(ACCOUNTING ) MULTIPLE CHOICE QUESTION Chapter 10

MULTIPLE CHOICE QUESTIONS

Select the appropriate response.

1. Which of the following items should be expensed as incurred?

a. Broker's fees on the purchase of a long-lived asset.
b. Repair of damage occurring during installation of new equipment.
c. Freight charges on the purchase of equipment.
d. Normal installation fees on the purchase of equipment.

HELP ME!

2. Lancer Corporation purchased a parcel of land as a factory site for $150,000. Construction began immediately on a new building. Costs incurred are as follows:

Architect's fees	25,000
Legal fees for land purchase contract	2,000
Construction costs	250,000

Lancer should record the cost of the new land and building, respectively, at:

a. $150,000 and $275,000
b. $152,000 and $275,000
c. $150,000 and $250,000
d. $152,000 and $250,000

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3. Reno Acquisitions Company recently bought a furnished hotel for a lump-sum purchase price of $15,000,000. Separately, the land was valued at $6,000,000, the building at $12,000,000, and the furniture and equipment at $2,000,000. How much cost should Reno assign to the land?

a. $1,000,000
b. $4,500,000
c. $6,000,000
d. $8,000,000

HELP ME!

4. The appropriate journal entry to record machinery depreciation of $1,000 is:

a. Depreciation Expense 1,000
Accumulated Depreciation 1,000

b. Depreciation Expense 1,000
Machine 1,000

c. Accumulated Depreciation 1,000
Depreciation Expense 1,000

d. Accumulated Depreciation 1,000
Machine 1,000

HELP ME!

5. Omni Corporation purchased a new vehicle on January 1, 20X1. The vehicle cost $100,000, has a five-year life, and a $20,000 residual value. Omni has a December 31 year-end. If Omni depreciates the truck by the double-declining balance method, how much should be recorded as depreciation expense during 20X4?

a. $0
b. $1,600
c. $8,640
d. $40,000

HELP ME!

6. Realistic Company purchased a new truck on January 1, 20X1. The truck cost $20,000, has a four-year life, and a $4,000 residual value. The company has a December 31 year-end. If Realistic Company depreciates the truck by the sum-of-the-years'-digits method, how much should Realistic report as the book value of the truck at the end of 20X3?

a. $1,600
b. $2,000
c. $5,600
d. $14,400

HELP ME!

7. On July 1, 20X1, Clem Company purchased factory equipment for $50,000. Residual value was estimated to be $2,000. The equipment will be depreciated over ten years using the sum-of-the-years'-digits depreciation method. Clem has a December 31 year-end, and during 20X1, one-half of a year's depreciation expense was recorded. How much depreciation expense should be recorded for 20X2? (round computations to the nearest dollar)

a. $7,855
b. $8,291
c. $8,636
d. $8,727

HELP ME!

8. A graph is set up with "depreciation expense" on the vertical axis and "time" on the horizontal axis. Assuming linear relationships, how would the lines for straight-line and sum-of-the-years'-digits depreciation expense, respectively, be drawn on this graph?

a. Vertically and sloping down to the right.
b. Vertically and sloping up to the right.
c. Horizontally and sloping down to the right.
d. Horizontally and sloping up to the right.

HELP ME!

9. On July 1, 20X1, Robinson Company purchased a new machine for $200,000. The machine is estimated to have a service-life of 10 years with an estimated residual value of $5,000. Robinson uses straight-line depreciation. During 20X5, it became apparent that the machine would not be efficient to operate after December 31, 20X7. Furthermore, the machine would have no scrap value. How much should be charged to depreciation expense in 20X5 under generally accepted accounting principles? (round computations to the nearest dollar)

a. $19,500
b. $42,250
c. $43,917
d. $65,000

HELP ME!

10. Assume that the modified accelerated cost recovery system is used to account for a depreciable asset for tax purposes. In general, which of the following observations is correct?

a. Depreciation amounts will be the same for financial reporting purposes.
b. In the early years of an asset's life, depreciation will be greater for tax than for financial reporting purposes.
c. In the early years of an asset's life, depreciation will be less for tax than for financial reporting purposes.
d. The tax life will exceed the financial reporting life.

