Accounting 1 Mid-Term

A company earned $2,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:

b. 20%. Correct

At the end of the day, the cash register's record shows $1,250, but the count of cash in the cash register is $1,245. The correct entry to record the cash sales is

b. Cash...1,245 Cash over and short....5 Sales...1,250

Source documents include all of the following except:

b. Ledgers. Correct

The accounting guideline that requires financial statement information to be supported by independent, unbiased evidence other than someone's belief or opinion is the:

e. Objectivity principle.

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below. What amount will be posted to Tricia DeBarre, Capital in the process of closing the Income Summary account? (Assume all accounts have normal balances.)

$16,780 credit.

The usual order for the asset section of a classified balance sheet is:

Current assets, long-term investments, plant assets, intangible assets.

A voucher system is a series of prescribed control procedures:

Designed to control cash disbursements and the acceptance of obligations.

8.5%

FastForward has net income of $18,955, and assets at the beginning of the year of $200,000. Assets at the end of the year total $246,000. Compute its return on assets.

e. The cash payment of a $750 account payable was posted as a debit to Accounts Payable and a debit to Cash for $750.

In which of the following situations would the trial balance not balance?

Closing the temporary accounts at the end of each accounting period:

Serves to transfer the effects of these accounts to the owner's capital account on the balance sheet. b. Prepares the withdrawals account for use in the next period. c. Gives the revenue and expense accounts zero balances. d. Causes owner's capital to reflect increases from revenues and decreases from expenses and withdrawals. e. All of these. (ANSWER - E)

$130,000.

The following information is available for the Travis Travel Agency. After these closing entries what will be the balance in the Jay Travis, Capital account?

Depreciation expense.

The periodic expense created by allocating the cost of plant and equipment to the periods in which they are used, representing the expense of using the assets, is called:

Preparing a post-closing trial balance.

Which of the following is the usual final step in the accounting cycle?

Of the following errors, which one by itself will cause the trial balance to be out of balance?

a. A $200 cash salary payment posted as a $200 debit to Cash and a $200 credit to Salaries Expense.

Merchandise with an invoice price of $2,000 was purchased on October 3, terms 1/15, n/60. The company uses the net method to record purchases. The entry to record the cash payment of this purchase obligation on October 17 is:

a. Accounts Payable...1,980 Cash....1,980 Correct

Ethics:

a. Are beliefs that separate right from wrong. b. And law often coincide. c. Help to prevent conflicts of interest. d. Are critical in accounting. e. All of these. (ANSWER)

Banking activities include:

a. Bank accounts. b. Bank deposits. c. Checking. d. Electronic funds transfer. e. All of these. (ANSWER)

Under the alternative method for recording prepaid expenses, which is the correct set of journal entries?

a. Choice A

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the:

a. Going-concern principle. Correct

If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:

a. Increased $22,000.

A general journal is:

c. A complete record of any transaction and the place from which transaction amounts are posted to the ledger accounts.

Adjusting entries:

c. Affect both income statement and balance sheet accounts.

Cash equivalents:

c. Are short-term investments sufficiently close to their maturity date that their value is not sensitive to interest rate changes.

To include the personal assets and transactions of a business's owner in the records and reports of the business would be in conflict with the:

c. Business entity principle.

A credit entry:

c. Decreases asset and expense accounts, and increases liability, owner's capital, and revenue accounts. Correct

The difference between a company's assets and its liabilities, or net assets is:

c. Equity.

An account balance is:

c. The difference between the total debits and total credits for an account including the beginning balance.

A voucher is an internal file:

c. Used to accumulate information needed to control cash disbursements and to ensure that transactions are properly recorded. Correct

A classified balance sheet differs from an unclassified balance sheet in that

c. a classified balance sheet presents information in a manner that makes it easier to calculate a company's current ratio.

On March 31, 2009, Phoenix, Inc. paid Melanie Publishing Company $15,480 for a 3-year subscription for five different magazines. The subscriptions started immediately. What amount should appear in the Prepaid Subscription account for Phoenix Company after adjustments on December 31 each year?

d. 2009, $11,610; 2010, $6,450; 2011, $1,290; 2012, $0.

A list of all accounts and the identification number assigned to each account used by a company is called a:

d. Chart of accounts.

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

d. Matching principle.

Which of the following statements is incorrect?

d. On the work sheet, the adjusted amounts are sorted into columns according to whether the accounts are used in preparing the unadjusted trial balance or the adjusted trial balance.

`Internal control systems are:

d. Required by Sarbanes-Oxley (SOX) to be documented and certified if the company's stock is traded on an exchange. Correct

evenue is properly recognized:

d. Upon completion of the sale or when services have been performed and the business obtains the right to collect the sales price.

Outstanding checks refer to checks that have been:

d. Written, recorded on the company books, sent to the customer, but have not yet been paid by the bank.

In the process of completing a work sheet, you determine that the Income Statement debit column totals $83,000, while the Income Statement credit column totals $65,000. To enter net income (or net loss) for the period into the work sheet would require an entry to

d. the Balance Sheet & Statement of Owner's Equity debit column and the Income Statement credit column.

A sales invoice:

e. All of these.

The difference between the cost of an asset and the accumulated depreciation for that asset is called

e. Book Value.

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31. Which of the following statements is true?

e. It will understate expenses and overstate net income by $9,000. Correct