Accounting Old Exam Q's

On jan 1, 2014, Kinnear Company purchased equipment at a cost of $20,000. The equipment has an estimated useful life of 5 years and a salvage of $2,000. Kinnear Company uses the straight-line depreciation method for all its assets. Given this information if Kinnear Company sells the equipment for $13,800 on dec 31, 2015 it will have a

$1,000 gain

Sanfran Company purchases inventory for $100,000. In addition, they had purchases returns of $7000 and paid freight-in of $8,000. Sanfran company's net cost of purchases would be

$115,000

the total interest expense on a $200,000, 8%, 10-year bond issued at 97 would be

$166,000

The following info was taken from the records of McDyce Corporation for the year ended Dec, 31st 2015: Dividends paid: 9,600 Sales Revenue: 67,875 Accounts payable: 14,812 Common Stock: 120,000 Total Expenses: 50,250 Retained earnings (1/1/15): 32,550 The net income for the year 2015 was:

$17,625

If a company has $26,000 of sales revenue, pays 6,000 in dividends and has net income of $8,200, how much were the expenses for the year?

$17,800

Rolf Corperation reported the following data for the period end: Retained Earnings:$54,000 Revenues: $150,000 Common Stock: $30,000 Expenses: $129,000 Dividends: $24,000 with this information, determine the retained earnings for the prior period

$180,000 beg. Retained earnings + revenues - dividends

Boone company purchased a piece of machinery by paying $20,000 cash. In addition to the purchase price,the company incurred $200 freight charges. The machine has an estimated useful life of 5 years and will require $300 for insurance over that period. Boone Company would record the cost of the machine at

$20,200

Interest expense on a 6-month, 8%, $6,000 note payable would be approximately

$240

Winter Company earned revenues of $18,000 in cash and $21,000 on account during 2015. Of the $21,000 on account, $8,000 was collected in cash in 2015 and the rest in 2016. The company incurred expenses of $12,500 in 2015 and made payments of $9,000 towards the expenses in 2015. What is net income in 2015 under accrual-basis accounting?

$26,500

Amy company sold $4,000 of merchandise to Tory turnbull with terms 3/10, n/30. If tory paid for three-fourths of the merchandise within the discount period and one-fourth after the discount period, he paid a total of

$3,910

Assume the following facts for Erich company: the month-end bank statement shows a balance of $27,200; outstanding checks totaled $2000; a deposit of $8000 is in transit at month end; and a check for $400 was erroneously charged against the account by the bank

$33,600

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 collectible. Allowance for doubtful accounts prior to adjustment has a credit balance of $16,000. The amount of bad debt expense will be:

$40,000

the following information is available for Harvey cooperation for the month of June Beg Inv: 32 units X $80=$2560 Purcashed June 3: 20 units X $88= $1760 Purchased June 5: 28 units X $96= $2688 Sold June 9: 36 units Purchased: 32 units X $64=$ 2048 Sold June 29: 24 units Given this information, the LIFO (periodic system) ending inventory balance is approximately

$4736

On jan 1,2015, 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 $2400 salvage value at the end of its life. The equipment was used 6500 hours in 2015. The depreciation expense for the year ending dec 31 2015 using the units of production method would be

$4940

The net sales figure of XYZ Company in 2015 was $120,000. If the gross margin was 30% of net sales, the beginning inventory is 50,000 and the net purchases during the period is 90,000, the ending inventory much have been

$56,000

The dec 31 trial balance of Humming Company included the following accounts Accounts Receivable: 50,000 Allowance for Doubtful Accounts: 4,000 Sales Revenue: 650,000 Sales Return and Allowances: 24,000 if it is estimated that 1 percent of the net sales is uncollectable, the entry to record the estimate of bad debts would include a debit to Bad Debt expense for

$6,260

A company has a beginning of $40,000 and purchases during the year of $110,000. The beginning inventory consisted of 3,000 units were purchased during the year. The company has 4000 units left at year end. Under average cost, what is COGS?

$90,000

Under the allowance method for estimating uncollectible accounts

-a company sets up an allowance for doubtful accounts to estimate the amount of the receivables the company does not expect to collect -the allowance for doubtful accounts is a contra account to gross accounts receivables -the allowance for doubtful accounts will normally have a credit balance

Businesses use accounting systems to

-analyze transactions -handle routine bookkeeping tasks -evaluate the performance and health of the business

How does the declaration of a cash dividend affect the accounting equation

-increase to liabilities and decrease to stockholders equity

The inventory method (cost flows assumptions) used by a company affects

-net income on the income statement -the income taxes to be paid -the ending inventory on the balance sheet

The transactions carried out Blue Waters corporation during the year caused an increase in total assets of $25,000 and a decrease in total liabilities of $12,000. if no additional stock was issued during the year and dividends of $7,000 were paid , what was the net income for the year?

