Accounting 211 Final Review

The statement of cash flows may be viewed in terms of the balance sheet equation. Which of the following expressions below is correct?

A) Change in Cash = Change in (Liabilities + Stockholders' Equity − Noncash Assets)

Which inventory costing method uses the oldest cost for cost of goods sold on the income statement and the newest cost for inventory on the balance sheet?

FIFO

The fraud triangle contains three elements that must exist for accounting fraud to occur. The elements are?

Incentive, opportunity, and rationalization.

Which of the following would not be recorded as an accounting transaction?

Ordering supplies to be delivered next month

ABC Corp. issued $100,000 of bonds at a premium; as a result, the company:

received more than $100,000

Depreciation is added back to net income in a statement of cash flows prepared using the indirect method because it

reduces net income but not cash

If the calculation of cash flows from operating activities starts with net income, the company

will remove the effects of all noncash items included in the calculation of net income

Preferred stock differs from common stock in that

preferred stockholders are paid dividends before common stockholders

Sunnyside Co.'s comparative balance sheet indicated that the Equipment account increased by $112,000. Upon further investigation of the account changes, it is determined that Sunnyside purchased equipment totaling $196,000 for the year. It also sold equipment with an original cost of $84,000 for $22,400 cash. Assuming these are the only transactions affecting the investing activities, Sunnyside will report net cash flows provided by (used in) investing activities of

$(173,600)

The issue price of each $1,000 bond that pays interest at 5% and has a bond price of 102.10 equals:

$1,021

The following additional information is available from the financial statements of Garfield Industries: Amortization Expense$36,000 Purchase of building for cash 270,000 Depreciation Expense 108,000 Increase in Accounts Receivable 30,000 Increase in Bonds Payable 500,000 Increase in Common Stock 120,000 Increase in Inventory 86,000 Decrease in Accounts Payable 136,000 Increase in Salaries and Wages Payable 50,000 Cash dividends paid 200,000 Net income 584,000 What is Garfield's net cash provided by operating activities?

$526,000

The following information pertains to Chestnut, Inc.: Net Sales Revenue $96,460 Cost of Sales 63,458 Gross Profit 33,002 Operating and Other Expenses 25,430 Interest Expense 560 Income Tax Expense 2,622 Net Income$4,390 What would be reported next to Interest Expense on a common sized income statement

0.6%

Galleria Company has 280,000 shares authorized, 196,000 shares issued and 14,000 shares of treasury stock. How many shares does Galleria Company have outstanding?

182,000

A corporate charter specifies that the company may sell up to 20 million shares of stock. The company sells 12 million shares to investors and later buys back 3 million shares. The number of authorized shares after these transactions are accounted for is

20 million shares

Assume the following sales data for a company: Year 1 $4,200,000 Year 2 5,880,000 Year 3 5,250,000 By what percentage did sales differ between Years 1 and 2 and Years 2 and 3, respectively?

40.0% and (10.7%)

Willow Manufacturing had net Accounts Receivable of $600,000 at the beginning of the year and $740,000 at the end of the year. Net Sales Revenue for 2019 was $5,200,000. What is the days to collect from customers?

47.03

Kingsbury Manufacturing has net sales revenue of $624,000, cost of goods sold of $274,560, and all other expenses of $262,080. The gross profit percentage is closest to:

56%

Larabee Company's stock sells for $20 per share. The company has $160 million in earnings and 500 million outstanding shares. The Price/Earnings ratio for the company is closest to

62.5

Which of the following are not correct?

Assets= Liabilities- Stockholders' Equity

Which of the following is constructed immediately prior to preparing the financial statements with the purpose of demonstrating that the accounts balance?

Adjusted trial balance

A company sells 1 million shares of common stock with no par value for $15 a share. In recording the transaction, it would debit

Cash and credit Common Stock for $15 million

A company that has a current ratio less than one cannot cover

Current liabilities with its current assets

Polk Company uses a perpetual inventory system and had the following transactions during November: November 6- Purchased $8,700 of inventory on account, terms 2/10, n/30 November 8- Returned $1,200 of defective units and received full credit. November 15- Paid the amount What journal entry will be recorded by Polk Company on November 8?

