ACCT 2000 final

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What are the additional standard deduction amounts. For old age and blindness?

$1250 married filing jointly $1550 single

Her lifetime learning credit and tax credits how much can you use per year of graduate and undergraduate education?

$2000

What is the cost of the exemptions for 2015?

$4000

American opportunity credit is also known as?

(AOC) HOPE

Made individual claim a personal exemption if he or she is claimed as a dependent by another person?

**** no!

A company just starting business made the following purchases in August: August 1 300 units $1,560 August 12 400 units 2,340 August 24 400 units 2,520 August 30 300 units 1,980 1,400 units $8,400 A physical count of the inventory on August 31 reveals that there are 500 units on hand. What inventory method produces the lowest gross profit for August? Entry field with correct answer LIFO method Average cost method FIFO method Not determinable

A company's monthly bank statement shows a collection of a note receivable by the bank in the amount of $500. Which of the following is one part of the journal entry needed to record the note collection by the company? Entry field with correct answer Credit to Notes Receivable for $500 Debit to Notes Receivable for $500 Credit to Cash for $500 Credit to Note Expense for $500

A net loss will appear in which column of the worksheet? Entry field with correct answer Balance Sheet - Debit Adjustments - Debit. Income Statement - Debit. Adjusted Trial Balance - Credit.

Accounts are listed on the trial balance in Entry field with correct answer the order that they appear in the ledger. chronological order. the order in which they are posted. alphabetical order.

Adjustments for accrued revenues Entry field with correct answer increase assets and increase revenues. decrease liabilities and increase revenues. increase assets and increase liabilities. decrease assets and decrease revenues.

Adjustments for unearned revenues Entry field with correct answer decrease liabilities and increase revenues. increase liabilities and increase revenues. decrease revenues and decrease assets. increase assets and increase revenues.

After passage of the Sarbanes-Oxley Act of 2002 Entry field with correct answer CEOs and CFOs must certify that financial statements give a fair presentation of the company's operating results. reports prepared by managerial accountants must comply with generally accepted accounting principles (GAAP). the audit committee, rather than top management, is responsible for the company's financial statements. reports prepared by managerial accountants must be audited by CPAs.

All of the following are required steps in the accounting cycle except: Entry field with correct answer preparing a worksheet. journalizing and posting closing entries. preparing an adjusted trial balance. preparing a post-closing trial balance.

As a result of a thorough physical inventory, Railway Company determined that it had inventory worth $180,000 at December 31, 2017. This count did not take into consideration the following transactions: • Rogers Consignment store currently has goods worth $35,000 on its sales floor that belong to Railway but are being sold on consignment by Rogers. The selling price of these goods is $50,000. • Railway purchased $13,000 of goods that were shipped on December 27, FOB destination, that will be received by Railway on January 3. Determine the correct amount of inventory that Railway should report. Entry field with correct answer $215,000 $228,000 $193,000 $230,000

As used in a bank reconciliation, how are deposits in transit handled? Entry field with correct answer Added to the bank balance Deducted from the book balance Added to the book balance Deducted from the bank balance

Cecil gives goods on consignment to Jerry who agrees to try to sell them for a 25% commission. At the end of the accounting period, which of the following parties includes in its inventory the consigned goods? Entry field with correct answer Cecil Jerry Both Cecil and Jerry Neither Cecil nor Jerry

Coordinating the preparation of the budget is the responsibility of the Entry field with correct answer budget committee. treasurer. chief accountant. president.

Drew Enterprises reports all its sales on credit, and pays operating costs in the month incurred. Estimated amounts for the months of June through October are: June July August September October Budgeted sales $310,000 $330,000 $300,000 $280,000 $260,000 Budgeted purchases $144,000 $120,000 $128,000 $132,000 $90,000 Customer amounts on account are collected 60% in the month of sale and 40% in the following month. Cost of goods sold is 45% of sales. Drew purchases and pays for merchandise 30% in the month of acquisition and 70% in the following month. How much cash is budgeted to be received during August? Entry field with correct answer $312,000. $291,000. $180,000. $318,000.

During the adjusting process two transactions were missed. The first is for unearned rent revenue of which $450 was earned during the period, the second was for accrued interest payable of which $275 is owed for the period. As a result of these omissions Entry field with correct answer net income is understated by $175. revenue is overstated by $725. liabilities are overstated by $725. assets are overstated by $725.

Each of the following is a period cost except Entry field with correct answer indirect labor. non-manufacturing costs. administrative expenses. selling expenses.

Each of the other budgets in the master budget depends on the Entry field with correct answer sales budget. budgeted income statement. production budget. cash budget.

Expected direct materials purchases in Read Company are $70,000 in the first quarter and $90,000 in the second quarter. Forty percent of the purchases are paid in cash as incurred, and the balance is paid in the following quarter. The budgeted cash payments for purchases in the second quarter are Entry field with correct answer $78,000. $90,000. $72,000. $96,000.

For which of the following will an adjusting entry be required as the result of a bank reconciliation? Entry field with correct answer NSF checks Outstanding checks Deposits in transit Bank errors

If a company receives cash from a customer before performing services for the customer, then Entry field with correct answer assets increase and liabilities increase. assets decrease and liabilities increase. assets increase and liabilities decrease. assets increase and stockholders' equity increases.

If the sum of the debit column equals the sum of the credit column in a trial balance, it indicates Entry field with correct answer the mathematical equality of the accounting equation. that all accounts reflect correct balances. no errors can be discovered. no errors have been made.

In the closing process total revenues are determined to be $4,750 while total expenses are determined to be $3,875 and total dividends are $1,150. The retained earnings account will: Entry field with correct answer increase by $875 due to net income. decrease by $275 due to net income. decrease by $875 due to net income. increase by $275 due to net income.

In what section of the statement of cash flows would the purchase of office equipment for $10,000 cash appear? Entry field with correct answer Investing activities Financing activities In the notes to the statement of cash flows Operating activities

Jax Company uses a perpetual inventory system and on November 30 purchased merchandise for which it must pay the shipping charges. Which of the following is one part of the required journal entry when Jax pays the shipping charges of $200? Entry field with correct answer A debit to Inventory for $200 A debit to Freight-out for $200 A debit to Delivery Expense for $200 A debit to Cash for $200

Martin Company purchases $4,200 of merchandise on March 1, with credit terms of 3/10, n/30. If Martin pays on March 11, what is the cost of this purchase? Entry field with correct answer $4,074 $3,864 $4,200 $3,780

Net income is $15,000, operating expenses are $20,000, and net sales total $75,000. How much is cost of goods sold? Entry field with correct answer $40,000 $35,000 $15,000 $60,000

Net income is $200,000, preferred dividends are $20,000, and average common shares outstanding are 50,000. How much is earnings per share? Entry field with correct answer $3.60 $0.28 $0.25 $4.00

Net sales are $2,000,000, cost of goods sold is $960,000, and average inventory is $30,000. How many days sales are in inventory? Entry field with correct answer 11.4 2.6 12.2 66.7

On. Jan. 10, Novis Company purchased manufacturing equipment for $80,000 cash. What kind of activity is this? Entry field with correct answer Investing activity Financing activity Accrual activity Operating activity

Operating budgets include all of the following except the Entry field with correct answer capital expenditure budget. production budget. budgeted income statement. sales budget.

Product costs include each of the following except Entry field with correct answer selling and administrative expenses. direct labor. direct materials. manufacturing overhead.

Saira's Maid Service began the year with total assets of $120,000 and stockholders' equity of $40,000. During the year the company earned $90,000 in net income and paid $20,000 in dividends. Total assets at the end of the year were $215,000. How much was stockholders' equity at the end of the year? Entry field with correct answer $110,000 $150,000 $135,000 $130,000

The budgeted balance sheet is Entry field with correct answer developed from the budgeted balance sheet for the preceding year and the budgets for the current year. the last operating budget prepared. used to prepare the cash budget. all of the above.

The cash budget contains sections for each of the following except Entry field with correct answer capital expenditures. financing. cash disbursements. cash receipts.

The correct order of presentation in a classified balance sheet for the following current assets is Entry field with correct answer cash, accounts receivable, inventories, prepaid insurance. cash, inventories, accounts receivable, prepaid insurance. inventories, cash, accounts receivable, prepaid insurance. accounts receivable, cash, prepaid insurance, inventories.

The formula for computing the direct labor budget is to multiply the direct labor cost per hour by the Entry field with correct answer total required direct labor hours. physical units to be produced. equivalent units to be produced. no correct answer is given.

The generally accepted accounting principle which dictates that revenue be recognized in the accounting period in which the performance obligation is satisfied is the Entry field with correct answer revenue recognition principle. accrued revenues principle. periodicity assumption. expense recognition principle.

The management of an organization performs several broad functions. They are Entry field with correct answer planning, directing, and controlling. planning, manufacturing, and controlling. directing, manufacturing, and controlling. planning, directing, and selling.

The operating cycle of a merchandising company is ordinarily ___________________ that of a service firm. Entry field with correct answer longer than has fewer steps than the same as shorter than

The payment of dividends is an example of a(n) Entry field with correct answer financing activity. investing activity. delivery activity. operating activity.

The segment of the annual report that presents an opinion regarding the fairness of the presentation of the financial position and results of operations is/are the Entry field with correct answer auditor's opinion. balance sheet. income statement. financial statements.

Transactions are initially recorded in chronological order in a __________ before they are transferred to the accounts. Entry field with correct answer journal ledger T account register

Under IFRS, income statement items can be classified as which of the following? Entry field with correct answer Nature or function Classification or nature Function or classification Function

Under IFRS, what is the label used for common stock? Entry field with correct answer Share capital Share common stock Common shares Ordinary shares

Under IFRS, which of the following selections properly refer to what GAAP signifies as a "balance sheet"? Entry field with correct answer Statement of financial position Statement of balance Statement of financial resources Statement of financial wherewithal

What accounting concept is employed when using the lower-of-cost-or-market valuation? Entry field with correct answer Conservatism Expense recognition Full disclosure Revenue recognition

What are generally accepted accounting principles? Entry field with correct answer A set of accounting rules and practices that have authoritative support. Usually established by the Internal Revenue Service. The guidelines used to resolve ethical dilemmas. Fundamental truths that can be derived from the laws of nature.

What does a general ledger of a company contain? Entry field with correct answer All the asset, liability, stockholders' equity, revenue, and expense accounts Asset and liability accounts only Asset and stockholders' equity accounts only Revenue and expense accounts only

What is measured by current assets minus current liabilities? Entry field with correct answer Working capital Profitability Cash flow Solvency

What is the appropriate order for a company's chart of accounts? Entry field with correct answer Assets, liabilities, stockholders' equity, revenues, expenses Assets, liabilities, revenues, expenses, stockholders' equity Assets, revenues, expenses, liabilities, stockholders' equity Assets, liabilities, stockholders' equity, expenses, revenue

What is the primary criterion by which accounting information can be judged? Entry field with correct answer Usefulness for decision making Predictive value Comparability Consistency

What is the underlying rationale for the lower-of-cost-or-market rule? Entry field with correct answer The conservatism constraint The economic entity assumption The historical cost principle The materiality constraint

What section of a cash flow statement shows the cash spent on new equipment during the past accounting period? Entry field with correct answer The investing section. The operating section. The financing section. The cash flow statement does not give this information.

