Which of the following is a major advantage to forming a corporation?
Lenders of a corporation do not have the right to claim the corporation's assets
... [Show More] to pay its debts.
The income from a corporation is not taxed.
Stockholders have limited liability for the debts of the corporation.
A corporation is usually managed by its owners.
CONCEPT
Businesses and Organizations
2
Which of the principles below does Val follow when she reviews her records to make sure that recorded accounting events correspond to the actual costs?
Full disclosure principle
Time period principle
Measurement principle
Matching principle
CONCEPT
Conceptual Framework and Principles
3
The employees of Catherine's business earned $22,800 in wages during December, but the next payday is not until January 2nd.
When Catherine makes an adjustment on her December 31st trial balance worksheet to account for these wages, what two types of accounts will be affected?
An asset account and an expense account
A payable account and a revenue account.
An expense account and a payable account
Owner's equity and a payable account
CONCEPT
Creating Adjusting Entries
4
Which of the following is responsible for conducting an independent examination of a company's financial statements and records?
Bookkeeper
Stakeholder
Auditor
Controller
CONCEPT
Accounting in Practice
5
A car valued at $30,000 has $600 of depreciation to be adjusted as of January 31st.
Which entry should be made?
Credit Accumulated Depreciation, Debit Depreciation Expense, both for $600
Debit Accumulated Depreciation, Credit Car, both for $600
Debit Accumulated Depreciation, Credit Depreciation Expense, both for $600
Debit Car, Credit Depreciation, both for $600
CONCEPT
Creating Adjusting Entries
6
Which of the following is NOT a temporary account?
Revenue
Expense
Drawings
Equity
CONCEPT
Account Groups
7
Which of the following concerning unearned revenues is NOT true?
They are found on a balance sheet.
Adjusting entries are made at the end of a period to report unearned revenues.
They are receipts for services or products that will be performed or delivered at a future date.
They are recorded as a revenue account entry.
CONCEPT
Current Liabilities
8
Which one of the businesses below would most likely use the FIFO method of inventory valuation?
Luxury car dealership
Produce stand
Petroleum company
Stone and brick company
CONCEPT
Inventory Cost Flow Assumptions
9
Which of the amounts below is the total interest Scott will pay when he is approved for a 9-month loan at an interest rate of 2.9% for a new, $12,500 company car?
$259.89
$282.54
$264.63
$271.88
CONCEPT
Short Term Notes Payable
10
Which of the following about inventory turnover is true?
It measures the number of times that the inventory is sold and replaced.
It measures the inventory that is bought and replaced.
It measures the number of times that the inventory is replaced.
It measures the inventory that is sold and replaced.
CONCEPT
Ratio Analysis
11
Money borrowed from a bank to purchase new machinery would be considered which of the following?
Equity
Liabilities
Revenue
Assets
CONCEPT
Account Groups
12
Examine the partial balance sheet vertical analysis below.
ASSETS
Cash $97,500 15%
Accounts Receivable $552,500 85%
Total Assets $650,000 100%
LIABILITIES
Accounts Payable $78,000 12%
Notes Payable _______ ____
Total Liabilities 50%
EQUITY
Total Equity $325,000 50%
Based on the information shown, what is the correct amount and percentage of notes payable?
$247,000; 38%
$572,000; 88%
$325,000; 50%
$403,000; 62%
CONCEPT
Vertical Analysis and Horizontal Analysis
13
ABC Pipe Supply ordered inventory from a PVC pipe manufacturer. The terms of freight on the order acknowledgement specify that ABC Pipe Supply must take ownership of the order and pay the shipping costs when the order is loaded on the truck at the manufacturer's docks.
Which FOB terms will be stated on the order acknowledgement?
FOB Destination
FOB Shipping Point
FOB In Transit
FOB 2% 10, Net 30
CONCEPT
Merchandising
14
Which of the following allowances for bad debt should the company enter into their financials for an Accounts Receivable account with a balance of $50,000 if the company estimates that 1.9% of receivables will be uncollectible?
$950.00
$1,025.00
$9,500.00
$10,250.00
CONCEPT
Allowance Method: Percentage of Net Credit Sales and Percentage of Receivables
15
Which of the steps in preparing a trial balance worksheet (below) will Joe complete next if he has already prepared an adjusted trial balance and an income statement?
Make adjusting entries
Prepare a balance sheet
Close out temporary accounts
Determine net income for the period
CONCEPT
End of Period Activities
16
Which of the following examples can be classified as an accounts receivable?
The Animal Shop decided a goldfish could stay for a week and they'd be paid when it was picked up.
The Animal Shop signed up for a new credit card to receive 0% financing for the first six months.
The building management company agreed that The Animal Shop could pay September's rent in October.
Due to an extra shipment, the Animal Shop had a special this week on kitty litter.
CONCEPT
Accounts Receivable Subsidiary Ledgers
Accounts Payable Subsidiary Ledgers
17
The organization responsible for analyzing how the government spends taxpayer dollars is the __________.
GAO
IRS
GASB
SEC
CONCEPT
Governance
18
What are the total liabilities of John's Tackle if the total assets are $142,000 and the equity is $39,000?
$220,000
$181,000
$284,000
$103,000
CONCEPT
Preparing Balance Sheets
19
Based on this information in this partial income statement, what is the total of the Goods Available for Sale?
$83,000
$90,000
$65,300
$87,800
CONCEPT
Expanded Income Statement
20
Elijah currently has six strollers that he purchased for $235 each and four cribs that he purchased for $450 each on the floor of his baby supply store. He also has three strollers and two cribs in his storeroom.
Using the weighted average cost method, what is the cost of each item being sold at Elijah's baby supply store?
$342.50
$301.15
$364.00
$321.00
CONCEPT
Weighted Average Method
21
Beginning Assets
Beginning Revenues
Beginning Balance
Liabilities
Capital Added/Investment During the Period
Net Income/Net Loss
Drawings
Expenses
Ending Balance/Owner's Capital
Which of the above accounts would be included in the Statement of Changes in Owner's Equity?
Beginning Revenues
Expenses
Ending Balance/Owner's capital
Beginning Balance
Expenses
Ending Balance/Owner's Capital
Beginning Balance
Capital Added/Investment During the Period
Net Income/Net Loss
Drawings
Ending Balance/Owner's Capital
Beginning Assets
Capital Added/Investment During the Period
Liabilities
Ending Balance/Owner's Capital
CONCEPT
Statement of Changes in Owner's Equity
22
Which inventory method was used to calculate cost of goods sold, based on the information above?
Weighted average
Specific ID
FIFO
LIFO
CONCEPT
Inventory Cost Flow Assumptions
23
Which of the following kinds of companies would use a 990 tax form?
LLC
Non-profit
Sole proprietorship
LLP
CONCEPT
Businesses and Organizations
24
Which of the following is NOT depreciated because it does not get used up?
Land
Automobiles
Land fixtures
Buildings
CONCEPT
Depreciation
25
__________________ includes policies, procedures and mindset of top management. A tangible representation can be found in the employee handbook or annual statement.
Risk assessment
Control environment
Monitoring process
Control activity
CONCEPT
Internal Controls and Reconciliations [Show Less]