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Financial Accounting Exam

1.
If a firm had sales of $50,000 during a period and sales returns and allowances of $4,000, its net sales were 
 
2.
On December 31, prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $200. An age analysis of the accounts receivable produces an estimate of $1,000 of probable losses from uncollectible accounts. The adjusting entry needed to record the estimated losses from uncollectible accounts is made for
 
3.
A firm reported sales of $300,000 during the year and has a balance of $20,000 in its Accounts Receivable account at year-end. Prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $300. The firm estimated its losses from uncollectible accounts to be one-half of 1 percent of sales. The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for 
 
4.
The adjusting entry to record accrued interest on a note payable requires 
 
5.
When a company issues a promissory note, the accountant records an entry that includes a credit to Note Payable for 
 
6.
The balance sheet shows 
 
7.
Amounts that a business must pay in the future are known 
 
8.
Examples of assets are 
 
9.
A net loss results 
 
10.
The income statement shows 
 
11.
If liabilities are $4,000 and stockholders’ equity is $15,000, assets are 
 
12.
Credits are used to record
 
13.
Debits are used to record increases in
 
14.
The journal entry to record the sale of services on credit should include
 
15.
The journal entry to record the payment of the current month utility bill would include
 
16.
The journal entry to record the payment of dividends for the month is:
 
17.
If the prepaid expenses are not adjusted, assets on the balance sheet
 
18.
On May 1, 20XX, a firm purchased a 1-year insurance policy for $1,800 and paid the full premium in advance. The insurance expense associated with this policy for 20XX is
 
19.
The entry to record a purchase of merchandise on credit using a perpetual inventory system includes
 
20.
Which of the following is allowed under generally accepted accounting principles?
 
21.
An accountant who records revenue when a credit sale is made rather than waiting for the receipt of cash from the customer is
 
22.
Depreciating equipment over its useful life is an example of
 
23.
The method of depreciation that results in the same amount of depreciation expense each year is the
 
24.
The book value of an asset is
 
25.
An asset that cost $14,000 was sold for $9,000 cash. Accumulated depreciation on the asset was $7,000. The entry to record this transaction includes the recognition of
 
26.
A company receives a note payable for $3,500 at 9% for 45 days. How much interest (to the nearest cent) will the customer owe using a 360-day year?
 
27.
Utilize the _____________ principle to estimate warranty liabilities.
 
28.
Which of the following would NOT be considered a contingent liability?
 
29.
If a $6,000, 10 percent, 10-year bond was issued at 104 on October 1, 2011, how much interest will accrue on December 31 if interest payments are made annually?
 
30.
If the market rate of interest is greater than the bond’s stated rate of interest, the bond will be issued at
 
31.
The number of shares of stock that a corporation is given the right to sell is called
 
32.
Which of the following is NOT an advantage of a corporation? 
 
33.
Earnings that a stockholder receives from a corporation is an example of which stockholder right?
 
34.
Cherry Corporation’s outstanding stock is 100 shares of $100 par, 11% cumulative preferred stock and 2,000 shares of $12 par common stock. Cherry paid $1,600 in cash dividends during the year. No dividends are in arrears. Common stockholders received
 
35.
A stock dividend affects the debiting and crediting of the following accounts
 
36.
The statement of cash flows reports the sources and uses of cash from all of the following EXCEPT
 
37.
The accuracy of the statement of cash flows can be verified by computing the change in the balance of the
 
38.
The purpose of the statement of cash flows is to show
 
39.
Which of the following is NOT a part of operating activities?
 
40.
Which of the following is NOT a part of investing activities?
 
41.
Which of the following activities is computed differently using the two methods of formatting a statement of cash flows?
 
42.
The debt ratio is the relationship between
 
43.
What is the purpose of the Statement of Cost of Goods Manufactured?
 
44.
The cost of a manufactured product generally consists of which of the following costs?
 
45.
The entry to record a purchase of merchandise on credit using a perpetual inventory system includes
 
46.
The entry to record a return by a credit customer of defective merchandise on which no sales tax was charged includes
 
47.
The entry to record a purchase of merchandise on credit using a periodic inventory system includes
 
48.
The total of the balances in the individual creditor's accounts should agree with the balance
 
49.
As part of the initial investment, a partner contributes equipment that had a cost of $50,000 and accumulated depreciation of $35,000. If the partners agree on a valuation of $30,000 for the equipment, what amount should be debited to the office equipment account?
 
50.
A firm purchases an asset for $50,000 and estimates that it will have a useful life of five years and a salvage value of $5,000. Under the double-declining-balance method, the depreciation expense for the first year of the asset's useful life is

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