Which account will have a zero balance after a company has journalized and posted closing entries? Entry field with correct answer Service Revenue. Advertising Supplies. Accumulated Depreciation. Prepaid Insurance.

Which accounts normally have debit balances? Entry field with correct answer Assets, dividends, and expenses Assets, expenses, and retained earnings Assets, expenses, and revenues Assets, liabilities, and dividends

Which forms of business organization are considered to be separate accounting entities? Entry field with correct answer Sole proprietorships, corporations, and partnerships Only corporations Partnerships and corporations only Sole proprietorships and partnerships only

Which group of costs consists of only product costs? Entry field with correct answer Direct labor, indirect labor, factory utilities Direct labor, direct materials, and selling expenses Indirect labor, factory building depreciation, administrative expenses Factory maintenance, sales commissions, salaries paid to sales clerks

Which is true about a wholesaler? Entry field with correct answer It sells to another business, which will sell to a consuming customer. It sells only to manufacturing companies. It conducts large sales for consumers on a recurring basis. It is a company that sells to consumers at a discount.

Which of the following answer choices lists the three manufacturing costs? Entry field with correct answer Direct materials, direct labor, and manufacturing overhead Raw materials, work in process, and finished goods Indirect materials, indirect labor, and factory-related costs Work in process, finished goods, and cost of goods sold

Which of the following does not properly reflect a financial ratio? Entry field with correct answer $7,200 18.4% 7:1 $0.60 per dollar

Which of the following is a merchandiser that sells directly to consumers? Entry field with correct answer Retailer Wholesaler Customer Service enterprise

Which of the following is an example of an intangible asset? Entry field with correct answer Trademarks Property, plant, and equipment Prepaid expenses Accounts receivable

Which of the following is not an inventory account? Entry field with correct answer Equipment Work in process Raw materials Finished goods

Which of the following is the correct sequence of events? Entry field with correct answer Journalize; post; prepare a trial balance Post; journalize; prepare a trial balance Prepare a trial balance; post; journalize Prepare a trial balance; journalize; post

Which of the following lists includes only financial budgets? Entry field with correct answer Budgeted balance sheet, cash budget, and the capital expenditures budget. Cash budget, production budget, and capital expenditures budget. Capital expenditure budget, sales budget, and budgeted income statement. Budgeted income statement, budgeted balance sheet, and sales budget

Which of the following statements is correct? Entry field with correct answer A company which uses a periodic inventory system needs only one journal entry when it sells merchandise. A company which uses a periodic inventory system needs two journal entries when it sells merchandise. A company which uses a periodic inventory system debits Cost of Goods Sold and credits Inventory when it sells merchandise. None of the answer choices are correct.

Which of the following would not appear on the income statement? Entry field with correct answer Dividends paid Net income Interest expense Service revenue

Which of the following would not appear on the retained earnings statement? Entry field with correct answer Service revenue Dividends Beginning retained earnings balance Net income

Which of the following would you find on the income statement of a manufacturing company, but not on the income statement of a merchandising company? Entry field with correct answer Cost of goods manufactured Raw materials Work in process Cost of goods purchased

Which one of the following is a primary benefit of budgeting? Entry field with correct answer It provides definite objectives for evaluating performance. It eliminates potential problems so that managers do not need to be concerned that things may get out of hand. It removes the 'plan ahead' from lower level managers so that they can focus on operations. It eliminates the need for coordination of activities throughout the company.

Which one of the following is necessary if a company expects its budget to be effective? Entry field with correct answer The company must have a sound organizational structure. The company's budget should be a good substitute for management. The budget amounts must be based on those of previous accounting periods. Managers must be held responsible for controllable and uncontrollable costs.

Which principle dictates that efforts (expenses) be matched with results (revenues)? Entry field with correct answer Expense recognition principle. Historical cost principle. Periodicity principle. Revenue recognition principle.

Which statement about users of accounting information is incorrect? Entry field with correct answer Regulatory authorities are considered internal users. Taxing authorities are considered external users. Management is considered an internal user. Present creditors are considered external users.

Which statement is correct? Entry field with correct answer The use of the cash-basis of accounting violates both the revenue recognition and expense recognition principles. As long as a company consistently uses the cash-basis of accounting, generally accepted accounting principles allow its use. As long as management is ethical, there are no problems with using the cash-basis of accounting. The cash-basis of accounting is objective because no one can be certain of the amount of revenue until the cash is received.

Which statement is true concerning IFRS? Entry field with correct answer IFRS may differ somewhat in principles from U.S. GAAP. IFRS will change the way transactions are recorded. IFRS will change the format of the trial balance. IFRS will cause companies to report less profit than under U.S. GAAP.

Which types of accounts will appear in the post-closing trial balance? Entry field with correct answer Permanent accounts. Temporary accounts. Accounts shown in the income statement columns of a work sheet. None of these answer choices are corrrect.

With the assumption of costs and prices generally rising, which of the following is correct? Entry field with correct answer LIFO provides the closest valuation of cost of goods sold to replacement cost of inventory sold. FIFO provides the closest cost of goods sold to replacement cost. LIFO provides the closest valuation of inventory on the balance sheet to replacement cost. Specific identification method provides the closest cost of goods sold to replacement cost on the income statement.

A company has the following account balances: Sales revenue $2,000,000: Sales Returns and Allowances $250,000: Sales Discounts $50,000: and Cost of Goods Sold $1,275,000. How much is the gross profit rate? Entry field with correct answer 25% 51% 36% 64%

A Net sales = $2,000,000 ‒ $250,000 ‒ $50,000 = $1,700,000 Gross profit = $1,700,000 ‒ $1,275,000 = $425,000 Gross profit rate = $425,000/$1,700,000 = 25%

At December 31, 2017, Sunrise Company's inventory records indicated a balance of $752,000. Upon further investigation it was determined that this amount included the following: • $112,000 in inventory purchases made by Sunrise shipped from the seller December 27, 2016 terms FOB destination, but not due to be received until January 2, 2017 • $74,000 in goods sold by Sunrise with terms FOB destination on December 27. The goods are not expected to reach their destination until January 6, 2017 • $6,000 of goods received on consignment from Wallwood Company What is Sunrise's correct ending inventory balance at December 31, 2017? Entry field with correct answer $634,000 $640,000 $746,000 $560,000

A ($752,000 - $112,000 - $6,000 = $634,000.)

At December 31, 2017, Shorts Company had retained earnings of $2,184,000. During 2017, the company issued stock for $98,000, and paid dividends of $34,000. Net income for 2017 was $402,000. How much was the retained earnings balance at the beginning of 2017? Entry field with correct answer $1,816,000 $1,914,000 $2,552,000 $2,454,000

A ($X + $402,000 - $34,000 = $2,184,000. Therefore, beginning retained earnings = $1,816,000.)

At the beginning of the year, Goldenrod had beginning inventory of 2,000 scooters. Goldenrod estimates it will sell 5,000 units during the first quarter of the current year, with a 10% increase in sales each quarter. It is Goldenrod's policy to maintain an ending inventory equal to 20% of the next quarter's budgeted sales. Each scooter costs $100 to produce and sold for $150. How much is the budgeted sales revenue for the third quarter of the current year? Entry field with correct answer $907,500. $825,000. $605,000. $500,000.

A (6050*150)

How long can you claim lifetime learning credit?

A limited number of years

When do you have to file income taxes?

April 15

A credit sale of $750 is made on June 13, terms 2/10, n/30, on which a return of $50 is granted on June 16. What amount is received as payment in full on June 23? Entry field with correct answer $650 $686 $735 $700

An account is a part of the financial information system and is described by all except which one of the following? Entry field with correct answer An account has a title. An account is a source document. An account has a debit and credit side. An account consists of three parts.

An annual report includes all of the following except Entry field with correct answer notes to the financial statements. a listing of all of the stockholders. an auditor's report. a management discussion and analysis section.

As of December 31, 2017, Stoneland Corporation has assets of $3,500 and stockholders' equity of $2,000. How much are the liabilities for Stoneland Corporation as of December 31, 2017? Entry field with correct answer $2,000 $1,500 $1,000 $2,500

Barker Company collected the following information to prepare its November bank reconciliation: Cash balance per bank, November 30 $21,000 Note receivable plus interest collected 9,000 Outstanding checks 6,000 Deposits in transit 5,400 Bank service charges 85 NSF check 2,100 How much is the cash balance per books prior to preparing the reconciliation? Entry field with correct answer $6,815 $13,585 $20,400 $27,815

Bonita Realty Management Co. received a check for $30,000 on October 1, which represents a one year advance payment of rent on an office it rents to a client. Unearned Rent Revenue was credited for the full $30,000. Financial statements are prepared on December 31. The appropriate adjusting journal entry to make on December 31 of the first year would be Entry field with correct answer Rent Revenue $2,500 Unearned Rent Revenue $2,500 Unearned Rent Revenue $7,500 Rent Revenue $7,500 Unearned Rent Revenue $22,500 Rent Revenue $22,500 Rent Revenue $22,500 Unearned Rent Revenue $22,500

Cash flows from operating activities are $200,000; cash flows from financing activities are $150,000; capital expenditures are $90,000; and dividends are $20,000. How much is free cash flow? Entry field with correct answer $40,000 $90,000 $180,000 $110,000

Cash received before services are performed are recorded as Entry field with correct answer expenses. liabilities. revenues. equity.

Cash received before services are performed which is recorded as a debit to a Cash account and a credit to a liability account is called Entry field with correct answer an accrued revenue. an unearned revenue. an unrecorded revenue. None of these answer choices are correct.

Cosmos Corporation, which uses a perpetual inventory system, purchased $2,000 of merchandise on July 5 on account. Credit terms were 2/10, n/30. It returned $400 of the merchandise on July 9. Which of the following is one effect when Cosmos pays its bill on July 21? Entry field with correct answer Debit to Cash for $1,600 Credit to Cash for $1,600 Debit to Accounts Payable for $2,000 Credit to Accounts Payable for $1,600

Cost of goods available for sale is reported on the income statement of Entry field with correct answer a merchandising company but not a manufacturing company. a merchandising company and a manufacturing company. neither a manufacturing company nor a merchandising company. a manufacturing company but not a merchandising company.

Debits Entry field with correct answer decrease both assets and liabilities. increase assets and decrease liabilities. decrease assets and increase liabilities. increase both assets and liabilities.

Each of the following budgets is used in preparing the budgeted income statement except the Entry field with correct answer sales budget. capital expenditure budget. selling and administrative budget. direct labor budget.

Earnings per share is computed by dividing net income Entry field with correct answer by the average common shares outstanding. less preferred stock dividends by the average common shares outstanding. less preferred stock dividends by the ending common shares outstanding. by the ending common shares outstanding.

Genesis Company buys equipment for $900 machine on credit. This transaction will immediately affect the Entry field with correct answer income statement, retained earnings statement, and balance sheet. balance sheet only. income statement and retained earnings statement only. income statement only.

