Short-term investments are
a. (1) readily marketable and (2) intended to be converted into cash after the current
year or operating cycle, whichever is shorter.
b. (1) readily marketable and (2) intended to be converted into cash within the current
year or operating cycle, whichever is longer.
c. (1) readily marketable and (2) intended to be converted into cash after the current
year or operating cycle, whichever is longer.
d. (1) readily marketable and (2) intended to be converted into cash within the current
year or operating cycle, whichever is shorter.
Answer:
An alternative name for Bad Debt Expense is
a. Deadbeat Expense.
b. Uncollectible Accounts Expense.
c. Collection Expense.
d. Credit Loss Expense.
Answer:
During 2015, Zuma Company had $150,000 in cash sales and $1,240,000 in credit
sales. The accounts receivable balances were $180,000 and $215,000 at December 31,
2014 and 2015, respectively. Using the direct method of reporting cash flows from
operating activities, what was the total cash collected from all customers during 2015?
a. $1,205,000
b. $1,425,000
c. $1,390,000
d. $1,355,000
Answer:
Car and Auto Sisters had retained earnings of $18,000 on the balance sheet but
disclosed in the footnotes that $3,000 of retained earnings was restricted for plant
expansion and $1,000 was restricted for bond repayments. Cash of $2,000 had been set
aside for the plant expansion. How much of retained earnings is available for
dividends?
a. $14,000
b. $15,000
c. $18,000
d. $12,000
Answer:
On September 23, Sebadoh Company received a $350 check from Surfer Rosa Inc. for
services to be performed in the future. The bookkeeper for Sebadoh Company
incorrectly debited Cash for $350 and credited Accounts Receivable for $350. The
amounts have been posted to the ledger. To correct this entry, the bookkeeper should
a. debit Cash $350 and credit Unearned Service Revenue $350.
b. debit Accounts Receivable $350 and credit Unearned Service Revenue $350.
c. debit Accounts Receivable $350 and credit Cash $350.
d. debit Accounts Receivable $350 and credit Service Revenue $350.
Answer:
The factor 1.0816 is taken from the 4% column and 2 periods row in a certain table.
From what table is this factor taken?
a. Future value of 1
b. Future value of an annuity of 1
c. Present value of 1
d. Present value of an annuity of 1
Answer:
Which board(s) has(have) faced bitter opposition when working to
implement fair value measurement for financial instruments?
a. FASB, but not IASB.
b. IASB, but not FASB.
c. both FASB and IASB.
d. neither FASB nor IASB.
Answer:
During the current year, Marin Company incurred several expenditures. Briefly explain
whether the expenditures listed below should be recorded as an operating expense or as
an intangible asset. If you view the expenditure as an intangible asset, indicate the
number of years over which the asset should be amortized. Explain your answer.
(a) Spent $30,000 in legal costs in a patent defense suit. The patent was unsuccessfully
defended.
(b) Purchased a trademark from another company. The trademark can be renewed
indefinitely. Marin Company expects the trademark to contribute to revenue
indefinitely.
(c) Marin Company acquires a patent for $2,000,000. The company selling the patent
has spent $1,000,000 on the research and development of it. The patent has a remaining
life of 15 years.
(d) Marin Company is spending considerable time and money in developing a different
patent for another product. So far $3,000,000 has been spent this year on research and
development. Marin Company is very confident they will obtain this patent in the next
few years.
Answer:
Yankee Hotel Foxtrot initiated operations on July 1, 2015. To manage the company
officers and managers have requested monthly financial statements starting July 31,
2015. The adjusted trial balance amounts at July 31 are shown below.
(a) Determine the net income for the month of July.
(b) Determine the total assets and total liabilities at July 31, 2015 for Yankee Hotel
Foxtrot.
(c) Determine the amount that appears for Retained Earnings at July 31, 2015.
