1) A business purchased office supplies of $10,000 using a note The business would:
A) debit Supplies for $10,000 and credit Accounts Payable for $10,000
B) debit Supplies for $10,000 and credit Notes Payable for $10,000
C) debit Note Receivable for $10,000 and credit Supplies for $10,000
D) debit Note Receivable for $10,000 and credit Supplies Expense for $10,000
2) The market interest rate is also referred to as the:
A) contractual rate
B) coupon rate
C) effective rate
D) stated rate
3) After approving an invoice for payment:
A) the receiving department should examine the payment packet to make sure all the
documents agree
B) after payment, the payment packet should be stamped “paid” by the person in the
treasurer’s department who has authorized the disbursement
C) checks should be returned to the department who prepared them for mailing
D) the person who ordered the goods should examine the payment package to make
sure all the documents agree
4) In order to see a complete transaction in one place, you would need to look at the:
A) trial balance
B) ledger
C) journal
D) financial statements
5) Thelen’s inventory records show the following data at January 31:
At January 31, 210 units are still on hand. What is the cost of the ending inventory at
January 31 if Thelen uses the LIFO method?
A) $1,680
B) $1,900
C) $2,210
D) $3,000
6) Wetzel, Inc. has 20,000 shares of cumulative preferred stock outstanding, with
annual dividends paid at a rate of $2 per share. Wetzel, Inc. also has 40,000 shares of
common stock outstanding. Preferred dividends were passed in the prior year. If Wetzel,
Inc. declares a $200,000 dividend, each outstanding share of common stock would
receive:
A) $2.00
B) $3.00
C) $4.00
D) $5.00
7) On January 1, Hanley Corporation issued $2,000,000, 10-year, 8% bonds at 101. The
journal entry to record this transaction would include a:
A) credit to Bonds Payable $2,020,000
B) debit to Discount on Bonds Payable $20,000
C) debit to Cash $2,000,000
D) credit to Premium on Bonds Payable $20,000
8) Accumulated depreciation is normally associated with which asset on the Balance
Sheet?
A) Inventory
B) Accounts receivable
C) Land
D) Property, plant and equipment
9) Connar Company reports the following accounts and balances at year end:
What is the total amount of current assets at the end of the year?
A) $80,000
B) $108,000
C) $118,000
D) $128,000
10) There are three parties to a check. The person or company to whom the check is
paid is the:
A) maker
B) payee
C) draftee
D) promissee
11) On a statement of cash flows prepared with the indirect method, adjustments to
reconcile net income to net cash provided by operating activities do NOT include:
A) gain on Sale of Equipment
B) Patent Amortization Expense
C) Depletion Expense
D) changes in all the current assets
12) On January 1, 2014, Winston Company purchased 6% bonds with a face value of
$50,000 for par. Winston Company intends to hold the bonds until maturity. Interest is
payable semiannually on July 1 and January 1. The company’s fiscal year ends on
December 31. The journal entry on July 1, 2014 is:
A) debit Cash $3,000 and credit Interest Revenue $3,000
B) debit Cash $1,500 and credit Interest Revenue for $1,500
C) debit Cash $1,500 and credit Interest Receivable for $3,000
D) debit Cash $3,000 and credit Interest Receivable for $3,000
13) The trial balance is used to determine if:
A) total assets equal total liabilities
B) total debits of all the accounts equal total credits of all the accounts
C) total debits of the income statement accounts equal the total credits of the income
statement accounts
D) total debits of the balance sheet accounts equal the total credits of the balance sheet
accounts
14) A machine costing $40,000 was purchased on January 1, 2014. It has an estimated
useful life of 5 years and a salvage value of $5,000.
Required:
1> Calculate depreciation expense for 2014 and 2015 using (a) straight-line rate, and
(b) double-declining balance method.
2> Determine the book value of the machine at December 31, 2015 under the (a)
straight-line method and (b) double-declining balance method.
15) For good internal control:
A) the purchasing agent should also receive the goods
B) the purchasing agent should also approve the invoice for payment
C) the purchasing agent should not receive the goods or approve the invoice for
payment
D) the purchasing agent should not order the goods
16) Selling accounts receivable typically:
A) decreases total assets and increases revenues
B) decreases total assets and increases expenses
C) increases total assets and increases revenues
D) has no effect on total assets and decreases expenses
17) Marathon Corporation owns 500 shares of Mini Company’s common stock. Mini
Company has 100,000 shares of common stock outstanding. Marathon Corporation is
the ________ and Mini Company is the ________.
A) investee; investor
B) investor; investee
C) parent company; subsidiary company
D) controlling company; noncontrolling company
18) All of the following line items are found on the income statement EXCEPT for:
A) cost of goods sold
B) interest expense
C) operating expense
D) dividends declared
19) Which of the following items would NOT be included in the journal entry for a
transaction?
A) The names of the employees involved in the transaction
B) The date the transaction occurred
C) The titles of the accounts debited
D) The dollar amount of the transaction
20) Amortization expense is recorded for:
A) intangible assets with an indefinite life
B) intangible assets with a finite life
C) goodwill
D) franchise established with a contract with unlimited extensions
21) In a bank reconciliation, a bank service charge for printing checks is:
A) added to the bank balance
B) added to the book balance
C) deducted from the book balance
D) deducted from the bank balance
22) Lloyd Corporation has $2,400,000 of bonds outstanding with an unamortized
premium of $120,000 immediately following the last interest payment. At that time, the
bonds were converted into 250,000 shares of $10 par value common stock. As a result
of this conversion:
A) liabilities decreased by $2,280,000 and stockholders’ equity increased by $2,280,000
B) liabilities decreased by $2,400,000 and stockholders’ equity increased by $2,400,000
C) liabilities decreased by $2,520,000 and stockholders’ equity increased by $2,520,000
D) liabilities increased by $2,280,000 and stockholders’ equity increased by $2,280,000
23) At the beginning of the year, the balance in the Buildings account was $1,000,000.
At the end of the year, the balance in the Buildings account was $2,000,000. During the
year, a building was purchased for $1,500,000. This was the only purchase of buildings
during the year. What was the cost of the building or buildings sold during the year?
A) $0
B) $500,000
C) $1,000,000
D) $1,500,000
24) Equipment with a historical cost of $50,000 and Accumulated Depreciation of
$50,000 is scrapped. What journal entry is necessary?
A) debit Equipment for $50,000 and credit Accumulated Depreciation for $50,000
B) debit Cash for $50,000 and credit Equipment for $50,000
C) debit Equipment for $50,000 and credit Cash for $50,000
D) debit Accumulated Depreciation for $50,000 and credit Equipment for $50,000