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Multiple choice
When preparing a
bank reconciliation, which of the following items should be added to the book
balance?
EFT receipts
deposits in
transit
collection items
both EFT receipts and collection items
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Which of the
following must be added to beginning Retained Earnings to compute ending
Retained Earnings?
net income
expenses
dividends
all of these
answers are correct
The use of the
FIFO method increases taxable income:
when prices are
constant
when prices are
declining
when prices are increasing
under all
circumstances
A company
mistakenly destroys a unit of inventory that originally cost $12. The company
included the cost of the destroyed unit in cost of goods sold on the income
statement, rather than recognizing it as a loss. This action is justifiable
based on:
the revenue
concept
accounting conservatism
the materiality
concept
none of the
above answers. All of them are incorrect; according to GAAP, a separate loss
must be recognized
When applying
the lower-of-cost-or-market rule, market value generally refers to:
fifo cost using
the periodic method
lifo cost using
the periodic method
current sales
price of the inventory
current replacement cost
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A company
performed services for a customer on account. This transaction increased assets
and _______.
decreased equity
increased
liabilities
increased
expenses
increased revenues
The two methods
of estimating uncollectible receivables are the:
aging-of-receivables
method and direct write-off method
percent of sales method and the aging-of-receivables method
allowance method
and the direct write-off method
percent of sales
method and the direct write-off method
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The use of the
allowance method of accounting for bad debts is preferred over the direct
write-off method because of the:
matching principle
historical cost
principle
revenue
recognition principle
full disclosure
principle
For which form
of business ownership are the owners of a business legally distinct from the
business?
Corporation
Partnership
Proprietorship
all of the above
A written
promise to pay a specified amount of money at a particular future date is
called a(n) :
maturity note
promissory note
account
receivable
unearned revenue
If the interest
is $5,000 on a 6%, 60 day note, what is the principal?
$500,000
$300,000
$5,000,000
not enough
information to calculate
Which
characteristic will NOT be found in an effective system of internal control?
competent,
reliable, and ethical personnel
a combination of duties
a separation of
duties
documents and
records
An accountant
recognizes the impact of a business event as it occurs and accounts for it
appropriately under which basis of accounting?
Cash
Prepaid
Accrual
Deferred
The
stable-monetary-unit concept of accounting:
ensures that
accounting records and statements are based on the most reliable data available
holds that the
entity will remain in operation for the foreseeable future
maintains that
each organization or section of an organization stands apart from other
organizations and individuals
enables accountants to ignore the effect of inflation in
the accounting records
In a bank
reconciliation, a NSF check is
added to the
bank balance
added to the
book balance
deducted from the book balance
deducted from the bank balance
Essay
1.) Given the
following data, calculate the gross profit using the average-cost method, if
the selling price was $20 per unit.
Date,
Item,
Unit
1/1,
Beginning
inventory,
40 units at $12 per unit
3/5,
Purchase of
inventory,
18 units at $14 per unit
5/30, Purchase
of
inventory,
24 units at $18 per unit
12/31, Ending
inventory,
20 unites
2.) Eckle Ltd. has the following unadjusted Trial
Balance as of March 31, 2009:
The following
data is available from Shantrice Meadows, Controller for Eckle Ltd.:
a. Store Supplies used for the period were $1,225.
b. The Building has been depreciated for three years; this Fiscal year is year
4.
c. The Store Equipment has been depreciated for 5 years; this Fiscal year is
year 6.
d. Prepaid Rent is for six months purchased on January 1, 2009.
e. Forty percent of the Unearned Revenue has been earned.
f. There are 8 employees, each receiving a salary of $2,000 per week for a
five-day (Monday through Friday) week. FYE ends on a Tuesday.
Prepare the appropriate Adjusting Journal entries.
Make sure your
answer is in Journal Entry Form. List the Account Name and Debit or
Credit. Remember all Journal Entries should balance.
3.) John Smith
started a consulting business and completed the following transactions during
January 2007. Journalize the
transactions. Explanations are not
required.
1. John incorporated the business, Consulting
Inc., and invested $10,000 for common stock.
2. Paid $2,000 monthly rent for office space.
3. Purchased $3,000 of office equipment, paying
cash.
4. Purchased $500 of office supplies on account.
5. Recorded $1,000 of revenue, receiving cash.
6. Recorded $1,500 of revenue on account and
mailed invoices to the customers.
7. Paid utilities expense of $300.
8. Collected cash from a customer on account,
$500.
Make sure your
answer is in Journal Entry Form. List
the Account Name and Debit or Credit.
Remember all Journal Entries should balance.
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