Question 3
1. (Points: 1) The primary purpose of hiring a public accounting firm to examine the financial statements of the company is a. to assure no fraud has been committed by the company's management b. to provide credibility that the financial information conforms with generally accepted accounting principles in all material respects c. to detect all accounting errors made by the accounting system and employees d. None of the above is the primary purpose for hiring public accountants Save Answer 2. (Points: 1) Which of the following websites provides access to the Securities and Exchange Commission's (SEC) reports filed by companies. a. EDGAR b. Lexui-Nexis c. First Call d. Compustat e. None of the above is the SEC's website Save Answer 3. (Points: 1) The Securities and Exchange Commission (SEC) is empowered to do the following: a. Set reporting standards for firms with publicly traded debt or equity securities b. Bring enforcement actions against company executives and auditors for accounting related violations c. File anti-trust suits against companies involved in restraint of trade d. Both A and B are SEC powers e. All of the above are SEC powers Save Answer 4. (Points: 1) Which of the following is an example of a typical institutional investor. a. The officers of Callaway Golf who own shares of stock in the company b. Employees who participate in a stock option plan and own shares of Callaway Golf c. The mutual funds managed by Oppenheimer Management Corporation d. All of the above are institutional investors e. None of the above is an institutional investor Save Answer 5. (Points: 1) The Securities and Exchange Commission's (SEC) report that is required to be filed if any special event occurs that is material in amount is the a. Form 10K b. Form 8K c. Form 10Q d. Prospectus e. None of the above Save Answer 6. (Points: 1) Current liabilities are defined as a. obligations which are incurred during the past year. b. debts at the balance sheet date which must be paid within two years. c. accounts payable and bonds payable. d. debts at the balance sheet date which are expected to be paid with the current assets listed on the same balance sheet. e. obligations (debts) related only to normal operations. Save Answer 7. (Points: 1) The criteria for extraordinary items are a. unusual in nature and occur frequently. b. unusual in nature and occur infrequently. c. unusual in nature or occur infrequently. d. infrequent in occurrence only. e. unusual in nature only. Save Answer 8. (Points: 1) Which of the following would not be a subclassification reported on a corporate income statement? a. Income before income taxes. b. Accumulated depreciation. c. Earnings per share. d. Cumulative effects of a change in accounting principle. e. All of the above are commonly reported on the income statement. Save Answer 9. (Points: 1) Extraordinary items differ from the other items on the income statement in that extraordinary items are a. unusual in nature. b. extraordinarily large in comparison to the other items. c. infrequent in occurrence. d. All of the above. e. A and C only. Save Answer 10. (Points: 1) Milsap Corporation reported total assets of $2,500,000, total current liabilities of $900,000, and total long-term liabilities of $800,000. Therefore, the stockholders' equity was a. $ 100,000. b. $ 800,000. c. $1,600,000. d. $1,700,000. e. None of the above is correct. Save Answer 11. (Points: 1) Ramstetter, Inc., purchased a piece of land with a new building on January 1, 20A. The land was valued at $40,000 and the building was valued at $120,000 with a 40 year life and a zero salvage (residual) value. How would the land and building appear in the plant, property and equipment section of the December 31, 20A, balance sheet? a. Land at 40,000 less accumulated depreciation of 1,000; Building at 120,000 less accumulated deprecation of 3,000. b. Land at 40,000; Building at 120,000. c. Land at 30,000; Building at 120,000. d. Land at 40,000; Building at 120,000 less accumulated depreciation of 3,000. e. None of the above is correct. Save Answer 12. (Points: 1) Use the following items from Upaway Company's income statement to compute its net income: Cost of goods sold $400,000 Selling, general and admin. expenses 200,000 Miscellaneous income 20,000 Net sales 650,000 Income tax expense 15,000 Net loss from discontinued operations(net of tax) (10,000) Cumulative effect of a change in accounting for income taxes(net of tax) 30,000 What is Upaway Company's net income to be reported on the income statement? a. $75,000. b. $55,000. c. $85,000. d. $65,000. e. None of the above is correct. Save Answer 13. (Points: 1) Which