Fluent Essays

1.Credits are used to record:A) decreases in assets and owners equity and increases in liabilities.B) decreases in assets, liabilities, and owners equity.C) decreases in liabilities and increases in assets and owners equity.D) increases in liabilities and owners equity.2.Which of the following types of accounts normally have debit balances?A) assets and revenueB) assets, liabilities, and owners equityC) expenses and assetsD) liabilities and owner’s equity3.On November 1, 20--, a firm accepted a 4-month, 10 percent note for $900 from a customer with an overdue balance. The accrued interest recorded for this note for the year ended December 31, 20--, is (assume a 360 day year)A) $75B) $30C) $15D) $904.The entry to record a return by a credit customer of defective merchandise on which no sales tax was charged includes:A) a credit to Sales and a debit to Accounts ReceivableB) a debit to Sales and a credit to Sales Returns and AllowancesC) a debit to Sales Returns and Allowances and a credit to Accounts ReceivableD) a debit to Accounts Receivable and a credit to Sales Returns and Allowances5.If a firm had sales of $50,000 during a period and sales returns and allowances of $4,000, its net sales were:A) $54,000B) $50,000C) $46,000.D) $4,0006.On December 31, prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $200. An aged 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 forA) $800B) $1,000C) $1,200D) $2007.A firm reported net credit sales of $225,000 during the year and has a balance of $20,000 in its Accounts Receivable account at year-end. Prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $100. The firm estimated its losses from uncollectible accounts to be one-half of 1 percent of sales. The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts forA) $1,225B) $1,125C) $ 900D) $2,2508.Upon collection of the amount due on a $6,000 face value, 90-day note with interest at 10 percent a year, the Note Receivable account is:A) debited for $6,600B) credited for $6,000C) credited for $6,150D) debited for $6,0009.The entry to record a purchase of merchandise on credit using a periodic inventory system includesA) a debit to Merchandise Inventory and a credit to Accounts PayableB) a credit to Merchandise Inventory and a debit to Accounts PayableC) a debit to Accounts Payable and a credit to PurchasesD) a debit to Purchases (COGS) and a credit to Accounts Payable10.The entry to record a purchase of merchandise on credit using a perpetual inventory system includes:A) a debit to Merchandise Inventory and a credit to Accounts PayableB) a credit to Merchandise Inventory and a debit to Accounts PayableC) a debit to Accounts Payable and a credit to PurchasesD) a debit to Purchases (COGS) and a credit to Accounts Payable11.The total of the balances in the creditors accounts should agree with the balance of:A) the Purchases account in the general ledgerB) the Accounts Receivable account in the general ledgerC) the Accounts Payable account in the general ledgerD) the Sales account in the general ledger12.A firm purchased equipment for $6,000 on credit and issued a 120-day note bearing interest at 9 percent. To record this transaction, the accountant would:A) debit Equipment for $6,000 and credit Notes Payable for $6,000B) debit Equipment for $6,180, credit Interest Expense for $180, and credit Notes Payable for $6,000C) debit Equipment for $6,000, debit Interest Expense for $180, and credit Notes Payable for $6,180D) credit Equipment for $6,000 and debit Accounts Payable for $6,00013.When a company issues a promissory note, the accountant records an entry that includes a credit to Note Payable for:A) the face value of the noteB) the face value of the note plus the interest that will accrueC) the face value less the interest that will accrueD) the maturity value of the note14.How much interest will accrue on a $20,000 face value, 60-day note that bears interest at 9 percent a year? (assume a 360 day year)A) $300B) $1,800C) $450D) $90015.Notes payable due within one year are usually shown:A) in the Current Assets section of the balance sheetB) in the Current Liabilities section of the balance sheetC) in the Other Expenses section of the income statementD) in the Long-Term Liabilities section of the balance sheet16.The maturity value of a 90-day note for $4,000 that bears interest at 10 percent a year is (assume a 360 day year)A) $4,400B) $4,000C) $3,900D) $4,10017.Lisa Ramos has a regular hourly rate of $10.75. In a week when she worked 40 hours and had deductions of $55 for federal income tax, $26.75 for social security tax, and $6.25 for Medicare tax, her net pay wasA) $430B) $342C) $375D) $39718.The amount debited to Wages Expense when a payroll is recorded is the:A) Regular gross earnings (not including overtime)B) Earnings after taxesC) Net earningsD) Total gross earnings19.Each type of deduction made from the employees earnings is recorded in a separate:A) asset accountB) expense accountC) liability accountD) revenue account20.To record the deposit of FUTA tax, the accountant would:A) debit Payroll Taxes Expense and credit Federal Unemployment Tax Payable.B) debit Payroll Taxes Expense and credit Cash.C) debit Federal Unemployment Tax Payable and credit Cash.D) debit Social Security Taxes Payable and credit Cash.21.The adjusting entry to record accrued interest on a note payable requires:A) a debit to Interest Income and a credit to Notes PayableB) a debit to Interest Payable and a credit to Interest ExpenseC) a debit to Interest Expense and a credit to CashD) a debit to Interest Expense and a credit to Interest Payable22.On May 1, 20--, 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 20—isA) $600B) $1,200C) $1,800D) $1,05023.