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Questions
Q:
A positive cross price elasticity of demand between two goods suggests that the goods areA) not related. B) complements.C) substitutes. D) both of unitary elasticity.
Q:
According to the above table, what is the absolute price elasticity of demand when price rises from $5.50 to $6?A) 4.00 B) 2.23 C) 1.21 D) 0.50
Q:
Shebing Corporation had $80,000 of $10 par value common stock outstanding on January 1, 2010, and retained earnings of $120,000 on the same date. During 2010 and 2011, Shebing earned net incomes of $30,000 and $45,000, respectively, and paid dividends of $8,000 and $10,000, respectively.
On January 1, 2010, Pentz Company purchased 25% of Shebing's outstanding common stock for $60,000. On January 1, 2011, Pentz purchased an additional 10% of Shebing's outstanding stock for $30,200. The payments made by Pentz in excess of the book value of net assets acquired were attributed to equipment, with each excess value amount depreciable over 8 years under the straight-line method.
Required:
1. What is the adjustment to Investment Income for depreciation expense relating to Pentz's Investment in Shebing in 2010 and 2011?
2. What will be the December 31, 2011 balance in the Investment in Shebing account after all adjustments have been made?
Q:
Which of the following statements is incorrect?
A.Higher financial leverage involves higher risk.
B.Risk is higher if a company has more liabilities.
C.Risk is higher if a company has higher assets.
D.The debt ratio is one measure of financial risk.
E.Lower financial leverage involves lower risk.
Q:
In the above figure, if a firm is cleaning up Q4 units of pollution, it is anA) efficient solution, because marginal social benefits are greater than marginal social costs. B) efficient solution, because marginal social benefits are equal to marginal social costs.C) inefficient solution, because marginal social benefits are greater than marginal social costs. D) inefficient solution, because marginal social costs are greater than marginal social benefits.
Q:
On January 2, 2010, Slurg Corporation paid $600,000 to acquire 20% interest in Padwaddy Inc. At that time, the book value of Padwaddy's stockholders' equity included $700,000 of common stock and $1,800,000 of retained earnings. All the excess purchase cost over the book value acquired was attributable to a patent with an estimated life of 10 years. Padwaddy paid $6,250 of dividends each quarter for the next two years, and reported net income of $180,000 for 2010 and $220,000 for 2011. Slurg recorded all activities related to their investment using the equity method.
Required:
1. Calculate Slurg's income from Padwaddy for 2010.
2. Calculate Slurg's income from Padwaddy for 2011.
3. Determine the balance of Slurg's Investment in Padwaddy account on December 31, 2011.
Q:
Which of the following is the formula used to calculate the debt ratio?
A.Total Equity/Total Liabilities.
B.Total Liabilities/Total Equity.
C.Total Liabilities/Total Assets.
D.Total Assets/Total Liabilities.
E.Total Equity/Total Assets.
Q:
Since the War on Poverty was started in 1965, the United States has spent more than $12 trillion on income maintenance programs. The effect has been toA) reduce poverty levels substantially. B) reduce poverty levels moderately.C) have virtually no effect on poverty levels.D) increase poverty substantially.
Q:
Pearl Corporation paid $150,000 on January 1, 2010 for a 25% interest in Sandlin Inc. On January 1, 2010, the book value of Sandlin's stockholders' equity consisted of $200,000 of common stock and $200,000 of retained earnings. All the excess purchase cost over book value acquired was attributable to a patent with an estimated life of 5 years. During 2010 and 2011, Sandlin paid $3,000 of dividends each quarter and reported net income of $60,000 for 2010 and $80,000 for 2011. Pearl used the equity method.
Required:
1. Calculate Pearl's income from Sandlin for 2010.
2. Calculate Pearl's income from Sandlin for 2011.
3. Determine the balance of Pearl's Investment in Sandlin account on December 31, 2011.
Q:
The MFC can be calculated by theA) change in total wages/change in labor. B) total wages/total labor.C) change in labor/change in total wages. D) total wages/change in labor.
