ACCT 200 Final Exam

Cornett Company reported the following information: cash received from the issuance of common stock. $150,000; cash received from the sale of equipment, $14,800; cash paid to purchase an investment, $20,000; cash paid to retire a note payable, $50,000; and cash collected from sales to customers, $225,000. What amount should Cornett report on its statement of cash flows as net cash flows provided/used by investing activities?

a. $(5,200) b. $144,800 c. $55,200 d. none of the above choices are correct a. $(5,200)

RVR Enterprises shows net income of $100,000 for 2019 and retained earnings of $500,000 on its December 31, 2019 balance sheet. During the year, RVR declared and paid $60,000 in dividends. What was RVR's retained earning balance at December 31, 2018? `

a. $440,000 b. $540,000 c. $460,000 d. $400,000 c. $460,000

A company reported the following information: Accounts receivable, Dec 31, 2020: $122,000 Accounts Receivable, Dec 31, 2019: $113,000 Sales (all on credit ) for 2020: $850,000 How much cash was collected from customers during 2020?

a. $841,000 b. $963,000 c. $859,000 d. $972,000 a. $841,000

A manufacturing company purchased equipment on Jan. 1, 2010 for $450,000. As of January 1, 2019, deprecation of $202,500 had been recorded on this asset. Deprecation expense for 2019 is $22,500. After the adjustments are recorded and posted at December 31, 2019, what are the balances for the equipment and accumulated depreciation?

a. 450,000 & $0 b. 225,000 & $22,500 c. 450,000 & 225,000 d. 225,000 & 225,000 c. 450,000 & 225,000

On December 15, the accounts receivable balance was $50,000 and the balance in the allowance for doubtful accounts was $5,000. That morning, a $1,000 uncollected account was written-off. The net realizable value of accounts receivable immediately after the write-off is:

a. 49,000 b. 45,000 c. 44,000 d. 46,000 b. 45,000

A company purchased land and incurred the following costs: Purchase price: 500,000 Excavation costs: 50,000 Razing old building: 12,500 Broker fees: 10,000 Cost of a parking lot: 25,000 What is the cost of the land for accounting purposes?

a. 562,500 b. 572,500 c. 550,000 d. 597,500 b. 572,500

Which of the following accounts would most likely appear on the income statement of a merchandise company, but not on the income statement of a service company?

a. selling expenses b. cost of goods sold c. administrative expense d. income tax expense b. cost of goods sold

The Kaplan Group sold $200,000 of 10-year bonds for $190,000. The stated rate on the bonds was 8% and interest is paid annually on December 31. What entry would be made on december 31 when the interest is paid (numbers are omitted)?

a. Interest expense Discount on Bonds Payable Cash b. Interest Expense Cash c. Interest Expense Discount on Bonds Payable Cash d. Interest Expense Bonds Payable Cash a. Interest Expense Discount on Bonds Payable Cash

Which of the following are noncurrent assets?

a. accounts receivable b. unearned revenues c. inventories d. machinery and equipment d. machinery and equipment

When a company declares a cash dividend, which of the following is true?

a. assets are increased b. liabilities are increased c. stockholders' equity is increased d. assets are decreased b. liabilities are increased

For which type of merchandise would a company most likely use the specific identification method of inventory costing?

a. custom-made boats b. barbie dolls c. cases of bottled water d. gasoline held in storage units a. custom-made boats

The effect of recording depreciation for the year is a(n)

a. decrease in assets but no change in owners' equity b. increase in assets and an increase in net income c. decrease in assets and a decrease in net income d. decrease in net income and no change in assets c. decrease in assets and a decrease in net income

What happens in a 2-for-1 stock split?

a. decreases the par value of the stock b. increases the number of shares of stock issues c. both a & b d. none of the above c. both a & b

Cash collected and recorded by a company but not yet reflected in a bank statement are known as

a. deposits in transit b. credit memos c. outstanding checks d. debit memos a. deposits in transit

All of the following accounts have a normal debit balances except

a. dividends b. service revenue c. supplies expense d. accounts receivable b. service revenue

A day spa accepted a check from a customer as payment for services. Unfortunately, the customer's check bounced. The journal entry required on the company's books as a result of this bank reconciliation item will

a. have no net impact on total assets b. both "decrease total assets" and "decrease stockholders' equity" c. decrease total assets d. decrease stockholders' equity a. have not net impact on total assets

