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3. Which of the following accounts is not closed to Income
Summary? A) Cost of Goods Sold B) Merchandise Inventory C) Sales D) Sales
Discounts

4. Claims for which formal instruments of credit are issued
as proof of the debt are A) accounts receivable. B) interest receivable. C)
notes receivable. D) other receivables.

5. When the allowance
method is used to account for uncollectible accounts, Bad Debts Expense is
debited when A) a sale is made. B) an account becomes bad and is written off.
C) management estimates the amount of uncollectibles. D) a customer’s account
becomes past-due.

6. A factor which
distinguishes the corporate form of organization from a sole proprietorship or
partnership is that a A) corporation is organized for the purpose of making a
profit. B) corporation is subject to numerous federal and state government
regulations. C) corporation is an accounting economic entity. D) corporation’s
temporary accounts are closed at the end of the accounting period.

7. Flynn Company reported a net loss of $11,000 for the year
ended December 31, 2008. During the year, accounts receivable decreased $9,000,
merchandise inventory increased $13,000, accounts payable increased by $27,000
and depreciation expense of $17,000 was recorded. During 2008, operating
activities A) used net cash of $29,000. B) used net cash of $51,000. C)
provided net cash of $29,000. D) provided net cash of $51,000.

8. In recording the sale of accounts receivable, the
commission charged by a factor is recorded as A) Bad Debts Expense. B)
Commission Expense. C) Loss on Sale of Receivables. D) Service Charge Expense.

9. Inventoriable costs include all of the following except
the A) freight costs incurred when buying inventory. B) costs of the purchasing
and warehousing departments. C) cost of the beginning inventory. D) cost of
goods purchased. Use the following to answer question

10: On October 1, Jerry’s Carpet Service borrows $250,000
from First National Bank on a 3-month, $250,000, 8% note. 10. What entry must
Jerry’s Carpet Service make on December 31 before financial statements are
prepared? A) a B) b C) c D) d
INFORMATION MISSING

11. W.B. Reindeer Company’s inventory records show the
following data: Units Unit Cost Inventory, January 1 5,000 9 Purchases: June 18
4,500 6 November 8 3,000 4 A physical inventory on December 31 shows 2,000
units on hand. W.B. Reindeer sells the units for $17 each. The company has an
effective tax rate of 30%. Reindeer uses the periodic inventory method. The
weighted-average cost per unit is A) $5.00. B) $6.33. C) $6.72. D) $6.58.

12. A stock split A) may occur in the absence of retained
earnings. B) will increase total paid-in capital. C) will increase the total
par value of the stock. D) will have no effect on the par value per share of
stock.

13. Each payment on a
mortgage note payable consists of A) interest on the original balance of the
loan. B) reduction of loan principal only. C) interest on the original balance
of the loan and reduction of loan principal. D) interest on the unpaid balance
of the loan and reduction of loan principal.

14. An accounting time period that is one year in length,
but does not begin on January 1, is referred to as A) a fiscal year. B) an
interim period. C) the time period assumption. D) a reporting period.

15. Paid-In Capital in Excess of Stated Value A) is credited
when no-par stock does not have a stated value. B) is reported as part of paid-in
capital on the balance sheet. C) represents the amount of legal capital. D)
normally has a debit balance.

16. If a company is given credit terms of 2/10, n/30, it
should A) hold off paying the bill until the end of the credit period, while
investing the money at 10% annual interest during this time. B) pay within the
discount period and recognize a savings. C) pay within the credit period but
don’t take the trouble to invest the cash while waiting to pay the bill. D)
recognize that the supplier is desperate for cash and withhold payment until
the end of the credit period while negotiating a lower sales price.

17. All of the following are reported as current liabilities
except A) accounts payable. B) bonds payable. C) notes payable. D) unearned
revenues.

18. In a manufacturing business, inventory that is ready for
sale is called A) raw materials inventory. B) work in process inventory. C)
finished goods inventory. D) store supplies inventory.

19. Which of the following methods of computing depreciation
is production based? A) Straight-line B) Declining-balance C) Units-of-activity
D) None of these

20. The method of accounting for uncollectible accounts that
results in a better matching of expenses with revenues is the A) aging accounts
receivable method. B) direct write-off method. C) percentage of receivables
method. D) percentage of sales method.

21. Intangible assets are the rights and privileges that
result from ownership of long-lived assets that A) must be generated
internally. B) are depletable natural resources. C) have been exchanged at a
gain. D) do not have physical substance.

