Reference no: EM13970387

If a firm had sales of $50,000 during a period and sales returns and allowances of $4,000, its net sales were
Select one:
a. $4,000.
b. $46,000.
c. $54,000.
d. $50,000.

On December 31, prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $200. An age analysis of the accounts receivable produces an estimate of $1,000 of probable losses from uncollectible accounts. The adjusting entry needed to record the estimated losses from uncollectible accounts is made for
Select one:
a. $1,000.
b. $1,200.
c. $800.
d. $200.

Which of the following budgets allow for adjustments in activity levels?
Select one:
a. Continuous Budget
b. Flexible Budget
c. Static Budget
d. Zero-Based Budget

The adjusting entry to record accrued interest on a note payable requires
Select one:
a. a debit to Interest Payable and a credit to Interest Expense.
b. a debit to Interest Expense and a credit to Interest Payable.
c. a debit to Interest Expense and a credit to Cash.
d. a debit to Interest Income and a credit to Notes Payable.

When a company issues a promissory note, the accountant records an entry that includes a credit to Note Payable for
Select one:
a. the face value less the interest that will accrue.
b. the maturity value of the note.
c. the face value of the note plus the interest that will accrue.
d. the face value of the note.

The balance sheet shows
Select one:
a. the amount of net income or loss.
b. all revenues and expenses.
c. the results of business operations.
d. the financial position of a business at a given time.

The first budget customarily prepared as part of an entity's master budget is the:
Select one:
a. sales budget
b. cash budget
c. production budget
d. direct materials purchases

Examples of assets are
Select one:
a. cash and rent expense
b. investments by the owner and revenue
c. cash and accounts receivable.
d. cash and revenue.

A net loss results
Select one:
a. when expenses are greater than revenue.
b. when revenue is greater than expenses
c. when expenses are greater than assets.
d. when assets are greater than liabilities.

The income statement shows
Select one:
a. the total value of the business.
b. the financial position of a business on a specific date.
c. the results of operations for a period of time.
d. revenue and stockholders' equity.

If liabilities are $4,000 and stockholders' equity is $15,000, assets are
Select one:
a. $15,000.
b. $19,000
c. $4,000
d. $9,000.

Credits are used to record
Select one:
a. decreases in assets, liabilities, and stockholders' equity.
b. decreases in liabilities and increases in assets and stockholders' equity.
c. increases in liabilities and stockholders' equity.
d. decreases in assets and stockholders' equity and increases in liabilities.

Debits are used to record increases in
Select one:
a. assets and revenue.
b. assets and liabilities.
c. assets and expenses.
d. revenue and stockholders' equity.

Henry and Thomas share gains and losses in the ratio of 2:1. After selling all assets for cash and paying all liabilities, the cash account has $12,000 in it. The capital accounts were as follows:

Henry $10,000; Thomas $2,000. How much of the $12,000 cash would Henry receive?

@ Henry receives cash to equal her capital balance

Select one:
a. $12,000
b. $2,000
c. $10,000
d. $8,000

The journal entry to record the payment of the current month utility bill would include
Select one:
a. a debit to Utilities Expense and a credit to Accounts Payable.
b. a debit to stockholders' equity and a credit to Cash.
c. a debit to Utilities Expense and a credit to Stock.
d. a debit to Utilities Expense and a credit to Cash.

The journal entry to record the payment of dividends for the month is:
Select one:
a. a debit to retained earnings and a credit to Cash.
b. a debit to cash and a credit to dividends.
c. a debit to dividends and a credit to common stock.
d. a debit to Common Stock and a credit to Cash.

If the prepaid expenses are not adjusted, assets on the balance sheet
Select one:
a. will be understated.
b. will be overstated.
c. may be either overstated or understated.
d. will not be affected.

On May 1, 20XX, a firm purchased a 1-year insurance policy for $1,800 and paid the full premium in advance. The insurance expense associated with this policy for 20XX is
Select one:
a. $1,050.
b. $1,800.
c. $600.
d. $1,200.

