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If a parcel of land is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is purchased for $137,000, the land should be recorded in the purchaser's books at:



a.     $ 95,000.


b.     $137,000.


c.     $138,500.


d.     $140,000.


e.     $150,000.

49. The description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the:




a.     Income statement equation.


b.     Accounting equation.


c.     Business equation.


d.     Return on equity ratio.


e.     Net income.

162. The assets of a company total $700,000; the liabilities, $200,000. What are the claims of the owners?

The assets of a company total $700,000; the liabilities, $200,000. What are the claims of the owners?



a.     $900,000.


b.     $700,000.


c.     $500,000.


d.     $200,000.


e.     It is impossible to determine unless the amount of this owners' investment is known.

165. Photometer Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

Photometer Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?



a.     Assets, $30,000 increase; liabilities, no effect; equity, $30,000 increase.


b.     Assets, $30,000 decrease; liabilities, $30,000 decrease; equity, no effect.


c.     Assets, $30,000 decrease; liabilities, $30,000 increase; equity, no effect.


d.     Assets, no effect; liabilities, $30,000 decrease; equity, $30,000 increase.


e.     Assets, $30,000 decrease; liabilities, no effect; equity $30,000 decrease.


167. Zion Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It buys office equipment on credit for $75,000. The effect of this transaction include:

Zion Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It buys office equipment on credit for $75,000. The effect of this transaction include:



a.     Assets increase by $75,000 and expenses increase by $75,000.


b.     Assets increase by $75,000 and expenses decrease by $75,000.


c.     Liabilities increase by $75,000 and expenses decrease by $75,000.


d.     Assets decrease by $75,000 and expenses decrease by $75,000.


e.     Assets increase by $75,000 and liabilities increase by $75,000.


168. Viscount Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are:

Viscount Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are:



a.     Total assets decrease and equity increases.


b.     Both total assets and total liabilities decrease.


c.     Total assets, total liabilities, and equity are unchanged.


d.     Both total assets and equity are unchanged and liabilities increase.


e.     Total assets increase and equity decreases.


169. If the liabilities of a business increased $75,000 during a period of time and the owner's equity in the business decreased $30,000 during the same period, the assets of the business must have:

If the liabilities of a business increased $75,000 during a period of time and the owner's equity in the business decreased $30,000 during the same period, the assets of the business must have:



a.     Decreased $105,000.


b.     Decreased $45,000.


c.     Increased $30,000.


d.     Increased $45,000.


e.     Increased $105,000.

170. If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:

If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:



a.     Increased $22,000.


b.     Decreased $22,000.


c.     Increased $89,000.


d.     Decreased $156,000.


e.     Increased $156,000.

171. If assets are $365,000 and equity is $120,000, then liabilities are:

If assets are $365,000 and equity is $120,000, then liabilities are:



a.     $120,000.


b.     $245,000.


c.     $365,000.


d.     $485,000.


e.     $610,000.


175. FastForward has net income of $18,955, and assets at the beginning of the year of $200,000. Assets at the end of the year total $246,000. Compute its return on assets.

FastForward has net income of $18,955, and assets at the beginning of the year of $200,000. Assets at the end of the year total $246,000. Compute its return on assets.



a.     7.7%.


b.     8.5%.


c.     9.5%.


d.     11.8%.


e.     13.0%.

190. Use the following information as of December 31 to determine equity.

Use the following information as of December 31 to determine equity.





a.     $ 57,000.


b.     $141,000.


c.     $297,000.


d.     $438,000.


e.     $579,000.


191. Determine the net income of a company for which the following information is available for the month of May.

Determine the net income of a company for which the following information is available for the month of May.





a.     $190,000.


b.     $210,000.


c.     $230,000.


d.     $400,000.


e.     $610,000.