Use the following to
answer question

22: On October 1, 2008, Dole Company places a new asset into
service. The cost of the asset is $60,000 with an estimated 5-year life and
$15,000 salvage value at the end of its useful life. 22. What is the
depreciation expense for 2008 if Dole Company uses the straight-line method of
depreciation? A) $2,250 B) $12,000 C) $3,000 D) $6,000

23. If a stockholder receives a dividend consisting of a
promissory note, the stockholder has received a A) stock dividend. B) cash
dividend. C) contingent dividend. D) scrip dividend.

24. Generally, the most important category on the statement
of cash flows is cash flows from A) operating activities. B) investing
activities. C) financing activities. D) significant noncash activities.

25. Which of the statements below is not true? A) An
adjusted trial balance should show ledger account balances. B) An adjusted
trial balance can be used to prepare financial statements. C) An adjusted trial
balance proves the mathematical equality of debits and credits in the ledger.
D) An adjusted trial balance is prepared before all transactions have been
journalized.

26. A retail store credited the Sales account for the sales
price and the amount of sales tax on sales. If the sales tax rate is 4% and the
balance in the Sales account amounted to $166,400, what is the amount of the
sales taxes owed to the taxing agency? A) $160,000 B) $166,400 C) $6,656 D)
$6,400

27. Stine Company purchased merchandise with an invoice
price of $2,000 and credit terms of 2/10, n/30. Assuming a 360 day year, what
is the implied annual interest rate inherent in the credit terms? A) 20% B) 24%
C) 36% D) 72%

28. The net income reported on the income statement for the
current year was $206,000. Depreciation was $44,000. Account receivable and
inventories decreased by $20,000 and $41,000, respectively. Prepaid expenses and
accounts payable increased, respectively, by $1,000 and $7,200. How much cash
was provided by operating activities? A) $276,200 B) $317,200 C) $302,800 D)
$310,000

29. Rudolf Diesel Company’s inventory records show the
following data: Units Unit Cost Inventory, January 1 5,000 $9 Purchases: June
18 4,500 7 November 8 3,000 6 A physical inventory on December 31 shows 3,000
units on hand. Under the FIFO method, the December 31 inventory is A) $18,000.
B) $22,680. C) $22,000. D) $27,000.

