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Question 1
In its first month of operation, Kuhlman Company purchased 310 units of inventory for $5, then 410 units for $6, and finally 350 units for $7. At the end of the month, 380 units remained.
Compute the amount of phantom profit that would result if the company used FIFO rather than LIFO.
Question 2
Sadowski Video Center accumulates the following cost and market data at December 31.
Inventory Categories
Cost Data
Market Data
Cameras
$11,475
$12,565
Camcorders
8,599
9,289
DVDs
11,359
10,039
Compute the lower-of-cost-or-market valuation for Sadowski inventory.
The lower-of-cost-or-market value $Entry field with incorrect answer
Question 3
The financial statements of Tootsie Roll are presented below.
Answer the following questions. (Give the amounts in thousands of dollars, as shown in Tootsie Roll’s annual report.)
What did Tootsie Roll report for the amount of inventories in its Consolidated Balance Sheet at December 31, 2011? At December 31, 2010? (Round amounts to thousands.)
Compute the dollar amount of change and the percentage change in inventories between 2010 and 2011. (Round percentages to 1 decimal place, e.g. 15.4% and other answer to thousands.)
Compute inventory as a percentage of current assets for 2011.(Round answer to 1 decimal place, e.g. 15.4%.)
What are the (product) cost of goods sold reported by Tootsie Roll for 2011, 2010, and 2009?
Compute the ratio of (product) cost of goods sold to net (product) sales in 2011. (Round percentage to 1 decimal place, e.g. 15.2%.)
Question 4
The financial statements of The Hershey Company and Tootsie Roll are presented below.
Based on the information in the financial statements, compute these 2011 values for each company. (Do not adjust for the LIFO reserve.) (Round answers to 1 decimal place, e.g. 15.2.)
(1) Inventory turnover. (Use product cost of goods sold and total inventory.)
(2) Days in inventory.
Question 5
Halleran Company has the following internal control procedures over cash receipts.
Identify the internal control principle that is applicable to each procedure.
Question 6
Catt Company has the following internal control procedures over cash disbursements.
Identify the internal control principle that is applicable to each procedure.
Question 7
Which of the following should not be included in the inventory of a company using IFRS?
None of the these
Goods shipped on consignment to another company.
Goods held on consignment from another company.
Goods in transit from another company shipped FOB shipping point.
Question 8
Which method of inventory costing is prohibited under IFRS?
FIFO.
Average-cost.
Specific identification.
LIFO.
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Question 1
Mike Greenberg opened Clean Window Washing Inc. on July 1, 2014. During July, the following transactions were completed.
July 1 Issued 12,023 shares of common stock for $12,023 cash.
1 Purchased used truck for $8,023, paying $2,050 cash and the balance on account.
3 Purchased cleaning supplies for $917 on account.
5 Paid $2,280 cash on a 1-year insurance policy effective July 1.
12 Billed customers $4,890 for cleaning services.
18 Paid $1,037 cash on amount owed on truck and $506 on amount owed on cleaning supplies.
20 Paid $2,070 cash for employee salaries.
21 Collected $1,753 cash from customers billed on July 12.
25 Billed customers $2,620 for cleaning services.
31 Paid $370 for maintenance of the truck during month.
31 Declared and paid $616 cash dividend.
Journalize the July transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
Post to the ledger accounts. (Post entries in the order of journal entries presented in the previous question.)
Prepare a trial balance at July 31.
Journalize the following adjustments. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
(1) Services performed but unbilled and uncollected at July 31 were $1,871.
(2) Depreciation on equipment for the month was $217.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $320 of cleaning supplies on hand at July 31.
(5) Accrued but unpaid employee salaries were $446.
Post adjusting entries to the T-accounts.
Prepare an adjusted trial balance.
Prepare the income statement for July.
Prepare a retained earnings statement for July. (List items that increase retained earnings first.)
Prepare a classified balance sheet at July 31. (List current assets in order of liquidity.)
Journalize closing entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Prepare a post-closing trial balance at July 31.
Question 2
Presented here are the components in Casilla Company’s income statement.
