Linda Keller opened a consulting firm, Keller Consulting P.C. During its first month of operations, the following transactions were completed:

The ending bank statement balance at November 30 is $7,150.
The bank statement shows a service charge of $85, electronic funds receipts of $700 and a NSF check for $150. Deposits in transit total $2,050 and outstanding checks are $1,835. The balance per books at November 30 is $6,900.
What is the adjusted book balance at November 30?

A.$7,365

B.$7,115

C.$8,965

D.$ 7615


The following account balances were extracted from the accounting records of Thomas Corporation at the end of the year:
Accounts Receivable   $1,102,000
Allowance for Uncollectible Accounts (Credit)    $37,000
Uncollectibleminus−Account
Expense    $64,000
What is the net realizable value of the accounts receivable?

A.$1,102,000

B.$1,139,000

C.$1,166,000

D.$ 1 065000

Cash received from the issuance of bonds would be reported on a statement of cash flows under:

A.
investing activities.

B.
noncash activities.

C.
financing activities

D.
operating activities.


Fraudulent financial reporting:

A.
involves bribes and kickbacks.

B.
deceives investors into investing.

C.
involves stealing assets from the company.

D.
involves employee overstatement of expense reimbursement requests.
Answer
involves employee overstatement of expense reimbursement requests.

Linda Keller opened a consulting firm, Keller Consulting P.C. During its first month of operations, the following transactions were completed:
I. Linda invested $30,000 in the business, which in turn issued common stock to her.
II. The business purchased equipment on account for $65,000.
III. The business provided consulting services on account, $15,000.
IV. The business paid cash salaries to the receptionist, $2,000.
V. The business received cash from a customer as payment on account $6,000.
VI. The business borrowed $12,000 from the bank, issuing a note payable.
At the end of the month, total liabilities are:

A.65,000.

B.$12,000.

C.$77,000.

D.$80,000.
Answer
C.$77,000.

A statement of cash flows accomplishes all of the following EXCEPT:

A.
provides information about the cash receipts and cash payments during a period.

B.
lists revenues and expenses.

C.
predicts future cash flows.

D.
determines the ability of the company to pay dividends and interest.
Answer
B.
lists revenues and expenses.

Which of the following costs associated with a delivery van should NOT be capitalized?

A.
The van is modified so it can be used for multiple purposes in the business.

B.
The van's engine is overhauled, and this will extend the useful life by five years.

C.
The van is repainted after 4 years of use.

D.
All of the above items should be capitalized.
Answer
C.
The van is repainted after 4 years of use.

Monthly sales are $480,000. Warranty costs are estimated at 5% of monthly sales. Warranties are honored with replacement products. No defective products are returned during the month. At the end of the month, the company should record a journal entry with a credit to:

A.
Estimated Warranty Payable for $24,000.

B.Sales for $24,000.

C.
Warranty Expense for $24,000.

D.
Inventory for $24,000
Answer
Estimated Warranty Payable for $24,000.


An expense occurred in 2018, but it is not paid until 2019. Using accrual accounting, the expense should appear on:

A.
the 2018 income statement.

B.
the 2019 income statement.

C.
whichever income statement the business prefers.

D.
both the 2018 and 2019 income statements.
Answer
A.
the 2018 income statement.

Smith Corporation issues $2,200,000, 10−year, 6% bonds payable at a price of 96.
The journal entry to record the issuance will include a:

A.
credit to Bonds Payable for $2,112,000.

B.
credit to Discount on Bonds Payable for $88,000.

C.
debit to Cash of $2,200,000.

D.debit to Cash for $2,112,000.
Answer
D.debit to Cash for $2,112,000.

If a corporation issues 7,000 shares of $5 par value common stock for $88,000, the journal entry would include a credit to:

A.Common Stock for $53,000.

B.Paid−in Capital in Excess of —Common for $53,000.

C.Common Stock for $88,000.

D.Paid−in Capital in Excess of —Common for $88,000.
Answer
B.Paid−in Capital in Excess of —Common for $53,000.

Which is NOT an objective of an internal control system?

A.
risk assessment

B.
safeguarding of assets

C.
compliance with legal requirements

D.
compliance with company policies
Answer
risk assessment

Leno Company sells goods to the Fallon Company for $15,000. It offers credit terms of 5/10, n/30.

If bonds are issued at a discount, it means that the:

A.
market interest rate is lower than the stated interest rate.

B.
market interest rate is higher than the stated interest rate.

C.
bond is convertible.

D.
financial strength of the issuer is weak.

Answer
market interest rate is higher than the stated interest rate.