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(ACCOUNTING ) MULTIPLE CHOICE QUESTION Chapter 9

MULTIPLE CHOICE QUESTIONS

1. Which of the following categories/methods would be used to account for an investment, where the intent of the investment was primarily for short-term profits?

a. Trading securities
b. Available for sale securities
c. Held to maturity securities
d. Equity method

HELP ME!

2. Ace Corporation has a long-term investment in the common stock of another entity. This investment is accounted for as an available-for-sale security. A journal entry to record a $10,000 decline in market value below cost would necessarily involve:

a. a debit to Unrealized Gain/Loss -- OCI
b. a credit to Unrealized Gain/Loss -- OCI
c. a debit to Available for Sale Securities.
d. a debit to Investment Revenue.

HELP ME!

3. Investment in Bonds should be disclosed on the balance sheet.

a. At their face value minus any unamortized premiums.
b. At their face value plus any unamortized premiums.
c. At their maturity value.
d. At their face value.

HELP ME!

4. When the contract interest rate for a bond exceeds the effective interest rate of the bond, then:

a. The price of the bond will be equal to the future cash flow associated with the bond.
b. The bond will be issued at a premium.
c. The bond will be issued at a discount.
d. The face value of the bond will fluctuate over its life.

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5. On June 1, Pennell Corporation purchased $100,000 of 9%, 5-year bonds. The bonds are dated June 1, 20X1. The bonds were issued at 96, and pay interest on December 1 and June 1. The entry to record the investment in bonds is:

a. Investment in Bonds 100,000
Cash 100,000

b. Investment in Bonds 96,000
Cash 96,000

c. Investment in Bonds 104,000
Cash 104,000

d. Investment in Bonds 96,000
Interest Income 4,000
Cash 100,000

HELP ME!

6. On April 1, 20X1, Collinge Corporation purchased $100,000 of 7%, 5-year bonds dated April 1, 20X1, at 101. Interest is paid on March 31 and September 30. Assuming use of the straight-line amortization method, the proper amount of income to record on September 30, 20X1 is:

a. $7,000
b. $3,400
c. $3,500
d. $3,600

HELP ME!

7. On January 1, 20X2, Miller Corporation purchased $100,000 of 5%, 10-year bonds dated January 1, 20X2, at 98. Interest is paid on June 30 and December 31 of each year. Assuming use of the straight-line amortization method, the proper amount to report for Investment in Bonds at December 31, 20X3 is:

a. $98,000
b. $98,400
c. $100,000
d. $101,600

HELP ME!

8. Investor Corporation owns 30% of Investee Corporation. Investee had net earnings of $100,000 during the year and paid dividends of $30,000. Investor's Investment in Investee account contained a $70,000 balance at the beginning of the year. What would be the correct balance of this account at the end of the year?

a. $70,000
b. $91,000
c. $100,000
d. $140,000

HELP ME!

9. Investor Corporation owns 30% of Investee Corporation. Investee had net earnings of $100,000 during the year and paid dividends of $30,000. Investor's Investment in Investee account contained a $70,000 balance at the beginning of the year. How much dividend income will Investor record?

a. $0
b. $9,000
c. $30,000
d. $39,000

HELP ME!

10. Mega Corporation owns 100% of Wolf Corporation's stock. Mega paid $1,000,000 for its investment. At the time of the initial investment, Wolf had total stockholders' equity of $600,000. All of Wolf's assets and liabilities were carried at amounts that equaled their fair value, except for a building that was undervalued by $100,000. How much goodwill would you anticipate finding in the consolidated balance sheet?

a. $0
b. $100,000
c. $300,000
d. $400,000

HELP ME!

(ACCOUNTING ) MULTIPLE CHOICE QUESTION Chapter 8

MULTIPLE CHOICE QUESTIONS

Select the appropriate response.

1. Inventory accounts should be classified in which section of a balance sheet?

a. Current assets
b. Investments
c. Property, plant, and equipment
d. Intangible assets

HELP ME!

2. Ritz Company agreed to purchase certain inventory items from Hostess Corporation. Hostess shipped the goods F.O.B. destination. On December 31, Ritz's accounting year-end, Ritz was aware that the goods had been shipped and would be received any day.

a. Ritz should include the goods in its inventory calculated on December 31.
b. Ritz should include the goods in its inventory calculated on December 31, but should not record the obligation to pay for them.
c. Ritz should not include the goods in its inventory calculated on December 31, but should include the related payable on its balance sheet at December 31.
d. Ritz should not include the goods in its inventory calculated on December 31, and should not include the related payable on its balance sheet at December 31.