Determine the missing amounts.
Question 3
Gerish Company buys merchandise on account from Mangus Company. The selling price of the goods is $1,413 and the cost of the goods sold is $792. Both companies use perpetual inventory systems.
Journalize the transactions on the books of both companies. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Question 4
The financial statements of Tootsie Roll are presented below.
What was the percentage change in total revenue and in net income from 2010 to 2011? (Round answers to 1 decimal places, e.g. 15.2%. Show decrease with either a negative sign, e.g. -15.2% or in parentheses, e.g. (15.2)%.)
What was the profit margin in each of the 3 years? (Use “Total Revenue.”). (Round answers to 1 decimal places, e.g. 15.2%.)
What was Tootsie Roll’s gross profit rate in each of the 3 years? (Use “Net Product Sales” amounts.). (Round answers to 1 decimal places, e.g. 15.2%.)
Question 5
The financial statements of The Hershey Company and Tootsie Roll are presented below.
Based on the information contained in these financial statements, determine the following values for each company. (Round all percentages to 1 decimal places, e.g. 17.5%, and all other answers to thousands.)
(1) Profit margin for 2011. (For Tootsie Roll, use “Total Revenue.”)
(2) Gross profit for 2011. (For Tootsie Roll, use “Product” amounts.)
(3) Gross profit rate for 2011. (For Tootsie Roll, use “Product” amounts.)
(4) Operating income for 2011.
(5) Percentage change in operating income from 2011 to 2010. (Show decrease with either a negative sign, e.g. -15.2% or in parentheses, e.g. (15.2)%.)
Question 6
For each of the following income statement line items, state whether the item is a “by nature” expense item or a “by function” expense item.
Question 7
The company’s complete annual report, including the notes to its financial statements, is available in the Investor Relations section at www.zetarplc.com.
Visit Zetar’s corporate website and answer the following questions from Zetar’s 2011 annual report.
What is the approximate tax rate of Zetar’s “Tax on profit from continuing activities”? (Round answer to 0 decimal places, e.g. 25%.)
Question 8
The operating cycle of a merchandising company is ordinarily shorter than that of a service company.
True
False
Question 9
Which of the following is a merchandiser that sells directly to consumers?
Service enterprise
Customer
Retailer
Wholesaler
Question 10
Which is true about a wholesaler?
It sells only to manufacturing companies.
It is a company that sells to consumers at a discount.
It sells to another business, which will sell to a consuming customer.
It conducts large sales for consumers on a recurring basis.
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Question 1
Ken Lumas started his own consulting firm, Lumas Consulting, on June 1, 2014. The trial balance at June 30 is as follows.
LUMAS CONSULTING
Trial Balance
June 30, 2014
Debit
Credit
Cash
$ 6,850
Accounts Receivable
7,000
Supplies
2,044
Prepaid Insurance
3,480
Equipment
15,000
Accounts Payable
$ 4,280
Unearned Service Revenue
5,200
Common Stock
22,134
Service Revenue
8,000
Salaries and Wages Expense
4,000
Rent Expense
1,240
$39,614
$39,614
In addition to those accounts listed on the trial balance, the chart of accounts for Lumas also contains the following accounts: Accumulated Depreciation—Equipment, Salaries and Wages Payable, Depreciation Expense, Insurance Expense, Utilities Expense, and Supplies Expense.
Other data:
1.
Supplies on hand at June 30 total $850.
2.
A utility bill for $181 has not been recorded and will not be paid until next month.
3.
The insurance policy is for a year.
4.
Services were performed for $4,370 of unearned service revenue by the end of the month.
5.
Salaries of $1,338 are accrued at June 30.
6.
The equipment has a 5-year life with no salvage value and is being depreciated at $250 per month for 60 months.
7.
Invoices representing $4,206 of services performed during the month have not been recorded as of June 30.
Prepare the adjusting entries for the month of June. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Prepare an adjusted trial balance at June 30, 2014.
Question 2
The Solo Hotel opened for business on May 1, 2014. Here is its trial balance before adjustment on May 31.