Q:
Paster Corporation was seeking to expand its customer base, and wanted to acquire a company in a market area it had not yet served. Paster determined that the Semma Company was already in the market they were pursuing, and on January 1, 2011, purchased a 25% interest in Semma to assure access to Semma's customer base. Paster paid $800,000, at a time when the book value of Semma's net equity was $3,000,000. Semma's book values equaled their fair values except for the following items:
Book Fair
Value Value Difference
Inventories $150,000 $200,000 $ 50,000
Land 80,000 100,000 20,000
Building-net 220,000 180,000 (40,000)
Equipment-net 260,000 310,000 50,000
Required:
Prepare a schedule to allocate any excess purchase cost to identifiable assets and goodwill.
Q:
The debt ratio is used:
A.To measure the relation of equity to expenses.
B.To reflect the risk associated with a company's debts.
C.Only by banks when a business applies for a loan.
D.To determine how much debt a firm should pay off.
E.All of these.
Q:
Based on the information included in Question #102, the balance in the Andrea Conaway, Capital account reported on the Statement of Owner's Equity at the end of the month would be:
A.$31,400.
B.$39,200.
C.$31,150.
D.$40,175.
E.$30,875.
Q:
Union membership, in terms of percentage of the U.S. civilian labor force, A) has increased steadily since the passage of the Wagner Act.B) peaked about 1960 and has since declined. C) was over 50 percent in 1987.D) has increased dramatically since 1970.
Q:
Stilt Corporation purchased a 40% interest in the common stock of Shallow Company for $2,660,000 on January 1, 2011, when the book value of Shallow's net equity was $6,000,000. Shallow's book values equaled their fair values except for the following items:
Book Fair
Value Value Difference
Inventories $450,000 $500,000 $ 50,000
Land 100,000 450,000 350,000
Building-net 400,000 200,000 (200,000)
Equipment-net 350,000 400,000 50,000
Required:
Prepare a schedule to allocate any excess purchase cost to identifiable assets and goodwill.
Q:
The individual demand curve for an input such as labor to a firm would be the downward sloping portion of the firmʹsA) marginal physical product curve. B) marginal revenue product curve. C) marginal revenue curve. D) total revenue curve.
Q:
Andrea Conaway opened Wonderland Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books:
1) Conaway invested $13,500 cash in the business.
2) Conaway contributed $20,000 of photography equipment to the business.
3) The company paid $2,100 cash for an insurance policy covering the next 24 months.
4) The company received $5,700 cash for services provided during January.
5) The company purchased $6,200 of office equipment on credit.
6) The company provided $2,750 of services to customers on account.
7) The company paid cash of $1,500 for monthly rent.
8) The company paid $3,100 on the office equipment purchased in transaction #5 above.
9) Paid $275 cash for January utilities.
Based on this information, the balance in the cash account at the end of January would be:
A. $41,450.
B. $12,225
C. $18,700.
D. $15,250.
E. $13,500.
Q:
On January 1, 2011, Pailor Inc. purchased 40% of the outstanding stock of Saska Company for $300,000. At that time, Saska's stockholders' equity consisted of $270,000 common stock and $330,000 of retained earnings. Saska Corporation reported net income of $360,000 for 2011. The allocation of the $60,000 excess of cost over book value acquired is shown below, along with information relating to the useful lives of the items:
Overvalued receivables (collected in 2011) $(5,000)
Undervalued inventories (sold in 2011) 16,000
Undervalued building (4 years' useful life remaining at January 1, 2011) 24,000
Undervalued land 8,000
Unrecorded patent (6 years' economic life remaining at January 1, 2011) 18,000
Undervalued accounts payable (paid in 2011) (4,000)
Total of excess allocated to identifiable assets and liabilities 57,000
Goodwill 3,000
Excess cost over book value acquired $60,000
Required:
Determine Pailor's investment income from Saska for 2011.
