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| 1 | |
Consider the following accounts and their balances, presented in no particular order:
| Cash | $20,000 | | Accounts Payable | $5,000 | | General and Administrative Expenses | $13,000 | | Cost of Sales | $32,000 | | Prepaid Expenses | $4,000 | | Retained Earnings | $12,000 | | Contributed Capital | $72,000 | | Sales Revenue | $60,000 | | Salaries and Benefits Expenses | $15,000 | | Inventories | $65,000 |
Determine the debit and credit totals of an adjusted trial balance of the accounts listed above. Each account has a normal balance.
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| | A) | $149,000 |
| | B) | $159,000 |
| | C) | $72,000 |
| | D) | $117,000 |
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| 2 | |
Which of the following groups of accounts, with normal balances, would appear in the credit column of an unadjusted trial balance? |
| | A) | Accounts Payable, Unearned Revenues, Cost of Sales, and Investment Income. |
| | B) | Unearned Revenues, Accumulated Depreciation, and Prepaid Expenses. |
| | C) | Accounts Payable, Unearned Revenues, and Accumulated Depreciation. |
| | D) | Contributed Capital, Retained Earnings, and Cost of Sales. |
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| 3 | |
How is net book value calculated? |
| | A) | acquisition cost of the asset minus its accumulated depreciation |
| | B) | acquisition cost of the asset minus its depreciation expense |
| | C) | estimated value of the asset minus its accumulated depreciation |
| | D) | acquisition cost of the asset plus it accumulated depreciation |
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| 4 | |
An accrued revenue would be shown on the balance sheet as: |
| | A) | A receivable |
| | B) | A payable |
| | C) | A prepaid revenue |
| | D) | Unearned revenue |
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| 5 | |
A deferred expense would be shown on the balance sheet as: |
| | A) | A receivable |
| | B) | A payable |
| | C) | A prepaid expense |
| | D) | An unearned expense |
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| 6 | |
During the adjustment process, Property and Equipment is considered to be and is treated as |
| | A) | a deferred expense |
| | B) | an accrued expense |
| | C) | deferred revenue |
| | D) | accrued revenue |
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| 7 | |
Olivehurst Incorporated has made three quarterly prepaid income tax payments of $4,500 each. On December 31, it is determined that the income tax for the year is $15,000. What is the correct journal entry to adjust the Income Tax Expense account? |
| | A) | Income Tax Expense, debit, $1,500; Cash, credit, $1,500 |
| | B) | Income Taxes Payable, debit, $1,500; Income Tax Expense, credit $1,500 |
| | C) | Income Taxes Receivable, debit, $1,500; Income Tax Expense, credit , $1,500 |
| | D) | Income Tax Expense, debit, $1,500; Income Taxes Payable, credit, $1,500 |
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| 8 | |
If the accountant forgets to adjust the Prepaid Expenses account, there will be |
| | A) | an understatement of net income. |
| | B) | an overstatement of net income. |
| | C) | an overstatement of expense. |
| | D) | no under- or overstatement of net income. |
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| 9 | |
Burner Company adjusts its deferred expenses at year end. The effect of the adjusting entry is to |
| | A) | increase net income. |
| | B) | decrease net income. |
| | C) | have no effect on net income. |
| | D) | either increase or decrease net income. |
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| 10 | |
Burner Company adjusts its accrued expenses at year end. The adjusting entry will affect: |
| | A) | an asset account and an expense account. |
| | B) | a liability account and an expense account. |
| | C) | a expense account and a revenue account. |
| | D) | a liability account and a revenue account. |
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| 11 | |
Employees are paid $2,400 on every Friday for a five-day workweek. The accounting period ends on Wednesday, December 31. Adjusting for the salaries and benefits expense for the last three days of the accounting period would: |
| | A) | increase a deferred expense. |
| | B) | increase an accrued expense. |
| | C) | decrease a deferred expense. |
| | D) | decrease an accrued expense. |
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| 12 | |
Which of the following is TRUE about every adjusting entry? |
| | A) | They affect only income statement accounts. |
| | B) | They affect a balance sheet account and an income statement account. |
| | C) | They affect only balance sheet accounts. |
| | D) | The affect only accounts with normal debit balances. |
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| 13 | |
The contra asset account titled Accumulated Depreciation is used to |
| | A) | reduce the market value of the related asset. |
| | B) | reduce the estimated value of the related asset. |
| | C) | reduce the acquisition cost of the related asset. |
| | D) | accumulate the amount of the historical cost of the asset allocated to prior periods. |
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| 14 | |
Which is the normal sequence in preparing the financial statements? |
| | A) | income statement, balance sheet, statement of stockholders' equity, and statement of cash flows |
| | B) | balance sheet, income statement, statement of cash flows, and statement of stockholders' equity |
| | C) | income statement, statement of stockholders' equity, balance sheet, and statement of cash flows |
| | D) | income statement, balance sheet, statement of cash flows, and statement of stockholders' equity. |
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| 15 | |
The net income available to stockholders is $230,000. The beginning number of common shares outstanding was 100,000. The ending number of common shares outstanding was 150,000. What is the earnings per share? |
| | A) | $1.84 |
| | B) | $2.30 |
| | C) | $1.533 |
| | D) | $0.543 |
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| 16 | |
The earnings per share ratio is |
| | A) | not a required calculation or disclosure. |
| | B) | of little importance to stockholders. |
| | C) | the only ratio required to be disclosed in the income statement or notes to the income statement. |
| | D) | determined by dividing average number of shares outstanding during the period by the net income available to the common stockholders. |
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| 17 | |
The changes in the Retained Earnings account are disclosed in which of the following financial statements? |
| | A) | income statement |
| | B) | statement of stockholders' equity |
| | C) | balance sheet |
| | D) | statement of cash flows |
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| 18 | |
Consider the following:
| Lumber Revenues | $120,000 | | Hardware Revenues | $90,000 | | Cost of Sales | $130,000 | | All other costs and expenses | $35,000 | | Investment Income | $8,000 | | Income Tax Expense | $13,000 | | Net income | $40,000 |
What is the net profit margin?
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| | A) | 24.31% |
| | B) | 24.24% |
| | C) | 18.34% |
| | D) | 19.05% |
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| 19 | |
Which account would be listed on a post-closing trial balance? |
| | A) | a revenue account. |
| | B) | the Depreciation Expense account. |
| | C) | the Retained Earnings account. |
| | D) | the Income Tax Expense account. |
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| 20 | |
Which account should not appear on a post-closing trial balance? |
| | A) | Cash |
| | B) | Unearned Revenues |
| | C) | Investment Income |
| | D) | Accrued Expenses Payable |
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