Assignment
1. The best definition of assets is the
collections of resources belonging to the company and the claims on these resources.
owners' investment in the business.
cash owned by the company.
resources belonging to a company that have future benefit to the company.
2. Which of the following is not a liability?
Interest Payable
Unearned Service Revenue
Accounts Receivable
Accounts Payable
3. Which of the following financial statements is divided into major categories of operating, investing, and financing activities?
The income statement.
The balance sheet.
The statement of cash flows.
The retained earnings statement.
4. Ending retained earnings for a period is equal to beginning
Retained earnings + Net income + Dividends.
Retained earnings - Net income + Dividends.
Retained earnings - Net income - Dividends.
Retained earnings + Net income - Dividends.
5. Which of the following is not an advantage of the corporate form of business organization?
Easy to transfer ownership
No personal liability
Favorable tax treatment
Easy to raise funds
6. An advantage of the corporate form of business is that
its owner's personal resources are at stake.
its ownership is easily transferable via the sale of shares of stock.
it is simple to establish.
it has limited life.
7. A small neighborhood barber shop that is operated by its owner would likely be organized as a
corporation.
joint venture.
proprietorship.
partnership.
9. If services are rendered for cash, then
liabilities will increase.
assets will increase.
stockholders' equity will decrease.
liabilities will decrease.
10. A revenue generally
increases assets and decreases stockholders' equity.
leaves total assets unchanged.
increases assets and liabilities.
increases assets and stockholders' equity.
11. A revenue account
is increased by credits.
has a normal balance of a debit.
is increased by debits.
is decreased by credits.
12. Which accounts normally have debit balances?
Assets, expenses, and dividends
Assets, liabilities, and dividends
Assets, expense, and retained earnings
Assets, expenses, and revenues
13. In recording an accounting transaction in a double-entry system
there must only be two accounts affected by any transaction.
the amount of the debits must equal the amount of the credits.
there must always be entries made on both sides of the accounting equation.
the number of debit accounts must equal the number of credit accounts.
14. The usual sequence of steps in the transaction recording process is
analyze, journalize, post to the ledger.
journalize, analyze, post to the ledger.
journalize, post to the ledger, analyze.
post to the ledger, journalize, analyze.
15. Under the expense recognition principle expenses are recognized when
the invoice is received.
they contribute to the production of revenue.
they are billed by the supplier.
they are paid.
16. The revenue recognition principle dictates that revenue should be recognized in the accounting records:
when cash is received.
when the performance obligation is satisfied.
at the end of the month.
in the period that income taxes are paid.
17. Merchandising companies that sell to retailers are known as
brokers.
wholesalers.
service firms.
corporations.
18. Gross profit equals the difference between
net income and operating expenses.
sales revenue and cost of goods sold.
sales revenue and operating expenses.
sales revenue and cost of goods sold plus operating expenses.
19. Net income will result if gross profit exceeds
operating expenses.
purchases.
cost of goods sold plus operating expenses.
cost of goods sold.
20. Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account?
Freight-Out
Inventory
Freight Expense
Freight-In
21. Financial information is presented below:
|
Operating expenses
|
$ 25000
|
|
Sales revenue
|
247000
|
|
Cost of goods sold
|
167000
|
The profit margin ratio would be
0.68.
0.78.
0.22.
0.32.
22. Financial information is presented below:
|
Operating expenses
|
$ 35000
|
|
Sales returns and allowances
|
7000
|
|
Sales discounts
|
4000
|
|
Sales revenue
|
186000
|
|
Cost of goods sold
|
106000
|
The gross profit rate would be
0.39.
0.37.
0.43.
0.61.
23. Financial information is presented below:
|
Operating expenses
|
$ 49000
|
|
Sales returns and allowances
|
5000
|
|
Sales discounts
|
6000
|
|
Sales revenue
|
206000
|
|
Cost of goods sold
|
108000
|
$103000.
$87000.
$93000.
$98000.
24. The LIFO inventory method assumes that the cost of the latest units purchased are
the first to be allocated to ending inventory.
the first to be allocated to cost of goods sold.
not allocated to cost of goods sold or ending inventory.
the last to be allocated to cost of goods sold.
25. Which of the following statements is correct with respect to inventories?
It is generally good business management to sell the most recently acquired goods first.
Under FIFO, the ending inventory is based on the latest units purchased.
FIFO seldom coincides with the actual physical flow of inventory.
The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.
26. All of the following are examples of internal control procedures except
usingprenumbered documents.
customer satisfaction surveys.
insistence that employees take vacations.
reconciling the bank statement.
27. Each of the following is a feature of internal control except
recording of all transactions.
an extensive marketing plan.
bonding of employees.
separation of duties.
28. For which of the following errors should the appropriate amount be subtracted from the balance per books on a bank reconciliation?
A returned $200 check recorded by the bank as $20.
Check written for $73, but recorded by the company as $37.
Check written for $58, but recorded by the company as $85.
Deposit of $700 recorded by the bank as $70.
29. A check written by the company for $128 is incorrectly recorded by a company as $182. On the bank reconciliation, the $54 error should be
deducted from the balance per bank.
added to the balance per books.
added to the balance per bank.
deducted from the balance per books.
30. The following information was available for Kingbird, Inc. at December 31, 2017: beginning inventory $70000; ending inventory $108000; cost of goods sold $644000; and sales $888000. Kingbird inventory turnover ratio (rounded) in 2017 was
6.0 times.
7.2 times.
10.0 times.
9.2 times.
31. The following information was available for Novak Corp. at December 31, 2017: beginning inventory $78000; ending inventory $102000; cost of goods sold $684000; and sales $872000. Novak days in inventory (rounded) in 2017 was
54.5 days.
41.5 days.
37.6 days.
48.0 days.