Q:
On January 1 of the current year, Bob's Lawn Care Service reported owner's capital totaling $122,500. During the current year, total revenues were $96,000 while total expenses were $85,500. Also, during the current year Bob withdrew $20,000 from the company. No other changes in equity occurred during the year. If, on December 31 of the current year, total assets are $196,000, the change in owner's capital during the year was:
A.A decrease of $9,500.
B.An increase of $9,500.
C.An increase of $30,500.
D.A decrease of $30,500
E.Impossible to determine from the information provided.
Q:
Regarding the costs of regulation, which is a FALSE statement?
A) Airline safety standards have increased the price of air travel.
B) Automobile safety standards raise the price of cars.
C) Regulatory spending by federal agencies has decreased since 1970.
D) Pharmaceutical manufacturing safety standards raise the price of drugs.
Q:
Sandpiper Inc. acquired a 30% interest in Shore Corporation for $27,000 cash on January 1, 2011, when Shore's stockholders' equity consisted of $30,000 of capital stock and $20,000 of retained earnings. Shore Corporation reported net income of $18,000 for 2011. The allocation of the $12,000 excess of cost over book value acquired on January 1 is shown below, along with information relating to the useful lives of the items:
Overvalued receivables (collected in 2011) $(600)
Undervalued inventories (sold in 2011) 2,400
Undervalued building (6 years' useful life remaining at January 1, 2011) 3,600
Undervalued land 900
Unrecorded patent (8 years' economic life remaining at January 1, 2011) 3,200
Undervalued accounts payable (paid in 2011) (300)
Total of excess allocated to identifiable assets and liabilities 9,200
Goodwill 2,800
Excess cost over book value acquired $12,000
Required:
Determine Sandpiper's investment income from Shore for 2011.
Q:
If the product of one firm is complementary to another product of another firm, then the two productsA) are compatible. B) are substitutable.C) have a zero network effect. D) have a negative network effect.
Q:
During the month of March, Cooley Computer Services made purchases on account totaling $43,500. Also during the month of March, Cooley was paid $8,000 by a customer for services to be provided in the future and paid $36,900 of cash on its accounts payable balance. If the balance in the accounts payable account at the beginning of March was $77,300, what is the balance in accounts payable at the end of March?
A.$83,900.
B.$91,900.
C.$6,600.
D.$75,900.
E.$4,900.
Q:
On January 1, 2011, Pendal Corporation purchased 25% of the outstanding common stock of Sedda Corporation for $100,000 cash. Book value and fair value of Sedda's assets and liabilities at the time of acquisition are shown below.
Assets Book Fair
Values Values
Cash $40,000 $40,000
Accounts receivable 100,000 90,000
Inventories 40,000 50,000
Equipment 180,000 210,000
$360,000 $390,000
Liabilities & Equities
Accounts payable $110,000 $110,000
Note payable 50,000 40,000
Capital stock 100,000
Retained earnings 100,000
$360,000 $150,000
Required:
Prepare an allocation schedule for Pendal's investment in Sedda.
Q:
At the beginning of January of the current year, Thomas Law Center's ledger reflected a normal balance of $52,000 for accounts receivable. During January, the company collected $14,800 from customers on account and provided additional services to customers on account totaling $12,500. Additionally, during January one customer paid Thomas $5,000 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be:
A.$54,700.
B.$49,700.
C.$2,300.
D.$54,300.
E.$49,300.
Q:
Managers in oligopoly firms mustA) eliminate any barriers to entry if they hope to make short -run profits. B) advertise heavily in order to differentiate their product.C) anticipate the reaction of rival firms.D) establish many varieties of their products to cover the spectrum of consumer tastes.
