ACC 212 exam 2 homework
What inventory system updates a company's inventory balance at the end of an accounting period?
Periodic
What inventory system continuously updates a company's inventory balance each time an inventory is bought, sold, or returned?
Perpetual
Laker Bakery purchased a new oven from Louie's Restaurant Equipment for $20,000. Laker Bakery wrote a $20,000 check to Louie's Restaurant Equipment. Which of the following describes the immediate effect of this transaction on Laker Bakery's financial statements?
Property, Plant & Equipment increases by $20,000 Cash decreases by $20,000
(T/F) Companies often pay for inventory after receiving the items.
True
(T/F) Shrinkage refers to inventory that is lost as a reult of theft, waste, or error.
True
what is one for-sale resource that would be owned by a bakery?
a loaf of bread
Laker Bakery purchased an oven for $21,000 on January 1, 2022. Laker Bakery believes it will be able to sell the oven for $1,000 at the end of its ten-year useful life. If this is the company's only fixed asset, what amount of accumulated depreciation will Laker Bakery report on its December 31, 2023 balance sheet?
$4,000
how is the multiple step income statement more advantageous than a single step format?
A multiple step income statement isolates operating income from non-operating elements of net income. + A multiple step income statement provides intermediate subtotals that allow a user to better understand components of net income.
Which inventory costing method uses a weighted average to assign inventory costs to items?
Average costing
which of the following accounts is an asset?
accounts receivable
which of the following is a physical balance account?
both inventory and buildings w
Laker Television Corporation needs to paint the tower that supports its antenna. If Laker Television Corporation records the cost as an asset, it has _____________ the cost.
capitalized
what accounting method allows companies to recognize revenue when they receive cash from customers without regard to the timing of the transfer of goods or services?
cash-basis
Which inventory costing method assumes that the cost of the oldest purchases is the cost of items that were sold?
FIFO
(T/F) Companies usually pay for inventory at the same time they receive inventory items.
False
(T/F) U.S. GAAP allows certain small businesses to use the cash-basis method of accounting in lieu of more complex accrual accounting.
False
The market price of inventory will always be equal to its net realizable value.
False
Which inventory costing method assumes that the cost of the most recent purchases is the cost of items that were sold?
LIFO
Laker Television Corporation hired a company to repaint the tower that supports its antenna. The total cost of the job is $1,000. On June 15, 2022, Laker Television Corporation paid $250 to the contractor as a deposit. The job was completed on July 12, 2022, at which point Laker Television Corporation immediately wrote a $750 check to the painting contractor. Laker Television Corporation uses accrual accounting, and has determined that this should be classified as repair & maintenance expense. How will the June 15 transaction affect Laker Television Corporation's retained earnings account?
No change
Laker Bakery purchased a new oven from Louie's Restaurant Equipment for $20,000. Louie's Restaurant Equipment allows Laker Bakery to pay for the oven within 30 days. Which of the following describes the immediate effect of this transaction on Laker Bakery's financial statements?
Property, Plant & Equipment increases by $20,000 Accounts Payable increases by $20,000
(T/F) Beginning inventory plus purchases equals cost of goods available for sale
True
(T/F) RFID tags and bar code scanners are two technological resources that can help a company efficiently count inventory at the end of an accounting period.
True
what is a primary advantage of a classified balance sheet?
a classified balance sheet helps users assess a company's ability to satisfy near-term obligations.
which of the following account balances could occur when a business gets something before it gives something in return?
accounts payable
which of the following accounts is a liability?
accounts payable
which of the following account balances could occur when a business gives something before it gets something in return?
accounts receivable
what accounting method allows companies to recognize revenue when they deliver promised goods or services without regard to the actual timing of the customer's cash payment?
accrual
which of the following is a contra-asset?
accumulated depreciation
what term describes allocation of the cost of long-term intangible assets to an accounting period?
amortization expense
what is one for-use resource that would be owned by a bakery?
an oven
On which financial statement would accounts payable primarily be depicted?
