Shelby.
Prepare the necessary general journal entry for June 25.
__________________________________________ __________ __________
__________________________________________ __________ __________
__________________________________________ __________ __________