Given the following quality of earnings ratios, which suggests the company may be using the most conservative accounting techniques? Entry field with correct answer 0.2 1.8 0.6 1.0

IFRS stand for: Entry field with correct answer International Finance Regulatory Stipulations. International Financial Reporting Standards. International Fiscal Regulatory Standards. International Financial Regulatory Schema.

If cash is received in advance from a customer Entry field with correct answer assets will decrease. liabilities will increase. stockholders' equity will decrease. retained earnings will increase.

If sales revenues totals $400,000, cost of goods sold is $310,000, and operating expenses are $60,000, how much is the gross profit? Entry field with correct answer $400,000 $90,000 $30,000 $340,000

If the adjusting entry is not made for unearned revenues, then the result will be to Entry field with correct answer overstate assets and understate liabilities. overstate liabilities and understate revenues. understate net income and overstate retained earnings. understate retained earnings and overstate revenues.

If total liabilities increase by $5,000 then Entry field with correct answer assets and stockholders' equity each increase by $2,500. assets increase by $5,000, or stockholders' equity decrease by $5,000. assets decrease by $5,000. stockholders' equity increase by $5,000.

In a classified balance sheet, how are assets usually classified? Entry field with correct answer Current assets; long-term investments; property, plant, and equipment; and common stock Current assets; long-term investments; property, plant, and equipment; and intangible assets Current assets; long-term investments; tangible assets; and intangible assets Current assets; long-term assets; property, plant, and equipment; and intangible assets

In a period of falling prices, which of the following methods will give the largest net income? Entry field with correct answer Average-cost LIFO FIFO Specific identification

In a perpetual inventory system, which accounts will the seller credit when merchandise is returned by a customer? Entry field with correct answer Sales Returns and Allowances and Inventory Accounts Receivable and Cost of Goods Sold Inventory and Cost of Goods Sold Sales Returns and Allowances and Accounts Receivable

In what order are current assets listed? Entry field with correct answer Alphabetically By liquidity By importance By longevity

In which forms of business organization are the owners personally liable for all the debts of the business? Entry field with correct answer Sole proprietorships and corporations Sole proprietorships and partnerships Partnership and corporation All of the answer choices are correct

In which of the following sequences are the financial statements usually prepared? Entry field with correct answer Balance sheet, retained earnings statement, statement of cash flows, and income statement. Income statement, retained earnings statement, balance sheet, and statement of cash flows. Balance sheet, statement of cash flows, income statement and retained earnings statement. Income statement, balance sheet, retained earnings statement, and statement of cash flows.

Kam Company has the following units and costs: Units Unit Cost Inventory, Jan. 1 8,000 $11 Purchase, June 19 13,000 12 Purchase, Nov. 8 5,000 13 If 9,000 units are on hand at December 31, what is the cost of the ending inventory under LIFO using a periodic inventory system? Entry field with correct answer $99,000 $100,000 $108,000 $113,000

On July 1, Mesa Verde, Inc. purchased a 6-month insurance policy for $12,600. Prepaid Insurance was debited for the entire amount. On December 31, when the annual financial statements are prepared, the appropriate adjusting journal entry would be Entry field with correct answer Prepaid Insurance $10,500 Insurance Expense $10,500 Insurance Expense $2,100 Prepaid Insurance $2,100 Prepaid Insurance $2,100 Insurance Expense $2,100 Insurance Expense $10,500 Prepaid Insurance $10,500

On September 1 the Petite-Sizes Store paid $12,000 to the Mega-Mall Co. for 3-month rent beginning September 1. Prepaid Rent was debited for the payment. If Petite-Sizes Store prepares financial statements on September 30, the appropriate adjusting journal entry to make on September 30 would be Entry field with correct answer Prepaid Rent $8,000 Rent Expense $8,000 Rent Expense $4,000 Prepaid Rent $4,000 Rent Expense $8,000 Prepaid Rent $8,000 Prepaid Rent $4,000 Rent Expense $4,000

On average, studies have shown that the smallest component of total manufacturing cost is Entry field with correct answer manufacturing overhead. direct labor. factory overhead. direct materials.

One key difference appears when comparing the income statements of a manufacturing company to a merchandising company. What is that difference? Entry field with correct answer Manufacturing companies use work in process, raw materials, and finished goods inventory balances to calculate cost of goods sold, while merchandising companies use only merchandise inventory balances. Manufacturing companies use cost of goods manufactured and merchandising companies use cost of goods purchased. Cost of goods sold equals the cost of merchandise purchased for a merchandising company, while cost of goods sold equals the cost of raw materials purchased for a manufacturing company. Cost of goods manufactured is subtracted from sales to get gross profit on a manufacturing income statement, while cost of goods purchased is subtracted from sales to get gross profit on a merchandising income statement.

Payment of a dividend Entry field with correct answer increases expenses; decreases cash. decreases cash; decreases retained earnings. increases retained earnings; increases expenses. decreases cash; increases stockholders' equity.

Pharmco incurred the following costs while manufacturing its product: Materials used in production, $120,000; factory depreciation, $60,000; property taxes on the administrative offices, $12,000; labor costs of assembly-line workers, $95,000; factory supplies used, $8,000; advertising expense, $13,000; property taxes on the factory, $20,000; delivery expense, $23,000; salaries of the sales staff, $53,000; and sales commissions, $17,000. The total product costs for Pharmco are Entry field with correct answer $421,000. $303,000. $391,000. $315,000.

Posting Entry field with correct answer transfers ledger transaction data to the journal. transfers journal entries to ledger accounts. normally occurs before journalizing. is an optional step in the recording process.

Retained earnings is decreased by Entry field with correct answer owner's investments. expenses. revenues. assets.

Saira works for a sports franchise, which pays wages and salaries earned on a monthly basis. A new accountant was hired by the sports franchise in late May. Due to inexperience, the new accountant failed to accrue Saira's salary for May. What is the impact on the May 31 financial statements of the sports franchise? Entry field with correct answer Liabilities are understated; assets are overstated. Expenses are understated; net income is overstated. Revenues are overstated; net income is understated. Liabilities are overstated; retained earnings is overstated.

Saira's Maid Service began the year with total assets of $120,000 and stockholders' equity of $40,000. During the year the company earned $90,000 in net income and paid $20,000 in dividends. Total assets at the end of the year were $215,000. How much are total liabilities at the end of the year? Entry field with correct answer $90,000 $105,000 $80,000 $110,000

Sales revenue total to $10,000. Sales returns and allowances are $500 and sales discounts are $1,000. How much is net sales? Entry field with correct answer $10,500 $8,500 $10,000 $11,500

The budget that is often considered to be the most important financial budget is the Entry field with correct answer budgeted income statement. cash budget. budgeted balance sheet. capital expenditure budget.

The budgeted income statement is Entry field with correct answer the end-product of the financial budgets. the end-product of the operating budgets. the starting point of the master budget. dependent on cash receipts and cash disbursements.

The closing entry process consists of closing Entry field with correct answer all permanent accounts. all temporary accounts. all asset and liability accounts. out the Retained Earnings account.

The direct labor budget and the manufacturing overhead budget are prepared directly from the Entry field with correct answer cash budget. production budget. sales budget. budgeted income statement.

The ending retained earnings balance appears on Entry field with correct answer the balance sheet only. both the retained earnings statement and the balance sheet. the income statement and the retained earnings statement. the retained earnings statement only.

The financial statements for Harold Corporation contained the following information: Accounts receivable $5,000 Sales revenue 75,000 Cash 15,000 Salaries and wages expense 20,000 Rent expense 10,000 How much was Harold's net income? Entry field with correct answer $65,000 $45,000 $60,000 $15,000

The management function that requires management to look ahead and establish objectives is Entry field with correct answer evaluating. planning. controlling. directing.

The process of keeping the company's activities on track is Entry field with correct answer evaluating. controlling. planning. directing.

The segment of a corporation's annual report that describes the corporation's accounting methods is the Entry field with correct answer management discussion and analysis. notes to the financial statements. income statement. auditor's report.

The worksheet, used as an aid in the preparation of adjusting entries and the financial statements, consists of how many debit/credit columns? Entry field with correct answer 8 10 12 6

What are the accounting rules that have substantial authoritative support and are recognized as a general guide for financial reporting purposes in the U. S.? Entry field with correct answer Generally accepted accounting standards Generally accepted accounting principles Generally accepted auditing principles General accounting principles

What is the periodicity assumption? Entry field with correct answer Companies should recognize revenue in the accounting period in which the performance obligation is satisfied. The economic life of a business can be divided into artificial time periods. Companies should match expenses with revenues. The fiscal year should correspond with the calendar year.

What is the primary accounting standard-setting body in the United States? Entry field with correct answer Securities and Exchange Commission Financial Accounting Standards Board IFRS Public Company Accounting Oversight Board (PCAOB)

What kind of classification is cost of goods sold? Entry field with correct answer Revenue Expense Asset Liability

What organization issues International Financial Reporting Standards? Entry field with correct answer International Auditing Standards Committee International Accounting Standards Board IFRS Financial Accounting Standards Board

What type of account is unearned revenue? Entry field with correct answer Asset Liability Revenue Expense

What type of accounts are Sales Returns and Allowances and Sales Discounts? Entry field with correct answer Contra expense accounts Contra revenue accounts Contra asset accounts Expense accounts

What will vary between countries when statements are prepared using IFRS? Entry field with correct answer The number of shares outstanding The monetary unit Faithful representation Accounting time period

When is a physical inventory usually taken? Entry field with correct answer When goods are not being sold or received. At the end of the company's fiscal year. When a company has its greatest amount of inventory and when goods are not being sold or received. When the company has its greatest amount of inventory.

Which financial statement reports assets, liabilities, and stockholders' equity? Entry field with correct answer Retained earnings statement. Balance sheet. Statement of cash flows. Income statement.

Which is an advantage of corporations relative to partnerships and sole proprietorships? A. Harder to transfer ownership B. Reduced legal liability for investors C. Most common form of organization D. Increased difficulty of raising funds

Which is an indicator of profitability? Entry field with correct answer Current ratio Earnings per share Debt to total assets ratio Free cash flow

Which is the correct order of steps in the accounting cycle? Entry field with correct answer Journalize and post transactions, journalize and post closing entries, journalize and post adjusting entries. Journalize and post transactions, journalize and post adjusting entries, journalize and post closing entries. Prepare financial statements, prepare adjusting entries, prepare closing entries, prepare a post-closing trial balance. Post transactions, journalize transactions, prepare a trial balance, prepare financial statements.

Which of the following are considered to be management's three broad functions? Entry field with correct answer Conducting, directing, manufacturing Planning, directing, and controlling Planning, calculating, and controlling Controlling, directing, manufacturing

Which of the following are constraints that allow a company to modify generally accepted accounting principles without jeopardizing the usefulness of the financial statements? Entry field with correct answer Timeliness and neutrality Cost constraint Relevance and faithful representation Consistency and comparability

Which of the following are not considered to be primary users of financial statements in countries outside the U.S.? Entry field with correct answer Tax authorities Economic advisors Private investors Central government planners

Which of the following costs are classified as a period cost? Entry field with correct answer Wages paid to a production department supervisor. Wages paid to a cost accountant department supervisor. Wages paid to a factory custodian. Wages paid to an assembly worker.

