Gomez Co. had beginning inventory of $2,400 and ending inventory of $1,200. The
cost of goods sold was $9,600. Based on this information, Gomez Co. must have
purchased inventory amounting to:
A.$8,400.
B.$9,600.
C.$10,800.
D.$13,200.
Hartford Company borrowed $20,000 on October 1, 2016. Hartford issued a one year
6% discount note payable. The adjusting entry necessary to record accrued interest on
December 31, 2016 would include a:
A.debit to Discount on Notes Payable of $300.
B.debit to Interest Expense for $300.
C.credit to Interest Payable for $300.
D.none of these answer choices are correct.
Which inventory costing method will produce an amount for cost of goods sold that is
closest to current market value?
A.Weighted average.
B.Specific identification.
C.LIFO.
D.FIFO.
Flagler Company purchased equipment that cost $90,000. The equipment had a useful
life of 5 years and a $10,000 salvage value. Flagler used the double-declining-balance
method to depreciate its assets. Which of the following choices accurately reflects how
the recognition of the first year’s depreciation would affect the company’s financial
statements?
A.
B.
C.
D.
Thrasher Company reported income before taxes of $180,000. The company is in a
30% income tax bracket. Also, Thrasher’s income statement contained a charge for
interest expense amounting to $60,000. Based on this information alone, the company’s
times interest ratio would be:
A.2.1.
B.3.0.
C.3.1.
D.4.0.
While performing the monthly bank reconciliation, the bookkeeper for Avon Company
made the journal entry for a bank service charge of $20. Which of the following
correctly shows the effect of the entry on the financial statements?
A.
B.
C.
D.
In vertical analysis, each item is expressed as a percentage of:
A. Net income on the income statement.
B.Net sales on the income statement.
C.Total expenses on the income statement.
D. None of these answer choices are correct.
While performing its monthly bank reconciliation, the bookkeeper for the Mosaic
Company discovered that a check written for $421 for advertising expense was
recorded in the firm’s books as $241. Which of the following shows the effect of the
correcting entry on the financial statements?
A.
B.
C.
D.
Curtis Company had the following transactions for the month of January:
Assume that Curtis uses the perpetual inventory method and that all transactions were
for cash.
Required:
a) Prepare journal entries for the above transactions using the FIFO cost flow method.
b) Determine the amount of ending inventory using the FIFO cost flow method.
Hancock Medical Supply Co., which had no beginning balance in its Accounts
Receivable and Allowance for Doubtful Accounts, earned $160,000 of revenue on
account during 2016. During 2016, Hancock collected $128,000 of cash from its
receivables accounts. The company estimates that it will be unable to collect 1% of
revenue on account. The amount of net realizable value of receivables on the December
31, 2016 balance sheet would be:
A.$30,400.
B.$30,720.
C.$32,000.
D.$30,000.
Which of the following is not included in the computation of the quick ratio?
A. prepaid expenses
B. cash
C. accounts receivable
D. marketable securities
Indicate whether each of the following statements is true or false.
_____ a) Debit memos in a bank statement describe transactions that increase the
depositor’s assets.
_____ b) Credit memos in a bank statement describe transactions that act to increase the
bank’s liabilities.
_____ c) Service fees charged by a bank appear on bank statements as credit memos.
_____ d) Deposits in transit appear on the bank statement as credit memos.
_____ e) Outstanding checks do not appear on the bank statement.
Financial statement analysis involves forms of comparison including:
A.Comparing changes in the same item over a number of periods.
B.Comparing key relationships within the same year.
C.Comparing key items to industry averages.
D.All of these answer choices are correct.
Gross Company established a $250 petty cash fund on January 1, 2016. On March 1,
2016 the fund contained $160 in receipts for miscellaneous expenses and $85 in cash.
The entries necessary to replenish the petty cash fund will
A.have no effect on total assets.
B.decrease equity by $160.
C.increase equity by $165.
D.decrease assets by $165.
The employees of Able Company have worked the last two weeks of 2016, but the
employees’ wages have not been paid or recorded as of December 31, 2016. The
adjusting entry that Able should make for these unpaid wages on December 31, 2016 is:
A.debit to Wages Expense and credit to Cash.
B.debit to Wages Expense and credit to Wages Payable.
C.debit to Wages Payable and credit to Wages Expense.
D.no entry is required until the employee is paid next period.
The average number of days to sell inventory for Company Y is approximately:
A.15.3
B.24.8
C.23.9
D.25.6
When do the effects of product warranties appear on the statement of cash flows?
