Financial statements generally include all of the following except:

Question
1
Financial statements generally include all of the following except:

Multiple Choice

Income statement.
Federal income tax return.
Balance sheet.
Statement of cash flows.

2
In general, revenue is recognized when the earnings process is virtually complete and:

Multiple Choice

Goods or services are transferred to the customer.
A purchase order is received.
Cash is collected.
Production is completed.
3
The matching principle:

Multiple Choice

Provides guidelines where expenses should be placed in the income statement.

Describes how expenses should be split between Cost of Goods Sold and Selling Expense.

Indicates how current assets and current liabilities are presented on the balance sheet.

Requires all relevant expenses be recorded in the same period as the revenues that are generated from having incurred the expense.

4
The journal entry to record the borrowing of cash and the signing of a note payable involves:

Multiple Choice

A debit to note payable and a credit to cash.
Debits to cash and interest expense and a credit to note payable.
A debit to cash and a credit to note payable.
All of these answer choices are incorrect.

5
The employees of Neat Clothes work Monday through Friday. Every other Friday the company issues payroll checks totaling $27,000. The current pay period ends on Friday, July 3. Neat Clothes is now preparing quarterly financial statements for the three months ended June 30. What is the adjusting entry to record accrued salaries at the end of June?

Multiple Choice

Prepaid salaries 8,100
Salaries payable 8,100

Salaries expense 18,900
Prepaid salaries 8,100
Salaries payable 27,000

Salaries expense 18,900
Salaries payable 18,900

Salaries expense 5,400
Salaries payable 5,400

6
On September 15, 2018, Oliver’s Mortuary received a $3,600, nine-month note bearing interest at an annual rate of 8% from the estate of Jay Hendrix for services rendered. Oliver’s has a December 31 year-end. What adjusting entry will the company record on December 31, 2018?

Multiple Choice

Interest receivable 288
Interest revenue 84
Cash 204

Interest receivable 84
Notes receivable 84

Interest receivable 204
Interest revenue 204

Interest receivable 84
Interest revenue 84

7
Somerset Leasing received $12,000 for 24 months’ rent in advance. How should Somerset record this transaction?

Multiple Choice

Prepaid rent 12,000
Rent expense 12,000

Cash 12,000
Deferred revenue 12,000

Interest expense 12,000
Interest payable 12,000

Salaries expense 12,000
Salaries payable 12,000

8
Davis Hardware Company uses a perpetual inventory system. How should Davis record the sale of merchandise, costing $620, and sold on account for $960?

Multiple Choice

Inventory 620
Accounts receivable 620
Sales 960
Revenue from sales 960

Accounts receivable 960
Sales revenue 960
Cost of goods sold 620
Inventory 620

Inventory 620
Gain on sale 340
Sales revenue 960

Accounts receivable 960
Sales revenue 620
Gain on sale 340

9
The following partial balance sheet ($ in thousands) for Paisano Seafood Inc. is shown below.

Assets Liabilities and Equity
Current assets: Current liabilities:
Cash $ 80 Accounts payable $ 236
Accounts receivable (net) 187 Other liabilities 69
Notes receivable 69 Total current liabilities 305
Inventories 207 Long-term liabilities 107
Prepaid expenses 31 Total liabilities 412
Total current assets 574 Shareholders’ equity:
Plant assets (net) 267 Capital stock 140
Retained earnings 289
Total shareholders’ equity 429
Total assets $ 841 Total liabilities and equity $ 841

The current ratio is (Round your answer to two decimal places.):

Multiple Choice

0.68.

1.88.

1.39.

2.15.

10
The balance sheet reports:

Multiple Choice

Net income at a point in time.
Cash flows for a period of time.
Assets and equities at a point in time.
Assets and liabilities for a period of time.

11
When accounting for a long-term construction contract for which revenue is recognized over time according to the percentage of completion, gross profit is recognized in any year is debited to:

Multiple Choice

Construction in progress.
Billings on construction contract
Deferred income
Accounts receivable

12
Under the realization principle, revenue is recognized as earned when there is reasonable certainty as to the collectibility of the asset to be received and:

Multiple Choice

The sales price has been collected.
The earnings process is virtually complete.
Production is completed.
A purchase order has been received.

13
On November 10 of the current year, Flores Mills sold carpet to a customer for $8,800 with credit terms 1/10, n/30. Flores uses the gross method of accounting for cash discounts.

What is the correct entry for Flores on December 5, assuming the correct payment was received on that date?

Multiple Choice

Cash 8,800
Accounts receivable 8,800
Cash 8,800
Accounts receivable 8,712
Interest revenue 88
Cash 8,800
Accounts receivable 8,712
Discounts revenue 88
Cash 8,888
Accounts receivable 8,800
Interest revenue 88

14
The statement of cash flows reports cash flows from the activities of:

Multiple Choice

operating, purchasing, and investing.
borrowing, paying, and investing.
financing, investing, and operating.
using, investing, and financing.

15
In a bank reconciliation, deposits outstanding are:

Multiple Choice

Subtracted from the bank balance.
Added to the book balance.
Added to the bank balance.
Subtracted from the book balance.

16
Tammy wants to buy a car that costs $10,000 and wishes to know the amount of the monthly payments, which will be made at the first of the month, with interest of 12% on the unpaid balance. She should use a table for the:

Multiple Choice

Present value of $1.
Present value of an ordinary annuity of $1.
Present value of an annuity due of $1.
Future value of an annuity due of $1.
17
George Jones is planning on a cruise for his 70th birthday party. He wants to know how much he should set aside at the beginning of each month at 6% interest to accumulate the sum of $4,800 in five years. He should use a table for the:

Multiple Choice

Future value of an ordinary annuity of $1.
Future value of an annuity due of $1.
Future value of $1.
Present value of an annuity due of $1.

18
Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition):

42 units at $105
70 units at $74
174 units at $50

Sales for the year totaled 268 units, leaving 18 units on hand at the end of the year.

Ending inventory using the average cost method is: (Do not round unit cost calculation. Round your final answer to the nearest whole dollar amount.)

Multiple Choice

$1,890.

$1,151.

$950.

$900.

19
The Hamlet Company uses the periodic inventory system. Information for 2018 is as follows:

Sales $ 2,650,000
Beginning inventory 680,000
Purchases 1,200,000
Purchase returns 12,000
Ending inventory 740,000

Hamlet’s cost of goods sold for 2018 is:

rev: 06_20_2017_QC_CS-91751

Multiple Choice

$1,522,000
$1,188,000
$1,140,000
$1,128,000

20
In a period of declining costs, the use of which of the following inventory cost methods would result in the highest ending inventory?

Multiple Choice

FIFO.
LIFO.
Average cost.
Weighted-average cost.

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