25 m/c questions on accounting :

QUESTIONS :

1.On September 30, the Cash account of Value Company had a normal balance of $5,700. During September, the account was debited for a total of $12,900 and credited for a total of $12,200. What was the balance in the Cash account at the beginning of September?

A $6,400 credit balance.

A $6,400 debit balance.

A $0 balance.

A $5,000 debit balance.

A $5,000 credit balance.

2.   

A company had no office supplies available at the beginning of the year. During the year, the company purchased $370 worth of office supplies. On December 31, $135 worth of office supplies remained. How much should the company report as office supplies expense for the year?

$135.

$185.

$235.

$370.

$505.

3.   

On January 1 of the current year, Bob’s Lawn Care Service reported owner’s capital totaling $124,400. During the current year, total revenues were $97,900 while total expenses were $83,600. Also, during the current year Bob withdrew $21,900 from the company. No other changes in equity occurred during the year. If, on December 31 of the current year, total assets are $196,000, the change in owner’s capital during the year was:

A decrease of $7,600.

An decrease of $36,200.

An increase of $7,600.

Impossible to determine from the information provided.

A increase of $36,200.

4.   

On March 31, Phoenix, Inc. paid Melanie Publishing Company $21,600 for a 3-year subscription for five different magazines. The subscriptions started immediately. What amount should appear in the Prepaid Subscription account for Phoenix Company after adjustments on December 31 each year assuming Phoenix using a calendar reporting period?

$21,600; $16,200; $9,000; $1,800.

$5,400; $7,200; $7,200; $1,800.

$7,200; $7,200; $7,200.

$16,200; $9,000; $1,800; $0.

The answer cannot be determined based on the information given.

 

5.   

A trial balance taken at year-end showed total credits exceed total debits by $5,760. This discrepancy could have been caused by:

The balance of $57,600 in Accounts Payable being entered in the trial balance as $640.

The balance of $6,400 in the Office Equipment account being entered on the trial balance as a debit of $640.

An error in the general journal where a $5,760 increase in Accounts Payable was recorded as a decrease in Accounts Payable.

A net income of $5,760.

An error in the general journal where a $5,760 increase in Accounts Receivable was recorded as an increase in Cash.

6.   

A $190 credit to Office Equipment was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?

Office Equipment, overstated $190; Fees Earned, overstated $190.

Office Equipment, overstated $380; Fees Earned, understated $190.

Office Equipment, understated $380; Fees Earned, overstated $190.

Office Equipment, understated $190; Fees Earned, overstated $190.

Office Equipment, overstated $190; Fees Earned, understated $190.

7.   

On April 30, Holden Company had an Accounts Receivable balance of $19,600. During the month of May, total credits to Accounts Receivable were $53,600 from customer payments. The May 31 Accounts Receivable balance was $14,600. What was the amount of credit sales during May?

 

$5,000.

$48,600.

$34,200.

$58,600.

$53,600.

8.   

On April 1, a company paid the $2,052 premium on a three-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the year ended December 31? (Round your answer to 1 decimal places.)

$2,052.00.

$684.00.

$1,539.00.

$513.00.

$57.00.

9.   

At the beginning of January of the current year, Thomas Law Center’s ledger reflected a normal balance of $52,000 for accounts receivable. During January, the company collected $14,800 from customers on account and provided additional services to customers on account totaling $12,500. Additionally, during January one customer paid Thomas $5,000 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be:

$49,300.

$54,300.

$2,300.

$49,700.

$54,700.

10.   

Stride Along has total assets of $425 million. Its total liabilities are $110 million. Its equity is $315 million. Calculate the debt ratio.

 

38.6%.

 

13.5%.

 

34.9%.

 

25.9%.

 

14.9%.

11.   

The following information is available for the Travis Travel Agency. After closing entries are posted, what will be the balance in the Jay Travis, Capital account?

 

  Total revenues $128,000  

  Total expenses 61,500  

  Jay Travis, Capital 75,000  

  Jay Travis, Withdrawals 16,500  

$66,500.

$75,000.

$125,000.

$141,500.

$281,000.

 

12.   

A company normally sells its product for $30 per unit. However, the selling price has fallen to $25 per unit. This company’s current inventory consists of 100 units purchased at $26 per unit. Replacement cost has now fallen to $23 per unit. Calculate the value of this company’s inventory at the lower of cost or market.

$2,500.

$2,400.

$2,600.

$2,250.

$2,300.

13.   

Use the information in the adjusted trial balance presented below to calculate current assets for Jones Company:

 

  Account TitleDr.Cr.

  Cash 24,000   

  Accounts receivable 17,000   

  Prepaid insurance 7,600   

  Equipment 110,000   

  Accumulated Depreciation –  Equipment  55,000  

  Land 105,000   

  Accounts payable  18,000  

  Interest payable  2,900  

  Unearned revenue  6,000  

  Long-term notes payable  40,000  

  J. Jones, Capital  141,700  

 

  Totals 263,600   263,600  

 

 

$21,700.

$48,600.

$26,900.

$103,600.

$44,200.

14.   

A company has net sales and cost of goods sold of $754,000 and $544,600, respectively. Its net income is $17,730. The company’s gross margin and operating expenses are ________ and ___________, respectively.

$191,670; $209,400

$227,130; $526,870

$736,270; $191,670

$209,400; $191,670

$526,870; $227,130

15.   