Leno Company sells goods to the Fallon Company for $15,000. It offers credit terms of 5/10, n/30. If Fallon Company pays the invoice within the discount period, Leno Company will record a debit to Cash in the amount of:

A.$15,750.

B.$15,000.

C.$750.

D.$14,250.
Answer
D.$14,250.

Given the following data, what is cost of goods sold as determined by the FIFO method?
Sales   270
units
Beginning inventory    240
units at $5 per unit
Purchases    108
units at $10 per unit

Answer
1500
On October 1, 2018, Golde Company paid $17,400 for one year of insurance for the period, October 1, 2018 through September 30, 2019. Which of the following will be part of the adjusting entry on December 31, 2018?

A.
Debit Prepaid Insurance for $13,050

B.
Debit Insurance Expense for $13,050

C.
Debit Insurance Expense for $4,350

D.
Debit Prepaid Insurance for $ 4350
Answer
C.
Debit Insurance Expense for $4,350


On December 31, Sulfur Corporation has the following data available:
Net Income    $170,000
Market price of one share of common stock    $5

Preferred dividends    40,000
Weighted−average number of shares of common stock outstanding   40,000 shares
Total common stockholders' equity at the beginning of the year    440,000
Total common stockholders' equity at the end of the year 270,000
What is the earnings per share? (Round the final answer to two decimal places.)

A.3.25

B.2.59

C.2.09

D.0.48
Answer
3.25

On December 1, 2019, Carrie's Day Care receives $1,800 in advance for an agreement to care for Susan's children for the months of December, January, and February. Carrie's Day Care will make an adjusting entry on December 31, 2019 to:

A.
credit Revenue for $1,800.

B.debit Unearned Revenue for $600.

C.credit Prepaid Revenue for $1,200.

D.credit Revenue for $1,200.
Answer
B.debit Unearned Revenue for $600.

When evaluating the collectability of accounts receivable:

A.the direct write−off method uses the Allowance for Uncollectible Accounts to record bad debts.

B.
the allowance method uses estimates developed from the company's collection experience.

C.
the Allowance for Uncollectible Accounts is an operating expense in the selling, general and administrative category.

D.
the Uncollectible−Account Expense is a contra account.
Answer
B.
the allowance method uses estimates developed from the company's collection experience.


On a statement of cash flows, activities that affect long−term assets are classified as:

A.
investing activities.

B.
stockholders' equity activities.

C.
operating activities.

D.
financing activities.
Answer
A.
investing activities.

A $4,000, 9% bond is sold at 98. When the bond is issued, the Cash account will be increased by:
Answer
3920

Madison Bank lends Neenah Paper Company $90,000 on January 1, 2017. Neenah signs a $90,000, 11%, 6−month note. The journal entry made by Neenah on January 1, 2017 will debit:

A.
Cash for $90,000 and credit Notes Payable for $90,000.

B.
Cash for $80,100 and credit Note Payable for $80,100.

C.Interest Expense for $9,900 and credit Cash for $9,900.

D.Interest Expense for $9,900 and credit Interest Payable for $9,900.
Answer
Cash for $90,000 and credit Notes Payable for $90,000.


Andy Company had a cash balance on May 1 of $30,000. At the end of May, the cash balance has increased to $28,000. During the month of May, Andy received cash of $48,000 from various sources. Based on this information, cash payments for the month of May were:

A.$78,000.

B.$50,000.

C.$28,000.

D.$30,000.
Answer
B.$50,000.


On May 1, a business provided legal services to a client and billed the client $4,100. The client promised to pay the business in one month. Which journal entry should the business record on May 1?

A.Debit Accounts Receivable for $4,100 and credit Service Revenue for $4,100.

B.Debit Cash for $4,100 and credit Retained Earnings for $4,100.

C.Debit Cash for $4,100 and credit Service Revenue for $4,100.

D.Debit Accounts Payable for $4,100 and credit Service Revenue for $4,100.

Answer
Debit Accounts Receivable for $4,100 and credit Service Revenue for $4,100.

Nichols, Inc. has 1,000 shares of 6%, $100 par value, cumulative preferred stock and 75,000 shares of $1 par value common stock outstanding at December 31 of the current year. What is the annual dividend that will be paid to the preferred stockholders?

Nichols, Inc. has 1,000 shares of 6%, $100 par value, cumulative preferred stock and 75,000 shares of $1 par value common stock outstanding at December 31 of the current year. What is the annual dividend that will be paid to the preferred stockholders?