Which of the following did not result from the Sarbanes-Oxley Act? Entry field with correct answer Penalties for fraudulent activity increased. Tax rates on corporations increased. Top management must now certify the accuracy of financial information. Auditors cannot provide non-audit services to the same client.

Which of the following events is not recorded in the accounting records? Entry field with correct answer A cash investment is made into the business. An employee is terminated. Equipment is purchased on account. The owner withdraws cash for personal use.

Which of the following is an example of a financing activity? Entry field with correct answer Buying inventory Issuing shares of common stock Buying delivery equipment Selling goods on account

Which of the following is considered property, plant, and equipment on a classified balance sheet? Entry field with correct answer Copyright Land Supplies Investment in Intel Corporation stock

Which of the following is not a benefit of budgeting? Entry field with correct answer An early warning system is provided for potential problems. It enables disciplinary action to be taken at every level of responsibility. The coordination of activities is facilitated. Management can plan ahead.

Which of the following is not a legitimate business reason for taking a physical inventory? Entry field with correct answer To determine if any inventory has been lost from waste, shoplifting, or employee theft To verify the profitability of individual inventory items To check the accuracy of the perpetual inventory records To determine cost of goods sold

Which of the following is not a typical example of a prepaid expense? Entry field with correct answer Supplies Wages Insurance Rent

Which of the following is not an external user of accounting data? Entry field with correct answer Economic planners Chief Financial Officer Labor unions Customers

Which of the following is not one of the three primary business activities? Entry field with correct answer Operating Advertising Financing Investing

Which of the following is one of the factors that must be present if budgets are to be effective? Entry field with correct answer Participative budgeting must be used. The company must have a sound organizational structure. The budget committee must prepare the budget. The budget should be prepared for long time periods.

Which of the following is one of the issues that the SEC said should be considered in deciding if the United States should adopt IFRS? Entry field with correct answer Whether U.S. citizens will vote to accept IFRS Whether IFRS is sufficiently developed and consistent in applications Whether IFRS modifies its structure to agree with current U.S. GAAP Whether IFRS will eliminate U.S. GAAP

Which of the following is the correct order for listing current assets on the balance sheet? Entry field with correct answer Cash, accounts receivable, inventories, short-term investments, prepaid expenses Cash, short-term investments, accounts receivable, inventories, prepaid expenses Cash, short-term investments, inventories, prepaid expenses, accounts receivable Cash, accounts receivable, prepaid expenses, inventories, short-term investments

Which of the following is the most appropriate definition of accounting information? Entry field with correct answer The interconnected network of subsystems necessary to operate a business. The information system that identifies, records, and communicates the economic events of an organization to interested users. Electronic collection and organization of vast amounts of financial information. A means of collecting information.

Which of the following items does not result in an entry to the Inventory account under a perpetual system? Entry field with correct answer Payment of freight costs for goods received from a supplier Payment of freight costs for goods shipped to a customer A purchase of merchandise A return of Inventory to the supplier

Which of the following should not be included in the physical inventory of a company? Entry field with correct answer All of the answer choices are correct Goods held on consignment from another company Goods shipped on consignment to another company Goods in transit from another company shipped FOB shipping point

Which of the following statements about a periodic inventory system is true? Entry field with correct answer Companies continuously maintain detailed records of the cost of each inventory purchase and sale. Companies determine cost of goods sold only at the end of the accounting period. The increased use of computerized systems has increased the use of the periodic system. The periodic system provides better control over inventories than a perpetual system.

Which of the following statements is not true about managerial accounting? Entry field with correct answer It does not require an audit by a CPA. It is highly aggregated. Reports are generated as needed. It is primarily for internal users such as officers and managers.

Which of the following would affect the gross profit rate if sales remain constant? Entry field with correct answer An increase in advertising expense An increase in cost of goods sold A decrease in insurance expense A decrease in depreciation expense

Which of these measures is an evaluation of a company's ability to pay current liabilities? Entry field with correct answer Earnings per share Current ratio Both earnings per share and current ratio None of these answer choices are correct

Which of these statements about a journal is false? Entry field with correct answer It discloses the complete effect of a transaction in one place. It contains only revenue and expense accounts. It helps to locate errors because the debit and credit amounts for each entry can be readily compared. It provides a chronological record of transactions.

Which one of the following does not affect retained earnings? Entry field with correct answer Dividends Issuance of common stock Net income Net loss

Which one of the following is not a consideration that affects the selection of an inventory costing method? Entry field with correct answer Tax effects Perpetual versus periodic inventory system Balance sheet effects Income statement effects

Which one of the following is not an alternate means of expressing a ratio? Entry field with correct answer Percentage Dollar amount Proportion Rate

Which one of the following statements is correct? Entry field with correct answer A company which uses a perpetual inventory system needs only one journal entry when it sells merchandise. A company which uses a perpetual inventory system needs two journal entries when it sells merchandise. A company which uses a perpetual inventory system debits inventory and credits cost of goods sold when it sells merchandise. None of the answer choices are correct.

Which one of the following statements is true? Entry field with correct answer A manufacturing company will normally have raw materials, work in process, and merchandise inventory as inventory account classifications. A manufacturing company will normally have raw materials, work in process, and finished goods as inventory account classifications. A merchandising company will normally have raw materials, work in process, and finished goods as inventory account classifications. A merchandising company will normally have raw materials and merchandise inventory as inventory account classifications.

Which one of the following will result in gross profit? Entry field with correct answer Sales revenue less operating expenses Sales revenue less cost of goods sold Operating expenses less cost of goods sold Operating expenses less net income

Which statement about an account is true? Entry field with correct answer There are separate accounts for specific assets and liabilities but only one account for stockholders' equity items. An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items. In its simplest form, an account consists of two parts. The right side of an account is the debit side.

Which statement is incorrect concerning the adjusted trial balance? Entry field with correct answer The adjusted trial balance provides the primary basis for the preparation of financial statements. The adjusted trial balance lists the account balances segregated by assets and liabilities. An adjusted trial balance proves the equality of the total debit balances and the total credit balances in the ledger after all adjustments are made. The company prepares the adjusted trial balance after it has journalized and posted the adjusting entries.

Which statement is true for the seller? Entry field with correct answer The Sales Discounts account is debited for defective merchandise returned by a customer. The Sales Returns and Allowances account is debited for defective merchandise returned by a customer. The Sales Returns and Allowances account is credited for defective merchandise returned by a customer. The Sales Discounts account is credited for defective merchandise returned by a customer.

Which statement is true when recording the sale of goods for cash in a perpetual inventory system? Entry field with correct answer Only one journal entry is necessary. It will record the receipt of cash and sales revenue. Two journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods sold and to reduce inventory. Two journal entries are necessary: one to record the receipt of cash and reduction of inventory, and one to record the the cost of goods sold and sales revenue. Only one journal entry is necessary. It will record cost of goods sold and reduce of inventory.

Windathon, Inc. expects sales volume totaling $500,000 for June. Data for the month follows: Sales commissions 4% of sales Sales manager's salary $30,000 per month Advertising expense $25,000 per month Shipping expense. 1% of sales Miscellaneous selling expenses $2,100 per month plus 3/4% of sales How much is Windathon's selling expense budget for June? Entry field with correct answer $57,100. $85,850. $30,850. $83,750.

With the adjusted trial balance in hand, you see that the debit totals of the real accounts is $18,250 and the credit totals of the real accounts is $14,550. The debit total of the nominal or temporary accounts is $3,475 while the credit total of the nominal or temporary accounts is $7,175. From this you know that Entry field with correct answer net income is $3,700 for the fiscal period. retained earnings will increase by $3,700 through the closing process. there is an error in the adjusted trial balance. net loss is $3,700 for the fiscal period.

In a period of rising prices which inventory method will result in the greatest amount of income tax expense? Entry field with correct answer LIFO FIFO Average cost Specific identification

B ( FIFO will result in the lowest cost of goods sold, highest net income, and highest income tax expense.)

In 2017, Bombay Corporation had cash receipts of $21,000 and cash disbursements of $12,000. The company's ending cash balance at December 31, 2017 was $33,000. What was the beginning cash balance? Entry field with correct answer $42,000 $24,000 $30,000 $45,000

B ( The ending balance plus cash disbursements less cash receipts equals the beginning balance. $33,000 + $12,000 - $21,000 = $24,000.)

The following information came from the income statement of the Wilkens Company at December 31, 2017: sales revenue $1,800,000; beginning inventory $160,000; ending inventory $240,000; and gross profit $600,000. What is Wilkens' inventory turnover ratio for 2017? Entry field with correct answer 3.75 times 6.0 times 3.0 times 2.5 times

B ($1,800,000 - $600,000 = $1,200,000 --> $1,200,000 / [($160,000 + $240,000) / 2] = 6.)

Tomy Toys is planning to sell 200 action figures and to produce 190 action figures in July. Each action figure requires 100 grams of plastic and a half hour of direct labor. The cost of the plastic used in each action figure is $5 per 100 grams. Employees of the company are paid at a rate of $15.00 per hour. Manufacturing overhead is applied at a rate of 120% of direct labor costs. Tomy Toys has 90,000 grams of plastic in its beginning inventory and wants to have 80,000 grams in its ending inventory. What is the amount of budgeted direct labor cost for the month of July? Entry field with incorrect answer $2,850. $1,425. $1,500. $3,000.

B (190*.5*15)

Under IFRS, a number of inventory options are available. Which one of the following is not allowed under IFRS? Entry field with correct answer Including amounts held-for-sale in the ordinary course of business in the inventory account Last in-first out Periodic Perpetual

B (GAAP)

A company can change to a new method of accounting if management can justify that the new method results in terms of Entry field with correct answer a lower net income for tax purposes. less likelihood of clerical errors. more meaningful financial information. a higher net income.

A key difference between GAAP and IFRS would include which of the following? Entry field with correct answer Income statement items can be classified under function. Comprehensive income is used for both GAAP and IFRS. Revaluation of land is permitted. Inventories can be maintained under either a periodic or perpetual system.

A trial balance will not balance if Entry field with correct answer a correct journal entry is posted twice. the purchase of supplies on account is debited to Supplies and credited to Cash. a $100 cash dividend is debited to Dividends for $1,000 and credited to Cash for $100. a $450 payment on account is debited to Accounts Payable for $45 and credited to Cash for $45

Accounts with normal credit balances include Entry field with correct answer assets and liabilities. revenues and expenses. liabilities and stockholders' equity. revenues and assets.

An account has $300 on the debit side and $900 on the credit side. How much is the account balance? Entry field with correct answer Debit of $600 Credit of $900 Credit of $600 Debit of $1,200

At the beginning of the year, Opal Company has a cash balance of $23,000. During the year, the company expects cash disbursements of $160,000, and cash receipts of $140,000. If Opal Company requires an ending cash balance of $20,000, how much must the company borrow? Entry field with correct answer $20,000. $40,000. $17,000. $0.