balance sheet
on what financial statement would accounts receivable primarily be depicted?
balance sheet
on which financial statement would the cash account primarily be depicted?
balance sheet
procurement could involve the acquisition of which assets?
both inventory and equipment are possibilities.
which of the following would not be reported on an accrual-basis income statement?
cost of land purchased for future use
a ___ resource is intended to be used or sold within one year.
current
what term describes allocation of the cost of natural resources to an accounting period?
depletion expense
what term describes allocation of the cost of property, plant, and equipment to an accounting period?
depreciation expense
"disposal" is a term that signifies an enterprise's sale of resources to someone else.
true
(T/F) a deferral is a transaction for which the obligation to pay has been satisfied, but the obligation to deliver has not.
true
(T/F) long-term debt and notes payable are 2 acceptable terms used to denote a liability owed to a lender.
true
which inventory account could be depicted on a manufacturer's balance sheet but would not be portrayed on a merchandiser's balance sheet?
work-in-progress, raw materials
On December 31, 2021, Piper's Pizza wrote a $6,000 check to Global Insurance for general liability insurance coverage. The policy covers the entire 2022 calendar year. Piper's Pizza uses accrual accounting. Based only on this information, what amount of prepaid insurance expense will by reflected on Piper Pizza's December 31, 2022 balance sheet?
$0
Laker Television Corporation hired a company to repaint the tower that supports its antenna. The job was completed on July 12, 2022, at which point Laker Television Corporation immediately wrote a $1,000 check to the painting company. Laker Television Corporation uses accrual accounting, and has determined that this should be classified as repair & maintenance expense. How will this transaction affect Laker Television Corporation's retained earnings account?
$1,000 decrease
Laker Television Corporation hired a company to repaint the tower that supports its antenna. The total cost of the job is $1,000. On June 15, 2022, Laker Television Corporation paid $250 to the contractor as a deposit. The job was completed on July 12, 2022, at which point Laker Television Corporation immediately wrote a $750 check to the painting contractor. Laker Television Corporation uses accrual accounting, and has determined that this should be classified as repair & maintenance expense. How will the July 12 transaction affect Laker Television Corporation's retained earnings account?
$1,000 decrease
Laker Television Corporation hired a company to repaint the tower that supports its antenna. The total cost of the job is $1,000. The job was completed on July 12, 2022. Laker Television Corporation plans to write a $1,000 check in August 2022 to pay the bill. Laker Television Corporation uses accrual accounting, and has determined that this should be classified as repair & maintenance expense. How will the July 12 transaction affect Laker Television Corporation's retained earnings account?
$1,000 decrease
Cheryl's Publishing Company purchased a printing press in 2013 by paying $40,000. On December 31, 2021, when accumulated depreciation equaled $35,000, Cheryl's Publishing Company sold the printing press to the GVSU Lanthorn for $6,000. How will the sale of the printing press be depicted in the 2021 income statement for Cheryl's Publishing Company?
$1,000 gain
Cheryl's Publishing Company purchased a printing press in 2013 by paying $40,000. On December 31, 2021, when accumulated depreciation equaled $35,000, Cheryl's Publishing Company sold the printing press to the GVSU Lanthorn for $4,000. How will the sale of the printing press be depicted in the 2021 income statement for Cheryl's Publishing Company?
$1,000 loss
Cheryl's Farmstand uses accrual accounting. In October the company purchased 1,000 pumpkins at a cost of $5 per pumpkin. During October the company sold 900 of the pumpkins for $20 per pumpkin. All customers paid for their pumpkins with cash. What amount of sales revenue should Cheryl's Farmstand report for the month of October?
$18,000 on its income statement
Laker Bakery purchased an oven for $21,000 on January 1, 2022. Laker Bakery believes it will be able to sell the oven for $1,000 at the end of its ten-year useful life. As of December 31, 2022, the oven's book value will be _______________.
$19,000
Laker Bakery purchased an oven for $21,000 on January 1, 2022. Laker Bakery believes it will be able to sell the oven for $1,000 at the end of its ten-year useful life. If this is the company's only fixed asset, what amount of depreciation expense will Laker Bakery record for the year ended December 31, 2022?