of the following is an example of a long-term liability? a. Accounts payable b. Income taxes payable c. Bonds Payable d. All of the above are long-term liabilities e. None of the above is a long-term liability Save Answer 14. (Points: 1) The debt-to-equity ratio is computed by taking a. current liabilities divided by total stockholders' equity b. total liabilities divided by total stockholders' equity c. current assets divided by total stockholders' equity d. none of the above Save Answer 15. (Points: 1) Credit terms of 2/10, n/30 indicate that a a. two percent discount for early payment is available if the invoice is paid before the tenth day of the month following the month the sale. b. two percent discount for early payment is available within ten days of the invoice date. c. ten percent discount for early payment is available if the invoice is paid within two days of the date of the invoice. d. two percent discount for early payment is available if the invoice is paid after the tenth day, but before the thirtieth day of the invoice date. e. None of the above is correct. Save Answer 16. (Points: 1) When goods are sold to a customer with credit terms of 2/15, n/30, the customer will a. receive a 15% discount if they pay within 2 days. b. receive a 2% discount if they pay 15% of the amount due within 30 days. c. receive a 15% discount if they pay within 30 days. d. receive a 2% discount if they pay within 15 days. e. None of the above is correct. Save Answer 17. (Points: 1) Central Company sold goods for $5,000 to Western Company on March 12 on credit. Terms of the sale were 2/10, n/30. At the time of the sale, Central recorded the transaction by debiting Accounts Receivable for $5,000 and crediting Sales Revenue for $5,000. Western paid the balance due on April 9. To record the April 9 transaction, Central would debit a. Cash for $4,900. b. Accounts Receivable for $5,000. c. Cash for $5,000. d. Sales discounts for $100. e. None of the above is correct. Save Answer 18. (Points: 1) A company had the following partial list of account balances at year-end: Sales Returns and Allowances $500 Accounts Receivable 9,000 Sales Discounts (a contra account) 700 Sales Revenue 57,200 Allowance for Doubtful Accounts 300 The amount of Net Sales shown on the income statement would be a. $57,200. b. $64,200. c. $56,000. d. $55,700. e. None of the above is correct. Save Answer 19. (Points: 1) What is the annual interest rate of a sales discount of 2/10, n/30? a. 37.2% b. 24.3% c. 36.5% d. 24.8% e. None of the above Save Answer 20. (Points: 1) Coca-Cola's gross profit percentage was 70.4% in 1998 and 69.7% in 1999. Which of the following was the most likely cause of that change? a. Discounted prices b. Rising product cost as a percentage of sales c. Increased competition from Pepsi d. None of the above may have caused the change e. All of the above may have caused the change Save Answer 21. (Points: 1) In 1999, Coca-Cola reported net sales revenues of $19.8 billion and cost of goods sold for $6.0 billion. Their gross profit percentage for 1999 was a. 30.3% b. 69.7% c. 43.5% d. None of the above Save Answer 22. (Points: 1) In 1998, Coca-Cola reported net sales revenues of $18.8 billion and cost of goods sold of $5.6 billion while PepsiCo reported revenues of $22.3 billion and cost of goods sold of $9.3 billion. Which of the following statements is correct? a. While PepsiCo generated more revenue than Coca-Cola, they generated a lower gross profit percentage b. Coca-Cola generated a lower gross profit percentage because their sales revenue was lower c. PepsiCo did a better job of controlling product costs as a percentage of sales than did Coca-Cola as evidenced by their $13.0 billion gross profit amount d. None of the above Save Answer 23. (Points: 1) Albert Company uses the allowance method to account for bad debts. The entry to write-off a bad account (one that will never be collected) should be: Debit Credit a. Bad debt expense Accounts receivable b. Bad debt expense Allowance for doubtful accounts c. Sales revenue Accounts receivable d. Allowance for doubtful accounts Accounts receivable e. None of the above is correct Save Answer 24. (Points: 1) On January 31, 20A, Low Company wrote off an uncollectible account of $2,000. The allowance method is used. The write-off would cause bad debt expense to a. decrease $2,000. b. increase $2,000. c. be unchanged. d. None of the above is correct. Save Answer 25. (Points: 1) During 20A, Thomas Company recorded bad debt expense of $15,000 and wrote off an uncollectible account receivable amounting to $5,000. Assuming a January 1, 20A, balance in the allowance for doubtful