he balance in the _______ account is the amount owed to the company by its customers.
a. Equity
b. Accounts Receivable
c. Cash
d. Accounts Payable
At the beginning of
the year, XYZ Company reported a $7,200 balance in its Prepaid Insurance
account. At year end, the company reported Insurance Expense of $9,000 in its
Income Statement and a balance of $3,800 in the Prepaid Insurance account. What
was the cost of the additional insurance that was purchased during the year?
a. $9,000
b. $12,400
c. $5,600
d. $12,800
XYZ Company has
assets and liabilities of $15,000 and $12,000, respectively. If the company
issues an additional $1,500 of stock for cash, what will be the balance in
shareholders' equity following the transaction?
a. $15,000
b. $25,500
c. $4,500
d. $16,500
Firms may prepare
reports of performance ____________.
a. using the calendar year
as the accounting period
b. using a natural business
year as the accounting period
c. for interim periods
d. All the above are correct
in the appropriate circumstances.
Which of the
following options would NOT be classified as a current liability account?
a. Accounts Payable
b. Interest Payable
c. Rent Received in Advance
d. All of the above are
current liability accounts
Which of the
following accounts is not closed during the closing process?
a. Wage Expense
b. Interest Expense
c. Utility Expense
d. Accumulated
Depreciation
Which of the
following is a permanent account?
a. Accumulated Depreciation
b. Advances from Customers
c. Both a and b
d. Neither a nor b
Which of the
following is NOT an account title for liabilities?
a. Advances to suppliers
b. Advances from tenants
c. Rent received in advance
d. Advances from customers
On December 31 of
Year 1, XYZ Company reported total shareholders' equity of $225,000, of which
$180,000 represented contributed capital. If revenues, expenses, and dividends
during Year 2 were $500,000, $420,000, and $30,000 respectively - and the total
shareholders' equity is $290,000 on December 31 of Year 2 - how much additional
capital was contributed by shareholders?
a. $15,000
b. $40,000
c. $65,000
d. $205,000
During the year,
XYZ Company's inventory account balance increased from $26,000 to $31,500.
During the year, the company made payments totaling $152,500 to creditors for
inventory purchases and reported Cost of Goods Sold of $159,500 on its Income
Statement. How much inventory was purchased during the year?
a. $165,000
b. $158,000
c. $152,500
d. $159,500
XYZ Company
completed its second year of operations in Year 2. On January 1 of Year 2, the
balance in Retained Earnings was $84,000. During the year, the company declared
and paid a dividend of $65,000 to shareholders. The company reported net
earnings of $105,000 in its Year 2 Income Statement. What was the balance in
Retained Earnings on December 31 of Year 2?
a. $189,000
b. $170,000
c. $149,000
d. $124,000
Which of the
following accounts would NOT appear on a corporation's Balance Sheet?
a. Owner Investment
b. Retained Earnings
c. Investment in ABC Stock
d. Premium on Common Stock
Stocks and bonds
that can be readily converted into cash are called ____________.
a. Current Assets
b. Current Liabilities
c. Marketable Securities
d. Treasury Stock
Which of the
following accounts is NOT a temporary account that should be closed during the
closing process?
a. Prepaid Insurance
b. Cost of Goods Sold
c. Sales Revenue
d. Depreciation
In preparing its
year-end adjusting entries, XYZ Company neglected to adjust prepaid insurance
for the amount of insurance expired during Year 1. Which of the following
reflects the result of this error?
a. Year 1 net income is
understated, the balance in retained earnings is understated, and assets are
understated.
b. Year 1 net income is
overstated, the balance in retained earnings is overstated, and assets are
correctly stated.
c. Year 1 net income is
overstated, the balance in retained earnings is overstated, and assets are
overstated.
d. None of the above
Amounts received
for the par value of a firm's voting stock are called ___________.
a. Common Stock
b. Accounts Receivable
c. Preferred Stock
d. Retained Earnings
Amounts borrowed by
a business for a relatively long period of time under a formal written contract
or indenture are called ____________.
a. Unsecured Loans
b. Current Liabilities
c. Bonds Payable
d. Cash
The normal balances
in Depreciation Expense and its related Accumulated Depreciation accounts are
____________.
a. debit and credit
respectively
b. credit and debit
respectively
c. Both are debit
d. Both are credit
The process of
transferring entries in the general journal to the accounts in the general
ledger is called ___________.
a. posting
b. journalizing
c. financial reporting
d. taxation
Which of the
following liabilities would be accounted for at the present value of future
cash payments?
