Answer needed only
1. Accounting is an information and measurement system that identifies, records, and communicates financial information to users.
True False
2. External users of accounting information include:
A. Shareholders.
B. Customers.
C. Creditors.
D. Government regulators.
E. All of these.
3. Career opportunities in accounting include:
A. Auditing.
B. Management consulting.
C. Tax accounting.
D. Cost accounting.
E. All of these.
4. The balance sheet is based on the accounting equation.
True False
5. The three basic financial statements discussed in this chapter include the balance sheet, income statement, statement of owner's equity.
True False
6. If equity is 400,000 and liabilities are $220,000, then assets equal:
A. $180,000.
B. $220,000.
C. $400,000.
D. $620,000.
E. $720,000.
7. Liabilities include:
A. accounts payable.
B. wages payable.
C. unearned revenue.
D. loans payable.
E. All of the above.
8. Debit means the right-hand side of any account.
True False
9. Debits increase asset and expense accounts.
True False
10. A report that lists accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(n):
A. Account balance.
B. Trial balance.
C. Income Statement.
D. Chart of accounts.
E. Balance Sheet.
11. During the month of February, Hoffer Company had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the January 31 beginning cash balance?
A. $700.
B. $1,100.
C. $2,900.
D. $0.
E. $4,300.
12. The journal is known as the book of original entry.
True False
13. Financial statements are prepared from the Trial Balance.
True False
14. A company had the following accounts and balances year-end:
If all of the accounts have normal balances, what are the totals for the trial balance?
A. $55,400.
B. $68,850.
C. $101,800.
D. $210,450.
E. $245,440.
15. The journal entry to record a payment made in January for rent for the months of February and March would include
A. a debit to Sue Snow, Capital, and a credit to Cash.
B. a debit to Rent Expense and a credit to Cash.
C. a debit to Prepaid Rent and a credit to Cash.
D. a debit to Sue Snow, Drawing and a credit to Rent Expense.
16. A fiscal year requires any 12 consecutive months in the reporting period.
True False
17. Plant assets are intangible, long-term assets used to produce and sell products and services.
True False
18. The basis for adjusting entries is founded on these two principles:
A. Business entity, time period assumption.
B. Revenue recognition, matching principle.
C. Cost principle, revenue recognition.
D. Cost principle, matching principle.
E. Objectivity principle, matching principle.
19. Baylee's Bike's employees earn $1,000 per day, or $5,000 for a five-day work week (Monday through Friday). This fiscal year ends on a Thursday. How much in accrued wages must be recorded in this year?
A. $0
B. $1,000
C. $4,000
D. $5,000
E. None - the payroll will be recorded on Friday
20. After posting the entries to close all revenue accounts and all expense accounts, the Income Summary account of Waif Services has a $4,000 debit balance. This result implies that Waif Services earned a net income of $4,000.
True False
21. The Unadjusted Trial Balance columns of a company's work sheet show the balance in the Office Supplies account as $750. The Adjustments columns show that $425 of these supplies were used during the period. The amount shown as Office Supplies in the Adjusted Trial Balance columns of the work sheet is:
A. $325 debit.
B. $325 credit.
C. $425 debit.
D. $750 debit.
E. $750 credit.
22. The following items appeared on a company's December 31 work sheet for the current period. Based on the following information, what is net income for the current period?