$2,000
Laker Bakery purchased an oven for $21,000 on January 1, 2022. Laker Bakery believes it will be able to sell the oven for $1,000 at the end of its ten-year useful life. If this is the company's only fixed asset, what amount of depreciation expense will Laker Bakery record for the year ended December 31, 2023?
$2,000
Skylar's Aircraft Dealership, a company that buys and resells used aircraft, purchased a Cessna 421 airplane for $350,000 on January 15, 2020. Unfortunately, market demand for Cessna 421 models declined because a structural problem was identified with wing spars used in this aircraft. The decline in value is expected to be long-lasting because owners of Cessna 421 aircraft will incur significant costs to repair the defect. An independent appraiser opined that the aircraft's fair market value was $200,000 as of December 31, 2020. At what amount should this aircraft be reflected in the company's December 31, 2020 balance sheet?
$200,000
On October 1, 2021 Clark Manufacturing paid a $12,000 insurance premium for liability coverage. The insurance policy covers the period October 1, 2021 through September 30, 2022. What amount of this transaction will the company include in insurance expense on its accrual-basis income statement for the year ended December 31, 2021?
$3,000
Ace Electronics uses cash-basis accounting. During January 2019 the company sold $50,000 of goods to customers. The company collected $30,000 of this amount during January 2019. The remaining amount was collected during February 2019. What amount of sales revenue should Ace Electronics report for January and February?
$30,000 in January and $20,000 in February
On December 31, 2021, Piper's Pizza wrote a $6,000 check to Global Insurance for general liability insurance coverage. The policy covers the entire 2022 calendar year. Piper's Pizza uses accrual accounting. Based only on this information, what amount of prepaid insurance expense will by reflected on Piper Pizza's January 31, 2022 balance sheet?
$5,500
Ace Electronics uses accrual-basis accounting. During January 2019 the company sold $50,000 of goods to customers. The company collected $30,000 of this amount during January 2019. The remaining amount was collected during February 2019. What amount of sales revenue should Ace Electronics report for January and February?
$50,000 in January and $0 in February
On December 31, 2021, Piper's Pizza wrote a $6,000 check to Global Insurance for general liability insurance coverage. The policy covers the entire 2022 calendar year. Piper's Pizza uses accrual accounting. Based only on this information, what amount of insurance expense will Piper Pizza record for the month ended January 31, 2022?
$500
BrookeBlake Corporation purchased these train tracks for its copper mine. The cost of track materials was $600,000. BrookeBlake Corporation spent $30,000 to have the tracks shipped to the mine. Finally, the company paid $60,000 to the contractor who installed the tracks. At what amount will this asset be recorded in the company's balance sheet?
$690,000
Randi is a CPA who uses paper and other supplies in her accounting practice. On January 1, 2022, the balance in her Supplies asset account was $2,000. During 2022, she purchased supplies costing $6,000. On December 31, 2022, Randi counted her supplies, noting that the cost of supplies on hand was $500. What amount of Supplies Expense will Randi report in her income statement for the year ended December 31, 2022?
$7,500
Skylar's Aircraft Dealership, a company that buys and resells used aircraft, purchased a Cessna Citation jet for $750,000 on December 15, 2020. An independent appraiser opined that the aircraft's fair market value was $900,000 as of December 31, 2020. The company sold the aircraft to Buechler Corporation for $950,000 on April 1, 2021. At what amount will this aircraft be included in Skylar's Aircraft Dealership's inventory on its December 31, 2020 accrual-basis balance sheet?
$750,000
Laker Bakery purchased ingredients. The invoice total is $1,000, but the supplier offers 2/10, n/30 terms. What will be the final cost of the ingredients if Laker Bakery remits payment within six days?