accounts of $10,000, the December 31, 20A, balance in the allowance account would be a. $25,000. b. $20,000. c. $15,000. d. $ 5,000. e. None of the above is correct. Save Answer 26. (Points: 1) The books of Tweed Company provided the following information: Beginning balances: Accounts receivable $30,000 Allowances for doubtful accounts (a credit) 2,000 Transactions during the year: Sales revenue (of which 1/3 were on credit) 1,800,000 Collections on accounts receivable 590,000 Accounts written off as uncollectible 2,500 Past collection experience has indicated that 1% of credit sales normally is not collected. Therefore, an adjusting entry for bad debt expense should be made in the amount of a. $6,500. b. $2,500. c. $6,000. d. $ 500. e. None of the above is correct. Save Answer 27. (Points: 1) In recording the year-end adjusting entry for bad debt expense, a company would a. debit accounts receivable. b. credit accounts receivable. c. debit allowance for doubtful accounts. d. credit allowance for doubtful accounts. e. None of the above is correct. Save Answer 28. (Points: 1) If a customer pays her bill after her account has already been written off, the company receiving the payment should record the account reinstatement with a. a credit to bad debt expense. b. a credit to allowance for doubtful accounts. c. a credit to cash. d. a debit to bad debt expense. e. None of the above is correct. Save Answer 29. (Points: 1) Use the following to answer question 29: Liberty Company estimates that its annual bad debts approximate 4% of credit sales. Liberty had the following balances at year-end prior to recording adjusting entries: Credit Sales $160,000 Accounts Receivable 30,000 Allowance for Doubtful Accounts 100 (debit) Following the completion of an aging analysis, the accountant for Liberty estimated that $1,100 of the receivables would be uncollectible. The year-end adjusting entry to record bad debt expense would include a a. credit to allowance for doubtful accounts of $1,100. b. debit to bad debt expense of $1,000. c. debit to bad debt expense of $900. d. a credit to allowance for doubtful accounts of $1,200. e. None of the above is correct. Save Answer 30. (Points: 1) Apple Company's bank statement showed an ending balance of $5,000. Items appearing in the bank reconciliation included: outstanding checks, $500; deposits in transit, $1,000; bank service charges, $10; and Orange Company's check erroneously charged to Apple's bank account by the bank, $110. The correct cash balance at the end of the month should be reported as a. $4,610 b. $5,390 c. $5,610 d. $6,610 e. None of the above is correct Save Answer 31. (Points: 1) When preparing the monthly bank reconciliation, the accountant for Tiffany Toys noted that a check received from a customer last month for $89 was marked NSF and returned along with the bank statement. To correct the cash account balance, the accountant recorded an adjusting entry. This entry required a debit to a. Cash. b. Bad debt expense. c. Accounts receivable. d. Sales. e. None of the above is correct. Save Answer 32. (Points: 1) A customer purchased a $200 item at Best Bike Shop, paying with a credit card (VISA). The merchant is charged a 2% fee by the credit card company. When recording this sale, the merchant would: a. debit accounts receivable for $200. b. credit sales revenue for $200. c. credit sales revenue for $196. d. credit unearned sales revenue for $200. e. None of the above is correct. Save Answer 33. (Points: 1) The 20B records of Tom Company showed beginning inventory, $6,000; cost of goods sold, $14,000; and ending inventory, $8,000. The purchases amount for 20B, was a. $12,000 b. $10,000 c. $ 9,000 d. $16,000 e. None of the above is correct. Save Answer 34. (Points: 1) The following information was taken from the 20B income statement of Milburn Company: Pretax income, $12,000; Total operating expenses (not including income taxes), $20,000; Sales revenue, $120,000; Beginning inventory, $8,000; and Purchases, $90,000. Compute the amount of the ending inventory . a. $88,000. b. $10,000. c. $ 8,000. d. $18,000. e. None of the above is correct. Save Answer 35. (Points: 1) Richmond Company had the following information taken from its 20A adjusted trial balance: Sales, $200,000; Sales Discounts, $4,000; Beginning Inventory, $10,000; and Purchases, $140,000. A physical count of the merchandise on hand at the end of the year showed $20,000. Compute the gross margin (gross profit) that would appear in the income statement. a. $70,000. b. $74,000. c. $66,000. d. $62,000. e. None of the above is correct. Save Answer 36. (Points: 1) Which of the following is