HELP ME!

3. Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year.

January 2	Beginning Inventory	500 units at $3.00
April 7	Purchased	1,100 units at $3.20
June 30	Purchased	400 units at $4.00
December 7	Purchased	1,600 units at $4.40

Sales during the year were 2,700 units at $5.00. If Hefty used the first-in, first-out method, ending inventory would be:

a. $2,780
b. $3,960
c. $9,700
d. $10,880

HELP ME!

4. Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year.

January 2	Beginning Inventory	500 units at $3.00
April 7	Purchased	1,100 units at $3.20
June 30	Purchased	400 units at $4.00
December 7	Purchased	1,600 units at $4.40

Sales during the year were 2,700 units at $5.00. If Hefty used the periodic LIFO method, cost of goods sold would be:

a. $2,780
b. $3,960
c. $9,700
d. $10,880

HELP ME!

5. Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year.

January 2	Beginning Inventory	500 units at $3.00
April 7	Purchased	1,100 units at $3.20
June 30	Purchased	400 units at $4.00
December 7	Purchased	1,600 units at $4.40

Sales during the year were 2,700 units at $5.00. If Hefty used the weighted-average method, gross profit would be:

a. $3,255
b. $3,415
c. $10,245
d. $13,500

HELP ME!

6. Which of the following inventory methods will always produce the same results under both a periodic and perpetual system?

a. FIFO
b. LIFO
c. Average
d. All of these

HELP ME!

7. An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is:

a. FIFO
b. LIFO
c. Retail
d. Weighted-average

HELP ME!

8. Bernstein Corporation recently experienced a fire which destroyed all of its inventory. The following data have been reconstructed from partial accounting information, and pertain to the year up to the date of the fire.

Beginning inventory	$20,000
Net purchases	$45,000
Sales	$80,000
Gross profit rate	40%

Using the gross profit method, estimate the dollar amount of inventory which was destroyed in the fire.

a. $17,000
b. $33,000
c. $48,000
d. $65,000

HELP ME!

9. Gerber Department Store utilizes the retail inventory method. Gerber's beginning inventory cost $140,000 and retailed for $280,000. Purchases for the period amounted to $390,000 and were priced to sell at twice that amount. Sales for the period, all at normal retail, were $600,000. How much is the cost of Gerber's estimated ending inventory?

a. $115,000
b. $150,000
c. $230,000
d. $300,000

HELP ME!

10. Wonder Corporation failed to record the purchase of merchandise on account. The merchandise and related accounts payable should have been recorded but were not. What is the effect of these errors on assets, liabilities, retained earnings, and net income, respectively?

a. Understated, understated, no effect, no effect
b. Understated, understated, understated, understated
c. Understated, overstated, overstated, understated
d. Overstated, overstated, understated, overstated

HELP ME!

(ACCOUNTING ) MULTIPLE CHOICE QUESTION Chapter 7

MULTIPLE CHOICE QUESTIONS

Select the appropriate response.

1. Trade accounts receivable:

a. arise from the sale of a company's products or services.
b. are reported in the noncurrent asset section of the balance sheet.
c. include deposits with utilities.
d. generally comprise the minority of the total receivables balance.

HELP ME!

2. Lundstrom Company began making sales on credit during 20X1. The company used the direct write-off method for uncollectible accounts. A material amount of uncollectible accounts resulting from sales made during 20X1 were written off during 20X2. What was the effect of this write-off on net income for 20X1 and 20X2?

20X1 20X2

a. Overstate Overstate
b. Overstate Understate
c. Understate Overstate
d. Understate Understate

HELP ME!

3. Taylor Company uses the direct write-off method of recording uncollectible accounts receivable. Recently, a customer informed Taylor that he would be unable to pay $300 owed to Taylor. Taylor's proper journal entry to reflect this event would be:

a. Uncollectible Accounts Expense 300
Allow. for Uncollectible Accounts 300

b. Allow. for Uncollectible Accounts 300
Accounts Receivable 300

c. Uncollectible Accounts Expense 300
Accounts Receivable 300

d. Sales 300
Accounts Receivable 300

HELP ME!

4. Malcom's financial statements revealed uncollectible accounts expense of $8,000, accounts receivable of $140,000, and allowance for uncollectible accounts of $12,000. The net realizable value of Malcom's accounts receivable is:

a. $128,000
b. $132,000
c. $136,000
d. $152,000

HELP ME!

