143.A company earned $3,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:
A.3%.
30%.
C.33%.
D.333%.
E.$7,000.
Profit Margin = Net Income/Net Sales
Profit Margin = $3,000/$10,000 = .30 = 30%
144.A company had $7,000,000 in net income for the year. Its net sales were $15,200,000 for the same period. Calculate its profit margin.
A.85.4%.
B.117.1%.
C.53.9%.
D.217.1%.
46.1%.
Profit Margin = Net Income/Net Sales
Profit Margin = $7,000,000/$15,200,000 = .461 = 46.1%
145.On July 1 Plum Co. paid $7,500 cash for management services to be performed over a two-year period. Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. On July 1 Plum should record:
A.A debit to an expense and credit to a prepaid expense for $7,500.
B.A debit to an expense and credit to Cash for $7,500.
A debit to a prepaid expense and a credit to Cash for $7,500.
D.A credit to a prepaid expense and a debit to Cash for $7,500.
E.A debit to Cash for $7,500 and a credit to an expense for $7,500.
146.An account linked with another account that has an opposite normal balance and is subtracted from the balance of the related account is a(n):
A.Accrued expense.
Contra account.
C.Accrued revenue.
D.Intangible asset.
E.Adjunct account.
147.The total amount of depreciation recorded against an asset over the entire time the asset has been owned:
A.Is referred to as depreciation expense.
Is referred to as accumulated depreciation.
C.Is shown on the income statement of the final period.
D.Is only recorded when the asset is disposed of.
E.Is referred to as an accrued asset.
148.Prior to recording adjusting entries, the Office Supplies account had a $359 debit balance. A physical count of the supplies showed $105 of unused supplies available. The required adjusting entry is:
A.Debit Office Supplies $105 and credit Office Supplies Expense $105.
B.Debit Office Supplies Expense $105 and credit Office Supplies $105.
Debit Office Supplies Expense $254 and credit Office Supplies $254.
D.Debit Office Supplies $254 and credit Office Supplies Expense $254.
E.Debit Office Supplies $105 and credit Supplies Expense $254.
149.If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees, the end-of-period adjusting entry to record the portion of those fees that has been earned is:
A.Debit Cash and credit Legal Fees Earned.
B.Debit Cash and credit Unearned Legal Fees.
Debit Unearned Legal Fees and credit Legal Fees Earned.
D.Debit Legal Fees Earned and credit Unearned Legal Fees.
E.Debit Unearned Legal Fees and credit Accounts Receivable.
150.On July 1, a company paid the $2,400 premium on a one-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the current year ended December 31?
$1,200.
B.$2,400.
C.$1,000.
D.$400.
E.$1,400.
$2,400 * 6/12 = $1,200
151.On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:
A.Debit Prepaid Insurance, $1,800; credit Cash, $1,800.
B.Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440.
C.Debit Prepaid Insurance, $360; credit Insurance Expense, $360.
Debit Insurance Expense, $360; credit Prepaid Insurance, $360.
E.Debit Insurance Expense, $360; credit Prepaid Insurance, $1,440.
$1,800 * 1/5 = $360 per year
152.Unearned revenue is reported in the financial statements as:
A.A revenue on the balance sheet.
A liability on the balance sheet.
C.An unearned revenue on the income statement.
D.An asset on the balance sheet.
E.A financing activity on the statement of cash flows.