Q:
Dotterel Corporation paid $200,000 cash for 40% of the voting common stock of Swamp Land Inc. on January 1, 2011. Book value and fair value information for Swamp on this date is as follows:
Book Fair
Assets Values Values
Cash $60,000 $60,000
Accounts receivable 120,000 120,000
Inventories 80,000 100,000
Equipment 340,000 400,000
$ 600,000 $ 680,000
Liabilities & Equities
Accounts payable $200,000 $200,000
Note payable 120,000 100,000
Capital stock 200,000
Retained earnings 80,000
$600,000 $300,000
Required:
Prepare an allocation schedule for Dotterel's investment in Swamp Land.
Q:
The two economists associated with the development of the theory of monopolistic competition wereA) Joan Robinson and Edward Chamberlin. B) David Hume and Adam Smith.C) John Neville Keynes and John Maynard Keynes.D) Carl Menger and Eugen Von Bohm-Bawerk.
Q:
Zed Bennett opened an art gallery and as a dealer completed these transactions:
1) Started the gallery, Artery, by investing $40,000 cash and equipment valued at $18,000.
2) Purchased $70 of office supplies on credit.
3) Paid $1,200 cash for the receptionist's salary.
4) Sold a painting for an artist and collected a $4,500 cash commission on the sale.
5) Completed an art appraisal and billed the client $200.
What was the balance of the cash account after these transactions were posted?
A. $12,230.
B. $12,430.
C. $43,300.
D. $43,430.
E. $61,430.
Q:
On January 1, 2010, Platt Corporation purchased a 30% interest in Sandig Company for $450,000. On this date, the fair values of Sandig's assets and liabilities are assumed to be the same as their book values. Platt will account for Sandig using the equity method. Sandig's adjusted trial balance at the date of acquisition and year end were as follows:
Debits December 31 January 1
Current assets $160,000 $120,000
Noncurrent assets 420,000 460,000
Expenses 390,000
Dividends (paid June 30) 40,000
Total $1,010,000
Credits
Current Liabilities $90,000 $120,000
Capital stock 250,000 250,000
Beginning Retained earnings 140,000 140,000
Sales 530,000
Total $1,010,000
Required:
1. What is Platt's investment income from Sandig for the year ending December 31, 2010?
2. Calculate Platt's investment in Sandig at year end December 31, 2010.
Q:
If Tim Jones, the owner of Jones Hardware proprietorship, uses cash of the business to purchase a family automobile, the business should record this use of cash with an entry to:
A.Debit Salary Expense and credit Cash.
B.Debit Tim Jones, Salary and credit Cash.
C.Debit Cash and credit Tim Jones, Withdrawals.
D.Debit Tim Jones, Withdrawals and credit Cash.
E.Debit Automobiles and credit Cash.
Q:
PQTC$1310$15$1214$25$1119$45$1025$75$930$115$835$165Refer to the above table. Given the demand and cost schedules, what is the profit -maximizing price for this monopolist?A) $9 B) $12 C) $11 D) $10
Q:
Wader's Corporation paid $120,000 for a 25% interest in Shell Company on July 1, 2010. No information is available on the fair value of Shell's assets and liabilities. Assume the equity method. Shell's trial balances at July 1, 2010 and December 31, 2010 were as follows:
Debits December 31 July 1
Current assets $100,000 $50,000
Noncurrent assets 300,000 310,000
Expenses 160,000 120,000
Dividends (paid in June) 40,000 40,000
Total $ 600,000 $ 520,000
Credits
Current Liabilities $60,000 $40,000
Capital stock (no change) 200,000 200,000
Retained earnings Jan. 1 100,000 100,000
Sales 240,000 180,000
Total $600,000 $520,000
Required:
1. What is Wader's investment income from Shell for the year ending December 31, 2010?
2. Calculate Wader's investment in Shell at year end December 31, 2010.
Q:
In the long run when a perfectly competitive firm experiences negative economic profits, A) the high barriers to entry prevent further competition.B) existing firms exit the industry.C) additional firms enter the industry.D) firms have no incentive to exit or enter the industry.
