Accounting test 2 (34-65)

Adjusting entries are made

for all of these reasons.

Which of the following elements is not recognized on the balance sheet?

expense

Merry Company uses the cash basis of accounting. Merry Company made $600,000 in payments to its suppliers during the year. Merry's beginning inventory was $20,000, and its ending inventory was $35,000. In addition, Merry had a beginning accounts payable of $40,000 and an ending accounts payable of $70,000. What is Merry's cost of goods sold under the accrual basis of accounting?

$615,000

The major components of the income statement are listed below: A = revenues B = income from continuing operations C = earnings per share D = results from discontinued operations E = operating income In what sequence do they normally appear on the income statement?

A-E-B-D-C

Which of the following is helpful to report separately?

All of these answer choice present elements that are helpful to report separately.

An operating segment is a component of a company

All of these types of companies would have an operating segment as a component.

What element is a probable future economic benefit controlled and previously acquired by a company?

Asset

On a worksheet, the balance in the accumulated depreciation account should be extended to which column?

Balance sheet credit column

Which of the following formulas represents working capital?

Current assets - current liabilities

Which of the following accounts is not classified as a current asset?

Patent

The accounting cycle is a series of steps that process the accounting information contained in its transactions, events, and arrangements. What are the steps involved in this task?

Record, organize, summarize, report

Which T-account is incorrect?

Unearned Rent Debit + Credit -

All of the following are non-monetary assets except

accounts receivable.

On August 1, 2015, Yellow Company paid $6,320 for a three-year insurance policy. On that date, an expense account was charged. In the adjusting entry on December 31, 2015, there would be a

credit to Insurance Expense for $5,442

The amount a company would pay to acquire an asset it now holds is the asset's

current replacement cost.

With closing entries, you would expect to find all of the following except

debit Unearned Rent; credit Income Summary.

The systematic allocation of the costs of natural assets to expense is called

depletion

Differences that currently exist between IFRS and U.S. GAAP with regard to the presentation of information on the income statement include all of the following except

differences resulting because IFRS does not require the use of accrual accounting under the historical cost framework.

A deficit occurs when a company's

dividends and cumulative losses are greater than cumulative net income.

An accrued expense is an expense

incurred but neither paid nor recorded.

A comparison of a company's performance with that of its competitors is known as

intercompany comparison

Which is the most commonly computed coverage ratio?

interest coverage ratio

Financial flexibility is assessed by evaluating

liquidity.

The financial statements are the responsibility of the

management.

The adjusted historical cost of fixed assets, calculated as historical cost minus depreciation, is called

net book value

In a statement of cash flows, which of the following events would be classified as a financing activity?

payment of cash dividends to shareholders

When cash is debited for rents that are collected but are not yet earned, the amount credited should be

presented as a liability until earned.

Which of the following adjusting entries involves the recognition of an accrued expense?

recognition of salaries owed to employees for work done during the current period that will be paid during the next accounting period

Under cash-basis accounting,

revenue is recorded when cash is received.

The statement of cash flows is least likely to help external users assess

the amount of a company's future accrual-based sales revenue.

Which of the following is not part of other comprehensive income?

unrealized changes in the value of trading securities

Refer to Exhibit 4-1. Blue Bell's quick ratio at December 31 was

​1.33 times