1
NEW YORK STATE FBLA
ACCOUNTING II
2011
PLEASE DO NOT OPEN THIS TEST UNTIL DIRECTED TO DO SO
Test Directions
1. Complete the information requested on the answer sheet.
PRINT YOUR NAME on the “Name” line.
PRINT the name of the event, ACCOUNTING II on the “Subject” line.
PRINT the name of your CHAPTER on the “DATE” line.
2. All answers will be recorded on the answer sheet.
Please do not write on the test booklet.
Scrap paper will be provided.
3. Read each question completely before answering. With a NO. 2 pencil, blacken in your choices completely on the answer sheet. Do not make any other marks on the answer sheet, or the scoring machine will reject it.
4. You will be given 60 minutes for the test. You will be given a starting signal and a signal after 50 minutes have elapsed.
1. Failure to record the receipt of a utility bill for services already received will result in:
a. An overstatement of assets.
b. An overstatement of liabilities.
c. An overstatement of equity.
d. An understatement of assets.
2. Which of the following errors will be disclosed in the preparation of a trial balance? a. Recording transactions in the wrong account.
b. Duplication of a transaction in the accounting records.
c. Posting only the debit portion of a particular journal entry.
d. Recording the wrong amount for a transaction to both the account debited and the account credited.
3. The basic sequence in the accounting process can best be described as: a. Transaction, journal entry, source document, ledger account, trial balance.
b. Source document, transaction, ledger account, journal entry, trial balance.
c. Transaction, source document, journal entry, trial balance, ledger account.
d. Transaction, source document, journal entry, ledger account, trial balance.
4. 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.
5. Adjusting entries at the end of an accounting period would not be required for which of the following a. Multi-period costs that must be split among two or more accounting periods.
b. Multi-period 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.
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
7. 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
8. Under 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
9. 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.
10. 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.
11. 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
12. 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
13. 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.
14. 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.
15. 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.
16. 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)
17. 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.
18. 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.
19. 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.
20. Jones Company 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 Jones Company only $300. The appropriate journal entry for Jones Company 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
21. 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.
22. Robertson’s 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 Robertson's beginning inventory? a. $17,000
b. $43,000
c. $93,000
d. $143,000
23. Clark Company utilizes the periodic inventory accounting system. Clark had beginning inventory of $60,000, ending inventory of $47,000, and net purchases of $123,000. Which of the following components should be included in the year-end closing entries prepared by Clark?
a. Purchases 123,000
Inventory 123,000
b. Income Summary 47,000
Inventory 47,000
c. Income Summary 60,000
Inventory 60,000
d. All of the above
24. 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.
25. 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
26. 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.
27. 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
28. 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.
29. 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
30. 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.
31. 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
32. 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.
33. 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.
34. 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
35. 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
36. 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
37. 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
38. 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
39. 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
40. 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.
41. 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
42. 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
43. 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
44. 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
45. 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
46. 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
47. 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.
48. Lance 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 |
Lance 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
49. 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
50. 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
51. 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. $5,376
d. $14,400
52. 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.
53. Typical current liabilities include: a. Prepayments by customers.
b. Travel advances to employees.
c. The principal portion of a mortgage note that is due beyond one year or the operating cycle, whichever is longer.
d. Accumulated depreciation.
54. Contingent liabilities should be recorded in the accounts when: a. It is probable that the future event will occur.
b. The amount of the liability can be reasonably estimated.
c. Both (a) and (b).
d. Either (a) or (b).
55. On June 1, Whit Corporation purchased a truck for $30,000. To pay for the truck, Whit issued and recorded a six-month note payable for $31,500. No other entry was recorded for the note until payment on December 1. The journal entry to record payment of the note would include: a. A debit to Interest Expense for $1,500.
b. A debit to Discount on Notes Payable for $1,500.
c. A debit to Notes Payable for $30,000.
d. A debit to Cash for $31,500.
56. The Discount on Notes Payable: a. Is a contra liability account.
b. Is a contingent liability account.
c. Should be reported as an asset because of its debit balance.
d. Is amortized to reduce interest expense over the life of the note payable.
57. If the journal entry to record an accrued liability were accidentally recorded twice, it would: a. Understate income for the year.
b. Overstate income for the year.
c. Have no effect on income for the year.
d. Understate accrued liabilities at the end of the year.
58. Landry paid $5,000 cash for warranty service work. If a Warranty Liability account had been previously established, the proper journal entry to record the service work would be:
a. Sales 5,000
Cash 5,000
b. Warranty Expense 5,000
Warranty Liability 5,000
c. Warranty Expense 5,000
Cash 5,000
d. Warranty Liability 5,000
Cash 5,000
59. The employee's withholding allowance certificate is popularly referred to as a:
a. W-2.
b. W-4.
c. Form 1040.
d. Payroll register.
60. The FICA tax is levied on:
a. Employees only.
b. Employers only.
c. Both employees and employers.
d. Earnings in excess of base amounts.
