Hoppmann Company wrote checks totaling $25,620 during October and $27,975 during
November. $24,360 of these checks cleared the bank in October, and $27,330 cleared
the bank in November. What was the amount of outstanding checks on November 30?
a. $645
b. $1,260
c. $1,905
d. $2,355
Answer:
A purchased patent has a legal life of 20 years. It should be
a. expensed in the year of acquisition.
b. amortized over 20 years regardless of its useful life.
c. amortized over its useful life if less than 20 years.
d. not amortized.
Answer:
Book value per share is
a. the equity a common stockholder has in the net assets of the corporation from owning
one share of stock.
b. the equity a common stockholder has in the total assets of the corporation from
owning one share of stock.
c. always equal to the market value of the stock.
d. computed only for preferred stockholders.
Answer:
At January 31, 2015, the balance in Aislers Inc.’s supplies account was $750. During
February, Aislers purchased supplies of $900 and used supplies of $1,125. At the end of
February, the balance in the supplies account should be
a. $525 debit.
b. $975 debit.
c. $525 credit.
d. $775 debit.
Answer:
A cash discount is usually granted to all of the following except
a. retail customers.
b. retailers.
c. wholesalers.
d. All of these answers are correct.
Answer:
For accounting purposes, postdated checks (checks payable in the future) are
considered to be
a. money orders.
b. cash.
c. petty cash.
d. accounts receivable.
Answer:
A company purchased a delivery truck on January 1, 2014, for $18,000. It is estimated
that the delivery truck will have a $4,000 salvage value at the end of its 5-year useful
life. If the company recorded depreciation expense of $2,800 for the year 2015 on the
delivery truck, the depreciation method used by the company is
a. not determinable.
b. the straight-line method.
c. the units-of-activity method.
d. the double-declining-balance method.
Answer:
Enos Company has decided to change the estimate of the useful life of an asset that has
been in service for 2 years. Which of the following statements describes the proper way
to revise a useful life estimate?
a. Revisions in useful life are permitted if approved by the IRS.
b. Retroactive changes must be made to correct previously recorded depreciation.
c. Only future years will be affected by the revision.
d. Both current and future years will be affected by the revision.
Answer:
There are ten transactions listed below. Match the transactions that have the identical
effect on the accounting equation. You should end up with 5 matches.
a. Receive cash from customers on account.
b. Issued stock in exchange for cash.
c. Pay cash to reduce an accounts payable.
d. Purchase supplies for cash.
e. Pay cash to reduce a notes payable.
f. Purchase supplies on account.
g. Additional investment by a stockholder.
h. Purchase equipment with a note payable.
i. Pay utilities with cash.
j. Pay dividends.
Answer:
Centro-matic Company began the year with stockholders’ equity of $30,000. During the
year, Centro-matic issued additional shares of stock in exchange for cash of $42,000,
recorded expenses of $120,000, and paid dividends of $8,000. If Centro-matic’s ending
stockholders’ equity was $112,000, what was the company’s revenue for the year?
a. $160,000.
b. $168,000.
c. $202,000.
d. $210,000.
Answer:
The steps in preparing a trial balance include all of the following except
a. listing the account titles and their balances.
b. totaling the debit and credit columns.
c. proving the equality of the two columns.
d. transferring journal amounts to ledger accounts.
Answer:
A credit balance in retained earnings represents
a. the amount of cash retained in the business.
b. a claim on specific assets of the corporation.
c. a claim on the aggregate assets of the corporation.
d. the amount of stockholders’ equity exempted from the stockholders’ claim on total
assets.
Answer:
A $100 petty cash fund has cash of $17 and receipts of $86. The journal entry to
replenish the account would include a
a. debit to Cash for $86.
b. credit to Petty Cash for $86.
c. credit to Cash Over and Short for $3.
d. credit to Cash for $86.
