What will always increase when net income increases?
a) liabilities
b) cash
c) merchandise
d) sales
e) capital
What is capital?
100
A company prepares a bank reconciliation in order to
a)determine the correct amount of the cash balance
b)satisfy banking regulations
c)determine deposits not yet recorded by the bank
d)double-check the amount of petty cash
e)record all check disbursements
What is determine the correct amount of the cash balance?
100
What impact does collecting a receivable have?
a) total assets increases
b) total assets decreases
c) net income increases
d) net income decreases
e) total assets and net income are not affected
What is total assets and net income are not affected?
What is depreciation expense (equipment) debit, accumulated depreciation (equipment) credit?
100
The Accumulated Depreciation account should be shown in the financial statements as
a) an operating expense
b) an extraordinary loss
c) a liability
d) stockholders' equity
e) a contra(deduction) to an asset account
What is a contra(deduction) to an asset account?
200
Assume there are 365 days in a year. What is the number of days' inventory on hand for a firm with cost of goods sold of $750,000 and average inventory of $150,000?
a) 5
b) 8
c) 20
d) 43
e) 73
What is 73?
200
An inventory valuation method affects
a) the cost of goods sold but not the balance sheet
b)the balance sheet but not the cost of goods sold
c)both the income statement and the balance sheet
d)neither the income statement nor the balance sheet
e)the cost of goods sold but not the income statement
What is both the income statement and the balance sheet.
200
The financial statement that includes classifications for operating, financing, and investing activities of a business entity for a period of time is called the
a) income statement
b) statement of retained earnings
c) balance sheet
d) statement of changes in owners' equity
e) statement of cash flows
What is statement of cash flows?
200
A company had net sales of $27,900 in April. Beginning inventory was $5,000. Net inventory purchases were $15,000. Ending inventory was $7,000. Total operating expenses were $6,500. How much net income did the company earn in April?
a) $8,400
b) $12,400
c) $13,000
d) $14,900
e) $21,400
What is $8,400?
200
If an individual borrows $95,000 on July 1, 2010, from Community Bank by signing a $95,000, 9 percent, one-year note, what is the accrued interest as of December 31, 2010?
a) $0
b) $2,138
c) $4,275
d) $6,413
e) $8,550
What is $4,275?
300
During the current year, accounts receivable increased from $27,000 to $41,000, and sales were $225,000. Based on this information, how much cash did the company collect from its customers during the year?
a) $225,000
b) $239,000
c) $211,000
d) $252,000
e) $266,000
What is $211,000?
300
A liability for dividends is recorded on which of the following?
a) declaration date
b) record date
c) payment date
d) collection date
e) statement date
What is the declaration date?
300
In a period of rising prices, which of the following inventory methods results in the highest cost of goods sold?
a) LIFO
b) FIFO
c) average cost
d) periodic inventory
e) perpetual inventory
What is LIFO?
300
Green Corporation with assets of $5,000,000 and liabilities of $2,000,000 has 6,000 shares of capital stock outstanding (par value $300). What is the book value per share?
a) $200
b) $300
c) $500
d) $833
e) $1,167
What is $500?
300
Net purchases for the year amounted to $80,000. The merchandise inventory at the beginning of the year was $19,000. On sales of $120,000, a 30 percent gross profit on the selling price was realized. The inventory at the end of the year was
a) $13,000
b) $15,000
c) $17,000
d) $25,000
e) $63,000
What is $15,000?
400
Accounts receivable turnover helps determine
a) the balance of accounts payable
b) the customers who have recently paid their bills
c) how quickly a firm collects cash on its credit sales
d) when to write off delinquent accounts
e) credit sales
What is how quickly a firm collects cash on its credit sales?
400
Assets are classified as intangible under which of the following conditions?
a)They are converted into cash within one year
b)They have no physical substance
c)They are acquired in a merger
d)They are held for resale
e)They are short term and used in operations
What is they have no physical substance?
400
Dividends paid is shown on which of the following financial statements?
a)balance sheet
b) income statement
c)statement of cash flows
d)statement of cost of goods manufactured
e)statement of comprehensive income
What is statement of cash flows?
400
Cost of goods sold is determined by which of the following?
a)Beginning inventory plus net purchases minus ending inventory
b)Beginning inventory plus purchases plus purchase returns minus ending inventory
c)Beginning inventory minus net purchases plus ending inventory
d)Purchases minus transportation-in plus beginning inventory minus ending inventory
e)net sales minus ending inventory
What is beginning inventory plus net purchases minus ending inventory?
400
Which of the following investing activities appears on the statement of cash flows?
a) selling a building
b) buying treasury stock
c) selling treasury stock
d) paying dividends
e) receiving interest income on a note receivable
What is selling a building?
500
The income statement is designed to measure
a) whether a firm is able to pay its bills
b) how solvent a company has been
c) how much cash flow a firm is likely to generate
d) the financial position of the firm
e) the results of business operations
What is the results of business operations?
500
Return on assets helps users of financial statements evaluate which of the following?
a) profitability
b) liquidity
c) solvency
d) cash flow
e) reliability
What is profitability?
500
Equipment with a cost of $50,000 has an estimated residual value of $2,000 and an estimated life of 10 years or 8,000 machine hours. It is to be depreciated by the units-of-production method. What is the amount of depreciation for the third year, during which the machine was used 1,000 machine hours?
a) $2,000
b) $3,000
c) $4,800
d) $5,000
e) $6,000
What is $6,000?
500
The owner's equity in a business increases from which of the following?
I. Excess of revenue over expenses
II. Investments by the owner
III. Decrease in accounts payable
a) I only
b) II only
c) III only
d) I and II only
e) I, II, and III
What is I and II only?
500
"In determining net income from business operations, the costs involved in generating revenue should be charged against that revenue." The statement above best describes which of the following?
a) the cost principle
b) the going-concern principle
c) the profit principle
d) the matching principle
e) the business entity principle