Answer:
Reliable Insurance Company collected a premium of $36,000 for a 1-year insurance
policy on May 1. What amount should Reliable report as a current liability for
Unearned Insurance Revene at December 31?
a. $0.
b. $12,000.
c. $24,000.
d. $36,000.
Answer:
Dividends in arrears on cumulative preferred stock
a. are considered to be a non-current liability.
b. are considered to be a current liability.
c. only occur when preferred dividends have been declared.
d. should be disclosed in the notes to the financial statements.
Answer:
Norris Company uses the perpetual inventory system and had the following purchases
and sales during March.
Instructions
Using the inventory and sales data above, calculate the value assigned to cost of goods
sold in March and to the ending inventory at March 31 using (a) FIFO and (b) LIFO.
Answer:
A complete journal entry does not show
a. the date of the transaction.
b. the new balance in the accounts affected by the transaction.
c. a brief explanation of the transaction.
d. the accounts and amounts to be debited and credited.
Answer:
Assuming that there is a net loss for the period, debits equal credits in all but which
section of the worksheet?
a. Income statement columns
b. Adjustments columns
c. Trial balance columns
d. Adjusted trial balance columns
Answer:
Magneto Company had net credit sales during the year of $1,350,000 and cost of goods
sold of $810,000. The balance in accounts receivable at the beginning of the year was
$180,000, and the end of the year it was $120,000. What was the accounts receivable
turnover?
a. 5.6
b. 7.5
c. 9.0
d. 11.3
Answer:
The method of accounting for uncollectible accounts that results in a better matching of
expenses with revenues is the
a. aging accounts receivable method.
b. direct write-off method.
c. percentage of receivables method.
d. percentage of sales method.
Answer:
Robert Tingle is studying for the next accounting mid-term examination. What should
Robert know about (a) departing from the cost basis of accounting for inventories and
(b) the meaning of “market” in the lower-of-cost-or-market method?
Answer:
Penny Company made an inventory count on December 31, 2015. During the count,
one of the clerks made the error of counting an inventory item twice. For the balance
sheet at December 31, 2015, the effects of this error are
Answer:
Interest is the difference between the amount borrowed and the principal.
Answer:
Brandy Corporation’s trading portfolio at the end of the year is as follows:
Brandy subsequently sells Stock D for $10,000. What entry is made to record the sale?
Answer:
Pleasant Company has decided to begin accumulating a fund for plant expansion. The
company deposited $80,000 in a fund on January 2, 201 Pleasant will also deposit
$40,000 annually at the end of each year, starting in 201 The fund pays interest at 4%
compounded annually. What is the balance of the fund at the end of 2015 (after the
2015 deposit)?
Answer:
Under the indirect method, retained earnings is adjusted for items that affected reported
net income but did not affect cash.
Answer:
Repair costs incurred in honoring warranty contracts should be debited to Warranty
Liability.
Answer:
Sales revenues are recognized during the period cash is collected from the buyer.
Answer:
Free _______________ equals cash provided by operations less capital expenditures
and cash dividends.
Answer:
Some of the following errors would cause the debit and credit columns of the trial
balance to have unequal totals. For each of the four cases, state whether the error would
cause unequal totals in the trial balance. If the error causes unequal totals, indicate the
amount of difference between the columns and state whether the debit or credit is larger.
Each case is to be considered independently of the others.
1> A payment of $500 to a creditor was recorded by a debit to Accounts Payable of $50
and a credit to Cash of $500.
2> A $480 payment for a printer was recorded by a debit to Equipment of $48 and a
credit to Cash for $48.
3> An account receivable in the amount of $2,500 was collected in full. The collection
was recorded by a debit to Cash for $2,500 and a debit to Accounts Payable for $2,500.
4> An account payable was paid by issuing a check for $800. The payment was
recorded by debiting Accounts Payable $800 and crediting Accounts Receivable $800.
Answer:
The trial balance will not balance when incorrect account titles are used in journalizing
or posting.
Answer: