Carroll College Accounting & Financial Statement Questions

Question Description

  • The Cash account in the records of Hensley, Incorporated showed a balance of $6,100 at June 30. The bank statement, however, showed a balance of $10,900 at the same date. The only reconciling items consisted of a $1,350 deposit in transit, a bank service charge of $23, and a large number of outstanding checks.

What is the total amount of the outstanding checks at June 30?

Multiple Choice

  • $6,173.
  • $4,750.
  • $6,150.
  • $3,354

2. Bert had accounts receivable of $310,000 and an allowance for doubtful accounts of $12,600 just before writing off as worthless an account receivable from Ernie Company of $1,700. After writing off this receivable what would be the balance in Bert’s Allowance for Doubtful Accounts?

Multiple Choice

$10,900 credit balance.

$12,600 credit balance.

$10,900 debit balance.

$14,300 credit balance.

3. On November 1, Year 1, Salem Corporation sold land priced at $320,000 in exchange for a 3%, six-month note receivable.

Salem’s balance sheet at December 31, Year 1, includes which of the following as a result of the sale of land on November 1?

Multiple Choice

Notes Receivable of $320,000 and Interest Receivable of $4,800.

Notes Receivable of $324,800 and Interest Receivable of $1,600.

Notes Receivable of $320,000 and Interest Receivable of $1,600.

Notes Receivable of $320,000 only.

4.Investors may be described as:

Multiple Choice

Individuals and enterprises that have ownership interest in a reporting entity.

Anyone with an interest in the results of the operations of the reporting entity.

Those whose primary economic activity consists of buying and selling stocks and bonds.

Individuals and enterprises that have provided credit to a reporting entity.

5. Which of the following decision makers is least likely to be among the users of management accounting reports developed by a large organization that operates retail stores that sell to consumers?

Multiple Choice

  • The manager of a department in one of the stores owned by the organization.
  • The chief executive officer of the organization.
  • Internal auditors within the organization.
  • The manager of a mutual fund considering investing in the organization’s common stock.

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6. Which of the following events is not a transaction that would be recorded in a company’s accounting records?

Multiple Choice

The purchase of equipment for cash.

The purchase of equipment on account.

The death of a key executive.

The investment of additional cash in the business by the owner.

7. Which of the following does not describe accounting?

Multiple Choice

It is used by businesses, governments, non-profit organizations, and individuals.

It is commonly referred to as the language of business.

It is useful for decision-making.

It is an end rather than a means to an end.

8. Suppose a number of your friends have organized a company to develop and sell a new software product. They have asked you to loan them $8,000 to help get the company started, and they have promised to repay your $8,000 plus 10% interest in one year. Of the following, which amount may be described as the return on your investment?

Multiple Choice

  • $7,200
  • $8,000
  • $8,800

9. At December 31, Year 1, the accounting records of Braun Corporation contain the following items:

Accounts Payable

$ 17,500

Accounts Receivable

$ 43,000

Land

$ 243,000

Cash

?

Capital Stock

?

Equipment

$ 123,000

Building

$ 183,000

Notes Payable

$ 193,000

Retained Earnings

$ 163,000

If Capital Stock is $263,000, what is the December 31, Year 1 cash balance?

Multiple Choice

  • $95,500.
  • $636,500.
  • $87,500.
  • $44,500.

10. At December 31, Year 1, the accounting records of Braun Corporation contain the following items:

Accounts Payable

$ 17,000

Accounts Receivable

$ 42,000

Land

$ 242,000

Cash

?

Capital Stock

?

Equipment

$ 122,000

Building

$ 182,000

Notes Payable

$ 192,000

Retained Earnings

$ 162,000

If Capital Stock is $322,000, total assets of Braun Corporation at December 31, Year 1, amounts to:

Multiple Choice

  • $935,000.
  • $693,000.
  • $735,000.
  • $109,000.

11. At December 31, Year 1, the accounting records of Braun Corporation contain the following items:

Accounts Payable

$ 20,500

Accounts Receivable

$ 49,000

Land

$ 249,000

Cash

?

Capital Stock

?

Equipment

$ 129,000

Building

$ 189,000

Notes Payable

$ 199,000

Retained Earnings

$ 169,000

If Cash at December 31, Year 1, is $95,000, Capital Stock is:

Multiple Choice

  • $177,000.
  • $273,500.
  • $322,500.
  • $660,500.

12. At December 31, Year 1, the accounting records of Braun Corporation contain the following items:

Accounts Payable

$ 11,500

Accounts Receivable

$ 31,000

Land

$ 231,000

Cash

?

Capital Stock

?

Equipment

$ 111,000

Building

$ 171,000

Notes Payable

$ 181,000

Retained Earnings

$ 151,000

If Cash at December 31, Year 1, is $17,000, total owners’ equity is:

Multiple Choice

  • $368,500.
  • $561,000.
  • $151,000.
  • $343,500.

13. At December 31, Year 1, the accounting records of Braun Corporation contain the following items:

Accounts Payable

$ 19,500

Accounts Receivable

$ 47,000

Land

$ 247,000

Cash

?

Capital Stock

?

Equipment

$ 127,000

Building

$ 187,000

Notes Payable

$ 197,000

Retained Earnings

$ 167,000

If Cash at December 31, Year 1, is $73,000, total assets amounts to:

Multiple Choice

  • $700,500.
  • $634,000.
  • $848,000.

14. At the end of October, Flagship Marina received a bill for fuel used in October. Payment is not due until November 30. This transaction:

Multiple Choice

Is recorded as a liability in October, but is not considered an expense until paid.

Should be recorded as an expense of October, regardless of the payment date.

Causes a decrease in assets and in owners’ equity in November, when the bill is paid.

Should not be recorded in the accounting records until November.

15. The matching principle:

Multiple Choice

Is used in accrual accounting to determine the proper period in which to recognize revenue.

Applies only to situations in which a cash payment occurs before an expense is recognized.

Is used in accrual accounting to determine the proper period for recognition of expenses.

Applies only to situations in which a cash receipt occurs before revenue is recognized.

16.The accounting cycle begins with:

Multiple Choice

Formation of a business.

Preparation of a trial balance.

Initial recording of business transactions.

Posting of journal entries to ledger accounts.

17. Which of the following is not a step in the accounting cycle?

Multiple Choice

Prepare a trial balance.

Prepare financial statements.

Prepare a purchase order.

Prepare an adjusted trial balance.

18. In February of each year, the Carlton Hotel holds a very popular wine tasting event. Tickets must be ordered and paid for in advance, and are typically sold out by November of the preceding year. The realization principle indicates that the revenue from these ticket sales should be recognized in the period in which the:

Multiple Choice

  • Expenses associated with the wine tasting are paid in full.
  • Order is placed.
  • Payments are received.

19. Closing entries should be made:

Multiple Choice

Only when an entity goes out of business.

Every year.

Only if there is a loss.

Only if there is a profit.

20.Which of the following accounts will be closed to Income Summary?

Multiple Choice

Prepaid Expenses.

Unearned Revenue.

Depreciation Expense.

Dividends.

21.A statement of retained earnings shows:

Multiple Choice

The changes in the Retained Earnings account occurring during the accounting period.

The types of assets that have been purchased with the earnings retained during the accounting period.

The revenue, expense, and dividends of the period.

The changes in the Cash account occurring during the accounting period.

22.If Income Summary has a net credit balance, it signifies:

Multiple Choice

A reduction of net worth.

Dividends have been declared.

Net income.

A net loss.

23.The normal order in which the financial statements are prepared is:

Multiple Choice

Income statement, annual report, balance sheet.

Income statement, statement of retained earnings, balance sheet.

Balance sheet, income statement, statement of retained earnings.

Income tax return, income statement, balance sheet.

24.Which of the following is not true regarding the general ledger account for Cash?

Multiple Choice

Each debit entry in the Cash account represents a cash receipt.

The balance of the account indicates the amount of cash owned by the business on a particular date.

Debit entries are made before credit entries.

Credit entries in the Cash account represent cash payments.

25. The matching principle is best demonstrated by:

Multiple Choice

The equation Assets = Liabilities + Owners’ Equity.

Using debits to record decreases in owners’ equity and credits to record increases.

Offsetting the cash receipts of the period with the cash payments made during the period.

Allocating the cost of an asset to expense over the periods during which benefits are derived from the asset.

26, Steps in the accounting cycle include (1) prepare financial statements, (2) post each journal entry to the appropriate ledger account, and (3) journalize transactions. Which of the following reflects the correct order of these steps?