A. $1,400.
B. $1,855.
C. $1,905.
D. $2,060.
E. $4,670.
23. The existence of an internal control system guarantees that fraud cannot occur.
True False
24. Internal control policies and procedures are identical across companies.
True False
25. An internal control system consists of the policies and procedures managers use to:
A. Protect assets.
B. Ensure reliable accounting.
C. Promote efficient operations.
D. Urge adherence to company policies.
E. All of these.
26. The document that the purchasing department prepares and sends to the vendor to place an order is the
A. Purchase requisition.
B. Purchase order.
C. Invoice.
D. Receiving report.
E. Invoice approval.
27. Cash includes currency, coins, and the deposits in most checking accounts.
True False
28. Assume that the custodian of a $450 petty cash fund has $62.50 in coins and currency plus $382.50 in receipts at the end of the month. The entry to replenish the petty cash fund will include:
A. A debit to Cash for $377.50.
B. A credit to Cash Over and Short for $5.00.
C. A debit to Petty Cash for $382.50.
D. A credit to Cash for $387.50.
E. A debit to Cash for $387.50.
29. Governments can impose penalties if the employer does not follow payroll tax laws.
True False
30. Social Security and Medicare taxes are collectively referred to as FICA taxes.
True False
31. Phildell Phoenix is paid monthly. For the month of January of the current year, he earned a total of $8,288. FICA tax for social security is 6.2% and the FICA tax for Medicare is 1.45%. The amount of federal income tax withheld from his earnings was $1,375.17. His net pay for the month is:
A. $5,190.83
B. $5,844.79
C. $6,278.79
D. $6,566.00
E. $6,792.64
32. The Social Security Number for a business is known as its employer identification number (EIN).
True False
33. An employer with 100 employees each earning more than $7,000/yr will pay how much in state unemployment taxes assuming that their rate is 5.4%?
A. $18,900
B. $7,000
C. $5,000
D. $37,800
E. $94,200
34. A company with a high merit rating would likely receive which of the following:
A. A reduction in SUTA tax
B. A reduction in FUTA tax
C. An increase in SUTA tax
D. An increase in FUTA tax
E. A reduction in Federal Tax
35. A merchandiser buys and sells merchandise in order to make a profit.
True False
36. A customer return of $100 of merchandise purchased previously on account is recorded as
A.
B.
C.
D.
E.
37. On October 1, Courtland Company sold merchandise in the amount of $5,800 to Carter Company, with credit terms of 2/10, n/30. On October 4, Carter returns $500 of the merchandise. Carter pays the invoice on October 8, and takes the appropriate discount. The journal entry that Courtland makes on October 8 is:
A.
B.
C.
D.
E.
38. Merchandise Inventory is a long term asset as it is an essential resource for a merchandising firm and is expected to last more than one year.
True False
39. The credit terms 3/15, n/60 are interpreted as:
A. 3% cash discount if the amount is paid within 15 days, with the balance due in 60 days.
B. 15% cash discount if the amount is paid within 3 days, with balance due in 60 days.
C. 15% discount if paid within 60 days.
D. 60% discount if paid within 15 days.
E. 3% discount if paid within 60 days.
40. A company purchased $4,000 worth of merchandise. Transportation costs were an additional $350. The company later returned $275 worth of merchandise and paid the invoice within the 2% cash discount period. The total amount paid for this merchandise is:
A. $3,725.00.
B. $3,925.00.
C. $3,995.00.
D. $4,000.50.
E. $4,075.00.
41. If on January 1, 2010 a company paid $18,000 cash for one year of rent in advance and adjusting entries are made at the end of each month, the balance of Prepaid Rent as of December 1, 2010 should be:
A. $18,000.
B. $16,500.
C. $3,000.
D. $1,500.
E. $0.
42. A company had sales of $375,000 and its gross profit was $157,500. Its cost of goods sold equals:
A. $(217,000).
B. $375,000.
C. $157,500.
D. $217,500.
E. $532,500.
43. The owner's beginning capital is $32,000; fees earned were $59,500 and related expenses totaled $43,300. After withdrawing $7,000 from the account in the last month, the ending capital is:
A. $9,200
B. $16,200
C. $23,200
D. $41,200
E. $48,200
44. A balance sheet covers a period of time such as a month or year.
True False
45. The Accounts Payable account has a $3,000 credit balance. An entry for the payment of $1,000 on the amount owed is recorded and posted. The new balance of the Accounts Payable account is
A. a $2,000 credit balance.
B. a $4,000 credit balance.
C. a $2,000 debit balance.
D. a $4,000 debit balance.