Question 1

Stock records do not reflect

Accepted Answer

A)  decreases in quantity on hand. 
B)  increases in quantity on hand. 
C)  the cost of the merchandise. 
D)  the balance on hand after each increase or decrease is recorded. 
A)  decreases in quantity on hand. 
B)  increases in quantity on hand. 
C)  the cost of the merchandise. 
D)  the balance on hand after each increase or decrease is recorded.

Question 2

A corporation usually sells its bonds to a securities dealer who sells the bonds to individual investors.

Accepted Answer

A) True 
 B)False

Question 3

If a company uses reversing entries, a reversing entry should be made for every adjusting entry that created a balance in an asset or a liability account.

Accepted Answer

A) True 
 B)False

Question 4

The purchase of store equipment for cash would be listed as a cash outflow in the Investing Activities section on a statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 5

Select the one term that best fits each definition
-Purchases of plant assets used in the operation of a business.

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 6

If an intangible asset's useful life is different from its legal life, amortization should be based on

Accepted Answer

A)  only the legal life. 
B)  only the useful life. 
C)  the legal or useful life, whichever is greater. 
D)  the legal or useful life, whichever is less. 
A)  only the legal life. 
B)  only the useful life. 
C)  the legal or useful life, whichever is greater. 
D)  the legal or useful life, whichever is less.

Question 7

The creditor can take and sell collateral if a borrower is unable to repay the loan.

Accepted Answer

A) True 
 B)False

Question 8

Submitting a business plan with a loan application serves to convince the bank that the business can repay the loan.

Accepted Answer

A) True 
 B)False

Question 9

After adjustments at the end of a fiscal period, the balance in Unearned Rent Income represents the rent still unearned.

Accepted Answer

A) True 
 B)False

Question 10

The issuance of bonds payable is an example of an investing activity.

Accepted Answer

A) True 
 B)False

Question 11

To record revenue that has been received but not yet earned, an entry is made that increases a liability account.

Accepted Answer

A) True 
 B)False

Question 12

An amount earned by a corporation and not yet distributed to stockholders is

Accepted Answer

A)  retained earnings. 
B)  net income. 
C)  capital stock. 
D)  stockholders' equity. 
A)  retained earnings. 
B)  net income. 
C)  capital stock. 
D)  stockholders' equity.

Question 13

Select the one term that best fits each definition
-A bank loan agreement that provides immediate short-term access to cash.

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

If Merchandise Inventory increases from the beginning to the end of the fiscal period, the adjusting entry includes a credit to Merchandise Inventory.

Accepted Answer

A) True 
 B)False

Question 15

When the FIFO method is used, cost of merchandise sold is priced at

Accepted Answer

A)  the average cost. 
B)  the earliest cost. 
C)  the most recent cost. 
D)  none of these. 
A)  the average cost. 
B)  the earliest cost. 
C)  the most recent cost. 
D)  none of these.

Question 16

The gross profit method of estimating inventory makes it possible to prepare monthly income statements without taking a physical inventory.

Accepted Answer

A) True 
 B)False

Question 17

Select the one term that best fits each definition
-A value assigned to a share of stock.

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 18

Calculating an accurate inventory cost to assure that gross profit and net income are reported correctly on the income statement is an application of the accounting concept

Accepted Answer

A)  Adequate Disclosure. 
B)  Business Entity. 
C)  Consistent Reporting. 
D)  Perpetual Inventory. 
A)  Adequate Disclosure. 
B)  Business Entity. 
C)  Consistent Reporting. 
D)  Perpetual Inventory.

Question 19

The closing entry for the Loss on Plant Assets account includes a debit to

Accepted Answer

A)  Retained Earnings. 
B)  Income Summary. 
C)  Loss on Plant Assets. 
D)  Gain on Plant Assets. 
A)  Retained Earnings. 
B)  Income Summary. 
C)  Loss on Plant Assets. 
D)  Gain on Plant Assets.

Question 20

When the LIFO method is used, ending inventory units are valued at

Accepted Answer

A)  the average cost. 
B)  the earliest cost. 
C)  the most recent cost. 
D)  none of these. 
A)  the average cost. 
B)  the earliest cost. 
C)  the most recent cost. 
D)  none of these.

Exam 18: Acquiring Capital for Growth and Development

Stock records do not reflect

A corporation usually sells its bonds to a securities dealer who sells the bonds to individual investors.

If a company uses reversing entries, a reversing entry should be made for every adjusting entry that created a balance in an asset or a liability account.

The purchase of store equipment for cash would be listed as a cash outflow in the Investing Activities section on a statement of cash flows.

Select the one term that best fits each definition -Purchases of plant assets used in the operation of a business.

If an intangible asset's useful life is different from its legal life, amortization should be based on

The creditor can take and sell collateral if a borrower is unable to repay the loan.

Submitting a business plan with a loan application serves to convince the bank that the business can repay the loan.

After adjustments at the end of a fiscal period, the balance in Unearned Rent Income represents the rent still unearned.

The issuance of bonds payable is an example of an investing activity.

To record revenue that has been received but not yet earned, an entry is made that increases a liability account.

An amount earned by a corporation and not yet distributed to stockholders is

Select the one term that best fits each definition -A bank loan agreement that provides immediate short-term access to cash.

If Merchandise Inventory increases from the beginning to the end of the fiscal period, the adjusting entry includes a credit to Merchandise Inventory.

When the FIFO method is used, cost of merchandise sold is priced at

The gross profit method of estimating inventory makes it possible to prepare monthly income statements without taking a physical inventory.

Select the one term that best fits each definition -A value assigned to a share of stock.

Calculating an accurate inventory cost to assure that gross profit and net income are reported correctly on the income statement is an application of the accounting concept

The closing entry for the Loss on Plant Assets account includes a debit to

When the LIFO method is used, ending inventory units are valued at

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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