SOLO HOTEL
Trial Balance
May 31, 2014
Debit
Credit
Cash
$ 2,876
Supplies
2,600
Prepaid Insurance
1,800
Land
15,376
Buildings
72,400
Equipment
16,800
Accounts Payable
$ 5,076
Unearned Rent Revenue
3,300
Mortgage Payable
38,400
Common Stock
60,376
Rent Revenue
9,000
Salaries and Wages Expense
3,000
Utilities Expense
800
Advertising Expense
500
$116,152
$116,152
Other data:
- Insurance expires at the rate of $360 per month.
- A count of supplies shows $1,052 of unused supplies on May 31.
- (a) Annual depreciation is $3,480 on the building.
(b) Annual depreciation is $3,360 on equipment. - The mortgage interest rate is 5%. (The mortgage was taken out on May 1.)
- Unearned rent of $2,540 has been earned.
- Salaries of $784 are accrued and unpaid at May 31.
Journalize the adjusting entries on May 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Prepare a ledger using T-accounts. Enter the trial balance amounts and post the adjusting entries. (Post entries in the order of journal entries presented in the previous question.)
Prepare an adjusted trial balance on May 31.
Prepare an income statement for the month of May.
Prepare a retained earnings statement for the month of May.
Prepare a classified balance sheet at May 31. (List current assets in order of liquidity. List Property, Plant and Equipment in order of Land, Buildings and Equipment .)
Question 3
The financial statements of Tootsie Roll are presented below.
What was the amount of depreciation expense for 2011 and 2010? (You will need to examine the notes to the financial statements or the statement of cash flows.) (Enter amounts in thousands.)
What was the cash paid for income taxes during 2011, reported at the bottom of the consolidated statement of cash flows? What was income tax expense (provision for income taxes) for 2011? (Enter amounts in thousands.)
Question 4
GAAP:
allows revenue to be recognized when a customer makes an order.
requires that revenue not be recognized until cash is received.
provides very detailed, industry-specific guidance on revenue recognition, compared to the general guidance provided by IFRS.
provides only general guidance on revenue recognition, compared to the detailed guidance provided by IFRS.
Question 5
Which of the following statements is false?
IFRS employs accrual accounting.
IFRS requires that revenues and costs must be capable of being measured reliably.
IFRS employs the periodicity assumption.
IFRS uses the cash basis of accounting.
Question 6
As a result of the revenue recognition project being undertaken by the FASB and IASB:
revenue recognition will place more emphasis on when revenue is earned.
revenue will no longer be recorded unless cash has been received.
revenue recognition will place more emphasis on when revenue is realized.
revenue recognition will place more emphasis on when changes occur in assets and liabilities.
Question 7
Which of the following is false?
Under IFRS, firms do not engage in the closing process.
IFRS has fewer standards than GAAP that address revenue recognition.
Under IFRS, the term expenses includes losses.
Under IFRS, the term income describes both revenues and gains.
Question 8
Transactions that affect earnings do not necessarily affect cash. Identify the effect, if any, that each of the following transactions would have upon cash and net income. The first transaction has been completed as an example. (If an amount reduces the account balance then enter with negative sign preceding the number e.g. -15,000 or parentheses e.g. (15,000).)
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Question 1
Foyle Architects incorporated as licensed architects on April 1, 2014. During the first month of the operation of the business, these events and transactions occurred:
Apr. 1 Stockholders invested $22,450 cash in exchange for common stock of the corporation.
1 Hired a secretary-receptionist at a salary of $468 per week, payable monthly.
2 Paid office rent for the month $1,122.
3 Purchased architectural supplies on account from Burlington Company $1,621.
10 Completed blueprints on a carport and billed client $2,370 for services.
11 Received $873 cash advance from J. Madison to design a new home.
20 Received $3,492 cash for services completed and delivered to M. Svetlana.
30 Paid secretary-receptionist for the month $1,872.
30 Paid $374 to Burlington Company for accounts payable due.
Journalize the transactions. (If no entry is required, select “No entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
Post to the ledger T-accounts. (Post entries in the order of journal entries presented in the question.)