5. Branz Company had credit sales during the current year which amounted to $700,000. Historically, 3% of credit sales are uncollectible. If Branz uses the allowance method of recording uncollectible accounts, a proper journal entry for the year would be:

a. Accounts Receivable 21,000
Allow. for Uncollectible Accounts 21,000

b. Uncollectible Accounts Expense 21,000
Accounts Receivable 21,000

c. Uncollectible Accounts Expense 21,000
Allow. for Uncollectible Accounts 21,000

d. Allow. for Uncollectible Accounts 21,000
Accounts Receivable 21,000

HELP ME!

6. Lindy Company uses an allowance method to account for bad debts. Lindy estimates that 5% of the outstanding accounts receivable will be uncollectible. At the end of the year, Lindy has outstanding accounts receivable of $750,000, and a debit balance in the Allowance for Uncollectible Accounts of $9,000. Lindy should record uncollectible accounts expense of:

a. $28,500
b. $37,500
c. $46,500
d. $55,500

HELP ME!

7. Flynn Company uses an allowance method for recording uncollectibles. Flynn determined that $4,000 due from Mitchell will not be collected. The entry Flynn should record to write off the Mitchell account is:

a. Uncollectible Accounts Expense 4,000
Accounts Receivable 4,000

b. Sales 4,000
Accounts Receivable 4,000

c. Uncollectible Accounts Expense 4,000
Allowance for Uncollectible Accounts 4,000

d. Allowance for Uncollectible Accounts 4,000
Accounts Receivable 4,000

HELP ME!

8. John Company uses an allowance method for recording uncollectible receivables. John was notified by Paul that payment on a $1,000 receivable would be forthcoming. John had previously written off the receivable from Paul. The proper journal entry for John to record to reinstate the receivable into the accounts is:

a. Accounts Receivable 1,000
Allow. for Uncollectible Accounts 1,000

b. Allow. for Uncollectible Accounts 1,000
Sales 1,000

c. Accounts Receivable 1,000
Sales 1,000

d. Accounts Receivable 1,000
Uncollectible Accounts Expense 1,000

HELP ME!

9. Interest on a loan may be computed by which of the following formulas?

a. (principal x rate)/time
b. (principal x rate x time)
c. (principal x time)/rate
d. (principal x time)/time

HELP ME

10. Vivian Howell is the payee of $10,000, 180-day, 8% note. At maturity, the maker failed to pay. How much interest income should Vivian recognize on the dishonored note?

a. $0
b. $400
c. $800
d. $10,800

HELP ME

(ACCOUNTING ) MULTIPLE CHOICE QUESTION Chapter 6

MULTIPLE CHOICE QUESTIONS

Select the appropriate response.

1. The Cash account on the balance sheet should not include which of the following items?

a. Travel advances to employees
b. Currency
c. Money orders
d. Deposits in transit

HELP ME!

2. A credit memorandum accompanying a bank statement would occur for which of the following items?

a. A previously deposited customer check which was returned NSF.
b. Bank service charges for the month.
c. The proceeds of a note collected by the bank are deposited to the account.
d. Each of the above.

HELP ME!

3. When reconciling the ending cash balance per the bank statement to the correct adjusted cash balance, how would deposits in transit be handled?

a. Added to the balance per the bank statement.
b. Subtracted from the balance per the bank statement.
c. Added to the balance per company records.
d. Ignored.

HELP ME!

4. A bank reconciliation sometimes points to the need for adjusting entries. In general, the source of the adjustments is:

a. the reconciliation of the ending balance per the bank statement to the adjusted cash balance.
b. the reconciliation of the cash balance per the company records to the adjusted cash balance.
c. both a and b.
d. none of the above.

HELP ME!

5. Malory Company provides the following information about the month-end bank reconciliation:

Ending cash per bank statement	$1,367
Ending cash per company records	7,383
Monthly bank service charge	25
Deposits in transit at month-end	8,345
Outstanding checks at month-end	2,399
Customer check returned NSF	45

The correct ending cash balance is:

a. $4,914
b. $7,268
c. $7,313
d. $7,383

HELP ME!