At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to employees was omitted. Which of the following statements is true? Entry field with correct answer Salaries and Wages Expense for the year is overstated. Stockholders' equity at the end of the year is understated. Liabilities at the end of the year are understated. Assets at the end of the year are understated.

Current liabilities are $10,000, long-term liabilities are $20,000, common stock is $50,000, and retained earnings totals $70,000. How much is total stockholders' equity? Entry field with correct answer $150,000 $140,000 $120,000 $70,000

During 2017, Gibson Company assets decreased $50,000 and its liabilities decreased $90,000. Its stockholders' equity Entry field with correct answer decreased $40,000. increased $140,000. increased $40,000. decreased $140,000.

Easy transfer of ownership is a characteristic of which form of business organization? A. Sole proprietorship B. Partnership C. Corporation D. All of the answer choices are correct

Financial statements can be prepared directly from the Entry field with correct answer trial balance. reversing trial balance. adjusted trial balance. post-closing trial balance.

For 2017, Stoneland Corporation reported net income, $24,000; net sales, $400,000; and average shares outstanding, 6,000. There were no preferred stock dividends. How much was the 2017 earnings per share? Entry field with correct answer $16.67 $66.67 $4.00 $0.06

For which of the following might a bank issue a debit memorandum to a depositor's account? Entry field with correct answer Collection of a note receivable Deposits in transit Monthly service charges Interest earned

Hagger Sounds has accumulated the following cost and market data on March 31: Cost Data Market Data iPods $24,000 $20,400 Cell phones 18,000 19,000 DVDs 28,000 25,600 Using the lower-of-cost-or-market, how much is the value of the ending inventory? (Apply LCM to each category) Entry field with correct answer $70,000 $65,000 $64,000 $71,000

If a company has the ability to pay obligations that are expected to become due within the next year or operating cycle whichever is longer, what is the term that describes this measure? Entry field with correct answer Profitability Solvency Liquidity Working capital

If an expense is paid with cash Entry field with correct answer retained earnings will increase. expenses will decrease. assets will decrease. liabilities will increase.

If total liabilities decreased by $15,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? Entry field with correct answer $20,000 increase $15,000 decrease $10,000 decrease $10,000 increase

In a periodic inventory system, when is the cost of the merchandise sold determined? Entry field with correct answer Either at time of sale, end of period or periodically during the period At the time of the sale At the end of the period Periodically during the period

In terms of the principal types of business activities, paying salaries expense is an example of Entry field with correct answer investing activities. advertising activities. operating activities. financing activities.

Indirect labor is a Entry field with correct answer raw material cost. non-manufacturing cost. product cost. period cost.

Inventory costing methods place primary reliance on assumptions about the flow of Entry field with correct answer resale prices. goods. costs. values.

Managerial accounting Entry field with correct answer is governed by generally accepted accounting principles. is limited to cost data. places emphasis on special-purpose information. pertains to the entity as a whole and is highly aggregated.

Marsh, Inc. paid for freight costs on merchandise it shipped to a customer. In what account will Marsh record this cost in a perpetual inventory system? Entry field with correct answer Inventory Freight-in account Freight-out account Cost of goods sold account

Microtech plans to sell 2,000 computers in April; 1,900 in May; and 2,000 in June. The company keeps 15% of the next month's sales as ending inventory. How many units should Microtech produce in May? Entry field with correct answer 1,885. Amount cannot be determined due to insufficient information. 1,915. 2,200.

On what amount is a sales discount based? Entry field with correct answer Invoice less discount Invoice price plus freight-out Invoice price less returns and allowances Invoice price plus freight-in

Ownership passes to the buyer when the public carrier accepts the goods if the goods are shipped Entry field with correct answer FOB shipper. FOB destination. FOB shipping point. FOB buyer.

Resources owned by a business are referred to as Entry field with correct answer liabilities. stockholders' equity. assets. revenues.

Scan Design provided the following budgeted information for April through July: April May June July Projected sales $104,000 $123,000 $115,000 $132,000 Projected merchandise purchases $82,000 $92,000 $78,000 $66,000 The cash balance on June 1 is $12,000. The company pays 40% of merchandise purchases in the month purchased and 60% in the following month. General operating expenses are budgeted to be $31,000 per month of which depreciation is $3,000 of this amount. Management pays operating expenses in the month incurred. The company makes loan payments of $4,000 per month of which $600 is interest and the remainder is principal. How much are budgeted cash disbursements for June? Entry field with correct answer $86,400. $102,800. $118,400. $63,200.

Springer Company listed outstanding checks totaling $4,500 on its September bank reconciliation. In October, the company issued checks totaling $45,700. The October bank statement shows that checks totaling $39,800 cleared the bank. In addition, a check from one of Springer's customers in the amount of $500 was returned as NSF. The outstanding checks on the October bank reconciliation should total Entry field with correct answer $5,900. $9,900. $10,400. $1,400.

The effect on the basic accounting equation of performing services for cash are to Entry field with correct answer increase liabilities and increase stockholders' equity. increase assets and decrease stockholders' equity. increase assets and increase stockholders' equity. increase assets and increase liabilities.

The essentials of effective budgeting do not include Entry field with correct answer management acceptance. sound organizational structure. top-down budgeting. research and analysis.

The following information came from the income statement of the Wilkens Company at December 31, 2017: sales revenue $1,800,000; beginning inventory $160,000; ending inventory $240,000; and gross profit $600,000. Inventory turnover is 6 times per year. What is Wilkens' days in inventory for 2017? Entry field with correct answer 146 days 97.3 days 60.8 days 121.7 days

The format of a cash budget is Entry field with correct answer Beginning cash balance + Cash revenues - Cash expenses = Ending cash balance. Beginning cash balance + Cash receipts + Cash from financing - Cash disbursements = Ending cash balance. Beginning cash balance + Cash receipts - Cash disbursements +/- Financing = Ending cash balance. Beginning cash balance + Net income- Cash dividends = Ending cash balance.

The formula for the production budget is budgeted sales in units plus Entry field with correct answer desired ending direct materials units less beginning direct materials units. desired ending merchandise inventory less beginning merchandise inventory. desired ending finished goods units less beginning finished goods units. beginning finished goods units less desired ending finished goods units.

The most common budget period is a Entry field with correct answer quarter. month. year. week.

The primary benefits of budgeting include all of the following except it Entry field with correct answer creates an early warning system for potential problems. motivates personnel throughout the organization. requires only top management to plan ahead and formalize goals. provides definite objectives for evaluating performance.

The sole proprietorship form of business organization Entry field with correct answer combines the records of the business with the personal records of the owner. must have at least two owners in most states. generally receives favorable tax treatment relative to a corporation. is classified as a separate legal entity.

Under IFRS, how many years of comparative income statements must be presented for a complete set of financial statements? Entry field with correct answer One year Four years Two years Three years

Under what system is cost of goods sold determined at the end of an accounting period? Entry field with correct answer Double entry inventory system Perpetual inventory system Periodic inventory system Single entry inventory system

What effects occur when an account payable is paid with cash? Entry field with correct answer Increases assets and decreases liabilities Decreases assets and increases stockholders' equity Decreases assets and decreases liabilities Decreases stockholders' equity and decreases liabilities

What journal entry is recorded as a result of issuing stock to investors for cash? Entry field with correct answer A debit to Cash and a credit to Retained Earnings A debit to Common Stock and a credit to Cash A debit to Cash and a credit to Common Stock A credit to Cash and a debit to Retained Earnings

When a trial balance balances, it is an indication that Entry field with correct answer all journal entries have been posted. the account balances are correct. debits equal credits. all transactions have been journalized

When credit terms of 1/15, n/60 are offered, how long is the discount period? Entry field with correct answer 45 days 1 day 15 days 60 days

Which factor would not affect the gross profit rate? Entry field with correct answer An increase in the use of "discount pricing" to sell merchandise An increase in the price of inventory items An increase in the cost of heating the store An increase in the sale of luxury items

Which inventory system will likely be used by a company with merchandise that has a high unit value? Entry field with correct answer Single entry inventory system Double entry inventory system Perpetual inventory system Periodic inventory system

Which of the following correctly describes the closing process? Entry field with correct answer Net income or net loss is transferred to the Cash account. Each revenue and expense account is closed individually to Retained Earnings. Net income or net loss is transferred to Retained Earnings. Permanent accounts become ready to accumulate data in the next accounting period.

Which of the following is classified in an income statement as a nonoperating activity? Entry field with correct answer Cost of goods sold Advertising expense Interest expense Freight-out

Which of the following is classified in an income statement as a nonoperating activity? Entry field with correct answer Paying for a purchase of inventory Receiving an allowance for merchandise damaged in shipment Receiving dividend revenue from an investment Returning merchandise

Which of the following is not a characteristic of relevance? Entry field with correct answer Confirmatory value Predictive value Verifiability Materiality

Which of the following is not an acceptable inventory costing method? Entry field with correct answer Average cost Last-in, first-out Last-in, last-out First-in, first-out

Which of the following is not an element of manufacturing overhead? Entry field with correct answer Factory repairman's wages. Product inspector's salary. Sales manager's salary. Plant manager's salary.

Which of the following is not classified as a current asset? Entry field with correct answer Accounts receivable Prepaid expenses Patents Inventory

Which of the following is not one of the primary types of the financing activities in the statement of cash flows? Entry field with incorrect answer now contains modified data Issuing shares of stock Paying dividends Buying equipment Borrowing money

Which of the following is true of the FIFO inventory method? Entry field with correct answer It assumes that the cost of the earliest units purchased are the first to be allocated to the ending inventory. It assumes that the cost of the earliest units purchased are the last to be allocated to cost of goods sold. It assumes that the cost of the earliest units purchased are the first to be allocated to cost of goods sold. It assumes that the cost of the earliest units purchased are the last to be allocated to the beginning inventory.

Which of the following statements is correct? Entry field with correct answer A perpetual inventory system computes cost of goods sold only at the end of the accounting period. A periodic inventory system provides better control over inventories than does a perpetual inventory system. A perpetual inventory system provides better control over inventories than does a periodic inventory system. A periodic inventory system computes cost of goods sold each time a sale occurs.

Which of the following statements is true? Entry field with correct answer LIFO inventory valuation requires physical flow of goods to be representative of the cost flow. FIFO inventory valuation requires physical flow of goods to be representative of the cost flow. Specific identification method inventory valuation requires physical flow of goods to be representative of the cost flow. All of these answer choices are correct.

Which of these accounts normally have a debit balance? Entry field with correct answer Sales Discounts only Sales Returns and Allowances only Both Sales Discounts and Sales Returns and Allowances Neither Sales Discount nor Sales Returns and Allowances

Which of these transactions would cause the inventory turnover ratio to increase the most? Entry field with correct answer Keeping the amount of inventory on hand constant but decreasing sales Increasing the amount of inventory on hand Decreasing the amount of inventory on hand and increasing sales Keeping the amount of inventory on hand constant but increasing sales

Which one of the following budgets is considered to be the most important financial budget? Entry field with correct answer Budgeted income statement. Budgeted balance sheet. Cash budget. Sales budget.

