ACC 201 Final
Net Sales = ?
Sales Revenue - Returns & Allowances - Sales Discounts
Revenues: A) decrease assets. B) increase stockholders' equity. C) increase liabilities. D) decrease expenses.
B. increase stockholders equity
If total liabilities decreased by $25,000 and stockholder's equity increased by $5,000 during a period of time, then total assets must change by what amount and direction using that same time period?
$20,000 decrease
Straight line method = ?
(Cost- Residual Value) ÷ estimated useful life
Earnings per share = ?
(Net Income- Preferred Dividends) ÷ Weighted Average Common Shares Outstanding
What are the 9 steps in the accounting cycle?
1. Analyze business transactions 2. Journalize 3. Post 4. Trial Balance 5. Journalize and Post Adjusting Entries 6. Adjusted Trial Balance 7. Financial Statements 8. Closing Entries 9. Post-Closing Trial Balance
A company issued $300,000, 10-year, 10 percent bonds at 105. 1. Use the information above to answer the following question. What is the issue price of these bonds? A. $300,000 B. $285,000 C. $315,000 D. $330,000 2. Use the information above to answer the following question. What is the total amount of interest expense that will be recorded over the life of these bonds? A. $300,000 B. $285,000 C. $315,000 D. $330,000
1. C. $315,000 300,000 x 1.05 = 315,000 2. B. $285,000 Cash interest paid is 300,000 * .10 = 30,000 per year 30,000 x 10 years = 300,000 to calculate the interest expense you need to subtract the premium of $15,000. 300,000 - 15,000 = 285,000
What are the 5 Enhancing Qualities?
1. Comparability 2. Verifiable 3. Understandability 4. Consistency 5. Timely
Days in Inventory = ?
365 ÷ Inventory Turnover Ratio
Wang Company had the following transactions during 2016: Sales of $10,800 on account Collected $4,800 for services to be performed in 2017 Paid $2,600 cash in salaries Purchased airline tickets for $600 in December for a trip to take place in 2017 What is Wang's 2016 net income using cash basis accounting? a. $1,600 b. $2,800 c. $13,000 d. $2,200
A. $1,600
During 2016, a company provided services for cash of $21,000 and services on credit of $15,000. The company collected accounts receivable of $8,000 and incurred operating expenses of $22,700, $14,000 of which were paid during the year. The amount of net income (loss) for the year is: A) $13,300 B) ($1,700) C) $22,700 D) $6,300
A. $13,300
The Tasman Company purchased land for $150,000. The cost to demolish the existing building and prepare the land for a new building was $20,000. The real estate commission paid to buy the land was $9,000. What amount should be recorded in Tasman's accounting records for the cost of the land? A. $179,000 B. $150,000 C. $159,000 D. $170,000
A. $179,000 *include all
On January 1, Baker Co. purchased equipment for $100,000. It has an estimated useful life of five years and its residual value is $10,000. The company has a calendar year-end. Using the straight-line method, depreciation expense for the first year of its life equals: A. $18,000. B. $20,000. C. $36,000. D. $40,000.
A. $18,000
Because interest rates have fallen, a company retires bonds which had been issued at their face value of $200,000. The company bought the bonds back at 97. The journal entry to record this retirement includes a debit of: A. $200,000 to Bonds Payable, a credit of $6,000 to Gain on Bond Retirement, and a credit of $194,000 to Cash. B. $194,000 to Bonds Payable, a debit to Gain on Bond Retirement of $6,000, and a credit of $200,000 to Cash. C. $200,000 to Bonds Payable, a credit of $6,000 to Interest Expense, and a credit of $194,000 to Cash. D. $194,000 to Bonds Payable and a credit of $194,000 to Cash.
A. $200,000 to Bonds Payable, a credit of $6,000 to Gain on Bond Retirement, and a credit of $194,000 to Cash.
On average, 5% of total accounts receivable has been uncollectible in the past. At the end of the year, the balance of accounts receivable is $100,000 and the allowance for doubtful accounts has an unadjusted credit balance of $500. Credit sales during the year were $150,000. Using the aging of accounts receivable method, the estimated bad debt expense would be: A. $4,500. B. $5,000. C. $7,000. D. $7,500.
A. $4,500 ($100,000 * .05) - 500
Your company sells $50,000 of one-year, 10% bonds for an issue price of $52,000. The journal entry to record this transaction will include a credit to Bonds Payable in the amount of: A. $50,000. B. $52,000. C. $55,000. D. $57,000.
A. $50,000
The average cost method always produces net income _______ FIFO and LIFO A. Between B. Below C. Above
A. Between
In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the a. FIFO method. b. LIFO method. c. average-cost method. d. tax method.
A. FIFO method
When interest is accrued on a note payable, but not paid, the A. Interest Expense account is increased; the Interest Payable account is increased. B. Interest Expense account is decreased; the Interest Payable account is increased. C. Notes Payable account is increased; the Interest Payable account is increased. D. Interest Expense account is increased; the Interest Payable account is decreased
A. Interest Expense account is increased; the Interest Payable account is increased.
If a purchaser using a perpetual inventory system pays the transportation costs, then the a. Inventory account is increased. b. Inventory account is not affected. c. Freight-Out account is increased. d. Delivery Expense account is increased.
