After posting the entries to close all revenue and expense accounts, the Income Summary account of Cleaver Auto Services has a $5,000 debit balance. This result implies that Cleaver earned a net income of $5,000.

Group startsTrue or False

True, unselectedFalse, unselected

f a company has current assets of $14,420 and current liabilities of $10,300, its current ratio is 1.4.

Group startsTrue or False

True, unselectedFalse, unselected

A company has sales of $705,200 and cost of goods sold of $282,200. Its gross profit equals:

Multiple Choice

• $282,200.

• $705,200.

• $423,000.

• $987,400.

• $(423,000).

A $190 credit to Supplies was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?

Multiple Choice

• Supplies, understated $380; Fees Earned, overstated $190.

• Supplies, overstated $190; Fees Earned, understated $190.

• Supplies, overstated $380; Fees Earned, understated $190.

• Supplies, understated $190; Fees Earned, overstated $190.

• Supplies, overstated $190; Fees Earned, overstated $190.

Savvy Sightseeing had beginning equity of $85,000; revenues of $129,000, expenses of $78,000, and withdrawals by owners of $10,300. Calculate the ending equity.

Multiple Choice

• $125,700.

• $136,000.

• $23,700.

• $34,000.

• $51,000.

On April 1, Santa Fe, Inc. paid Griffith Publishing Company $3,348 for 36-month subscriptions to several different magazines. Santa Fe debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. What amount should appear in the Prepaid Subscription account for Santa Fe, Inc. after adjustments on December 31 of the first year assuming the company is using a calendar-year reporting period and no previous adjustment has been made?

Multiple Choice

• $837.

• $2,511.

• $0.

• $3,348.

• $1,116.

Flitter reported net income of $19,000 for the past year. At the beginning of the year the company had $203,000 in assets and $53,000 in liabilities. By the end of the year, assets had increased to $303,000 and liabilities were $78,000. Calculate its return on assets:

Multiple Choice

• 9.4%.

• 35.2%.

• 6.3%.

• 7.5%.

• 24.0%.

A physical count of supplies on hand at the end of May for Masters, Inc. indicated $1,255 of supplies on hand. The general ledger balance before any adjustment is $2,150. What is the adjusting entry for office supplies that should be recorded on May 31?

Multiple Choice

• Debit Supplies Expense $1255 and credit Supplies $1255.

• Debit Prepaid Supplies $895 and credit Supplies Expense $895.

• Debit Supplies Expense $1255 and credit Supplies $2150.

• Debit Supplies $1255 and credit Cash $1255.

• Debit Supplies Expense $895 and credit Supplies $895.