Which one of the following is not a benefit of budgeting? Entry field with correct answer It provides definite objectives for evaluating performance. It requires all levels of management to plan ahead on a recurring basis. It provides assurance that the company will achieve its objectives. It facilitates the coordination of activities.

Which situation requires a departure from the cost basis of accounting to the lower-of-cost-or-market basis in valuing inventory? Entry field with correct answer An increase in the value of the inventory An increase in selling price A decline in the value of the inventory A desire for more profit

Which statement is true when goods are purchased for resale by a company using a periodic inventory system? Entry field with correct answer Purchase returns are debited to the Purchase Returns and Allowances account. Freight costs are debited to the Purchases account. Purchases on account are debited to the Purchases account. Purchases on account are debited to the Inventory account.

aying interest expense and receiving interest revenue are examples of Entry field with correct answer investing activities. delivery activities. operating activities. financing activities.

Arbor Corporation had reported the following amounts at December 31, 2014: Sales revenue $184,000: ending inventory $11,600: beginning inventory $17,200: purchases $60,400: purchases discounts $3,000: purchase returns and allowances $1,100: freight-in $600: freight-out $900. Calculate the cost of goods available for sale. Entry field with correct answer $197,700 $69,400 $74,100 $56,900

C ( $17,200 + $60,400 - $3,000 - $1,100 + $600 = $74,100.)

During the year ended December 31, 2017, State Street Corporation had the following results: Sales revenue $267,000: cost of goods sold $107,000: net income $92,400: operating expenses $55,400: net cash provided by operating activities $108,950. How much is the company's profit margin? Entry field with correct answer 60.0% 20.5% 34.6% 40.0%

C ($92,400 ÷ $267,000 = 34.6%.)

Which of the following is not a typical example of an accrued expense? Entry field with correct answer Wages Interest Depreciation Taxes

C (ADJUSTING ENTRY)

Davidson Electronics has the following: Units Unit Cost Inventory, Jan. 1 5,000 $ 8 Purchase, April 2 15,000 10 Purchase, Aug. 28 20,000 12 If Davidson has 7,000 units on hand at December 31, how much is the cost of ending inventory under the average-cost method in a periodic inventory system? Entry field with correct answer $56,000 $70,000 $75,250 $84,000

C (Average inventory = [(5,000 × $8) + (15,000 × $10) + (20,000 × $12)] ÷ (5,000 + 15,000 + 20,000) = $430,000 ÷ 40,000 units = $10.75 per unit. Ending inventory = $10.75 × 7,000 units = $75,250.)

Common exclusions in gross income

Child support payments Damages for personal injury Disability benefits Gifts Inheritance Life insurance proceeds Municipal bond interest Scholarships (tuition books supplies)

Common inclusions in gross income

Compensation for services Alimony received Dividends/interest Scholarships (room and board) Gambling winnings (win more than lose) Retirement pay Rents Unemployment compensation

A budget Entry field with correct answer ignores past performance because it represents management's plans for a future time period. may promote efficiency but has no role in evaluating performance. is the responsibility of management accountants. is the primary method of communicating agreed-upon objectives throughout an organization.

A company purchased a tract of land on which it expects to build a production plant on in approximately five years. During the five years before construction, the land will be idle. In what classification should the land be reported? Entry field with correct answer An intangible asset Property, plant, and equipment Land expense A long-term investment

A sales budget is Entry field with correct answer derived from the production budget. not the starting point for the master budget. prepared only for credit sales. management's best estimate of sales revenue for the year.

A trial balance Entry field with correct answer proves the mathematical accuracy of journalized transactions. will not balance if a correct journal entry is posted twice. proves that all transactions have been recorded. is a list of accounts with their balances at a given time.

Adjusting entries are made to ensure that Entry field with correct answer expenses are recognized in the period in which they are incurred. revenues are recorded in the period in which the performance obligation is satisfied. balance sheet and income statement accounts have correct balances at the end of an accounting period. All of these answer choices are correct.

Adjustments for prepaid expenses Entry field with correct answer decrease revenues and increase assets. decrease assets and increase revenues. decrease expenses and increase assets. decrease assets and increase expenses.

All of the following are distinguishing features of managerial accounting except Entry field with correct answer to provide special-purpose information. reports pertaining to subunits of the entity. internal users. independent audits.

An item is ________ if it is likely to influence the decision of an investor or creditor. Entry field with correct answer faithful representation consistent comparable material

Assume that sales revenue are $450,000, sales discounts are $10,000, net income is $35,000, and cost of goods sold is $320,000. How much are gross profit and operating expenses, respectively? Entry field with correct answer $130,000 and $85,000 $120,000 and $95,000 $130,000 and $95,000 $120,000 and $85,000

At December 31, 2017, before any year-end adjustments, Macarty Company's Prepaid Insurance account had a balance of $2,700. It was determined that $1,500 of the Prepaid Insurance had expired. The adjusted balance for Insurance Expense for the year would be Entry field with correct answer $2,700 $1,900 $1,200 $1,500

Barry's BarBQue incurred the following costs: $1,400 for ribs, 45 hours of labor to cook the ribs at $10 per hour, $50 for seasoning and sauce, $300 for signs to advertise the ribs, $150 to clean the grill after cooking the ribs, and $100 of administrative costs. How much are total product costs? Entry field with correct answer $2,350 $1,850 $2,150 $2,050

Cost of goods purchased is $540,000, ending inventory is $20,000, and cost of goods sold is $560,000. How much is beginning inventory? Entry field with correct answer $20,000 $0 $10,000 $40,000

Direct materials inventories are kept in pounds in Byrd Company, and the total pounds of direct materials needed for production is 9,500. If the beginning inventory is 1,000 pounds and the desired ending inventory is 2,200 pounds, the total pounds to be purchased are Entry field with correct answer 9,500. 9,700. 9,400. 10,700.

Each of the following is a major type (or category) of adjusting entry except Entry field with correct answer accrued expenses. accrued revenues. prepaid expenses. earned expenses.

Employees at the Waco Waffle House were paid on Friday, December 27 for the five days ending on December 27. The next payday is Friday, January 3. Employees work 5 days a week. The weekly payroll amounts to $3,800. The appropriate adjusting journal entry on December 31 would be to credit Salaries and Wages Payable for Entry field with correct answer $760 $3,800 $2,280 $1,520

Ending inventory is $10,000, beginning inventory is $20,000, and the cost of goods purchased is $25,000. How much is cost of goods sold? Entry field with correct answer $25,000 $45,000 $15,000 $35,000

Financial budgets consist of all of the following except the Entry field with correct answer capital expenditure budget. budgeted balance sheet. cash budget. budgeted income statement.

For the year, Redder Company has cost of goods manufactured of $600,000, beginning finished goods inventory of $200,000, and ending finished goods inventory of $250,000. The cost of goods sold is Entry field with correct answer $500,000. $450,000. $600,000. $550,000.

For what purpose might a company use free cash flow? Entry field with correct answer Pay additional dividends Acquire property, plant, and equipment Pay off debts All of the answer choices are correct

For which item below might a bank issue a credit memorandum to a depositor's account? Entry field with correct answer An NSF check Outstanding checks Monthly service charges Interest earned

Heaters, Inc. provided the following budgeted information for March through July: March April May June July Projected sales $104,600 $123,000 $115,000 $132,000 $141,400 Projected merchandise purchases $82,000 $92,400 $75,300 $66,600 $73,000 Inventory at end of month $12,000 $13,600 $11,300 $12,400 $14,300 Heaters estimates that it will collect 30% of its sales in the month of sale and 70% in the month after the sale. General operating expenses are budgeted to be $31,000 per month of which depreciation is $3,000 of this amount. Heater pays operating expenses in the month incurred. The income tax rate is 30%. How much is budgeted net income for May? Entry field with incorrect answer now contains modified data $6,400. $8,400. $6,090. $4,480.

How is the issuance of common stock reported on the statement of cash flows? Entry field with correct answer Investing activity Marketing activity Operating activity Financing activity

If an account is debited in the journal entry, then Entry field with correct answer that account will be credited in the ledger. the transactions will not balance. that account will be both debited and credited in the ledger. that account will be debited in the ledger.

If beginning inventory is $60,000, cost of goods purchased is $380,000, sales revenue is $800,000 and ending inventory is $50,000, how much is cost of goods sold under a periodic system? Entry field with correct answer $410,000 $440,000 $420,000 $390,000

If revenues are recognized only when a customer pays, what method of accounting is being used? Entry field with correct answer Matching basis Recognition basis Accrual-basis Cash-basis

In 2017, Costello Company performs work for a customer and bills the customer $10,000; it also pays expenses of $3,000. The customer pays Costello in 2018. If Costello uses the accrual-basis of accounting, then Costello will report Entry field with correct answer expenses of $3,000 in 2018. net income of $7,000 in 2018. revenue of $10,000 in 2018. revenue of $10,000 in 2017.

Inventory turnover is calculated by dividing cost of goods sold by Entry field with correct answer 365 days. beginning inventory. ending inventory. average inventory.

Issuing new shares of common stock will Entry field with correct answer decrease common stock. increase retained earnings. decrease retained earnings. increase common stock.

Kam Company has the following units and costs: Units Unit Cost Inventory, Jan. 1 8,000 $11 Purchase, June 19 13,000 12 Purchase, Nov. 8 5,000 13 If 9,000 units are on hand at December 31, what is the cost of the ending inventory under FIFO using a periodic inventory system? Entry field with correct answer $108,000 $117,000 $99,000 $113,000

Long-range planning usually encompasses a period of Entry field with correct answer a quarter. a year. at least two years. at least five years.

Net income will result during a time period when Entry field with correct answer assets exceed revenues. expenses exceed revenues. assets exceed liabilities. revenues exceed expenses.

Ownership passes to the buyer when purchased goods are received from a public carrier if the goods are shipped Entry field with correct answer FOB shipper. FOB shipping point. FOB buyer. FOB destination.

Receipt of an unearned revenue Entry field with correct answer increases an asset; increases a revenue. decreases a liability; increases stockholders' equity. decreases a revenue; increase stockholders' equity. increases an asset; increases a liability.

Stockholders' equity represents Entry field with correct answer the difference between revenues and expenses. economics resources to be used in the future. claims of creditors. claims of owners.

The balance sheet Entry field with correct answer summarizes the changes in total equity for a specific period of time. presents the revenues and expenses for a specific period of time. reports the changes in assets, liabilities, and stockholders' equity over a period of time. reports the assets, liabilities, and stockholders' equity at a specific date.

The difference between an asset's cost and its accumulated depreciation is called Entry field with correct answer real value. market value. fair value. book value.

The final step in the accounting cycle is to prepare Entry field with correct answer adjusting entries. closing entries. financial statements. a post-closing trial balance.

The following ratios are available for Leer Inc. and Stable Inc. Current Ratio Debt to Assets Ratio Earnings per Share Leer Inc. 2:1 75% $3.50 Stable Inc. 1.5:1 40% $2.75 Compared to Stable Inc., Leer Inc. has Entry field with correct answer higher liquidity, higher solvency, but profitability cannot be compared based on information provided. lower liquidity, higher solvency, and higher profitability. higher liquidity, lower solvency, and higher profitability. higher liquidity and lower solvency, but profitability cannot be compared based on information provided.