A.$6,000

B.$1,000

C.$100,000

D.$0. Preferred stockholders are not guaranteed an annual dividend payment.
Answer
6000

The selling price of a television is $2,000 and the cost to the retailer is $325.
What is the retailer's gross profit from the sale of the television?

A.$2,000

B.$1,675

C.$0
Answer
1675

Kathy's Corner Store has total cash sales for the month of $32,000 excluding sales taxes. If the sales tax rate is 7%, which journal entry is needed? (Ignore Cost of Goods Sold.)

A.debit Cash $34,240, credit Sales Revenue $34,240

B.debit Cash $34,240, credit Sales Revenue $32,000 and credit Sales Tax Payable $2,240

C.debit Cash $32,000 and credit Sales Revenue $32,000

D.debit Cash $29,760, debit Sales Tax Receivable for $2,240 and credit Sales Revenue for $ 32000
Answer
B.debit Cash $34,240, credit Sales Revenue $32,000 and credit Sales Tax Payable $2,240

Marjorie Company's cash balance per the books at the end of the month was $9,000. After comparing the company's records with the monthly bank statement, Marjorie's accountant identified the following reconciling items: outstanding checks, $800; deposits in transit, $700; bank service charge, $20; and NSF check, $400.
The bank collection of a note receivable was $1,500 plus interest of $130. There also was an EFT payment of $150. What is the adjusted book balance at the end of the month?

A.$8,900

B.$10,210

C.$10,080

D.$ 10060
Answer
D.$ 10060


A business purchased office supplies of $22,000 on account. The business would:

A.
debit Supplies for $22,000 and credit Accounts Payable for $22,000.

B.debit Supplies for $22,000 and credit Cash for $22,000.

C.debit Accounts Receivable for $22,000 and credit Supplies for $22,000.

D.debit Accounts Payable for $22,000 and credit Supplies for $22,000.
Answer
A.
debit Supplies for $22,000 and credit Accounts Payable for $22,000.

Beck Company had the following accounts and balances at the end of the year. What is net income or net loss for the year?

When a company issues common stock at a price per share greater than its par value per share, the excess should be credited to:

A.
Common Stock.

B.
Excess Capital.

C.
Paid−in Capital in Excess of —Common.

D. Retained Earnings.
Answer
C.
Paid−in Capital in Excess of —Common.

At the end of the current accounting period, account balances were as follows:
Cash, $27,000;
Accounts Receivable, $40,000;
Common Stock, $19,000;
Retained Earnings, $12,000.
Liabilities for the period were:
Answer
36000


Beck Company had the following accounts and balances at the end of the year. What is net income or net loss for the year?
Cash    $69,000   
Accounts Payable    $12,000

Common Stock    $21,000

Dividends    $12,000

Operating Expenses    $13,000   
Accounts Receivable   $58,000   
Inventory    $48,000   
Longminus−term
Notes Payable    $33,000

Revenues    $91,000   
Salaries Payable    $31,000   

A.
net income of $6,000

B.
net income of $78,000

C.
net income of $91,000

D.
net loss of $7,000
Answer
91000-13000=78000
So,
net income of $78,000

Which statement(s) reports the revenues, gains, expenses, and losses of an entity?

A.
Statement of cash flows and income statement

B.
Balance sheet

C.
Statement of retained earnings and statement of operations

D.
Income statement
Answer
D.
Income statement

An important rule of debits and credits is:

A.
credits increase revenue accounts.

B.
debits increase liability accounts.

C.
debits decrease asset accounts.

D.
credits increase asset accounts.
Answer
A.
credits increase revenue accounts.

Wininger Corporation has 1,000 shares of 6%, $50 par value, cumulative preferred stock and 25,000 shares of $1 par value common stock outstanding on December 31, 2019 and December 31, 2020. The board of directors declared and paid a $2,000 dividend in 2019. In 2020, $15,000 of dividends are declared and paid. What are the dividends received by the common stockholders in 2020 (there were no dividends in arrears prior to 2019)?

Advantages of a corporation include:

A.
double taxation of distributed profits.

B.
limited liability of the stockholders for the corporation's debts.

C.
each stockholder can conduct business in the name of the corporation.

D.
difficulty in raising large sums of capital.
Answer
 limited liability of the stockholders for the corporation's debts.