A company purchased $4,400 worth of merchandise. Transportation costs were an additional $400. The company later returned $325 worth of merchandise and paid the invoice within the 1% cash discount period. The total amount paid for this merchandise is:

$4,431.00.

$4434.25.

$4,075.00.

$4,475.00.

$4,356.00.

16.   

Based on the following information from Raptor Company’s balance sheet, calculate the current ratio.

 

  Current assets   $  87,000  

  Long-term investments 50,000  

  Plant assets 250,000  

  Current liabilities 39,000  

  Long-term liabilities 90,000  

  Raptor, Capital 258,000  

.45.

3.51.

3.33.

1.06.

2.23.

17.   

Herald Company had sales of $141,000, sales discounts of $3,200, and sales returns of $4,400. Herald Company’s net sales equals:

$141,000.

$133,400.

$148,600.

$137,800.

$7,600.

18.   

Thelma Company reported cost of goods sold for Year 1 and Year 2 as follows:

 

 Year 1Year 2

  Beginning inventory$ 123,000   $ 130,600   

  Cost of goods purchased  250,600     278,000   

  Cost of goods available for sale 373,600    408,600   

  Ending inventory  130,600     135,600   

  Cost of goods sold$ 243,000   $ 273,000   

 

Thelma Company made two errors: 1) ending inventory at the end of Year 1 was understated by $15,600 and 2) ending inventory at the end of Year 2 was overstated by $6,600. Given this information, the correct cost of goods sold figure for Year 2 would be:

$288,600

$279,600

$252,000

$266,400

$295,200

19.   

Bentley records adjusting entries on December 31 year end. At December 31, employees had earned $12,500 of unpaid and unrecorded salaries. The next payday is January 3, during which $31,000 will be paid. Prepare the January 1 journal entry to reverse the effect of the December 31 salary expense accrual.

Debit Salaries expense $12,500; credit Salaries payable $12,500.

Debit Salaries expense $18,500; debit Salaries payable $12,500; credit Cash $31,000.

Debit Salaries payable $18,500; credit Cash $18,500.

Debit Salaries payable $12,500, credit Salaries expense $12,500.

Debit Salaries expense $18,500; credit Salaries payable $18,500.

20.   

The Unadjusted Trial Balance columns of a work sheet total $84,500. The Adjustments columns contain entries for the following:

 

1.

Office supplies used during the period, $1,450.

2.

Expiration of prepaid rent, $950.

3.

Accrued salaries expense, $750.

4.

Depreciation expense, $1,050.

5.

Accrued service fees receivable, $650.

  

The Adjusted Trial Balance columns total is:

$79,650.

$84,500.

$86,950.

$87,150.

$89,350.

21.   

The following information is available for Holland Company at December 31:

 

  Money market fund balance$   2,920  

  Certificate of deposit maturing June 30 of next year$ 16,300  

  Postdated checks from customers$   1,800  

  Cash in bank account$ 23,731  

  NSF checks from customers returned by bank$      780  

  Cash in petty cash fund $      330  

  Inventory of postage stamps $        31  

  U.S. Treasury bill purchased on December 15 and maturing

     on February 28 of following year 

$ 11,300  

 

Based on this information, Holland Company should report Cash and Cash Equivalents on December 31 of:

$38,281

$40,861

$43,312

$54,581

$39,301

22.   

A company had net sales of $540,000, total sales of $690,000, and an average accounts receivable of $83,000. Its accounts receivable turnover equals (Round your final answer to two decimal places):

0.15

0.78

0.12

6.51

8.31

23.   

Martha Company has an established petty cash fund in the amount of $500. The fund was last reimbursed on November 30. At the end of December, the fund contained the following petty cash receipts:

 

  December 4 Freight charge for merchandise purchased$ 56  

  December 7 Freight charge for delivery to customer$ 80  

  December 12 Purchase of office supplies$ 45  

  December 18 Donation to charitable organization$ 64  

 

If, in addition to these receipts, the petty cash fund contains $246.00 of cash, the journal entry to reimburse the fund on December 31 will include:

 

A debit to Transportation-In of $101.

A debit to Transportation-Out of $101.

A credit to Cash Over and Short of $9.00.

A debit to Cash Over and Short of $9.00.

A credit to Office Supplies of $80.

 

24.   

A company had net sales of $31,400 and ending accounts receivable of $2,800 for the current period. Its days’ sales uncollected equals. (Use 365 days a year and round your final answer to two decimal places):

24.55 days.

47.85 days.

32.55 days.

43.75 days.

11.21 days.

25.   

Teller purchased merchandise from TechCom on October 17 of the current year and TechCom accepted Teller’s $8,400, 90-day, 8% note. What entry should TechCom make on January 15 of the next year when the note is paid? (Use 360 days a year. Do not round intermediate calculations.)

Debit Notes Receivable $8,400; debit Interest Receivable $168; credit Sales $8,568.

Debit Cash $8,568; credit Interest Revenue $28; credit Interest Receivable $140; credit Notes Receivable $8,400.

Debit Cash $4,920; credit Interest Revenue $100; credit Interest Receivable $20; credit Notes Receivable $4,800.

Debit Cash $8,568; credit Notes Receivable $8,568.

Debit Cash $8,568; credit Interest Revenue $168; credit Notes Receivable $8,400.