Question 1

Select the one term that best fits each definition
-Interest incurred but not yet paid.

Accepted Answer

A)  accrual 
B)  accrued interest expense 
C)  accrued expenses 
D)  deferral 
E)  deferred expenses
F) deferred revenue
G) reversing entry 
A)  accrual 
B)  accrued interest expense 
C)  accrued expenses 
D)  deferral 
E)  deferred expenses
F) deferred revenue
G) reversing entry

Question 2

Preferred stock dividends are determined by the par value and the prime interest rate.

Accepted Answer

A) True 
 B)False

Question 3

The adjusting entry for deferred rent income results in a debit to Rent Income.

Accepted Answer

A) True 
 B)False

Question 4

The closing entry for interest income is

Accepted Answer

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

Question 5

In periods of rising costs, the inventory method which gives the lowest cost of merchandise sold is the

Accepted Answer

A)  FIFO method. 
B)  LIFO method. 
C)  weighted-average method. 
D)  lower of cost or market inventory method. 
A)  FIFO method. 
B)  LIFO method. 
C)  weighted-average method. 
D)  lower of cost or market inventory method.

Question 6

A corporation's total stockholders' equity is increased by

Accepted Answer

A)  net income. 
B)  declaring dividends. 
C)  paying dividends. 
D)  receiving payment on account. 
A)  net income. 
B)  declaring dividends. 
C)  paying dividends. 
D)  receiving payment on account.

Question 7

Select the one term that best fits each definition
-The ratio of interest and dividend payments to the proceeds from debt and capital financing.

Accepted Answer

A)  bond 
B)  bond issue 
C)  capital expenditure 
D)  collateral 
E)  cost of capital
F) debt financing
G) equity financing
H) financial leverage
I) interest expense
J) issue date
K) line of credit
L) non-operating expenses
M) par value
N) preferred stock
O) prime interest rate
P) revenue expenditure
Q) stated interest rate 
A)  bond 
B)  bond issue 
C)  capital expenditure 
D)  collateral 
E)  cost of capital
F) debt financing
G) equity financing
H) financial leverage
I) interest expense
J) issue date
K) line of credit
L) non-operating expenses
M) par value
N) preferred stock
O) prime interest rate
P) revenue expenditure
Q) stated interest rate

Question 8

Select the one term that best fits each definition
-A form used to show the kind of merchandise, quantity received, quantity sold, and balance on hand.

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 9

The actual flow of inventory in a company

Accepted Answer

A)  should influence the inventory costing method a company chooses. 
B)  must always be on a LIFO basis. 
C)  must match the inventory costing method a company chooses. 
D)  does not have to match the inventory costing method a company chooses. 
A)  should influence the inventory costing method a company chooses. 
B)  must always be on a LIFO basis. 
C)  must match the inventory costing method a company chooses. 
D)  does not have to match the inventory costing method a company chooses.

Question 10

Select the one term that best fits each definition
-Obtaining capital by issuing additional stock in a corporation.

Accepted Answer

A)  bond 
B)  bond issue 
C)  capital expenditure 
D)  collateral 
E)  cost of capital
F) debt financing
G) equity financing
H) financial leverage
I) interest expense
J) issue date
K) line of credit
L) non-operating expenses
M) par value
N) preferred stock
O) prime interest rate
P) revenue expenditure
Q) stated interest rate 
A)  bond 
B)  bond issue 
C)  capital expenditure 
D)  collateral 
E)  cost of capital
F) debt financing
G) equity financing
H) financial leverage
I) interest expense
J) issue date
K) line of credit
L) non-operating expenses
M) par value
N) preferred stock
O) prime interest rate
P) revenue expenditure
Q) stated interest rate

Question 11

Creditors may be unwilling to lend money to a business with a high debt ratio.

Accepted Answer

A) True 
 B)False

Question 12

All of the following accounts would appear in the Other Expenses section of an income statement except

Accepted Answer

A)  Interest Expense. 
B)  Utilities Expense. 
C)  Loss on Plant Assets. 
D)  none of these. 
A)  Interest Expense. 
B)  Utilities Expense. 
C)  Loss on Plant Assets. 
D)  none of these.

Question 13

Select the one term that best fits each definition
-Expenses that are not related to a business's normal operations.

