Question 1

Retained Earnings represents previous years' earnings that have been distributed to stockholders.

Accepted Answer

A) True 
 B)False  False

Question 2

The more efficient the investment, the

Accepted Answer

A)  lower the return on investment (ROI). 
B)  higher the return on investment (ROI). 
C)  higher the current ratio. 
D)  lower the current ratio. 
A)  lower the return on investment (ROI). 
B)  higher the return on investment (ROI). 
C)  higher the current ratio. 
D)  lower the current ratio. B

Question 3

An asset account that would not be included in current assets is

Accepted Answer

A)  Merchandise Inventory. 
B)  Prepaid Insurance. 
C)  Store Equipment. 
D)  Supplies. 
A)  Merchandise Inventory. 
B)  Prepaid Insurance. 
C)  Store Equipment. 
D)  Supplies. C

Question 4

The closing entry for the Dividends account includes a credit to

Accepted Answer

A)  Retained Earnings. 
B)  Dividends. 
C)  Income Summary. 
D)  Capital Stock-Common. 
A)  Retained Earnings. 
B)  Dividends. 
C)  Income Summary. 
D)  Capital Stock-Common.

Question 5

Select the one term that best fits each definition
-An increase in equity that results when a plant asset is sold for more than book value.

Accepted Answer

A)  accelerated depreciation 
B)  amortization 
C)  assessed value 
D)  declining-balance method of depreciation 
E)  double declining-balance method of depreciation
F) gain
G) gain on plant assets
H) intangible assets
I) loss
J) loss on plant assets
K) personal property
L) plant asset record
M) real property
N) return on investment (ROI) 
A)  accelerated depreciation 
B)  amortization 
C)  assessed value 
D)  declining-balance method of depreciation 
E)  double declining-balance method of depreciation
F) gain
G) gain on plant assets
H) intangible assets
I) loss
J) loss on plant assets
K) personal property
L) plant asset record
M) real property
N) return on investment (ROI)

Question 6

Companies that use a product's UPC code and a point-of-sale terminal

Accepted Answer

A)  should still take a physical inventory at least once each fiscal year. 
B)  eliminate the need for a physical inventory. 
C)  are assured of totally accurate inventory records at all times. 
D)  none of these. 
A)  should still take a physical inventory at least once each fiscal year. 
B)  eliminate the need for a physical inventory. 
C)  are assured of totally accurate inventory records at all times. 
D)  none of these.

Question 7

The unadjusted trial balance and other financial data are used to plan and record adjusting entries.

Accepted Answer

A) True 
 B)False

Question 8

Select the one term that best fits each definition
-A type of accelerated depreciation that multiplies the book value of an asset by a constant depreciation rate to determine annual depreciation.

Accepted Answer

A)  accelerated depreciation 
B)  amortization 
C)  assessed value 
D)  declining-balance method of depreciation 
E)  double declining-balance method of depreciation
F) gain
G) gain on plant assets
H) intangible assets
I) loss
J) loss on plant assets
K) personal property
L) plant asset record
M) real property
N) return on investment (ROI) 
A)  accelerated depreciation 
B)  amortization 
C)  assessed value 
D)  declining-balance method of depreciation 
E)  double declining-balance method of depreciation
F) gain
G) gain on plant assets
H) intangible assets
I) loss
J) loss on plant assets
K) personal property
L) plant asset record
M) real property
N) return on investment (ROI)

Question 9

Receiving cash from interest income is an example of an operating activity.

Accepted Answer

A) True 
 B)False

Question 10

Receiving cash from the sale of equipment is an example of an investing activity.

Accepted Answer

A) True 
 B)False

Question 11

A business that pays a dividend reduces its internal source of capital.

Accepted Answer

A) True 
 B)False

Question 12

An expense that is paid in advance is recorded as an asset until the expense is incurred.

Accepted Answer

A) True 
 B)False

Question 13

When reversing entries are used and a note payable that was signed in a previous fiscal period is paid,

Accepted Answer

A)  Interest Payable is credited for the amount of interest incurred in the current fiscal year. 
B)  Interest Payable is credited for the total amount of interest incurred during the full term of the note. 
C)  Interest Expense is debited for the amount of interest incurred in the current fiscal year. 
D)  Interest Expense is debited for the total amount of interest incurred during the full term of the note. 
A)  Interest Payable is credited for the amount of interest incurred in the current fiscal year. 
B)  Interest Payable is credited for the total amount of interest incurred during the full term of the note. 
C)  Interest Expense is debited for the amount of interest incurred in the current fiscal year. 
D)  Interest Expense is debited for the total amount of interest incurred during the full term of the note.

Question 14

A bondholder who purchases a bond on December 1 would receive one-sixth of the December 31 interest payment.

Accepted Answer

A) True 
 B)False

Question 15

If a company has a net income, the entry to close the Income Summary account includes a debit to Income Summary.