30. Expenditures that maintain the operating efficiency and
expected productive life of a plant asset are generally A) expensed when
incurred. B) capitalized as a part of the cost of the asset. C) debited to the
Accumulated Depreciation account. D) not recorded until they become material in
amount.
3. Which of the following accounts is not closed to Income
Summary? A) Cost of Goods Sold B) Merchandise Inventory C) Sales D) Sales
Discounts4. Claims for which formal instruments of credit are issued
as proof of the debt are A) accounts receivable. B) interest receivable. C)
notes receivable. D) other receivables.5. When the allowance
method is used to account for uncollectible accounts, Bad Debts Expense is
debited when A) a sale is made. B) an account becomes bad and is written off.
C) management estimates the amount of uncollectibles. D) a customer’s account
becomes past-due.6. A factor which
distinguishes the corporate form of organization from a sole proprietorship or
partnership is that a A) corporation is organized for the purpose of making a
profit. B) corporation is subject to numerous federal and state government
regulations. C) corporation is an accounting economic entity. D) corporation’s
temporary accounts are closed at the end of the accounting period.7. Flynn Company reported a net loss of $11,000 for the year
ended December 31, 2008. During the year, accounts receivable decreased $9,000,
merchandise inventory increased $13,000, accounts payable increased by $27,000
and depreciation expense of $17,000 was recorded. During 2008, operating
activities A) used net cash of $29,000. B) used net cash of $51,000. C)
provided net cash of $29,000. D) provided net cash of $51,000.8. In recording the sale of accounts receivable, the
commission charged by a factor is recorded as A) Bad Debts Expense. B)
Commission Expense. C) Loss on Sale of Receivables. D) Service Charge Expense.9. Inventoriable costs include all of the following except
the A) freight costs incurred when buying inventory. B) costs of the purchasing
and warehousing departments. C) cost of the beginning inventory. D) cost of
goods purchased. Use the following to answer question10: On October 1, Jerry’s Carpet Service borrows $250,000
from First National Bank on a 3-month, $250,000, 8% note. 10. What entry must
Jerry’s Carpet Service make on December 31 before financial statements are
prepared? A) a B) b C) c D) dINFORMATION MISSING11. W.B. Reindeer Company’s inventory records show the
following data: Units Unit Cost Inventory, January 1 5,000 9 Purchases: June 18
4,500 6 November 8 3,000 4 A physical inventory on December 31 shows 2,000
units on hand. W.B. Reindeer sells the units for $17 each. The company has an
effective tax rate of 30%. Reindeer uses the periodic inventory method. The
weighted-average cost per unit is A) $5.00. B) $6.33. C) $6.72. D) $6.58.12. A stock split A) may occur in the absence of retained
earnings. B) will increase total paid-in capital. C) will increase the total
par value of the stock. D) will have no effect on the par value per share of
stock.13. Each payment on a
mortgage note payable consists of A) interest on the original balance of the
loan. B) reduction of loan principal only. C) interest on the original balance
of the loan and reduction of loan principal. D) interest on the unpaid balance
of the loan and reduction of loan principal.14. An accounting time period that is one year in length,
but does not begin on January 1, is referred to as A) a fiscal year. B) an
interim period. C) the time period assumption. D) a reporting period.15. Paid-In Capital in Excess of Stated Value A) is credited
when no-par stock does not have a stated value. B) is reported as part of paid-in
capital on the balance sheet. C) represents the amount of legal capital. D)
normally has a debit balance.16. If a company is given credit terms of 2/10, n/30, it
should A) hold off paying the bill until the end of the credit period, while
investing the money at 10% annual interest during this time. B) pay within the
discount period and recognize a savings. C) pay within the credit period but
don’t take the trouble to invest the cash while waiting to pay the bill. D)
recognize that the supplier is desperate for cash and withhold payment until
the end of the credit period while negotiating a lower sales price.17. All of the following are reported as current liabilities
except A) accounts payable. B) bonds payable. C) notes payable. D) unearned
revenues.18. In a manufacturing business, inventory that is ready for
sale is called A) raw materials inventory. B) work in process inventory. C)
finished goods inventory. D) store supplies inventory.19. Which of the following methods of computing depreciation
is production based? A) Straight-line B) Declining-balance C) Units-of-activity
D) None of these20. The method of accounting for uncollectible accounts that
results in a better matching of expenses with revenues is the A) aging accounts
receivable method. B) direct write-off method. C) percentage of receivables
method. D) percentage of sales method.21. Intangible assets are the rights and privileges that
result from ownership of long-lived assets that A) must be generated
internally. B) are depletable natural resources. C) have been exchanged at a
gain. D) do not have physical substance.Use the following to
answer question22: On October 1, 2008, Dole Company places a new asset into
service. The cost of the asset is $60,000 with an estimated 5-year life and
$15,000 salvage value at the end of its useful life. 22. What is the
depreciation expense for 2008 if Dole Company uses the straight-line method of
depreciation? A) $2,250 B) $12,000 C) $3,000 D) $6,00023. If a stockholder receives a dividend consisting of a
promissory note, the stockholder has received a A) stock dividend. B) cash
dividend. C) contingent dividend. D) scrip dividend.24. Generally, the most important category on the statement
of cash flows is cash flows from A) operating activities. B) investing
activities. C) financing activities. D) significant noncash activities.25. Which of the statements below is not true? A) An
adjusted trial balance should show ledger account balances. B) An adjusted
trial balance can be used to prepare financial statements. C) An adjusted trial
balance proves the mathematical equality of debits and credits in the ledger.
D) An adjusted trial balance is prepared before all transactions have been
journalized.26. A retail store credited the Sales account for the sales
price and the amount of sales tax on sales. If the sales tax rate is 4% and the
balance in the Sales account amounted to $166,400, what is the amount of the
sales taxes owed to the taxing agency? A) $160,000 B) $166,400 C) $6,656 D)
$6,40027. Stine Company purchased merchandise with an invoice
price of $2,000 and credit terms of 2/10, n/30. Assuming a 360 day year, what
is the implied annual interest rate inherent in the credit terms? A) 20% B) 24%
C) 36% D) 72%28. The net income reported on the income statement for the
current year was $206,000. Depreciation was $44,000. Account receivable and
inventories decreased by $20,000 and $41,000, respectively. Prepaid expenses and
accounts payable increased, respectively, by $1,000 and $7,200. How much cash
was provided by operating activities? A) $276,200 B) $317,200 C) $302,800 D)
$310,00029. Rudolf Diesel Company’s inventory records show the
following data: Units Unit Cost Inventory, January 1 5,000 $9 Purchases: June
18 4,500 7 November 8 3,000 6 A physical inventory on December 31 shows 3,000
units on hand. Under the FIFO method, the December 31 inventory is A) $18,000.
B) $22,680. C) $22,000. D) $27,000.30. Expenditures that maintain the operating efficiency and
expected productive life of a plant asset are generally A) expensed when
incurred. B) capitalized as a part of the cost of the asset. C) debited to the
Accumulated Depreciation account. D) not recorded until they become material in
amount.

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