A company started the year with $500 of supplies. During the year, the company purchased an additional $1,000 of supplies. There were $700 of supplies on hand at the end of the year. An adjusting entry prepared at the end of the accounting period includes a:

A.
debit to Supplies Expense for $800.

B.
debit to Supplies for $500.

C.
debit to Supplies for $700.

D.
debit to Supplies Expense for $200.
Answer
A.
debit to Supplies Expense for $800.


Wininger Corporation has 1,000 shares of 6%, $50 par value, cumulative preferred stock and 25,000 shares of $1 par value common stock outstanding on December 31, 2019 and December 31, 2020. The board of directors declared and paid a $2,000 dividend in 2019. In 2020, $15,000 of dividends are declared and paid. What are the dividends received by the common stockholders in 2020 (there were no dividends in arrears prior to 2019)?

A.$1,000

B.$3,000

C.$15,000

D.$ 11 000
Answer
$ 11 000

Cubs Corporation issues $460,000, 9%, 5−year bonds on January 1, 2019 for $449,000. Interest is paid annually on January 1. If Cubs Corporation uses the straight−line method of amortization of bond discount, the amount of interest expense recorded at December 31, 2019 would be:

A.$43,600.

B.$11,000.

C.$39,200.

D.$41,400.
Answer
$43,600.

The most frequently used current liabilities are:

A.
cash, notes payable, and accrued liabilities.

B.
accounts payable, accounts receivable, and accrued liabilities.

C.
accounts payable, notes payable, and inventories.

D.
accounts payable, notes payable, and accrued liabilities.
Answer
accounts payable, notes payable, and accrued liabilities.

Closing entries:

A.
are the same as adjusting entries.

B.
are made at the beginning of each accounting period.

C.
brings all asset account balances to zero.

D.
prepare the accounts for the next period's transactions.

Answer

prepare the accounts for the next period's transactions.

Tony Company sells equipment for $20,000 cash. The equipment has a historical cost of $60,000 and accumulated depreciation of $55,000.

Previously issued stock that a corporation purchases from shareholders is called:

A.
treasury stock.

B.
outstanding stock.

C.
issued stock.

D.
authorized stock.

Answer
treasury stock.

A company purchased inventory for $1,200 per unit. The company later sold one unit of the inventory for cash of $2,200. Under the perpetual inventory system, which accounts will be debited to record the sale?

A.
Cash, $2,200; Cost of Goods Sold, $1,000

B.
Cash, $2,200; Cost of Goods Sold, $1,200

C.
Cash, $2,200; Inventory, $1,200

D.
Cash, $2,200; Inventory, $ 1  000


Answer
Cash, $2,200; Cost of Goods Sold, $1,200



Tony Company sells equipment for $20,000 cash. The equipment has a historical cost of $60,000
and accumulated depreciation of $55,000.
What is the gain or loss on sale of the equipment?

A.$15,000 loss

B.$20,000 loss

C.$15,000 gain

D.$20,000 gain
Answer
C.$15,000 gain

 


 
 

 

Cubs Corporation issues $460,000​, 9​%, 5−year bonds on January​ 1, 2019 for $449,000.

Cubs Corporation issues $460,000​, 9​%, 5−year bonds on January​ 1, 2019 for $449,000. Interest is paid annually on January 1. If Cubs Corporation uses the straight−line method of amortization of bond​ discount, the amount of interest expense recorded at December​ 31, 2019 would​ be:

Answer
43600

Minor Company purchased land which is being prepared for the construction of a new office building. Which of the following should be included in the cost of the land?

A.
cost of removing an old building

B.
cost of clearing and grading the land

C.
cost of the fence which surrounds the property

D. A and B

Answer
 D. A and B


The cost of inventory that is still on hand is called:

A.
inventory, a current asset that appears on the balance sheet.

B.
inventory, a long−term asset that appears on the balance sheet.

C.
cost of goods sold, an expense that appears on the balance sheet.

D.
purchases, a current asset that appears on the balance sheet.

Answer
A.
inventory, a current asset that appears on the balance sheet.


A year−end review of Accounts Receivable and estimated uncollectible percentages revealed the following:
Days Outstanding    Accounts Receivable    Est. Percent Uncollectible
1−30 days    $61,000    3%

31−60 days    $45,000    4%

61−90 days    $25,000    10%

Over 90 days    $5,000    52%

Before the year−end adjustment, the credit balance in Allowance for Uncollectible Accounts was $700. Under the aging−of−receivables method, the balance in the Allowance for Uncollectible Accounts will be ________ after the adjusting entry is made.

Answer
8030