Accepted Answer

A) True 
 B)False

Question 16

The cost of merchandise sold can be calculated by subtracting the cost of merchandise available for sale from the cost of ending inventory.

Accepted Answer

A) True 
 B)False

Question 17

Select the one term that best fits each definition
-The decrease in equity that results when a plant asset is sold for less than book value.

Accepted Answer

A)  accelerated depreciation 
B)  amortization 
C)  assessed value 
D)  declining-balance method of depreciation 
E)  double declining-balance method of depreciation
F) gain
G) gain on plant assets
H) intangible assets
I) loss
J) loss on plant assets
K) personal property
L) plant asset record
M) real property
N) return on investment (ROI) 
A)  accelerated depreciation 
B)  amortization 
C)  assessed value 
D)  declining-balance method of depreciation 
E)  double declining-balance method of depreciation
F) gain
G) gain on plant assets
H) intangible assets
I) loss
J) loss on plant assets
K) personal property
L) plant asset record
M) real property
N) return on investment (ROI)

Question 18

Select the one term that best fits each definition
-Using the cost of merchandise purchased last to calculate the cost of merchandise sold first.

Accepted Answer

A)  first-in, first-out inventory costing method (FIFO) 
B)  gross profit method of estimating inventory 
C)  inventory record 
D)  last-in, first-out inventory costing method (LIFO) 
E)  lower of cost or market inventory costing method (LCM)
F) market value
G) stock ledger
H) stock record
I) weighted-average inventory costing method 
A)  first-in, first-out inventory costing method (FIFO) 
B)  gross profit method of estimating inventory 
C)  inventory record 
D)  last-in, first-out inventory costing method (LIFO) 
E)  lower of cost or market inventory costing method (LCM)
F) market value
G) stock ledger
H) stock record
I) weighted-average inventory costing method

Question 19

The adjusting entry for accrued interest expense is

Accepted Answer

A)  debit Interest Payable; credit Interest Expense. 
B)  debit Interest Expense; credit Interest Payable. 
C)  debit Interest Expense; credit Income Summary. 
D)  debit Income Summary; credit Interest Expense. 
A)  debit Interest Payable; credit Interest Expense. 
B)  debit Interest Expense; credit Interest Payable. 
C)  debit Interest Expense; credit Income Summary. 
D)  debit Income Summary; credit Interest Expense.

Question 20

A business would typically benefit from signing a note for an extension of time on an account payable rather than drawing from a line of credit.

Accepted Answer

A) True 
 B)False

Exam 18: Acquiring Capital for Growth and Development

Retained Earnings represents previous years' earnings that have been distributed to stockholders.

The more efficient the investment, the

An asset account that would not be included in current assets is

The closing entry for the Dividends account includes a credit to

Select the one term that best fits each definition -An increase in equity that results when a plant asset is sold for more than book value.

Companies that use a product's UPC code and a point-of-sale terminal

The unadjusted trial balance and other financial data are used to plan and record adjusting entries.

Select the one term that best fits each definition -A type of accelerated depreciation that multiplies the book value of an asset by a constant depreciation rate to determine annual depreciation.

Receiving cash from interest income is an example of an operating activity.

Receiving cash from the sale of equipment is an example of an investing activity.

A business that pays a dividend reduces its internal source of capital.

An expense that is paid in advance is recorded as an asset until the expense is incurred.

When reversing entries are used and a note payable that was signed in a previous fiscal period is paid,

A bondholder who purchases a bond on December 1 would receive one-sixth of the December 31 interest payment.

If a company has a net income, the entry to close the Income Summary account includes a debit to Income Summary.

The cost of merchandise sold can be calculated by subtracting the cost of merchandise available for sale from the cost of ending inventory.

Select the one term that best fits each definition -The decrease in equity that results when a plant asset is sold for less than book value.

Select the one term that best fits each definition -Using the cost of merchandise purchased last to calculate the cost of merchandise sold first.

The adjusting entry for accrued interest expense is

A business would typically benefit from signing a note for an extension of time on an account payable rather than drawing from a line of credit.

The Accounting Equation

Debit and Credit Parts

Journalizing Transactions

Posting to a General Ledger

Cash Control Systems

Work Sheet and Adjusting Entries

Financial Statements for a Proprietorship

Closing Entries and Post-Closing

Accounting for Purchases and Cash Payments

Accounting for Sales and Cash Receipts

Using a General Journal

Preparing Payroll Records

Accounting for Payroll and Payroll Taxes

Uncollectible Accounts Receivable

Adjusting Entries and a Trial Balance

Financial Statements and Closing Entries

Financial Statement Analysis

Plant Assets and Intangible Assets

Accounting for Inventory

Accruals, Deferrals, and Reversing Entries

End-Of-Fiscal-Period Work for a Corporation

Accounting for Partnerships

Recording International and Internet Sales

Service Business Organized As a Proprietorship

Merchandising Business As a Corporation

Additional Accounting Procedures

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