A.When the sale of merchandise is made.
B.When the warranty obligation is recognized.
C.When there is a settlement of a warranty claim made by a customer.
D.None of these answer choices are correct.
The current ratio is a measure of:
A.Solvency.
B.Liquidity.
C.Equity.
D.Profitability.
A discount given to encourage prompt payment is called:
A.a cash discount.
B.a sales discount by the seller.
C.a purchase discount by the buyer.
D.all of these answer choices are correct.
Which of the following assets is not considered to have indefinite useful lives?
A.Goodwill
B.Patents
C.Renewable franchises
D.Trademarks
On July 1, 2016, Village Bookstore, Inc. appropriated retained earnings in the amount
of $36,000 for a future remodeling project in the basement of the bookstore. On June
30, 2016, the balance of Retained Earnings was $82,800 and the Cash balance was
$43,200. Which of the following answers shows the effect of the July 1 event on the
financial statements?
A.
B.
C.
D.
For 2015, Willis Corporation reported after-tax net income of $550,000. During the
year, the number of outstanding shares of 6% $100 par preferred stock remained
constant at 3,000, and 200,000 shares of common stock were outstanding all year. The
company’s total stockholders’ equity at December 31, 2015, was $6,500,000. Willis’s
common stock was selling at $28 per share at the end of the year. All dividends for the
year were paid, including a dividend of $1.50 per share to common stockholders.
Round your percentage to two decimal places. (e.g., .1562 as 15.62%)
Required:
Compute the following:
(a) Earnings per share
(b) Book value per share of common stock
(c) Price-earnings ratio
(d) Dividend yield
Yi Company provided services to a customer for $5,500 cash. As a result of this event,
A.total assets increased and total equity decreased.
B.total assets were unchanged and cash flows from operating activities increased.
C.liabilities decreased and net income increased.
D.total assets increased and net income increased.
The following accounts and balances were drawn from the records of Carolina
Company on December 31, 2016:
Total assets on Carolina’s December 31, 2016 balance sheet would amount to:
A.$12,600.
B.$13,800.
C.$7,200.
D.$10,600.
Kellogg, Inc. purchased 200 shares of its own $20 par value stock for $30 cash per
share. Which of the following answers reflects how this purchase of treasury stock
would affect Kellogg’s financial statements?
A.
B.
C.
D.
Llewelyn Company purchased 1,000 shares of its own $10 par value common stock
when the market price of the stock was $36 per share. Select the journal entry that
correctly records Llewelyn’s purchase of treasury stock.
A.
B.
C.
D.
For the year ended December 31, 2016, Fields Company made cash payments of
$50,000 for dividends, paid interest of $20,500, paid $30,000 cash to suppliers, and
purchased equipment for $64,000 cash. The amount of cash used by investing activities
for 2016 is:
A.$114,000.
B.$64,000.
C.$20,500.
D.$134,500.
How does the going concern assumption affect accounting for notes payable?
A.It dictates that notes payable be reported at their face value.
B.It dictates that interest expense be accrued at the end of the accounting period.
C.It dictates that notes payable be reported at their net realizable value.
D.It dictates that interest expense be paid when the note matures.
Wayne Company issued bonds with a face value of $600,000, a 6% stated rate of
interest, and a 10-year term. The bonds were issued on January 1, 2016, and Wayne
uses the straight-line method of amortization. Interest is paid annually on December 31.
Assuming Wayne issued the bond for 102, the amount of interest expense appearing on
the 2016 income statement would be:
A.$34,500.
B.$36,000.
C.$37,500.
D.$15,000.
On January 1, 2016, Burton Company had a balance in Accounts Receivable of $90,000
and a balance in the Allowance for Doubtful Accounts account of $2,400. During 2016
Burton had credit sales of $244,000 and ended the year with a balance in Accounts
Receivable of $48,000. During 2016 Burton also wrote off $1,100 of receivables.
Burton uses the allowance method for uncollectible accounts and assumes that 2% of
the sales on account will not be collected.
a) After adjusting entries on 12/31/16, what will be the balance in the Allowance for
Doubtful Accounts?
b) By what amount did net realizable value of accounts receivable decrease in 2016 due
to the write-off of the receivable?
c) What amount of cash was collected from customers during 2016?
On August 1, 2016, Billias Company issued a $10,000 6%, 1-year note to Citizens
Bank. Which of the following entries reflects the end of the year adjustment to record
the expense incurred?
A.
B.
C.
D.