Question 1

Anson Corporation had $325,000 in current assets and $145,000 in current liabilities before borrowing $100,000 from the bank for a 6-month period. What effect did the borrowing transaction have on Anson's current ratio?

Select one:

a. The change in the current ratio cannot be determined.

b. The ratio decreased.

c. The ratio increased.

d. The ratio remained unchanged.

Question 2

In general, standard setters require that most assets be recorded using historical cost because

Select one:

a. current values may not always be representationally faithful.

b. current values may overstate assets and equity.

c. cost often cannot be verified.

d. cost values may or may not be relevant.

Question 3

Guardian Corp. sells $6,250 of goods on account in the current year and collects $3,250 of this. It incurs $4,200 in expenses on account during the current year and pays $2,600 of them. Guardian would report what amount of net income under the cash and accrual bases of accounting, respectively?

Select one:

a. $2,050 on the cash basis and $3,000 on the accrual basis

b. $3,250 on the cash basis and $4,200 on the accrual basis

c. $3,000 on the cash basis and $1,600 on the accrual basis

d. $650 on the cash basis and $2,050 on the accrual basis

Question 4

Fang's Tune-Up Shop Ltd. uses the accrual basis of accounting. Fang services a car on May 31. The customer picks up the vehicle on June 1 and mails payment to Fang on June 5. Fang receives the cheque in the mail on June 6. When would Fang recognize the revenue as being earned?

Select one:

a. June 5

b. May 31

c. June 6

d. June 1

Question 5

Which of the following accounts would not likely need to be adjusted at year end?

Select one:

a. Equipment

b. Supplies

c. Prepaid Insurance

d. Unearned Revenue

Question 6

Griffin Inc. purchased supplies costing $4,250 and debited Supplies for the full amount. At the end of the accounting period, a physical count of supplies revealed $2,100 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be

Select one:

a. debit Supplies, $4,250; credit Supplies Expense, $4,250.

b. debit Supplies Expense, $2,100; credit Supplies, $2,100.

c. debit Supplies, $2,100; credit Supplies Expense, $2,100.

d. debit Supplies Expense, $2,150; credit Supplies, $2,150.

Question 7

Question text

If XYZ Corp. fails to adjust the Prepaid Rent account for rent that has expired, what effect will this have on that month's financial statements?

Select one:

a. Assets will be overstated and net income and shareholders' equity will be understated.

b. This will have no effect on the financial statements.

c. Expenses will be overstated and net income and shareholders' equity will be understated.

d. Assets will be overstated and net income and shareholders' equity will be overstated.

Question 8

At December 31, Witts Corp. reports Salaries Payable of $20,000 on its statement of financial position. The next payroll amounting to $50,000 is to be paid in January. What will be the journal entry to record the payment of salaries in January?

Select one:

a. Salaries Expense..............................................................................30,000

Salaries Payable...............................................................................20,000

Cash..........................................................................................50,000

b. Salaries Expense..............................................................................50,000

Salaries Payable...............................................................................20,000

Cash..........................................................................................70,000

c. Salaries Expense..............................................................................50,000

Salaries Payable........................................................................20,000

Cash..........................................................................................30,000

d. Salaries Expense50,000

Cash50,000

Question 19

York Manufacturing Company reported the following year-end information:

Beginning work in process inventory.... ..... $75,000

Beginning raw materials inventory........ ....... 20,000

Ending work in process inventory......... ....... 73,000

Ending raw materials inventory............. ....... 23,000

Raw materials purchased...................... ..... 220,000

Direct labour.......................................... ..... 170,000

Manufacturing overhead....................... ....... 80,000

How much is Hooter Manufacturing's cost of goods manufactured for the year?

Select one:

a. $465,000

b. $469,000

c. $472,000

d. $470,000

Question 20

At May 31, 2020, Smythe Inc. has $4,500 in beginning raw materials, $6,000 of direct labour. If manufacturing overhead was $10,500, total manufacturing costs was $50,500, and total raw material purchases were $36,000, how much is ending amount of raw materials?

Select one:

a. $36,000

b. $21,000

c. $6,500

d. $40,500