accounting test accounting test Question Credits are used to record: A) decreases in assets and owner's equity and increases in liabilities. B) decreases in assets, liabilities, and owner's equity. C) decreases in liabilities and increases in assets and owner's equity. D) increases in liabilities and owner's equity. Save your time! Proper editing and formatting Free revision, title page, and bibliography Flexible prices and money-back guarantee ORDER NOW Which of the following types of accounts normally have debit balances? A) assets and revenue B) assets, liabilities, and owners equity C) expenses and assets D) liabilities and owner’s equity Make sure you submit a unique essay Our writers will provide you with an essay sample written from scratch: any topic, any deadline, any instructions. 100% ORIGINAL ORDER NOW On November 1, 20--, a firm accepted a 4-month, 10 percent note for $900 from a customer with an overdue balance. The accrued interest recorded for this note for the year ended December 31, 20--, is (assume a 360 day year) A) $75 B) $30 C) $15 D) $90 The entry to record a return by a credit customer of defective merchandise on which no sales tax was charged includes: A) a credit to Sales and a debit to Accounts Receivable B) a debit to Sales and a credit to Sales Returns and Allowances C) a debit to Sales Returns and Allowances and a credit to Accounts Receivable D) a debit to Accounts Receivable and a credit to Sales Returns and Allowances If a firm had sales of $50,000 during a period and sales returns and allowances of $4,000, its net sales were: A) $54,000 B) $50,000 C) $46,000. D) $4,000 On December 31, prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $200. An aged analysis of the accounts receivable produces an estimate of $1,000 of probable losses from uncollectible accounts. The adjusting entry needed to record the estimated losses from uncollectible accounts is made for A) $800 B) $1,000 C) $1,200 D) $200 A firm reported net credit sales of $225,000 during the year and has a balance of $20,000 in its Accounts Receivable account at year-end. Prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $100. The firm estimated its losses from uncollectible accounts to be one-half of 1 percent of sales. The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for A) $1,225 B) $1,125 C) $ 900 D) $2,250 Upon collection of the amount due on a $6,000 face value, 90-day note with interest at 10 percent a year, the Note Receivable account is: A) debited for $6,600 B) credited for $6,000 C) credited for $6,150 D) debited for $6,000 The entry to record a purchase of merchandise on credit using a periodic inventory system includes A) a debit to Merchandise Inventory and a credit to Accounts Payable B) a credit to Merchandise Inventory and a debit to Accounts Payable C) a debit to Accounts Payable and a credit to Purchases D) a debit to Purchases (COGS) and a credit to Accounts Payable The entry to record a purchase of merchandise on credit using a perpetual inventory system includes: A) a debit to Merchandise Inventory and a credit to Accounts Payable B) a credit to Merchandise Inventory and a debit to Accounts Payable C) a debit to Accounts Payable and a credit to Purchases D) a debit to Purchases (COGS) and a credit to Accounts Payable The total of the balances in the creditor's accounts should agree with the balance of: A) the Purchases account in the general ledger B) the Accounts Receivable account in the general ledger C) the Accounts Payable account in the general ledger D) the Sales account in the general ledger A firm purchased equipment for $6,000 on credit and issued a 120-day note bearing interest at 9 percent. To record this transaction, the accountant would: A) debit Equipment for $6,000 and credit Notes Payable for $6,000 B) debit Equipment for $6,180, credit Interest Expense for $180, and credit Notes Payable for $6,000 C) debit Equipment for $6,000, debit Interest Expense for $180, and credit Notes Payable for $6,180 D) credit Equipment for $6,000 and debit Accounts Payable for $6,000 When a company issues a promissory note, the accountant records an entry that includes a credit to Note Payable for: A) the face value of the note B) the face value of the note plus the interest that will accrue C) the face value less the interest that will accrue D) the maturity value of the note How much interest will accrue on a $20,000 face value, 60-day note that bears interest at 9 percent a year? (assume a 360 day year) A) $300 B) $1,800 C) $450 D) $900 Notes payable due within one year are usually shown: A) in the Current Assets section of the balance sheet B) in the Current Liabilities section of the balance sheet C) in the Other Expenses section of the income statement D) in the Long-Term Liabilities section of the balance sheet The maturity value of a 90-day note for $4,000 that bears