correct? a. Beginning Inventory + Purchases - Cost of Goods Sold = Ending Inventory. b. Sales + Cost of Goods Sold = Gross Margin. c. Beginning Inventory + Ending Inventory - Purchases = Cost of Goods Sold. d. Income Before Taxes - Operating Expenses = Cost of Goods Sold. e. None of the above is correct. Save Answer 37. (Points: 1) Will Company's independent CPA discovered that the ending inventory for 20B had been overstated by the company $2,000. Before the correction, what was the effect in the 20B income statement because of the overstatement of the ending inventory? a. Pretax income was understated by $2,000. b. Cost of goods sold was understated by $2,000. c. Pretax income was overstated by $2,000. d. A and B are correct. e. B and C are correct. Save Answer 38. (Points: 1) A $15,000 overstatement of the 20B ending inventory was discovered after the financial statements for 20B were prepared. The effect of the inventory error on the 20B financial statements was a. current assets were overstated and net income was understated. b. current assets were understated and net income was understated. c. current assets were overstated and net income was overstated. d. current assets were understated and net income was overstated. e. None of the above is correct. Save Answer 39. (Points: 1) Maxell Company uses the periodic FIFO method to value inventory and had the following transactions in the period. What are the cost of goods sold and ending inventory balances in dollars for the period? Date Transaction # of units Cost per unit 1/1 Beginning balance 100 $5 1/2 Purchase 75 $4 1/5 Sale 75 1/6 Sale 50 COGS Ending Inventory a. 625 175 b. 575 225 c. 550 250 d. 600 200 e. None of the above is correct. Save Answer 40. (Points: 1) When prices are rising: a. LIFO will result in lower net income and a higher inventory valuation than will FIFO. b. LIFO will result in higher net income and lower inventory valuation than will FIFO. c. FIFO will result in lower net income and a lower inventory valuation than will LIFO. d. FIFO will result in higher net income and a higher inventory valuation than will LIFO. e. None of the above is correct. Save Answer 41. (Points: 1) Toys "R" Us had cost of goods sold in 1999 of $8,191 million and $7,710 million in 1998. Their merchandise inventory in 1999 was $1,902 million and $2,464 million in 1998. What was their inventory turnover in 1999? a. 4.31 b. 3.75 c. 3.64 d. None of the above Save Answer 42. (Points: 1) Under the perpetual inventory system: a. one entry is required to record a sales return. b. cost of goods sold cannot be determined unless a physical inventory is taken. c. two entries are required to record a sale. d. a separate account for purchases is not required. e. Two of the above are correct. Save Answer 43. (Points: 1) Under the periodic inventory system: a. a transaction by transaction unit inventory record is maintained. b. the cost of goods sold for each sale is recorded at the time each sale is made. c. a separate account for purchases is used. d. a continuous inventory record provides the amount of ending inventory and the cost of goods sold throughout the period. e. None of the above is correct. Save Answer 44. (Points: 1) Which of the following may be used to calculate ending inventory (EI) under the periodic inventory system? a. BI + P + CGS = EI. b. BI + P - CGS = EI. c. BI - P + CGS = EI. d. BI + P + GM. e. None of the above is correct. Save Answer 45. (Points: 1) Joe Company sold merchandise with an invoice price of $1,000 to Gibbs, Inc., with terms of 2/10, n/30. Which of the following is the correct entry to record the purchase by Gibbs if the company uses the periodic inventory system and the gross method to record purchases? a. Purchases 1,000 Cash 1,000 b. Inventory 1,000 Accounts Payable 1,000 c. Purchases 980 Accounts Payable 980 d. Purchases 1,000 Accounts Payable 1,000 e. None of the above is correct. Save Answer 46. (Points: 1) Joe Company sold merchandise with an invoice price of $1,000 to Gibbs, Inc., with terms of 2/10, n/30. Which of the following is the correct entry to record the payment by Gibbs within the 10 days if the company uses the periodic inventory system and the gross method to record purchases? a. Cash 980 Sales Discount 20 Accounts receivable 1,000 b. Accounts Payable 1,000 Cash 980 Purchases Discounts 20 c. Accounts Payable 1,000 Cash 1,000 d. Purchases 980 Cash 980 e. None of the above is correct. Save Answer 47. (Points: 1) Tangible assets include a. Land, buildings and natural resources. b. Land, buildings and leaseholds. c. Natural resources, buildings, and franchises. d. Licenses, trademarks, and land. e. None of the above