At the beginning of 2015, Elixir Inc. has the following ledger balances: During the year, credit sales amounted to $800,000. Cash collected on credit sales amounted to $760,000, and $18,000 has been written off. At the end of the year, the company adjusted for bad debts expense using the percent-of-sales method and applied a rate, based on past history, of 2.5%. The ending balance of Accounts Receivable would be ________.

		$40,000
		$62,000
		$80,000
		$18,000

QUESTION 5

At the beginning of 2015, Elixir Inc. has the following ledger balances: During the year, credit sales amounted to $800,000. Cash collected on credit sales amounted to $760,000 and $18,000 has been written off. At the end of the year, company adjusted for bad debts expense using the percent-of-sales method and applied a rate, based on past history, of 2.5%. The ending balance in the Allowance for Bad Debts would be ________.

		$5,000
		$6,500
		$6,400
		$7,000

QUESTION 6

A company has net credit sales of $1,012,500, beginning net accounts receivable of $250,000, and ending net accounts receivable of $200,000. What is the days' sales in accounts receivable? (Round to nearest whole day.)

		81 days
		99 days
		93 days
		90 days

QUESTION 7

On January 1, 2012 Hillop Inc. had total assets of $360,000. During the year, the company purchased new machinery worth $80,000 and promised to pay the amount due after two years. Throughout the year, it earned revenue of $50,000 every month. Calculate the asset turnover ratio.

		1.2 times
		1.8 times
		1.5 times
		1.4 times

QUESTION 8

An intangible asset is an asset with no physical form that is valuable because of the special rights it carries.

True

False

QUESTION 9

A trademark should not be amortized over its useful life.

True

False

QUESTION 10

Maple Corp. had net sales of $200,550 for the year ended December 31, 2015. Its beginning and ending total assets were $75,200 and $110,500, respectively. Determine Maple's asset turnover ratio for the year ended December 31, 2015.

		0.46 times
		2.67 times
		1.18 times
		2.16 times

QUESTION 11

A company's accountant capitalized a payment that should be recorded as a revenue expenditure. How will this error affect the financial statements of the corporation?

		net income will be overstated
		revenues will be understated
		assets will be understated
		liabilities will be understated

QUESTION 12

On January 1, 2015, Anodel Inc. acquired a machine for $1,000,000. The estimated useful life of the asset is 5 years. The residual value at the end of 5 years is estimated to be $50,000. What is the book value of the machine at the end of 2016, if the company uses the straight-line method of depreciation?

		$600,000
		$620,000
		$570,000
		$550,000

QUESTION 13

A $35,000, two-month, 7% note payable was issued on December 1, 2015. What is the amount of interest expense recorded in the year 2016?

		$402
		$204
		$408
		$202

QUESTION 14

Berkley's gross pay for the week is $950. His deduction for federal income tax is based on a rate of 20%. He has no voluntary deductions. His yearly pay is under the limit for OASDI. What is the amount of FICA tax that will be withheld from Berkley's pay? (Assume a FICAOASDI Tax of 4.2% and FICAMedicare Tax of 1.45%.)

		$190.00
		$53.68
		$243.68
		$60.32

QUESTION 15

FICA tax is a tax which is paid both by the employer and the employee in equal amounts.

True

False

QUESTION 16

Which of the following is pay over and above base salary, usually paid for exceptional performance?

		FICA
		Benefits
		Wages
		Bonuses

QUESTION 17

The employee federal and state income tax and Social Security tax are optional deductions under payroll withholding deductions.

True

False

QUESTION 18

Which of the following is included in the entry to record estimated warranty payable?

		a credit to Estimated Warranty Payable
		a credit to Merchandise Inventory
		a credit to Warranty Expense
		a debit to Estimated Warranty Payable

QUESTION 19

Stock sold for amounts in excess of par value results in a gain reported on the income statement.

True

False

QUESTION 20

On November 1, 2015, Oster Inc. declared a dividend of $3.00 per share. Oster Inc. has 20,000 shares of common stock outstanding and no preferred stock. Which of the following is the journal entry needed to record the declaration of dividends?

		debit Dividends PayableCommon $60,000 and credit Retained Earnings $60,000
		debit Retained Earnings $60,000 and credit Cash $60,000
		debit Retained Earnings $60,000 and credit Dividends PayableCommon $60,000
		debit Cash $60,000 and credit Dividends PayableCommon $60,000

QUESTION 21

Preferred stockholders receive a dividend preference over common stockholders.

True

False

QUESTION 22

Treasury stock is recorded at cost without reference to par value.

True

False

QUESTION 23

On December 1, 2015, Arthur Inc. had 30,000 shares of $5 par value common stock issued and outstanding. The next day they declared a 50% stock dividend. The market value of the stock on that date was $9 per share. Which of the following is the correct journal entry to record this transaction?

		debit Retained Earnings $270,000 and credit Cash $270,000
		debit Retained Earnings $270,000, credit Common Stock $150,000, and credit Paid-In Capital in Excess of Par $120,000
		debit Common Stock $75,000 and credit Cash $75000
		debit Retained Earnings $75,000 and credit Common Stock Dividend Distributable $75,000

QUESTION 24

Declaring and paying dividends causes an increase in both assets and stockholders' equity for the corporation.

True

False

QUESTION 25

A corporation is a separate legal entity and is organized independently of its owners.

True False

Accounts Receivable Allowance for Bad Debts Bad Debts Expense 40,000 5,000