Prepare a trial balance on April 30, 2014.
Question 2
This is the trial balance of Solis Company on September 30.
SOLIS COMPANY
Trial Balance
September 30, 2014
Debit
Credit
Cash
$ 23,840
Accounts Receivable
7,240
Supplies
4,940
Equipment
10,840
Accounts Payable
$ 9,440
Unearned Service Revenue
3,940
Common Stock
19,640
Retained Earnings
13,840
$46,860
$46,860
The October transactions were as follows.
Oct. 5
Received $1,500 in cash from customers for accounts receivable due.
10
Billed customers for services performed $5,840.
15
Paid employee salaries $1,000.
17
Performed $600 of services in exchange for cash.
20
Paid $1,950 to creditors for accounts payable due.
29
Paid a $260 cash dividend.
31
Paid utilities $420.
Prepare a general ledger using T-accounts. Enter the opening balances in the ledger accounts as of October 1.
Journalize the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
Post to the ledger accounts. (Post entries in the order of information presented in the question.)
Prepare a trial balance on October 31, 2014.
Question 3
A tabular analysis of the transactions made during August 2014 by Colaw Company during its first month of operations is shown below. Each increase and decrease in stockholders’ equity is explained.
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
+
A/R
+
Supp.
+
Equip.
=
Accounts Payable
+
Common Stock
+
Retained Earnings
Revenues
–
Expenses
–
Dividends
(1)
$24,400
$24,400
Com. Stock
(2)
–2,000
$5,100
$3,100
(3)
–790
$790
(4)
4,430
$5,610
$10,040
Serv. Rev.
(5)
–1,980
–1,980
(6)
–1,410
–$1,410
Div.
(7)
–820
–$820
Rent Exp.
(8)
490
–490
(9)
–2,550
–2,550
Salar. Exp.
(10)
330
–330
Util. Exp.
Determine how much stockholders’ equity increased for the month.
Compute the net income for the month.
Question 4
This information relates to Crofoot Real Estate Agency.
Oct. 1 Stockholders invest $30,950 in exchange for common stock of the corporation.
2 Hires an administrative assistant at an annual salary of $32,640.
3 Buys office furniture for $3,950, on account.
6 Sells a house and lot for M.E. Graves; commissions due from Graves, $11,660 (not paid by Graves at this time).
10 Receives cash of $180 as commission for acting as rental agent renting an apartment.
27 Pays $610 on account for the office furniture purchased on October 3.
30 Pays the administrative assistant $2,720 in salary for October.
Journalize the transactions. (If no entry is required, select “No entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
Question 5
The financial statements of The Hershey Company and Tootsie Roll are presented below. Assume Hershey’s average number of shares outstanding was 220,688,000, and Tootsie Roll’s was 57,892,000.
For each company calculate the following values for 2011. (Hint: When calculating free cash flow, do not consider business acquisitions to be part of capital expenditures.) (Round all ratios to 1 decimal places, e.g. 15.2:1 or 15.2%, earnings per share to 2 decimal places, e.g. 15.21 and all other answers to thousands. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
(1) Working capital.
(2) Current ratio.
(3) Debt to assets ratio.
(4) Free cash flow.
(5) Earnings per share.
Question 6
The financial statements of The Hershey Company and Tootsie Roll are presented below.
Based on the information contained in these financial statements, determine the normal balance for:
Question 7
The following information is available for Cole Bowling Alley at December 31, 2014.
Prepare a classified statement of financial position; assume that $13,900 of the notes payable will be paid in 2015. (List Property, plant and equipment in order of land, buildings and equipment. List current assets in reverse order of liquidity.)
Question 8
The Zetar plc’s complete annual report, including the notes to its financial statements, is available in the Investors section at www.zetarplc.com.
Describe in which statement each of the following items is reported, and the position in the statement (e.g., current asset).
Question 9
This information relates to Crofoot Real Estate Agency.
Oct. 1 Stockholders invest $30,400 in exchange for common stock of the corporation.