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:A) a gain of $2,000B) a loss of $5,000C) neither a gain nor a lossD) a loss of $2,00024.An adjusting entry is usually not required for an expense item:A) when it is paid for and recorded in one period but not fully used until a later periodB) when it is used in one period but not paid for or recorded until a later periodC) when it is paid for, recorded, and used in one periodD) when it is budgeted but not paid for or used during the period25.A firm that sells a single product had a beginning inventory of 4,000 units with a total cost of $28,000. Early in the year, 10,000 units were purchased at $9 each. Using FIFO, what is the value of the ending inventory of 3,000 units?A) $27,000B) $24,000C) $21,000D) $36,00026.A firm that sells a single product had a beginning inventory of 4,000 units with a total cost of $16,000. Early in the year, 8,000 units were purchased at $6 each. Using LIFO, what is the value of the ending inventory of 2,000 units?A) $12,000B) $10,000C) $8,000D) $24,00027.A matching of the most recent costs to revenue results from the use of:A) the LIFO methodB) the FIFO methodC) the average cost methodD) the lower of cost or market method28.On January 2, 20--, a firm purchased equipment for $8,500. Depreciation expense for 20--, given the straight-line method, a 5-year useful life, and a salvage value of $1,500, is:A) $1,500B) $1,700C) $1,200D) $1,40029.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 assets useful life is:A) $9,000B) $18,000C) $10,000D) $20,00030.The method of depreciation that results in the same amount of depreciation expense each year is the:A) units-of-output methodB) straight-line methodC) sum-of-the-years-digits methodD) declining-balance method31.An accountant who records revenue when a credit sale is made rather than waiting for the receipt of cash from the customer is:A) following the accrual principleB) following the conservatism conventionC) violating generally accepted accounting principlesD) following the consistency principle32.Depreciating equipment over its useful life is an example of:A) following the objectivity assumptionB) applying the matching principleC) applying the realization principleD) applying the conservatism convention33.Keeping the personal assets of the owner of a business separate from the assets of the firm is an example of:A) following the going concern assumptionB) applying the realization principleC) following the separate entity assumptionD) applying the conservatism convention34.A firm has sales of $40,000 in 2004 and $45,000 in 2005. The increase in sales from 2004 to 2005 is:A) 25\%B) 20\%C) 125\%D) 12.5\%35.A firm has liabilities of $60,000 and stockholders’ equity of $180,000. The percentage of total liabilities to total assets is:A) 25 percentB) 20 percentC) 50 percentD) 75 percent36.The current ratio is calculated by:A) dividing current assets by total liabilitiesB) dividing net working capital by current liabilitiesC) dividing current assets by current liabilitiesD) dividing total assets by current liabilities37.A companys January 1 balance in Accounts Receivable is $70,000. The December 31 balance is $80,000. If the company has credit sales of $600,000, the accounts receivable turnover is:A) 8.0 timesB) 7.5 timesC) 4.0 timesD) 7.0 times38.Stockholders equity:A) is usually equal to cash on handB) includes paid-in capital and liabilitiesC) includes retained earnings and paid-in capitalD) is shown on the income statement39.The charter of a corporation authorizes 100,000 shares of common stock. Assume that 50,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $1 per share dividend is declared?A) $50,000B) $5,000C) $100,000D) $45,00040.If the market rate of interest is 8\%, the price of 6\% bonds paying interest semiannually with a face value of $100,000 will be:A) equal to $100,000B) greater than $100,000C) less than $100,000D) greater than or less than $100,000, depending on the maturity date of the bonds41.The journal entry a company records for the issuance of bonds when the contract rate is greater than the market rate would be:A) debit Cash, credit Premium on Bonds Payable and Bonds PayableB) debit Bonds Payable, credit CashC) debit Cash and Discount on Bonds Payable, credit Bonds PayableD) debit Cash, credit Bonds Payable42.Jack and Jill share income and losses in a 2:1 ratio after allowing for salaries to Jack of $24,000 and $30,000 to Jill. Net income for the partnership is $66,000. Income should be divided as follows:A) Jack, $24,000; Jill, $30,000B) Jack, $24,000; Jill, $34,000C) Jack, $30,000; Jill, $36,000D) Jack, $32,000; Jill, $34,00043.The liability for a dividend is recorded on which of the following dates?A) the date of recordB) the date of paymentC) the date of announcementD) the date of declaration44.The journal entry to issue 1,000,000 shares of $5 par common stock for $7.00 per