The post-closing trial balance contains only
a. income statement accounts.
b. balance sheet accounts.
c. balance sheet and income statement accounts.
d. income statement, balance sheet, and retained earnings statement accounts.
Answer:
A lease where the intent is temporary use of the property by the lessee with continued
ownership of the property by the lessor is called
a. off-balance sheet financing.
b. an operating lease.
c. a capital lease.
d. a purchase of property.
Answer:
The following information is available for Macon Corporation:
Instructions
Based on the preceding information, calculate each of the following:
(a) Total paid-in capital.
(b) Total stockholders’ equity.
Answer:
Under IFRS, the trial balance
a. follows the same format as under GAAP.
b. shows credits on the left and debits on the right.
c. includes less accounts than under GAAP.
d. includes more accounts than under GAAP.
Answer:
Kong Inc. reported net income of $298,000 during 2015 and paid dividends of $26,000
on common stock. It also has 10,000 shares of 6%, $100 par value cumulative preferred
stock outstanding. Common stockholders’ equity was $1,200,000 on January 1, 2015,
and $1,600,000 on December 31, 2015. The company’s return on common stockholders’
equity for 2015 is:
a. 17.4%
b. 17.0%
c. 15.1%
d. 21.3%
Answer:
Expenses paid and recorded as assets before they are used are called
a. accrued expenses.
b. interim expenses.
c. prepaid expenses.
d. unearned expenses.
Answer:
On December 31, 2015, Stock, Inc. has 4,000 shares of 6% $100 par value cumulative
preferred stock and 60,000 shares of $10 par value common stock outstanding. On
December 31, 2015, the directors declare a $20,000 cash dividend. The entry to record
the declaration of the dividend would include:
a. a credit of $4,000 to Cash Dividends.
b. a note in the financial statements that dividends of $4 per share are in arrears on
preferred stock for 2015.
c. a debit of $20,000 to Common Stock.
d. a credit of $20,000 to Dividends Payable.
Answer:
A proprietorship is a business
a. owned by one person.
b. owned by two or more persons.
c. organized as a separate legal entity under state corporation law.
d. owned by a governmental agency.
Answer:
A stockholder who receives a stock dividend would
a. expect the market price per share to increase.
b. own more shares of stock.
c. expect retained earnings to increase.
d. expect the par value of the stock to change.
Answer:
At the end of its first year, the trading securities portfolio consisted of the following
common stocks.
The unrealized loss to be recognized under the fair value method is
a. $2,000.
b. $5,600.
c. $2,100.
d. $3,600.
Answer:
The following financial statement information is available for Buil Corporation:
The current ratio for 2015 is
a. .31:1.
b. 3.2:1.
c. 1.5:1.
d. 4.24:1.
Answer:
On November 2, 2014, Kasdan Company has cash sales of $6,000 from merchandise
having a cost of $3,600. The entries to record the day’s cash sales will include:
a. a $3,600 credit to Cost of Goods Sold.
b. a $6,000 credit to Cash.
c. a $3,600 credit to Inventory.
d a $6,000 debit to Accounts Receivable.
Answer:
A major disadvantage resulting from the use of bonds is that
a. earnings per share may be lowered.
b. interest must be paid on a periodic basis.
c. bondholders have voting rights.
d. taxes may increase.
Answer:
Closing entries are necessary for
a. permanent accounts only.
b. temporary accounts only.
c. both permanent and temporary accounts.
d. permanent or real accounts only.
Answer:
A statement of stockholders’ equity discloses all of the following except:
a. The cost of treasury stock owned at the end of the year.
b. Net income for the current year.
c. The amount of cash dividends declared during the current year.
d. The market value of the stockholders’ equity at the end of the year.
Answer:
Financial statements are prepared directly from the
a. general journal.
b. ledger.
c. trial balance.
d. adjusted trial balance.
Answer:
Correcting entries are made
a. at the beginning of an accounting period.
b. at the end of an accounting period.
c. whenever an error is discovered.
d. after closing entries.
Answer:
All of the following statements are correct except
a. Good decision-making depends on good information.
b. A vital element in communicating economic events is the accountant’s ability to
analyze and interpret reported information.
c. The origins of accounting are generally attributed to Socrates, a classical Greek
philosopher, who promoted accounting as a social contract.
d. The information that a user of financial information needs depends upon the kinds of
decisions the user makes.
Answer:
Selected financial statement data for Freeman Company are presented below.
Instructions
Compute the following ratios at December 31, 2015:
(a) Current.
(b) Acid-test.
Answer:
The account titles used in journalizing transactions need not be identical to the account
titles in the ledger.
Answer:
______________ is the process of allocating the cost of a plant asset to expense over its
service life in a rational and systematic manner.
Answer:
Two federal taxes which are levied against employees’ wages that must be deducted in
arriving at net pay are (1) ________________ taxes and (2) _______________ taxes.
Answer:
FICA taxes withheld and federal income taxes withheld are mandatory payroll
deductions.
Answer:
The four subdivisions of stockholders’ equity are: ________________,
________________, ________________, and ________________.
Answer:
At December 31, 2015, the following information was available for Deen Company:
ending inventory $22,600; beginning inventory $21,400; cost of goods sold $171,000;
and sales revenue $430,000.
Calculate the inventory turnover and days in inventory for Deen.
Answer: