Team Shirts, Inc. pays 600 for insurance. This transaction ________.
A) causes total assets to increase and total liabilities to increase
B) causes total liabilities to increase and retained earnings to decrease
C) is an investing activity
D) is an operating activity
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Q. 2) Comparing a company's cash balance in its accounting records with the bank statement is called ________.
A) a bank reconciliation
B) an external audit
C) an internal audit
D) adjusting the books
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Q. 3) A receipt called a petty cash voucher should be prepared for every payment from the petty cash fund.
a. True
b. False
Indicate whether the statement is true or false
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Q. 4) Slumbers, Inc. borrows 3,000 at 12 from a bank on September 1, 2012 and agrees to pay the interest and principal in two years. Which of the following will be reported on the year ended December 31, 2012 financial statements?
A) The balance sheet will report Interest payable of 120.
B) The income statement will report Interest expense of 0.
C) The statement of cash flows will report Cash paid for interest of 120.
D) The income statement will report Interest expense of 360.
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Q. 5) When goods are shipped FOB destination and the seller pays the freight charges, the buyer
a. journalizes a reduction for the cost of the merchandise
b. journalizes a reimbursement to the seller
c. does not take a discount
d. makes no journal entry for the freight
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Q. 6) How much interest will accrue over ten months on a 50,000, 6 loan?
A) 3,000
B) 3,600
C) 300
D) 2,500
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