Q:
The following transactions occurred during July:
1) Received $900 cash for services provided to a customer during July.
2) Received $2,200 cash investment from Barbara Hanson, the owner of the business.
3) Received $750 from a customer in partial payment of his account receivable which arose from sales in June.
4) Provided services to a customer on credit, $375.
5) Borrowed $6,000 from the bank by signing a promissory note.
6) Received $1,250 cash from a customer for services to be rendered next year.
What was the amount of revenue for July?
A. $ 900.
B. $ 1,275.
C. $ 2,525.
D. $ 3,275.
E. $11,100.
Q:
Pancake Corporation saw the potential for vertical integration and purchases a 15% interest in Syrup Corp. on January 1, 2010, for $150,000. At that date, Syrup's stockholders' equity included $200,000 of $10 par value common stock, $300,000 of additional paid in capital, and $500,000 retained earnings. The companies began to work together and realized improved sales by both parties. On December 31, 2011, Pancake paid $250,000 for an additional 20% interest in Syrup Corp. Both of Pancake's investments were made when Syrup's book values equaled their fair values. Syrup's net income and dividends for 2010 and 2011 were as follows:
2010 2011
Net income $220,000 $330,000
Dividends $20,000 $30,000
Required:
1. Prepare journal entries for Pancake Corporation to account for its investment in Syrup Corporation for 2010 and 2011.
2. Calculate the balance of Pancake's investment in Syrup at December 31, 2011
Q:
During the month of February, Hoffer Company had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the January 31 beginning cash balance?
A.$700.
B.$1,100.
C.$2,900.
D.$0.
E.$4,300.
Q:
ʺA perfect competitor should maximize total revenues.ʺ Do you agree or disagree? Explain.
Q:
Pike Corporation paid $100,000 for a 10% interest in Salmon Corp. on January 1, 2010, when Salmon's stockholders' equity consisted of $800,000 of $10 par value common stock and $200,000 retained earnings. On December 31, 2011, after receipt of the year's dividends from Salmon, Pike paid $192,000 for an additional 20% interest in Salmon Corp. Both of Pike's investments were made when Salmon's book values equaled their fair values. Salmon's net income and dividends for 2010 and 2011 were as follows:
2010 2011
Net income $60,000 $140,000
Dividends $20,000 $40,000
Required:
1. Prepare journal entries for Pike Corporation to account for its investment in Salmon Corporation for 2010 and 2011.
2. Calculate the balance of Pike's investment in Salmon at December 31, 2011
Q:
On April 30, Holden Company had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May?
A.$ 5,000.
B.$47,000.
C.$52,000.
D.$57,000.
E.$32,000.
Q:
Total OutputTotal Costs0$101182213234245266297338389441051In the above table, the marginal cost of the seventh unit isA) $4.00. B) $5.00. C) $3.00. D) $33.00.
Q:
Plum Corporation paid $700,000 for a 40% interest in Satin Company on January 1, 2011 when Plum's stockholders' equity was as follows:
10% cumulative preferred stock, $100 par $ 500,000
Common stock, $10 par value 300,000
Other paid-in capital 400,000
Retained earnings 800,000
Total stockholders' equity $2,000,000
On this date, the book values of Plum's assets and liabilities equaled their fair values and there were no dividends in arrears.
Required: Calculate the amount recorded in the Investment in Satin Company and the amount of implied Goodwill in this transaction.
Q:
ʺStocks and bondsʺ are collectively known asA) securities. B) equities. C) real property. D) shares.
Q:
Firms must conduct impairment tests more frequently than annually when
A) other shareholders hold more than 50% interest.
B) a more-likely-than-not expectation exists that a reporting unit will be sold or disposed of.
C) a specific unit does not have publicly traded stock.
D) using the equity method.