30,000

The tommy company has 5,000 shares of treasury stock and the following balance information Common stock, 5$ par value 200,0000

35,000

Dana Company's dec 31, 2015 financial statements showed the following Sales revenue: 750,000 average receivables :125,000 COGS: 555,0000 Average inventory: 215,000 Net income: 105,000 Average total assets: 1,220,000 Given the information above, Dana company's accounts receivable turnover ration for 2015 was

6.0

An adjusting entry to record the used portion of a prepaid expense always includes

A debit to an expense

Which of the following statements is FALSE? -a liability is an item that involves a future transfer of resources -a liability is an item that is measurable in monetary terms -a liability is an item that represents an obligation of an enterprise -a liability is an item that must be paid in cash

A liability is an item that must be paid in cash

Which form of financing requires repayment, regardless of whether the company receiving the funds does well? -a loan -an investment (stock insurance) -both a loan and an investment -neither a loan nor an investment

A loan

If rent revenue of $5,000 is earned in 2015 but will not be received until 2016, what is the appropriate adjusting journal entry at December 31, 2015?

A/R 5,000 Rent Revenue 5,000

Which of the following would be classified as a current asset? -accounting payable -land -common stock -accounts receivable

Accounts Receivable

During July 2013, Guitierrez Corporation sold $9,000 of merchandise on account. The revenue portion of this transaction would be posted as

Accounts Receivable ---------------------------------|----------------------------- 9,000 Sales revenue ---------------------------------|----------------------------- 9,000

The basic accounting equation is

Assets= liabilities + Owners equity

Gordie Co. reported an allowance for doubtful accounts of $20,000 (credit) at dec 31, before performing an aging of accounts receivable would prove uncollectable. The adjusting entry required at dec 31 would be

Bad Debt Expense 8,000 Allowance for doubtful accounts 8,000

Which of the following financial statements reports a company's resources, obligations, and owners equity? -Balance sheet -income statement -statement of retained earnings -statements of cash flows

Balance Sheet

Which of the following types of accounts show how resources came into a firm?

Both liabilities and owners equity

If COGS is $6,000 and the ending inventory balance is $3,000 the

COGS available for sale $9,000

how is accumulated Depreciation classified?

Conta-asset

An entry to the right side of an account is called a

Credit

What journal entry is prepared for a check with insufficient funds for payment?

Debit Accounts receivable and credit cash

On Dec 2, a customer returned merchandise with a selling price of $500 purchased on account to a department store. Ignoring COGS, what journal entry did the department store prepare?

Debit Sales Returns and Allowances for $500 and credit Accounts receivable for $500

On December 1, Macy Company sold merchandise with a selling price $1,000 on account to Mrs. Jorgensen, with terms 2/10, n/30. Mrs. Jorgenson paid the amount due on December 9. What journal entry did Macy Company prepare on Dec 9?

Debit cash for $980, debit Sales Discounts for $20 and credit Accounts Receivable for $1,000

Which of the following accounts is NOT an expense account? -Income tax -wages expense -COGS -Dividends

Dividends

Valenzuala Company purchases a truck for $38,000 cash. This transaction would be posted to the ledger accounts of Valenzuala Company as

Equiptment ---------------------------------|----------------------------- $38,000 Cash ---------------------------------|----------------------------- $38,000

If the shipping terms indicate that the seller owns the goods until delivered to the buyer, this arrangement is known

FOB destination

Which of the followings is NOT used to determine net purchases? -freight in -freight out -purchase discounts -purchase returns

Freight in

Which of the following is an example fo an adequate segregation of duties

Greg is in charge of recording receipt of payments made to accounts receivable while Susan in charge of making deposits to the bank

A company preformed services for a costumer for cash. This transaction increases assets and

Increases Reveunes

Which of the following accounts would be closed at year-end? -prepaid expense -notes receivable -interest expense -salary payable

Interest Expense

Items that are either manufactured of purchased for resale in the normal course of business are called

Inventory

During the inflationary period which inventory costing method usually results in the lower reported net income?

LIFO

Which of the following would be true if inventory costs were increasing?

