MULTIPLE CHOICE

2. The historical cost of Jahn Company's ending inventory was less than the current replacement cost. Following US GAAP, which journal entry is required?

A. Debit cost of goods sold and credit inventory

B. Debit COGS and credit sales

C. Debit inventory and credit COGS

D. No journal entry is needed

3. The purchase of treasury stock is reported on the statement of cash flows as a:

A. Negative amount in the investing activities section

B. Positive amount in the investing activities section

C. Positive amount in the financing activities section

D. Negative amount in the financing activities section

7. Adjusting Entries:

A. are needed because errors have been made in previous journal entries

B. are need for all balance sheet accounts

C. must be made on a daily basis to record supplies used during that day.

D. are made before the financial statements can be prepared.

12. Every journal entry:

A. must increase at least one account and decrease one account

B. Must debit at least one account and credit at least one account

C. is recorded in either the journal or the ledger.

D. affects both an income statement account and a balance sheet account.

13. Which accounts are increased by debits?

A. salaries expense and common stock

B. cash and accounts payable

C. accounts payable and service revenue

D. accounts receivable and utilities expense

20. The category other receivables on the balance sheet includes:

A. interest receivable, dividend receivable, advances to employees

B. notes receivable, accounts receivable, interest receivable

C. accounts receivable, interest receivable

D. none of the above

21. Declaring and distributing stock dividends

A. is the distribution of cash to the stockholders

B. has no effect on total stockholders equity

C. reduced the total assets of the corporation

D. increases the total liabilities of the corporation and decreases the total stockholders equity

30. On the statement of cash flows, investing activities include:

A. repaying borrowed money

B. collecting cash on loans

C. selling stock to stockholders

D. obtaining cash from creditors

35. Which financial statement answers the following question: what is the companys operating performance over the past year?

A. statement of retained earnings

B. statement of cash flows

C. income statement

D. balance sheet

36. The adjustment for an accrued expense:

A. decreases expenses and increases liabilities

B. increases expenses and increases liabilities

C. increases expenses and decreases assets

D. decreases expenses and increases assets