Chapter 4
1. It is not true that current assets are assets that a company expects to
2. After closing entries are posted, the balance in the owner’s capital account in the ledger will be equal to
3. When using a worksheet, adjusting entries are journalized
4. Liabilities are generally classified on a balance sheet as
Chapter 5
5. At the beginning of the year, Hinz Company had an inventory of $400,000. During the year, the company
purchased goods costing $1,600,000. If Hinz Company reported ending inventory of $600,000
and sales of $2,000,000, the company’s cost of goods sold and gross profit rate must be
6. The Merchandise Inventory account is used in each of the following except the entry to record
7. On a classified balance sheet, merchandise inventory is classified as
8. The Sales Returns and Allowances account does not provide information to management about
Chapter 6
9. Merchandise inventory is
10. Lee Industries had the following inventory transactions occur during 2010:
11. The company sold 51 units at $63 each and has a tax rate of 30%. Assuming that a periodic inventory
system is used, what is the company’s gross profit using LIFO? (rounded to whole dollars)
12. Shandy Shutters has the following inventory information.
Nov.
1
Inventory
15 units @
$8.00
8
Purchase
60 units @
$8.60
17
Purchase
30 units @
$8.40
25
Purchase
45 units @
$8.80
A physical count of merchandise inventory on November 30 reveals that there are 50 units on hand.
Assume a periodic inventory system is used. Ending inventory under FIFO is
13. During July, the following purchases and sales were made by James Company. There was no beginning inventory. James Company uses a perpetual inventory system.
Purchases
Sales
July
3
20 units @ $12
July
13
25 units
11
20 units @ $13
22
10 units
20
10 units @ $15
Under the FIFO method, the cost of goods sold for each sale is:
Chapter 7
14. The one characteristic that all entries recorded in a multi-column purchases journal have in common is a
15. The individual amounts in the Accounts Payable column in the cash payments journal are posted to
the subsidiary ledger
16. The individual amounts in the sales journal are posted to the accounts receivable subsidiary ledger
17. In which journal would a cash purchase of merchandise inventory be recorded?
Chapter 8
18. In large companies, the independent internal verification procedure is often assigned to
19. Which of the following would not be reported on the balance sheet as a cash equivalent?
20. If a petty cash fund is established in the amount of $250, and contains $150 in cash and $95 in receipts
for disbursements when it is replenished, the journal entry to record replenishment should include credits
to the following accounts
21. A $100 petty cash fund has cash of $15 and receipts of $80. The journal entry to replenish the account
would include a credit to
Chapter 9
22. The maturity value of a $30,000, 8%, 3-month note receivable is
23. The balance of Allowance for Doubtful Accounts prior to making the adjusting entry to record
estimated uncollectible accounts
24. The percentage of receivables basis for estimating uncollectible accounts emphasizes
25. A note receivable is a negotiable instrument which
Chapter 10
26. Depreciable cost is the
27. Mather Company purchased equipment on January 1, 2010 at a total invoice cost of $224,000;
additional costs of $4,000 for freight and $20,000 for installation were incurred.
28. The equipment has an estimated salvage value of $8,000 and an estimated useful life of five years.
29. The amount of accumulated depreciation at December 31, 2011 if the straight-line method of depreciation is used is:
30. Hull Company acquires land for $86,000 cash. Additional costs are as follows:
Removal of shed
$300
Filling and grading
1,500
Salvage value of lumber of shed
120
Broker commission
1,130
Paving of parking lot
10,000
Closing costs
560
Hull will record the acquisition cost of the land as
31. The factor that is not relevant in computing depreciation is
Chapter 11
32. Lincoln Company sells 600 units of a product that has a one-year warranty on parts.
The average cost of honoring one warranty contract is $50. During the year 30 contracts are honored
at a cost of $1,500. It is estimated that 60 contracts will be honored in the following year. The adjusting
entry at the end of the current year will include a
33. The paid absence that is most commonly accrued is
34. Most companies pay current liabilities
35. The entry to record the issuance of an interest-bearing note credits Notes Payable for the note’s
Chapter 12
36. Which one of the following would not be considered an expense of a partnership in determining income
for the period?
37. Finney is admitted to a partnership with a 25% capital interest by a cash investment of $90,000.
38. If total capital of the partnership is $390,000 before admitting Finney, the bonus to Finney is
39. Mary Janane’s capital statement reveals that her drawings during the year were $50,000.
She made an additional capital investment of $25,000 and her share of the net loss for
the year was $10,000. Her ending capital balance was $200,000. What was Mary Janane’s beginning capital balance?
40. The most appropriate basis for dividing partnership net income when the partners do not plan to take
an active role in daily operations is
Chapter 13
41. The following data is available for BOX Corporation at December 31, 2010:
Common stock, par $10 (authorized 15,000 shares)
$100,000
Treasury Stock (at cost $15 per share)
600
Based on the data, how many shares of common stock are outstanding?
42. When stock is issued for legal services, the transaction is recorded by debiting Organization Expense
for the
43. The two ways that a corporation can be classified by ownership are
44. On January 2, 2007, Pacer Corporation issued 30,000 shares of 6% cumulative preferred stock
at $100 par value. On December 31, 2010, Pacer Corporation declared and paid its first
dividend. What dividends are the preferred stockholders entitled to receive in the current year before any distribution is made to common stockholders?