Debit Accounts Payable and credit Inventory for $1,200.

Mitchell uses a perpetual inventory system. Mitchell sells a computer from inventory for $1198 on credit. Mitchell originally bought the computer from IBM for $790. What journal entry (entries) will Mitchel prepare to record the sale?

Debit Accounts Receivable and credit Sales Revenue for $1,198; debit Cost of Goods Sold credit Inventory for $790

Mapleleaf Industries declared a $0.80 per share cash dividend. The company has 200,000 shares authorized, 90,000 shares issued, and 84,000 shares of common stock outstanding. What is the journal entry to record the dividend declaration?

Debit Dividends and credit Dividends Payable for $67,200

Anthem Inc. issues 200,000 shares of stock with a par value of $0.01 for $150 per share. Three years later, it repurchases these shares for $80 per share. Anthem records the repurchase in which of the following ways?

Debit Treasury Stock for $16 million and credit Cash for $16 million

To recognize the use of and benefit received from long-Lived assets, such as equipment, during the accounting period, _______ Expense should be recorded.

Depreciation

The MegaHit Film Studio has a licensing right (or agreement) to distribute films produced by the Artsy Film Company. How would MegaHit Company classify this licensing right?

Intangible asset

Protecting against theft of assets and enhancing accounting information is the objective of

Internal controls

A debit would make which of the following accounts increase?

Inventory

In a period of rising prices, the inventory costing method that will cause the company to have the lowest income tax expense is

LIFO

If an analyst wants to examine a company's short-run ability to survive, which of the following would best be considered

Liquidity

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

Net Income will be too high.

A company has outstanding 10 million shares of $2 par common stock and 1 million shares of $4 par preferred stock. The preferred stock has an 8% dividend rate. The company declares $300,000 in total dividends for the year. Which of the following is correct if the preferred stockholders only have a current dividend preference?

Preferred stockholders will receive the entire $300,000, but will receive nothing more relating to this dividend declaration. Common stockholders will receive nothing.

Features of common stock usually include all of the following except:

Primary claim to the company's assets in case of liquidation

Adjustments help to ensure that all ______ are recorded in the period in which they are earned.

Revenues

In a common size income statement, each item on the income statement is expressed as a percentage of

Sales Revenue

Which financial statement shows how net income (loss) and dividends impacted a stockholders' equity account?

Statement of Retained Earnings

During June, Parker's Lawn Service mows 100 lawns a week. Parker received payment in advance, during May for these services. The company uses the accrual basis of accounting. Which financial statement is impacted by these transactions?

The income statement shows the effects of the transaction in June

Par value of a stock refers to the

Value assigned to a share of stock by the corporate charter

Cash flows from operating activities include all of the following except:

a purchase of land

When the indirect method is used, if accounts payable increases during the accounting period, the change in accounts payable is

added to net income

Using the indirect method, which of the following would not be added to net income?

an increase in Equipment

The repayment of the principal of a loan which had been used to finance the purchase of equipment should be reported on the statement of cash flows as a

cash outflow from financing activities

The adjusting entry to record the allowance for doubtful accounts includes a

debit to Bad Debt Expense

The write-off a specific customer account receivable involves decreasing an asset account and

decreasing a contra-asset account

Advantages of equity financing over debt financing include that

dividends are mandatory

To analyze changes in a company's sales over the last five years, you should perform

horizontal analysis

Solvency ratio data are primarily concerned with ability of a company

maintain long-term survival and repay debt

Bailey Hill Co. uses the indirect method to determine its net cash flows from operating activities. During the course of the year, the company's Accounts Receivable increased by $28,000 and its Accounts Payable decreased by $14,000. If these are the only two adjustments required to convert net income to net cash provided by operating activities, the combined effect will be a(n)

subtraction of $42,000