Accounting Final
Which of the following amounts would be reported as Merchandise Inventory on the balance sheet of a company if the cost of an item is $ 110 and the current replacement cost is $ 100?
$100
Brandy Enterprises discarded a computer that was fully depreciated and had no residual value. As a result of this transaction, Brandy will _________.
. zero out the Computer and Accumulated Depreciation-Computer accounts.
What does "2/10" mean, with respect to "credit terms of 2/10, n/30"?
A discount of 2 percent will be allowed if the invoice is paid within 10 days of the invoice date.
Which of the following statements is true of a trial balance?
A trial balance is a list of all accounts with their balances.
Dickens Services, Inc. performed accounting services for a client in December. A bill was mailed to the client on December 30. The company received a check by mail on January 5. Which of the following accounts should appear on the balance sheet as of December 31 as related to the services performed?
Accounts Receivable
Which of the following is an asset account?
Accounts Receivable
Which of the following accounts will be included in a post closing trial balance?
Accumulated Depreciation-Building
Princeton Financial Services, Inc. purchased computers that are to be used in its consulting services. Based on the matching principle, what account, other than Computers, should appear on the balance sheet as of December 31, 2018?
Accumulated Depreciation-Equipment
Which of the following statements is true?
Appropriations of retained earnings require journal entries, but restrictions on retained earnings are usually reported in notes to the financial statements.
Which of the following is true of assets?
Assets are something of value the business owns or controls.
Which of the following is the correct formula to calculate average merchandise inventory?
Average merchandise inventory = (Beginning merchandise inventory + Ending merchandise inventory) / 2
Montgomery Equipment Rental Company received $1,000 cash from a customer; the amount was owed to the business from the previous month. What is the effect of this transaction on the accounting equation?
Cash increases and Accounts Receivable decreases
Ranger Pool Company received cash of $40,000 and issued common stock. Which of the following accounts will be credited?
Common Stock
The formula for computing the current ratio is ________.
Current ratio = Total Current assets / Total Current liabilities
Which of the following statements regarding earnings per share (EPS) is incorrect?
EPS reports the amount of income (loss) for each share of the company's issued common stock.
Which of the following accounts has an ending balance equal to net income immediately before it is closed?
Income Summary
Which of the following is a characteristic of a current liability?
It creates a present obligation for future payment of cash or services.
Which of the following statements is true of the accounting cycle?
It is a process by which financial statements for a period are produced.
Which of the following statements regarding receivables is correct?
Receivables occur when a business loans money to another party.
________ represents a debt owed for renting a building.
Rent Payable
The income statement section of the worksheet includes ________.
Service Revenue and Utilities Expense
A company has a cash ratio of 2.3. What does this imply?
The company has an unnecessarily large amount of cash and cash equivalents.
Which of the following statements regarding the accounting equation is incorrect?
The equation can be stated as assets plus liabilities equals equity.
Which of the following is the proper treatment for a contingency that is probable but the exact amount of which is not known? The amount can be estimated.
The liability should be estimated and recorded.
Which of the following statements is true of a sole proprietorship?
The sole proprietor is personally liable for the liabilities of the business.
The accountant of Newton Legal Services failed to make an adjusting entry for supplies that had been used for the year. Assume the supplies were initially recorded as an asset. Which of the following statements is true?
The total assets will be overstated.
The accountant for Watson Electrical Repair, Inc. failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year. Which of the following statements is true?
The total expenses will be understated.
The accountant of Omega, Inc. failed to make an adjusting entry to record $6,000 of unearned service revenue that has now been earned. Assume the deferred revenue was initially recorded as a liability. Which of the following statements is true?
The total revenue will be understated.
Earnings per share for income from continuing operations must be reported on the face of the income statement.
True
Which of the following accounts will be included in a postminusclosing trial balance?
Unearned Revenue
________ is a pay amount stated at an hourly rate.
Wage
Which of the following is an example of an estimable probable contingency?