A. Inventory account is increased
On Time Computer Repair uses accrual basis accounting. A computer was repaired on May 15. The customer picked up the computer on June 1 and mailed the payment on June 5. On Time Computer Repair received the check in the mail on June 10. The revenue should be recognized as earned on which date? A) May 15 B) August 1 C) June 5 D) June 10
A. May 15
Which account will have a zero balance after closing entries have been journalized and posted? a. Service revenue. b. Supplies. c. Prepaid Insurance. d. Accumulated Depreciation.
A. Service revenue
In a classified balance sheet, assets and liabilities are classified according to whether they are current or noncurrent. Which of the following statements is not correct about current assets? A) They will be acquired within one year. B) They will be converted to cash within one year. C) They will be sold within one year. D) They will be used up within one year.
A. They will be acquired within one year
Because interest rates have fallen, a company retires bonds which had been issued at their face value of $200,000. The company bought the bonds back at 97. This retirement would be recorded with a: A. debit of $200,000 to Bonds Payable, a credit of $6,000 to Gain on Bond Retirement, and a credit of $194,000 to Cash. B. debit of $194,000 to Bonds Payable, a debit to Gain on Bond Retirement of $6,000, and a credit of $200,000 to Cash. C. debit of $200,000 to Bonds Payable, a credit of $6,000 to Interest Expense, and a credit of $194,000 to Cash. D. debit of $194,000 to Bonds Payable and a credit of $194,000 to Cash.
A. debit of $200,000 to Bonds Payable, a credit of $6,000 to Gain on Bond Retirement, and a credit of $194,000 to Cash
The Accounts Payable account: A. has a normal credit balance B. is increased by a debit C. is an asset D. is increased when a company receives cash from customers
A. has a normal credit balance
When costs to purchase inventory are rising, using LIFO leads to reporting ______ cost of goods sold and ______ net income than FIFO. A) higher; lower B) higher; higher C) lower; lower D) lower, higher
A. higher; lower
If goods in transit are shipped FOB destination a. the seller has legal title to the goods until they are delivered. b. the buyer has legal title to the goods until they are delivered. c. the transportation company has legal title to the goods while the goods are in transit. d. no one has legal title to the goods until they are delivered.
A. the seller has legal title to the goods until they are delivered
Accounting Equation = ?
Assets= Liabilities + Stockholders Equity
In a period of inflation, the cost flow method that results the lowest income taxes is the A. FIFO method B. LIFO method C. average cost method D. gross profit method
B. LIFO method
Understating ending inventory will overstate A. assets B. cost of goods sold C. net income D. owner's equity
B. cost of goods sold
A corporate bond with a face value of $1,000 is issued at 107. This means that the bond actually sold for: A. $107 and the stated interest rate was higher than the market interest rate. B. $1,070 and the stated interest rate was higher than the market interest rate. C. $107 and the stated interest rate was lower than the market interest rate. D. $1,070 and the stated interest rate was lower than the market interest rate.
B. $1,070 and the stated interest rate was higher than the market interest rate.
On October 1, 2015, Bill Burns borrowed $170,000 from the New National Bank on a 6-month, 6% note. Assuming no interest has been recorded yet, what is the amount of accrued interest as of December 31, 2015? A. $5,100 B. $2,550 C. $10,200 D. $7,650
B. $2,550
The amount of uncollectible accounts at the end of the year is estimated to be $36,500, using the aging of accounts receivable method. The balance in the Allowance of Doubtful Accounts account is an $12,600 credit before adjustment. What is the adjusted balance of the Allowance for Doubtful Accounts at the end of the year? A. $49,100 B. $36,500 C. $23,900 D. $12,600
B. $36,500
On June 15, Oakley Inc. sells inventory on account to Sunglass Hut (SH) for $1,000, terms 2/10, n/30. On June 20, SH returns to Oakley inventory that SH had purchased for $300. On June 24, SH completely fulfills its obligation to Oakley by making a cash payment. What is the amount of cash paid by SH to Oakley? A) $680 B) $686 C) $700 D) $1,000
B. $686
Cary Inc. reported net credit sales of $430,000 for the current year. The unadjusted credit balance in its Allowance for Doubtful Accounts is $825. The company has experienced bad debt losses of 2% of credit sales in prior periods. Using the percentage of credit sales method, what amount should the company record as an estimate of Bad Debt Expense? A. $2,475 B. $8,600 C. $3,300 D. $9,425
B. $8,600
Tidwell Company's goods in transit at December 31 include sales made (1) FOB destination (2) FOB shipping point and purchases made (3) FOB destination (4) FOB shipping point. Which items should be included in Tidwell's inventory at December 31? a. (2) and (3) b. (1) and (4) c. (1) and (3) d. (2) and (4)
B. (1) and (4) *i don't really get why, but just go with it
National Corp. has 100,000 shares authorized, 70,000 shares issued and 5,000 shares of treasury stock. How many shares does National Corp. have outstanding? A. 5,000 B. 65,000 C. 75,000 D. 95,000
B. 65,000
Which of the following would not be classified as a current asset? A) Cash B) Accounts Payable C) Supplies D) Inventory
B. Accounts Payable
A company declared a $0.80 per share cash dividend. The company has 100,000 shares authorized, 45,000 shares issued, and 42,000 shares of common stock outstanding. What is the journal entry to record the dividend declaration? A. Debit Dividends and credit Dividends Payable for $36,000 B. Debit Dividends and credit Dividends Payable for $33,600 C. Debit Dividends Payable and credit Cash for $36,000 D. Debit Dividends Payable and credit Cash for $80,000
B. Debit Dividends and credit Dividends Payable for $33,600 =common stock outstanding * price per share
Extraordinary repairs: A. are revenue expenditures. B. extend an asset's life beyond the original estimate. C. are expensed as incurred. D. are credited to Accumulated Depreciation.
