ACC 2101 - Final

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ABC buys widgets for $5 cash and sells them on account for $8. From a cash flow perspective, the receivable is valued at?

Which of the following is/are a sign that a company cannot quickly turn its receivables into cash?

- A low receivables turnover ratio - A high average collection period

Which of the following are made ONLY at year end?

- Adjusting entries - Closing entries

Uncontrolled liquidations

- Increase income for LIFO companies - Increase taxed for LIFO companies

A capital lease will have which of these expenses

- Interest expense - Depreciation expense

Which of the following is/are a sign that a company can quickly turn its receivables into cash?

- Low average collection period - High receivables turnover ratio

Which of the following are classified as Accounts Receivable?

- Monies that customers owe us for providing a service - Monies that customers owe us from sale of merchandise

Which of the following are classified as accounts receivable?

- Monies that customers owe us from sale of merchandises - Monies that customers owe us from providing a service

Which of the following events would require an expense to be recorded?

- Paying employee's salaries for the current month - Receiving but not paying a current utility bill

Which of the following transactions would affect operating cash flows reported in the statement of cash flows (all transactions involve cash) (may have more than one answer)?

- Provide services to customers for $27,000 - Purchased $12,000 in supplies - Paid the utility bill of $750

Which of these transactions increased the given company's total assets?

- Purchased equipment by signing a note payable - Issued common stock for cash

Which of the following is/are made before the financial statements are prepared?

- Transaction entries - Adjusting entries

Investors and creditors are interested in which of these entries?

- Transaction entries - adjusting entries

Which of the following are made BEFORE the financial statements are prepared?

- Transaction entries - Adjusting entries

For which of the following must Debits equal Credits?

- Transaction entries - Adjusting entries - Closing entries

To do math with Ruritanian rubis and euros you can

- Translate the Rubis to euros - Translate the euros to rubis - translate both the euros and rubis to dollars - Translate both the Euros and Rubis to Japanese yen - translate both the euros and rubis to ounces of gold

ABC buys widgets for $5 cash and sells them on account for $8. From a cash flow perspective, the receivable is valued at?

What I can I add to a number without changing it?

Net income (in millions) $175 Preferred stock dividends (in millions) $25 Common shares outstanding (in millions) 250 Stock price $10.00 What is earnings per share (to the nearest penny)?

0.6

Net income (in millions) $175 Preferred stock dividends (in millions) $25 Common shares outstanding (in millions) 250 Stock price $10.00 What is earnings per share (to the nearest penny)?

0.6

Consider the following transactions: Issued common stock for cash. Purchased equipment by signing a note payable. Provided services to customers on account. Collected cash from customers on account. How many of these four transactions increased the given company's total liabilities?

Following are transactions of ABC, a new company, during the month of January: Issued 10,000 shares of common stock for $15,000 cash. Purchased land for $12,000, signing a note payable for the full amount. Purchased office equipment for $1,200 cash. Received cash of $14,000 for services provided to customers during the month. Purchased $300 of office supplies on account. Paid employees $10,000 for their first month's salaries. How many of these transactions decreased ABC's total assets?

Following are transactions of ABC., a new company, during the month of January: - Issued 10,000 shares of common stock for $15,000 cash. - Purchased land for $12,000, signing a note payable for the full amount. - Purchased office equipment for $1,200 cash. - Received cash of $14,000 for services provided to customers during the month. - Purchased $300 of office supplies on account. - Paid employees $10,000 for their first month's salaries. How many of these transactions decreased ABC's total assets?

For which step of the operating cycle is there a difference between manufacturers and retailers?

What number can I multiply something by without changing it

Which of the following statements is/are a snapshot (may have more than one answer)? - statement of changes in equity - statement of cash flows - income statement - balance sheet

Balance sheet

Payroll expense will usually

Be more than the cash amount paid to an employee

Accounts Receivable are usually measured at?

Benefit value

Bond X and Bond Y are both issued by the same company. Each of the bonds has a face value of $100,000 and each matures in 10 years. Bond X pays 8% interest while Bond Y pays 7% interest. The current market rate of interest is 7%. Which of the following is correct?

Bond X will sell more than Bond Y

Bond X and Bond Y are both issued by the same company. Each of the bonds has a face value of $100,000 and each matures in 10 years. Bond X pays 8% interest while Bond Y pays 9% interest. The current market rate of interest is 8%. Which of the following is correct?

Bond Y will sell for more than Bond X

Define business in 4 words

buy low sell high

Land is depreciated

Never

Does a balance sheet work with present value concepts

Does a subchapter S pay taxes?

Bad News which is the beginning of a Plateau change will do what to the company's P/E ratio?

No change

Good News which is the beginning of a Plateau change will do what to the company's P/E ratio?

No change

Non recurring Bad News will do what to the company's share price?

No change

Non recurring Good news will do what to the company's share price?

No change

When a company pays cash for equipment, what is the effect on the accounting equation for that company?

No change

When we get a line of credit from the bank

No change to the balance sheet and no change to the income statement

ABC accounts for bad debts using the allowance method. On 6/1, ABC wrote off DE's $2,500 account. What effect will this write-off have on ABC's balance sheet at the time of the write-off?

No effect

ABC buys widgets for $5 cash and sells them on account for $8. At collection, what is the effect on the net income of ABC?

No effect

ABC buys widgets for $5 cash and sells them on account for $8. At the point of sale, what is the effect on the cash flow of ABC?

No effect

When we purchase a few shares of another corporation, what is the effect on our stockholder's equity

No effect

ABC sold inventory for $1,200 that was purchased for $700. ABC records which of the following when it sells inventory using a periodic inventory system?

No entry is required for costs fo goods sold and inventory

On January 1, ABC sold $30,000 in products to a customer on account. Then on January 10, ABC collected the cash on that account. What is the impact on ABC's accounting equation from the collection of cash on January 10?

No net effect on the accounting equation

ABC sold $500 in widgets to a customer on account on January 1. On January 11 ABC collected the cash from that customer. What is the impact on ABC's accounting equation from the collection of cash?

No net effect to the accounting equation

The abbreviation of the rules an accountant has to follow when doing financial statement analysis is:

None of these

Executory contracts are generally

Not recorded

In a periodic inventory system, the entry at the time of a sale to record the cost of inventory sold includes a

Not recorded at this time of the sale

What is expensed in a factory?

Nothing

Receiving a utility bill for costs in the current period but delaying payment until the following period is an example of a(n):

accrued expense

The contra asset account associated with building and equipment is called

accumulated depreciation

When a company has a defined benefit pension they have to hire an

actuary

Which statement is true?

all balance sheet accounts are permanent

which one statement is true?

all income statement accounts are temporary

Which statement is true?

all income statements are temporary

On the cost of goods sold statement

all numbers are sacrifice numbers

Calculating ending inventory and cost of goods sold is what kind of problem

allocation

When you see an interest rate, it is

always an annual rate

When applying LCM, the net income of a firm

always goes down

When applying lower of cost or market, the net income of a firm:

always goes down

When prices are rising, a LIFO liquidation will

always increase income

When intangible assets, like franchises or patents, die, it is called

amortization expense

The Direct Method and Indirect Method of Reporting Cash Flows

apply only to cash from operations

Subsidiary accounts and master accounts

are bookkeeping devices

Periodic inventory accounting and perpetual inventory accounting

are two different bookkeeping systems

When treasury stock is acquired, what is the effect on assets and stockholder's equity

assets and stockholder's equity decrease

ABC purchases inventory for $2,000 and incurs shipping costs of $100 for the goods to be delivered. To record this transaction, the company debits Inventory for $2,000, debits Selling Expenses for $100, and credits Cash for $2,100. Which of the following statements is correct?

assets are understated

In the allowance method, when we do the year end adjusting entry for bad debts

assets decrease, net income decreases

In the allowance method when a receivable is resurrected

assets stay the same, net income stays the same

Which of the least important number of shares

authorized

Usually we measure accounts receivable at

benefit value

The ultimate goal of doing accounting is to

bill the client

Accounts receivable are like

dead fish that deteriorate with age

Common stock dividends become a legal obligation when they are

declared

Bad News which is the beginning of a plateau change will do what to the company's share price

decrease

Non recurring good news will do what to the company's P/E ratio?

decrease

When the company pays stockholders a dividend, what is the effect on the accounting equation for that company?

decrease assets and decrease stockholder's equity

which of the following is possible for a particular business transaction?