The important end-product of the operating budgets is the Entry field with correct answer cash budget. production budget. budgeted balance sheet. budgeted income statement.

The most common description of IFRS as contrasted to GAAP is that Entry field with correct answer GAAP is principles based and IFRS is concepts based. GAAP is principles based and IFRS is rules based. GAAP is rules based and IFRS is rules based. GAAP is rules based and IFRS is principles based.

To what is the gross profit rate equal? Entry field with correct answer Cost of goods sold divided by net sales Sales minus cost of goods sold, divided by cost of goods sold Net income divided by net sales Net sales minus cost of goods sold, divided by net sales

To which of the following questions will internal users want answers? Entry field with correct answer What selling price for our product will maximize the company's net income? Which product line is most profitable? Is cash sufficient to pay dividends to stockholders? All of the answer choices are correct.

Two companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, which statement is true? Entry field with correct answer The company using LIFO will have the lowest cost of goods sold. The company using LIFO will have the highest ending inventory. The company using FIFO will have the highest cost of good sold. The company using FIFO will have the highest ending inventory.

Under IFRS, which of the following current assets section would be presented correctly in accordance with IFRS standards? Entry field with correct answer Marketable securities, Land, Cash Cash, Intangibles, Short term notes receivable Short term investments, Cash, Land Short term notes receivable, Accounts receivable, Cash

What is evidence that a transaction has occurred? Entry field with correct answer Anyone of the answer choices can be considered evidence Ledger Journal Source document

When the auditor is satisfied that the financial statements provide a fair representation of the company's financial position and results of operation in accordance with generally accepted accounting principles, the auditor will express Entry field with correct answer a qualified opinion. a disclaimer of opinion. an adverse opinion. unqualified opinion.

When using a periodic inventory system and the purchaser directly incurs the freight costs, which account is debited? Entry field with correct answer Purchases Freight-out Inventory Freight-In

Where is the first place every transaction is recorded? Entry field with correct answer In the basic accounting equation In the ledger In the respective accounts In the journal

Which is not one of the three forms of business organization? A. Corporation B. Partnership C. Sole proprietorship D. Creditorship

Which is not part of the recording process? Entry field with correct answer Posting transactions Entering transactions in a journal Analyzing transactions Preparing a trial balance

Which of the five elements of financial statements does the IASB's definitional structure recognize? Entry field with correct answer Assets, Lending balances, Equity, Investments, Expenses Accumulated income, Liabilities, Equity, Income, Financing Assets, Liabilities, Earnings, Income, Expenses Assets, Liabilities, Equity, Income, Expenses

Which of the following are correct statements about a budget? Entry field with correct answer It is a formal written statement of management's plans for a specified future time period. It becomes an important basis for evaluating performance. It promotes efficiency and serves as a deterrent to waste and inefficiency. All of these options are correct statements.

Which of the following costs would a computer manufacturer include in manufacturing overhead? Entry field with correct answer The cost of the disk drives. The cost of the memory chips. The wages earned by computer assemblers. Depreciation on testing equipment.

Which of the following determines the quality of earnings ratio? Entry field with correct answer Operating income divided by the net income Net cash flow increase divided by the net income Net cash provided by operating activities divided by operating income Net cash provided by operating activities divided by net income

Which of the following is considered part of the controlling process? Entry field with correct answer Looking ahead and establishing objectives Coordinating activities and human resources to produce a smooth running operation Implementing planned objectives Keeping the company's activities on track

Which of the following is not a fundamental quality of useful accounting information? Entry field with correct answer Relevance Neutrality Faithful representation Verifiability

Which of the following is not a part of a complete journal entry? Entry field with correct answer The date of the transaction The accounts and amounts to be debited and credited A brief explanation of the transaction The balance of each account affected by the transaction

Which of the following is not a type of adjusting entry? Entry field with correct answer Accrued expenses Accrued revenues Prepaid expenses Earned revenues

Which of the following is required as a result of SOX? Entry field with correct answer Companies that go bankrupt must repay shareholders for loss investments. Public companies must present audited financial statements. All shareholders now have an oversight role of the company's financial activities. Top management must certify the financial statements for their company.

Which of the following is the correct sequence of events? Entry field with correct answer Record a transaction in the journal; analyze the transaction; post it to the ledger None of the answer choices provides the correct sequence Analyze a transaction; post it to the ledger; record it in the journal Analyze a transaction; record it in the journal; post it to the ledger

Which of the following ratios measures the ability of the company to survive over a long period of time? Entry field with correct answer Profitability ratios Current ratios Liquidity ratios Solvency ratios

Which of the following statements is true about managerial accounting? Entry field with correct answer It must be prepared using generally accepting accounting principles. It is primarily for internal users such as stockholders and managers. It pertains to a business as a whole. It provides more detailed information than financial accounting does.

Which of the following statements is true? Entry field with correct answer GAAP dictates the method of inventory costing method a company must use. The IRS dictates the method of inventory costing method a company must use. The SEC dictates the method of inventory costing method a company must use. Company management selects the method of inventory costing method a company will use.

Which of the following will be shown on the income statement for a merchandising company? Entry field with correct answer Gross profit Cost of goods sold A sales revenue section All of the answer choices are correct

Which of the following will not require an adjusting entry? Entry field with correct answer NSF checks Book errors Bank service charges Deposits in transit

Which of the following would appear on both a single-step and a multiple-step income statement? Entry field with correct answer Gross profit Other expenses and losses Income from operations Cost of goods sold

Which of the following would most likely employ the specific identification method of inventory costing? Entry field with correct answer Grocery store Gasoline station Hardware store Jewelry store

Which one of the following is not a justification for adjusting entries? Entry field with correct answer Adjusting entries are necessary to ensure that the expense recognition principle is followed. Adjusting entries are necessary to ensure that the revenue recognition principle is followed. Adjusting entries are necessary to enable financial statements to be in conformity with GAAP. Adjusting entries are necessary to bring the general ledger accounts in line with the budget.

Which one of the following is not a manufacturing cost? Entry field with correct answer Factory maintenance Wages of assembly workers Wheels that are being installed on new automobiles being manufactured Advertising cost

Which one of the statements below is true? Entry field with correct answer Both deposits in transit and outstanding checks are deducted from the balance per the bank statement during the bank reconciliation process. Both deposits in transit and outstanding checks are added to the balance per the bank statement during the bank reconciliation process. Deposits in transit are deducted from the balance per the bank statement, and outstanding checks are added to the balance per the bank statement during the bank reconciliation process. The deposits in transit are added to the balance per the bank statement, and outstanding checks are deducted from the balance per the bank statement during the bank reconciliation process.

Which one of these statements about the accrual-basis of accounting is false? Entry field with correct answer Companies record events that change a company's financial statements in the periods in which the events occur. This basis is in accord with generally accepted accounting principles. Companies recognize revenue in the period in which the performance obligation is satisfied. Companies record revenue only when they receive cash, and record expense only when they pay out cash.

Which section of the annual report presents highlights of favorable or unfavorable trends and identifies significant events and uncertainties affecting a company's ability to pay near-term obligations, and a company's ability to fund operations and expansion? Entry field with correct answer Notes to the financial statements Auditor's report Financial statements Management discussion and analysis

Which statement is used by most corporations instead of the retained earnings statement? Entry field with correct answer Balance sheet Statement of owners' equity Statement of cash flows Statement of stockholders' equity

Which statement presents information as of a specific point in time? Entry field with correct answer Retained earnings statement Income statement Statement of cash flows Balance sheet

Why should a bank reconciliation be prepared? Entry field with correct answer To make sure employees have not committed fraud. To make sure the actual cash balance is the same as the cash received from customers. To explain any difference between the bank deposits and the checks written. To explain any difference between the depositor's balance per books and the balance per bank.

A company has the following balances: Sales revenue $312,000: Sales Returns and Allowances $2,000: Sales Discounts $4,000: Cost of Goods Sold $184,000: Operating Expenses $84,000. How much is the profit margin? Entry field with correct answer 41.0% 12.2% 16.0% 12.4%

D Net sales = $312,000 ‒ $2,000 ‒ $4,000 = $306,000 Net income = $306,000 ‒ $184,000 ‒ $84,000 = $38,000 Profit margin = $38,000/$306,000 or a profit margin ratio of 12.4%.

A company lends $15,000 at 8% interest for 3 months on June 1. If adjusting entries are recorded on June 30, how much will be credited to Interest Revenue? Entry field with correct answer $300 $1,200 $900 $100

D $15,000 x 8% x (1/12)

Net income is $15,000, operating expenses are $20,000, and net sales total $75,000. How much is the gross profit rate? Entry field with correct answer 20.0% 75.0% 26.7% 46.7%

D ( gross profit of $35,000. divided by net sales of $75,000 = gross profit ratio of 46.7%)

Beginning inventory is $12,000: purchases are $34,000: sales revenue are $60,000: and cost of goods sold is $31,000. How much is ending inventory? Entry field with correct answer $14,000 $31,000 $46,000 $15,000

D ($12,000 + $34,000 - $31,000 = $15,000)

On August 1 the Darius Co. purchased a photocopy machine for $8,000. The estimated annual depreciation on the machine is $1,680. If the company prepares annual financial statements on December 31, the appropriate adjusting journal entry to make on December 31 of the first year would be Entry field with correct answer Depreciation Expense $700 Equipment $700 Depreciation Expense $1,680 Accumulated Depreciation $1,680 Depreciation Expense $140 Accumulated Depreciation $140 Depreciation Expense $700 Accumulated Depreciation $700

D (($1,680/12 x 5))

On August 1, Luang Corporation signed a $30,000, 14%, 2-year note to help finance renovations being made to the corporation headquarters. Assuming interest is accrued only when the year ends on December 31, the appropriate journal entry for the first year would be Entry field with correct answer Interest Expense $4,200 Notes Payable $4,200 Interest Expense $1,750 Notes Payable $1,750 Interest Expense $4,200 Interest Payable $4,200 Interest Expense $1,750 Interest Payable $1,750

D ((($30,000 X .14)/12) X 5).

Carlos Company had beginning inventory of $80,000, ending inventory of $110,000, cost of goods sold of $285,000, and sales revenue of $475,000. What is Carlos' days in inventory? Entry field with correct answer 102.5 days 73 days 84.5 days 121.7 days

D (365 ÷ ($285,000 ÷ [($80,000 + $110,000) ÷ 2]) = 121.7 days)

Compared to budgeting, long-range planning generally has the Entry field with correct answer same emphasis. same time period. same amount of detail. longer time period.