is correct. Save Answer 48. (Points: 1) Intangible assets include a. Natural resources, patents, and trademarks. b. Accounts receivable, franchises, and trademarks. c. Copyrights, licenses, and land. d. Leaseholds, patents and copyrights. e. None of the above is correct. Save Answer 49. (Points: 1) Depletion is recorded for a. Uncollectible accounts receivable. b. Land and buildings. c. Intangible assets. d. Natural resources. e. None of the above is correct. Save Answer 50. (Points: 1) On March 1, Chapine Company purchased a new stamping machine for $5,000. Chapine paid cash for the machine. Other costs associated with the machine were: transportation costs, $300; sales tax paid $200; and installation cost, $100. The cost recorded for the machine was a. $5,200. b. $5,600. c. $5,500. d. $5,000. e. None of the above is correct. Save Answer 51. (Points: 1) The amount of sales tax paid on the purchase of new machinery should be debited to a. the machinery account. b. a separate deferred charge account. c. a sales tax expense account. d. accumulated depreciation for machinery. e. None of the above is correct. Save Answer 52. (Points: 1) Martinelli Company recently purchased a truck. The price negotiated with the dealer was $85,000. Martinelli also paid sales tax of $6,000 on the purchase, shipping and preparation costs of $950, and insurance for the first year of operation of $2,000. For the truck, what amount should be debited to the asset account Vehicles? a. $85,000. b. $91,000. c. $91,000. d. $91,950. e. $93,950. Save Answer 53. (Points: 1) The book value of a tangible operating asset is the a. acquisition cost. b. current estimated market value. c. acquisition cost minus the balance in accumulated depreciation. d. total depreciation that has been recorded on the asset to date. e. acquisition cost plus the balance in accumulated depreciation. Save Answer 54. (Points: 1) Which of the following costs would be excluded from the acquisition cost of equipment purchased from a supplier? a. Cost to install the equipment. b. A purchases discount offered by the supplier. c. The cost to widen an entrance in the building to bring the equipment into the facilities. d. The cost of freight paid to get the equipment to our factory. Save Answer 55. (Points: 1) Johnson Company acquires land and building for $4,000,000 including all fees related to acquisition. The land is appraised at $2,700,000 and the building at $2,100,000. The building is then renovated at a cost of $750,000. What amount is capitalized to the building account? a. $2,500,000. b. $2,078,125. c. $2,375,000. d. None of the above Save Answer 56. (Points: 1) The main purpose of recording depreciation is to a. allocate the cost of a tangible asset to the periods in which its use contributes to earning revenue. b. estimate the remaining useful life of the asset. c. report the asset on the balance sheet at the estimated amount for which the asset could be sold on the balance sheet date. d. estimate the current replacement cost of the asset. e. give the bookkeeper something to do. Save Answer 57. (Points: 1) Residual value is a. equal to the acquisition cost of a tangible operational asset. b. the same as book value of an asset. c. the amount expected to be recovered when an asset is disposed of at the end of its estimated useful life. d. the current value of an asset as of the balance sheet date. e. the total of depreciation accumulated to date. Save Answer 58. (Points: 1) On January 1, 20A, Straight, Inc., purchased a machine with a cash price of $9,500. Straight also paid $500 for transportation and installation. The expected useful life of the machine is 5 years and the residual value is $500. Assuming straight-line depreciation, the annual depreciation expense would be a. $2,100. b. $2,000. c. $1,900. d. $1,800. e. None of the above is correct. Save Answer 59. (Points: 1) Bethany Company plans to depreciate a new building using declining-balance depreciation with 200 percent acceleration rate. The building cost $400,000. The estimated residual value of the building is $50,000 and it has an expected useful life of 25 years. Assuming the first year's depreciation expense was recorded properly, what would be the amount of depreciation expense for the second year? a. $15,360. b. $16,000. c. $29,440. d. $32,000. e. None of the above is correct. Save Answer 60. (Points: 1) Which method of depreciation results in periodic depreciation expense that fluctuates from one period to the next, not necessarily in a steadily upward or downward direction? a. Straight-line. b. Units-of-production. c. Amortization. d. Declining balance. e. None of the above are