123. Use the information in the adjusted trial balance presented below to calculate the current ratio for Taron Company, Inc.:
Account Title
|
Dr.
|
Cr.
|
Cash
|
23,000
|
|
Accounts receivable
|
16,000
|
|
Prepaid insurance
|
6,600
|
|
Equipment
|
100,000
|
|
Accumulated Depreciation—Equipment
|
|
50,000
|
Land
|
95,000
|
|
Accounts payable
|
|
17,000
|
Interest payable
|
|
2,400
|
Unearned revenue
|
|
5,000
|
Long-term notes payable
|
|
30,000
|
Common stock
Retained earnings
|
|
1,000
135,200
|
Totals
|
240,600
|
240,600
|
A. 1.87.
B. .54.
C. 3.92.
D. 1.77.
E. 1.60.
124. Which of the following statements regarding reporting under GAAP and IFRS is
not
true:
A. Both GAAP and IFRS define the initial asset value as historical cost for nearly all assets.
B. The definition of an asset under GAAP and IFRS involves three basic criteria.
C. Both GAAP and IFRS define the initial asset value as replacement value.
D. The definition of a liability under GAAP and IFRS involves three basic criteria.
E. After acquisition, one of two asset measurement systems is applied.
125. The following information is available for Brendon Company, Inc. before closing the accounts. What will be the amount in the Income Summary account that should be closed to Retained Earnings?
J. Retained earnings
|
112,000
|
Dividends
|
32,000
|
Fees earned
|
187,000
|
Depreciation Expense—Equipment
|
12,000
|
Wages expense
|
71,400
|
Interest expense
|
3,300
|
Insurance expense
|
11,700
|
Rent expense
|
24,200
|
A. $80,000.
B. $64,400.
C. $43,000.
D. $32,400.
E. $42,400.
126. Flagg, Inc. records adjusting entries at its December 31 year end. At December 31, employees had earned $12,000 of unpaid and unrecorded salaries. The next payday is January 3, at which time $30,000 will be paid. Prepare the January 1 journal entry to reverse the effect of the December 31 salary expense accrual.
A. Debit Salaries expense $12,000; credit Salaries payable $12,000.
B. Debit Salaries expense $18,000; debit Salaries payable $12,000; credit Cash $30,000.
C. Debit Salaries payable $18,000; credit Cash $18,000.
D. Debit Salaries payable $12,000, credit Salaries expense $12,000.
E. Debit Salaries expense $18,000; credit Salaries payable $18,000.
127. Flagg, Inc. records adjusting entries at its December 31 year end. At December 31, employees had earned $12,000 of unpaid and unrecorded salaries. The next payday is January 3, at which time $30,000 will be paid. Prepare the journal on January 3 to record payment assuming the adjusting and reversing entries were made on December 31 and January 1.
A. Debit Salaries expense $12,000; debit Salaries payable $18,000; credit Cash $30,000.
B. Debit Salaries expense $30,000; credit Cash $30,000.
C. Debit Salaries payable $30,000; credit Cash $30,000.
D. Debit Salaries expense $18,000, debit Salaries payable $12,000; credit Cash $30,000.
E. Debit Salaries expense $18,000; credit Cash $18,000.
128. Which of the following accounts would be included in a post-closing trial balance?
A. Accounts Receivable.
B. Dividends.
C. Consulting Fees Earned.
D. Depreciation Expense—Equipment.
E. Salaries Expense.
129. Palmer Company, Inc. is at the end of its annual accounting period. The accountant has journalized and posted all external transactions and all adjusting entries, had prepared an adjusted trial balance, and completed the financial statements. The next step in the accounting cycle is:
A. Prepare a work sheet.
B. Prepare reversing entries.
C. Close temporary accounts.
D. Prepare a post-closing trial balance.
E. Prepare an unadjusted trial balance.
Multiple Choice Questions
130. A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the:
A. Operating cycle of a business.
B. Time period assumption.
C. Going-concern assumption.
D. Matching principle.
E. Accrual basis of accounting.
131. Interim financial statements refer to financial reports:
A. That cover less than one year, usually spanning one, three, or six-month periods.
B. That are prepared before any adjustments have been recorded.
C. That show the assets above the liabilities and the liabilities above the equity.
D. Where revenues are reported on the income statement when cash is received and expenses are reported when cash is paid.
E. Where the adjustment process is used to assign revenues to the periods in which they are earned and to match expenses with revenues.
132. The length of time covered by a set of periodic financial statements, primarily a year for most companies, is referred to as the:
A. Fiscal cycle.
B. Natural business year.
C. Accounting period.
D. Business cycle.
E. Operating cycle.