decrease assets; increase assets

Receiving cash from customers before services are performed results in:

deferred revenues

Government pension plans are usually

defined benefit

if your employer declares bankruptcy, this can have a major effect on your pension if you are in a

defined benefit plan

The expense when a natural resource is being used up is called

depletion

When a bond with a face value of $100,000 is sold for $90,000, the bond is being issued at a (1 word)

discount

the par value of preferred stock is used in calculating preferred

dividends

What is the main disadvantage of a regular corporation

double taxation

How often can you calculate EPS?

every time the company issues a financial report

One of the conditions of an asset is that it must have

future value

Opening inventory plus purchases equals

goods available for sale

What are the most important Cash Inflows from Financing Activities

issuing bonds issuing stocks

When I raise money for my business, I will be better off

it depends how well the business does

When a firm takes a big bath:

it increases expenses

When a company makes an end-of-period adjusting entry that includes a credit to Prepaid Rent, the debit is usually made to:

rent expense

In a sale on account, who is undertaking a financial risk on non-payment?

the seller

In cash flow reporting when the firm acquires inventory

there is a loss

In cash flow, reporting at the point of sale

there is no gain or loss

In a three line heading, the third line is the:

time period of the statement

If a company records cash received for services to be provided in the future with a debit to Cash and a credit to Service Revenue, how will this error affect total assets for the current period?

total assets will be correct

when a company buys back its own shares, the shares are called

treasury stock

In a balanced set of accounting records, every transaction must balance

true

In a financing lease the Lessee records an asset and a liability

true

It is easier for a company to cheat on its taxes

under periodic inventory accounting than under perpetual inventory accounting

The income statement is a:

video

The statement of cash flows is a:

video

Collateral is useful

when there are multiple creditors

Current assets are assets that will be gone by the end of the:

year

Can a company that had a loss this year declare a dividend

yes

The gross profit ratio is a

Profitability ratio

The Average Days in Operating Cycle is a

Liquidity ratio

The quick ratio is

Liquidity ratio

LCM stands for

Lower of cost or market

Define ROE

Return on equity

unearned revenue usually turns into

Revenue

The most common form of business structure in the United States is?

Sole proprietorship

ABC has a $5 million liability at December 31, 2018, of which $1 million is payable in each of the next five years. ABC reports the liability on the balance sheet as a:

$1 million current liability and a $4 million long-term liability

The following information pertains to ABC: March 1 Beginning inventory = 30 units @ $5 March 3 Purchased 15 units @ $4 March 9 Sold 25 units @ $8 What is the cost of goods sold for ABC assuming it uses LIFO?

$110

ABC purchased equipment for $60,000 on January 1, 2018. The equipment is expected to have a five-year life, with a residual value of $5,000 at the end of five years. Using the straight-line method, depreciation expense for 2019 and the book value at December 31, 2019 would be:

$11000 and $38000

ABC issues 1,000 shares of 6%, $100 par value preferred stock at the beginning of 2017. All remaining shares are common stock. The company was not able to pay dividends in 2017, but plans to pay dividends of $18,000 in 2018. Assuming the preferred stock is cumulative, how much of the $18,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2018?

$12,000 to preferred stockholders and $6,000 to common stockholders

At the beginning of the period, Accounts Receivable equals $1,700. At the end of the period, Accounts Receivable equals $2,200. If Service Revenue for the period equals $15,400, what was the cash received from customers for the period?

$14900

Total change in cash = $40, Net operating cash flows = $20, Net investing cash flows = ($10) What is net financing cash flows = $

$30

ABC buys widgets for $5 cash and sells them on account for $8. What is the sacrifice value of a receivable on the books of ABC?

ABC buys widgets for $5 cash and sells them on account for $8. What is the sacrifice value of a widget on the books of ABC?

$6,000 to preferred stockholders and $12,000 to common stockholders

ABC issues 1,000 shares of 6%, $100 par value preferred stock at the beginning of 2017. All remaining shares are common stock. The company was not able to pay dividends in 2017, but plans to pay dividends of $18,000 in 2018. Assuming the preferred stock is noncumulative, how much of the $18,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2018?

$6,000 to preferred stockholders and $12,000 to common stockholders

We always sell pens at $8. We sold a pen at $7 because it was damaged. Record the sale at:

ABC buys widgets for $5 cash and sells them on account for $8. What is the benefit value of a receivable on the books of ABC?

which of the following is a negative sign that a company is not selling its inventory quickly

- A high average days in inventory - low inventory turnover ratio

In a stock dividend

- assets don't change, liabilities don't change

Which of these require a journal entry

- cash dividends - small stock dividends - large stock dividends

in a natural resource, the quantity reported on the financial statements depends on

- geological estimates - market value of oil - extraction costs of the oil

Which of the following never pay taxes

- partnership - S corporation

when we sell treasury stock for less than we buy it for, where do we put the difference (cost method) (may have more than one answer)?

- retained earnings - Additional paid in capital

A company had the following cash flows for the year: (a) Purchased inventory, $60,000 (b) Sold goods to customers, $90,000 (c) Received loan from a local bank, $150,000 (d) Purchased land, $180,000 (e) Purchased treasury stock, $40,000 (f) Paid dividends, $10,000 (g) Sold delivery truck, $30,000 What amount would be reported for net investing cash flows on the Statement of Cash Flows (for a negative number put a minus in front of the number)?

-150000

On January 1, 2018, ABC purchased a commercial truck for $48,000 and uses the straight-line depreciation method. The truck has a useful life of eight years and an estimated residual value of $8,000. Assume the truck was totaled in an accident on December 31, 2019. What amount of gain or loss should ABC record on December 31, 2019 (If a loss, put a minus number in front) ?

-38000

During the year, ABC. had the following cash flows: receipt from customers, $10,000; receipt from the bank for long-term borrowing, $6,000; payment to suppliers, $5,000; payment of dividends, $1,000, payment to workers, $2,000; and payment for machinery, $8,000. What amount would be reported for investing net cash flows on the Statement of Cash Flows (put a minus number in front if it is negative)?

-8000

The balance sheet of ABC reports total assets of $1,500,000 and $1,700,000 at the beginning and end of the year, respectively. Net income and sales for the year are $240,000 and $2,000,000, respectively. What is ABC's asset turnover (round the times to 2 decimal points)?

1.25

ABC reports dividends per share of $1.40 and net income for the year of $140,000. The current stock price is $14.00. What is ABC's dividend yield? (just put in the number without %)

ABC's sales equal $60,000 and cost of goods sold equals $20,000. Its beginning inventory was $1,600 and its ending inventory is $2,400. ABC's inventory turnover ratio equals how many times a year?

ABC's sales equal $60,000 and cost of goods sold equals $20,000. Its beginning inventory was $1,600 and its ending inventory is $2,400. ABC's inventory turnover ratio equals how many times?

On November 1, 2018, ABC signed a $100,000, 6%, six-month note payable with the amount borrowed plus accrued interest due six months later on May 1, 2019. ABC should report interest payable at December 31, 2018, in the amount of:

1000

Parent Co. purchased the entire business of Subsidiary Co. including all its assets and liabilities for $600,000. Below is information related to the two companies: Parent Subsidiary Fair value of assets $1,050,000 $800,000 Fair value of liabilities 575,000 300,000 Reported assets 800,000 650,000 Reported liabilities 500,000 250,000 Net Income for the year 60,000 50,000 How much goodwill did Parent pay for acquiring Subsidiary?

100000

Sales revenue $350,000 Accounts receivable $280,000 Ending inventory $230,000 Cost of goods sold $180,000 Sales returns $50,000 Sales Discount $20,000 Given the information in the above table, what is the company's gross profit?

100000

Sales revenue $350,000 Accounts receivable $280,000 Ending inventory $230,000 Cost of goods sold $180,000 Sales returns $50,000 Sales discount $20,000 What is the gross profit?

100000

11000

During the first two years, ABC drove the company truck 15,000 and 22,000 miles, respectively, to deliver merchandise to its customers. The company originally purchased the truck for $175,000. If the truck has an estimated life of 10 years or 300,000 miles, with an estimated residual value of $25,000, what amount of depreciation expense should ABC record in the second year using the activity-based method?

11000

The balance sheet of ABC reports total assets of $1,500,000 and $1,700,000 at the beginning and end of the year, respectively. Net income and sales for the year are $240,000 and $2,000,000, respectively. What is ABC's profit margin (round to nearest whole percentage, just put in the number with no %)?

to the nearest %, paying on the 30th day for a 1/30, net/60, gives an annual return of?