interest at 10 percent a year is (assume a 360 day year) A) $4,400 B) $4,000 C) $3,900 D) $4,100 Lisa Ramos has a regular hourly rate of $10.75. In a week when she worked 40 hours and had deductions of $55 for federal income tax, $26.75 for social security tax, and $6.25 for Medicare tax, her net pay was A) $430 B) $342 C) $375 D) $397 The amount debited to Wages Expense when a payroll is recorded is the: A) Regular gross earnings (not including overtime) B) Earnings after taxes C) Net earnings D) Total gross earnings Each type of deduction made from the employees' earnings is recorded in a separate: A) asset account B) expense account C) liability account D) revenue account To record the deposit of FUTA tax, the accountant would: A) debit Payroll Taxes Expense and credit Federal Unemployment Tax Payable. B) debit Payroll Taxes Expense and credit Cash. C) debit Federal Unemployment Tax Payable and credit Cash. D) debit Social Security Taxes Payable and credit Cash. The adjusting entry to record accrued interest on a note payable requires: A) a debit to Interest Income and a credit to Notes Payable B) a debit to Interest Payable and a credit to Interest Expense C) a debit to Interest Expense and a credit to Cash D) a debit to Interest Expense and a credit to Interest Payable On May 1, 20--, a firm purchased a 1-year insurance policy for $1,800 and paid the full premium in advance. The insurance expense associated with this policy for 20—is A) $600 B) $1,200 C) $1,800 D) $1,050 An asset that cost $14,000 was sold for $9,000 cash. Accumulated depreciation on the asset was $7,000. The entry to record this transaction includes the recognition of: A) a gain of $2,000 B) a loss of $5,000 C) neither a gain nor a loss D) a loss of $2,000 An adjusting entry is usually not required for an expense item: A) when it is paid for and recorded in one period but not fully used until a later period B) when it is used in one period but not paid for or recorded until a later period C) when it is paid for, recorded, and used in one period D) when it is budgeted but not paid for or used during the period A firm that sells a single product had a beginning inventory of 4,000 units with a total cost of $28,000. Early in the year, 10,000 units were purchased at $9 each. Using FIFO, what is the value of the ending inventory of 3,000 units? A) $27,000 B) $24,000 C) $21,000 D) $36,000 A firm that sells a single product had a beginning inventory of 4,000 units with a total cost of $16,000. Early in the year, 8,000 units were purchased at $6 each. Using LIFO, what is the value of the ending inventory of 2,000 units? A) $12,000 B) $10,000 C) $8,000 D) $24,000 A matching of the most recent costs to revenue results from the use of: A) the LIFO method B) the FIFO method C) the average cost method D) the lower of cost or market method On January 2, 20--, a firm purchased equipment for $8,500. Depreciation expense for 20--, given the straight-line method, a 5-year useful life, and a salvage value of $1,500, is: A) $1,500 B) $1,700 C) $1,200 D) $1,400 A firm purchases an asset for $50,000 and estimates that it will have a useful life of five years and a salvage value of $5,000. Under the double-declining-balance method, the depreciation expense for the first year of the asset's useful life is: A) $9,000 B) $18,000 C) $10,000 D) $20,000 The method of depreciation that results in the same amount of depreciation expense each year is the: A) units-of-output method B) straight-line method C) sum-of-the-years'-digits method D) declining-balance method An accountant who records revenue when a credit sale is made rather than waiting for the receipt of cash from the customer is: A) following the accrual principle B) following the conservatism convention C) violating generally accepted accounting principles D) following the consistency principle Depreciating equipment over its useful life is an example of: A) following the objectivity assumption B) applying the matching principle C) applying the realization principle D) applying the conservatism convention Keeping the personal assets of the owner of a business separate from the assets of the firm is an example of: A) following the going concern assumption B) applying the realization principle C) following the separate entity assumption D) applying the conservatism convention A firm has sales of $40,000 in 2004 and $45,000 in 2005. The increase in sales from 2004 to 2005 is: A) 25% B) 20% C) 125% D) 12.5% A firm has liabilities of $60,000 and stockholders’ equity of $180,000. The percentage of total liabilities to total assets is: A) 25 percent B) 20 percent C) 50 percent D) 75 percent The current ratio is calculated by: A) dividing current assets by total liabilities B) dividing net working capital by current liabilities C) dividing current assets by current liabilities D) dividing total assets by current