Which of the following transactions would most likely NOT be recorded in an auxiliary
petty cash record?
A) Purchase of first aid supplies
B) Purchase of postage stamps
C) Payment on a $400 rent bill
D) Payment of gas for the company vehicle
Returned merchandise under the periodic inventory method. This will be recorded with:
A) a debit to Accounts Payable and a credit to Purchases Returns and Allowances.
B) a debit to Merchandise Inventory and a credit to Cash.
C) a credit to Accounts Payable and a debit to Merchandise Inventory.
D) a debit to Accounts Payable and a credit to Merchandise Inventory.
Sonny’s Service Bureau is able to collect an amount previously written off last year
under the direct write-off method. The journal entry will:
A) decrease Bad Debts Expense.
B) increase Bad Debts Recovered.
C) decrease Accounts Receivable.
D) decrease Cash.
An account never used in an adjusting entry is:
A) Consulting Fees-Revenue.
B) Interest Payable.
C) Equipment.
D) Accumulated Depreciation – Equipment.
The payroll register includes sections for recording:
A) gross pay, deductions, and net pay.
B) assets, liabilities, equity, revenues, and expenses.
C) employee home address and phone number.
D) accrued expenses, unearned revenues, and net pay.
From the following information of Carlson’s Restoration Corporation, compute:
a. ________ Asset turnover for Year 2.
b. ________ Inventory turnover for Year 2.
c. ________ Accounts receivable turnover for Year 2.
Year 2 Year 1
Net Sales (on credit) $150,000 $120,000
Cost of Goods Sold 90,000 84,000
Net Income 30,000 24,000
Ending Acct. Receivable 24,000 21,000
Ending Inventory 16,500 13,500
Total Assets 120,000 135,000
If the adjustment for Supplies used during the period was NOT made:
A) expenses would be too low.
B) assets would be too low.
C) expenses would be too high.
D) revenue would be too low.
The current ratio determines the ability of a company to:
A) pay off all payables.
B) pay off current payables.
C) manage its ability to earn profit.
D) use its equity.
Which of the following is NOT a financial statement?
A) Balance sheet
B) Income statement
C) Statement of owner’s equity
D) Trial balance
On July 1, Carly Corporation issued 10-year 9%, $600,000 bonds for $640,771, a price
to yield 8% market rate. Interest dates are June 30 and December 31. Record the
following journal entries:
a. Issuance of the bonds.
b. The semiannual interest payment and amortization of the premium on December 31
using the interest method.
The calculation of Net Purchases does NOT include:
A) Purchases Returns and Allowances.
B) Purchases Discounts.
C) Purchases.
D) Merchandise Inventory.
The bank deducted another company’s check from our account. This would be included
on the bank reconciliation as a(n):
A) addition to the balance per books.
B) subtraction from the balance per books.
C) addition to the balance per bank.
D) subtraction from the balance per bank.
The debit amount to Payroll Tax Expense represents:
A) the employer’s portion of the payroll taxes.
B) the employees’ portion of the payroll taxes.
C) the employer’s and employees’ portion of the payroll taxes.
D) None of the above is correct.
Common Stock Subscribed is:
A) shown as an equity account below Issued Common Stock.
B) a contra-asset account.
C) a receivables account.
D) shown on the income statement as a revenue.
Which of the following would NOT typically be an employee payroll withholding?
A) Unemployment taxes
B) Medical Insurance
C) State income tax
D) Social Security
The cosmetic department experienced the following revenue and expenses during
December:
The cosmetic department’s contribution margin is:
A) $57,000.
B) $44,000.
C) $53,000.
D) $47,000.
On October 1, Indiana Company issued $10,000, 8%, 5-year bonds at 98. What is the
adjusting entry on December 31 using the straight-line method?
A)
B)
C)
D)
Discuss and describe the major differences among the following common stock values:
a. Par value
b. Stated value
c. Redemption value
d. Market value
e. Book value
A monthly depositor:
A) is an employer who only has to deposit Form 941 taxes on the 15th day of the month
(or next banking day).
B) is determined by the amount of Form 941 taxes that they paid in the
look-back-period.
C) will remain a monthly depositor, once classified, for one year at which time they will
be reevaluated.
D) All of the above answers are correct.
The current balance of Allowance for Doubtful Accounts is considered when
calculating the current period’s Bad Debts Expense under the following approach:
A) Balance sheet approach
B) Income statement approach
C) Direct write-off method
D) All of these answers are correct.
Rick’s Internet Corporation’s balance in Retained Earnings is $50,000. The board of
directors directs that $25,000 be appropriated for future business expansion. This will
cause total retained earnings to:
A) remain at $50,000.
B) increase by $25,000.
C) decrease by $25,000.
D) increase or decrease $25,000, as determined by the board.
What is the rate of return on common stockholders’ equity if net income before taxes is
$21,200, sales are $200,000, and common stockholders’ equity is $76,000?
A) 22.7%
B) 26.4%
C) 27.9%
D) None of these answers is correct.
A method of dividing net income or loss between the partners is known as a(n):
A) salary allowance.
B) interest allowance.
C) payroll allowance.
D) Both A and B are correct.
A plant asset is fully depreciated when the book value is:
A) greater than the salvage value.
B) greater than the market value.
C) equal to the salvage value.
D) equal to the market value.
Dissolution of a partnership can occur under the limited life characteristic if a partner:
A) dies.
B) becomes incapacitated.
C) goes bankrupt.
D) All of the above are correct.
If management wishes to determine the average degree of delinquency of the charge
customers, they could use the:
A) rate of return on total assets.
B) rate of return on common stockholders’ equity.
C) accounts receivable turnover.
D) quick (acid test) ratio.
Which of the following transactions would cause one asset to increase and another asset
to decrease?
A) The owner invested cash in the business.
B) The business paid a creditor.
C) The business incurred an expense on credit.
D) The business bought supplies for cash.
The journal entry to adjust the records from Nothin’ But Organization bank
reconciliation would include:
A) the total of outstanding checks.
B) deposits in transit.
C) notification from the bank of a customer’s NSF check.
D) correction of any errors or omissions on the bank statement.
The general journal entry to record the purchase of an asset for cash would include:
A) a debit to Accounts Receivable and a credit to Fees Earned.
B) a debit to Equipment and a credit to Accounts Payable.
C) a debit to Accounts Payable and a credit to Equipment.
D) a debit to Supplies and a credit to Cash.
On January 1, Preston Corporation issued 6%, 20-year bonds at 106. The face value is
$400,000 and interest is paid semiannually. Interest is paid January 1 and July 1.
Prepare the journal entries to record:
a. Issuance of the bonds.
b. First semiannual interest payment and amortization of the premium using the
straight-line method.
Compute the cost of ending inventory using the retail method when goods available for
sale at cost are $15,000, retail is $25,000, and sales at retail equal $20,000. What will
the cost ratio be? What will the cost of ending inventory be?
A) Cost ratio 60%; ending inventory $5,000
B) Cost ratio 75%; ending inventory $10,000
C) Cost ratio 70%; ending inventory $12,000
D) Cost ratio 60%; ending inventory $3,000
When using the direct method to determine the net cash flows from operating activities,
major categories would include:
A) Cash received from bank.
B) Cash paid for salaries.
C) Cash paid for dividends.
D) Cash paid for equipment.
Screws, electricity for manufacturing, and production supervisor salary are examples
of:
A) raw materials.
B) direct labor.
C) manufacturing overhead.
D) None of the above