A company has 12,247 customers they extend credit to, how many total A/R will they have?

12248

Following are transactions of ABC, a new company, during the month of January: - Issued 10,000 shares of common stock for $15,000 cash. - Purchased land for $12,000, signing a note payable for the full amount. - Purchased office equipment for $1,200 cash. - Received cash of $14,000 for services provided to customers during the month. - Purchased $300 of office supplies on account. - Paid employees $10,000 for their first month's salaries. What was the total amount of ABC's liabilities following these six transactions? (just type numbers)

12300

ABC has the following balances on December 31 prior to closing entries: Revenues - $25,000 Retained Earnings, Jan. 1 - 20,000 Cash - 3,000 Expenses - 10,000 Accounts Payable - 4,000 Dividends - 2,000 Supplies - 17,000 Based upon the balances above, what net adjustment would be made to Retained Earnings due to closing entries? An Increase of (just type numbers)

13000

Net sales $296,000 Cost of goods sold 138,000 Average inventory 50,000 What is the average days in inventory (round to the nearest whole day)

132

ABC has beginning inventory for the year of $12,000. During the year, ABC purchases inventory for $150,000 and ends the year with $20,000 of inventory. ABC will report cost of goods sold equal to:

142000

The balance sheet of ABC reports total assets of $1,500,000 and $1,700,000 at the beginning and end of the year, respectively. Net income and sales for the year are $240,000 and $2,000,000, respectively. What is ABC's return on assets (round to nearest whole percentage, just put in the number with no %)?

ABC engages in the following cash payments: Purchase equipment - $2,000 Pay rent - 500 Repay loan to the bank - 5,000 Pay worker's salaries - 1,000 What is the total amount of cash paid for operating activities? (just type numbers)

1500

ABC has beginning inventory for the year of $18,000. During the year, ABC purchases inventory for $230,000 and has cost of goods sold equal to $233,000. ABC's ending inventory equals:

15000

A company had the following cash flows for the year: (a) Purchased land, $60,000 (b) Borrowed from a local bank, $100,000 (c) Paid employee salaries, $50,000 (d) Issued common stock, $75,000 (e) Paid dividends, $20,000 (f) Sold equipment, $40,000 (g) Sold services to customers, $120,000 What amount would be reported for net financing cash flows on the Statement of Cash Flows?

155000

Net income (in millions) $175 Preferred stock dividends (in millions) $25 Common shares outstanding (in millions) 250 Stock price $10.00 What is the company's price-earnings ratio (round to one decimal point)?

16.7

Net income (in millions) $150 Shares outstanding (in millions) 300 Stock price $30.00 What is the price-earnings ratio (to the nearest whole number)?

What is the amount of current assets, assuming the accounts above reflect normal activity? (just type in numbers) Accounts Payable - $12,000 Buildings - 70,000 Cash - 8,000 Accounts Receivable - 7,000 Sales Tax Payable - 5,000 Retained Earnings - 47,000 Supplies - 2,000 Notes Payable (due in 18 months) - 35,000 Interest Payable - 3,000 Common Stock - 45,000

17000

The balance sheet of ABC' reports total assets of $800,000 and $900,000 at the beginning and end of the year, respectively. The return on assets for the year is 20%. What is ABC's net income for the year?

170000

Accounts Payable $55,000 Land $90,000 Inventory $10,500 Accounts Receivable $7,500 Equipment $8,000 Deferred Revenue $58,500 Short-term Investments $20,000 Notes Receivable (due in 8 months) $45,500 Interest Payable $2,000 Patents $75,000 What is the amount of long-term assets assuming the accounts above reflect normal activity? (No need to put $).

173000

The following financial information is from ABC Company: Accounts Payable $55,000 Land $90,000 Inventory $10,500 Accounts Receivable $7,500 Equipment $8,000 Deferred Revenue $58,500 Short-term Investments $20,000 Notes Receivable (due in 8 months) $45,500 Interest Payable $2,000 Patents $75,000 What is the amount of long-term assets assuming the accounts above reflect normal activity? (No need to put $).

173000

Net credit sales = $400,000 Net income = $100,000 Average total assets = $80,000 Average accounts receivable = $20,000 What is the average collection period in days (rounded to the nearest whole day)?

ABC has the following information: Net credit sales = $400,000 Net income = $100,000 Average total assets = $80,000 Average accounts receivable = $20,000 What is ABC's average collection period?

18 days

A company: Issued common stock for cash. Purchased equipment by signing a note payable. Paid rent for the current month. Collected cash from customers on account. How many of these four transactions increased the given company's total assets?

ABC has the following current assets: cash, $102 million; receivables, $94 million; inventory, $182 million; other current assets, $18 million. ABC also has the following liabilities: accounts payable, $98 million; long-term debt, $23 million. Based on these amounts, what is the acid-test ratio ?

Consider the following transactions: Issued common stock for cash. Purchased equipment by signing a note payable. Paid rent for the current month. Collected cash from customers on account. How many of these four transactions increased the given company's total assets?

How many of the following events would require an expense to be recorded? Ordering office supplies Hiring a receptionist Paying employees' salaries for the current month Receiving but not paying a current utility bill Paying for insurance in advance

How many types of inventory are there in the factory

The marketing department is involved in which step in the operating cycle?

The ending Retained Earnings balance of ABC decreased by $1.5 million from the beginning of the year. The company declared a dividend of $4.4 million during the year. What was the net income for the year?

2.9 million

Given the information below about ABC, how much dividends did the company paid in the current period? (just type numbers) Beginning retained earnings - $45,000 Ending retained earnings - $110,000 Decrease in cash - $10,000 Net income - $85,000 Change in stockholders' equity - $15,000

20,000

On November 1, 2018, ABC signed a $100,000, 6%, six-month note payable with the amount borrowed plus accrued interest due six months later on May 1, 2019. ABC records the appropriate adjusting entry for the note on December 31, 2018. In recording the payment of the note plus accrued interest at maturity on May 1, 2019, ABC would Debit Interest Expense

2000

The balance sheet of Subsidiary Co. shows assets of $86,400 and liabilities of $15,000. The fair value of the assets is $90,000 and the fair value of its liabilities is $15,000. Parent Co. paid Subsidiary $95,000 to acquire it. Parent should record goodwill on this purchase of:

20000

The balance sheet of Subsidiary shows assets of $86,400 and liabilities of $15,000. The fair value of the assets is $90,000 and the fair value of its liabilities is $15,000. Parent paid $95,000 to acquire Subsidiary. Parent should record goodwill on this purchase of:

20000

Cost of goods sold $420,000 Sales revenue 800,000 Nonoperating expenses 10,000 Operating expenses 170,000 Income tax expense 80,000 What is operating income?

210000

During 2018, ABC had the following cash flows: received cash of $5,000 billed to a customer in 2017; earned $20,000 of net income; paid interest of $6,000 on a corporate bond issued; paid dividends of $8,000 to its stockholders; borrowed $40,000 from a local bank; purchased its own shares of common stock for $10,000. What is ABC's net cash flows from financing activities for 2018?

22000

To the nearest %, paying on the 15th day for a 1/15, net/30, gives an annual return of

ABC purchased equipment for $60,000 on January 1, 2018. The equipment is expected to have a five-year life, with a residual value of $5,000 at the end of five years. Using the double-declining balance method, depreciation expense for 2018 would be:

24000

ABC opened for business on January 1, 2018, and paid for two insurance policies effective that date. The liability policy was $54,000 for 18 months, and the crop damage policy was $18,000 for a two-year term. What was the balance in ABC's Prepaid Insurance account as of December 31, 2018?

27000

The following financial information is from ABC. All debt is due within one year unless stated otherwise. Retained Earnings - $52,000 Supplies - 37,000 Equipment - 72,000 Accounts Receivable - 8,600 Deferred Revenue - 6,000 Accounts Payable - 15,000 Common Stock - 25,000 Notes Payable (due in 18 months) - 35,000 Interest Payable - 7,000 Cash - 22,400 What is the amount of current liabilities? (just type numbers)

28000

A company has the following transactions: Pay employees' salaries for the current period. Pay rent in advance. Pay dividends to stockholders in the current period. Receive (but do not pay) a utility bill. Use supplies previously purchased. How many of these transactions result in an expense being reported in the current period using accrual-basis accounting?