B. Extend an asset's life beyond the original estimate
Which of the following statements regarding issued and outstanding stock is true? A. Outstanding stock includes all stock issued by a corporation. B. Issued stock equals the sum of outstanding stock and treasury stock. C. Issued stock is equal to authorized stock. D. Outstanding stock includes stock in the hands of investors, as well as treasury stock in the hands of the corporation.
B. Issued stock equals the sum of outstanding stock and treasury stock
IBM is planning to issue $1,000 bonds with a stated interest rate of 7% and a maturity date of July 15, 2022. If interest rates fall in the economy so that similar financial investments pay 5%, IBM will: A. not be able to issue the bonds because no one will buy them. B. receive a higher issue price as buyers compete for the bonds. C. have to accept a lower issue price to attract buyers. D. have to reprint the bond certificates to change stated interest rate to 5%.
B. receive a higher issue price as buyers compete for the bonds
Your company is planning to issue $1,000 bonds with a stated interest rate of 7% and a maturity date of July 15, 2022. If interest rates fall in the economy so that similar financial investments pay 5%, your company will: A. not be able to issue the bonds because no one will buy them. B. receive a higher issue price as buyers compete for the bonds. C. have to accept a lower issue price to attract buyers. D. have to reprint the bond certificates to change stated interest rate to 5%.
B. receive a higher issue price as buyers compete for the bonds.
An objective of the expense recognition principle ("matching") is to have bad debt expense debited in: A. The same period that the related accounts receivable is determined to be uncollectible B. the same period the related credit sales are recorded C. a later period after the related credit sales are recorded D. the period that a customer eventually becomes bankrupt
B. the same period the related credit sales are recorded * expense always follows revenue
Cost of goods sold = ?
Beginning inventory + Purchases - Ending inventory
Depreciation is the process of: A) valuing an asset at its fair value. B) increasing the value of an asset over the periods in which it is used. C) allocating the cost of an asset to the periods in which it is used. D) writing down an asset to its real value each accounting period.
C) allocating the cost of an asset to the periods in which it is used
Purrfect Pets, Inc. makes a $10,000 payment on account. This would result in a: A) $10,000 credit to Cash and a $10,000 credit to Accounts Payable. B) $10,000 debit to Cash and a $10,000 debit to Accounts Payable. C) $10,000 debit to Accounts Payable and a $10,000 credit to Cash. D) $10,000 debit to Cash and a $10,000 credit to Accounts Payable.
C. $10,000 debit to Accounts Payable and a $10,000 credit to Cash
A company issues 1 million shares of common stock with a par value of $0.02 for $15 a share. The entry to record this transaction includes a debit to Cash for: A. $20,000 and a credit to Common Stock for $20,000. B. $15,000,000 and a credit to Common Stock for $15,000,000. C. $15,000,000, a credit to Common Stock for $20,000, and a credit to Additional Paid-in Capital for $14,980,000. D. $20,000, a debit to Capital Receivable for $14,980,000, a credit to Common Stock for $20,000, and a credit to Additional Paid-in Capital for $14,980,000.
C. $15,000,000, a credit to Common Stock for $20,000, and a credit to Additional Paid-in Capital for $14,980,000.
Total doubtful accounts at the end of the year are estimated to be $27,500 based on an aging of accounts receivable. If the balance in the Allowance for Doubtful Accounts is a $8,500 debit before adjustment, what is current year's Bad Debt Expense? A. $27,500 B. $19,000 C. $36,000 D. $ 8,500
C. $36,000
A company sells a long-lived asset that originally cost $200,000 for $50,000 on December 31, 2016. The Accumulated Depreciation account had a balance of $110,000 after the current year's depreciation of $45,000 had been recorded. The company should recognize a: A. $100,000 loss on sale. B. $40,000 gain on sale. C. $40,000 loss on sale. D. $25,000 loss on sale.
C. $40,000 Loss *Gain/ Loss= Sales Proceeds - Book Value
A company issued 600 shares of $50 par value stock for $45,000. What is the total amount of contributed capital? A. $30,000 B. $15,000 C. $45,000 D. $50
C. $45,000 *Contributed Capital= Value of Stock
On July 1, 2016, Empire Inc. lends $9,000 to a customer and receives a 12% note due in two years. Interest is due in full on July 1, 2018, the due date of the note. What is the amount of Interest Revenue that will be reported on Empire's income statement for the year ended December 31, 2016?. A. $2,160 B. $1,080 C. $540 D. $630
C. $540
On average, 5% of credit sales has been uncollectible in the past. At the end of the year, the balance of accounts receivable is $100,000 and the allowance for doubtful accounts has an unadjusted credit balance of $500. Net credit sales during the year were $150,000. Using the percentage of credit sales method, the estimated bad debt expense would be: A. $5,000. B. $7,000. C. $7,500. D. $8,000
C. $7,500 $150,000 * .05
A 1-year, $15,000, 12 percent note is signed on April 1. If the note is repaid on September 1 of the same year, how much interest expense is incurred? A. $1,800 B. $900 C. $750 D. $600
C. $750 $15,000 x .12 x 5/12
Which of the following would not be reported on the balance sheet? A. Accounts Receivable B. Accounts Payable C. Advertising Expense D. Cash
C. Advertising Expense
On July 1, Darin Company sold inventory costing $4,500 to Dee Company for $6,000, terms 2/10, n/30. Both companies use a perpetual inventory system. What journal entry will be recorded by Dee Company on July 1? A) Debit Purchases and credit Accounts Payable for $6,000 B) Debit Inventory and credit Accounts Receivable for $6,000 C) Debit Inventory and credit Accounts Payable for $6,000 D) Debit Cost of Goods Sold and credit Inventory for $4,500
C. Debit Inventory and credit Accounts Payable for $6,00
Which of the following is an advantage of debt financing? A. It does not have to be repaid. B. Interest is discretionary. C. Interest is tax deductible. D. It reduces stockholder control.
C. Interest is tax deductible
Sales revenue equals $367,810, sales returns & allowances are $10,000, and sales discounts total $14,180. The cost of goods sold is $216,490, operating expenses are $28,500, and the company incurs $31,640 of income tax expense. Which of the following statements is correct? A) Net sales equal $343,630 and gross profit is $98,640. B) Net sales equal $67,000 and gross profit is $98,640. C) Net sales equal $343,630 and gross profit is $127,140. D) Net sales equal $367,810 and gross profit is $67,000.
C. Net sales equal $343,630 and gross profit is $127,140
Ambiance Inc. buys back 3,000 shares of its $10 par value common stock from investors at $45 per share. This stock repurchase would be recorded with a debit to: A. Cash and a credit to Treasury Stock for $135,000. B. Treasury Stock and a credit to Cash for $30,000. C. Treasury Stock and a credit to Cash for $135,000. D. Treasury Stock for $30,000, a debit to Additional Paid-in Capital for $105,000, and a credit to Cash for $135,000.
C. Treasury Stock and a credit to Cash for $135,000.
A company purchased equipment for use in the business at a cost of $12,000, one-fourth was paid in cash, and the company signed a note for the balance. The journal entry to record this transaction will include a: A. debit to Notes Payable of $9,000. B. debit to Cash of $12,000. C. credit to Notes Payable of $9,000. D. debit to Equipment of $3,000.
C. credit to Notes Payable of $9,000
Holders of common stock receive certain benefits, such as a residual claim, which is the: A. right of stockholders to be paid back for their investment before anyone else if the company ceases operation. B. right to oversee management of the company. C. right to share in any remaining assets after creditors have been paid off, should the company cease operations. D. continuing right to receive a share of the company's profits in the form of dividends.
C. right to share in any remaining assets after creditors have been paid off, should the company cease operations.
Revenues are recognized when __________, even when cash is collected in a different accounting period than the revenue is earned. A) cash is collected B) bills are paid C) services are performed D) customers prepay for goods/services
C. services are performed
Allowance for doubtful accounts is what type of account?
Contra- asset account
Inventory Turnover Ratio = ?
Cost of Goods Sold ÷ Average Inventory
Average Cost calculation = ?
Cost of goods available ÷ units on hand
Working Capital = ?
Current Assets - Current Liabilities
Current Ratio = ?
Current Assets ÷ Current Liabilities
Harney Inc. uses the percentage of credit sales method of estimating doubtful accounts. The Allowance for Doubtful Accounts has an unadjusted credit balance of $5,300 and the company had $270,000 of net credit sales during the period. Harney has experienced bad debt losses of 3% of credit sales in prior periods. After making the adjusting entry for estimated bad debts, what is the ending balance in the Allowance for Doubtful Accounts account? A. $8,100. B. $10,600. C. $2,800. D. $13,400.