liabilities A company's January 1 balance in Accounts Receivable is $70,000. The December 31 balance is $80,000. If the company has credit sales of $600,000, the accounts receivable turnover is: A) 8.0 times B) 7.5 times C) 4.0 times D) 7.0 times Stockholders' equity: A) is usually equal to cash on hand B) includes paid-in capital and liabilities C) includes retained earnings and paid-in capital D) is shown on the income statement The charter of a corporation authorizes 100,000 shares of common stock. Assume that 50,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $1 per share dividend is declared? A) $50,000 B) $5,000 C) $100,000 D) $45,000 If the market rate of interest is 8%, the price of 6% bonds paying interest semiannually with a face value of $100,000 will be: A) equal to $100,000 B) greater than $100,000 C) less than $100,000 D) greater than or less than $100,000, depending on the maturity date of the bonds The journal entry a company records for the issuance of bonds when the contract rate is greater than the market rate would be: A) debit Cash, credit Premium on Bonds Payable and Bonds Payable B) debit Bonds Payable, credit Cash C) debit Cash and Discount on Bonds Payable, credit Bonds Payable D) debit Cash, credit Bonds Payable Jack and Jill share income and losses in a 2:1 ratio after allowing for salaries to Jack of $24,000 and $30,000 to Jill. Net income for the partnership is $66,000. Income should be divided as follows: A) Jack, $24,000; Jill, $30,000 B) Jack, $24,000; Jill, $34,000 C) Jack, $30,000; Jill, $36,000 D) Jack, $32,000; Jill, $34,000 The liability for a dividend is recorded on which of the following dates? A) the date of record B) the date of payment C) the date of announcement D) the date of declaration The journal entry to issue 1,000,000 shares of $5 par common stock for $7.00 per share on January 2nd would be: A) Jan 2 Cash 7,000,000 Common Stock 5,000,000 Paid-in Capital in Excess of Par - C/S 2,000,000 B) Jan 2 Cash 5,000,000 Common Stock 5,000,000 C) Jan 2 Cash 5,000,000 Common Stock 2,000,000 Paid-in Capital in Excess of Par - C/S 7,000,000 D) Jan 2 Cash 1,000,000 Common Stock 1,000,000 Which types of inventories does a manufacturing business report on the balance sheet? A) Finished goods inventory and work in process inventory B) Direct materials inventory and work in process inventory C) Direct materials inventory, work in process inventory, and finished goods inventory D) Direct materials inventory and finished goods inventory In a job order cost accounting system, the entry to record the flow of direct materials into production is: A) debit Work in Process, credit Materials B) debit Materials, credit Work in Process C) debit Factory Overhead, credit Materials D) debit Work in Process, credit Supplies Based on the following production and sales estimates for May, determine the number of units expected to be manufactured in May: Estimated inventory (units), May 1 10,000 Desired inventory (units), May 31 15,000 Expected sales volume (units): South region 30,000 West region 40,000 North region 20,000 Unit sales price $10 A) 85,000 B) 95,000 C) 90,000 D) 105,000 If fixed costs are $250,000, the unit selling price is $105, and the unit variable costs are $65, what is the break-even sales (units)? A) 3,846 units B) 2,381 units C) 10,000 units D) 6,250 units The entry to transfer a net income to the owner's capital account would include: A) a debit to the owner's capital account and a credit to Cash B) a debit to the owner's drawing account and a credit to the owner's capital account C) a debit to Income Summary and a credit to the owner's capital account D) a debit to the owner's capital account and a credit to Income Summary The entry to close the appropriate insurance account at the end of the accounting period is: A) debit Income Summary; credit Prepaid Insurance B) debit Prepaid Insurance; credit Income Summary C) debit Insurance Expense; credit Income Summary D) debit Income Summary; credit Insurance Expense Which of the following accounts ordinarily appears in the post-closing trial balance? A) Unearned Rent B) Bill Smith, Drawing C) Supplies Expense D) Fees Earned John, age 25, is a full time student at a state university. John lives with his sister, Ann, who provides over half of his support. His only income is $4,000 of wages from a part-time job at the college book store. What is Ann’s filing status? A) Single B) Head of Household C) Married, filing separately D) Qualifying widow Wesley owns and operates the Cheshire Chicken Ranch in Turpid, Nevada. The income from this ranch is $49,000. Wesley wishes to use the easiest possible tax form. He may file: A) Form 1040EZ B) Form 1040A C) Form 1040 D) Form 1040C Which of the following would be a business debt if it were uncollectible? A) A taxpayer loans his father $1,000 to start a business B) A taxpayer loans