2 Hires an administrative assistant at an annual salary of $39,960.
3 Buys office furniture for $3,620, on account.
6 Sells a house and lot for M.E. Graves; commissions due from Graves, $10,660 (not paid by Graves at this time).
10 Receives cash of $230 as commission for acting as rental agent renting an apartment.
27 Pays $640 on account for the office furniture purchased on October 3.
30 Pays the administrative assistant $3,330 in salary for October.
Post the transactions to T-accounts. (Post entries in the order of information presented in the question.)
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Question 1
Marsh Corporation began operations on January 1, 2014. The following information is available for Marsh Corporation on December 31, 2014.
Accounts payable
$ 7,580
Notes payable
$ 12,160
Accounts receivable
4,580
Rent expense
12,580
Advertising expense
4,320
Retained earnings
?
Cash
5,680
Service revenue
30,160
Common stock
17,580
Supplies
4,480
Dividends
5,080
Supplies expense
1,380
Equipment
29,380
Prepare an income statement for Marsh Corporation.
Prepare a retained earnings statement for Marsh Corporation. (List items that increase retained earnings first.)
Prepare a balance sheet for Marsh Corporation. (List assets in order of liquidity.)
Question 2
The Clear View Golf & Country Club details the following accounts in its financial statements.
(a) Classify each of the following accounts as an asset, liability, stockholders’ equity, revenue, or expense item.
(b) Classify each of the following accounts as a financing activity, investing activity, or operating activity.
Question 3
This information relates to Molina Co. for the year 2014.
Retained earnings, January 1, 2014
$75,703
Advertising expense
2,034
Dividends
6,779
Rent expense
11,751
Service revenue
65,534
Utilities expense
2,712
Salaries and wages expense
33,897
After analyzing the data, prepare an income statement for the year ending December 31, 2014.
After analyzing the data, prepare a retained earnings statement for the year ending December 31, 2014. (List items that increase retained earnings first.)
Question 4
For each of the following events affecting the stockholders’ equity of Noland, indicate whether the event would: increase retained earnings, decrease retained earnings, increase common stock, or decrease common stock.
Question 5
The statement of financial position for Ruiz Company includes the following accounts (in British pounds): Accounts Receivable £12,500; Prepaid Insurance £3,600; Cash £15,400; Supplies £5,200; and Debt Investments (short-term) £6,700. Prepare the current assets section of the statement of financial position, listing the accounts in proper sequence. (List current assets in reverse order of liquidity. Do not enter currency symbols in your answer.)
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Question 1
Jackson Company recorded the following cash transactions for the year:
Paid $135,000 for salaries.
Paid $60,000 to purchase office equipment.
Paid $15,000 for utilities.
Paid $6,000 in dividends.
Collected $245,000 from customers.
What was Jackson’s net cash provided by operating activities?
$89,000
$95,000
$110,000
$35,000
Question 2
Which of the following describes the classification and normal balance of the Unearned Rent Revenue account?
Asset, debit
Expense, debit
Liability, credit
Revenues, credit
Question 3
Posting
involves transferring all debits and credits on a journal page to the trial balance.
is accomplished by examining ledger accounts and seeing which ones need updating.
should be performed in account number order.
accumulates the effects of journalized transactions in the individual accounts.
Question 4
The following is selected information from L Corporation for the fiscal year ending October 31, 2014.
Cash received from customers $300,000
Revenue earned 390,000
Cash paid for expenses 170,000
Cash paid for computers on November 1, 2013 that will be used for 3 years 48,000
Expenses incurred including any depreciation 216,000
Proceeds from a bank loan, part of which was used to pay for the computers 100,000
Based on the accrual basis of accounting, what is L Corporation’s net income for the year ending October 31, 2014?
$204,000
$220,000
$174,000
$158,000
Question 5
La More Company had the following transactions during 2013.
- Sales of $4,500 on account
- Collected $2,000 for services to be performed in 2014
- Paid $1,325 cash in salaries
- Purchased airline tickets for $250 in December for a trip to take place in 2014
What is La More’s 2013 net income using cash basis accounting?
