The journal entry to record a payment on account will a. debit Accounts Payable and credit Retained Earnings. b. debit Cash and credit Expenses. c. debit Expenses and credit Cash. d. debit Accounts Payable and credit Cash.
> The sum of ending inventory and cost of goods sold is a. gross profit. b. cost of goods available (or cost of goods available for sale). c. net purchases. d. beginning inventory.
> The word market as used in “the lower of cost or market” generally means a. liquidation price. b. original cost. c. retail market price. d. current replacement cost.
> The income statement for Good Heart Foods shows gross profit of $149,000, operating expenses of $124,000, and cost of goods sold of $218,000. What is the amount of net sales revenue? a. $342,000 b. $491,000 c. $367,000 d. $273,000
> In a period of rising prices, a. cost of goods sold under LIFO will be less than under FIFO. b. LIFO inventory will be greater than FIFO inventory. c. gross profit under FIFO will be higher than under LIFO. d. net income under LIFO will be higher than
> If Leading Edge Frame Shop uses the LIFO method, cost of goods sold will be a. $27,450. b. $32,850. c. $32,700. d. $32,400. Units Unit Cost Total Cost $18.00 Jun 1 4 Beginning inventory Purchase 2,400 1,500 $43,200 27,450 $18.30 9. Sale (1,800)
> If Leading Edge Frame Shop uses the FIFO method, the cost of the ending inventory will be a. $32,400. b. $27,450. c. $32,700. d. $38,250.
> When does the cost of inventory become an expense? a. When inventory is delivered to a customer b. When inventory is purchased from the supplier c. When payment is made to the supplier d. When cash is collected from the customer
> What was Riverview’s gross profit for January? a. $ − 0 – b. $5,200 c. $7,300 d. $2,100
> Riverview Software began January with $3,700 of merchandise inventory. During January, Riverview made the following entries for its inventory transactions: How much was Riverview’s inventory at the end of January? a. $5,100 b. $ &aci
> A company sells on credit terms of 2/10, n/30 and has days’ sales in accounts receivable of 31 days. Its days’ sales outstanding is a. about right. b. too high. c. too low. d. not able to be evaluated from the data given.
> A company with net credit sales of $1,017,000, beginning net receivables of $90,000, and ending net receivables of $120,000 has days’ sales outstanding of a. 48 days. b. 44 days. c. 41 days. d. 38 days.
> Which of the following is included in the calculation of the quick (acid-test) ratio? a. Inventory and prepaid expenses b. Prepaid expenses and cash c. Inventory and short-term investments d. Cash and accounts receivable
> On August 1, 2016, Azore, Inc., sold equipment and accepted a six-month, 8%, $30,000 note receivable. Azore’s year-end is December 31. Write the journal entry on the maturity date (February 1, 2017).
> On August 1, 2016, Azore, Inc., sold equipment and accepted a six-month, 8%, $30,000 note receivable. Azore’s year-end is December 31. Which of the following accounts will Azore, Inc., credit in the journal entry at maturity on February 1, 2017, assumin
> On August 1, 2016, Azore, Inc., sold equipment and accepted a six-month, 8%, $30,000 note receivable. Azore’s year-end is December 31. How much interest does Azore, Inc., expect to collect on the maturity date (February 1, 2017)? a. $1,200 b. $2,400
> On August 1, 2016, Azore, Inc., sold equipment and accepted a six-month, 8%, $30,000 note receivable. Azore’s year-end is December 31. If Azore, Inc., fails to make an adjusting entry for the accrued interest on December 31, 2016, a. net income will be
> On August 1, 2016, Azore, Inc., sold equipment and accepted a six-month, 8%, $30,000 note receivable. Azore’s year-end is December 31. How much interest revenue should Azore accrue on December 31, 2016? a. $1,550 b. $2,400 c. $1,200 d. $1,000
> Refer to questions 5-42 and 5-43. The following year, Milo Company wrote off $2,000 of old receivables as uncollectible. What is the balance in the Allowance account now?
> Refer to Q5-42. The balance of Allowance for Doubtful Accounts, after adjustment, will be a. $1,000. b. $4,000. c. $3,000. d. $7,000.