LIFO would result in lower net income and lower ending inventory amounts than would FIFO

The are of accounting that is concerned with providing information for internal users is referred to as

Managerial Accouting

If a corporation issued 5,000 shares of $5 par value common stock for $95,000, the journal entry would include a credit to

Paid in capital in excess of par for $70,000

The existing balance in Allowance for Doubtful accounts is ignored when which estimation method is used -Percentage of sales method -percentage of receivables method -aging-of-receivables -all of the above

Percentage of sales method

The major types of transactions that affect retained earnings are:

Revenues, expenses and dividends

Which of the following accounting is decreased with a debit entry? -unearned revenue -building -prepaid expense -cost of goods sold

Unearned Revenue

When do bonds usually sell at face value?

When the market rate of interest is equal to the stated rate of interest on the bonds

Expenses generally cause

a decrease in net assets

The bookkeeper recorded a deposit of $100 as $10. On the bank reconciliation, this will be an

addition of $90 to the balance per books

Which of the following depreciation methods can NOT depreciate an asset below its salvage value? -straight line method -double decling balance method -units of production -all of these cannot depreciate below salvage value

all of these cannot depreciate below salvage value

Three key duties much always be separated under a good system of internal controls

asset handling, record keeping and transaction

The accounting equation can be stated as:

assets- liabilites=owners equity

The purchase of treasury stock returns______ to the stockholders but also______

cash; decreases their ownership of the company

Using a periodic inventory system, what journal entry(ies) is(are) prepared when two units of merchandise are sold on account?

debit accounts receivable and credit sales revenue only

Over the term of the bonds, the balance in the discount on bonds payable account will

decrease

Under accrual-basis accounting, the event that triggers revenue recognition for the sale of the goods is the

delivery of goods to costumer

Deposits that have been recorded on the books but have not yet been recorded by the bank are

deposits in transit

The amount of a company's net income earned for each share of its outstanding common stock is termed the

earnings per share

Which of the following statements is most correct with respect to separation of duties -a person who has temporary or permanent custody of an asset should account for that asset -employees who authorize transaction should have recording responsibility for these transactions -employees who open cash receipts should record the amounts in the subsidiary ledgers -employees who authorize transactions should not have custody of related assets

employees who authorize transactions should not have custody of related assets

The two types of accounting are:

financial and managerial

the repayment of the principle on a loan (payable) should be classified as a(n)

financing activities

Normally speaking, the future value of 2000 will be

greater than 2000

The accounts payable is

increased with a credit

A bond discount is reported on the financial statements in the

liabilities section on the balance sheet

Bonds payable is normally classified as a(n)

long term liabailty

The idea that all expenses incurred in generating revenues should be recognized in the same period as those revenues is called the

matching principle

A $20,000, 7% is sold at 98. When the bond is issued the cash account will be increased by

more than $500,000

Flute Corporation issued $500,000, 5-year, 10% bonds at a time when the market rate of interest was 9%. These bonds will be issued for

more than $500,000

When preparing the statement of cash flows, cash payments from operating activities do NOT include -payments of dividends -payments to suppliers -payments to employees -payments of interest

payments of dividends

The inventory system that uses computer software to keep a running record of inventory on hand is the:

perpetual inventory system

Peters computers purchased 4,000 shares of its own $10 par value common stock for $92,000. as a result of this transaction

peters stock holders equity increased $52,000

Which of the following is NOT a current asset? -cash -accounts receivable -property, plant, and equipment

property, plant and equiptment

Closing entries are

required to bring all nominal accounts to zero balance prior to starting a new accounting cycle

Which of the following accounts is a permanent account? -Income Tax -dividends -sales revenue -retained earnings

retained earnings

The difference between gross sales and net sales is

sales discounts and sales returns and allowances

ABC auto sales sells new Lexus vehicles. ABC will most likely use the _____ method to cost its ending inventory

specific identification

The beginning balance of retained earnings will be greater than the ending balance if...

the company has a net income less than dividends paid

To determine the COGS sold under the LIFO method

the latest purchase costs are used

When inventory is shipped from the seller to the buyer with shipping terms of FOB shipping point

title passes from the seller to the buyer when the good leave the sellers shipping dock

If COGS is understood on the income statement, net income

will be overstated

Which of the following transactions does NOT affect cash during a period? -sale of common stock -purchase of supplies -write-off of an uncollectible account -payment of a accounts payable

write off of an uncollectable account