Accounting Final

A Discount on Bonds Payable account a. is a contra account to Bonds Payable. b. will cause interest expense to be less than cash interest payable. c. is increased over the life of the bond until it equals the bond's face value. d. is an adjunct account to Bonds Payable.

A

Allowance for Doubtful Accounts is reported in the a. balance sheet as a. contra asset. b. balance sheet as a contra liability account. c. income statement under other expenses and losses. d. income statement under other revenues and gains.

A

An enterprise's obligations to pay cash or other economic resources to others are called a. Liabilities b. Expenses c. Losses d. Assets

A

If ending inventory is understated, net income and assets will be Net Income Asset A. understated understated B. overstated overstated C. understated unaffected D. none of the above

A

In a period of rising prices, the inventory method that results in the lowest income tax payment is A. LIFO B. FIFO C. average cost D. specific identification.

A

On January 1, 2019, Bushong Company purchased equipment at a cost of $12,600. The equipment had an estimated useful life of 6 years or 30,000 hours. The equipment will have a $1,200 salvage value at the end of its life. The depreciation expense for the year ending December 31, 2019, using the straight-line method would be a. $1,900 b. $1,883 c. $475 d. $471

A

Stockholders' equity is decreased by all of the following except a. sales of stock. b. net losses. c. expenses. d. dividends.

A

Under accrual-basis accounting, revenues are always recognized when a. Earned b. Cash is received c. The manufacture of the product to be sold is completed d. The selling price is firmly established

A

When a note payable is given to settle an existing account payable, a. There is no net change in assets, liabilities, or stockholders' equity b. Net assets are increased c. Net liabilities are increased d. Net stockholders' equity is increased

A

All of the following are intangible assets except A. patents B. land improvements C. goodwill D. franchises.

B

Bigg and Talle Corporation uses the percent-of-sales method to estimate bad debts. Net credit sales for the current year amount to $2,000,000, and management estimates 2% will be uncollectible. Allowance for Doubtful Accounts prior to adjustment has a credit balance of $16,000. The amount of bad debt expense will be: a. $16,000. b. $40,000. c. $24,000. d. $56,000.

B

Lake of Fire Company purchased supplies costing $7,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of supplies revealed $1,900 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be a. Debit Supplies Expense, $1,900; Credit Supplies, $1,900. b. Debit Supplies Expense, $5,100; Credit Supplies, $5,100. c. Debit Supplies, $5,100; Credit Supplies Expense, $5,100. d. Debit Supplies, $1,900; Credit Supplies Expense, $1,900.

B

On October 1, Doe Hunting Supplies, a calendar-year company, sold inventory that cost $60,000 for $100,000. The customer signed a six-month, 10% note in payment. On December 31, Woods should a. Debit Interest Revenue for $2,500 b. Debit Interest Receivable for $2,500 c. Credit Interest Revenue for $10,000 d. Debit Interest Receivable for $10,000

B

On October 1, Mathis Company entered into a six-month contract with Lewis Company to provide custodial services on a daily basis. The terms of the contract state that the cost will be $3,000 per month and Mathis will bill Lewis at the end of every two months. If Mathis is a calendar year company, what is the appropriate adjusting entry at December 31? a. Cash 3,000 Service Revenue 3,000 b. Accounts Receivable 3,000 Service Revenue 3,000 c. Service Revenue 3,000 Accounts Receivable 3,000 d. Accounts Receivable 3,000 Cash 3,000

B

Shipping terms of FOB destination mean that the A. purchaser is responsible for the shipping charges. B. shipping charges are debited to Freight-Out. C. items should be in the purchaser's inventory account at year-end if the items are in transit. D. both (a) and (c) above.

B

The matching principle requires that a. Cash outflows be matched with cash inflows b. Expenses incurred be matched with revenues earned c. Assets be matched with liabilities d. Assets be matched with owners' equity

B

The statement of cash flows is a(n) a. required supplemental financial statement. b. required basic financial statement. c. optional basic financial statement. d. optional supplementary statement.