Consider the following account balances of ABC at the end of the year: Accounts Payable - $4,400 Salaries Expense - 12,800 Cash - 1,700 Common Stock - 2,400 Service Revenue - 8,300 Supplies - 4,300 Retained Earnings - 1,100 Utilities Expense - 5,000 How many of these accounts would appear in ABC's year-end Income Statement?

How many of the following transactions are operating activities? Borrowed $50,000 from the bank Purchased $12,000 in supplies Provide services to customers for $27,000 Paid the utility bill of $750Purchased a delivery truck for $12,000 Received $25,000 from issuing common stock

How many of the following transactions would affect operating cash flows reported in the statement of cash flows (all transactions involve cash)? Borrowed $50,000 from the bank Purchased $12,000 in supplies Provide services to customers for $27,000 Paid the utility bill of $750 Purchased a delivery truck for $12,000 Received $25,000 from issuing common stock

how many types of cash flow are there on a cash flow statement?

ABC had the following final balances after the first year of operations: assets - $55,000 stockholders' equity - $25,000 dividends - $3,000 net income - $10,000 What is the amount of ABC's liabilities? (just type numbers)

30,000

On September 1, 2018, ABC signed a $100,000, 9%, six-month note payable with the amount borrowed plus accrued interest due six months later on March 1, 2019. ABC should report interest payable at December 31, 2018, in the amount of:

3000

On December 1, 2018, ABC signed a $300,000, 5%, six-month note payable with the amount borrowed plus accrued interest due six months later on June 1, 2019. ABC records the appropriate adjusting entry for the note on December 31, 2018. What amount of cash will be needed to pay back the note payable plus any accrued interest on June 1, 2019?

307500

The following amounts are reported in the ledger of ABC: Assets - $80,000 Liabilities - 36,000 Retained Earnings - 12,000 What is the balance in the Common Stock account? (just type numbers)

32000

If the liabilities of a company increased by $55,000 during a month and the stockholders' equity decreased by $21,000 during that same month, did assets increase or decrease and by how much?

34,000 increase

A company has 342 customers they extend credit to, how many accounts receivable will they have on their books?

343

ABC paid dividends of:$2,500, $0, $1,500 and $2,000 over the first four years of the company's existence. If Retained Earnings after year four has an ending balance of $8,000, what is the average annual amount of net income (loss) over the past four years for ABC? (just type numbers)

3500

to the nearest %, paying on the 10th day for a 2/10, net/30, gives an annual return of?

ABC issued callable bonds on January 1, 2018. ABC's accountant has projected the following amortization schedule from issuance until maturity: Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 1/1/2018 $194,758 6/30/2018 $7,000 $7,790 $790 195,548 12/31/2018 7,000 7,822 822 196,370 6/30/2019 7,000 7,855 855 197,225 12/31/2019 7,000 7,889 889 198,114 6/30/2020 7,000 7,925 925 199,039 12/31/2020 7,000 7,961 961 200,000 ABC buys back the bonds for $196,000 immediately after the interest payment on 12/31/2018 and retires them. What gain or loss, if any, would ABC record on this date (use a minus sign in front of the number if it is a loss)?

370

ABC has the following: cash, $102 million; receivables, $94 million; inventory, $182 million; other current assets, $18 million, Plant Property and Equipment $220 million, accounts payable, $98 million long-term debt, $23 million. Based on these amounts, what is the current ratio (round to 2 decimal points)?

4.04

Net sales $2,800 Cost of goods sold 1,680 Operating expenses 880 Ending inventories 820 What is ABC's gross profit ratio (round to nearest whole percentage, just put in the number with no %)?

Net sales $2,800 Cost of goods sold 1,680 Operating expenses 880 Ending inventories 820 What is the gross profit ratio (put in the number without %) ?

ABC reports the following information for the year: Net credit sales - $120,000 Average accounts receivable - 20,000 Cash collections on credit sales - 100,000 What is ABC's receivables turnover ratio?

6.0

ABC borrowed $100,000 on November 1, 2018, and signed a six-month note bearing interest at 12%. Principal and interest are payable in full at maturity on May 1, 2019. In connection with this note, ABC should report interest expense in 2019 for the amount of:

4000

ABC purchases a copyright for $50,000. The copyright has a remaining legal life of 25 years, but only an expected useful life of five years with no residual value. Assuming the company uses the straight-line method, what is the carrying value at the end of the first year?

40000

Assets $1,200,000 Liabilities $800,000 Net income $100,000 Retained earnings $250,000 Stockholders' claims to the company's resources amount to:

400000

Given the following, stockholders' claims to the company's resources amount to: Assets - $1,200,000 Liabilities - $800,000 Net income - $100,000 Retained earnings - $250,00

400000

The balance sheet of ABC reports total assets of $400,000 and $450,000 at the beginning and end of the year, respectively. The return on assets for the year is 10%. What is ABC's net income for the year?

42500

Inventory records for ABC revealed the following: Date Transaction Number of Units Unit Cost Apr. 1 Beginning inventory 500 $2.40 Apr. 20 Purchase 400 2.50 ABC sold 700 units of inventory during the month. Ending inventory assuming LIFO would be:

480

49000

Accounts Payable - $4,400 Salaries Expense - 12,800 Cash - 1,700 Common Stock - 2,400 Service Revenue - 8,300 Supplies - 4,300 Retained Earnings - 1,100 Utilities Expense - 5,000 How many of these accounts would appear in a year-end balance sheet?

Date Transaction Number of Units Unit Cost Apr. 1 Beginning inventory 500 $2.40 Apr. 20 Purchase 400 2.50 700 units of inventory were sold during the month. Ending inventory assuming FIFO would be:

500

During the year, ABC had the following cash flows: receipt from customers, $10,000; receipt from the bank for long-term borrowing, $6,000; payment to suppliers, $5,000; payment of dividends, $1,000, payment to workers, $2,000; payment for machinery, $8,000. What amount would be reported for net financing cash flows on the Statement of Cash Flows?

5000

The balance sheet of ABC reports total assets of $450,000 and $550,000 at the beginning and end of the year, respectively. The return on assets for the year is 10%. What is ABC's net income for the year?

50000

ABC purchased a piece of equipment by paying $5,000 cash. They also incurred a shipping cost of $400 to get the equipment to its factory. The fair value of this equipment is $7,000. For what amount should ABC record the equipment?

5400

ABC issues $10 million in bonds on January 1, 2018. The bonds have a ten-year term and pay interest semiannually on June 30 and December 31 each year. Below is a partial bond amortization schedule for the bonds: Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 1/1/2018 $8,640,967 6/30/2018 $300,000 $345,639 $45,639 8,686,606 12/31/2018 300,000 347,464 47,464 8,734,070 6/30/2019 300,000 349,363 49,363 8,783,433 12/31/2019 300,000 351,337 51,337 8,834,770 What is the stated annual rate of interest on the bonds? (Hint: Be sure to provide the annual rate rather than the six month rate. (round to nearest whole percentage, just put in the number with no %)

Net credit sales - $120,000 Average accounts receivable - 20,000 Cash collections on credit sales - 100,000 What is the receivables turnover ratio?

The following table contains financial information for ABC before closing entries: Cash - $23,000 Common Stock - 34,000 Supplies - 4,000 Advertising Expense - 2,000 Accounts Payable - 20,000 Service Revenue - 30,000 Salaries Expense - 3,000 Prepaid Rent - 4,000 Dividends - 3,000 Equipment - 45,000 How many of the above accounts are permanent?

A machine has a cost of $15,000, an estimated residual value of $3,000, and an estimated useful life of four years. The machine is being depreciated on a straight-line basis. At the end of the second year, what amount will be reported for accumulated depreciation?

6000

ABC reports net income and sales for the year of $65,000 and $1,300,000, respectively. Return on equity is 10%. What is ABC's average Stockholders' Equity for the year?

650000

ABC issued callable bonds on January 1, 2018. ABC's accountant has projected the following amortization schedule from issuance until maturity: Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 1/1/2018 $194,758 6/30/2018 $7,000 $7,790 $790 195,548 12/31/2018 7,000 7,822 822 196,370 6/30/2019 7,000 7,855 855 197,225 12/31/2019 7,000 7,889 889 198,114 6/30/2020 7,000 7,925 925 199,039 12/31/2020 7,000 7,961 961 200,000 What is the annual stated interest rate on the bonds? (Hint: Be sure to provide the annual rate rather than the six-month rate. (Round to nearest whole percentage and just put in the number without %)

Calculate net income: (just type numbers) Revenues - $10,000 Liabilities - $5,000 Expenses - $3,000 Assets - $19,000 Dividends - $4,000

7000

Accounts Payable $55,000 Land $90,000 Inventory $10,500 Accounts Receivable $7,500 Equipment $8,000 Deferred Revenue $58,500 Short-term Investments $20,000 Notes Receivable (due in 8 months) $45,500 Interest Payable $2,000 Patents $75,000 What is the amount of intangible assets assuming the accounts above reflect normal activity?

