I’m studying for a test and answering questions on the review sheet – I’ve figured out all but 10. help with any of them would be appreciated
1. T/F: A corporation is a separate entity for accounting purposes but not for legal purposes.
2. Which of the following would not normally operate as a service business?
a. video rentals – i’m thinking this one, but then against most questions I think are obvious I get wrong.
b. styling salon
c. restaraunt
d. pet groomers
3. The business entity concept means that
a. an entity is organized according to the rules set by the FASB
b. the stockholder is part of the business entity
c. the entity is an individual economic unit for which data are recorded, analyzed, and reported
d. an entity is organized according to state or federal statutes
4. Clifford Moore deposits ,000 in a bank account in the name of Star Tech, a computer programming business, in return for shares of stock. Star Tech’s records would show
a. Increased Assets (Cash) and increased Liabilities (Accounts Payable)
b. Increased Assets (Cash) and increased Assets (Accounts Receivable)
c. Increased Assets (Accounts Receivable) and decreased Liabilities (Accounts Payable)
d. Increased Assets (Cash) and increased Stockholders’ Equity (Capital Stock)
5. A company purchases a one-year insurance policy on June 1 for ,260. The adjusting entry on December 31 is
a. debit Insurance Expense, 5 and credit Prepaid Insurance, 5.
b. debit Prepaid Insurance, 0, and credit Cash, 0.
c. debit Insurance Expense, 5, and credit Prepaid Insurance, 5
d. debit Insurance Expense, 0 and credit Prepaid Insurance, 0
6. Using a perpetual inventory system, the entry to record the purchase of ,000 of merchandise on account would include a
a. debit to Merchandise Inventory
b. credit to Merchandise inventory
c. debit to sales
d. credit to sales
7. A retailer purchases merchandise with a catalog list price of ,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should the retailer debit to the Merchandise Inventory account?
a. 4500
b. 10290
c. 10500
d. 14700
8. Procedures designed to protect cash from theft and misuse from the time it is received until it can be deposited in a bank are called
a. cash controls
b. accounting controls
c. preventive controls
d. detective controls
9. The Brock Company acquired new machinery with a price of ,562.00 by trading in similar old machinery and paying ,205.80. The old machinery originally cost ,970.00 and had accumulated depreciation of ,176.00. In recording this transaction, what should Brock Company record?
a. the new machinery at ,768.00
b. loss of 7.80
c. the new machinery at ,205.80
d. a gain of 7.80
10. If Larger Company issues 2,000 shares of par value common stock for ,000, determine the result of the transaction on the accounts.
a. Paid-in Capital in excess of Par Value will be credited for ,000.
b. Paid-in Capital in excess of Par Value will be credited for ,000
c. Common Stock will be credited for ,000
d. Cash will be debited for ,000.
1. T/F: A corporation is a separate entity for accounting purposes but not for legal purposes. FALSE
2. Which of the following would not normally operate as a service business?
a. video rentals
3. The business entity concept means that
c. the entity is an individual economic unit for which data are recorded, analyzed, and reported
4. Clifford Moore deposits $15,000 in a bank account in the name of Star Tech, a computer programming business, in return for shares of stock. Star Tech’s records would show
d. Increased Assets (Cash) and increased Stockholders’ Equity (Capital Stock)
5. A company purchases a one-year insurance policy on June 1 for $1,260. The adjusting entry on December 31 is
c. debit Insurance Expense, $735, and credit Prepaid Insurance, $735
6. Using a perpetual inventory system, the entry to record the purchase of $30,000 of merchandise on account would include a
a. debit to Merchandise Inventory
7. A retailer purchases merchandise with a catalog list price of $15,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should the retailer debit to the Merchandise Inventory account?
c. 10500
8. Procedures designed to protect cash from theft and misuse from the time it is received until it can be deposited in a bank are called
c. preventive controls
9. The Brock Company acquired new machinery with a price of $13,562.00 by trading in similar old machinery and paying $12,205.80. The old machinery originally cost $8,970.00 and had accumulated depreciation of $7,176.00. In recording this transaction, what should Brock Company record?
d. a gain of $437.80
10. If Larger Company issues 2,000 shares of $6 par value common stock for $32,000, determine the result of the transaction on the accounts.
b. Paid-in Capital in excess of Par Value will be credited for $20,000