1. The accounting equation is Assets = 2. The Sweet Smell of Success Fragrance Company borrowed $60,000 from the bank to be paid back in five years and used all of the money to purchase land for a new store. Sweet Smell's balance sheet would show this as: A. $60,000 under Land and $60,000 under Notes Payable (long-term). B. $60,000 under Depreciation Expense and $60,000 under Notes Payable (long- c. $60,000 under Land and $60,000 under Notes Receivable (long- term). D. $60,000 under Other Assets and $60,000 under Other Liabilities. term). 3. A complete set of financial statements includes the following four reports (list the report name): A. B. C. D. 4. True or False? Current assets are cash, accounts receivable, inventory, and buildings. 5. True or False? Current liabilities are amounts owed that will be paid within the next 24 months. 6. True or False? The Statement of Retained Earnings shows assets = liabilities + equity. 7. True or False? The Income Statement shows dividends paid. 8. Which of the following is the correct order in the accounting cycle of recording of transactions? 6. True or False? The Statement of Retained Earnings shows assets = liabilities + equity. 7. True or False? The Income Statement shows dividends paid. 8. Which of the following is the correct order in the accounting cycle of recording of transactions? A. Prepare financial statements, post to the ledger, record transactions in the journal B. Prepare financial statements, record transactions in the journal, post to the ledger C. Post to the ledger, record transactions in the journal, prepare financial statements D. Record transactions in the journal, post to the ledger, prepare financial statements 9. Dividends are: A. Expenses. B. Recorded as current assets. C. Payments made by the company to stockholders as a return on their investment. D. Special bonuses made to management. 10. True or False? The following accounts all normally have a debit balance: cash, accounts receivable, inventory, expenses, and unearned revenue. 11. True or False? Unearned Revenue is a revenue account shown on the income statement. 12. True or False? During December 2018 John's House Painting Company painted a house. He was not paid until January 2019. Using accrual accounting, the revenue is reported in January 2019. 13. John paid his employees $5,000 in July for work done that month. What journal entry will John record in July? A. Debit cash, credit Wages Revenue. B. Debit cash, credit Wages Payable. C. Debit Wages Revenue, credit Cash. D. Debit Wages Expense, credit Cash. 2010 d 14. Alpha Company purchased a vehicle on January 1, 2018 that cost $25,000. The vehicle has a five-year life. After the adjusting entry for depreciation is made in 2018 the accumulated depreciation is $5,000. The vehicle's book value at December 31, 2018 is: C. $10,000 B. $20,000 D. $5,000 A. $25,000 15. Payment of a dividend will: A. Decrease net income. B. Increase net income. C. Decrease retained earnings. D. Increase retained earnings. 16. On January 1, 2018 Post Company purchased a machine for $80,000. The machine had a salvage value of $8,000 and a useful life of 10 years. Using straight line depreciation, the accounting entry for recording depreciation expense for the second year of operation would be: A. Debit depreciation expense - $7,200, credit accumulated depreciation - $7,200. B. Debit depreciation expense - $8,000, credit accumulated depreciation - $8,000. C. Debit depreciation expense - $8,000, credit machine - $8,000. D. Debit depreciation expense - $4,000, credit machine - $4,000. 17. A company has sales of $1,200,000 and cost of goods sold of S800,000. The company's gross profit percentage is: C. 33.33% B. 6.67% A. 66.67% D. 3.33% 18. On June 1 Company B purchases 10 televisions at S600 each for cash. During June Company B sells 3 for $1,200 each cash. The journal entry will include (but not be limited to): A. A debit of S3,600 to cost of goods sold and a credit of $3,600 to inventory, B. A debit of S1,800 to cost of goods sold and a credit of $1,800 to inventory, C. A debit of S3,600 to cost of goods sold and a credit of $1,800 to inventory, D. A debit of S1,800 to cost of goods sold and a credit of $3,6 inventory, 19. The 2018 records of Thompson Company showed beginning inventory of $4 000, cost of goods sold ofS14 000 and ending inventory 19. The 2018 records of Thompson Company showed beginning inventory of $4,000, cost of goods sold of $14,000 and ending inventory of $8,000. The cost of purchases for 2018 was: A. S18,000 B. $22,000 C. S26,000 D. $44,000 20. On November 1, 2018 Alpha Company sells services to Post Company and receives a 6 month, 6% (annual rate) note from Post Company for $60,000. Post pays the note with all interest on April 30, 2019. What is the amount paid by Post on April 30, 2019? B. $61,800 C. $63,600 A. S60,000 $61,200 D. 21. In regard to the accrual basis which of the following are true? I. Revenue is only recorded if cash is received. II. Expenses are only recorded when paid. III. Revenue is recorded when earned. IV. Expenses are recorded when incurred. A. None are true. B. I and II are true. C. III and IV are true. D. All of the above are true. 22. Beginning Inventory = $10,000 Purchases = $20,000 Goods Available for Sale = ? Ending Inventory = $5,000 Cost of Goods Sold = ? 23. Current Liabilities are $20,000. Current Assets are $40,000. 1 the current ratio? 23. Current Liabilities are $20,000. Current Assets are $40,000. What is the current ratio? 