B

Vital information that CANNOT be captured solely by dollar amounts is reported in a firm's a. Balance sheet b. Notes to financial statements c. Income statement d. Statement of retained earnings

B

When total expenses exceed total revenues, the result is: A. a net profit B. a net loss C. a dividend D. retained earnings

B

Which of the following accounts is decreased with a debit? a. Rent Expense b. Retained Earnings c. Equipment d. Accounts Receivable

B

Which of the following types of accounts show how resources came into a firm? a. Liabilities b. Stockholders' equity c. Assets d. Both liabilities and stockholders' equity

B

An adjusting entry to record the expired portion of a prepaid expense that was originally debited to a prepaid expense account always includes a. A debit to an asset b. A credit to cash c. A debit to an expense d. A credit to an expense

C

Bates Company has a $300,000 balance in Accounts Receivable and a $1,000 debit balance in Allowance for Doubtful Accounts. Credit sales for the period totaled $1,800,000. What is the amount of the bad debt adjusting entry if Bates uses a percentage of receivables basis at 5%? a. $15,000 b. $14,000 c. $16,000 d. $15,050

C

Liabilities of a company are owed to a. debtors. b. benefactors. c. creditors. d. underwriters.

C

Mott Company uses the units-of-activity method in computing depreciation. A new plant asset is purchased for $48,000 that will produce an estimated 100,000 units over its useful life. Estimated salvage value at the end of its useful life is $4,000. What is the depreciation expense per unit? a. $4.40 b. $4.80 c. $0.44 d. $0.48

C

On January 1, 2019, Bushong Company purchased equipment at a cost of $25,200. The equipment had an estimated useful life of 6 years or 30,000 hours. The equipment will have a $2,400 salvage value at the end of its life. The equipment was used 6,500 hours in 2019. The depreciation expense for the year ending December 31, 2019, using the units-of-activity method would be a. $3,800 b. $7,600 c. $4,940 d. $5,460

C

On January 1, 2019, total assets for Liftoff Technologies were $125,000; on December 31, 2019, total assets were $145,000. On January 1, 2019, total liabilities were $110,000; on December 31, 2019, total liabilities were $115,000. What is the amount of the change and the direction of the change in Liftoff Technologies' stockholders' equity for 2019? a. Decrease of $15,000. b. Increase of $30,000. c. Increase of $15,000. d. Decrease of $30,000.

C

On November 30, Thatcher Company issued a $15,000, 6%, 4-month note to the National Bank. The entry on Thatcher's books to record the payment of the note at maturity will include a credit to Cash for A. $15,000 B. $15,900 C. $15,300 D. $15,600

C

The following information is available for Lighten Company: Sales $130,000 Freight-in $10,000 Ending Merchandise Inventory 12,000 Purchase Returns and Allowances 5,000 Purchases 100,000 Beginning Merchandise Inventory 15,000 Lighten's COGS is: A. $125,000 B. $120,000 C. $108,000 D. 105,000

C

The primary accounting standard-setting body in the United States is the a. Securities and Exchange Commission. b. Accounting Principles Board. c. Financial Accounting Standards Board. d. Internal Revenue Service.

C

The primary internal group that uses accounting information is a. Government agencies b. Investors c. Management d. Competitors

C

Treasury stock is stock that is a. Authorized but not issued b. Issued and outstanding c. Issued but not outstanding d. Authorized and outstanding

C

When 30,000 shares of $10 par-value common stock are issued at $30 per share, Paid-In Capital in Excess of Par, Common Stock is credited for a. $300,000 b. $900,000 c. $600,000 d. $30,000

C

Which of the following accounts would be closed at year-end? a. Common Stock b. Prepaid Rent c. Dividends d. Accounts Payable

C

Which of the following errors will cause a trial balance to be out of balance? The entry to record a payment on account was a. not posted at all. b. posted as a debit to Cash and a credit to Accounts Payable. c. posted as a debit to Cash and a debit to Accounts Payable. d. posted as a debit to Accounts Receivable and a credit to Cash.