If bonds were initially issued at a discount, the carrying value of the bonds on the issuer's books will

a. increase as the bonds approach maturity date b. fluctuate throughout the bonds' life c. decrease as the bonds approach their maturity date d. remain a constant throughout the bonds' life a. increase as the bonds approach maturity date

Which of the following would not appear on a bank statement for a checking account?

a. interest earned b. credit memos c. service charges d. outstanding checks d. outstanding checks

All of the following are true for a company that uses the allowance method of accounting for bad debt, except:

a. it records bad debt expense each time an account is determined to be uncollectible b. it reports accounts receivable in the balance sheet at their net realizable value c. it reduces its accounts receivable balance when the account is written off d. it uses a contra-asset account called the allowance for doubtful accounts a. it records bad debt expense each time an account is determined to be uncollectible

Kiss Greetings planned on to raise $500,000 by issuing bonds. The bond certificates were printed bearing a stated interest of 6% which was equal to the yield rate of interest. However, before the bonds could be issued, economic conditions forced the yield rate up to 7%. If the life of the bonds is 10 years and interest is paid annually on December 31, how much will the company receive from the sale of the bonds?

a. less than $500,000 because the 7% yield rate of interest was higher than the stated rate b. the 6% bonds will not be sold at all. The company will be required to have the certificates reprinted bearing the new yield rate of 7% c. more than $500,000 because the 6% stated rate of interest was less than the yield rate d. exactly $500,000 because the company would still pay interest at the stated rate a. less that $500,000 because the 7% yield rate of interest was higher that the stated rate

On October 1, 2019, the company received a $50,000 promissory note from a customer. The annual interest rate is 6%. Principle and interest will be collected in cash at the maturity date of September 30, 2020. The effect on the company's financial statements on December 31, 2019 is as follows:

a. no net change is assets b. assets and liabilities increase c. assets and stockholders' equity decrease d. assets and stockholders' equity increase d. assets and stockholders' equity increase

When should a shipping company recognize revenue from its delivery service?

a. on the date the customer's packages are delivered b. on the date the customer's payment is received c. on the date the invoice is mailed to the customer d. on the date the customer places a order a. on the date the customer's packages are delivered

The following journal entry was included in the accounting records of Jentzen Corp: Oct. 15. Accounts Payable 4,000 Merchandise Inventory. 40 Cash 3960 Based on this information, it is likely that the company:

a. paid for inventory purchased on credit and took advantage of a 1% discount b. collected cash for inventory sold on credit and recognized a 1% sales discount c. sold inventory for cash d. purchased inventory for cash a. paid for inventory purchased on credit and took advantage of a 1% discount

Which of the following is an example of a cash outflow from a financing activity?

a. payment of interest on a note payable b. issuance of common stock for cash c. payment of wages to employees d. payment of cash dividends to stockholders d. payment of cash dividends to stockholders

Which of the following would be classified as a cash outflow from an operating activity?

a. purchase of an investment b. payment of dividends c. purchase of equipment d. payment of goods purchased from suppliers d. payment of goods purchased from suppliers`

A company uses plant assets that are subject to rapid decreases in value due to obsolescence and physical deterioration. Which of the following deprecation methods is most appropriate to measure the decline in the usefulness of this company's assets?

a. revenue expenditure method b. units of production c. double declining balance d. straight line c. double declining balance

Calmar corporation sold merchandise to a customer for $30,000 on credit on July 15. The customer paid Calmar Corporation the amount due on July 31. Under the Accrual basis of accounting how should Calmar Corporation record the transaction?

a. the July 31st transaction has no effect on total assets under the accrual basis b. revenue is recognize after the cost of the merchandise sold has been paid by Calmar Corporation c. the company will recognize revenue on July 31 d. the July 15th transaction increases revenue but has no effect on assets because cash has not been received a. the July 31st transaction has no effect on total assets under the accrual basis

The primary purpose of the statement of cash flows is to provide information about

a. the profitability of the company b. the cash inflows of the company c. the investing and financing activities of the company d. the financial position of the company b. the cash inflows of the company

Assets become expenses when?

a. their economic benefits expire b. they are paid in cash c. purchased for cash or on credit d. asset is delivered a. their economic benefits expire