6. Malory Company provides the following information about the month-end bank reconciliation:

Ending cash per bank statement	$1,367
Ending cash per company records	7,383
Monthly bank service charge	25
Deposits in transit at month-end	8,345
Outstanding checks at month-end	2,399
Customer check returned NSF	45

What journal entry should be recorded to cause the company records to be correct?

a. Cash 70
Cash Short & Over 70

b. Miscellaneous Expense 70
Cash 70

c. Miscellaneous Expense 25
Accounts Receivable 45
Cash 70

d. Miscellaneous Expense 2,399
Cash 2,399

HELP ME!

7. When using a petty cash system, the replenishment of the fund would normally include a debit to:

a. Cash.
b. Petty Cash.
c. Revenues.
d. None of the above.

HELP ME!

8. The trading securities owned by a company are:

a. reported on the balance sheet as a current asset.
b. reported on the balance sheet as a noncurrent asset.
c. reported on the balance sheet as a contra-equity account.
d. reported on the balance sheet as a reduction of liabilities.

HELP ME!

9. During its first year of operation, Lenton Company acquired three investments in trading securities. Investment A cost $50,000 and had a year-end market value of $60,000. Investment B cost $35,000 and had a year-end market value of $17,000. Investment C cost $26,000 and had a year-end market value of $24,000. What amount should be reported as a charge against income in Lenton's income statement for the first year of operation?

a. $0
b. $10,000
c. $20,000
d. $30,000

HELP ME!

10. During its first year of operation, Lenton Company acquired three investments in trading securities. Investment A cost $50,000 and had a year-end market value of $60,000. Investment B cost $35,000 and had a year-end market value of $17,000. Investment C cost $26,000 and had a year-end market value of $24,000. The journal entry to record the decline in market value would include:

a. a debit to Unrealized Loss on Trading Securities.
b. a credit to Unrealized Gain on Trading Securities.
c. a debit to Trading Securities.
d. At least two of the above.

HELP ME!

(ACCOUNTING ) MULTIPLE CHOICE QUESTION Chapter 5

MULTIPLE CHOICE QUESTIONS

Select the appropriate response.

1. The Sales account and Purchases account should include:

a. only cash sales and cash purchases of merchandise.
b. only credit sales and credit purchases of merchandise.
c. both cash and credit sales and cash and credit purchases of merchandise.
d. not only merchandise transactions, but also purchases and sales of other assets used in the business.

HELP ME!

2. Purchasers of merchandise may be dissatisfied with the quality of goods purchased on account, and return the goods to the seller with an indication that payment will not be forthcoming. In such case, the document prepared by the purchaser is called:

a. a debit memorandum.
b. a credit memorandum.
c. a receiving report.
d. an invoice.

HELP ME!

3. Bergstrom accepted the return of merchandise by a customer. The merchandise had been sold on account, and payment had not been received on the date of return. The returned goods retailed for $400, but cost Bergstrom only $300. The appropriate journal entry for Bergstrom is:

a. Accounts Receivable 400
Sales Returns & Allowances 400

b. Sales Returns & Allowances 400
Accounts Receivable 400

c. Sales 400
Purchases 300
Accounts Receivable 100

d. Sales Returns & Allowances 400
Purchases 300
Accounts Receivable 100

HELP ME!

4. Which of the following statements is true?

a. Cash discounts are used to reduce the invoice price below the stated list price.
b. The expression 2/30, n/60, means that a 2% cash discount is available if the invoice is paid within 30 to 60 days.
c. Cash discounts may not be used in conjunction with trade discounts.
d. Cash discounts normally apply to the invoice price of the merchandise, excluding freight charges.

HELP ME!

5. Lux had net purchases of $50,000, ending inventory of $25,000, net sales of $100,000, and gross profit of $32,000. How much was Lux's beginning inventory?

a. $7,000
b. $43,000
c. $93,000
d. $143,000

HELP ME!

6. On February 1, Crown Company purchased $2,000 of merchandise, terms 2/10, n/30. Crown uses the gross method of recording purchases. Payment of the accounts payable was made on February 26. Which of the following journal entries is appropriate for the February 26 transaction?

a. Purchases 2,000
Accounts Payable 2,000

b. Accounts Payable 1,960
Cash 1,960

c. Accounts Payable 1,960
Purchases Discounts Lost 40
Cash 2,000

d. Accounts Payable 2,000
Cash 2,000

HELP ME!