194. FastForward had cash inflows from operations $62,500; cash outflows from investing activities of $47,000; and cash inflows from financing of $25,000. The net change in cash flows was:

FastForward had cash inflows from operations $62,500; cash outflows from investing activities of $47,000; and cash inflows from financing of $25,000. The net change in cash flows was:



a.     $40,500 increase.


b.     $40,500 decrease.


c.     $134,500 decrease.


d.     $134,000 increase.


e.     $9,500 increase.


197. Fees earned (but not yet received in cash) by a business in exchange for services it provided appear on which of the following statements?

Fees earned (but not yet received in cash) by a business in exchange for services it provided appear on which of the following statements?



a.     Balance sheet.


b.     Income statement.


c.     Statement of owner's equity.


d.     Statement of cash flows.


e.     Both A and B.

199. A company reported total equity of $145,000 on its December 31, 2003, balance sheet. The following information is available for the year ended December 31, 2004:

A company reported total equity of $145,000 on its December 31, 2003, balance sheet. The following information is available for the year ended December 31, 2004:




What are the total assets of the company at December 31, 2004?



a.     $ 45,000.


b.     $ 92,000.


c.     $190,000.


d.     $210,000.


e.     $282,000.

115. A $15 credit to Sales was posted as a $150 credit. By what amount is Sales in error?

A $15 credit to Sales was posted as a $150 credit. By what amount is Sales in error?



a.     $150 understated.


b.     $135 overstated.


c.     $150 overstated.


d.     $15 understated.


e.     $135 understated.

90. Robert Haddon contributed $70,000 in cash and some land worth $130,000 to open a new business, RH Consulting. Which of the following general journal entries will RH Consulting make to record this transaction?

Robert Haddon contributed $70,000 in cash and some land worth $130,000 to open a new business, RH Consulting. Which of the following general journal entries will RH Consulting make to record this transaction?



a.     



b.                        



c.                        



d.                        



e.                        



91. A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:

A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:



a.     Recorded as a debit to an unearned revenue account.


b.     Recorded as a debit to a prepaid expense account.


c.     Recorded as a credit to an unearned revenue account.


d.     Recorded as a credit to a prepaid expense account.


e.     Not recorded in the accounting records until the earnings process is complete.

92. On September 30, the Cash account of Value Company had a normal balance of $5,000. During September, the account was debited for a total of $12,200 and credited for a total of $11,500. What was the balance in the Cash account at the beginning of Septembe

On September 30, the Cash account of Value Company had a normal balance of $5,000. During September, the account was debited for a total of $12,200 and credited for a total of $11,500. What was the balance in the Cash account at the beginning of September?



a.     A $0 balance.


b.     A $4,300 debit balance.


c.     A $4,300 credit balance.


d.     A $5,700 debit balance.


e.     A $5,700 credit balance.

93. On April 30, Holden Company had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of cred

On April 30, Holden Company had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May?



a.     $ 5,000.


b.     $47,000.


c.     $52,000.


d.     $57,000.


e.     $32,000.

95. The following transactions occurred during July:

The following transactions occurred during July:
1. Received $900 cash for services provided to a customer during July.
2. Received $2,200 cash investment from XXXXX XXXXXson, the owner of the business.
3. Received $750 from a customer in partial payment of his account receivable which arose from sales in June.
4. Provided services to a customer on credit, $375.
5. Borrowed $6,000 from the bank by signing a promissory note.
6. Received $1,250 cash from a customer for services to be rendered next year.
What was the amount of revenue for July?



a.     $   900.


b.     $ 1,275.


c.     $ 2,525.


d.     $ 3,275.

97. Zed Bennett opened an art gallery and as a dealer and completed these transactions:

Zed Bennett opened an art gallery and as a dealer and completed these transactions:

1. Started the gallery, Artery, by investing $40,000 cash and equipment valued at $18,000.
2. Purchased $70 of office supplies on credit.
3. Paid $1,200 cash for the receptionist's salary.
4. Sold a painting for an artist and collected a $4,500 cash commission on the sale.
5. Completed an art appraisal and billed the client $200.