Accepted Answer

A)  bond 
B)  bond issue 
C)  capital expenditure 
D)  collateral 
E)  cost of capital
F) debt financing
G) equity financing
H) financial leverage
I) interest expense
J) issue date
K) line of credit
L) non-operating expenses
M) par value
N) preferred stock
O) prime interest rate
P) revenue expenditure
Q) stated interest rate 
A)  bond 
B)  bond issue 
C)  capital expenditure 
D)  collateral 
E)  cost of capital
F) debt financing
G) equity financing
H) financial leverage
I) interest expense
J) issue date
K) line of credit
L) non-operating expenses
M) par value
N) preferred stock
O) prime interest rate
P) revenue expenditure
Q) stated interest rate

Question 14

Select the one term that best fits each definition
-Interest incurred on borrowed funds.

Accepted Answer

A)  bond 
B)  bond issue 
C)  capital expenditure 
D)  collateral 
E)  cost of capital
F) debt financing
G) equity financing
H) financial leverage
I) interest expense
J) issue date
K) line of credit
L) non-operating expenses
M) par value
N) preferred stock
O) prime interest rate
P) revenue expenditure
Q) stated interest rate 
A)  bond 
B)  bond issue 
C)  capital expenditure 
D)  collateral 
E)  cost of capital
F) debt financing
G) equity financing
H) financial leverage
I) interest expense
J) issue date
K) line of credit
L) non-operating expenses
M) par value
N) preferred stock
O) prime interest rate
P) revenue expenditure
Q) stated interest rate

Question 15

The face value of a bond is the amount to be repaid at the end of the bond term.

Accepted Answer

A) True 
 B)False

Question 16

Select the one term that best fits each definition
-The value of an asset determined by tax authorities for the purpose of calculating taxes.

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 17

Paid-in Capital in Excess of Par-Common appears on the

Accepted Answer

A)  balance sheet and statement of cash flows. 
B)  income statement and statement of stockholders' equity. 
C)  statement of stockholders' equity and balance sheet. 
D)  income statement and statement of cash flows. 
A)  balance sheet and statement of cash flows. 
B)  income statement and statement of stockholders' equity. 
C)  statement of stockholders' equity and balance sheet. 
D)  income statement and statement of cash flows.

Question 18

FIFO is a method used to determine the quantity of each type of merchandise on hand.

Accepted Answer

A) True 
 B)False

Question 19

Select the one term that best fits each definition
-Payments for goods or services which have not yet been received.

Accepted Answer

A)  accrual 
B)  accrued interest expense 
C)  accrued expenses 
D)  deferral 
E)  deferred expenses
F) deferred revenue
G) reversing entry 
A)  accrual 
B)  accrued interest expense 
C)  accrued expenses 
D)  deferral 
E)  deferred expenses
F) deferred revenue
G) reversing entry

Question 20

Select the one term that best fits each definition
-Using the cost of merchandise purchased first 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

Exam 18: Acquiring Capital for Growth and Development

Select the one term that best fits each definition -Interest incurred but not yet paid.

Preferred stock dividends are determined by the par value and the prime interest rate.

The adjusting entry for deferred rent income results in a debit to Rent Income.

The closing entry for interest income is

In periods of rising costs, the inventory method which gives the lowest cost of merchandise sold is the

A corporation's total stockholders' equity is increased by

Select the one term that best fits each definition -The ratio of interest and dividend payments to the proceeds from debt and capital financing.

Select the one term that best fits each definition -A form used to show the kind of merchandise, quantity received, quantity sold, and balance on hand.

The actual flow of inventory in a company

Select the one term that best fits each definition -Obtaining capital by issuing additional stock in a corporation.

Creditors may be unwilling to lend money to a business with a high debt ratio.

All of the following accounts would appear in the Other Expenses section of an income statement except

Select the one term that best fits each definition -Expenses that are not related to a business's normal operations.

Select the one term that best fits each definition -Interest incurred on borrowed funds.

The face value of a bond is the amount to be repaid at the end of the bond term.

Select the one term that best fits each definition -The value of an asset determined by tax authorities for the purpose of calculating taxes.

Paid-in Capital in Excess of Par-Common appears on the

FIFO is a method used to determine the quantity of each type of merchandise on hand.

Select the one term that best fits each definition -Payments for goods or services which have not yet been received.

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

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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