c. Dividends declared
d. Rent expense
9. The sale of merchandise to a customer partly for cash and partly on account would require
which of the following entries?
a. Dr. Accounts receivable, Dr. Cash, Cr. Sales revenue
b. Dr. Cash, Dr. Accounts payable, Cr. Sales revenue
c. Dr. Cash, Cr. Sales revenue
d. Dr. Accounts payable, Dr. Accounts receivable, Cr. Sales revenue
10. The purchase of land for a combination of cash and a 15-year note would require which of
the following entries?
a. Dr. Land, Dr. Cash, Cr. Long-term note payable
b. Dr. Land, Cr. Cash, Cr. Long-term note payable
c. Dr. Cash, Cr. Long-term note payable, Cr. Land
d. Dr. Land, Dr. Long-term note payable, Cr. Cash
11. Normal operating activities are divided into which two main groups?
a. Revenues and expenses
b. Operating and Non-Operating Revenues
c. Assets and Liabilities
d. Debits and Credits
12. When a firm has substantially completed the earnings process, a revenue is said to be:
13. Revenue is recognized at the time of collection under the:
a. Completed contract method
b. Point of sale method
c. Percentage of completion method
d. Instalment method
14. Which of the following would equal cash received from customers?
a. Sales plus increase in accounts receivable
b. Sales plus increase in accounts payable
c. Sales plus decrease in accounts receivable
d. Sales plus decrease in accounts payable
15. Which of the following would equal the purchases of inventory?
a. Inventory plus change in accounts payable
b. Cost of goods sold plus change in inventory
c. Purchases plus change in accounts payable
d. Inventory plus change in purchases
Questions 16 to2 35 are each worth two marks.
16. In 2008 Indec Ltd. earned gross revenues of $1,500,000 and had net income of $419,000.
During 2008, the company had 50,000 common shares outstanding and its average
shareholders equity was $2,620,000. Indec’s basic earnings per share for 2008 was:
17. If a company had $1,500 in inventory at the beginning of the month, made purchases of
$5,000 during the month, and at the end of the month had $1,200 in inventory still on
hand, the Cost of Goods Sold to be recorded on the Income Statement for the month