The entry to record a purchase of merchandise on credit using a perpetual inventory system includes
Select one:
a. a debit to Merchandise Inventory and a credit to Accounts Payable.
b. a credit to Merchandise Inventory and a debit to Accounts Payable.
c. a debit to Accounts Payable and a credit to Purchases.
d. a debit to Purchases (COGS) and a credit to Accounts Payable.

Which of the following is allowed under generally accepted accounting principles?
Select one:
a. The Equipment ledger account shows a balance of $55,000. This amount represents the original cost of $75,000 less the accumulated depreciation of $20,000.
b. An owner lists the full cost of his or her personal automobile, which is occasionally used for business purposes, on the company's balance sheet.
c. A company was offered $60,000 for land that it had purchased for $15,000. The company did not sell the land but increased the Land account to $60,000.
d. A large company recorded the $20 cost of a tool as an expense, although the item is expected to be used for 3 years.

An accountant who records revenue when a credit sale is made rather than waiting for the receipt of cash from the customer is
Select one:
a. following the consistency principle.
b. following the conservatism convention.
c. following the accrual principle.
d. violating generally accepted accounting principles.

Depreciating equipment over its useful life is an example of
Select one:
a. following the objectivity assumption.
b. applying the realization principle.
c. applying the matching principle.
d. applying the conservatism convention.

The method of depreciation that results in the same amount of depreciation expense each year is the
Select one:
a. declining-balance method.
b. straight-line method.
c. sum-of-the-years'-digits method.
d. units-of-output method.

The book value of an asset is
Select one:
a. the acquisition cost shown in the asset account less the estimated salvage value.
b. the portion of the asset's cost that has not yet been charged to expense.
c. the market value of the asset.
d. the replacement cost of the asset.

An asset that cost $14,000 was sold for $9,000 cash. Accumulated depreciation on the asset was $7,000. The entry to record this transaction includes the recognition of
Select one:
a. a gain of $2,000.
b. a loss of $2,000.
c. neither a gain nor a loss.
d. a loss of $5,000.

A company receives a note payable for $3,500 at 9% for 45 days. How much interest (to the nearest cent) will the customer owe using a 365-day year?
Select one:
a. $354.38
b. $ 3538.84
c. $ 38.84
d. $315.00

Utilize the _____________ principle to estimate warranty liabilities.
Select one:
a. relevance
b. objectivity
c. matching
d. entity

Which of the following would NOT be considered a contingent liability?
Select one:
a. Pending legal action
b. Cosigning a loan
c. Potential fines from the EPA
d. Mortgage payable

If a $6,000, 10 percent, 10-year bond was issued at 104 on October 1, 2011, how much interest will accrue on December 31 if interest payments are made annually?
Select one:
a. None
b. $144
c. $104
d. $500

If the market rate of interest is greater than the bond's stated rate of interest, the bond will be issued at
Select one:
a. maturity value.
b. par.
c. a discount.
d. a premium.

The number of shares of stock that a corporation is given the right to sell is called
Select one:
a. outstanding stock.
b. issued stock.
c. capital stock.
d. authorized stock.

Which of the following is NOT an advantage of a corporation?
Select one:
a. Unlimited liability
b. Ease of transfer ownership
c. Continuous life
d. Ease of raising capital

Earnings that a stockholder receives from a corporation is an example of which stockholder right?
Select one:
a. Dividends
b. Preemption
c. Liquidation
d. Vote

Cherry Corporation's outstanding stock is 100 shares of $100 par, 11% cumulative preferred stock and 2,000 shares of $12 par common stock. Cherry paid $1,600 in cash dividends during the year. No dividends are in arrears. Common stockholders received
Select one:
a. $2,500
b. $ 0.
c. $ 500.
d. $1,100.

