When the obligations of a partnership canâ€™t be met, each partner is liable for the obligation. This characteristic is called B. unlimited liability. C. limited liability. D. mutual agreement. When a partnership is terminated, the assets are turned into cash, and obligations are paid. This process is called B. termination. C. realization. D. None of the above The accounting procedures for sole proprietorships are the same as for partnerships except B. for the liability section. C. for the revenue section. D. that the capital section is now divided per the number of partners. Mary and Jeff entered into a partnership agreement. However, the agreement didnâ€™t state how income and losses would be divided. The law states that income will be divided A. equally. B. according to investments. C. according to abilities. D. None of the above When a partnership is liquidated, the journal entry to pay the claims of creditors would include a debit to A. Cash and a credit to each individual creditor. B. each individual creditor and a credit to Cash. C. each individual partnerâ€™s capital account. Nathan Long is entering into a partnership with Terri. Nathan is investing $2,000 in cash and equipment currently on Nathanâ€™s books at $6,000, with an accumulated depreciation of $1,000. The equipment has a fair market value of $4,000. The entry to record Nathanâ€™s investment should be which of the following? A. Debit Cash $2,000; debit Equipment $6,000; credit Accumulated Depreciation $1,000; credit Nathanâ€™s Capital $7,000 D. Debit Cash $2,000; debit Equipment $4,000; credit Nathanâ€™s Capital $6,000 Which method of allocating profits and losses is based on a percentage of initial investment by the partners? A. Salary allowance B. Salary expense D. Interest allowance Lauraâ€™s investment in a new partnership includes $1,000 in cash and $5,000 of equipment. The new partnership is assuming $500 of Lauraâ€™s accounts payable. The partnership entry should be which of the following? A. Debit Lauraâ€™s Capital $5,500; debit Accounts Payable $500; credit Cash $1,000; credit Equipment $5,000 C. Debit Cash $1,000; debit Equipment $5,000; credit Accounts Payable $500; credit Lauraâ€™s Capital $5,500 D. Debit Lauraâ€™s Investment $5,500; credit Capital $5,500 Soy.com has 100 shares of $100, 6% cumulative nonparticipating preferred stock, and 1,000 shares of $10 par value common stock outstanding. The company paid $2,000 cash dividends, including one-year dividends in arrears to preferred stockholders. Preferred stockholders received A. $1,200. C. $182. D. $600. Which of the following would normally not appear in the Stockholdersâ€™ Equity section of the balance sheet? A. Cash B. Paid-In Capital D. Preferred Stock Rhubarb Corporationâ€™s outstanding stock is 100 shares of $100, 11% cumulative nonparticipating preferred stock, and 2,000 shares of $12 par value common stock. Rhubarb paid $1,600 cash dividends during the year. Common stockholders received B. $500. C. $2,500. D. $1,100. The Logan Company issued 140 shares of its $12 par value stock for $14 per share. The entry to record the receipt of cash and issuance of the stock would include a A. debit to Cash for $1,680 and a credit to Common Stock for $1,680. B. debit to Cash for $1,960. C. credit to Common Stock for $1,960. The major parts of the Stockholdersâ€™ Equity section of the balance sheet are A. Paid-In Capital and Retained Earnings. B. Stock and Retained Earnings. D. Authorized Stock and Preferred Stock. Barkleyâ€™s Resort had 2,000 shares of $20 par value common stock outstanding. On June 1, Barkleyâ€™s purchased 200 shares of treasury stock at $21 per share and later reissued them for $22 per share. Which amount of profit from the reissuance will be reported on the income statement? B. $200 C. $100 D. $0 A stock split, B. increases the par or stated value in proportion. C. reduces retained earnings. D. None of the above Which of the following dividend dates does not get a formal journal entry? A. Date of payment B. Date of declaration C. Date of record Appropriations to retained earnings are, B. disclosed in the notes to the financial statements. C. recorded as a contra-liability. D. a contra-stockholdersâ€™ equity. Declaration of a cash dividend was recorded by debiting Operations Expense and crediting Cash. This error would cause B. the periodâ€™s end liabilities to be overstated. C. the periodâ€™s end stockholdersâ€™ equity to be understated. D. None of the above The entry to record the distribution of the stock dividend would include, B. a debit to Common Stock Distributable. C. Both a and b D. None of the above When a bond issued at face value is retired, what is the journal entry A. Debit Bond Interest Expense; credit Cash B. Debit Bonds Payable; credit Cash