D. $13,400
28. Quiet Phones Company has the following inventory data: July 1 Beginning inventory 30 units at $19 $570 7 Purchases 105 units at $20 2,100 22 Purchases 15 units at $22 330 $3,000 A physical count of merchandise inventory on July 30 reveals that there are 48 units on hand. Using the LIFO inventory method, the amount allocated to cost of goods sold for July is a. $930. b. $990. c. $2,010. d. $2,070.
D. $2,070
Ace Electronics bought a new cash register for $2,500. Ace plans to use the cash register for 4 years and then sell it for $200. The cash register's depreciable cost equals: A. $2,500. B. $200. C. $575. D. $2,300.
D. $2,300 *Depreciable Cost=Asset Cost-Residual Value
McLeod Corporation is a merchandising company. The year began with inventory of $27,000, Purchases for the year were $52,000, and the Ending Inventory was $14,000.What is the Cost of Goods Sold that would be reported on the income statement? A) $93,000 B) $39,000 C) $11,000 D) $65,000
D. $65,000
On February 16, a company declares a 34¢ dividend to be paid on April 5. There are 2 million shares of common stock issued and 100,000 shares of treasury stock. What does the company record in February? A. A debit to Dividends Payable and a credit to Cash for $680,000. B. A debit to Dividends and a credit to Dividends Payable for $646,000. C. A debit to Dividends Payable and a credit to Cash for $646,000. D. A debit to Dividends and a credit to Dividends Payable for $680,000.
D. A debit to Dividends and a credit to Dividends Payable for $680,000.
Which of the following would be properly classified as a long-lived asset? A. A car held for resale by an automobile dealership. B. Accounts receivable. C. Merchandise inventory held for resale. D. A warehouse used to store inventory.
D. A warehouse used to store inventory
Although there are some clear disadvantages associated with extending credit to customers, such as bad debt costs, most managers believe a particular advantage outweighs the costs. To which primary advantage do they refer? A. Increased labor costs B. Increased bad debt expense. C. Delayed receipt of cash D. Additional sales revenue
D. Additional sales revenue
The stockholders' equity section of the balance sheet includes all of the following except: A. Retained Earnings. B. Contributed Capital. C. Treasury Stock. D. Dividends
D. Dividends
The adjusting entry to record the estimated bad debts in the period credit sales occur includes a debit to an: ? A. Asset account and a credit to a liability account B. Expense account and a credit to an asset account C. Expense account and a credit to a revenue account D. Expense account and credit to a contra-asset account
D. Expense account and credit to a contra-asset
A company receives $102,000 when it issues a bond with a face value of $100,000 and a stated interest rate of 7%. Which of the following statements is correct? A. The entry to record the issuance will include a credit to Bonds Payable for $102,000. B. The market interest rate is 7%. C. The annual interest expense is $7,000. D. The carrying value of the bonds will be $100,000 at maturity.
D. The carrying value of the bonds will be $100,000 at maturity
During the year, a company that uses the allowance method concludes that $6,844 of specific customer accounts will not be collected. These are written off by: A. debiting Accounts Receivable and crediting Allowance for Doubtful Accounts for $6,844. B. debiting Accounts Receivable and crediting Bad Debt Expense for $6,844. C. debiting Bad Debt Expense and crediting Accounts Receivable for $6,844. D. debiting Allowance for Doubtful Accounts and crediting Accounts Receivable for $6,844.
D. debiting Allowance for Doubtful Accounts and crediting Accounts Receivable for $6,844.
Goodwill: A. should be treated like most other intangible assets and amortized over a useful life of not more than 40 years. B. is an accounting measurement of how well a company's employees behave towards the company's customers. C. should be recorded as a negative value if a company is purchased for less than the net carrying value of its assets. D. is recorded when the purchasers of a business pay more than the fair value of the assets purchased.
D. is recorded when the purchasers of a business pay more than the fair value of the assets purchased.
The best definition of assets is the A. cash owned by the company. B. collections of resources belonging to the company and the claims on these resources. C. owners' investment in the business. D. resources belonging to a company that have future benefit to the company
D. resources belonging to a company that have future benefit to the company
The expense recognition principle ("matching") dictates: A) where on the income statement expenses should be presented. B) when revenues are recognized on the income statement. C) the ordering of current assets and current liabilities on the balance sheet. D) when costs are recognized as expenses on the income statement.
D. when costs are recognized as expenses on the income statement
Does LIFO or FIFO produce the highest inventory amount
FIFO
Does LIFO or FIFO produce the highest cost of goods sold
LIFO
What type of account is Unearned Rent Revenue
Liability
Gross Profit = ?
Net Sales- Cost of Goods Sold
Bad Debt Expense = ?
Net credit sales * Bad debt loss %
Book Value = ?
Original Cost - Accumulated Depreciation
What is FOB Shipping Point?
Ownership of goods passes to the buyer when the public carrier accepts the goods from the seller.
What is FOB Destination?
Ownership of the goods remains with the seller until the goods reach the buyer
Net Income = ?
Revenues - Expenses
Debt to Assets Ratio = ?