75000

Accounts receivable $40,000 $36,000 Inventory 28,000 35,000 Net sales 190,000 186,000 Cost of goods sold 114,000 108,000 Total assets 425,000 405,000 Total stockholders' equity 240,000 225,000 Net income 32,500 28,000 The 2018 debt to equity ratio is (rounded to one decimal place / put in the number without %):

77.1

ABC reports income tax expense of $800,000. Income tax payable at the beginning and end of the year are $50,000 and $70,000, respectively. What is the amount of cash paid for income taxes?

780000

March 1 Beginning Inventory 20 $2 March 7 Purchase 15 3 March 11 Sale 25 7 March 12 Purchase 20 4 What is gross profit using LIFO cost flow assumptions?

ABC had the following net income (loss) the first three years of operation: $7,000, ($1,600), and $3,600. If the Retained Earnings balance at the end of year three is $1,000, what was the total amount of dividends paid over these three years? (just type numbers)

8000

ABC has net sales of $200,000, cost of goods sold of $120,000, selling expenses of $6,000, and nonoperating expenses of $2,000. What is the company's gross profit?

80000

The balance sheet of ABC reports total liabilities of $2,000,000. The Debt equity ratio is 2.5. What is the stockholder's equity?

800000

The following table contains financial information for ABC before closing entries: Cash - $12,000 Supplies - 4,500 Prepaid Rent - 2,000 Salaries Expense - 4,500 Equipment - 65,000 Service Revenue - 30,000 Miscellaneous Expenses - 20,000 Dividends - 3,000 Accounts Payable - 5,000 Common Stock - 68,000 Retained Earnings - 8,000 What is the amount of ABC's total assets? (just type numbers)

83500

ABC's beginning inventory is $2,000 and its ending inventory is $1,000. The inventory turnover is 6 times. Cost of goods sold for the year must equal:

9000

On January 1, ABC started the year with a $400,000 balance in Retained Earnings and a $550,000 balance in Common Stock. During the year, the company reported net loss of $25,000, paid a dividend of $15,000, and issued more common stock for $30,500. What is total stockholders' equity at the end of the year? (just type numbers)

94500

Accounts Payable $55,000 Land $90,000 Inventory $10,500 Accounts Receivable $7,500 Equipment $8,000 Deferred Revenue $58,500 Short-term Investments $20,000 Notes Receivable (due in 8 months) $45,500 Interest Payable $2,000 Patents $75,000 What is the total amount of property, plant, and equipment assuming the accounts above reflect normal activity?

98000

Which of the following statements is not correct about the financial statements?

A balance sheet reports assets, liabilities, revenues, and expenses

ABC retires a $40 million bond issue when the carrying value of the bonds is $42 million, but the market value of the bonds is $36 million. The entry to record the retirement will include:

A credit og $6 million to a gain account

Which is easier to calculate

A firm's cash flow

Which is simpler?

A firm's cash flow

Which is better for predicting a firm's future net income?

A firm's past net income

Which is better for predicting a firm's future stock return?

A firm's past net income

Which of the following statements regarding liquidity ratios is true?

A high working capital generally indicates the ability to pay current liabilities on a timely basis

ABC purchased a computer that cost $10,000. It had an estimated useful life of 5 years and no residual value. The computer was depreciated by the straight-line method and was sold at the end of the second year of use for $5,000 cash. ABC should record:

A loss of $1000

ABC purchased equipment that cost $120,000. It had an estimated useful life of four years and no residual value. The equipment was depreciated by the straight-line method and was sold at the end of the third year of use for $25,000 cash. ABC should record:

A loss of $5000

Define articulation:

A number that appears in more than one statement will always be the same

Window dressing is done by

Managers

Is goodwill an asset or expense

Asset

Prepaid rent is what kind of account?

Asset

ABC sells a large number of common household items, while DEF sells a small number of expensive items. The two companies report the same dollar amount for ending inventory and gross profit for the year. Which of the following is most likely true?

ABC has a higher inventory turnover ratio, and DEF has a higher gross profit ratio

ABC reports a receivables turnover ratio of 14.5. The industry average is 10.7. What most likely is causing this difference?

ABC has effective procedures related to selling goods on account

Choose one:

Accountants prefer to report harder numbers rather than softer numbers

After the Second STEP in the Operating Cycle the firm has?

Accounts receivable

When a company sells shares, where do they put the difference between the price of the shares sold and the par value of the shares sold?

Additional paid in capital

When we sell treasury stock for more than we buy it for, where do we put the difference (cost method)?

Additional paid in capital

where do we put gains/losses on sale of treasury stock (cost method)

Additional paid in capital/Retained earnings

A company provides services on account. Indicate how this transaction would affect (1) assets (2)stockholder's equity and (3) revenues

All increase

The year end adjusting entry for warranties debits

An expense account

ABC developed a new horse transport device and incurred research and development costs of $250,000. Rather than continue with their own research, ABC decided to purchase a patent for a similar design from Vail, Inc. for $350,000. What are the total assets and expenses for these developments?

Assets $350000; Expenses $250000

The basic accounting equation:

Assets = Liabilities + Stockholders' Equity

On September 30, ABC paid employee salaries of $7,000, including $1,000 it owed to its employees last month. What are the effects of this transaction on the accounting equation?

Assets decreased, liabilities increased, expenses decreased

In a stock split

Assets don't change, liabilities don't change

In the allowance method when we collect on a previously written off receivable

Assets stay the same, net income stays the same

In the allowance method when we write off a receivable

Assets stay the same, net income stays the same

An alternative form of the accounting equation is:

Assets − Liabilities = Stockholders' Equity.

A company orders office supplies in June. Those supplies are received and paid for in July. The supplies are used in August. In which month should the company record supplies expense?

August

Which is riskier when raising money for a business

Borrowing is always riskier than issuing shares

Which of the following is a positive sign that a company is selling its inventory quickly

Both a high inventory turnover ratio and a low average days in inventory

this year a company made an error in its ending inventory

Both this year's balance sheet and income statement will be wrong

Freight on FOB Shipping point is paid by the

Buyer

The largest business in the United States are

C corp

When you see the word corporation, it refers to a

C corporation

If a company understates its count of ending inventory in year 1, which of the following is true?

The balance of retained earnings is correct at the end of year 2

In which plan(s) does an employer often match what an employee pays to a pension fund

a defined contribution pension plan

The usual balance in a contra-asset account is a

The usual balance in a contra-dividend account is a

The usual balance in a contra-expense account is a:

The term when we treat something as an asset is

Capitalize

Specific identification is used by

Car dealers

After the 3rd step in the Operating cycle, the firm has?

Cash

After the third step in the operating cycle the firm has?

Cash

Before the 1st step in the operating cycle, the firm has?

Cash

The operating cycle starts with?

Cash

Which of the following is a balance sheet item?

Cash

Which of the following items would not appear in an income statement?

Cash

Which is listed third in a Cash Flow Statement?

Cash Flow from Financing Activities

Which is closest to the Income Statement?

Cash flow from operations

Which is lasted first in a Cash Flow Statement?

Cash flow from operations

Which is listed second in a Cash Flow Statement?

Cash flows from investing activities

Over the last 50 years, which company had a higher ROA

Cola Cola

In a three line heading, the first line is:

Company name

For a given interest rate, which gives more interest?

Compound interest

LCM is based on which accounting principle

Conservatism

LCM is based on which accounting principle (1 word)

Conservatism

What is the accounting principle that doesn't allow companies to switch between LIFO and FIFO every year

Consistency

allowance for bad debts is what kind of account?

Contra-asset

Goods available for Sale minus ending inventory equals

Cost of Goods Sold

Finished goods eventually turn into...

Costs of goods sold expense

On February 22, ABC acquired 200 shares of its $5 par value common stock for $25 each. On March 15, the company reissued 70 shares for $30 each. What is true of the entry for reissuing the shares?