a. Accounts Payable
b. Bonds Payable
c. Income Taxes Payable
d. Advances from Customers
________ refers
to shares originally issued and outstanding that have been reacquired from the
owners.
a. Treasury Stock
b. Common Stock
c. Preferred Stock
d. Retained Earnings
XYZ Company
purchased some equipment for $120,000 on July 1 of Year 1. The equipment has an
estimated useful life of 10 years and an estimated salvage value of $7,500. XYZ
Company computes depreciation on a straight-line basis. How much depreciation
should be recorded for Year 1?
a. $12,000
b. $11,250
c. $6,000
d. $5,625
Ms. Brown is an
attorney who collects a retainer fee from all of her new clients. At the
beginning of the year, the Unearned Retainer Fee account had a balance of
$24,000. Ms. Brown collected additional retainer fees totaling $94,000 from her
clients during the year. Her year-end Balance Sheet reports a $16,000 balance
in the Unearned Retainer Fee account. How much of the retainer fees were earned
by Ms. Brown during the year?
a. $108,000
b. $110,000
c. $86,000
d. $102,000
Different balance
sheet items employ different valuation methods. Which of the following
valuation applications is NOT generally accepted?
a. A major line of inventory
has increased in value substantially above its cost and has been restated to
its current replacement cost
b. Machinery is stated at
its historical cost less the estimated amount of benefits consumed to date
c. Cash is received for
goods to be delivered next month; the cost of goods to be delivered
d. Common stock is stated at
the amount at which it was originally sold
A debit balance is
normal for all of the following accounts except ___________.
a. Preferred Stock
b. Treasury Shares
c. Investment in Stock
d. All of the above
A trial balance
prepared at the end of the accounting period after adjusting entries are made
is called a/an ____________.
a. Pre-Adjustment Trial
Balance
b. Prior Year Trial Balance
c. Adjusted Trial Balance
d. Balance Sheet
A right granted to
an individual or company that excludes others from manufacturing, using, or
selling a certain process or device is called a __________.
a. liability
b. trademark
c. tax liability
d. patent
A trial balance
that shows revenue and expense accounts with zero balances and balance sheet
accounts at the end of the period is called a ___________.
a. Balance Sheet
b. Pre-Closing Trial
Balance
c. Post-Closing Trial
Balance
d. Income Statement
Temporary revenue
and expense accounts may be closed ___________.
a. individually by separate
entries to Retained Earnings
b. in a single entry to
Retained Earnings
c. to a temporary
"Income Summary" account
d. Any of the above methods
is acceptable.
Which of the
following would cause the accounting equation to be out of balance?
a. Recording a purchase on
account at the wrong amount
b. Recording a 2007 purchase
in 2008
c. Posting the credit for a
cash purchase at the wrong amount
d. All of the above
Which of the
following transactions would NOT result in revenue being reported?
a. Sale of merchandise for
cash
b. Sale of merchandise on
account
c. Collection of an account
receivable
d. All of the above
_________ is the
financial obligation of a company in regards to a loan that accrues with the
passage of time.
a. Interest Payable
b. Income Tax Payable
c. Income Tax Expense
d. Accounts Payable
Goods on hand that
have been purchased for resale are called ___________.
a. cash
b. COGS
c. assets
d. inventory
The concept of
present value ____________.
a. can be simply defined as
today's value of a stream of future cash flows
b. implies that the value of
receiving cash today will be less than the value of receiving it in the future
c. is employed extensively
in the valuation of assets under current generally accepted accounting
practices
d. determines the minimum
amount that a buyer would be willing to pay for an asset
A manufacturing
firm's cost of producing its product is called ____________.
a. direct labor
b. product costs
c. indirect labor
d. overhead
A residual claim of
owners having certain preferences relative to other owners' claims is called
__________.
a. Treasury Stock
b. Retained Earnings
c. Preferred Stock
d. Common Stock
XYZ Company has
just completed its first year of operations in Year 1. The company distributed
dividends of $50,000. If the ending balance of Retained Earnings on December 31
of Year 1 is $70,000, and the company had revenues of $400,000 from Year 1
sales, then what is the total of the company's Year 1 expenses?
a. $350,000
b. $330,000
c. $280,000
d. None of the above
Unused materials
for manufacturing products are called __________.
a. COGS
b. Accounts Receivable
c. depreciation
d. inventory
Insurance premiums
paid for future coverage are called ___________.
a. Deferred Income
b. Deferred Income taxes
c. Prepaid Insurance
d. Unearned Revenue
Amounts owed for
goods or services acquired under an informal credit agreement are called
__________.
a. Accounts Payable
b. Notes Payable
c. Money Market Funds
d. Common Stock
