Accounts MCQsQuestion 7 The ending balance in retained earnings is shown in the a. Income statement b. Statement of retained earnings c. Balance sheet d. Both (b) and (c) e. Both (a) and (c)f. (a), (b) and (c)
Accounts MCQs
Question 7: The ending balance in retained earnings is shown in the:
a. Income statement
b. Statement of retained earnings
c. Balance sheet
d. Both (b) and (c)
e. Both (a) and (c)
f. (a), (b) and (c)
Question 8: A cash dividend of $500 was declared and paid to stockholders. The correct journal entry to record the declaration is:
a. DR Capital stock 500 and CR Cash 500
b. DR Cash 500 and CR Dividends 500
c. DR Dividends 500 and CR Cash 500
d. DR Cash 500 and CR Capital stock 500
Question 9: If $3,000 has been earned by a company’s workers since the last payday in an accounting period, the necessary adjusting entry would be:
a. Debit an expense and credit a liability.
b. Debit an expense and credit an asset.
c. Debit a liability and credit an asset.
d. Debit a liability and credit an expense.
Question 10: The accrual basis of accounting:
a. Recognizes revenues only when cash is received
b. Is used by almost all companies
c. Recognizes expenses only when cash is paid out
d. Recognizes revenues when sales are made or services are performed and recognizes expenses only when cash is paid out.
Question 13: Which of the following statements is true regarding the classified balance sheet?
a. Current assets include cash, accounts receivable, and equipment.
b. Plant, property, and equipment is one category of long-term assets.
c. Current liabilities include accounts payable, salaries payable, and notes receivable.
d. Stockholders' equity is subdivided into current and long-term categories.
Question 14: The underlying assumptions of accounting includes all the following except:
a. Business entity
b. Going concern
c. Matching
d. Money measurement and periodicity
Question 15: Frick Company began the accounting period with $60,000 of merchandise, and net cost of purchases was $240,000. A physical inventory showed $72,000 of merchandise unsold at the end of the period. The cost of goods sold of Frick Company for the period is:
a. $300,000
b. $228,000
c. $252,000
d. $168,000
e. None of the above
Question 16: A classified income statement consists of all of the following major sections except for:
a. Operating revenues
b. Cost of goods sold
c. Operating expenses
d. Non-operating revenues and expenses
e. Current assets
Question 17: A business purchased merchandise for $12,000 on account; terms are 2/10, n/30. If $2,000 of the merchandise was returned and the remaining amount due was paid within the discount period, the purchase discount would be:
a. $240
b. $200
c. $1,200
d. $1,000
e. $3,600
Question 18: Frick Company began the accounting period with inventory of 3,000 units at $30 each. During the period, the company purchased an additional 5,000 units at $36 each and sold 4,600 units. Assume the use of periodic inventory procedure. The cost of ending inventory using weighted-average is:
a. $114,750
b. $157,600
c. $122,400
d. $109,650
e. None of the above
Question 19: Frick Company began the accounting period with inventory of 3,000 units at $30 each. During the period, the company purchased an additional 5,000 units at $36 each and sold 4,600 units. Assume the use of periodic inventory procedure. The cost of goods sold using weighted-average is:
a. $147,200
b. $160,350
c. $155,250
d. $114,000
e. None of the above
Question 20: During a period of rising prices, which inventory method might be expected to give the highest net income?
a. Weighted-average
b. FIFO
c. LIFO
d. Specific identification
e. Cannot determine
Question 21: The following information: related to the bank reconciliation of the Flip Company:
Balance per bank statement $1,951.20
Balance per ledger 1,869.60
Deposits in transit 271.20
Outstanding checks 427.80
NSF check 61.20
Service charges 13.80
The adjusted/correct cash balance is:
a. $1,794.60
b. $1,719.60
c. $1,638.00
d. $1,713.00
e. $1,876.20
Question 22: In a bank reconciliation, deposits in transit should be:
a. Deducted from the balance per books
b. Deducted from the balance per bank statement
c. Added to the balance per ledger
d. Added to the balance per bank statement
e. Disregarded in the bank reconciliation
Question 23: After the bank reconciliation is prepared, the entry to record bank service charges would have a credit to:
a. Bank Service Charge Expense
b. Cash
c. Petty Cash
d. Cash Short and Over
e. None of the above
Question 24: Frick Company estimates uncollectible accounts using the percentage-of-receivables method and expects that 5 percent of outstanding receivables will be uncollectible for 2010. The balance in Accounts Receivable is $200,000, and the allowance account has a $3,000 credit balance before adjustment at year-end. The uncollectible accounts expense for 2010 will be:
a $7,000
b. $10,000
c. $13,000
d. $9,850
e. None of the above
Question 25: Frick Company issued its own $10,000, 90-day, non interest-bearing note to a bank. If the note is discounted at 10 percent, the proceeds to Frick are:
a. $10,000
b. $9,000
c. $9,750
d. $10,250
e. None of the above
Question 27: The result of recording a capital expenditure as a revenue expenditure is an:
a. Overstatement of current year's expense
b. Understatement of current year's expense
c. Understatement of subsequent year's net income
d. Overstatement of current year's net income
e. None of the above
Question 28: A truck costing $45,000 and having an estimated salvage value of $4,500 and an original life of five years is exchanged for a new truck. The cash price of the new truck is $57,000, and a trade-in allowance of $22,500 is received. The old truck has been depreciated for three years using the straight-line method. The new truck would be recorded at:
a. $55,200
b. $57,000
c. $34,500
d. $43,200
e. None of the above
Question 29: Which of the following is not an advantage of the corporate form of organization?
a. Continuous existence of the entity
b. Limited liability of stockholders
c. Government regulation
d. Easy transfer of ownership