> Milo Company uses the percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $100,000, and management estimates 4% will be uncollectible. Allowance for Doubtful Accounts prior to adjustment has a credit balanc
> Refer to Q5-40. The net receivables on the balance sheet as of December 31, 2016, are _______.
> Snead Company uses the aging method to adjust the allowance for uncollectible accounts at the end of the period. At December 31, 2016, the balance of accounts receivable is $210,000 and the allowance for uncollectible accounts has a credit balance of $3,
> Under the allowance method for uncollectible receivables, the entry to record uncollectible-account expense has what effect on the financial statements? a. Decreases net income and decreases assets b. Increases expenses and increases owners’ equity c.
> Refer to the USA National Bank data in Q5-37. At December 31, USA National Bank’s balance sheet should report a. investment in trading securities of $650,000. b. unrealized gain of $7,000. c. investment in trading securities of $657,000. d. dividend
> USA National Bank, the nationwide banking company, owns many types of investments. Assume that USA National Bank paid $650,000 for trading securities on December 5. Two weeks later, USA National Bank received a $40,000 cash dividend. At December 31, thes
> Jubilee’s Bakery is budgeting cash for 2017. The cash balance at December 31, 2016, was $6,000. Jubilee’s Bakery budgets 2017 cash receipts at $81,000. Estimated cash payments include $44,000 for inventory, $34,000 for operating expenses, and $15,000 to
> Before paying an invoice for goods received on account, the controller or treasurer should ensure that a. the company is paying for the goods it actually received. b. the company has not already paid this invoice. c. the company is paying for the good
> In a bank reconciliation, interest revenue earned on your bank balance is a. deducted from the book balance. b. added to the bank balance. c. added to the book balance. d. deducted from the bank balance.
> If a bank reconciliation included a deposit in transit of $790, the entry to record this reconciling item would include a. a credit to Prepaid insurance for $790. b. a debit to Cash for $790. c. a credit to Cash for $790. d. No entry is required.
> If a bookkeeper mistakenly recorded a $34 deposit as $43, the error would be shown on the bank reconciliation as a a. $9 addition to the book balance. b. $43 deduction from the book balance. c. $43 addition to the book balance. d. $9 deduction from t
> Salary Payable at the beginning of the month totals $28,000. During the month, salaries of $126,000 were accrued as expense. If ending Salary Payable is $12,000, what amount of cash did the company pay for salaries during the month? a. $166,000 b. $139
> Unadjusted net income equals $5,000. Calculate what net income will be after the following adjustments: 1. Salaries payable to employees, $700 2. Interest due on note payable at the bank, $130 3. Unearned revenue that has been earned, $750 4. Supplie
> Selected data for the Dublin Company follow: Based on these facts, what are Dublin’s current ratio and debt ratio? Current ratio………….Debt ratio a. 1.213&
> A major purpose of preparing closing entries is to a. zero out the liability accounts. b. adjust the asset accounts to their correct current balances. c. close out the Supplies account. d. update the Retained Earnings account.