What was the balance of the cash account after these transactions were posted?



a.     $12,230.


b.     $12,430.


c.     $43,230.


d.     $43,430.


e.     $61,430.

100. Which of the following statements is incorrect?

Which of the following statements is incorrect?



a.     Higher financial leverage involves higher risk.


b.     Risk is higher if a company has more liabilities.


c.     Risk is higher if a company has higher assets.


d.     The debt ratio is one measure of financial risk.


e.     Lower financial leverage involves lower risk.

142. If equity is $300,000 and liabilities are $192,000, then assets equal:

If equity is $300,000 and liabilities are $192,000, then assets equal:



a.     $108,000.


b.     $192,000.


c.     $300,000.


d.     $492,000.


e.     $792,000.

74. Nike had income of $350 million and average invested assets of $2,000 million. Its ROA is:

Nike had income of $350 million and average invested assets of $2,000 million. Its ROA is:



a.     1.8%.


b.     35%.


c.     17.5%.


d.     5.7%.


e.     3.5%.

195. FastForward has beginning equity of $257,000, net income of $51,000, withdrawals of $40,000 and investments by owners of $6,000. Its ending equity is:

FastForward has beginning equity of $257,000, net income of $51,000, withdrawals of $40,000 and investments by owners of $6,000. Its ending equity is:



a.     $223,000.


b.     $240,000.


c.     $268,000.


d.     $274,000.


e.     $208,000.

198. A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of owner's equity?

A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of owner's equity?



a.     $ 17,000.


b.     $ 29,000.


c.     $ 71,000.


d.     $ 88,000.


e.     $105,000.

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

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



a.     38.6%.


b.     13.4%.


c.     34.9%.


d.     25.9%.


e.     14.9%.

103. Which of the following statements is false when applied to describe the debt ratio?

Which of the following statements is false when applied to describe the debt ratio?



a.     It is of use to both internal and external users of accounting information.


b.     A relatively high ratio is always desirable.


c.     The dividing line for a high and low ratio varies from industry to industry.


d.     Many factors such as company's age, stability, profitability and cash flow influence the determination of what would be interpreted as a high versus a low ratio.


e.     The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt.

109. A general journal is:

A general journal is:



a.     A ledger in which amounts are posted from a balance column account.


b.     Not required if T-accounts are used.


c.     A complete record of each transaction in the place from which transaction amounts are posted to the ledger accounts.


d.     Not necessary in electronic accounting systems.


e.     A book of final entry because financial statements are prepared from it.


11. A company had the following accounts and balances year-end:

A company had the following accounts and balances year-end:



If all of the accounts have normal balances, what are the totals for the trial balance?



a.     $ 45,200.


b.     $ 67,000.


c.     $104,800.


d.     $209,600.


e.     $186,600.

116. A trial balance taken at year-end showed total credits exceed total debits by $4,950. This discrepancy could have been caused by:

A trial balance taken at year-end showed total credits exceed total debits by $4,950. This discrepancy could have been caused by:



a.     An error in the general journal where a $4,950 increase in Accounts Receivable was recorded as an increase in Cash.


b.     A net income of $4,950.


c.     The balance of $49,500 in Accounts Payable being entered in the trial balance as $4,950.


d.     The balance of $5,500 in the Office Equipment account being entered on the trial balance as a debit of $550.


e.     An error in the general journal where a $4,950 increase in Accounts Payable was recorded as a decrease in Accounts Payable.

17. In which of the following situations would the trial balance not balance?

In which of the following situations would the trial balance not balance?



a.     A $1,000 collection of an account receivable was erroneously posted as a debit to Accounts Receivable and a credit to Cash.


b.     The purchase of office supplies on account for $3,250 was erroneously recorded in the journal as $2,350 debit to Office Supplies and credit to Accounts Payable.


c.     A $50 cash receipt for the performance of a service was not recorded at all.


d.     The purchase of office equipment for $1,200 was posted as a debit to Office Supplies and a credit to Cash for $1,200.


e.     The cash payment of a $750 account payable was posted as a debit to Accounts Payable and a debit to Cash for $750.