his son $10,000 to purchase a rental house C) A dentist, using the accrual basis of accounting, extends credit to a patient for services provided D) A taxpayer loans his brother $3,000 to purchase a truck for use in his brother’s business Which of the following tax credits can exceed the amount of the taxpayer’s tax liability? A) Child and dependent care credit B) HOPE credit C) Alternative minimum tax credit D) Earned income credit Sol purchased land as an investment on January 12, 2004 for $85,000. On January 31, 2008 Sol sold the land for $90,000 cash. What is the nature of the gain or loss? A) long-term capital loss B) long-term capital gain C) short-term capital loss D) short-term capital gain Which of the following is a benefit of computerized accounting systems? A) Time consuming B) Posting and journalizing separate functions C) Accuracy D) No subsidiary ledgers Trading Securities normally appears on which of the following statements? A) Balance Sheet B) Income Statement C) Statement of Owner's Equity D) Account does not appear on any statement Depreciation Expense normally appears on which of the following statements? A) Balance Sheet B) Income Statement C) Statement of Owner's Equity D) Account does not appear on any statement Leased Equipment normally appears on which of the following statements? A) Balance Sheet B) Income Statement C) Statement of Owner's Equity D) Account does not appear on any statement Dividends Payable normally appears on which of the following statements? A) Balance Sheet B) Income Statement C) Statement of Owner's Equity D) Account does not appear on any statement Gain on Sale of Equipment normally appears on which of the following statements? A) Balance Sheet B) Income Statement C) Statement of Owner's Equity D) Account does not appear on any statement Prepaid Rent normally appears on which of the following statements? A) Balance Sheet B) Income Statement C) Statement of Owner's Equity D) Account does not appear on any statement Accumulated Depreciation - Leased Asset normally appears on which of the following statements? A) Balance Sheet B) Income Statement C) Statement of Owner's Equity D) Account does not appear on any statement Unearned Revenue normally appears on which of the following statements? A) Balance Sheet B) Income Statement C) Statement of Owner's Equity D) Account does not appear on any statement You must use the spreadsheet that you downloaded earlier to complete the following questions: – Pastina Co. Trial Balance For the Period Ended January 31, 20xx January 1 Balances January 31 Balances Account Title Debit Credit Debit Credit Cash 25,000 41,900 - Accounts Receivable 7,000 24,500 - Allowance 1,750 - 3,500 Trading Securities 1,000 3,000 - Inventory 35,000 28,000 - Notes Receivable 5,000 18,000 - Interest Receivable 1,200 4,000 - Prepaid Rent 5,000 7,000 - Prepaid Insurance 1,000 2,000 - Patent 17,000 21,000 - Equipment 38,500 42,000 - Accumulated Depreciation - Equipment - 14,000 Leased Equipment - 120,000 Accumulated Depreciation - Leased Equipment - 4,000 Accounts Payable 21,000 17,500 Wage Payable 8,000 5,500 Long-term Note Payable 35,000 59,850 Taxes Payable 4,000 6,900 Interest Payable 500 - Discount on Notes Payable 3,500 2,800 Lease Payable - 120,000 Unearned Revenue 7,000 - Common Stock 30,000 45,000 Paid in Captial in Excess of Par - Common 16,700 17,500 Retained Earnings 13,250 ? Sales Revenue - 147,000 Interest Revenue - 1,400 Cost of Goods Sold - 84,000 Wage Expense - 14,600 Rent Expense - 10,000 Depreciation Expense - 9,000 Interest Expense - 4,200 Supplies Expense - 6,400 Insurance Expense - 600 Bad Debt Expense - 3,000 Rent Payable 1,000 5,000 Advertising expense - 4,500 Amortization Expense - 6,000 Dividends Payable 1,000 800 Gain on sale of equip - 1,500 Income tax Expense - 6,900 Treasury Stock - 3,000 Gain on Sales of Trading Securities - 2,000 Total 139,200 139,200 466,400 451,450 What is the amount of cash collected from customers if Pastina wrote off $1,250 of Accounts Receivable as Uncollectible? A) $121,250 B) $128,250 C) $170,250 D) $145,750 What are the total current liabilities? A) $16,780 B) $23,000 C) $35,700 D) $85,700 What would be the ending Retained Earnings balance if Pastina declared $1,000 in dividends? A) $14,950 B) $12,950 C) $12,250 D) $11,500 How much cash was paid for taxes? A) $2,900 B) $4,000 C) $6,900 D) $10,900 What are the cash flows from the sale of common stock? A) $15,000 B) $15,800 C) $18,800 D) $62,500 How much cash was paid for inventory? A) $80,500 B) $74,500 C) $50,000 D) $28,000 What is the gross profit? A) $147,000 B) $84,000 C) $63,000 D) $64,400 What is the total Stockholder's Equity? A) $74,450 B) $72,450 C) $73,450 D) $75,450 What is the value of total assets? A) $191,400 B) $289,900 C) $292,900 D) $311,400 What is the book value of the equipment? A) $42,000 B) $63,000 C) $49,000 D) $28,000