D (5 YEARS)

Jones Company collected the following information to prepare its May bank reconciliation: Cash balance per books, May 31 $5,300 Deposits in transit 510 Notes receivable with interest collected by bank 580 Bank service charges 30 Outstanding checks 180 NSF check 150 How much is the adjusted cash balance per books on May 31? Entry field with correct answer $5,660 $5,810 $6,210 $5,700

D (5300+580-150-30)

At September 1, 2017, Five-O Inc. reported retained earnings of $136,000. During the month, Five-O generated revenues of $20,000, incurred expenses of $12,000, purchased equipment for $5,000 and paid dividends of $2,000. What is the balance in retained earnings at September 30, 2017? Entry field with correct answer $136,000 debit $8,000 credit $137,000 credit $142,000 credit

D (First net income is calculated as revenues of $20,000 (Cr.) less expenses of $12,000, which is $8,000. Then the beginning balance of Retained Earnings, $136,000 (Cr.) plus net income of $8,000 less dividends of $2,000 (Dr.) results in the ending balance of retained earnings of $142,000 (Cr.).)

Net income is $15,000, operating expenses are $20,000, net sales total $75,000, and sales revenues total $95,000. How much is the profit margin? 16% 75% 79% 20%

D (Net income ($15,000) divided by net sales ($75,000) equals profit margin of 20%.)

An Adjusted Trial Balance is prepared after the books of a company are closed at the end of the accounting period. Entry field with correct answer True False

FALSE

Deposits in transit are added to the cash balance per books on the bank reconciliation. Entry field with correct answer True False

FALSE

Discount term of 2/10, n/30 mean that a 10% cash discount is available if payment is made within 30 days. Entry field with correct answer True False

FALSE

Every account has a left or credit side and a right or debit side. Entry field with correct answer True False

FALSE

Indirect material costs are easily traced to products because of their physical association with the finished product. Entry field with correct answer True False

FALSE

Manufacturers compute cost of goods sold by adding the beginning finished goods inventory to the cost of goods purchased and subtracting the ending finished goods inventory. Entry field with correct answer True False

FALSE

Merchandising firms usually classify their inventory into raw materials, work in process and finished goods. Entry field with correct answer True False

FALSE

Planning is the process of keeping the company's activities on track. Entry field with correct answer True False

FALSE

The expense recognition principle requires that expenses be recognized in the same period that they are paid. Entry field with correct answer True False

FALSE

The most common budget period is one month. Entry field with correct answer True False

FALSE

The worksheet is part of the permanent record of the company as it documents how the company prepared its financial statement. Entry field with correct answer True False

FALSE

If inventory at the end of 2017 and 2016 is $30,000 and $40,000, respectively, and cost of goods sold is $276,000 and $290,000 respectively, inventory turnover for 2014 is 8.3 times. Entry field with correct answer True False

FALSE ($276,000 / [($30,000 + $40,000)/2] = 7.89.)

The accounting cycle requires that closing entries be prepared on a monthly basis. Entry field with correct answer True False

FALSE (ANNUAL ACCOUNTING PERIOD)

The chief accountant (controller) has responsibility for coordinating the preparation of the budget. Entry field with correct answer True False

FALSE (BUDGET COMMITTEE)

Assets are increased by credits. Entry field with correct answer True False

FALSE (DEBIT)

The revenue recognition principle dictates that revenue is recognized in the period in which the cash is received. Entry field with correct answer True False

FALSE (EARNED)

Issuance of stock is an investing activity. Entry field with correct answer True False

FALSE (FINANCING)

A merchandiser uses a merchandise purchases budget in addition to a production budget. Entry field with correct answer True False

FALSE (INSTEAD OF A PRODUCTION BUDGET)

The entire group of accounts maintained by a company is referred to collectively as the journal. Entry field with correct answer True False

FALSE (LEDGER)

The budgeted income statement is the starting point in preparing financial budgets. Entry field with correct answer True False

FALSE (OPERATING BUDGET)

The production budget is the first budget prepared in the master budget. Entry field with correct answer True False

FALSE (SALES BUDGET)

The operating cycle of a merchandising company is ordinarily shorter than that of a service company. Entry field with correct answer True False

FALSE (SERVICE IS SHORTER)

At the end of the accounting period, all balance sheet accounts are closed out. Entry field with correct answer True False

FALSE (TEMPORARY ACCOUNTS)

The days in inventory is calculated by dividing the inventory turnover by 365. Entry field with correct answer True False

FALSE (dividing 365 by inventory turnover.)

The cash-basis of accounting is in accordance with generally accepted accounting principles. Entry field with correct answer True False

FALSE (not match revenues and expenses in the proper accounting period does not meet GAAP requirements)

Sales Discounts is a contra asset account. Entry field with correct answer True False

FALSE Sales Discounts is a contra account to Sales Revenue

Consistency means that a company uses the same accounting principles and methods as the other companies in the same industry. Entry field with correct answer True False

False

Going concern is the qualitative characteristic of accounting information that allows a statement reader to compare a company's performance from one year to the next. Entry field with correct answer True False

False

Partnerships generally receive more favorable tax treatment than sole proprietorships and corporations. T or F

False

The notes to the financial statements are not required if a company presents all four financial statements. Entry field with correct answer True False

False

The statement of cash flows reports net income, investing, and financing activities. Entry field with correct answer True False

False

Internal users of accounting information include a company's stockholders. T or F

False (External users)

The monetary unit assumption assures that all important information needed by investors, creditors, and managers is contained in the financial statements. Entry field with correct answer True False

False (only those things that can be expressed in monetary terms are included in the accounting records)

Current assets are economic resources that are expected to be converted to cash or used up by the business within one year or the normal operating cycle, whichever is shorter. Entry field with incorrect answer True False

False (within the next year or normal operating cycle)

What can you do if you can't pay your income taxes?

File for a six-month extension going to October 15

American opportunity credit allows for how many years of tax credits for a post secondary education? And how much?

First 4 years $2500 per student

What form is the most common tax return form?

Form 1040

What foremost you fill out for an extension on your income taxes?

Form 4868

What type of filing status as a person unmarried with a dependent child rates fall between single and joint?

Head of household

Why might someone use lifetime learning credit instead of Hope?

Hope credit expired after four years of school

What are 4 deductions for adjusted gross income?

IRA contributions (401K) Alimony (paid) Student loan interest Tuition and fees

The current ratio measures ________ and higher means the company is more _______

Liquidity : Liquid

What type of filing status usually is advantageous to file together and you get a tax break?

Married filing jointly

What type of filing status is only advantageous under certain limited situations?

Married filing separately

What are for itemized deduction's

Medical (10% of AGI) Taxes Interest ( mortgage , student loans) Charitable contributions (50% AGI)

Is it possible to collect AOC and lifetime learning?

Additional standard adduction amounts apply for?

Old age =>65 Blindness

outstanding shares measures ________

Profitability

What type of filing status allows joint rates to be applied for two years following the death of one spouse maintaining a household for dependent child?

Qualifying window/surviving spouse

WHAT IS THE MOST EXPENSIVE FILING STATUS

SINGLE

There are five filing statuses:

SINGLE MARRIED FILING JOINTLY Married filing Separately Head of House hold Surviving Spouse / Qualifying Widow

Standard deduction is based on your filing status: Single Married filing jointly Married filing separately Head of household Qualifying widow

Single 6300 Married filing jointly 12600 Married filing separately 6300 Head of household 9250 Qualifying widow 12600

The debt to assets ratio measures ________ and higher is not always ________

Solvency : Better

Book value is equal to cost minus accumulated depreciation. Entry field with correct answer True False

TRUE

Budgeting facilitates the coordination of activities within the business by correlating the goals of each segment with overall company objectives. Entry field with correct answer True False

TRUE

Every transaction affects at least two accounts. Entry field with correct answer True False

TRUE

Gross profit is the difference between net sales and cost of goods sold. Entry field with correct answer True False

TRUE

If a company's net cash provided by operating activities is $4,250,000 and its net income is $3,465,000, then its quality of earnings ratio is 1.23. Entry field with correct answer True False

TRUE

Managerial accounting applies to all types of businesses, including service, merchandising, and manufacturing, as well as to all forms of business organizations. Entry field with correct answer True False

TRUE

Manufacturing overhead consists of costs that are indirectly associated with the manufacture of the finished product. Entry field with correct answer True False

TRUE

Prior to an accrual adjustment, the revenue account (and the related asset account) or the expense account (and the related liability account) is understated. Entry field with correct answer True False

TRUE

Product costs are costs that are a necessary and integral part of producing the finished product. Entry field with correct answer True False

TRUE

Sales Returns and Allowances is a contra-revenue account. Entry field with correct answer True False

TRUE

The budgeted balance sheet is developed from the budgeted balance sheet for the preceding year and the budgets for the current year. Entry field with correct answer True False

TRUE

The direct materials budget shows both the quantity and cost of direct materials to be purchased. Entry field with correct answer True False

TRUE

The financing section of a cash budget shows expected borrowings and the repayment of borrowed funds plus interest. Entry field with correct answer True False

TRUE

The master budget is a set of interrelated budgets that constitutes a plan of action for a specified time period. Entry field with correct answer True False

TRUE

Transactions are recorded in chronological order in the journal. Entry field with correct answer True False

TRUE

Under FIFO, cost of goods sold consists of the units with the oldest costs. Entry field with correct answer True False

TRUE

When the terms of a sale are FOB destination, legal title to the goods passes to the buyer when the goods reach the buyer's place of business. Entry field with correct answer True False

TRUE

If the profit margin is 5% and total expenses are $1,330,000, the net sales are $1,400,000. Entry field with incorrect answer now contains modified data True False

TRUE ($1,400,000 ‒ $1,330,000)/$1,400,000 = 5%.

When is marital status determined?

The last day of the year

Expenses decrease retained earnings. Entry field with correct answer True False

True

Interest expense is classified under operating activities on the statement of cash flows. T or F

True

Only Certified Public Accountants may perform audits. Entry field with correct answer True False

True

Sole proprietorships and partnerships generally receive more favorable tax treatment than corporations. T or F

True

The balance sheet reports assets and claims to those assets at a specific point in time. Entry field with correct answer True False

True

The current ratio is a liquidity ratio that is computed as current assets divided by current liabilities. Entry field with correct answer True False

True

The historical cost principle requires that if a company buys a building for $2,000,000 in 2015 that increases in value to $2,900,000 in 2017, the company will have to report the building at $2,000,000 in the balance sheet for 2017. Entry field with correct answer True False

True

The statement of cash flows is divided into cash flows from operating activities, investing activities, and financing activities. T or F

True

How do you know if he should use standard adduction or itemized adduction?

Use the greater number

Free cash flow is computed by

cash provided by operations - capital expenditures - cash dividends

working capital equation

current assets minus current liabilities

A revenue account Entry field with correct answer has a normal balance of a debit. is decreased by credits. is increased by debits. is increased by credits.

Accounts with normal debit balances include Entry field with correct answer assets and liabilities. liabilities and expenses. stockholders' equity and revenues. expenses and assets.

Accrued expenses are expenses that have already been paid. Entry field with correct answer True False

false

The going concern assumption states that the business will remain in operation for the _________ ________

foreseeable future

Verifiability is an ingredient of Faithful Representation Relevance

no no

Current ratio equation

total current assets/total current liabilities

debt to assets ratio equation

total liabilities divided by total assets; $360,000 (total assets of $600,000 less stockholders' equity of $240,000) / $600,000 = 60%

ACCT 2000 final

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