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38 Cards in this Set
- Front
- Back
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1. Which of the following journal entries is correct when a business entity purchases land costing $30,000 by signing a one-year note payable?
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Land 30,000
Notes Payable 30,000 AEID LOERIC |
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2. Which of the following journal entries is correct when a business entity purchases a building by paying cash and signing a note payable?
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Building
Cash Notes Payable |
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Which of the following journal entries is correct when a business entity issues stock to stockholders in exchange for cash?
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Cash
Contributed Capital |
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4. Which of the following journal entries is prepared when a customer pays cash subsequent to delivery of goods or services?
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Accounts payable
Cash |
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5. Which of the following journal entries is prepared when a customer pays cash subsequent to delivery of goods or services?
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Cash
Accounts Receivable |
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6. Which of the following journal entries is prepared when a customer pays cash prior to delivery of the goods or services?
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Cash
Unearned Revenue |
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7. Which of the following is not a proper application of the revenue principle?
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Recording interest revenue when cash is collected rather than when earned.
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8. Which of the following best describes the matching principle?
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It requires expenses to be recorded when incurred to generate revenues.
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9. Which of the following journal entries correctly records the receipt of a utility bill, which will be paid for in later weeks?
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Utilities
Accounts payable |
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Which of the following statements does not properly describe the current ratio?
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It measures a firm’s ability to pay its long-term debts as they mature.
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11. Which of the following journal entries correctly records a transaction where services were provided to a customer on account?
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Accounts receivable
Sales Revenue |
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12. At the beginning of April, Warren Corporation’s assets totaled $240,000 and liabilities totaled $60,000. During April the following summarized transactions occurred:
• Additional shares of stock were sold for $20,000 cash • A building costing $95,000 was purchased using $10,000 cash and by signing an $85,000 long-term note payable • Short-term investments costing $9,000 were purchased using cash • $10,000 was lent to an employee; the employee signed a six-month note in exchange for the loan. How much are Warren’s total liabilities at the end of April? |
$145,000
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13. According to the article reviewed in class, The Financial Page— Don’t Enter the Dragon, when a company’s suppliers or partners are owned or controlled by the company’s own managers, what can often be the result?
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The managers will use the outside businesses to milk the company through fictitious or excessive charges.
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Assuming that a company is using the allowance method of accounting for bad debts, the effect of writing off specific uncollectible accounts on components of the balance sheet and Income Statement would be:
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Total Assets --> no effect
Net Realizable value of Accounts Receivable --> no effect Net income --> no effect |
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In a period of increasing inventory costs, if ending inventory has a positive balance, which cost flow method will result in the highest Net Income, all other things being equal?
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FIFO
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Eagle Consulting had a balance of $840,650 in their account on Devember 31, according to their accounting records. When the December bank statement was received, it reflected a cash balance (per bank) of $784,564. After reviewing the bank statement at the end of Devember and the company's records, the following information was available to perform the bank reconciliation:
Interest paid by bank --> 4,272 Outstanding checks--> 35,360 Deposits in transit --> 55,330 NSF Checks from various customers --> 28,523 Error, check recored on books for $55,740 that was actually for the amount of 66,035 --> 10295 Bank service charges --> 1570 Correct cash balance? |
804,534
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Which of the following phrases best describes the role of the FASB and PCAOB, respectively?
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Sets generally accepted accounting principles; sets auditing standards for independent auditors of public companies
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Which of the following classifications for assets found n the classified balance sheet is correct?
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Intangible assets --> noncurrent
Other assets--> noncurrent Inventories --> current Property, Plant and Equipment -->noncurrent Accounts Receivable --> current Cash --> current |
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The classified income statement provides detailed information about a firm's profitability. What does Gross Profit measure?
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The excess of net sales revenue over the cost of goods sold.
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The information below came from the financial statements of Battery Junction. What was the return on assets (ROA) for 2010? (rounded to two decimal places)
Battery Junction: Shareholders' Equity 2010-->3,555,000 2009--> 3,344,000 2008-->2, 652, 000 Total Liabilities 2010--> 2,033,000 2009-->1,927,500 2008--> 1,836,500 Net Income 2010--> 1,666,500 2009-->1,573,200 2008-->1,411,000 |
30.69%
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What does the LIFO conformity rule require?
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If LIFO is used on the income taz return, it must also be used to calculate inventory and cost of goods sold for the financial statements.