7. On March 1, Zekew Company purchased $1,000 of merchandise, terms 1/10, n/30. Zekew uses the net method of recording purchases. Payment of the accounts payable was made on March 4. Which of the following journal entries is appropriate for the March 4 transaction?

a. Purchases 990
Cash 990

b. Accounts Payable 990
Cash 990

c. Accounts Payable 1,000
Purchases Discounts 10
Cash 990

d. Accounts Payable 1,000
Cash 1,000

HELP ME!

8. Dodd Company utilizes the periodic inventory accounting system. Dodd had beginning inventory of $59,000, ending inventory of $37,000, and net purchases of $123,000. Which of the following components should be included in the year-end closing entries prepared by Dodd?

a. Purchases 123,000
Inventory 123,000

b. Income Summary 37,000
Inventory 37,000

c. Income Summary 59,000
Inventory 59,000

d. All of the above

HELP ME!

9. Russell Merchandising uses the perpetual inventory system. Which of the following statements is correct?

a. When Russell records a sale, it should also debit inventory.
b. When Russell records a sale, it should also credit inventory.
c. When Russell records a sale, it should also credit cost of goods sold.
d. When Russell records a sale, it should also debit cost of goods available for sale.

HELP ME!

10. A multiple-step income statement is thought to be more beneficial to financial users because of the revelation of important relationships. Which of the following is not separately identified on a multiple-step income statement?

a. Gross profit
b. Net income
c. Income taxes
d. Total costs and expenses

HELP ME!

(ACCOUNTING ) MULTIPLE CHOICE QUESTION Chapter 4

MULTIPLE CHOICE QUESTIONS

Select the appropriate response.

1. The accountant's worksheet:

a. lays the groundwork for formal financial statement preparation.
b. is a fundamental financial statement.
c. provides details necessary for full disclosure and the preparation of footnotes.
d. is prepared at the end of each operating cycle.

HELP ME!

2. In preparing a work sheet, a net loss would be computed and entered in the:

a. debit column of the income statement columns of the worksheet.
b. credit column of the income statement columns of the worksheet.
c. in the debit column of the adjusted trial balance.
d. in the credit column of the balance sheet columns of the worksheet.

HELP ME!

3. Which of the following accounts would not be closed at the end of an accounting period?

a. Income Summary
b. Dividends
c. Revenue
d. Capital Stock

HELP ME!

4. After closing all revenue and expense accounts, Norris Company had a debit balance in its Income Summary account of $10,000. The proper entry to record the closing of the Income Summary account would be:

a. Revenue 10,000
Income Summary 10,000

b. Retained Earnings 10,000
Income Summary 10,000

c. Income Summary 10,000
Retained Earnings 10,000

d. Income Summary 10,000
Expenses 10,000

HELP ME!

5. The following statements all pertain to the accounting cycle. Which of these statements is wrong?

a. A post-closing trial balance is prepared prior to closing temporary accounts.
b. Formal financial statements may be produced from the worksheet.
c. Adjusting entries are recorded in the journal and posted to the ledger.
d. The post-closing trial balance is prepared by examining ledger balances subsequent to the closing of accounts.

HELP ME!

6. Which of the following statements about reversing entries is true?

a. Identical account balances are achieved in the subsequent accounting period whether reversing entries are utilized or not.
b. Reversing entries may not be used with accrued revenues.
c. Reversals are generally applied to those adjusting items that do not involve future cash flow.
d. Reversing entries would not be prepared if a company also utilized closing entries.

HELP ME!

7. Shipman Company had accrued salaries of $300 on December 31. The company recorded reversing entries on the following January 1. On the next payday, January 7, the appropriate entry to record the payment of $1,000 in salaries should include:

a. a debit to Salaries Expense of $1,000.
b. a debit to Salaries Expense of $700.
c. a debit to Salaries Expense of $1,300.
d. a debit to Salaries Payable for $300.

HELP ME!

8. Current assets are those assets which management intends to convert into cash or consume within:

a. The operating cycle
b. One year
c. The longer of (a) or (b)
d. The shorter of (a) or (b)

HELP ME!

9. On a classified balance sheet, the appropriate ordering of specific classifications is:

a. Current assets; long-term investments; property, plant, and equipment; intangible assets; other assets.
b. Current assets; property, plant, and equipment; long-term investments; intangible assets; other assets.
c. Current assets; intangible assets; property, plant, and equipment; long-term investments; other assets.
d. Current assets; other assets; long-term investments; intangible assets; property, plant, and equipment.