$980
Laker Television Corporation needs to paint the tower that supports its antenna. If Laker Television Corporation records the cost as repair expense, it has _____________ the cost.
expensed
(T/F) Prepaid expenses will primarily be depicted on the statement of cash flows
false
(T/F) most inventory is a temporal resource
false
retained earnings will primarily be depicted on the statement of cash flows
false
what is the income statement caption used to label the difference between net sales and cost of goods sold?
gross profit
on which financial statement would cost of goods sold primarily be depicted?
income statement
on which financial statement would sales revenue primarily be depicted?
income statement
on which financial statement would utilities expense primarily be depicted?
income statement
"Summer Semester" is owned by Randi's Laker Marina, a company that sells used boats. Randi took this photo after she demonstrated the boat to a prospective retail customer. Which balance sheet account is most appropriate for this boat?
inventory
_______ is an account that summarizes physical goods that will be resold or used to make something else that will be resold.
inventory
Laker Bakery ordered ingredients on October 1. The ingredients were shipped on October 1. Laker Bakery received them on October 3. Terms with the supplier are FOB shipping point. Who owns the ingredients on October 2?
laker bakery
which of the following account balances could occur when a business gets something before it gives something in return?
long-term debt
what financial accounting term explains that an amount is significant if it would influence the judgement of a reasonable user of financial information?
materiality
BrookeBlake Corporation purchased a copper mine. Later, the corporation installed the rail-based transportation system shown in the photo. What type of asset account should be used to record the cost of acquiring the mine?
natural resources
a company incorrectly records a payment as an asset instead of an expense. How will this error affect accrual-basis net income?
net income will be too high in the current period
land, buildings, equipment, and patents are examples of what type of resource?
non-current
what is one example of an intangible resource?
patent
which of the following account balances occur when a business gives something before it gets something in return?
prepaid expenses
"Summer Semester" is owned by Randi's Fishing Frenzy, a company that offers charter fishing trips for customers. Randi took this photo after she used the boat to provide a charter fishing trip for three GVSU students.. Which balance sheet account is most appropriate for this boat?
property, plant and equipment
BrookeBlake Corporation purchased a copper mine. Later, the corporation installed the rail-based transportation system shown in the photo. What type of asset account should be used to record the cost of acquiring the rail-based transportation system?
property, plant, and equipment
Beginning Inventory + ___________ - Ending Inventory = Cost of Goods Sold
purchases
What term describes the formal recording of a business event in an enterprise's accounting system?
recognition
on which financial statement would dividends be depicted?
statement of stockholders' equity
the procurement process involves exchanges between an enterprise and its ___.
suppliers/vendors
A _____ resource has physical substance.
tangible
what is one example of an intangible asset?
the nike swoosh
Laker Bakery ordered ingredients on October 1. The ingredients were shipped on October 1. Laker Bakery received them on October 3. Terms with the supplier are FOB destination. Who owns the ingredients on October 2?
the supplier
what is one notable reason for designating an inventory purchase as either FOB shipping point or FOB destination?
these terms could identify who is responsible if the inventory is damaged during shipping.
temporal resources are consumed with the passage of ___.
time
(T/F) a truck could be classified as either equipment (long term asset) or inventory (current asset) depending upon the industry classification of the enterprise
true
(T/F) an accrual is a transaction for which the obligation to deliver has been satisfied, but the obligation to pay has not.
true
(T/F) labor is a temporal resource
true
(T/F) net income for a specified time period will be identical for both single step and multiple step income statement presentations
true
(T/F) physical balance accounts represent tangible things.
true
agreements with balances imply the existence of transactions that increase or decrease account balances.
true
which of the following is an example of a fungible resource?
two boxes of cheerios on a grocer's shelf
which of the following is an example of a nonfungible resource?
two cars in a dealer's showroom
Refer to the December 2021 and January 2022 calendars provided below. Laker Manufacturing pays employees every Friday for the prior week's work. Therefore, the cost of labor for December 27 - 31, 2021 will be included in employees' paychecks on January 7, 2022. What balance sheet account would be part of the employee resource exchange when Laker Manufacturing accrues this expense for 2021?
wages payable