$4,925
$675
$425
$5,175
Question 6
Which one of the following is not a justification for adjusting entries?
Adjusting entries are necessary to bring the general ledger accounts in line with the budget.
Adjusting entries are necessary to enable financial statements to be in conformity with GAAP.
Adjusting entries are necessary to ensure that the revenue recognition principle is followed.
Adjusting entries are necessary to ensure that the expense recognition principle is followed.
Question 7
The Vintage Laundry Company purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indi-cated only $1,000 on hand. The adjusting entry that should be made by the company on June 30 is:
debit Laundry Expense, $5,500; credit Laundry Supplies, $5,500.
debit Laundry, $1,000; credit Laundry Supplies Expense, $1,000.
debit Laundry Expense, $1,000; credit Laundry Supplies, $1,000.
debit Laundry, $5,500; credit Laundry Supplies Expense, $5,500.
Question 8
Similarities between International Financial Reporting Standards (IFRS) and U.S. GAAP in-clude all of the following except
Cash-basis accounting is not in accordance with either IFRS or U.S. GAAP.
Both IFRS and U.S. GAAP divide the economic life of companies into artificial time periods.
The form and content of financial statements are very similar under IFRS and U.S. GAAP.
Both IFRS and U.S. GAAP allow revaluation of items such as land and buildings to fair value.
Question 9
Conway Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Conway Company pays within the discount period?
$8,280
$9,000
$8,820
$8,100
Question 10
Stan’s Market recorded the following events involving a recent purchase of inventory:
Received goods for $90,000, terms 2/10, n/30. Returned $1,800 of the shipment for credit. Paid $450 freight on the shipment. Paid the invoice within the discount period.
As a result of these events, the company’s inventory
increased by $88,650.
increased by $86,886.
increased by $86,877.
increased by $86,436.
Question 11
Financial information is presented below:
Operating expenses $36,000
Sales revenue 150,000
Cost of goods sold 105,000
Gross profit would be
$45,000.
$24,000.
$114,000.
$36,000.
Question 12
At December 31, 2014 Mohling Company’s inventory records indicated a balance of $602,000. Upon further investigation it was determined that this amount included the following:
▪ $112,000 in inventory purchases made by Mohling shipped from the seller 12/27/14 terms FOB destination, but not due to be received until January 2nd
▪ $74,000 in goods sold by Mohling with terms FOB destination on December 27th. The goods are not expected to reach their destination until January 6th
▪ $6,000 of goods received on consignment from Dollywood Company
What is Mohling’s correct ending inventory balance at December 31, 2014?
$410,000
$490,000
$484,000
$596,000
Question 13
Olympus Climbers Company has the following inventory data:
July 1 Beginning inventory 20 units at $19 $380
7 Purchases 70 units at $20 1,400
22 Purchases 10 units at $22 220
$2,000
A physical count of merchandise inventory on July 30 reveals that there are 32 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is
$1,380.
$620.
$660.
$1,340.
Question 14
Jenks Company developed the following information about its inventories in applying the lower of cost or market (LCM) basis in valuing inventories:
Product Cost Market
A $57,000 $60,000
B 40,000 38,000
C 80,000 81,000
If Jenks applies the LCM basis, the value of the inventory reported on the balance sheet would be
$179,000.
$175,000.
$177,000.
$181,000.
Question 15
Nilson Company gathered the following reconciling information in preparing its August bank reconciliation:
Cash balance per books, 8/31 $21,000
Deposits in transit 900
Notes receivable and interest collected by bank 5,100
Bank charge for check printing 120
Outstanding checks 12,000
NSF check 1,020
The adjusted cash balance per books on August 31 is
$24,960.
$24,060.
$14,760.
$13,800.
Question 16
Which of the following is not a basic principle of cash management?
Increase collection of receivables.
Keep inventory levels low.
Pay all liabilities early.
Invest idle cash.
Question 17
Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment.
