41. The following comes from Simon Company's year-end financial statements: Sales $250,000, Cost of goods sold $100,000, Net income $12,500, Total assets $187,500 and Total liabilities $67,500. The return on equity (ROE) for the year is closest to?
A. 6.6%
B. 10.4%
C. 133.3%
D. 208.3%
(12,500/(187,500 - 67,500)
42. Turin Turbines had $250,000 worth of goods on hand at the beginning of the year. During the year they made purchases of $2,200,000 and sales of $4,200,000. At year-end they counted the inventory still on hand and had $212,500. What was their cost of sales for the year?
A. $1,787,500
B. $2,462,500
C. $2,200,000
D. $2,237,500
(250,000 + 2,200,000 - 212,500)
43. The manager preparing the financial statements receives a bonus based on net income. Which of the following accounting decisions could he use to increase his bonus?
A. Not recognize revenue until all the cash is collected.
B. Pick a longer life for the depreciation of fixed assets.
C. Pay out the maximum amount of dividends possible.
D. Delay the payment of expenses as long as possible.
44. The manager preparing the financial statements is trying to reduce net income to keep income taxes as low as possible. Which of the following accounting decisions could he use to decrease income?
A. Not recognize revenue until all the cash is collected.
B. Pick a longer life for the depreciation of fixed assets.
C. Pay out the maximum amount of dividends possible.
D. Delay the payment of expenses as long as possible.
Not recognizing revenue will reduce the income and taxes.
45. Which of the following is an example of an adjusting entry?
A. Collecting cash owing from a customer.
B. Paying interest expense on a loan.
C. Buying supplies on credit.
D. Recognizing the expired portion of prepaid rent.
46. Which of the following would be used to record depreciation expense for the period?
A. A journal entry
B. An adjusting entry
C. A closing entry
D. A temporary account
47. Which of the following would be used to record the expiry of prepaid rent during the period?
A. A journal entry
B. An adjusting entry
C. A closing entry
D. A temporary account
48. Which of the following is an example of an adjusting entry?
A. Recording the increase in the market value of land.
B. Recording the salary expense earned in the last week of the year, to be paid next year.
C. Recording the receipt of inventory in the last week of the year that will be paid next year.
D. Recording the payment of year-end dividends.
49. Davos Limited had $1,500 in prepaid rent at the beginning of the month, representing three months' worth of rent paid in advance. What is the correct adjusting entry at the end of the month?
A. Dr. Prepaid rent $500, Cr. Rent expense $500
B. Dr. Rent expense $500, Cr. Prepaid rent $500
C. Dr. Rent expense $1,000, Cr. Prepaid Rent $1,000
D. Dr. Prepaid rent $1,000, Cr. Rent expense $1,000
50. Geneva Inc, had opened for business on September 1st
but did not pay rent until September 15th, when they paid $6,000 in rent for the three months of September, October and November. How would the event be recorded on the September 30?
A. Dr. Rent expense $500, Dr. Prepaid rent $5,500, Cr. Cash $6,000
B. Dr. Rent expense $2,000 Dr. Prepaid rent $4,000 Cr. Cash $6,000
C. Dr. Rent expense $6,000, Cr. Cash $6,000
D. Dr. Prepaid rent $6,000, Cr. Cash $6,000