Q:
On September 30, the Cash account of Value Company had a normal balance of $5,000. During September, the account was debited for a total of $12,200 and credited for a total of $11,500. What was the balance in the Cash account at the beginning of September?
A.A $0 balance.
B.A $4,300 debit balance.
C.A $4,300 credit balance.
D.A $5,700 debit balance.
E.A $5,700 credit balance.
Q:
Which of the following is NOT an advantage of a proprietorship?A) They are easy to form and dissolve.B) Decision-making resides with one person-the owner. C) Liability of the owner is unlimited.D) Profits are only taxed once.
Q:
In reference to the determination of goodwill impairment, which of the following statements is correct?
A) The goodwill impairment test under FASB 142 is a three-step process.
B) If the reporting unit's fair value exceeds its carrying value, goodwill is unimpaired.
C) Under FASB 142, firms must first compare carrying values (book values) at the firm level.
D) All of the above are correct.
Q:
A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:
A.Recorded as a debit to an unearned revenue account.
B.Recorded as a debit to a prepaid expense account.
C.Recorded as a credit to an unearned revenue account.
D.Recorded as a credit to a prepaid expense account.
E.Not recorded in the accounting records until the earnings process is complete.
Q:
The marginal rate of substitution measuresA) the impact of product substitution.B) the changes in marginal utility along the indifference curve.C) the consumerʹs willingness to substitute one product for another so that total utility will remain unchanged.D) the consumerʹs willingness to substitute one product for another so that marginal utility will remain unchanged.
Q:
Robert Haddon contributed $70,000 in cash and land worth $130,000 to open a new business, RH Consulting. Which of the following general journal entries will RH Consulting make to record this transaction?A.B.C.D.E.
Q:
In reference to intercompany transactions between an investor and an investee, when the investor can significantly influence the investee, which of the following statements is correct, assuming that the investor is using the equity method?
A) There is the presumption of arms-length bargaining between the related parties.
B) As long as the investor recognizes the effects of the transaction in its financial statements, it is not required to provide any additional disclosures.
C) In reporting its share of earnings and losses of an investee, the investor must eliminate the effect of profits and losses on the intercompany transactions until they are realized.
D) None of the above is correct.
Q:
An asset created by prepayment of an expense is:
A.Recorded as a debit to an unearned revenue account.
B.Recorded as a debit to a prepaid expense account.
C.Recorded as a credit to an unearned revenue account.
D.Recorded as a credit to a prepaid expense account.
E.Not recorded in the accounting records until the earnings process is complete.
Q:
The principle of diminishing marginal utility suggests thatA) total utility falls with additional consumption.B) total utility is usually negative.C) the consumer will never tire of additional units of a good.D) the rate at which utility increases diminishes as more of a good is consumed.
Q:
Pelican Corporation acquired a 25% interest in Seafare Incorporated at book value several years ago. Seafare declared $100,000 dividends in 2010 and reported its income for the year as follows:
Income from continuing operations $600,000
Loss on discontinued division (100,000)
Net income $500,000
Pelican's Investment in Seafare account for 2010 should increase by
A) $ 100,000.
B) $ 125,000.
C) $ 150,000.
D) $ 180,000.
Q:
If the cross price elasticity of demand between two goods is positive, then the two goods areA) substitutes. B) complements. C) independent. D) unrelated.
Q:
Wisconsin Rentals purchased office supplies on credit. The general journal entry made by Wisconsin Rentals will include a:
A.Debit to Accounts Payable.
B.Debit to Accounts Receivable.
C.Credit to Cash.
D.Credit to Accounts Payable.
E.Credit to Wisconsin Rentals, Capital.
Q:
Bart Company purchased a 30% interest in Simpson Corporation on January 1, 2008, and Bart accounted for its investment in Simpson under the equity method for the next 3 years. On January 1, 2011, Bart sold one-half of its interest in Simpson after which it could no longer exercise significant influence over Simpson. Bart should
A) continue to account for its remaining investment in Simpson under the equity method for the sake of consistency.