61. Sparks Corporation had 15,000 shares of common stock outstanding on January 1, and issued an additional 5,000 shares on June 1. There was preferred stock outstanding, and dividends on the preferred stock amounted to $20,000. The corporation reports net income of $200,000. The preferred stock is not convertible. How much is basic earnings per share (to the nearest cent) for the calendar year? a. $9.00
b. $10.00
c. $10.05
d. $10.29
62. The organization that has been given the authority by Congress to set accounting principles for public companies is the: a. Internal Revenue Service.
b. Financial Accounting Standards Board.
c. Securities and Exchange Commission.
d. Institute of Management Accountants.
63. Financial statement ratio analysis may be undertaken to study liquidity, turnover, profitability, and other indicators. To which does the current ratio most relate? a. Liquidity
b. Turnover
c. Profitability
d. Other indicator
64. On a statement of cash flows, which of the following types of activities would not be disclosed in a separate section? a. Operating activities
b. Investing activities
c. Financing activities
d. Contractual activities
65. Which of the following activities would generally be regarded as a financing activity in preparing a statement of cash flows? a. Dividend distribution
b. Proceeds from the sale of stocks of other firms
c. Loans made by the entity to other businesses
d. Employees' salaries and wages paid
66. Which of the following statements about differences between financial and managerial accounting is incorrect? a. Managerial accounting information is prepared primarily for external parties such as stockholders and creditors; financial accounting is directed at internal users.
b. Financial accounting is aggregated; managerial accounting is focused on products and departments.
c. Managerial accounting pertains to both past and future items; financial accounting focuses primarily on past transactions and events.
d. Financial accounting is based on generally accepted accounting practices; managerial accounting faces no similar constraining factors.
67. Which of the following functions is managerial accounting intended to facilitate? a. Planning
b. Decision making
c. Control
d. All of these
68. Cost accounting information can be used for: a. Budget control and evaluation.
b. Determining standard costs and variances.
c. Pricing and inventory valuation decisions.
d. All of these
69. Manufacturing costs are also known as product costs. Which of the following best describes those costs which are considered to be manufacturing costs? a. Direct materials, direct labor, and factory overhead.
b. Direct materials and direct labor only.
c. Direct materials, direct labor, factory overhead, and administrative overhead.
d. Direct labor and factory overhead.
70. Factory overhead includes all manufacturing costs except direct material and direct labor. Which of the following items would not be considered to be a factory overhead cost? a. Repainting the corporate office building.
b. Indirect labor.
c. Repair and maintenance expenditures on factory machinery.
d. Small expenditures pertaining to items like rags, screws, adhesives, etc., used in the production process.
71. There are a number of benefits associated with budgeting. Which of the following is not frequently cited as a benefit of the budget process? a. Budgets can help identify production bottlenecks.
b. Budgets are useful tools in performance evaluation.
c. Budgets help provide an early warning for periods during which cash may be in short supply.
d. Budgets eliminate the opportunity for slack or padding within an organization.
72. The basic difference between a static budget and a flexible budget is that: a. A flexible budget considers only variable costs, but a static budget considers all costs.
b. Flexible budgets allow management latitude in meeting goals, whereas a static budget is based on a fixed standard.
c. A static budget is for an entire production facility, but a flexible budget is applicable only to a single department.
d. A static budget is based on one specific level of production and a flexible budget can be prepared for any production level within a relevant range.
73. Costs that do not change when the activity base fluctuates are known as: a. Variable costs
b. Discretionary costs
c. Fixed costs
d. Mixed costs
74. A company's telephone bill consisting of a $200 monthly base amount, plus long distance charges, would be classified as a: a. Variable cost
b. Committed fixed cost
c. Discretionary fixed cost
d. Mixed cost
75. Several alternative depreciation approaches that result in relatively more depreciation in early years of use, and smaller amounts during later years are considered: a. accelerated depreciation methods
b. modified accelerated depreciation methods
c. depreciable methods
d. straight-line depreciation methods
76. The overriding criterion by which accounting information can be judged is that of a. usefulness for decision making
b. freedom from bias
c. timeliness
d. comparability
77. Information is neutral if it a. provides benefits which are at least equal to the costs of its preparation
b. can be compared with similar information about an enterprise at other points in time
c. would have no impact on a decision maker
d. is free from bias toward a predetermined result
78. Blinder Corporation projected the following:
|Sales | $5,000,000 |
|Fixed manufacturing costs | 2,000,000 |
Blinder projects variable manufacturing costs of 40% of sales. Assuming no change in inventory, what will be the projected cost of goods sold? a. $2,000,000
b. $3,000,000
c. $4,000,000
d. $5,000,000
79. The accounting profession can be divided into three major categories; specifically, the practice of public accounting, private accounting, and governmental accounting. A somewhat unique and important service of public accountants is: a. Financial accounting.
b. Managerial accounting.
c. Auditing.
d. Cost accounting.
80. The primary private sector agency that oversees external financial reporting standards is the: a. Financial Accounting Standards Board.
b. Federal Bureau of Investigation.
c. General Accounting Office.
d. Internal Revenue Service.