24. Which of the following is deducted from the bank balance on a bank reconciliation? A. Deposits in transit B. Outstanding checks C. EFT received from customers D. Bank service charge 25. Before reconciling its bank statement, Lauren Cosmetics Corporation's general ledger had a month-end balance in the cash account of $5,250. The bank reconciliation for the month contained the following items: Deposits in transit Outstanding checks Interest earned $750 465 20 NSF check returned to bank 100 Bank service charge 10 Given the above information, what up-to-date ending cash balance should Lauren report at month-end? A. $4,500 B. $4,820 C. $5,160 D. $5,590 26. Which inventory costing method uses the oldest cost for cost of goods sold on the income statement and the newest cost for inventory on the balance sheet? A. LIFO B. Specific identification C. FIFO D. Weighted average 27. Mansfield Company has a periodic inventory system and uses the LIFO method to assign costs to inventory and cost of goods sold. C the following information: Date Description Beginning inventory 100 # of units Cost per unit $5 January 1 27. Mansfield Company has a periodic inventory system and uses the LIFO method to assign costs to inventory and cost of goods sold. Consider the following information: # of units Beginning inventory 100 Description Date Cost per unit $5 January 1 October 2 Purchase 75 $4 125 December 5 Sales What amounts would be reported as the cost of goods sold and ending inventory balances for the period? A. Cost of goods sold $625; Ending inventory $175 B. Cost of goods sold $755; Ending inventory $225 C. Cost of goods sold $550; Ending inventory $250 D. Cost of goods sold $600; Ending inventory $200 28. A company lent $10,000 to an employee who signed a 9%, 6-month promissory note. The entry made by the company to record this loan to the employee will include a: A. debit to Accounts Receivable for S10,000. B. credit to Sales for $10,000. C. debit to Notes Receivable for $10,000. D. credit to Notes Payable for $10,000. 29. A company has long-lived tangible assets with a cost of $3.5 million; its Accumulated Depreciation account has a balance of S1.1 million. Which of the following statements is correct? A. The book value of long-lived assets is $2.4 million. B. The market value of long-lived assets is $3.5 million. C. The carrying value of long-lived assets is $3.5 million. D. The resale value of long-lived assets is $2.4 million. 30. XYZ Company bought a new delivery truck for S65,000. They estimate it will last 5 years and have a residual value of $5,000. The journal entry to record depreciation will include: A. A credit of $13,000 to accumulated depreciation. B. A credit of $12,000 to accumulated depreciation C. A debit of $13,000 to accumulated depreciation. D. A debit of $12,000 to accumulated depreciation. E. A credit of $13,000 to depreciation. expense. 30. XYZ Company bought a new delivery truck for $65,000. They estimate it will last 5 years and have a residual value of $5,000. The journal entry to record depreciation will include: A. A credit of $13,000 to accumulated depreciation. B. A credit of $12,000 to accumulated depreciation C. A debit of $13,000 to accumulated depreciation. D. A debit of S12,000 to accumulated depreciation. E. A credit of $13,000 to depreciation. expense. F. A credit of $12,000 to depreciation expense. 31. On October 1, 2018, Bill Burns borrowed $170,000 from the New National Bank on a 6-month, 6% note. Assuming no interest has been recorded yet, what is the amount of accrued interest as of December 31, 2018? A. S5,100 B. $2,550 C. $10,200 D. $7,650 32. Zorn Inc. makes a sale for $300. The company is required to collect sales taxes amounting to 9%. What is the amount that will be credited to the Sales Tax Payable account? A. $27 B. $273 C. $300 D. S327 33. A company started the year with $3,750 of supplies on hand. During the year the company purchased additional supplies of $2,000 and recorded them as an increase to the supplies asset. At the end of the year the company determined that only $750 of supplies are still on hand. What is the adjusting journal entry to be made at the end of the period? A. Debit Supplies Expense and credit Supplies for $5,000 B. Debit Supplies and credit Supplies Expense for $750 c. Debit Supplies Expense and credit Supplies for $3,000 D. Debit Supplies and credit Supplies Expense for $2,500 34. During September, By the Book Co. collected $1,800 cash froi customer for services to be provided during November. Which of the following statements about this transaction is correct? 34. During September, By the Book Co. collected S1,800 cash from a customer for services to be provided during November. Which of the following statements about this transaction is correct? A. S1,800 of revenue should be recorded in September. B. S900 of revenue should be recorded in September and $900 in November. c.S1,800 of revenue should be recorded in November. D. No revenue should be recorded for these events because they relate only to the balance sheet. 35. On December 31, 2018, interest of $700 is owed on a bank loan that will not be paid until June 30, 2019. What is the necessary adjusting journal entry on December 31, 2018? A. Debit Interest Expense and credit Cash for $700. B. Debit Interest Expense and credit Interest Payable for $700. c. Debit Interest Payable and credit Interest Expense for $700. D. Debit Interest Receivable and credit Interest Revenue for $700. 30 Points 36. Using the information below prepare a classified balance sheet, income statement and statement of retained earnings for Bravo Company as of December 31, 2018: Cash Accounts Receivable Accounts Payable Capital Stock Equipment Accumulated Depreciation $12,000 credit Retained Earnings 1/1/2018 beginning balance Unearned Revenue** Prepaid Insurance (6 months) $ 300 debit Sales $26,000 debit $32,000 debit $18,000 credit $16,600 credit $14,000 debit S6,000 credit Hint this is the $ 300 credit $28,000 credit Supplies Expense Rent Expense S 1,200 debit $ 3,600 debit S 2,000 debit S 1,800 debit Dividends Depreciation Expense **Prepayment for work to be done in January 2019