share on January 2nd would be:A)Jan 2Cash7,000,000Common Stock5,000,000Paid-in Capital in Excess of Par - C/S2,000,000B)Jan 2Cash5,000,000Common Stock5,000,000C)Jan 2Cash5,000,000Common Stock2,000,000Paid-in Capital in Excess of Par - C/S7,000,000D)Jan 2Cash1,000,000Common Stock1,000,00045.Which types of inventories does a manufacturing business report on the balance sheet?A) Finished goods inventory and work in process inventoryB) Direct materials inventory and work in process inventoryC) Direct materials inventory, work in process inventory, and finished goods inventoryD) Direct materials inventory and finished goods inventory46.In a job order cost accounting system, the entry to record the flow of direct materials into production is:A) debit Work in Process, credit MaterialsB) debit Materials, credit Work in ProcessC) debit Factory Overhead, credit MaterialsD) debit Work in Process, credit Supplies47.Based on the following production and sales estimates for May, determine the number of units expected to be manufactured in May:Estimated inventory (units), May 110,000Desired inventory (units), May 3115,000Expected sales volume (units):South region30,000West region40,000North region20,000Unit sales price$10A) 85,000B) 95,000C) 90,000D) 105,00048.If fixed costs are $250,000, the unit selling price is $105, and the unit variable costs are $65, what is the break-even sales (units)?A) 3,846 unitsB) 2,381 unitsC) 10,000 unitsD) 6,250 units49.The entry to transfer a net income to the owners capital account would include:A) a debit to the owners capital account and a credit to CashB) a debit to the owners drawing account and a credit to the owners capital accountC) a debit to Income Summary and a credit to the owners capital accountD) a debit to the owners capital account and a credit to Income Summary50.The entry to close the appropriate insurance account at the end of the accounting period is:A) debit Income Summary; credit Prepaid InsuranceB) debit Prepaid Insurance; credit Income SummaryC) debit Insurance Expense; credit Income SummaryD) debit Income Summary; credit Insurance Expense51.Which of the following accounts ordinarily appears in the post-closing trial balance?A) Unearned RentB) Bill Smith, DrawingC) Supplies ExpenseD) Fees Earned52.John, age 25, is a full time student at a state university. John lives with his sister, Ann, who provides over half of his support. His only income is $4,000 of wages from a part-time job at the college book store. What is Ann’s filing status?A) SingleB) Head of HouseholdC) Married, filing separatelyD) Qualifying widow53.Wesley owns and operates the Cheshire Chicken Ranch in Turpid, Nevada. The income from this ranch is $49,000. Wesley wishes to use the easiest possible tax form. He may file:A) Form 1040EZB) Form 1040AC) Form 1040D) Form 1040C54.Which of the following would be a business debt if it were uncollectible?A) A taxpayer loans his father $1,000 to start a businessB) A taxpayer loans his son $10,000 to purchase a rental houseC) A dentist, using the accrual basis of accounting, extends credit to a patient for services providedD) A taxpayer loans his brother $3,000 to purchase a truck for use in his brother’s business55.Which of the following tax credits can exceed the amount of the taxpayer’s tax liability?A) Child and dependent care creditB) HOPE creditC) Alternative minimum tax creditD) Earned income credit56.Sol purchased land as an investment on January 12, 2004 for $85,000. On January 31, 2008 Sol sold the land for $90,000 cash. What is the nature of the gain or loss?A) long-term capital lossB) long-term capital gainC) short-term capital lossD) short-term capital gain57.Which of the following is a benefit of computerized accounting systems?A) Time consumingB) Posting and journalizing separate functionsC) AccuracyD) No subsidiary ledgers58.Trading Securities normally appears on which of the following statements?A) Balance SheetB) Income StatementC) Statement of Owners EquityD) Account does not appear on any statement59.Depreciation Expense normally appears on which of the following statements?A) Balance SheetB) Income StatementC) Statement of Owners EquityD) Account does not appear on any statement60.Leased Equipment normally appears on which of the following statements?A) Balance SheetB) Income StatementC) Statement of Owners EquityD) Account does not appear on any statement61.Dividends Payable normally appears on which of the following statements?A) Balance SheetB) Income StatementC) Statement of Owners EquityD) Account does not appear on any statement62.Gain on Sale of Equipment normally appears on which of the following statements?A) Balance SheetB) Income StatementC) Statement of Owners EquityD) Account does not appear on any statement63.Prepaid Rent normally appears on which of the following statements?A) Balance SheetB) Income StatementC) Statement of Owners EquityD) Account does not appear on any statement64.Accumulated Depreciation - Leased Asset normally appears on which of the following statements?A) Balance SheetB) Income StatementC) Statement of Owners EquityD) Account does not appear on any statement65.Unearned Revenue normally appears on which of the following statements?A) Balance SheetB) Income StatementC) Statement of Owners EquityD) Account does not appear on any statement