> Which of the following accounts would not be included in the closing entries? a. Retained Earnings b. Depreciation Expense c. Service Revenue d. Accumulated Depreciation
> For 2016, Nestor Company had revenues in excess of expenses. Which statement describes Nestor’s closing entries at the end of 2016 (assume there is only one closing entry for both revenue and expenses)? a. Revenues will be debited, expenses will be cred
> What is the effect on the financial statements of recording depreciation on equipment? a. Net income is not affected, but assets and stockholders’ equity are decreased. b. Net income, assets, and stockholders’ equity are all decreased. c. Net income a
> The Unearned Revenue account of Berry Incorporated began 2016 with a normal balance of $3,000 and ended 2016 with a normal balance of $19,000. During 2016, the Unearned Revenue account was credited for $22,000 that Berry will earn later. Based on these f
> On April 1, 2016, Jiminee Insurance Company sold a one-year insurance policy covering the year ended March 31, 2017. Jiminee collected the full $1,800 on April 1, 2016. Jiminee made the following journal entry to record the receipt of cash in advance:
> An adjusting entry recorded June salary expense that will be paid in July. Which statement best describes the effect of this adjusting entry on the company’s accounting equation? a. Assets are not affected, liabilities are increased, and stockholders’ e
> What effect does the adjusting entry in question 3-47 have on Bamber’s net income for February? a. Decrease by $500 b. Increase by $500 c. Decrease by $250 d. Increase by $250
> Assume the same facts as in question 3-46. Bamber’s adjusting entry at the end of February should include a debit to Rent Expense in the amount of a. $0. b. $1,500. c. $500. d. $250. From 3-46: On January 1 of the current year, B
> On January 1 of the current year, Bamber Company paid $1,500 rent to cover six months (January–June). Bamber recorded this transaction as follows: Bamber adjusts the accounts at the end of each month. Based on these facts, the adjusti
> Using the accrual basis, in which month should revenue be recorded? a. In the month that goods are shipped to the customer b. In the month that the invoice is mailed to the customer c. In the month that goods are ordered by the customer d. In the mon
> Kelsey Allerton began a music business in July 2016. Allerton prepares monthly financial statements and uses the accrual basis of accounting. The following transactions are Allerton Company’s only activities during July t
> Kelsey Allerton began a music business in July 2016. Allerton prepares monthly financial statements and uses the accrual basis of accounting. The following transactions are Allerton Company’s only activities during July t
> Kelsey Allerton began a music business in July 2016. Allerton prepares monthly financial statements and uses the accrual basis of accounting. The following transactions are Allerton Company’s only activities during July t
> Which statement is false? a. A trial balance can verify the equality of debits and credits. b. A trial balance lists all the accounts with their current balances. c. A trial balance can be taken at any time. d. A trial balance is the same as a balanc
> If the credit to record the payment of an account payable is not posted, a. expenses will be understated. b. cash will be understated. c. liabilities will be understated. d. cash will be overstated.
> If the credit to record the purchase of supplies on account is not posted, a. liabilities will be understated. b. assets will be understated. c. stockholders’ equity will be understated. d. expenses will be overstated.
> The journal entry to record the purchase of supplies on account a. debits Supplies Expense and credits Supplies. b. credits Supplies and debits Cash. c. credits Supplies and debits Accounts Payable. d. debits Supplies and credits Accounts Payable.
> The journal entry to record the receipt of land and a building and issuance of common stock a. debits Land and Building and credits Common Stock. b. debits Land, Building, and Common Stock. c. debits Common Stock and credits Land and Building. d. deb
> Which of the following is not an asset account? a. Salary Expense b. Common Stock c. Service Revenue d. None of the listed accounts is an asset.
> Where do we first record a transaction? a. Ledger b. Account c. Journal d. Trial balance
> Which of the following transactions will increase an asset and increase stockholders’ equity? a. Performing a service on account for a customer b. Borrowing money from a bank c. Collecting cash from a customer on an account receivable d. Purchasing s
> Which of the following transactions will increase an asset and increase a liability? a. Payment of an account payable b. Purchasing office equipment for cash c. Issuing stock d. Buying equipment on account
> What is the effect on total assets and stockholders’ equity of paying the telephone bill as soon as it is received each month? Total assets…………Stockholders’ equity a. Decrease………………………..Decrease b. No effect………………………..Decrease c. Decrease………………………..No ef
> Purchasing a building for $80,000 by paying cash of $25,000 and signing a note payable for $55,000 will a. decrease total assets and increase total liabilities by $25,000. b. increase both total assets and total liabilities by $55,000. c. increase bot
> Purchasing computer equipment for cash will a. decrease both total liabilities and stockholders’ equity. b. increase both total assets and total liabilities. c. have no effect on total assets, total liabilities, or stockholders’ equity. d. decrease b
> Receiving cash from a customer on account will a. decrease liabilities. b. have no effect on total assets. c. increase stockholders’ equity. d. increase total assets.
