Question : 81. A publishing company records the subscriptions paid in advance by : 1256791

 

 

81. A publishing company records the subscriptions paid in advance by its customers in an account called Unearned Subscription Revenue. If the company fails to make the end-of-period adjusting entry to record the portion of the subscriptions that have been earned, one effect will be: 

A. An overstatement of equity.

B. An overstatement of liabilities.

C. An understatement of assets.

D. An understatement of liabilities.

E. An overstatement of assets.

 

 

82. Profit margin is defined as: 

A. Revenues divided by net sales.

B. Net sales divided by assets.

C. Net income divided by net sales.

D. Net income divided by assets.

E. Assets divided by net sales.

 

 

83. A company earned $2,000 in net income for October. Its net sales for October were $10,000. Its profit margin is: 

A. 2%

B. 20%

C. 200%

D. 500%

E. $8,000

 

 

84. Which of the following accounts would be closed at the end of the accounting period?

A. Accounts Receivable

B. Unearned Consulting Fees

C. Fees Earned

D. Retained Earnings

E. Land

 

 

 

85. Compute profit margin ratio given the following information.

Cost of goods sold:$28,000

Net income:$21,400

Gross profit:$400,000 

A. 5%

B. 7%

C. 1.65%

D. 6.64%

E. 76.42%

 

 

 

86. The current ratio: 

A. Is used to measure a company’s profitability.

B. Is used to measure the relation between assets and long-term debt.

C. Measures the effect of operating income on profit.

D. Is used to help evaluate a company’s ability to pay its short-term obligations.

E. Is calculated by dividing current assets by equity.

 

 

87. Which of the following accounts would not be on the post- closing trial balance? 

A. Accounts Payable

B. Accounts Receivable

C. Common Stock

D. Dividends

E. Retained Earnings

 

 

88. On June 30, 2014, Apricot Co. paid $5,000 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses inasset accounts at the time of cash payment.

On June 30, 2014Apricot should record: 

A. A credit to an expense for $5,000.

B. A debit to an expense for $5,000.

C. A credit to a prepaid expense for $5,000.

D. A debit to a prepaid expense for $5,000.

E. A debit to Cash for $5,000.

 

 

89. On June 30, 2014, Apricot Co. paid $5,000 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.

The adjusting entry on December 31, 2014,for Apricot would include: 

 

A. A debit to Management ServicesExpense for $1,250.

B. A debit to Prepaid Management Services Expense for $1,250.

C. A credit to Management ServicesExpense for $3,750.

D. A debit to Prepaid Management Services Expense for $3,750.

E. A credit to Management Services Payable for $1,250.

 

 

90. Which of the following is true of accrued revenues? 

A. Accrued revenues at the end of one accounting period often result in cash  from customers in the next period.

B. Accrued revenues at the end of one accounting period often result in cash  in the next period.

C. Accrued revenues are also called unearned revenues.

D. Accrued revenues are listed on the balance sheet as liabilities.

E. Accrued revenues are recorded at the end of an accounting period because cash has already been received for revenues earned.