correct. Save Answer 61. (Points: 1) Bangor Industries purchased a car for $22,000 on January 1, 20A. The car had an estimated useful life of 80,000 miles and an estimated residual value of $4,000. In the second year of ownership (20B), the car was driven 25,000 miles. Using the units of production method, the amount of depreciation expense for 20B was a. $5,625. b. $6,875. c. $4,500. d. $5,000. e. $2,500. Save Answer 62. (Points: 1) The records of Pam Company showed the following about a machine on January 1, 20H: Purchased 1/1/20E for $35,000 Accumulated depreciation at January 1, 20H, $26,400 On July 1, 20H, the machine was sold for $7,000. Depreciation for the first six months of 20H was $1,467. The gain or loss on disposal would be a. $1,600 gain. b. $ 133 gain. c. $1,600 loss. d. $ 133 loss. e. None of the above is correct. Save Answer 63. (Points: 1) Kovacic Company purchased a computer that cost $10,000. It had an estimated useful life of five years and residual value of $0. The computer was depreciated by the straight-line method and was sold at the end of the fourth year of use for $3,000 cash. Kovacic should record a. a gain of $1,000. b. a loss of $1,000. c. neither a gain nor a loss - the computer was sold at its book value. d. neither a gain nor a loss- the gain that occurred in this case would not be recognized. e. an extraordinary item. Save Answer 64. (Points: 1) In 1998, Delta Air Lines had a fixed asset turnover of 1.63 compared to Southwest Airlines of 1.10. What is the most likely cause of Delta's higher ratio? a. Delta is less efficient in generating net sales from its operational assets. b. Delta is more efficient at generating net income from employing its operational assets. c. Delta is able to generate greater sales from its operational assets. d. Delta is able to generate less net income from its operational assets. Save Answer 65. (Points: 1) When a company is making strategic decisions about how to finance their assets, they should consider a. whether they can borrow funds at a lower rate than the return they generate by use of their assets. b. The relative composition of debt to equity funding that currently exists. c. The proportion of current liabilities to long-term liabilities that exist. d. Both A and B are considerations of the decision. e. All are considerations of the decision. Save Answer 66. (Points: 1) The current (or working capital) ratio is computed as follows a. current assets divided by total assets. b. current assets divided by current liabilities. c. current liabilities divided by total assets. d. current liabilities divided by current assets. e. None of the above is correct. Save Answer 67. (Points: 1) A company has a current ratio of 2.4 before paying off a large current liability with cash. Following this payment, the current ratio will be a. greater than 2.4. b. less than 2.4. c. equal to 2.4. d. greater than 2.4 or less than 2.4 depending upon the dollar amount involved. e. None of the above is correct. Save Answer 68. (Points: 1) The following is a partial list of account balances from the books of Ellsworth Enterprise at the end of 20B: Accounts Payable $1,200 Accounts Receivable 1,000 Accrued Vacation Liability 900 Cash 3,000 Deferred Revenue 500 Income Taxes Payable 2,200 Notes Payable (due in 2 years) 600 Based solely upon these balances, the amount of current liabilities appearing on Ellsworth's 20B year-end balance sheet should be a. $5,400. b. $4,800. c. $4,300. d. $3,900. e. None of the above is correct. Save Answer 69. (Points: 1) In 1997, PepsiCo reported a current ratio of 0.55 and Coca-Cola reported a ratio of 0.74. Which of the following is true? a. Coca-Cola has a lower level of liquidity. b. PepsiCo has more in current assets than current liabilities for the year. c. The soft drink industry appears to have a lower than average current ratio as indicated by the two industry giants. d. All of the above are true. e. None of the above is true Save Answer 70. (Points: 1) In 1999, The Walt Disney Company reported current assets of $10,200 million, total assets of $43,679 million, current liabilities of $7,707 million, and total liabilities of $22,704 million. What was their current ratio for 1999? a. 1.32 b. 0.45 c. 5.67 d. 1.92 Save Answer 71. (Points: 1) Genentech, a biotechnology company, reported current assets of $1,326.5 million and current liabilities of $484.1 million in 1999, and in 1998, current assets of $1,242.0 million and $291.3 million of current liabilities. Calculate the current ratio for 1999. a. 3.31 b. 2.74 c. 2.65 d. 3.42 Save Answer 72. (Points: 1) Which of the following usually is not a current liability? a. Wages