B) adjust the investment in Simpson account to one-half of its original amount and account for the remaining 15% interest using the equity method.
C) account for the remaining investment under the cost method, using the investment in Simpson account balance immediately after the sale as the new cost basis.
D) adjust the investment account to one-half of its original amount (one-half of the purchase price in 2008), and account for the remaining 15% investment under the cost method.
Q:
According to the above table, what is the absolute price elasticity of demand if price falls from $8.00 to $7.50?A) 4.00 B) 2.82 C) 1.80 D) 1.21
Q:
Management Services, Inc. provides services to clients. On May 1, a client prepaid Management Services $60,000 for 6-months services in advance. Management Services' general journal entry to record this transaction will include a
A.Debit to Unearned Management Fees for $60,000.
B.Credit to Management Fees Earned for $60,000.
C.Credit to Cash for $60,000.
D.Credit to Unearned Management Fees for $60,000.
E.Debit to Management Fees Earned for $60,000.
Q:
The income from an equity method investee is reported on one line of the investor company's income statement except when
A) the cost method is used.
B) the investee has extraordinary items.
C) the investor company is amortizing cost-book value differentials.
D) the investor company changes from the cost to the equity method.
Q:
Rocky Industries received its telephone bill in the amount of $300, and immediately paid it. Rocky's general journal entry to record this transaction will include a
A.Debit to Telephone Expense for $300.
B.Credit to Accounts Payable for $300.
C.Debit to Cash for $300.
D.Credit to Telephone Expense for $300.
E.Debit to Accounts Payable for $300.
Q:
In the above figure, the optimal level of pollution cleanup isA) Q1. B) Q2. C) Q3. D) Q4.
Q:
Panda Corporation purchased 100,000 previously unissued shares of Skunk Company's $10 par value common stock directly from Skunk for $2,200,000. Skunk's stockholders' equity immediately before the investment by Panda consisted of $3,000,000 of common stock and $4,800,000 in retained earnings. What is Panda's book value of equity in the net assets of Skunk?
A) $2,200,000
B) $2,500,000
C) $3,000,000
D) $3,333,000
Q:
Double-entry accounting is an accounting system:
A.That records each transaction twice.
B.That records the effects of transactions and other events in at least two accounts with equal debits and credits.
C.In which each transaction affects and is recorded in two or more accounts but that could include two debits and no credits.
D.That may only be used if T-accounts are used.
E.That insures that errors never occur.
Q:
The program that was created to provide rebates of Social Security taxes to low -income workers isA) Supplemental Security Income. B) Food Stamps. C) Earned Income Tax Credit Program. D) TANF.
Q:
Jacana Corporation paid $200,000 for a 25% interest in Lilypad Corporation's common stock on January 1, 2010, but was not able to exercise significant influence over Lilypad. During 2011, Jacana reported income of $120,000, excluding its income from Lilypad, and paid dividends of $50,000. Lilypad reported net income of $40,000 during 2011 and paid dividends of $20,000. Jacana should report net income for 2011 in the amount ofA) $115,000.B) $120,000.C) $125,000.D) $130,000.
Q:
Pyming Corporation accounts for its 40% investment in Sillabog Company using the equity method. On the date of the original investment, fair values were equal to the book values except for a patent, which cost Pyming an additional $40,000. The patent had an estimated life of 10 years. Sillabog has a steady net income of $20,000 per year and consistently pays out 40% of its net income as dividends to its shareholders. Which one of the following statements is correct?A) The net change in the investment account for each full year will be a debit of $8,000.B) The net change in the investment account for each full year will be a debit of $4,800.C) The net change in the investment account for each full year will be a debit of $800.D) The net change in the investment account for each full year will be a credit of $800.