Answer:
Which of the following is true?
a. Transaction analysis is completely different under IFRS and GAAP.
b. Most transactions are recorded differently under IFRS and GAAP.
c. Transaction analysis is the same under IFRS and GAAP, but some transactions are
recorded differently.
d. All transactions are recorded the same under IFRS and GAAP.
Answer:
In order to be relevant, accounting information must
a. be neutral.
b. be verifiable.
c. have predictive value.
d. be a faithful representation.
Answer:
Given the following information, determine the adjusted cash balance per books from
the following information:
a. Balance per books as of June 30, $8,600.
b. Outstanding checks, $820.
c. NSF check returned with bank statement, $130.
d. Deposit mailed the afternoon of June 30, $300.
e. Check printing charges, $30.
f. Interest earned on checking account, $12.
Answer:
The lower-of-cost-or-market (LCM) basis may be used with all of the following
methods except
a. average cost.
b. FIFO.
c. LIFO.
d. The LCM basis may be used with all of these.
Answer:
If a plant asset is sold before it is fully depreciated,
a. only a gain on disposal can occur.
b. only a loss on disposal can occur.
c. either a gain or a loss can occur.
d. neither a gain nor a loss can occur.
Answer:
In reviewing the accounts receivable, the cash realizable value is $16,000 before the
write-off of a $1,500 account. What is the cash realizable value after the write-off?
a. $1,500
b. $14,500
c. $16,000
d. $17,500
Answer:
Fat Possum’s Service Shop started the year with total assets of $330,000 and total
liabilities of $2400,000. During the year, the business recorded $630,000 in revenues,
$420,000 in expenses, and paid dividends of $60,000.
The net income reported by Fat Possum’s Service Shop for the year was
a. $150,000.
b. $210,000.
c. $240,000.
d. $270,000.
Answer:
An aging of a company’s accounts receivable indicates that $5,000 are estimated to be
uncollectible. If Allowance for Doubtful Accounts has a $900 credit balance, the
adjustment to record bad debts for the period will require a
a. debit to Bad Debt Expense for $5,000.
b. debit to Allowance for Doubtful Accounts for $4,100.
c. debit to Bad Debt Expense for $4,100.
d. credit to Allowance for Doubtful Accounts for $5,000.
Answer:
Camper Van Company purchased equipment for $2,600 cash. As a result of this event,
a. stockholders’ equity decreased by $2,600.
b. total assets increased by $2,600.
c. total assets remained unchanged.
d. stockholders’ equity decreased and total assets increased by $2,600.
Answer:
The petty cash fund of $200 for Ginther Company appeared as follows on December
31, 2015:
Instructions
1> Briefly describe when the petty cash fund should be replenished. Because there is
cash on hand, is there a need to replenish the fund at year end on December 31?
Explain.
2> Prepare in general journal form the entry to replenish the fund.
3> On December 31, the office manager gives instructions to increase the petty cash
fund by $50. Make the appropriate journal entry.
Answer:
A company may use more than one inventory costing method concurrently.
Answer:
During a period, cost of goods sold + an increase in inventory + an increase in accounts
payable = cash paid to suppliers.
Answer:
Two items are omitted from each of the following summaries of balance sheet and
income
statement data for two proprietorships for the year 2015, Holly Enterprises and Cat
Stevens.
Instructions
Determine the missing amounts.
Answer:
The accounting for short-term debt investments and for long-term debt investments is
similar.
Answer:
Using the code letters below, indicate how each of the items listed would be handled in
preparing a bank reconciliation. Enter the appropriate code letter in the space to the left
of each item.
Code
A Add to cash balance per books
B Deduct from cash balance per books
C Add to cash balance per bank
D Deduct from cash balance per bank
E Does not affect the bank reconciliation
Items:
1> Outstanding checks.
2> Bank service charge.
3> Check for $420 correctly written and paid by the bank but incorrectly entered in the
cash payments journal for $240.
4> Deposit in transit.
Answer: