One of the benefits of forming a partnership is limited liability.
Dividend yield is a liquidity ratio.
Compound interest is computed quarterly on $700 for seven years at 12 percent annual
interest. The future value table is used by multiplying the $700 by which factor?
A. 28 periods at 3 percent
B. 7 periods at 3 percent
C. 7 periods at 12 percent
D. 28 periods at 7 percent
A company’s merchandise inventory includes all of the following, except
A. goods in warehouses.
B. goods sold, but not yet delivered.
C. goods in transit from suppliers, if title has passed to the merchandiser.
D. goods in trucks between the warehouse and the store.
All of the following are classified as definitely determinable liabilities except
A. sales tax payable.
B. estimated property tax payable.
C. the current portion of long-term debt.
D. unearned revenue.
Use this information to answer the following question.
Panadora Company has the following information for the pay period of January 1-15,
2014. Payment occurs on January 20.
Salaries Payable would be recorded for
A. $21,520.
B. $23,968.
C. $25,952.
D. $28,400.
Which of the following appears in different sections of the income statement when
prepared on a single-step basis and when prepared on a multistep basis?
A. Sales commissions.
B. Office salaries.
C. Interest income.
D. Sales.
Use this information pertaining to Tucson Company to answer the following question.
1)The corporation’s Supplies account showed a beginning debit balance of $400 and
supplies purchased of $1,600. There were $600 of supplies on hand at year end.
2)Depreciation on a building is estimated to be $10,000.
3)A one-year insurance policy was purchased for $4,000. Six months have passed since
the purchase.
4)Accrued interest on a note receivable amounted to $200.
5)The company received a $3,600 advance payment during the year on services to be
performed. By the end of the year, one-third of the services had been performed.
The adjusting entry to record the amount of service revenue earned during the
accounting period is
A. Service Revenue 2,400
Unearned Revenue 2,400
B. Unearned Revenue 1,200
Service Revenue 1,200
C. Service Revenue 1,200
Unearned Revenue 1,200
D. Unearned Revenue 2,400
Davida’s Delivery Service purchased a delivery van for $30,000. The van had an
estimated useful life of six years and an estimated residual value of $6,000. After four
years of use, the total estimated useful life is revised to seven years. Assuming
straight-line depreciation, depreciation expense in year 5 would be (amounts rounded)
A. $2,667.
B. $4,667.
C. $2,000.
D. $1,143.
The inventory turnover amount is needed to calculate the
A. days’ sales uncollected.
B. days’ inventory on hand.
C. receivables turnover.
D. interest coverage ratio.
Which accounting convention requires a note to the financial statements explaining the
company’s method of revenue recognition?
A. Comparability and consistency
B. Materiality
C. Conservatism
D. Full disclosure
Under the cost-adjusted-to-market method of accounting for an investment,
A. Dividend Income is credited when dividends are received.
B. the investment account is credited when dividends are received.
C. the investment account is credited when the investee reports a net income.
D. Investment Income is credited when the invested reports a net income.
The adjustment dated 12/31/20×1 to accrue interest to be paid most likely would be
reversed by which of the following entries?
A. Debit Interest Payable and credit Interest Expense dated 1/1/20×2
B. Debit Interest Expense and credit Interest Payable dated 12/31/20×1
C. Debit Interest Payable and credit Interest Expense dated 12/31/20×1
D. Debit Interest Expense and credit Interest Payable dated 1/1/20×2
The intentional preparation of misleading financial statements, known as fraudulent
financial reporting, can result from all of the following except
A. the misapplication of accounting principles.
B. the manipulation of inventory records.
C. fictitious sales or orders.
D. recording a revenue that has been earned but not yet received.
Use this inventory information for the month of March to answer the following
question.
Assume that a periodic inventory system is used.
What is ending inventory under the LIFO method?
A. $1,680
B. $1,980
C. More information is needed.
D. $2,720
Which of the following statements is true about the full-costing method?
A. The cost of a dry well would be written off immediately as a loss.
B. All costs are recorded as assets and then depleted over the resource’s useful life.
C. All costs are written off immediately as a loss.
D. All costs are recorded as assets and remain on the books as assets.
Use this information to answer the following question.
In addition, beginning merchandise inventory was $11,000 and ending merchandise
inventory was $7,000.
Cost of goods sold for the period was
A. $31,000.
B. $25,000.
C. $38,000.
D. $23,000.
When expenses exceed revenues,
A. a liability is created.
B. a net loss occurs.
C. owner’s equity increases.
D. All of these choices.
A limited partnership
A. allows some partners to limit their loss to the amount of his or her investment.
B. has an agreed-upon limited life.
C. is a corporation that U.S. tax laws treat as a partnership.
D. is a firm with a limited life that a company creates to achieve a specific objective,
such as raising money by selling receivables.
Which of the following assets is not subject to depreciation, depletion, or amortization?
A. Land improvements, such as parking lots and fences
B. Gas fields
C. Land
D. Patents
On October 1, 2012, Biff’s Auto Repair purchased diagnostic equipment for $13,600.
The equipment had an estimated residual value of $4,000 and an eight-year life and was
sold on April 1, 2014. Assuming that the company depreciates the asset on a
straight-line basis and reports on a calendar-year basis, journalize the following
independent transactions in the journal provided. (Omit explanations.)
a. The entry to update depreciation to April 1, 2014
b. The entry to record the sale for $12,000
c. The entry to record the sale instead for $8,600
d. The entry to record the sale instead for $11,800
Second National Bank computes interest semiannually. If the annualized interest rate
(APR) is currently 6 percent, the amount deposited today should be multiplied by which
future value factor to calculate the amount that will accumulate by the end of 10 years?
A. 20 periods at 12 percent
B. 20 periods at 3 percent
C. 10 periods at 6 percent
D. 10 periods at 3 percent
Publicly held corporations must file annual reports with the SEC. All such reports are
available
A. only to the SEC, the company’s owners and management, and the company’s
auditors.
B. only to other SEC companies and the issuing company’s owners and management.
C. only to the SEC, the company’s management, and the company’s auditors.
D. to the general public.
Eddie and Lauren are partners in a business. Eddie’s original capital contribution was
$80,000, and Lauren’s was $120,000. They agreed to share profits and losses as follows:
Calculate each partner’s share of profits and losses, assuming (a) the profit was $200,000,
(b) the profit was $140,000, and (c) the loss was $16,000.
a. Eddie, $88,000 Lauren, $112,000
b. Eddie, $48,000 Lauren, $92,000
c. Eddie, ($56,000) Lauren, $40,000
Managers need to understand how long-term liabilities are
A. valued.
B. classified.
C. recognized.
D. All of these choices.
A change from FIFO to LIFO in a period of rising prices will
A. decrease both the current ratio and the inventory turnover ratio.
B. increase both the current ratio and the inventory turnover ratio.
C. increase the current ratio and decrease the inventory turnover ratio.
D. decrease the current ratio and increase the inventory turnover ratio.
The net effects on a corporation of the declaration and payment of a cash dividend are
to
A. increase assets and increase stockholders’ equity.
B. decrease liabilities and decrease stockholders’ equity.
C. decrease assets and decrease stockholders’ equity.
D. increase stockholders’ equity and decrease liabilities.
Which of the following groups uses accounting information primarily to help protect
the public?
A. Management
B. Regulatory agencies
C. Taxing authorities
D. Economic planners
Fraudulent financial reporting at Enron resulted in
A. thousands of people losing their jobs.
B. thousands of people losing their pensions and investment incomes.
C. prison sentences and fines for corporate executives.
D. all of these choices.
In which category would office salaries expense be included?
A. Net sales.
B. Cost of goods sold.
C. Selling expenses.
D. General and administrative expenses.
Scuilli Company purchased $5,000 worth of merchandise, terms n/30, from Zupcic
Company on June 4. The cost of the merchandise to Zupcic was $3,600. On June 10,
Scuilli returned $700 worth of goods to Zupcic for full credit. The goods had a cost of
$450 to Zupcic. On June 12, the account was paid in full. Prepare entries in journal
form without explanations to record these transactions in (a) Scuilli’s records and (b)
Zupcic’s records. Assume use of the perpetual inventory system by both companies.
a) Scuilli’s records:
b) Zupcic’s records:
Which of the following qualifies as a capital lease?
A. Four-year cancelable lease on a company vehicle.
B. One-year lease on a computer with an option to renew for one more year.
C. Five-year lease on a machine that has a five-year useful life.
D. Monthly lease on office space that can be canceled with 30 days’ notice.
Which of the following is a correct statement relating to the concept of mutual agency
and the corporate form of business?
A. There is no mutual agency with the corporate form of business.
B. Mutual agency may or may not exist in a corporation, depending on the individual
state law.
C. Mutual agency always exists in the corporate form of business.
D. Mutual agency may or may not exist in a corporation, depending on a vote by the
shareholders.
On July 1, 20×5, Claudio Corp. issued bonds with a face value of $800,000. The bonds
carry a face interest rate of 8 percent that is payable each July 1 and January 1.
a. Prepare the entry in journal form without explanation for the issuance of the bonds
assuming the bonds are issued at 98.
b. Prepare the entry in journal form without explanation for the issuance of the bonds
assuming the bonds are issued at 101.
The recording of an expense could result in a corresponding increase in
A. owner’s equity.
B. revenue.
C. a liability.
D. an asset.