Credit additional paid in capital $350

ABC provides music for special occasions. On January 14, the Smith family hired ABC for an upcoming family wedding for an agreed upon fee of $10,000. The wedding was scheduled for May As part of the agreement, the Smiths paid ABC half of the fee at the end of April with the remaining amount due by the end of June. How would ABC record the receipt of the final payment in June?

Credit to accounts receivable

which preferred stock would you rather own?

Cumulative preferred stock

The usual balance in a contra-liability account is a:

The usual balance in a contra-owner's equity account is a:

The usual balance in a contra-revenue account is a:

Days in inventory + Days in receivable - Days in payable =

Days in operating cycle

Which of the following is recorded upon receipt of a payment on April 7, 2018, by a customer who pays a $900 invoice dated March 3, 2018, with terms 2/10, n/60?

Debit cash $900

ABC sold inventory for $1,200 that was purchased for $700. ABC records which of the following when it sells inventory using a perpetual inventory system?

Debit costs of Goods Sold $700; Credit inventory $700

Under the principle of lower of cost and net realizable value, when a company has 10 units of inventory A with net realizable value of $50 and a cost of $60, what is the adjustment?

Debit costs of goods sold $100; credit inventory $100

ABC sold inventory for $1,200 that was purchased for $700. ABC records which of the following when it sells inventory using a perpetual inventory system?

Debit costs of goods sold $700; Credit inventory $700

On December 1, 2018, ABC signed a $300,000, 5%, six-month note payable with the amount borrowed plus accrued interest due six months later on June 1, 2019. ABC should record which of the following adjusting entries at December 31, 2018?

Debit interest expense and credit interest payable, $1250

On September 1, 2018, ABC signed a $100,000, 9%, six-month note payable with the amount borrowed plus accrued interest due six months later on March 1, 2019. ABC records the appropriate adjusting entry for the note on December 31, 2018. In recording the payment of the note plus accrued interest at maturity on March 1, 2019, ABC would

Debit interest expense, $1500

Debit interest expense, $2000

At the beginning of December, ABC had $2,000 in supplies on hand. During the month, supplies purchased amounted to $3,000, but by the end of the month the supplies balance was only $800. What is the appropriate month-end adjusting entry?

Debit supplies expense: $4200; credit supplies: $4200

in a perpetual inventory system, the entry at the time of a sale to record the cost of the inventory sold includes a

Debit to costs of goods sold

Dividends become a legal obligation on which day

Declaration date

Window dressing are (may have more than one answer)?

Legal transactions by management at year end to improve financial ratios

Bad News which is the beginning of a Negative Growth phase will do what to the company's share price?

Decrease

Bad news which is the beginning of a negative growth phase will do what to the company's P/E ratio?

Decrease

ABC estimates uncollectible accounts based on the percentage of accounts receivable. What effect will recording the estimate of uncollectible accounts have on the accounting equation?

Decrease assets and decrease stockholder's equity

At the end of a reporting period, ABC determines that its ending inventory has a cost of $300,000 and a net realizable value of $230,000. What would be the effect(s) of the adjustment to write down inventory to net realizable value (may have more than one answer)?

Decrease total assets Decrease net income decrease retained earnings

In purchase or manufacture in the operating cycle, what happens to cash?

Decreases

In the lecture, when there is a Purchase or Manufacture in the operating cycle, what happens to cash?

Decreases

When a magazine sells one-year subscriptions to customers but receives the full amount of cash immediately, it is an example of:

Deferred revenue

Which pension plan has more complicated accounting

Defined benefit plan

State and city politicians generally prefer giving their workers

Defined benefit plans

If management can estimate the amount of loss that will occur due to litigation against the company, and the likelihood of the loss is probable, a contingent liability should be

Disclosed and reported as a liability

If management can estimate the amount of loss that will occur due to litigation against the company, and the likelihood of the loss is reasonably possible, a contingent liability should be

Disclosed, but not reported as a liability

The declaration and issuance of a stock dividend

Does not change total assets, liabilities, or total stockholder's equity

What do we end with in a bathtub?

Ending balance

Payments on an installment loan

Every payment is partially principal partially interest

How often can you calculate the P/E ratio?

Every time the stock price changes

What is expensed in sales office

Everything

Which of the following is not on the balance sheet?

Expenses

When prices are rising, which will generally lead to Higher net income?

FIFO

When prices are rising, which will generally lead to higher tax payments?

FIFO

A company can use LIFO for taxes and FIFO for financial reporting

False

A contingent gain can sometimes be disclosed in a footnote

False

Companies are legally obligated to pay preferred dividends

False

Current liabilities are only amounts we owe to suppliers bought on credit

False

In a balanced set of accounting records, EVERY account must be balance

False

In an operating lease the Lessee records an asset and a liability

False

In financial statement analysis, a single number can be very important

False

Someone who sells gasoline must report their inventory using weighted average

False

The Indians would need to earn about 10% compounded to have made a good deal on the sale of Manhattan

False

The income statement always balances

False

The statement of cash flows always balances

False

When a business pays dividends to its shareholders, the dividends are tax deductible

False

Which is usually the first step in a new business?

Financing

Of the following inventories turn into Costs of Goods Sold directly?

Finished goods inventory

Which is more of a fact and less of a fairy tale?

Firm's cash flow

Which is better for predicting a firm's future cash flow?

Firm's past net income

Freight on FOB shipping point is called

Freight in

Freight on FOB destination is called

Freight out

A bond issue with a face amount of $500,000 bears interest at the rate of 7%. The current market rate of interest is 8%. These bonds will sell at a price that is:

Less than $500,000

Define GAAP

Generally accepted accounting principles

The assumption that a business will continue to operate into the future is the

Going concern assumption

Opening inventory plus purchases equals

Goods available for sale

When bonds are issued at a premium and the effective interest method is used for amortization, at each subsequent interest payment date, the cash paid is:

Greater than the interest expense

ABC correct ending balance for the inventory account at the end of 2018 should be $5,000, but the company incorrectly stated it as $3,000. In 2019, ABC correctly recorded its ending balance of the inventory account. Which one of the following is true?

Gross profit is overstated by $2000 in 2019

ABC's correct ending balance for the inventory account at the end of 2018 should be $5,000, but the company incorrectly stated it as $3,000. In 2019, ABC correctly recorded its ending balance of the inventory account. Which one of the following is true?

Gross profit is overstated by $2000 in 2019

Gross profit is overstated by $2000 in 2019.

Aggressive Accounting practices produce a

Higher net income than conservative accounting

# Classification on the Balance Sheet Section on Statement of Cash Flows I Bonds Payable Financing II Equipment Operating III Common Stock Financing IV Accounts Payable Operating V Accounts Receivable Operating All classifications on the Balance Sheet have a general relationship with sections identified on the Statement of Cash Flows. Indicate which relationships are correctly identified in the table above.

I, III, IV, V

The excel function which calculates the rate of return which makes a series of cash flows equals zero is called

IRR

When bonds are issued at a discount and the effective interest method is used for amortization, at each subsequent interest payment date, the cash paid is:

Less than the interest expense

Which of the following is true regarding LIFO and FIFO

In a period of rising costs, LIFO results in lower net income than FIFO

Which of the following is not possible when recording a transaction?

Liabilities increase and assets decrease

Is it possible to calculate shrinkage

In perpetual inventory accounting but not in periodic inventory accounting

Good News which is the beginning of a Growth phase will do what to the company's P/E ratio?

Increase

Good news which is the beginning of a growth phase will do what to the company's share price?

Increase

Good news which is the beginning of a plateau change will do what to the company's share price?

Increase

ABC issued a ten-year, $20 million bond with a 10% interest rate for $19,500,000. The entry to record the bond issuance would have what effect on the financial statements?

Increase assets and liabilities

ABC buys widgets for $5 cash and sells them on account for $8. At the point of sale, what is the effect on the net income of ABC?

Increase by 3$

Assuming a current ratio of 1.2 and an acid-test ratio of 0.80, how will an increase in accounts receivable affect each ratio?

Increase the current ratio and increase the acid-test ratio

During collection in the operating cycle, what happens to cash?

Increases

Leverage

Increases maximum returns and increases risk

After the 1st step in the operating cycle, the firm has?

Inventory

After the first step in the operating cycle the firm has?

Inventory

After the first step in the operating cycle, the company has?