Q:
A credit entry:
A.Increases asset and expense accounts, and decreases liability, owner's capital, and revenue accounts.
B.Is always a decrease in an account.
C.Decreases asset and expense accounts, and increases liability, owner's capital, and revenue accounts.
D.Is recorded on the left side of a T-account.
E.Is always an increase in an account.
Q:
A bilateral monopoly exists when there is aA) single buyer and many sellers in the market. B) single seller and many buyers in the market.C) large number of buyers and sellers in the market. D) single buyer and a single seller in the market.
Q:
A debit is used to record:
A.A decrease in an asset account.
B.A decrease in an expense account.
C.An increase in a revenue account.
D.An increase in the balance of an owner's capital account.
E.An increase in the balance of the owner's withdrawals account.
Q:
Which of the following is legal under the Taft-Hartley Act?A) Closed shops B) Collective bargainingC) Secondary boycotts D) Sympathy strikes
Q:
In the above figure, the marginal revenue product is represented by lineA) ʺa.ʺ B) ʺb.ʺ C) ʺc.ʺ D) ʺd.ʺ
Q:
Of the following accounts, the one that normally has a credit balance is:
A.Cash.
B.Office Equipment.
C.Sales Salaries Payable.
D.Owner, Withdrawals.
E.Sales Salaries Expense.
Q:
An investor uses the cost method of accounting for its investment in common stock. During the current year, the investor received $25,000 in dividends, an amount that exceeded the investor's share of the investee company's undistributed income since the investment was acquired. The investor should report dividend income of what amount?
A) $25,000
B) $25,000 less the amount in excess of its share of undistributed income since the investment was acquired
C) $25,000 less the amount that is not in excess of its share of undistributed income since the investment was acquired
D) None of the above is correct.
Q:
An account balance is:
A.The total of the credit side of the account.
B.The total of the debit side of the account.
C.The difference between the total debits and total credits for an account including the beginning balance.
D.Assets = liabilities + equity.
E.Always a credit.
Q:
The cost of complying with regulation
A) shifts the ATC curve upward.
B) shifts the MC curve downward.
C) shifts the demand curve to the right.
D) increases the productsʹ price elasticity of demand.
Q:
Jabiru Corporation purchased a 20% interest in Fish Company common stock on January 1, 2008 for $300,000. This investment was accounted for using the complete equity method and the correct balance in the Investment in Fish account on December 31, 2010 was $440,000. The original excess purchase transaction included $60,000 for a patent amortized at a rate of $6,000 per year. In 2011, Fish Corporation had net income of $4,000 per month earned uniformly throughout the year and paid $20,000 of dividends in May. If Jabiru sold one-half of its investment in Fish on August 1, 2011 for $500,000, how much gain was recognized on this transaction?
A) $278,950
B) $280,000
C) $280,950
D) $282,000
Q:
Which of the following statements is correct?
A.The left side of a T-account is the credit side.
B.Debits decrease asset and expense accounts, and increase liability, equity, and revenue accounts.
C.The left side of a T-account is the debit side.
D.Credits increase asset and expense accounts, and decrease liability, equity, and revenue accounts.
E.In certain circumstances the total amount debited need not equal the total amount credited for a particular transaction.
Q:
If two goods are complementary, then they have aA) low degree of product compatibility. B) high degree of product compatibility. C) high degree of negative network effect. D) low degree of negative network effect.
Q:
Sadie Corporation's stockholders' equity at December 31, 2010 included the following:
6% Preferred stock, $10 par value $1,000,000
Common stock, $1 par value 10,000,000
Other paid-in capital common 4,000,000
Retained earnings 4,000,000
$19,000,000
Pilga Corporation purchased a 30% interest in Sadie's common stock from other shareholders on January 1, 2011 for $5,800,000. What was the book value of Pilga's investment in Sadie on January 1, 2011?
A) $5,400,000
B) $5,700,000
C) $7,120,000
D) $7,440,000