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Discount Furniture purchases goods for resale. Information from their accounting records for the month of October is present below:
purchases during the month -->152,400 beginning inventory --> 115,900 ending inventory--> 59,800 |
208,500
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Flat screen LCD television panels originally purchased for 1220 each currently have a replacement cost of 1045 each. if 540 of these television panels are in inventory, what journal entry must be recored to comply with the lower of cost or market rule?
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costs of goods .....94500
.....inventory.............94500 |
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What is the correct entry for the sale of 1,000 shares of 10 dollars par value preferred stock for 50,000 cash
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Cash................50000
........Preferred stock.....10000 ........capital in excess of par value...........................40,000 |
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On December 15, 2009, the board of directors of Cross Corporation declared a cash dividend, payable on January 8, 2010 to shareholders of record on December 22, of $.80 per share on the 2,000,000 common shares outstanding.
On December 15, 2009, Cross Corporatoin should |
Decrease retained earnings of 1.6 million and increase liabilities by 1.6 million
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Amanda Company purchased a computer that cost 10,000. It had an estimated useful life of five years and a residual value of 1,000. The computer was depreciated by the straigh-line method and was sold at the end of the third year of use for 5,000 cash. How much of a gain or loss should Amanda record?
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a gain of 400
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Which of the following entries would be recorded when a company reissues 1,000 shares of treasury stock for cash of 40 per share. The treasury stock shares were pruchased at a cost of 44 per share and have a 1 par value?
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Cash.....40000
Capital in excess of par value..4000 ........treasury stock.....44000 |
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On march 1, Wright Company purchased new equipment for 50,000 by paying cash. Other costs associated with the equipment were: transportation costs, 1,000; sales tax paid 3,000; and installation cost 2,500. At what amount will the equipment be recorded at on a balance sheet?
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56,500
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Which of the following equipment related costs is not capitalize on a balance sheet?
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Equipment maintenance costs
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Which of the following accounts would not be considered when calculating the quick ratio?
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Inventory
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Which of the following statements is correct?
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Many fringe benefits such as sick and vacation leave benefits should be recognized when the employee earns the benefit not when they take the leave
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Miranda Company borrowed 100,000 cash on September 1, 2010, and signed a one-year 6%, interest-bearing note paable. Assuming no adjusting entries hae been made during the year, the required adjusting entry at the end of the accounting period, December 31, 2010, would be hich of the following?
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Interest expense ....2000
......interest payable.....2000 |
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The reportin gof contigent liabilities depends upon classification as either proable, reasonably possible, or remote. How should a contigent liability that is "reasonably possible" but "cannot reasonably be estimate" be reported within the financial statements?
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It should only be disclosed as a note to the financial statements.
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Libby Company purchased equipment by paying 5,000 cash on the purchase date and agreeing to pay 40,000 at the end of four years. No interst is specified or paid on the deferred payment of 40,000. Libby's incremental borrowing rate 9%. At what amount would the equipment be reported at on the balance sheet as of the purchase date? (assume annual compounding, all amounts are material, and round to nearest dollar.)
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33, 337
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Rachel Corporation purchased a building by paying 90,000 cash on the purchase date, and agreeing to pay 50,000 every year for the next ten years. The first payment it sude one year after the purchase date. Rachel's incremental borrowing rate is 10%. At what amount would the liability be reported at on the balance sheet of Rachel Corporation as of the purchase date, after the 90,000 down payment was made?
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307,229
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DORA Company declared and distributed a 10% stock dividend on 20,000 shares of issued and outstanding 5 dollar par value common stock. The market price per share on the declaration date was 9 and was 10 on the distribution date. Which of the following correctly describes the accounting for the declaration and distribution of the stock dividend?
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Reatined earnings decreased 18,000
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Assume the following capital structure:
preferred stock, 6%, $50 par value, 1,000 shares issued and outstanding with dividends in arrears for three prior years (2007-2009). Common stock, 100 par value, 2,000 shares issued and outstanding. Total dividends declared and paid in 2010 were 50,000. How much of the 2010 dividend will be paid to the common stockholders assuming the preferred stock is cumulative? |
38,000
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A company has 4 million common shares authorized, 2.5 million shares issued and 100,000 treasury shares. The par value is 1 per share and the market price is 30 when the company declares a 4 for 1 stock spilt. Which of the following is correct?
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The shares authorized, issued, outstanding, and held in treasury will all quadruple while the par value will be reduced to .25 per share.
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