This document contains a series of multiple choice questions testing accounting concepts related to financial statements, debits and credits, inventory valuation, and the matching and accrual principles. The questions cover topics like the components of the balance sheet and income statement, examples of debits and credits for different accounts, inventory cost flow assumptions, and calculating net income. The document also includes two short answer questions asking to explain debits and credits and prepare an income statement with calculations.

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1.Question :(TCO A, B, C) External users want answers to all of the
following questions except:
Points Received:
3 of 3
2.Question :(TCO C) Borrowing money is an example of a(n):
Points Received:
3 of 3
3.Question :(TCO C) Buying and selling products are examples of:
Points Received:
3 of 3
4.Question :(TCO A) Resources owned by a business are referred to as:
Points Received:
3 of 3
5.Question :(TCO C) Jamie Company recorded the following cash
transactions for the year:

2. Paid $70,000 for salaries.
Paid $20,000 to purchase office equipment.
Paid $6,000 for utilities.
Paid $7,000 in dividends.
Collected $130,000 from customers.
What was Jamie's net cash provided by operating activities?
Points Received:
3 of 3
6.Question :(TCO A) In a classified balance sheet, assets are usually
classified as:
Points Received:
3 of 3
7.Question :(TCO A) An intangible asset:
Points Received:
3 of 3
8.Question :(TCO A) These are selected account balances on December
31, 2010.
-Land (location of the corporation's office building) $50,000
-Land (held for future use) 75,000
-Corporate Office Building 300,000
-Inventory 100,000
-Equipment 225,000
-Office Furniture 50,000
-Accumulated Depreciation 150,000

3. What is the total NET amount of property, plant, and equipment that will
appear on the balance sheet?
Points Received:
3 of 3
9.Question :(TCO B) For 2010, Ford Corporation reported net income of
$15,000; net sales $200,000; and average share outstanding 6,000. There
were no preferred stock dividends. What was the 2010 earnings per
share?
Points Received:
3 of 3
10.Question :(TCO B) Morten Corporation had beginning retained
earnings of $764,000 and ending retained earnings of $833,000. During
the year they issued common stock totaling $47,000. There were no
dividends issued. What was their net income for the year?
Points Received:
3 of 3
11.Question :(TCO D) Is the purchase of equipment treated as an
expense at the time of purchase? Why or why not?
Points Received:
3 of 3
12.Question :(TCO D) The left side of an account is:
Points Received:
3 of 3

4. 13.Question :(TCO D) A credit is not the normal balance for which
account listed below?
Points Received:
3 of 3
14.Question :(TCO D) A debit is not the normal balance for which
account listed below?
Points Received:
3 of 3
15.Question :(TCO D) Which pair of accounts follows the rules of debit
and credit in relation to increases and decreases in the same manner?
Points Received:
3 of 3
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1.Question :(TCO E) The time period assumption states that:
Points Received:
3 of 3
2.Question :(TCO E) The matching principle matches:
Points Received:
3 of 3
3.Question :(TCO E) Expenses sometimes make their contribution to
revenue in a different period than when the expense is paid. When wages
are incurred in one period and paid in the next period, this often leads to

5. which account appearing on the balance sheet at the end of the first
period?
Points Received:
3 of 3
4.Question :(TCO E) The following is selected information from J
Corporation for the fiscal year ending October 31, 2010.
Cash received from customers $75,000
Revenue earned 87,500
Cash paid for expenses 42,500
Expenses incurred 50,000
Based on the accrual basis of accounting, what is J Corporation's net
income for the year ending October 31, 2007?
Points Received:
3 of 3
5.Question :(TCO E) The general term employed to indicate an expense
that has not been paid or revenue that has not been received and has not
yet been recognized in the accounts is:
Points Received:
3 of 3
6.Question :(TCO A, B) Which of the following expressions is
incorrect?
Points Received:
3 of 3

6. 7.Question :(TCO B) Hunter Company purchased merchandise
inventory with an invoice price of $6,000 and credit terms of 2/10, n/30.
What is the net cost of the goods if Hunter Company pays within the
discount period?
Points Received:
3 of 3
8.Question :(TCO A, B) Jake's Market recorded the following events
involving a recent purchase of merchandise:
Received goods for $20,000, terms 2/10, n/30.
Returned $400 of the shipment for credit.
Paid $100 freight on the shipment.
Paid the invoice within the discount period.
As a result of these events, the company's merchandise inventory:
Points Received:
3 of 3
9.Question :(TCO A) The Freight-in account:
Points Received:
3 of 3
10.Question :(TCO A) Barnes Company is taking a physical inventory
on March 31, the last day of its fiscal year. Which of the following must
be included in this inventory count?
Points Received:
3 of 3

7. 11.Question :(TCO A) Of the following companies, which one would
not likely employ the specific identification method for inventory
costing?
Points Received:
3 of 3
12.Question :(TCO A) Which of the following statements is correct with
respect to inventories?
Points Received:
3 of 3
13.Question :(TCO A) In a period of declining prices, which of the
following inventory methods generally results in the lowest balance
sheet figure for inventory?
Points Received:
3 of 3
14.Question :(TCO B) Which of the following is a true statement about
inventory systems?
Points Received:
3 of 3
15.Question :(TCO B) Two categories of expenses in merchandising
companies are:
Points Received:
3 of 3
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8. 1.Question :(TCO D) A classmate is considering dropping his
accounting class because he cannot understand the rules of debits and
credits.
Explain the rules of debits and credits in a way that will help him
understand them. Cite examples for each of the major sections of the
balance sheet (assets, liabilities and stockholders' equity) and the income
statement (revenues and expenses).
Points Received:
24 of 25
Ok
2.Question :(TCOs B & E) The Caltor Company gathered the following
condensed data for the year ended December 31, 2010:
Cost of goods sold $ 710,000
Net sales 1,279,000
Administrative expenses 239,000
Interest expense 68,000
Dividends paid 38,000
Selling expenses 45,000
Instructions:Prepare a multiple-step income statement for the year ended
December 31, 2010. Compute the profit margin ratio and gross profit
rate. Caltor Company s assets at the beginning of the year were
$770,000 and were $830,000 at the end of the year. To qualify for full
credit, you must state the formula you are using, show your
computations and explain your findings.