Total Liabilities ÷ Total Assets
Baden Industries borrows $20,000 at 7% annual interest for six months on October 1st, 2017. Which is the appropriate entry to accrue interest if Baden employs a December 31st, 2017, fiscal year? a. Interest Expense $350 Interest Payable $350 b. Interest Expense $1,400 Interest Payable $1,400 c. Interest Expense $350 Notes Payable $350 d. Notes Payable $1,400 Interest Payable $1,400
a. Interest Expense $350 Interest Payable $350
A furniture factory's employees work overtime to finish an order that is sold on January 31. The office sends a statement to the customer in early February and payment is received by mid-February. The overtime wages should be expensed in: a. January. b. February. c. the period when the workers receive their checks. d. either January or February depending on when the pay period ends.
a. January
Merando Industries employs a five-day workweek and a September 30 year-end. Normal weekly wages amount to $36,000. If September 30 ends on a Wednesday, what is the appropriate journal entry at fiscal year-end? a. Salaries and Wages Expense $21,600 Salaries and Wages Payable $21,600 b. Salaries and Wages Expense $36,000 Salaries and Wages Payable $36,000 c. Salaries and Wages Expense $7,200 Salaries and Wages Payable $7,200 d. Salaries and Wages Expense $21,600 Cash $21,600
a. Salaries and Wages Expense $21,600 Salaries and Wages Payable $21,600
Which of the following financial statements is concerned with the company at a point in time? a. Balance sheet b. Income statement c. Retained earnings statement d. Statement of cash flows
a. balance sheet
A company using a perpetual inventory system that returns goods previously purchased on credit would a. debit Accounts Payable and credit Inventory. b. debit Sales and credit Accounts Payable. c. debit Cash and credit Accounts Payable. d. debit Accounts Payable and credit Purchases.
a. debit Accounts Payable and credit Inventory.
Green Realty Company received a check for $24,000 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client. Unearned Rent Revenue was credited for the full $24,000. Financial statements will be prepared on July 31. Green Realty should make the following adjusting entry on July 31: a. debit Unearned Rent Revenue, $4,000; credit Rent Revenue, $4,000. b. debit Rent Revenue, $4,000; credit Unearned Rent Revenue, $4,000. c. debit Unearned Rent Revenue, $24,000; credit Rent Revenue, $24,000. d. debit Cash, $24,000; credit Rent Revenue, $24,000.
a. debit Unearned Rent Revenue, $4,000; credit Rent Revenue, $4,000.
A paid dividend a. decreases assets and stockholders' equity. b. increases assets and stockholders' equity. c. increases assets and decreases stockholders' equity. d. decreases assets and increases stockholders' equity.
a. decreases assets and stockholder's equity
Sales revenue minus (less) cost of goods sold = a. gross profit. b. net profit. c. net income. d. marginal income.
a. gross profit
Which of the following describes the classification and normal balance of the Retained Earnings account? a. Asset, debit b. Stockholders' equity, credit c. Revenues, credit d. Expense, debit
b. Stockholder's equity, credit
A trial balance a. is a list of accounts with their balances at a given point in time. b. will not balance if a correct journal entry is posted twice. c. will tell you if a transaction is not posted at all. d. proves the factual accuracy of journalized transactions.
a. is a list of accounts with their balances at a given point in time.
Buying and selling products are examples of a. operating activities. b. investing activities. c. financing activities. d. delivering activities.
a. operating activities
Jimmy's Repair Shop started the year with total assets of $300,000 and total liabilities of $240,000. During the year the business recorded $630,000 in revenues, $330,000 in expenses, and dividends of $60,000. Stockholders' equity at the end of the year was a. $360,000. b. $300,000. c. $240,000. d. $270,000.
b. $300,000
If total liabilities decreased by $90,000 and stockholders' equity increased by $30,000 during a period of time, then total assets must change by what amount and direction during that same period? a. $120,000 increase b. $60,000 decrease c. $60,000 increase d. $90,000 decrease
b. $60,000 decrease
Noise Makers Inc. has the following inventory data: July 1 Beginning inventory 30 units at $19 $570 7 Purchases 105 units at $20 2,100 22 Purchases 15 units at $22 330 $3,000 A physical count of merchandise inventory on July 30 reveals that there are 48 units on hand. Using the average cost method, the value of ending inventory is a. $930. b. $960. c. $976. d. $990.
b. $960
Pop-up Party Favors Inc. has the following inventory data: July 1 Beginning inventory 30 units at $19 $570 7 Purchases 105 units at $20 2,100 22 Purchases 15 units at $22 330 $3,000 A physical count of merchandise inventory on July 30 reveals that there are 48 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for July is a. $930. b. $990. c. $960. d. $1,056.
b. $990
When using a perpetual inventory system, why are discounts credited to Inventory? a. The discounts are debited to discount expense and thus the credit has to be made to merchandise inventory. b. The discounts reduce the cost of the inventory. c. The discounts are a reduction of business expenses. d. None of these answers choices are correct.
b. The discounts reduce the cost of the inventory
Can financial statements be prepared directly from the adjusted trial balance? a. They cannot. The general ledger must be used. b. Yes, adjusting entries have been recorded in the general journal and posted to the ledger accounts. c. No, the adjusted trial balance merely proves the equality of the total debit and total credit balances in the ledger after adjustments are posted. It has no other purpose. d. They can because that is the only reason that an adjusted trial balance is prepared.
b. Yes, adjusting entries have been recorded in the general journal and posted to the ledger accounts.
