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Stockholders’ equity will increase
D. Liabilities will decrease
3) Using accrual accounting, expenses are recorded and reported only:
When they are incurred whether or not cash is paid
When they are incurred and paid at the same time
If they are paid before they are incurred
If they are paid after they are incurred
4) Stockholders’ equity can be described as claims of
Creditors on total assets
Owners on total assets
Customers on total assets
Debtors on total assets
5) The Vintage Laundry Company purchases $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $2,000 on hand. The adjusting entry that should be made by the company on June 30 is:
Debit Laundry Supplies Expense, $2,000; credit Laundry Supplies, $2,000
Debit Laundry Supplies, $4,500; credit Laundry Supplies Expense, $4,500
Debit Laundry Supplies $2,000; credit Laundry Supplies Expense, $2,000
Debit Laundry Supplies Expense, $4,500; credit Laundry Supplies, $4,500
6) Use the following data to determine the total dollar amount of assets to be classified as current assets.
Koonce Office Supplies
Balance Sheet
December 31, 2010
$580,000
$430,000
$360,000 $290,000 7) In horizontal analysis, each item is expressed as a percentage of the Net income amount Stockholders’ equity amount Total assets amount Base-year amount 8) Which of the following statements is true with respect to financial statement reporting for all cases when a company changes from on acceptable accounting method to another? Comparability across periods is impaired Only a footnote is required to report the change Changes in both depreciation methods and inventory methods are reported retroactively Management must indicate that the accounting method change is preferable to the old method. 9) From an internal control standpoint, the asset most susceptible to improper diversion and use is Prepaid insurance Cash Buildings Land 10) The reconciliation of the cash register tape with the cash in the register is an example of Other controls Independent internal verification Establishment of responsibility Segregation of duties 11) Which of the following items on a bank reconciliation would require an adjusting entry on the company’s books? An entry by the bank Outstanding checks A bank service charge A deposit in transit 12) Why do pension and mutual funds invest in debt and equity securities? They have excess cash They want to generate earnings from investment income They invest for strategic reasons They invest for speculative reasons 13) Reed company acquires 80 Holmes 10%, 5 years, $1,000 bonds on January 1, 2012 for $82,000. This includes a brokerage commission of $2,000. The journal entry to record this investment includes a debit to Debt Investments for $80,000 Debt Investments for $82,000 Cash for $82,000 Stock Investments for $80,000 14) A company that owns more than 50% of the common stock of another company is known as the Charge company Subsidiary company Parent company Management company 15) Notes to the financial statements include which of the following: An independent auditors report Explanations of uncertainties Short-form Income Statement Subsidiary ledger for Accounts Receivable 16) If the retained earnings account increases from the beginning of the year to the end of the year, then Net income is less than dividends A net loss is less than dividends Additional investments are less than net losses Net income is greater than dividends 17) An …show more content…
Prepaid rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by the fisher Shoe store is:
Debit Rent Expense, $15,000; credit Prepaid Rent, $2,500
Debit Prepaid Rent, $2,500; credit Rent Expense, $2,500
Debit Rent Expense, $2,500; credit Prepaid Rent, $2,500
Debit Rent Expense, $15,000; credit Prepaid Rent, $12,500
22) Using the following data to calculate the current ration.
Koonce Office Supplies
Balance Sheet
December 31, 2012
1.81:1
1.44:1
3.07:1
2.69:1
23) When a change in depreciation method occurs
Prior years’ financial statements should be changed to reflect the newly adopted method
The change should be reported in current and future years
The cumulative effect of the change should be reflected on the income statement as of the beginning of the next year
The cumulative effect of the change in accounting principle should be classified as an extraordinary item on the income
D. Liabilities will decrease
3) Using accrual accounting, expenses are recorded and reported only:
When they are incurred whether or not cash is paid
When they are incurred and paid at the same time
If they are paid before they are incurred
If they are paid after they are incurred
4) Stockholders’ equity can be described as claims of
Creditors on total assets
Owners on total assets
Customers on total assets
Debtors on total assets
5) The Vintage Laundry Company purchases $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $2,000 on hand. The adjusting entry that should be made by the company on June 30 is:
Debit Laundry Supplies Expense, $2,000; credit Laundry Supplies, $2,000
Debit Laundry Supplies, $4,500; credit Laundry Supplies Expense, $4,500
Debit Laundry Supplies $2,000; credit Laundry Supplies Expense, $2,000
Debit Laundry Supplies Expense, $4,500; credit Laundry Supplies, $4,500
6) Use the following data to determine the total dollar amount of assets to be classified as current assets.
Koonce Office Supplies
Balance Sheet
December 31, 2010
$580,000
$430,000
$360,000 $290,000 7) In horizontal analysis, each item is expressed as a percentage of the Net income amount Stockholders’ equity amount Total assets amount Base-year amount 8) Which of the following statements is true with respect to financial statement reporting for all cases when a company changes from on acceptable accounting method to another? Comparability across periods is impaired Only a footnote is required to report the change Changes in both depreciation methods and inventory methods are reported retroactively Management must indicate that the accounting method change is preferable to the old method. 9) From an internal control standpoint, the asset most susceptible to improper diversion and use is Prepaid insurance Cash Buildings Land 10) The reconciliation of the cash register tape with the cash in the register is an example of Other controls Independent internal verification Establishment of responsibility Segregation of duties 11) Which of the following items on a bank reconciliation would require an adjusting entry on the company’s books? An entry by the bank Outstanding checks A bank service charge A deposit in transit 12) Why do pension and mutual funds invest in debt and equity securities? They have excess cash They want to generate earnings from investment income They invest for strategic reasons They invest for speculative reasons 13) Reed company acquires 80 Holmes 10%, 5 years, $1,000 bonds on January 1, 2012 for $82,000. This includes a brokerage commission of $2,000. The journal entry to record this investment includes a debit to Debt Investments for $80,000 Debt Investments for $82,000 Cash for $82,000 Stock Investments for $80,000 14) A company that owns more than 50% of the common stock of another company is known as the Charge company Subsidiary company Parent company Management company 15) Notes to the financial statements include which of the following: An independent auditors report Explanations of uncertainties Short-form Income Statement Subsidiary ledger for Accounts Receivable 16) If the retained earnings account increases from the beginning of the year to the end of the year, then Net income is less than dividends A net loss is less than dividends Additional investments are less than net losses Net income is greater than dividends 17) An …show more content…
Prepaid rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by the fisher Shoe store is:
Debit Rent Expense, $15,000; credit Prepaid Rent, $2,500
Debit Prepaid Rent, $2,500; credit Rent Expense, $2,500
Debit Rent Expense, $2,500; credit Prepaid Rent, $2,500
Debit Rent Expense, $15,000; credit Prepaid Rent, $12,500
22) Using the following data to calculate the current ration.
Koonce Office Supplies
Balance Sheet
December 31, 2012
1.81:1
1.44:1
3.07:1
2.69:1
23) When a change in depreciation method occurs
Prior years’ financial statements should be changed to reflect the newly adopted method
The change should be reported in current and future years
The cumulative effect of the change should be reflected on the income statement as of the beginning of the next year
The cumulative effect of the change in accounting principle should be classified as an extraordinary item on the income