HELP ME!

10. If a company had a current ratio of 0.5, then which of the following statements regarding that company's working capital would be true?

a. The company's working capital would be positive.
b. The company's working capital would be zero.
c. The company's working capital would be negative.
d. The company's working capital would be 2:1.

HELP ME!

(ACCOUNTING ) MULTIPLE CHOICE QUESTION Chapter 3

MULTIPLE CHOICE QUESTIONS

Select the appropriate response.

1. For purposes of measuring business income, the life of a business is:

a. divided into specific points in time.
b. divided into irregular cycles.
c. divided into discrete accounting periods.
d. considered to be a continuous cycle.

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2. Adjusting entries at the end of an accounting period would not be required for which of the following

a. Multiperiod costs that must be split among two or more accounting periods.
b. Multiperiod revenues that must be split among two or more accounting periods.
c. Expenses that have been incurred in a given period but not as yet recorded in the accounts.
d. Revenue that has been earned and recorded in the accounting records.

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3. Blankenship Company pays its employees every Friday for work rendered that week. The payroll is typically $10,000 per week. Which of the following journal entries would Blankenship ordinarily record on the Friday payday?

a. Salary Expense 10,000
Salary Payable 10,000

b. Salary Expense 10,000
Cash 10,000

c. Salary Payable 10,000
Cash 10,000

d. Salary Payable 10,000
Salary Expense 10,000

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4. Blankenship Company pays its employees every Friday for work rendered that week. The payroll is typically $10,000 per week. What journal entry would be recorded (on Wednesday) if the end of the accounting period occurred on a Wednesday?

a. Salary Expense 6,000
Salary Payable 6,000

b. Salary Expense 6,000
Cash 6,000

c. Salary Payable 6,000
Cash 6,000

d. Salary Payable 6,000
Salary Expense 6,000

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5. Blankenship Company pays its employees every Friday for work rendered that week. The payroll is typically $10,000 per week. Blankenship's year-end occurred on Wednesday, at which time a correct adjusting entry was recorded. On the following Friday, which of the following payroll journal entries should be recorded?

a. Salary Expense 10,000
Cash 10,000

b. Salary Expense 4,000
Salary Payable 6,000
Cash 10,000

c. Salary Expense 6,000
Salary Payable 4,000
Cash 10,000

d. Salary Payable 10,000
Cash 10,000

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6. The appropriate journal entry to record equipment depreciation expense would consist of a debit to Depreciation Expense and a credit to which of the following accounts?

a. Equipment
b. Accumulated Depreciation: Equipment
c. Retained Earnings
d. Cash

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7. At the end of the current accounting period, Johnson Company failed to record utilities consumed during the period. Johnson will be billed for the utilities during the next accounting period. As a result, current period assets, liabilities, equity, and income, respectively, are:

a. Overstated, overstated, correct, correct
b. Correct, understated, overstated, overstated
c. Overstated, understated, overstated, overstated
d. Overstated, understated, correct, correct

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8. On November 1, 20X1, Limit Company purchased a one-year insurance policy for $12,000. Limit Company debited Cash and credited Prepaid Insurance for $12,000. At the end of December, 20X1, $2,000 of insurance had expired. The journal entry to properly state all accounts involved on December 31, 20X1, would be:

a. Insurance Expense 2,000
Prepaid Insurance 22,000
Cash 24,000

b. Insurance Expense 2,000
Prepaid Insurance 2,000

c. Insurance Expense 2,000
Cash 2,000

d. Prepaid Insurance 2,000
Insurance Expense 2,000

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9. Under the the income statement approach to adjusting entries, the receipt of $5,000 of unearned revenue would be recorded by debiting Cash. What account should be credited?

a. Cash
b. Revenue
c. Unearned Revenue
d. Prepaid Revenue

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10. Simmons Company received and recorded a $5,000 payment for services to be rendered in the future. If the income statement approach to adjusting entries is used, the appropriate adjusting entry at the end of the accounting period for $3,000 of revenue not yet earned would be:

a. Service Revenue 3,000
Unearned Service Revenue 3,000

b. Service Revenue 2,000
Unearned Service Revenue 2,000

c. Accounts Receivable 3,000
Unearned Service Revenue 3,000

d. No entry would be needed.

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