1) The percentage of FICA-Medicare multiplied by taxable earnings on the 941 is:

1) The percentage of FICA-Medicare multiplied by taxable earnings on the 941 is: 

A) 12.4%. 

B) 6.2%. 

C) 2.9%. 

D) 1.45%. 

2) The employer’s annual Federal Unemployment Tax Return is: 

A) Form 940EZ. 

B) Form 8109. 

C) Form 941. 

D) Form W-4. 

3) Workers’ Compensation Insurance is: 

A) paid by the employer to protect the employee against job-related injury or death. 

B) paid by the employee to protect himself/herself against no-njob-related accidents and death. 

C) paid by the employee to protect himself/herself against job-related accidents or death. 

D) paid by the employer to protect the employee against non-job-related injury or death. 

4) Gross sales equals: 

A) the total of cash sales and credit sales. 

B) net income plus gross profit. 

C) net sales minus sales discount. 

D) sales discount less net income. 

5) The normal balance of the Sales Returns and Allowances account is: 

A) a debit. 

B) zero. 

C) a credit. 

D) It does not have a normal balance. 

6) Jane’s Bakery sold 50 pies at $8.00 each to a charge customer, terms 2/10, n/30.  Which entry is required to record this transaction? 

A)Debit Accounts Receivable for $400; credit Bakery Sales for $400 

B) Debit Accounts Receivable for $392; credit Bakery Sales for $392 

C) Debit Cash for $392; credit Bakery Sales for $392 

D) Debit Accounts Receivable for $392; debit Sales Discount for $8, and credit Bakery Sales for $400 

7) Compass Outfitters sold goods for $300 to a charge customer. The customer returned for credit $120 worth of goods. Which entry is required to record the return transaction? 

A) Debit Sales Returns and Allowances $120; credit Accounts Receivable for  $120 

B) Debit Accounts Receivable $180; credit Sales Returns and Allowances for  $120 

C) Debit Sales $180; credit Sales Returns and Allowances $120 

D) Debit Sales Returns and Allowances for $120; credit Sales for $180 

8) Accounts of a single type are kept in this ledger: 

A) subsidiary ledger. 

B) supplemental ledger. 

C) additional ledger. 

D) None of these answers are correct

9) Payment for merchandise sold on credit for $100 subject to 2/10 n/30 was received within the discount period - $98 was received. This was recorded with a debit to Sales Discounts for $2, a debit to Cash for $98, and a credit to Accounts Receivable100, but no mention was made of the subsidiary ledger account. This error will cause: 

A) the net income for the period to be overstated. 

B) the net income for the period to be understated. 

C) the assets to be overstated. 

D) the control account to not agree with the subsidiary ledger. 

10) When the term F.O.B. shipping point is used, title passes: 

A) when the buyer unpacks the goods. 

B) when goods are shipped. 

C) when goods reach the halfway point. 

D) when goods reach the destination. 

11) A form used to request the purchase department to buy goods is a: 

A) sales invoice. 

B) purchase requisition. 

C) purchase invoice. 

D) receiving report. 

12) A form completed at the time the shipment arrives is the: 

A) receiving report. 

B) purchase order. 

C) sales invoice. 

D) purchase invoice. 

13) A list of creditors with ending balances is called: 

A) a trade list. 

B) a schedule of accounts payable. 

C) a list of suppliers. 

D) a schedule of accounts receivable. 

14) Magic Shoe offers a trade discount of 25%. If the list price is $1,200, the trade discount amount would be: 

A) $300    

B) $400.

C) $900. 

D) $200. 

15) Purchased office supplies on account. This will be recorded with: 

A) a debit to a liability and a credit to an asset. 

B) a credit to a liability and a debit to an asset. 

C) a credit to an asset and a debit to an expense. 

D) a debit to an asset and a credit to an expense. 

16) The journal entry to record the return of a purchase of inventory under the perpetual system includes a: 

A) credit to Merchandise Inventory. 

B) credit to Purchases. 

C) debit to Purchases Returns and Allowances. 

D) debit to Merchandise Inventory. 

17) The inventory method that matches old costs with current selling prices is: 

A) specific invoice. 

B) LIFO. 

C) FIFO. 

D) weighted-average. 

18) Deluth Corporation has a normal gross profit of 40%. The current year’s beginning inventory was $2,000, purchases were $5,000, and retail sales were $6,000. The estimated ending inventory under the gross margin method is: 

A) $3,600. 

B) $3,400.   

C) $3,450. 

D) $4,500. 

19) Supplies bought on account were returned for credit and recorded with a debit to Accounts Payable and a credit to Merchandise Inventory. This error would cause: 

A) the period’s net income to be understated. 

B) the period end cost of goods sold to be understated. 

C) the period end cost of goods sold to be overstated. 

D) None of these are correct

20) The ending inventory for this year is understated. This error would cause: 

A) the period’s net income will be understated. 

B) the period end assets will be overstated. 

C) the period’s net income will be overstated. 

D) None of these are correct. 

21) What would the depreciation be in year 2 for a computer system using the straight-line method when cost is $5,000, residual value is $1,000, and the expected life is 4 years? 

A) $1,250 

B) $800 

C) $2,000 

D) $1,000     

22) What would be the depreciation using double-declining-balance to compute the expense for year 1 of a machine costing $15,000, when residual value is $5,000, and useful life is 5 years? 

A) $4,000 

B) $6,000   

C) $3,600 

D) $2,400 

23) When equipment that is fully depreciated is discarded: 

A) debit Accumulated Depreciation and credit Equipment. 

B) credit the balance of accumulated depreciation. 

C) debit the original cost of the asset. 

D) None of these answers are correct. 

24) When an asset is exchanged for a similar asset and a gain results, under accounting rules the gain is: 

A) subtracted from the cost of the new asset. 

B) credited to Gain on Exchange of an Asset. 

C) absorbed into the cost of the new asset. 

D) recorded in the other income section of the income statement. 

25) Salvage value was ignored using units-of-production depreciation. This error would cause: 

A) the period’s net income will be understated. 

B) the period’s net income will be overstated. 

C) the period end assets will be overstated. 

D) None of these are correct.