A stock dividend affects the debiting and crediting of the following accounts
Select one:
a. credit retained earnings; debit common stock; credit paid-in capital in excess par.
b. credit retained earnings, credit common stock and credit paid-in capital in excess of par.
c. debit retained earnings, debit common stock; credit paid-in capital in excess of par.
d. debit retained earnings; credit common stock, credit paid-in capital in excess of par.

The statement of cash flows reports the sources and uses of cash from all of the following EXCEPT
Select one:
a. operating activities.
b. investing activities.
c. managerial activities.
d. financing activities.

The accuracy of the statement of cash flows can be verified by computing the change in the balance of the
Select one:
a. revenue accounts.
b. cash and cash equivalent accounts.
c. equity account.
d. asset and liability accounts.

The purpose of the statement of cash flows is to show
Select one:
a. the expenses that were paid.
b. how cash was received and used during the period.
c. the revenue earned.
d. the profits that were earned.

Which of the following is NOT a part of operating activities?
Select one:
a. Paying payables
b. Earnings revenue
c. Paying utilities
d. Paying dividends

Which of the following is NOT a part of investing activities?
Select one:
a. Collecting on a loan receivable
b. Buying a building
c. Borrowing money
d. Selling off equipment

Which of the following activities is computed differently using the two methods of formatting a statement of cash flows?
Select one:
a. Financing activities
b. Both operating activities and investing activities
c. Operating activities
d. Investing activities

The debt ratio is the relationship between
Select one:
a. current assets and current liabilities.
b. total assets and total liabilities.
c. current assets and total liabilities.
d. total assets and current liabilities.

What is the purpose of the Statement of Cost of Goods Manufactured?
Select one:
a. To determine the amounts transferred to finished goods
b. To determine the ending materials inventory
c. All of these are true
d. To determine the ending work in process inventory

The cost of a manufactured product generally consists of which of the following costs?
Select one:
a. Direct materials cost and factory overhead cost
b. Direct materials cost and direct labor cost
c. Direct labor cost and factory overhead cost
d. Direct labor cost, direct materials cost, and factory overhead cost

Lee and stills are partners who share income in the ratio of 2:1 and who have capital balances of $65,000 and $35,000 respectively. If Mor, with the consent of Stills, acquired ½ of Lee's interest for $40,000 for what amount would Mor's capital account be credited?
Select one:
a. $50,000
b. $40,000
c. $72,500
d. $32,500

The entry to record a return by a credit customer of defective merchandise on which no sales tax was charged includes
Select one:
a. a debit to Sales Returns and Allowances and a credit to Accounts Receivable.
b. a debit to Sales and a credit to Accounts Receivable.
c. a debit to Accounts Receivable and a credit to Sales Returns and Allowances.
d. a debit to Sales and a credit to Sales Returns and Allowances.

The entry to record a purchase of merchandise on credit using a periodic inventory system includes
Select one:
a. a debit to Merchandise Inventory and a credit to Accounts Payable
b. a debit to Accounts Payable and a credit to Purchases
c. a debit to Purchases (COGS) and a credit to Accounts Payable
d. a credit to Merchandise Inventory and a debit to Accounts Payable

As a part of the initial investment, a partner contributes office equipment that had a cost of $20,000 and accumulated depreciation of $12,500. If the partners agree on a valuation of $9,000 for the equipment, what amount should be debited to the office equipment account?
Select one:
a. $7,500
b. $9,000
c. $20,000
d. $12,500

When a company issues a promissory note, the accountant records an entry that includes a credit to Note Payable for
Select one:
a. the maturity value of the note
b. the face value less the interest that will accrue
c. the face value of the note
d. the face value of the note plus the interest that will accrue

A firm purchases an asset for $50,000 and estimates that it will have a useful life of five years and a salvage value of $5,000. Under the double-declining-balance method, the depreciation expense for the first year of the asset's useful life is
Select one:
a. $9,000.
b. $18,000.
c. $20,000.
d. $10,000.