Inventory

The primary focus for financial accounting is to provide information useful to:

Investment decisions and credit decisions

The account "warranty liability"

Is adjusted at the end of the year

Earnings per share (EPS)

Is useful in comparing earnings performance for the same company over time

Choose one: - The Statement of Cash Flows always balances - It is possible for Cash Inflows to balance Cash Outflows on the Statement of Cash Flows - The Statement of Cash Flows never balances

It is possible for cash inflows to balance cash outflows on the statement of cash flows

Choose one: The Income Statement never balances The Income Statement always balances It is possible for the Income Statement to balance

It is possible for the income statement to balance

Which is true about the Cash Flow Statement?

It shows all significant changes to the company, including noncash items

Which is true about the cash flow statement?

It shows all significant changes to the company, including noncash items

When a company sells land for cash and makes a $25,000 gain:

Its debt to equity ratio decreases

A company received an order from a customer in June for services to be provided. Those services were provided in July, and the customer paid the full amount in August. According to the revenue recognition principle, in which month should the company record revenue?

July

When prices are falling, which will generally lead to higher net income?

LIFO

When prices are falling, which will generally lead to higher tax payments

LIFO

What are the two most common inventory flow assumptions

LIFO and FIFO

If the benefit value of inventory changes, but the sacrifice value of the inventory remains constant

LIFO net income will be identical to FIFO net income

if over the year the selling price of inventory increases, but the cost of the inventory remains constant

LIFO net income will be identical to FIFO net income

In an installment loan

Later payments pay less interest than earlier payments

in accounting, goodwill:

May be recorded when a company purchases another business

In the USA Goodwill on a financial statement

Must be bought, not internally developed

Is it possible to make an entry which changes only one account

in a three line heading, the second line is:

Name of the statement

Which of the following best represents value created for stockholders during the current period?

Net income

Permanent accounts are found:

On the balance sheet

Temporary accounts are found:

On the income statement

What do we start with in a bathtub

Opening balance

The sale of a good or service is classified in the statement of cash flows as a(n):

Operating activity

ABC paid $2,000 interest on short-term notes payable, $10,000 interest on long-term bonds, and $6,000 in dividends on its common stock. ABC would report cash outflows from activities, as follows:

Operating, $12,000; Financing, $6,000

Which is often the third step in a new business?

Operations

What does OPM stand for?

Other people's money

What in the P/E ratio deals with reality?

In the P/E ratio

P is forward looking; E is backward looking

In the P/E ratio?

P is forward looking; E is backward looking

Which of the following of ABC, a new company, decreased ABC's total assets?

Paid employees $10,000 for their first month's salaries

When company A acquires company B, company A is called the

Parent

Solvency is the ability to

Pay long term debt

What are the most important Cash Outflows from Financing Activities?

Paying dividends Buying treasury stock repayment of bonds

An example of an adjusting entry would not include

Paying salaries to company employees

Periodic vs Perpetual inventory accounting

Periodic and perpetual inventory accounting result in the same costs of goods sold

Choose one:

Periodic inventory accounting is less expensive to maintain than perpetual inventory accounting

Which of the following is true?

Periodic inventory accounting is less expensive to maintain than perpetual inventory accounting

Return on assets equals:

Profit margin x Asset turnover

Using the Trueblood Criterion what is the ultimate goal of accounting?

Predict future cash flows to the investor or creditor

Of the following, the most important objective for financial accounting is to provide information useful for?

Predicting cash flows

ROI is a

Profitability ratio

Which of the following are Cash Outflows from Investing?

Purchase a building Purchase a truck

Which of the following are Cash Outflows from Operating Activities?

Purchase inventory

Which of the following transactions would cause an increase in both the assets and liabilities of a company?

Purchase of a building by issuing a note payable

which of the following would increase assets and increase liabilities?

Purchase office supplies on account

Which of these transactions increased the given company's total liabilities?

Purchased equipment by signing a note payable

Which ratio is strongly influenced by the long-term Debt of a company

ROE

Which ratio is strongly influenced by the long-term debt of a company

ROE

Which ratio is strongly influences by the long term debt of a company

ROE

Which type of inventory is in a factory?

Raw materials and work in process

What is included in Work in Process inventory?

Raw materials, Direct labor, Overhead

After the second step in the operating cycle, the firm has?

Receivable

After evaluating the lower of cost and net realizable value of inventory, the accountant prepares a year-end adjustment. That adjustment would:

Reduce the company's stockholder's equity

When a company makes an end-of-period adjusting entry that includes a credit to prepaid rent, the debit is usually made to

Rent expense

An operating lease will have which of these expenses (may have more than one answer)

Rental expense

An operating lease will have which of these expenses (may have more than one answer)?

Rental expense

If a company's total assets decreased while liabilities and common stock were unchanged, and no dividends were paid, then

Revenues were less than expenses

The second step in the operating cycle is called?

Sale

Common size Income statements are a way of understanding what happens to $1 of (1 word)

Sales

When we collect sales tax, we credit which account

Sales tax payable

When we pay sales tax, we debit which account

Sales tax payable

Aggressive Accounting practices produce a

Same cash flow from operations as conservative accounting

Marketing is involved in which step in the operating cycle?

Second

A creditor who has collateral is called a

Secured creditor

Freight on FOB destination is paid by the

Seller

The debt to equity ratio is a measure of

Solvency

The Debt to asset Ratio is a

Solvency ratio

The Times Interest Earned is a

Solvency ratio

The debt to equity ratio is a

Solvency ratio

During a sale in the operating cycle, what happens to cash?

Stays the same

EPS is a

Stock market ratio

The P/E ratio is a

Stock market ratio

Which statement is true

The accounting for a defined benefit pension plan usually requires an actuary

Prior to year-end adjusting entries, what would explain the allowance for uncollectible accounts having a debit balance?

The amount of actual uncollectible accounts in the current year was greater than the estimate of uncollectible accounts made at the end of the prior year.

Which of the following best explains the meaning of total stockholder's equity?

The amount of capital invested by stockholders plus profits retained over the life of the company

The ending balance of retained earnings can be best described as:

The amount of net income over the life of a company not paid to owners in the form of dividends

What is the most likely reason for a company to have an increase in average collection period?

The company has become more lenient in its credit policies and is extending credit terms to maintain customers

A company receives a $50,000 cash deposit from a customer on October 15 but will not provide services until November 20. Which of the following statements is true?

The company records deferred revenue on October 15

At year end, by paying off debt or purchasing inventory on account a manager can manipulate

The current ratio

Which is always the larger ratio

The current ratio

Which of the following is not a solvency ratio (may have more than one answer)?

The current ratio

Which of the following is true regarding the relationship between the current ratio and the acid-test ratio

The current ratio will always be equal to or larger than the acid-test ratio for a specific company

Which statement is true about Operating Cash Flows?

The direct method is simpler for an investor to understand, the indirect method is used by most firms

in a defined contribution plan who has the investment risk

The employee

In a defined benefit plan who has the investment risk

The employer

A company in NY is buying goods from a japanese company. The goods are sold FOB San Francisco port

The freight from Japan to San Francisco is an expense, the freight from San Francisco to New York is an asset

Gain contingencies usually are recognized in a company's income statement when

The gain is certain

Which method of reporting Operating Cash Flows is more misleading?

The indirect method

Which method of reporting Operating Cash Flows is used more often by companies?

The indirect method

When a firm gets less risky what will happen to its bonds

The market interest rate of the bonds will go down and the price of the bonds will go up

When a firm gets riskier what will happen to its bonds

The market interest rate of the bonds will go up and the price of the bonds will go down

The difference between a defined contribution plan and a defined benefit plan

The plans are totally different

Which of the following would increase the gross profit ratio?

The sales price of a product increases by a higher percentage than does its cost of goods sold

When a firm gets riskier what will happen to its bonds

The stated interest rate of the binds will not change

Goodwill is:

The value of a business as a whole, over and above the value of its net identifiable assets

The lower of cots and net realizable value rule causes losses in the value of inventory to be recognized in the period when

The value of inventory declines below cost

Managers use controlled liquidations

To increase income when they are measuring inventory using LIFO

In cash flow reporting, at the collection of an account receivable

There is a gain

Where do we put gains/losses on purchase of treasury stock (cost method)?

There is no gain or loss on purchase of treasury stock

Which method of reporting Operating Cash Flows generally gives a higher Cash Flow?

