1. Corresponds to CLO 1(d) What is the primary purpose of the statement of cash flows?

   To disclose a company's financing activities.

   To report information about cash receipts and cash payments of a company.

   To determine the cash balance to be used on the balance sheet.

   To determine a company's working capital.

1. Corresponds to CLO 10(a) A system of internal controls

   is designed to safeguard assets from natural disasters.

   is designed to safeguard all balance sheet accounts.

   can be rendered ineffective by employee collusion.

Corresponds to CLO 10(c) At Stone Pool Supplies, one person is responsible for the related activities of ordering merchandise, receiving goods, and paying for them. Which of the following internal control principles does this violate?

Physical controls

Segregation of duties

Human resource controls

Establishment of responsibility

Corresponds to CLO 3(d) Hemmingway Corporation paid salaries of $5,000 and advertising expense of $2,000. Which of the following journal entries correctly records these expenses?

Debit: Cash $7,000 Credit: Salaries/Wages Expense$5,000 Credit: Advertising Expense $2,000

Debit: Salaries/Wages Expense$5,000 Debit: Advertising Expense $2,000 Credit: Cash$7,000

Debit: Salaries/Wages Expense$5,000 Debit: Advertising Expense $2,000 Credit: Salaries/Wages Payable$5,000 Credit: Accounts Payable$2,000

Debit: Salaries/Wages Expense$5,000

Debit: Advertising Expense $2,000

Credit: Cash$8,000

Corresponds to CLO 3(d) Hemmingway Corporation paid salaries of $5,000 and advertising expense of $2,000. Which of the following journal entries correctly records these expenses?

Debit: Cash $7,000 Credit: Salaries/Wages Expense$5,000 Credit: Advertising Expense $2,000

Debit: Salaries/Wages Expense$5,000 Debit: Advertising Expense $2,000 Credit: Cash$7,000

Debit: Salaries/Wages Expense$5,000 Debit: Advertising Expense $2,000 Credit: Salaries/Wages Payable$5,000 Credit: Accounts Payable$2,000

Debit: Salaries/Wages Expense$5,000 Debit: Advertising Expense $2,000 Credit: Cash$8,000

Corresponds to CLO 4(a) Which of the following statements is correct regarding accrued revenues and unearned revenues, before adjusting entries have been made?

Accrued revenues have not been earned and unearned revenues have been earned.

Accrued revenues have been paid and unearned revenues have not.

Accrued revenues have not been recorded and unearned revenues have been recorded.

Accrued revenues have been recorded and unearned revenues have been recorded.

Corresponds to CLO 4(c) Ace Corporation purchased office supplies costing $13,000 and debited Office Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $2,700 still on hand. The appropriate adjusting journal entry to be made at the end of the period is:

debit Office Supplies Expense, $10,300; credit Office Supplies, $10,300.

debit Office Supplies, $10,300; credit Office Supplies Expense, $10,300.

debit Office Supplies Expense, $2,700; credit Office Supplies, $2,700.

debit Office Supplies, $2,700; credit Office Supplies Expense, $2,700.

QUESTION 23

1. Corresponds to CLO 5(c) Tyree Company purchased equipment with a cost of $90,000 and an estimated salvage value of $18,000. The equipment is expected to produce 150,000 units over its estimated useful life of 10 years. If Tyree uses the units-of-activity method, what is the depreciation cost per unit to be used in calculating depreciation?

   $1.67

   $0.48

   $2.08

   $0.60

3 points

QUESTION 24

1. Corresponds to CLO 5(d) Kerns Company purchased equipment with a cost of $200,000 and an estimated salvage value of $10,000. The equipment has an estimated useful life of 10 years. If Kerns uses the double-declining balance method, what is the annual depreciation rate to be used in calculating depreciation?

   5%

   10%

   20%

   40%

3 points

QUESTION 25

1. Corresponds to CLO 6(a) Marshall Machinery made a sale for $150,000 on March 31. The customer is sent a statement on April 6 and payment is received on April 15. Marshall prepares March's monthly internal financial statements on April 20. Marshall follows GAAP and applies the revenue recognition principle. When is the $150,000 considered to be earned?

   March 31

   April 6

   April 15

   April 20

3 points

QUESTION 26

1. Corresponds to CLO 6(b) Mann Corporation's employees worked overtime to complete an order that is sold on June 25. The office sends a statement to the customer on July 15, and payment is received on August 8. Mann follows generally accepted accounting principles (GAAP). In what month should the overtime wages be expensed?

   August

   July

   June

   either June or July, depending on when the pay period ends.

3 points

QUESTION 27

1. Corresponds to CLO 6(c) Sight Company had the following transactions during 2013: sales of $6,000 on account; collected $1,800 for services to be performed in 2014; paid $4,300 cash for 2013 salaries; purchased airline tickets for $500 in December for a trip to take place in 2014. What is Sight's 2013 net income using accrual accounting?

   $1,700

   $1,200

   $3,500

   $3,000