payable. b. Rent revenue collected in advance. c. Dividends payable. d. Pension obligations. e. All of the above are current liabilities. Save Answer 73. (Points: 1) Which of the following is a typical example of a current liability? a. Revenue collected in advance. b. Accrued interest payable. c. Employee taxes withheld. d. The current portion of a long-term debt. e. All of the above are correct. Save Answer 74. (Points: 1) Until payment is made to the designated governmental agency or other organization, the following payroll items should be reported as liabilities of the employer. a. Federal income tax withheld. b. Union dues withheld. c. Employer's share of FICA (social security tax). d. Employee's share of FICA (social security tax). e. All of the above are correct. Save Answer 75. (Points: 1) On September 1, 20A, Dawn Equipment signed a one-year, 7% interest-bearing note payable for $5,000. Assuming that Dawn maintains its books on a calendar year basis, the amount of interest expense that should be reported in the 20B income statement for this note (rounded to the nearest dollar) would be a. $267. b. $400. c. $233. d. $300. e. $ -0-. Save Answer 76. (Points: 1) Warner Company borrowed $25,000 cash on November 1, 20A, and signed a six-month, 12% interest-bearing note payable with interest payable at maturity. The amount of accrued interest payable that should be shown on the 20A balance sheet is a. $ 250. b. $ 300. c. $ 500. d. $ 750. e. $1,250. Save Answer 77. (Points: 1) Gross wages of $5,000 accrued but not paid to employees at the end of 20B should be recorded by the employer in a journal entry that includes a a. debit of $5,000 to Wages payable. b. credit of $5,000 to Cash. c. debit of $5,000 to Wages expense. d. debit of $5,000 to Cash. e. None of the above is correct. Save Answer 78. (Points: 1) To finance a new department, Dannella Yogurt Corporation borrowed $80,000 at an interest rate of 10% On April 1, 20A. Considering the income tax rate of 40%, what is the effective interest rate (net of tax) for 20A? a. 4%. b. 6%. c. 10%. d. 14%. e. None of the above is correct. Save Answer 79. (Points: 1) Failure to make a necessary adjusting entry for accrued interest on a note payable would cause a. an understatement of liabilities and stockholders' equity. b. net income to be overstated and assets to be understated. c. net income to be understated and liabilities to be understated. d. an overstatement of net income, an understatement of liabilities, and an overstatement of stockholders' equity. e. None of the above is correct. Save Answer 80. (Points: 1) Goodman Company borrowed $100,000 cash on September 1, 20B, and signed a one-year 12%, interest-bearing note payable. The required adjusting entry at the end of the accounting period, December 31, 20B, would be a. Interest expense 4,000 Interest payable 4,000 b. Interest expense 12,000 Interest payable 12,000 c. Notes payable 100,000 Interest expense 12,000 Cash 112,000 d. Interest payable 4,000 Interest expense 4,000 e. None of the above is correct. Save Answer 81. (Points: 1) The federal government requires a. only the employer to pay FICA taxes. b. only the employee to pay FICA taxes. c. both the employer and the employee to pay FICA taxes. d. neither the employer nor the employee to pay FICA taxes. e. only corporations to pay FICA taxes. Save Answer 82. (Points: 1) The amount of federal income tax that is withheld from employees' paychecks by the employer should a. be recorded on the employer's books as a current liability. b. be recorded on the employer's books as an asset. c. be recorded on the employer's books as revenue. d. not be recorded on the employer's books. e. None of the above is correct. Save Answer 83. (Points: 1) Deferred revenue is another term for a. Prepaid expenses. b. Sales revenue. c. Trade payables. d. Unearned revenue. e. Accrued expenses. Save Answer 84. (Points: 1) Use the following to answer questions 84-86: On July 1, 20A, Wilson, Inc., borrowed $12,000 from First Bank on a one year, 8% note payable. Interest is payable on December 31, 20A and on June 30, 20B, the due date of the note. The journal entry required on the company's books to record the note payable on July 1, 20A would include a a. credit to notes payable for $12,000. b. credit to notes payable for $12,960. c. debit to cash for $11,040. d. debit to interest expense for $960. e. None of the above is correct. Save Answer 85. (Points: 1) The journal entry required on the company's books to record the interest paid on December 31, 20A, would include a a. debit to Interest Expense for $960. b. credit to Interest Expense for $960. c. credit to Cash fo
