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Determine cash withdrawals for the period if net income is

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1. If owner's equity is $150,000 and total liabilities are $90,000, then total assets would be:
a) $60,000
b) $225,000
c) $240,000
d) $135,000

2. Which of the following transactions would have no affect total assets, total liabilities, or owner's equity:
a. payment of a liability
b. payment of an expense
c. purchasing supplies on account
d. purchasing supplies for cash

3. Owner’s equity and total assets were $32,000 and $79,000 at the beginning of the period. Assets increased 50% and liabilities decreased 60% during the period. What is owner’s equity at the end of the period?
a) $43,300
b) $47,000
c) $99,700
d) $105,700

4.Performing a service on account would:
a) increase liabilities and decrease total assets
b) decrease liabilities and increase total assets
c) increase total assets and increase owner's equity
d) increase owner's equity and decrease liabilities

5. Determine cash withdrawals for the period if net income is $34,000, beginning owner's equity is $29,000 and ending owner's equity is $55,000
a) $5,000
b) $8,000
c) $50,000
d) $60,000

6. A chronological record of an entity's transaction is called a(n):
a) balanced sheet
b) ledger
c) trial balance
d) journal

7. A business purchases equipment for cash of $85,000. This transaction will cause:
a) cash to be debited for $85,000
b) equipment to be credited for $85,000
c) capital to be credited for $85,000
d) cash to be credited for $85,000

8. Receiving a check for $1,200 from a customer with an account balance of $2,000 would include a:
a) debit to cash and a credit to accounts receivable for $1,200
b) debit to cash and a credit to accounts receivable for $800
c) debit to accounts payable and a credit to cash for $1,200
d) debit to account receivable and a credit to service revenues for $1,200

9. A $250 payment on account was recorded as a debit to accounts receivable and and a credit to accounts payable. This error will cause:
a) owner's equity to be overstated
b) accounts payable to be understated
c) cash to be understated
d) accounts receivable to be overstated

10. An accountant recognizes the impact of a business expense when it is incurred under which basis of accounting?
a) financial
b) managerial
c) cash
d) accrual

11. Under the accrual basis of accounting, the receipt of cash from a customer in advance of performing the service would be credited to a(n):
a) accrued revenues account
b) prepaid asset account
c) deferred revenue account
d) deferred asset account

12. On October 1, 2006, Five Brothers Company paid $72,000 cash for eight months rent. The amount of the adjusting entry on December 31, 2006, would be:
a) $18,000
b) $24,000
c) $27,000
d) $36,000

13. The supplies account shows a beginning balance of $3,000. Assume the supplies account shows a debit for $5,500 representing supplies purchased during the period and the supplies inventory at year-end is $1,700. The adjusting entry involves a:
a) debit to supplies for $6,800 (3000-1700)+5500
b) debit to supplies expense for $1,700
c) debit to supplies expense for $6,800
d) debit to supplies for $1,700

14. Which of the following are all temporary accounts?
a) liabilities, revenues, and expenses
b) revenues, expenses, and withdrawals
c) revenues, expenses, and capital
d) assets, revenues, and capital

15. Which of the following accounts will have a remaining balance after the closing process is completed?
a) service revenues
b) depreciation expense
c) inventory
d) both a and b

16. Supplies would appear on a classified balance sheet as a(n):
a) long-term asset
b) other asset
c) current liability
d) current asset

17. Selected accounting data for the Phoenix Company follows:
Current assets $76,000
Current liabilities 30,000
Long-term assets 70,000
Long-term liabilities 37,000
Total revenues 25,000
Total expenses 22,000

The current ratio is:
a) 1.13
b) 2.53
c) 2.95
d) 0.34

18. Selected accounting data for the Phoenix Company follows:
Current assets $76,000
Current liabilities 30,000
Long-term assets 70,000
Long-term liabilities 37,000
Total revenues 25,000
Total expenses 22,000
The debt ratio is:
a) 0.44
b) 0.46
c) 0.97
d) 1.04

19. Sales revenues $460,000
Cost of goods sold 300,000
Interest expenses 5,000
Sales discounts 20,000
Sales returns and allowances 15,000
Operating expenses 85,000

What is net sales revenues?
a) $125,000
b) $340,000
c) $420,000
d) $425,000

20. Sales revenues $460,000
Cost of goods sold 300,000
Interest expenses 5,000
Sales discounts 20,000
Sales returns and allowances 15,000
Operating expenses 85,000

What is gross profit?
a) 35,000
b) 120,000
c) $125,000
d) $140,000

21. Inventory turnover indicates how:
a) quickly inventory is received from supplier after the order is placed
b) many days it takes the inventory to travel between the seller's warehouse and the buyer's warehouse
c) rapidly inventory is sold
d) many days it takes from the time an order is received to the day it is shipped.

22. The gross profit percentage is calculated as:
a) gross profit minus net sales revenue
b) gross profit divided by net sales revenue
c) gross profit times net sales revenue
d) gross profit plus net sales revenue

23. A perpetual system:
a) keeps a running record of all goods
b) may be used for all types of goods
c) is used only for inexpensive goods
d) both A and B are correct

24. Internal control does not:
a) help safeguard the assets a business uses in its operations
b) guarantee a company will not go bankrupt
c) encourage adherence to company policies
d) promote operational efficiency

25. Persons who authorize transactions should not handle the related asset is an example of which characteristic of internal control:
a) separation of duties
b) assignment of responsibilities
c) proper authorization
d) competent, reliable and ethical personnel

26. A bank reconciliation:
a) should not be prepared by an employee who handles cash transactions
b) is part of a sound internal control system
c) is a formal financial statement
d) both a and b are correct

27. In a bank reconciliation, a $400 NSF check is:
a) deducted from the book balance
b) added to the book balance
c) deducted from the bank balance
d) added to the bank balance

28. Designating a corporate controller is an example of which characteristic of internal control:
a) assignment of responsibilities
b) competent, reliable, and ethical personnel
c) proper authorization
d) separation of duties

29. The entry to record the sales of merchandise for cash includes a:
a) debit to accounts receivable
b) credit to sales discounts
c) debit to sales revenue
d) credit to sales revenue

30. During a period of rising prices and using a perpetual inventory costing system, LIFO will yield:
a) less net income than would FIFO
b) higher net income than would FIFO
c) higher gross profit than would FIFO
d) less operating expenses than would FIFO


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