D. Debit Cash; credit Bond Interest Expense A statement of cash flowâ€™s purpose is A. show the revenue earned. B. show the profits that were generated. D. show how cash was generated and used during an accounting period. The statement of cash flows provides information about all of the following except _______ activities. A. organizing B. investing D. financing On April 1, Braintree Corporation issued 10%, ten-year, $300,000 bonds at 106. The effective interest rate for these bonds is B. 9.43%. C. 4.7%. D. 5%. Transactions involving the purchase and sale of fixed assets would be considered _______ activities. Transactions involving the purchase and sale of fixed assets would be considered _______ activities. B. financing C. operating D. investing The lower the times interest earned ratio, the more likely A. a default in payment will occur. B. a business will need to borrow money. D. interest payments can be made. Normally the report prepared for a department is a/an A. cash flow statement. B. statement of equity. C. income statement. In a comparative balance sheet, the ending Cash was $315,000 in 2011 and $270,000 in 2012. The net increase or decrease from 2011 to 2012 is B. 14.3%. C. 26.4%. D. 16.7%. A line on the income statement that indicates what a department has left after covering cost of goods sold and direct expenses is B. the net income. C. the contribution margin. D. None of the above Noble Companyâ€™s accounts receivable turnover was 18.2 in Year 1 and 24.6 in Year 2. This change in accounts receivable turnover indicates that the A. company isnâ€™t selling its inventory as fast. B. company is selling its inventory faster. C. companyâ€™s customers are paying faster. When preparing an income statement showing departmental contribution margin, A. indirect expenses are combined with direct expenses. C. direct expenses are subtracted from contribution margin on sales. D. None of the above Departmental reports are useful for all of the following purposes except A. determining performance. B. determining future revenue. D. planning. Gross profit by department appears on the A. balance sheet. B. statement of retained earnings. D. income statement. The entry for indirect materials (such as glue, etc.) requisitioned for use in production is which of the following? B. Work-in-Process Inventory, Accounts Payable C. Work-in-Process Inventory, Raw Materials Inventory D. None of the above If direct labor for the month is $80,000 and overhead is applied based on 75% of direct labor dollars, what is the entry to apply overhead? A. Debit Work-in-Process Inventory $80,000; credit Payroll $80,000 C. Debit Work-in-Process Inventory $60,000; credit Overheadâ€”Applied $60,000 D. Debit Work-in-Process Inventory $80,000; credit Overheadâ€”Applied $80,000 If direct labor for the month is $40,000, overhead is applied based on direct labor, annual overhead is $600,000, and annual direct labor is $1,000,000, what is the entry to charge direct labor to production? A. Debit Work-in-Process Inventory $40,000; credit Payroll $40,000 B. Debit Overheadâ€”Applied $40,000; credit Work-in-Process Inventory $40,000 D. Debit Work-in-Process Inventory $66,000; credit Overheadâ€”Applied $66,000 The statement of cost of goods manufactured includes B. raw material costs. C. manufacturing overhead. D. All of the above Journal entries crediting Payroll and debiting Work-in-Process Inventory are made for A. administrative salaries. B. hourly manufacturing labor. D. raw materials Calculate the cost of goods sold when beginning finished goods inventory equals $70,000, ending finished goods inventory is $85,000, and cost of goods manufactured is $600,000. A. $615,000 B. $445,000 D. $585,000 What is the journal entry to record the direct labor summarized on the labor distribution report? A. Debit Finished Goods; credit Payroll B. Debit Work-in-Process; credit Payroll C. Debit Payroll; credit Direct Labor Direct labor includes the wages of A. an hourly worker producing the product. B. the shop foreman. D. administrators. Manufacturing overhead includes all manufacturing costs, A. including raw materials. C. excluding raw materials and direct labor. D. None of the above The entry to record the requisition of supplies from the storeroom would include which of the following? B. Debit to Overheadâ€”Applied; credit to Overheadâ€”Control C. Debit to Work-in-Process; credit to Overheadâ€”Control D. Debit to Overheadâ€”Control; credit to Supplies Inventory What is the journal entry to record issuing supplies from the storeroom? A. Debit Overheadâ€”Applied; credit Raw Materials Inventory B. Debit Overheadâ€”Control; credit Supplies Inventory D. Debit Overheadâ€”Applied; credit Supplies Inventory
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