ACCT 210 Final

Bloom's Garden Center Company Selected data from the financial statements of Bloom's Garden Center are provided below. 2012 2011 Cash and cash equivalents $75,000 $62,000 Inventory 28,000 32,000 Total assets 680,000 565,000 Cash flow from operations 850,000 639,000 Dividends 84,200 70,000 Capital expenditures 112,000 95,000 Refer to the selected data provided for Bloom's Garden Center. What is Bloom's free cash flow in 2012? a. The free cash flow is $653,800 in 2012. b. The free cash flow is $474,000 in 2012. c. The free cash flow is $744,000 in 2012. d. The free cash flow is $635,800 in 2012.

a. The free cash flow is $653,800 in 2012.

Machinery is purchased on credit. What effect does this transaction have on the accounting equation? a. Assets and stockholders' equity increase b. Liabilities increase and stockholders' equity decreases c. Assets and liabilities decrease d. Assets and liabilities increase

d. Assets and liabilities increase

Plant assets are depreciated because: a. cash basis of accounting requires depreciation. b. the book values equal market values. c. the replacement cost of plant assets may fluctuate over time. d. the accrual basis of accounting requires matching of costs to revenues.

d. the accrual basis of accounting requires matching of costs to revenues.

Depreciation is a process by which: a. the difference between current market value and historical cost of plant and equipment is recorded. b. replacement funds are accumulated for plant and equipment. c. the decline in market value of plant and equipment is determined and recorded. d. the cost of plant and equipment is allocated to expense over its useful life.

d. the cost of plant and equipment is allocated to expense over its useful life.

Donnay Corporation established a petty cash fund in the amount of $300. Which of the following is the correct entry for Donnay to record this event? a. Petty Cash Fund 300 Cash 300 b. Cash 300 Petty Cash Fund 300 c. Miscellaneous Expense 300 Petty Cash Fund 300 d. None of these, as no entry is necessary to record an exchange of cash.

a. Petty Cash Fund 300 Cash 300

Able Company purchased land and incurred the following costs: Purchase price $1,000,000 Excavation costs 100,000 Razing old building 25,000 Broker fees 20,000 Cost of property taxes 50,000 What is the cost of the land? a. $1,145,000 b. $1,195,000 c. $1,125,000 d. $1,100,000

a. $1,145,000

Portey Company Portey uses a perpetual inventory system and had the following inventory transactions for the month of June. June 1 On hand, 100 units at $9.00 each $900.00 4 Purchased 120 units at $9.10 each 1,092.00 5 Sold 150 units 10 Purchased 100 units at $9.50 each 950.00 24 Sold 60 units Total cost of goods available for sale 2,942.00 30 On hand, 110 units Refer to the information provided for Portey. If Portey uses the moving average inventory costing method, cost of goods sold for the month of June is: a. $1,917.18. b. $1,935.00. c. $1,930.69. d. $1,901.00.

a. $1,917.18.

On January 1, 2012, Blackstone Company reported assets of $1,000,000 and liabilities of $600,000. During 2012 assets decreased by $200,000 and equity decreased $250,000. What is the amount of equity on December 31, 2012? a. $150,000 b. $800,000 c. $400,000 d. $650,000

a. $150,000

Paradise Company reports the following information at December 31, 2012: Sales $18,000,000 Cash 3,000,000 Salaries payable 400,000 Dividends 1,000,000 Cost of sales 12,500,000 What is Paradise Company's Gross Profit? a. $5,500,000 b. $12,000,000 c. $6,100,000 d. $6,500,000

a. $5,500,000

Bloom's Garden Center Company Selected data from the financial statements of Bloom's Garden Center are provided below. 2012 2011 Accounts receivable $70,000 $56,000 Inventory 15,000 20,000 Total assets 450,000 380,000 Net sales 400,000 300,000 Cost of goods sold 200,000 180,000 Refer to the selected data provided for Bloom's Garden Center. Which of the following would result from a horizontal analysis of Bloom's balance sheet? a. Accounts receivable increased $14,000 or 25% during 2012. b. The accounts receivable turnover ratio is 6.35 times in 2012. c. Accounts receivable is around five times larger than inventory in 2012. d. Accounts receivable is 15.6% of total assets in 2012.

a. Accounts receivable increased $14,000 or 25% during 2012.

Which of the following is a correct fundamental accounting equation? a. Assets = Liabilities + Equity b. Assets + Retained Earnings = Equity c. Assets + Liabilities = Equity d. Assets + Equity = Liabilities

a. Assets = Liabilities + Equity

Max's Tire Center Company Selected data from the financial statements of Max's Tire Center are provided below. 2012 2011 Inventory $55,000 $46,000 Cost of sales 120,000 110,000 Total assets 500,000 490,000 Cash flow from operations 320,000 289,000 Net sales 390,000 360,000 Capital expenditures 15,000 13,000 Refer to the selected data provided for Max's Tire Center. Which of the following would result from a horizontal analysis of Max's income statement? a. Cost of sales increased by 9.09% during 2012. b. Cost of sales increased by 11% during 2012. c. Cost of sales and inventory doubled during 2012. d. Cost of sales is 30.76% of net sales in 2012.

a. Cost of sales increased by 9.09% during 2012.