> NextTalk, a new company, completed these transactions. 1. Stockholders invested $51,000 cash and inventory with a fair value of $30,000. 2. Sales on account, $22,000. What will NextTalk’s total assets equal? a. $51,000 b. $103,000 c. $81,000 d. $73
> A business’s receipt of a $115,000 building, with a $75,000 mortgage payable, and issuance of $40,000 of common stock will a. increase assets by $40,000. b. increase stockholders’ equity by $115,000. c. increase stockholders’ equity by $40,000. d. de
> Smith Company had the following on the dates indicated: Smith had no stock transactions in 2016; thus, the change in stockholders’ equity for 2016 was due to net income and dividends. If dividends were $70,000, how much was Smith&acir
> The stockholders’ equity of Voronsky Company at the beginning and end of 2016 totaled $119,000 and $138,000, respectively. Assets at the beginning of 2016 were $144,000. If the liabilities of Voronsky Company increased by $74,000 in 2016, how much were t
> Cash paid to purchase a building appears on the statement of cash flows among the a. stockholders’ equity. b. operating activities. c. financing activities. d. investing activities.
> Net income appears on which financial statement(s)? a. Balance sheet b. Statement of retained earnings c. Income statement d. Both b and c
> Thompson Instruments had retained earnings of $340,000 at December 31, 2015. Net income for 2016 totaled $185,000, and dividends declared for 2016 were $85,000. How much retained earnings should Thompson report at December 31, 2016? a. $425,000 b. $340
> Dobson Corporation began the year with cash of $143,000 and land that cost $41,000. During the year, Dobson earned service revenue of $230,000 and had the following expenses: salaries, $185,000; rent, $83,000; and utilities, $26,000. At year-end, Dobson’
> Another name for the balance sheet is the a. statement of financial position. b. statement of earnings. c. statement of operations. d. statement of profit and loss.
> The financial statement that reports revenues and expenses is called the a. income statement. b. balance sheet. c. statement of retained earnings. d. statement of cash flows.
> Revenues are a. increases in paid-in capital resulting from the owners investing in the business. b. increases in retained earnings resulting from selling products or performing services. c. decreases in liabilities resulting from paying off loans. d
> All of the following are current assets except a. accounts payable. b. inventory. c. accounts receivable. d. prepaid expenses.
> The amount a company expects to collect from customers appears on the a. balance sheet in the stockholders’ equity section. b. income statement in the expenses section. c. balance sheet in the current assets section. d. statement of cash flows.
> During February, assets increased by $87,000 and liabilities increased by $31,000. Stockholders’ equity must have a. increased by $56,000. b. decreased by $56,000. c. increased by $118,000. d. decreased by $118,000.
> Assets are usually reported at their a. current market value. b. historical cost. c. appraised value. d. none of the above (fill in the blank) .
> Which type of business organization provides the least amount of protection for bankers and other creditors of the company? a. Proprietorship b. Corporation c. Partnership d. Both a and c
> The primary objective of financial reporting is to provide information a. on the cash flows of the company. b. to the federal government. c. useful for making investment and credit decisions. d. about the profitability of the enterprise.
> Performing a service on account will a. increase total assets. b. increase stockholders’ equity. c. increase total liabilities. d. accomplish both a and b.
> Purchasing a laptop computer on account will a. increase total assets. b. have no effect on stockholders’ equity. c. increase total liabilities. d. All of the listed choices are correct.
> An investment of cash by stockholders into the business will a. increase stockholders’ equity. b. decrease total liabilities. c. have no effect on total assets. d. decrease total assets.
> Accounting definitions are precise, and you must understand the vocabulary to properly use accounting. Sharpen your understanding of key terms by answering the following questions: 1. How do the assets and owners’ equity of Nike, Inc., differ from each o
> Dynamite Enterprises, Inc. (Dynamite), a corporation doing business in Florida, maintained a checking account at Eagle National Bank of Miami (Bank). Dynamite drew a check on this account, payable to one of its business associates. Before the check had b
> David Siegel maintained a checking account with the New England Merchants National Bank (Bank). On September 14, Siegel drew and delivered a $20,000 check payable to Peter Peters. The check was dated November 14. Peters immediately deposited the check in
> Charles Ragusa & Son (Ragusa), a partnership consisting of Charles and Michael Ragusa, issued a check in the amount of $5,000, payable to Southern Masonry, Inc. (Southern). The check was drawn on Community State Bank (Bank). Several days later, Southern
> Robert K. Powers and Lee M. Solomon were among other limited partners of the Cosmopolitan Chinook Hotel (Cosmopolitan), a limited partnership. Cosmopolitan entered into a contract to lease and purchase neon signs from Dwinell’s Central Neon (Dwinell’s).