The cost of assets consumed or services used is also known as a. a revenue. b. an expense. c. a liability. d. an asset.
b. an expense
A company using the same accounting principles from year to year is an application of a. timeliness. b. consistency. c. full disclosure. d. materiality.
b. consistency
The following information is from the Income Statement of the Dirt Poor Laundry Service: Revenues Service Revenue $6,500 Expenses Salaries and Wages expense $ 2,450 Advertising expense 500 Rent expense 300 Supplies expense 200 Insurance expense 100 Total expenses 3,550 Net Income $2,950 The entry to close the expense accounts includes a: a. credit to Income Summary for $3,550. b. debit to Income Summary for $3,550. c. debit to Salaries and Wages Expense for $2,450. d. credit to Retained Earnings for $3,550.
b. debit to Income Summary for $3,550.
When a company performs a service but has not yet received payment, it a. debits Service Revenue and credits Accounts Receivable. b. debits Accounts Receivable and credits Service Revenue. c. debits Service Revenue and credits Accounts Payable. d. makes no entry until cash is received.
b. debits Accounts Receivable and credits Service Revenue.
The expense recognition principle matches: a. customers with businesses. b. expenses with revenues. c. assets with liabilities. d. creditors with businesses.
b. expenses with revenues.
In order for accounting information to be relevant, it must a. have very little cost. b. help predict future events or confirm prior expectations. c. not be reported to the public. d. be used by a lot of different firms.
b. help predict future events or confirm prior expectations.
Dividends are reported on the a. income statement. b. retained earnings statement. c. balance sheet. d. income statement and balance sheet.
b. retained earnings statement
GAAP, compared to IFRS, tends to be more a. simple in accounting requirements. b. rules-based. c. principles-based. d. simple in disclosure requirements.
b. rules-based
In a periodic inventory system, when is the costs of goods sold determined?
by count at the end of the accounting period
In the first month of operations, the total of the debit entries to the Cash account amounted to $7,000 and the total of the credit entries to the Cash account amounted to $4,000. The Cash account has a a. $4,000 credit balance. b. $7,000 debit balance. c. $3,000 debit balance. d. $3,000 credit balance.
c. $3,000 debit balance
An income statement shows a. revenues, liabilities, and stockholders' equity. b. expenses, dividends, and stockholders' equity. c. revenues, expenses, and net income. d. assets, liabilities, and stockholders' equity.
c. revenues, expenses, and net income
Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account? a. Freight Expense b. Freight-In c. Inventory d. Freight-Out
c. Inventory
Which of the following is a true statement about closing the books of a corporation? a. Expenses are closed to the Expense Summary account. b. Only revenues are closed to the Income Summary account. c. Revenues and expenses are closed to the Income Summary account. d. Revenues, expenses, and the Dividends account are closed to the Income Summary account.
c. Revenues and expenses are closed to the Income Summary account.
The entry to record the receipt of payment within the discount period on a sale of $900 with terms of 2/10, n/30 will include a a. credit to Sales Discounts for $18. b. debit to Sales Revenue for $882. c. credit to Accounts Receivable for $900. d. credit to Sales Revenue for $900.
c. credit to Accounts Receivable for $900.
A company purchased office supplies costing $5,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $900 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be: a. debit Supplies Expense, $5,900; credit Supplies, $5,900. b. debit Supplies, $900; credit Supplies Expense, $900. c. debit Supplies Expense, $4,100; credit Supplies, $4,100. d. debit Supplies, $4,100; credit Supplies Expense, $4,100.
c. debit Supplies Expense, $4,100; credit Supplies, $4,100
The entry to record the return of goods from a customer would include a a. debit to Sales Revenue. b. credit to Sales Revenue. c. debit to Sales Returns and Allowances. d. credit to Sales Returns and Allowances.
c. debit to Sales Returns and Allowances
Which of the following is not an advantage of the corporate form of business organization? a. No personal liability b. Easy to transfer ownership c. Favorable tax treatment d. Easy to raise funds
c. favorable tax treatment
Accrued expenses are: a. paid and recorded in an asset account before they are used or consumed. b. paid and recorded in an asset account after they are used or consumed. c. incurred but not yet paid or recorded. d. incurred and already paid or recorded.
c. incurred but not yet paid or recorded
Buying assets needed to operate a business is an example of a(n) a. delivering activity. b. financing activity. c. investing activity. d. operating activity.
c. investing activity
Intangible assets are a. listed directly under current assets on the balance sheet. b. not listed on the balance sheet because they do not have physical substance. c. listed after property, plant, and equipment. d. listed as a long-term investment on the balance sheet.
c. listed after property, plant, and equipment.
