Journal entry to record the issuance of bonds

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Reference no: EM1312661

Multiple choice questions in Accounts fundamentals

1.The matching rule relates to credit losses by stating that bad debt expense should be recorded
a.In the same period as allowed for tax purposes.
b.for an exact amount.
c.in the period of the sale.
d.In the period of the loss.

2. Long-term creditors are usually MOST interested in evaluating
a.solvency.
b.liquidity.
c.marketability.
d.profitability.

3. The journal entry to record the issuance of bonds at a premium will include a
a.debit to Cash for the face amount of the bonds.
b.debit to Cash for the face amount of the bonds plus the amount of the premium.
c.credit to Cash for the face amount of the bonds.
d.debit to Cash for the face amount of the bonds minus the amount of the premium.

4. Declaring a cash dividend will
a.decrease common stock.
b.decrease retained earnings.
c.increase common stock.
d.increase retained earnings.

5. Under the accrual basis of accounting
a.the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles.
b.cash must be received before revenue is recognized.
c.revenues and expenses are recognized in the period they occur rather than in the period in which cash is paid or received.
d.net income is calculated by matching cash outflows against cash inflows.

6. A debit is not the normal balance for which account listed below?
a.Dividends
b.Accumulated Depreciation
c.Prepaid Expense
d.Sales Discount

7. A gain or loss on disposal of a plant asset is determined by comparing the
a.replacement cost of the asset with the asset's original cost.
b.book value of the asset with the asset's original cost.
c.original cost of the asset with the proceeds received from its sale.
d. value of the asset with the proceeds received from its sale.

8. A successful discount retail store such as Walmart would probably have
a.low volume.
b.a low inventory turnover.
c.a high inventory turnover.
d.zero profit margin.

9. In periods of rising prices, which of the following inventory methods generally results in the lowest net income figure?
a.Average cost
b.Need more information to answer
c.LIFO method
d.FIFO method

Reference no: EM1312661

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