Multiple Choice

(3), (1), (2).

(2), (1), (3).

(1), (2), (3).

(3), (2), (1).

27.The accounting cycle begins with:

Multiple Choice

Formation of a business.

Preparation of a trial balance.

Posting of journal entries to ledger accounts.

Initial recording of business transactions.

28.The matching principle:

Multiple Choice

Applies only to situations in which a cash payment occurs before an expense is recognized.

Is used in accrual accounting to determine the proper period in which to recognize revenue.

Applies only to situations in which a cash receipt occurs before revenue is recognized.

Is used in accrual accounting to determine the proper period for recognition of expenses.

29. Berg Tooling reports net sales of $415,000, gross profit of $267,000, and net income of $24,000. The company’s cost of goods sold is:

Multiple Choice

$291,000.

$148,000.

$391,000.

$124,000.

30. Sutton Supplies reports net sales of $3,900,000, net income of $370,000, and gross profit of $996,000. The company’s cost of goods sold is:

Multiple Choice

$1,992,000.

$626,000.

$3,530,000.

$2,904,000.

31.Van Roy Supplies reports net sales of $1,810,000, net income of $180,000, and gross profit of $306,000. The company’s cost of goods sold is:

Multiple Choice

$1,504,000.

$1,324,000.

$486,000.

$1,630,000.

32. Beacon Food Stores purchased canned goods at an invoice price of $5,800 and terms of 2/10, n/60. Half of the goods had been mislabeled and were returned immediately to the supplier. If Beacon Food pays the remaining amount of the invoice within the discount period, the amount paid should be:

Multiple Choice

$5,800.

$2,784.

$2,842.

$5,684.

33. If Bounder Dog Supplies, Incorporated purchased inventory at $1,900 list price and the terms were 3/10 n/30, what would be the value associated with the inventory if payment was made within 10 days?

Multiple Choice

$1,957.

$1,843.

$1,900.

$1,862.

34.As of December 31, Year 1, Valley Company has $13,570 cash in its checking account, as well as several other items listed below:

Bank credit card slips signed by customers

$ 1,075

Money market fund balance

$ 14,000

Investment in U.S. Treasury bills, mature within 90 days

$ 40,000

Checks received from customers, but not yet deposited in the bank

$ 1,460

Investment in 4,500 shares of Coca-Cola capital stock

$ 43,000

What amount should be shown in Valley’s December 31, Year 1, balance sheet as “Cash and cash equivalents”?

Multiple Choice

  • $56,535.
  • $99,535.
  • $113,105.
  • $70,105.

35. A bank statement shows a balance of $11,500 at June 30. The bank reconciliation is prepared and includes outstanding checks of $2,820, deposits in transit of $1,160, and a bank service charge of $15. Among the paid checks returned by the bank was check number 900 in the amount of $420, which the company had erroneously recorded in the accounting records as $60. The “adjusted cash balance” at June 30 is:

Multiple Choice

$9,840.

$10,745.

$9,100.

$8,260.

36. The Cash account in the records of Hensley, Incorporated showed a balance of $6,100 at June 30. The bank statement, however, showed a balance of $10,900 at the same date. The only reconciling items consisted of a $1,350 deposit in transit, a bank service charge of $23, and a large number of outstanding checks.

What is the total amount of the outstanding checks at June 30?

Multiple Choice

$6,173.

$4,750.

$6,150.

$3,354

37. Bert had accounts receivable of $310,000 and an allowance for doubtful accounts of $12,600 just before writing off as worthless an account receivable from Ernie Company of $1,700. After writing off this receivable what would be the balance in Bert’s Allowance for Doubtful Accounts?

Multiple Choice

$10,900 credit balance.

$12,600 credit balance.

$10,900 debit balance.

$14,300 credit balance.

38.On November 1, Year 1, Salem Corporation sold land priced at $320,000 in exchange for a 3%, six-month note receivable.

Salem’s balance sheet at December 31, Year 1, includes which of the following as a result of the sale of land on November 1?

Multiple Choice

Notes Receivable of $320,000 and Interest Receivable of $4,800.

Notes Receivable of $324,800 and Interest Receivable of $1,600.

Notes Receivable of $320,000 and Interest Receivable of $1,600.

Notes Receivable of $320,000 only.

Prof. Angela

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