> Raugust-Mathwig, Inc., a corporation, was the sole general partner of a limited partnership. Calvin Raugust was the major shareholder of this corporation. The 3 limited partners were Cal-Lee Trust; W.J. Mathwig, Inc.; and W.J. Mathwig, Inc., and Associat
> Virginia Partners, Ltd. (Virginia Partners), a limited partnership organized under the laws of Florida, conducted business in Kentucky but failed to register as a foreign limited partnership, as required by Kentucky law. Robert Day was tortiously injured
> John Gilroy, an established commercial photographer in Kalamazoo, Michigan, had a small contractual clientele of schools for which he provided student portrait photographs. Robert Conway joined Gilroy’s established business, and they formed a partnership
> Thomas McGrath was a partner in the law firm Tarbenson, Thatcher, McGrath, Treadwell & Schoonmaker. One day, at approximately 4:30 p.m., McGrath went to a restaurant–cocktail establishment in Kirkland, Washington. From that time until about 11:00 p.m., h
> Jose Pena and Joseph Antenucci were medical doctors who were partners in a medical practice. Both doctors treated Elaine Zuckerman during her pregnancy. Her son, Daniel Zuckerman, was born with severe physical problems. Elaine, as Daniel’s mother and na
> James Schuster was a sole proprietor doing business as (d.b.a.) “Diversity Heating and Plumbing” (Diversity Heating). Diversity Heating was in the business of selling, installing, and servicing heating and plumbing systems. George Vernon and others (Vern
> Larry J. Goodwin and his wife maintained a checking and savings account at City National Bank of Fort Smith (Bank). Bank also had a customer named Larry K. Goodwin. Two loans of Larry K. Goodwin were in default. Bank mistakenly took money from Larry J. G
> PGA Tour, Inc., is a nonprofit entity that sponsors professional golf tournaments. The PGA has adopted a set of rules that apply to its golf tour. One rule requires golfers to walk the golf course during PGA-sponsored tournaments. Casey Martin is a talen
> Dianne Rawlinson, 22 years old, was a college graduate whose major course of study was correctional psychology. After graduation, she applied for a position as a correctional counselor (prison guard) with the Alabama Board of Corrections. Her application
> Johnson Controls, Inc. (Johnson Controls) manufactures batteries. Lead is the primary ingredient in the manufacturing process. Exposure to lead entails health risks, including risk of harm to a fetus carried by a female employee. To protect unborn childr
> Irma Rivera is a Hispanic woman who was born in Puerto Rico. She began working for Baccarat, Inc. (Baccarat), a distributor of fine crystal, as a sales representative in its retail store in Manhattan. Eight years later, Rivera was the top sales represent
> Teresa Harris worked as a manager at Forklift Systems Incorporated (Forklift), an equipment rental company, for 2½ years. Charles Hardy was Forklift’s president. Throughout Harris’s time at Forklift, Hardy often insulted her because of her sex and made h
> The Pennsylvania State Police (PSP) hired Nancy Drew Suders as a police communications operator for the McConnellsburg barracks. Suders’s supervisors were Sergeant Eric D. Easton, station commander at the McConnellsburg barracks; Patrol Corporal William
> The American Ship Building Company (American) operated a shipyard in Chicago, Illinois, where it repaired Great Lakes ships during the winter months, when freezing on the Great Lakes rendered shipping impossible. The workers at the shipyard were represen
> The union (Union) member-employees of the Erie Resistor Company (Company) struck Company over the terms of a new collective bargaining agreement that was being negotiated between Company and Union. Company continued production operations during the strik