A post-closing trial balance will show: a. zero balances for all accounts. b. zero balances for balance sheet accounts. c. only balance sheet accounts. d. only income statement accounts.
c. only balance sheet accounts
Accrued revenues are: a. received and recorded as liabilities before they are recognized. b. recognized and recorded as liabilities before they are received. c. recognized but not yet received or recorded. d. recognized and already received and recorded.
c. recognized but not yet received or recorded
The balance sheet a. summarizes the changes in retained earnings for a specific period of time. b. reports the changes in assets, liabilities, and stockholders' equity over a period of time. c. reports the assets, liabilities, and stockholders' equity at a specific date. d. presents the revenues and expenses for a specific period of time.
c. reports the assets, liabilities, and stockholders' equity at a specific date.
Which accounts normally have credit balances? a. Revenues, liabilities, and dividends b. Revenues, liabilities, and assets c. Revenues, liabilities, and retained earnings d. Revenues, liabilities, and expenses
c. revenues, liabilities, and retained earnings
Ashley's Accessory Shop started the year with total assets of $210,000 and total liabilities of $120,000. During the year the business recorded $330,000 in revenues, $165,000 in expenses, and dividends of $60,000. The net income reported by Ashley's Accessory Shop for the year was a. $120,000. b. $150,000. c. $195,000. d. $165,000.
d. $165,000
For 2017 Fielder Corporation reported net income of $32,000; net sales $400,000; and average share outstanding 16,000. There were no preferred dividends. What was the 2017 earnings per share? a. $0.08 b. $0.50 c. $25.00 d. $2.00
d. $2.00
At December 31, 2017 Howell Company's inventory records indicated a balance of $878,000. Upon further investigation it was determined that this amount included the following: • $168,000 in inventory purchases made by Howell shipped from the seller 12/27/17 terms FOB destination, but not due to be received until January 2nd • $111,000 in goods sold by Howell with terms FOB destination on December 27th. The goods are not expected to reach their destination until January 6th. • $9,000 of goods received on consignment from Westwood Company What is Howell's correct ending inventory balance at December 31, 2017? a. $710,000 b. $869,000 c. $590,000 d. $701,000
d. $701,000
Tony's Market recorded the following events involving a recent purchase of inventory: Received goods for $80,000, terms 2/10, n/30. Returned $1,600 of the shipment for credit. Paid $400 freight on the shipment. Paid the invoice within the discount period. As a result of these events, the company's inventory a. increased by $76,832. b. increased by $78,800. c. increased by $77,224. d. increased by $77,232.
d. $77,232 ($80,000- $1,600) * .98 + $400
Which of the following is not classified properly as a current asset? a. Supplies b. Debt investments c. A fund to be used to purchase a building within the next year d. A receivable from the sale of an asset to be collected in two years
d. A receivable from the sale of an asset to be collected in two years
Which of the following steps in the accounting cycle usually occurs only at the end of a company's annual accounting period? a. Post to the ledger accounts. b. Prepare financial statements. c. Prepare adjusting trial balance. d. Prepare a post-closing trial balance.
d. Prepare a post-closing trial balance
The primary source used in the preparation of the financial statements is the: a. trial balance. b. post-closing trial balance. c. general trial balance. d. adjusted trial balance.
d. adjusted trial balance
Adjusting entries are made to ensure that: a. expense are recognized in the period in which they are incurred. b. revenues are recorded in the period in which the performance obligation is satisfied. c. balance sheet and income statement accounts have correct balances at the end of an accounting period. d. All of these answer choices are correct.
d. all of these answer choices are correct
Common stock is reported on the a. statement of cash flows. b. retained earnings statement. c. income statement. d. balance sheet.
d. balance sheet
Debt securities sold to investors that must be repaid at a particular date some years in the future are called a. accounts payable. b. notes receivable. c. taxes payable. d. bonds payable.
d. bonds payable
The balance in the prepaid rent account before adjustment at the end of the year is $12,000 and represents three months rent paid on December 1. The adjusting entry required on December 31 is: a. debit Prepaid Rent, $4,000; credit Rent Expense $4,000. b. debit Prepaid Rent, $8,000; credit Rent Expense, $8,000. c. debit Rent Expense, $12,000; credit Prepaid Rent, $12,000. d. debit Rent Expense, $4,000; credit Prepaid Rent, $4,000.
d. debit Rent Expense, $4,000; credit Prepaid Rent, $4,000.
A credit is not the normal balance for which account listed below? a. Common Stock account b. Revenue account c. Liability account d. Dividends account
d. dividends account
In a perpetual inventory system, cost of goods sold is recorded a. on a daily basis. b. on a monthly basis. c. on an annual basis. d. each time a sale occurs.
d. each time a sale occurs
All of the following are qualities of useful information except a. faithful representation. b. materiality. c. relevance. d. flexibility
d. flexibility
The right side of an account a. is the correct side. b. reflects all transactions for the accounting period. c. shows all the balances of the accounts in the system. d. is the credit side.
d. is the credit side
A perpetual inventory system determines cost of goods sold when ?
each time a sale occurs