C

Which of the following would be true if inventory costs were increasing? a. FIFO would result in lower net income and higher ending inventory amounts than would LIFO b. LIFO would result in lower net income but higher ending inventory amounts than would FIFO c. LIFO would result in lower net income and lower ending inventory amounts than would FIFO d. None of these would be true

C

A basic assumption of accounting that requires activities of an entity be kept separate from the activities of its owner is referred to as the a. stand alone concept. b. monetary unit assumption. c. corporate form of ownership. d. economic entity assumption

D

A daily cash count of register receipts made by a cashier department supervisor demonstrates an application of which of the following internal control principles? A. Documentation procedures B. Segregation of duties C. Establishment of responsibility D. Independent internal verification

D

Dixon Corp. purchased 20,000 shares of its own $2 par common stock at a cost of $13 per share on April 30, 2019. The stock was originally issued at $11 per share. The entry to record the purchase of the stock should include a debit to a. Common Stock for $40,000. b. Treasury Stock for $40,000. c. Common Stock for $260,000. d. Treasury Stock for $260,000.

D

If a company has $528,000 of sales revenue, pays $26,400 in dividends, and has net income of $158,400, how much were the expenses for the year? a. $343,200 b. $422,400 c. $396,000 d. $369,600

D

If the market rate of interest is lower than the stated rate, bonds will sell at an amount a. equal to face value. b. not determinable from the given information. c. lower than face value. d. higher than face value

D

JR Corporation has a debit balance of $3,750 in Allowance for doubtful accounts. If it estimates that 2 percent of the net sales of $1,500,000 will be uncollectible, it should debit a. Allowance for doubtful accounts for $30,000 b. Allowance for doubtful accounts for $33,750 c. Bad Debt Expense for $33,750 d. Bad Debt Expense for $30,000

D

On January 1, 2019, Brown Company purchased a mine for $100,000. On this same date, it was estimated that the mine contained 1,000 tons of ore. During 2019, 300 tons of ore were extracted from the mine. The amount of depletion expense for 2019 would be a. $3,000 b. $100,000 c. $1,000 d. $30,000

D

Riodan Company sold old equipment for $420,000. The equipment has a cost of $840,000 and accumulated depreciation of $504,000. The entry to record the sale of equipment would include a A. loss on disposable of $410,000 B. gain on disposal of $410,000 C. loss on disposal of $84,000 D. gain on disposal of $84,000

D

The closing entry involving a net loss will include a a. Credit to sales revenue b. Debit to salaries expense c. Credit to dividends d. Debit to retained earnings

D

The failure to adjust an unearned revenue that has been partially earned and was originally recorded as a credit to Unearned Revenue will usually result in an a. Overstatement of revenues and an overstatement of liabilities b. Overstatement of revenues and an understatement of liabilities c. Understatement of revenues and an understatement of liabilities d. Understatement of revenues and an overstatement of liabilities

D

When equipment is purchased with a cash down payment and a signed note for the balance, the net effect will be a. Only an increase in assets b. Only a decrease in liabilities c. Only a decrease in assets d. Both an increase in assets and an increase in liabilities

D

When the allowance method is used for bad debts, the entry to write off an individual account known to be uncollectible involves a A. debit to an expense account. B. credit to an expense account. C. credit to the allowance account. D. debit to the allowance account.

D

Which of the following accounts is a permanent account? a. Income tax b. Dividends c. Sales revenue d. Retained earnings

D

Which of the following are usually NOT directly affected by adjusting entries? a. Asset accounts b. Liability accounts c. Revenue accounts d. Capital stock accounts

D

Which of the following groups of accounts have a normal debit balance? a. Revenues and Liabilities b. Owners' Equity and Assets c. Liabilities and Expenses d. Assets and Expenses

D

Which of the following would be reported as a cash flow from financing activities? a. Cash receipts from the sale of equipment b. Cash receipts from interest on notes receivable c. Cash receipts from dividends on long-term investments d. Cash receipts from the issuance of long-term debt

D

Which of the following would not be included in the operating activities section of a statement of cash flows? a. Cash inflows from returns on loans (i.e., interest) b. Cash inflows from returns on equity securities (i.e., dividends) c. Cash outflows to governments for taxes d. Cash outflows to reacquire treasury stock

D