Reference no: EM13555797

1.A company raised $50,000 in cash by taking a one-year loan of $10,000 and a 5-year loan of $40,000. Which of the following is the correct journal entry to record this transaction?

Debit short-term debt $40,000; debit retained earnings $10,000; credit cash $50,000
Debit short-term debt $50,000; credit cash $50,000
Debit cash $50,000; credit long-term debt $50,000
Debit cash $50,000; credit short-term debt $10,000; credit long-term debt $40,000

2.Which one of the following statements describes the rules about posting transactions into T-accounts in the ledger?

For assets, debits are entered on the left; for liabilities, credits are entered on the left
For assets, credits are entered on the left; for liabilities, debits are entered on the left
Debits on the left; credits on the right
Credits on the left; debits on the right

3.Baxtra, Inc. pays $20,000 in cash as interest to its lenders during 2005. According to U.S. GAAP, in which section of the statement of cash flows would this payment be included?

The operating section
The financing section
The investing section
Depends on whether cash flow statement is direct or indirect method.

4.Taylor Company had a salaries payable balance of $18,000 on December 31, 2004. During 2005, it paid $50,000 in cash as salaries, and recorded a salary expense of $50,000. Its December 31, 2005 salaries payable balance is:

$50,000
$18,000
$100,000
Cannot be determined from the information provided

5.On April 30, 2005, Zono Electronics, Inc. made a payment of $3,500 to Imperial Distributors, a supplier. Choose the statement that best describes the recording of this financial transaction by Imperial Distributors.
Debit cash $3,500; credit accounts payable $3,500
Debit accounts receivable $3,500; credit cash $3,500
Debit accounts payable $3,500; credit cash $3,500
Debit cash $3,500; credit accounts receivable $3,500

6.Sardi Company estimates its 2005 tax expense to be $80,000. It makes a cash payment of $20,000 to the tax authorities on December 31, 2005. How should this transaction be recorded by Sardi?

Debit tax expense $80,000; credit cash $60,000; credit taxes payable $20,000
Debit tax expense $80,000; credit cash $20,000; credit taxes payable $60,000
Debit tax expense $80,000; credit cash $20,000
Debit tax expense $80,000; credit cash $20,000; credit accounts payable $60,000

7.On June 1, 2005, Planet Music has accounts payable of $45,000. During the month, debits of $3,000 and credits of $11,000 were made to the account. At the end of June 2005, what was the accounts payable balance?
A credit balance of $53,000
A debit balance of $42,000
A credit balance of $56,000
A debit balance of $53,000

8.Barnaby & Sons receives a large shipment of goods from its supplier. It pays $58,000 at the time of delivery and promises to pay the remaining $42,000 within the next two months. What is appropriate journal entry for this transaction?
Debit cash $42,000; debit inventory $16,000; credit accounts payable $58,000;
Debit inventory $100,000; credit cash $58,000; credit accounts payable $42,000
Debit accounts payable $58,000; credit cash $42,000; credit inventory $16,000
Debit accounts payable $58,000; debit cash $42,000; credit inventory $100,000

9.Annie's Fitness sells a set of free weights to a customer for $1,000. The customer pays $600 in cash and puts the rest on her store credit account. Which one of the following statements describes the most appropriate accounting for the transaction?
Debit cash $600; debit accounts receivable $400; credit cost of good sold $1000
Debit cash $600; debit accounts receivable $400; credit revenues $1,000
Debit revenues $1,000; credit cash $600; credit accounts receivable $400
Debit cash $600; debit accounts receivable $400; credit inventory $1,000