118. The credit purchase of a delivery truck for $4,700 was posted to Delivery Trucks as a $4,700 debit and to Accounts Payable as a $4,700 debit. What effect would this error have on the trial balance?

The credit purchase of a delivery truck for $4,700 was posted to Delivery Trucks as a $4,700 debit and to Accounts Payable as a $4,700 debit. What effect would this error have on the trial balance?



a.     The total of the Debit column of the trial balance will exceed the total of the Credit column by $4,700.


b.     The total of the Credit column of the trial balance will exceed the total of the Debit column by $4,700.


c.     The total of the Debit column of the trial balance will exceed the total of the Credit column by $9,400.


d.     The total of the Credit column of the trial balance will exceed the total of the Debit column by $9,400.


e.     The total of the Debit column of the trial balance will equal the total of the Credit column.

120. Of the following errors, which one by itself will cause the trial balance to be out of balance?

Of the following errors, which one by itself will cause the trial balance to be out of balance?



a.     A $200 cash salary payment posted as a $200 debit to Cash and a $200 credit to Salaries Expense.


b.     A $100 cash receipt from a customer in payment of his account posted as a $100 debit to Cash and a $10 credit to Accounts Receivable.


c.     A $75 cash receipt from a customer in payment of his account posted as a $75 debit to Cash and a $75 credit to Cash.


d.     A $50 cash purchase of office supplies posted as a $50 debit to Office Equipment and a $50 credit to Cash.


e.     An $800 prepayment from a customer for services to be rendered in the future was posted as an $800 debit to Unearned Revenue and an $800 credit to Cash..
121. A $130 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?

A $130 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?



a.     Office Equipment, understated $130; Fees Earned, overstated $130.


b.     Office Equipment, understated $260; Fees Earned, overstated $130.


c.     Office Equipment, overstated $130; Fees Earned, overstated $130.


d.     Office Equipment, overstated $130; Fees Earned, understated $130.


e.     Office Equipment, overstated $260; Fees Earned, understated $130.


121. Generally accepted accounting principles:

Generally accepted accounting principles:



a.     Are based on long used accounting practices.


b.     Are basic assumptions, concepts, and guidelines for preparing financial statements.


c.     Are detailed rules used in reporting on business transactions and events.


d.     Arise from the rulings of authoritative bodies.


e.     All of the above.

94. During the month of February, Hoffer Company had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the January 31 beginning cash balance?

During the month of February, Hoffer Company had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the January 31 beginning cash balance?



a.     $   700.


b.     $1,100.


c.     $2,900.


d.     $      0.


e.     $4,300.

96. If XXXXX XXXXX, the owner of Jones Hardware proprietorship, uses cash of the business to purchase a family automobile, the business should record this use of cash with an entry to:

If XXXXX XXXXX, the owner of Jones Hardware proprietorship, uses cash of the business to purchase a family automobile, the business should record this use of cash with an entry to:



a.     Debit Salary Expense and credit Cash.


b.     Debit XXXXX XXXXX, Salary and credit Cash.


c.     Debit Cash and credit XXXXX XXXXX, Withdrawals.


d.     Debit XXXXX XXXXX, Withdrawals and credit Cash.


e.     Debit Automobiles and credit Cash.

119. If the Debit and Credit column totals of a trial balance are equal, then:

If the Debit and Credit column totals of a trial balance are equal, then:



a.     All transactions have been recorded correctly.


b.     All entries from the journal have been posted to the ledger correctly.


c.     All ledger account balances are correct.


d.     The total debit entries and total credit entries are equal.


e.     The balance sheet would be correct.

just wanted to see if my answers are correct.
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Category: Homework
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