Eddy Auto Supplies
Balance Sheet
December 31, 2014
Cash $84,000 Accounts payable $110,000
Accounts receivable 80,000 Salaries and wages payable 20,000
Inventory 140,000 Mortgage payable 180,000
Prepaid insurance 60,000 Total liabilities $310,000
Stock Investments 170,000
Land 190,000
Buildings $226,000 Common stock $240,000
Less: Accumulated depreciation (40,000) 186,000 Retained earnings 500,000
Trademarks 140,000 Total stockholders’ equity $740,000
Total assets $1,050,000 Total liabilities and stockholders’ equity $1,050,000
$516,000
$556,000
$376,000
$686,000
Question 18
Accounting information is relevant to business decisions because it
confirms prior expectations.
has been verified by external audit.
is prepared on an annual basis.
is neutral in its representations.
Question 19
Howard Company had a transaction that caused a $5,000 increase in both assets and total liabilities. This transaction could have been a(n)
investment of $5,000 cash in the business by the stockholders.
purchase of office equipment for $12,000, paying $7,000 cash and issuing a note payable for the balance.
purchase of office equipment for $5,000 cash.
repayment of a $5,000 bank loan.
Question 20
Can financial statements be prepared directly from the adjusted trial balance?
Yes, adjusting entries have been recorded in the general journal and posted to the ledger accounts.
No, the adjusted trial balance merely proves the equality of the total debit and total credit balances in the ledger after adjustments are posted. It has no other purpose.
They can because that is the only reason that an adjusted trial balance is prepared.
They cannot. The general ledger must be used.
Question 21
Which trial balance will consist of the greatest number of accounts?
All of these answer choices will contain the same number of accounts.
Post-closing trial balance
Trial balance
Adjusted trial balance
Question 22
All of the following are required steps in the accounting cycle except:
preparing a post-closing trial balance.
preparing an adjusted trial balance.
preparing a work sheet.
journalizing and posting closing entries.
Question 23
A sales discount does not
increase a contra revenue account.
increase an operating expense account.
reduce the amount of cash received from a credit sale.
provide the purchaser with a cash saving.
Question 24
American Importers reports net income of $50,000 and cost of goods sold of $450,000. If the company’s gross profit rate was 40%, net sales were
$1,125,000.
$1,175,000.
$825,000.
$750,000.
Question 25
The manager of Weiser is given a bonus based on net income before taxes. The net income after taxes is $35,700 for FIFO and $29,400 for LIFO. The tax rate is 30%. The bonus rate is 20%. How much higher is the manager’s bonus if FIFO is adopted instead of LIFO?
$6,300
$9,000
$1,800
$12,600
Question 26
Classic Floors has the following inventory data:
July 1 Beginning inventory 15 units at $6.00
5 Purchases 60 units at $6.60
14 Sale 40 units
21 Purchases 30 units at $7.20
30 Sale 28 units
Assuming that a perpetual inventory system is used, what is the cost of goods sold on a LIFO basis for July?
$348.00
$702.00
$236.40
$465.60
Question 27
Classic Floors has the following inventory data:
July 1 Beginning inventory 15 units at $6.00
5 Purchases 60 units at $6.60
14 Sale 40 units
21 Purchases 30 units at $7.20
30 Sale 28 units
Assuming that a perpetual inventory system is used, what is the value of ending inventory on a LIFO basis for July?
$236.40
$465.60
$702.00
$354.00
Question 28
Which of the following is not one of the main factors that contribute to fraudulent activity?
Opportunity.
Rationalization.
Incompatible duties.
Financial pressure.
Question 29
What is the rationale for the internal control principle, segregation of duties?
The work of one employee should, without duplication of effort, provide a reliable basis for evaluating the work of another employee.
History has shown that employees are generally dishonest and thus cannot be entrusted with performing related duties.
Control is most effective when only one person is responsible for a give task.
Segregation of duties causes companies to hire more employees and thus it supports the economy.
Question 30
Under IFRS
comparative prior-period information is not required, but financial statements must be provided annually.
comparative prior-period information must be presented, but financial statements need not be provided annually.
comparative prior-period information must be presented, and financial statements must be provided annually.
comparative prior-period information is not required, but financial statements need not be provided annually.
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