Warranty Payable
Which of the following is used by companies to separate cash duties and establish stronger control over cash receipts?
a a lock-box system
The adjusted trial balance shows ________.
account balances after adjustments
Financial statements are prepared from the balances in a(n) ________.
adjusted trial balance
Closing entries are journalized and posted ________.
after preparing the financial statements
The bank statement reveals an EFT received from a customer that has not yet been recorded in the journal. How would this information be included on the bank reconciliation?
an addition on the book side
Outstanding stock represents shares of stock that ________.
are held by the stockholders
Which of the following is representative of safeguarding assets?
attaching electronic sensors to merchandise inventory
Which of the following states that the business should use the same accounting methods from period to period?
consistency principle
Gross profit is calculated as the difference between net sales revenue and ________.
cost of goods sold
Assets that are expected to be converted to cash, sold, or used up during the next 12 months, or within the business's normal operating cycle if the cycle is longer than a year, are called ________ assets.
current
Salaries Payable, Accounts Payable, and Unearned Revenue are examples of ________.
current liabilities
The entry to record a write-off of an uncollectible account when using the direct write-off method involves a
debit to Bad Debts Expense.
The ability of a company to pay its debts can be evaluated by using the ________.
debt ratio
The revenue recognition principle guides accountants in ________.
determining when to record revenues
Operating expenses include ________.
expenses that occur in an entity's major line of business
Which of the following is required to be deducted from employees' paychecks?
federal income tax
Which of the following is not recorded as the cost of a building?
fencing
When inventory costs are declining, which of the following inventory costing method will result in the lowest ending merchandise inventory?
first-in, first-out
For a merchandiser, the term "inventory" refers to ________.
goods held for sale to customers
A receivable occurs when a business _________.
has a monetary claim against a business or individual loans money to another party sells goods or services to another party on account
The asset turnover ratio measures ________.
how efficiently a business uses its average total assets to generate sales
Managerial accounting provides information to ________.
internal decision makers
The retained earnings of a corporation is ________.
internally generated equity that is earned by profitable operations that is not distributed to stockholders
The periodic inventory system _______.
involves the use of inventory costing methods
Which of the following asset categories would include the cost of clearing land and removing unwanted buildings?
land
Which of the following is not an inventory costing method?
lower of cost or market
Which of the following states that a company must perform strictly proper accounting only for items that are significant to the business's financial statements?
materiality concept
An account that is not closed at the end of the period is called a(n) ________.
permanent account
Under the net method of handling credit and debit card payments, the ________.
processing fee is debited to the Credit Card Expense account on or just after the date of sale
Reducing expenses to increase operating profit is representative of ________.
promoting operational efficiency
In a perpetual inventory system, multiple performance obligations _________.
require the company to allocate the transaction price to each performance obligation
The expected value of an asset at the end of its useful life is known as ________.
residual value
An entity that buys goods and sells them to consumers at a markup is a ________.
retailer
Which of the following financial statements is used to report cash receipts for services provided?
statement of cash flows
A reversing entry ________.
switches the debit and the credit of a previous entry
Lamar Corporation originally purchased land for $ 38,000. It later sold the land for $ 38,000 in cash. Which of the following is true of the effect of the sale of land on the accounting equation?
the amount of total assets remains the same
Under the revenue recognition principle, a good or service is considered transferred when ________.
the customer obtains control of the good or service
Which of the following items must be examined by the controller or treasurer before signing a check?
the purchase order
Which of the following is not a reason for which a company may purchase treasury stock?
to avoid a takeover by an outside party by increasing the number of outstanding shares that have voting rights
Which of the following is an objective of internal control?
to encourage employees to follow company policies
Cash and cash equivalents are divided by ________ to determine the cash ratio.
total current liabilities
If a company is using accrual basis accounting, when should it record revenue?
when services are performed, even though cash may be received at a later date
Venus Corp. sold goods, with a selling price of $17,221, for cash. The state sales tax rate is 8%. What amount is credited to the Sales Revenue account? (Round calculations to the nearest dollar.)
$17,221
Assume Metro Corporation had a net income of $2,500 for the year ending December 2018. Its beginning and ending total assets were $32,500 and $19,500, respectively. Calculate Metro's return on assets (ROA). (Round your percentage answer to two decimal places.)
9.62%
A shortened form of the ledger is called a ________.
T-account
Which of the following accounting methods is generally used to compute amortization expense?
straight-line