81. Retained earnings will change over time because of several factors. Which of the following factors would explain an increase in retained earnings? a. Net loss.
b. Net income.
c. Dividends.
d. Investments by stockholders.
82. Which of these items would be accounted for as an expense? a. Repayment of a bank loan.
b. Dividends to stockholders.
c. The purchase of land.
d. Payment of the current period's rent.
83. Which of the following transactions would have no impact on stockholders' equity? a. Purchase of land from the proceeds of a bank loan.
b. Dividends to stockholders.
c. Net loss.
d. Investments of cash by stockholders.
84. Which of the following would not be included on a balance sheet? a. Accounts receivable.
b. Accounts payable.
c. Sales.
d. Cash.
85. Which of the following would be considered a liability? a. Accounts Payable
b. Prepaid Insurance
c. Dividend Expense
d. Retained Earnings
86. Gross profit is:
a. Cost of Goods Sold + Beginning Inventory
b. Excess of Sales over Cost of Goods Sold
c. Sales less Purchases
d. Net Profit less Expenses for the period
87. This appears in both the income statement and the statement of retained earnings.
a. Sales
b. Expenses
c. Net Income
d. Assets
88. Evidence of transactions is often provided by the receipt or issuance of accounting forms known as
a. Receipts
b. Sales Invoices
c. Transactions
d. Source Documents
89. Which of the following accounts are closed at the end of the accounting period: a. assets, liabilities, capital
b. expenses, revenues, income summary
c. capital, income summary
d. assets, revenues
90. Lynn Lipincott invested land valued at $5,000 in her business. This transaction would be recorded by:
a. Cash 5,000
Capital 5,000
b. Land 5,000
Capital 5,000
c. Land 5,000
Service Revenue 5,000
d. Capital 5,000
Land 5,000
91. 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.
92. Which of the following characteristics is considered to be an advantage of the corporate form of organization? a. Avoidance of double taxation
b. Limited liability of stockholders
c. Low level of regulation
d. The absence of a perpetual existence
93. The appropriate journal entry to record the issue of 1,000 shares of $1 par-value common stock, which is issued for $4 per share would be:
a. Cash 4,000
Common Stock 4,000
b. Cash 4,000
Common Stock 1,000
Paid-in Capital in Excess of Par 3,000
c. Cash 4,000
Common Stock 1,000
Retained Earnings 3,000
d. Cash 4000
Paid in Capital 4000
94. Jackson Corporation has 500,000 shares of common stock outstanding. On April 10, the board of directors declared a $0.60 per share cash dividend, to be paid to stockholders of record on April 25. The dividend was distributed on June 6. The proper journal entry to record on June 6 is:
a. Dividends Expense 300,000
Cash 300,000
b. Dividends Payable 300,000
Cash 300,000
c. Retained Earnings 300,000
Cash 300,000
d. Dividends Payable 300,000
Retained Earnings 300,000
95. Dividends omitted on preferred shares that must be paid before common shareholders are entitled to be paid are referred to as: a. Participating
b. Callable
c. Cumulative
d. In arrears
96. A machine that cost $18,000, with a book value of $4,000, is sold for $3,400. Which of the following is true concerning the journal entry to record the sale? a. Accumulated Depreciation is debited for $4,000.
b. Machinery is credited for $4,000.
c. Loss on sale of machinery is credited for $600.
d. Accumulated Depreciation is debited for $14,000.
97. The sale of a depreciable asset resulting in a loss indicates that the proceeds from the sale were:
a. Less than current market value.
b. Greater than cost.
c. Greater than book value.
d. Less than book value.
98. Which of the following terms best relates to natural resources?
a. Depreciation.
b. Depletion.
c. Amortization.
d. Accrual.
99. What type of account is Investment in Bonds? a. Asset
b. Liability
c. Equity
d. Revenue
100. How much will $1.00 invested at 10% (compounded annually) grow to by the end of 3 years? a. $.70
b. $1.21
c. $1.30
d. $1.331
|1. C |26. A |51. C |76. A |
|2. C. |27. C |52. B |77. D |
|3. D |28. D |53. A |78. C |
|4. C |29. C |54. C |79. C |
|5. D |30. A |55. A |80. A |
|6. B |31. B |56. A |81. B |
|7. A |32. A |57. A |82. D |
|8. B |33. A |58. D |83. A |
|9. A |34. B |59. B |84. C |
|10. B |35. C |60. C |85. A |
|11. D |36. A |61. A |86. B |
|12. B |37. C |62. C |87. C |
|13. A |38. B |63. A |88. D |
|14. A |39. A |64. D |89. B |
|15. A |40. D |65. A |90. B |
|16. C |41. B |66. A |91. C |
|17 A |42. D |67. D |92. B |
|18. C |43. A |68. D |93. B |
|19. A |44. A |69. A |94. B |
|20. B |45. A |70. A |95. D |
|21. D |46. A |71. D |96. D |
|22. B |47. A |72. D |97. D |
|23. C |48. B |73. C |98. B |
|24. B |49 A |74. D |99. A |
|25. D |50.C |75. A |100. D |
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