They give the same cash flow

Last year a company made an error in its ending inventory. For THIS year

This year's balance sheet will be correct but the income statement will be wrong

Horizontal analysis looks at the way accounts change over (1 time)

Time

The adjusting entry required when amounts previously recorded as deferred revenues are earned by providing goods or services to customers include:

a debit to a liability

To create common size balance sheets, divide every line by (2 words)

Total assets

Window dressing causes which kind of entry (may have more than one answer)

Transaction

Which of the following are made BEFORE a trial balance is prepared?

Transaction entries

Which of the following are made when the business does something?

Transaction entries

A company can use FIFO for taxes and LIFO for financial reporting

True

A contingent liability be disclosed in a footnote

True

A contingent liability can sometimes be ignored

True

For financial reporting a company can have some inventory on FIFO and some on LIFO

True

Historical cost numbers are usually harder than market value numbers

True

If you put $500 into a savings account that pays simple interest of 8% per year and then withdraw the money two years later, you will earn interest of exactly $80.

True

Someone who sells coal can report their inventory using FIFO

True

Someone who sells milk can report their inventory using LIFO

True

When a business pays interest to its shareholders, some (or all) the interest is tax deductible

True

in an financing lease the Lessee records an asset and a liability

True

the balance sheet always balances

True

Truman Co. sells a large number of common household items, while Stapleton sells a small number of expensive items. The two companies report the same dollar amount for ending inventory and gross profit for the year. Which of the following is most likely true?

Truman has a higher inventory turnover ratio, and Stapleton has a higher gross profit ratio

The adjusting entry required when amounts previously recorded as deferred revenues are earned by providing goods or services to customers includes:

a debit to a liability

A company overstates its ending inventory for 2018. What effect will this have on the reported amount of costs of goods sold for 2018?

Understate cost of goods sold

Suppose that ABC overstates its ending inventory for 2018. What effect will this have on the reported amount of costs of goods sold for 2018?

Understate costs of goods sold

If someone subscribes to a magazine, on the company books, which liability account goes up?

Unearned revenue

In doing an allocation for a basket purchase

Use the total cost and the individual market values

Common size statements are an example of

Vertical analysis

The going concern assumption means we assume that a company

Will pay all its liabilities

Can a contingent liability require a journal entry

Yes

Can a firm earn 36% risk free

Yes, by paying within the sales discount period

ABC purchased a computer that cost $10,000. It had an estimated useful life of 5 years and no residual value. The computer was depreciated by the straight-line method and was sold at the end of the fourth year of use for $3,000 cash. ABC should record:

a gain of $1000

Per value of shares is

a garbage number for common stock but an important number for preferred shares

The owner of an office building should report rent collected in advance as a debit to Cash and a credit to:

a liability

When a company spends money to fix an appliance under warranty, they credit cash and debit

a liability

When a company spends money to fix an appliance under warranty, they credit cash and debt:

a liability

When we collect sales tax we DR cash and credit

a liability

The year end adjusting entry for warranties credits

a liability account

Define liquidity

ability to pay current debt

A bond which the company may repay whenever they want is a called a

callable bond

Air conditioning cost in a company

can be an asset or an expense

Which of the following is not a major section in the statement of cash flows?

cash flows from customers

Which of the following are made AFTER the financial statements?

closing entries

the 3rd step in the operating cycle is called?

collection

the third step in the operating cycle is called?

collection

What kind of account is treasury stock

contra-equity

A bond which allows the bondholder to trade in his/her bond for stock is called a

convertible bond

the two groups who have claims on the assets in the business?

creditors and owners

The current portion of long term debt is a

current liability

when goodwill dies, this is called

impairment

A physical inventory count is necessary to calculate Cost of Goods Sold

in periodic inventory accounting but not in perpetual inventory accounting

Generally a firm becomes more of a growth company, its P/E ratio will

increase

Generally if a firm becomes less risky, its P/E ratio will

increase

Generally if a firm becomes less risky, its share price will

increase

Generally if a firm becomes more of a growth company, its share price will

increase

Non recurring bad news will do what to the company's P/E ratio?

increase

ABC spends $50,000 this year in research and development for a new drug to cure liver damage. By the end of the year, management feels confident that the new drug will gain FDA approval and lead to higher future sales. What impact will the $50,000 spending have on this year's financial statements?

increase expenses

Which of the following would result in an increase in the current ratio, but not necessarily the acid-test ratio?

increase in current assets

The change in the bathtub equals

increase minus decrease

The entry to record a monthly payment on an installment note such as a car loan

increases expense, decreases liabilities, and decreases assets

In a big bath, a firm:

increases expenses

In a perpetual inventory system, the purchase of inventory is debited to

inventory

Which is often the second step in a new business?

investing

Social security

is a defined benefit pension plan

Calculating the allowance for bad debts at the end of the year?

is an APPROXIMATE procedure

Freight on FOB shipping point

is an asset

Freight on FOB destination

is an expense

Assume a company's current ratio and acid-test ratio are less than 1.0 before it purchases inventory on credit. When it makes the purchase:

its acid-test ratio decreases

When collateral is the safest because it can't disappear

land

In an installment loan

later payments pay more principal than earlier payments

Window dressing is

legal

When bonds are issued at a discount and the effective interest method is used for amortization, at each subsequent interest payment date, the cash paid is:

less than the interest expense

Purchasing office equipment on account has what impact on the accounting equation?

liabilities increase, assets increase

Unearned revenue is what kind of account?

liability

Unearned revenue us what kind of account

liability

What is the most important advantage of a corporation

limited liability

The Current Ratio is a

liquidity ratio

a company has 12247 customers they extend credit to, they will have 1 ______________ A/R account

master

Which types of companies pay cash dividends

mature companies

One of the three condition of an asset is that an accountant can _____________ the asset.

measure

Financial accounting in three words

measure and communicate

A bond issue with a face amount of $500,000 bears interest at the rate of 7%. The current market rate of interest is 6%. These bonds will sell at a price that is:

more than $500,000

If I multiply one side of an equality by ten, to maintain the equality, what do I have to do to the other side?

multiply by ten

Can APIC have a debit balance

Does a partnership pay taxes

Assuming a current ratio of 1.2 and an acid-test ratio of 0.80, how will the purchase of inventory with cash affect each ratio?

no change to the current ratio and decrease the acid-test ratio

Managers prefer that a lease be

operating

Name the 3 cash flows:

operations, financing, and investing

The correct order from the smallest number of shares to the largest number of shares is:

outstanding, issued, and authorized

The definition of a liability is: something we:

owe

One of the three conditions for an asset is that the business ______ the asset

owns

Liquidity is the ability to:

pay current debt

In the allowance method, accountants have to do what to report the past

predict the future

When a bond with a face value of $100,000 is sold for $115,000, the bond is being issued at a (1 word)

premium

ROE is a

profitability ratio

The asset turnover ratio is a

profitability ratio

The net margin ratio is a

profitability ratio

The market will generally react to dividends on which day

record date

Managers generally prefer

recording an operating lease rather than a financing lease

Which of the following is/are NOT an example of aggressive accounting practices (may have more than one answer)?

recording contingent losses that are probable

Which statement below best describes the accounting equation?

resources of the company equals the creditors' and owners' claims to those resources

if a bond limits the ability of the business to issue dividends, this is called a

restrictive covenant

Define ROI (3 words)

return on investment

Which of the following is not a balance sheet item?

revenues

To create Common size Income statements, divide every line by (1 word)

sales

The gross profit ratio will typically be higher for companies that

sell products that are more highly specialized

Interest is usually paid on a bond how often (1 word)

semiannually

A bond in which payment of principal is done continuously through the life of the bond is called a

serial bond

The balance is a:

snapshot

If everything is in balance

some account balances may be wrong

Freight is

sometimes an asset, sometimes an expense

Calculation of ending inventory has an effect on which statements

statement of changes in equity income statement balance sheet

A company has 12247 customer they extend credit to, they will have 12247 _____________ accounts

subsidiary

When company A acquires company B, company B is called the

subsidiary

When a company makes an end-of-period adjusting entry, which includes a debit to supplies expense, the usual credit entry is made to

supplies

Which of the following best explains the meaning of total stockholder's equity

the amount of capital invested by stockholders plus profits retained over the life of a company

If a company has stockholders' equity of $60,000 at the end of the year, which of the following statements must be true?

the company's assets exceed the liabilities by at least $60,000

Which method of reporting Operating Cash Flows is more closely tied to the Income Statement?

ACC 2101 - Final

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Unit 2C