Max's Tire Center Company Selected data from the financial statements of Max's Tire Center are provided below. 2012 2011 Inventory $55,000 $46,000 Cost of sales 120,000 110,000 Total assets 500,000 490,000 Cash flow from operations 320,000 289,000 Net sales 390,000 360,000 Capital expenditures 15,000 13,000 Refer to the selected data provided for Max's Tire Center. Which of the following would result from a vertical analysis of Max's income statement in 2012? a. Cost of sales is 30.77% of total sales in 2012. b. Cost of sales increased by 9.09% during 2012. c. Cost of sales is 30.77% of total assets in 2012. d. Cost of sales is $390,000 in 2012.

a. Cost of sales is 30.77% of total sales in 2012.

Which inventory cost flow method assigns the cost of the most recent items purchased to ending inventory? a. FIFO b. LIFO c. Specific identification d. Weighted average

a. FIFO

According to the Sarbanes-Oxley Act of 2002, who is primarily responsible for establishing and maintaining a system of internal control over the company's financial reporting? a. Management of the company b. The company's auditors c. The audit committee of the company's board of directors d. The company's internal auditors

a. Management of the company

Which one of the following is an example of a deferred revenue? a. Payments are received prior to providing the services to customers. b. Sales are made to customers on credit. c. Cash sales are made to customers. d. Revenue has been earned but not yet recorded.

a. Payments are received prior to providing the services to customers.

Which of the following accounts will appear in a post-closing trial balance? a. Retained Earnings b. Dividends c. Operating Expense d. Fees Earned

a. Retained Earnings

How is the balance sheet linked to the other financial statements? a. Retained earnings from the statement of retained earnings is reported on the balance sheet. b. Retained earnings is added to total assets and reported on the balance sheet. c. There is no link between the balance sheet and other statements, as each contains different accounts and provides different information. d. The amount of retained earnings is reported on the balance sheet as a liability.

a. Retained earnings from the statement of retained earnings is reported on the balance sheet.

Max's Tire Center Company Selected data from the financial statements of Max's Tire Center are provided below. 2012 2011 Inventory $55,000 $46,000 Cost of sales 120,000 110,000 Total assets 500,000 490,000 Cash flow from operations 320,000 289,000 Net sales 390,000 360,000 Capital expenditures 15,000 13,000 Refer to the selected data provided for Max's Tire Center. What is Max's inventory turnover in 2012? a. The inventory turnover is 2.38 in 2012. b. The inventory turnover is 2.10 in 2012. c. The inventory turnover is 2.61 in 2012. d. The inventory turnover is 2.08 in 2012.

a. The inventory turnover is 2.38 in 2012.

A company should choose a depreciation method that: a. best allocates the original cost of the asset to the periods benefited by the use of the asset. b. shows the highest amount of net income. c. generates the most conservative estimate of the depreciation expense for the period. d. saves the most taxes by generating the highest amount of expense and decreasing the net income.

a. best allocates the original cost of the asset to the periods benefited by the use of the asset.

In recording the cost of merchandise sold for cash, based on data available from perpetual inventory records, the journal entry is: a. debit Cost of Merchandise Sold; credit Merchandise Inventory b. debit Merchandise Inventory; credit Cost of Merchandise Sold c. debit Accounts Receivable; credit Sales d. debit Cost of Merchandise Sold; credit Sales

a. debit Cost of Merchandise Sold; credit Merchandise Inventory

The depreciation method that does not use salvage value in calculating the first year's depreciation expense is: a. double-declining-balance method b. units-of-activity method c. straight-line method d. straight-line method and units-of-activity method

a. double-declining-balance method

The time period assumption is necessary because: a. external users of financial statements want accurately-reported net income for a specific period of time. b. financial statements users expect full disclosure of all events throughout the entire time period translated in dollars. c. inflation exists and causes confusing swings in financial statement amounts over time. d. it is required by the federal government.

a. external users of financial statements want accurately-reported net income for a specific period of time.

"Revenues" are best described as: a. increases in resources resulting from the sale of goods or the provision of services. b. decreases in resources resulting from the purchase of goods for the provision of services. c. assets used or consumed in the sale of products or services. d. an increase in the financing activities section of the statement of cash flows.

a. increases in resources resulting from the sale of goods or the provision of services.

On a multi-step income statement, subtracting total operating expenses from gross profit will equal: a. operating income. b. gross margin. c. net income. d. income before taxes.

a. operating income

Accrued expenses originate from: a. previously unrecorded expenses that have been incurred but not yet paid in cash. b. paying off liabilities. c. items paid in advance, but not incurred. d. collecting cash from customers.

a. previously unrecorded expenses that have been incurred but not yet paid in cash.

The Dividend account is a(n): a. temporary account b. asset account c. real account d. liability account

a. temporary account

During the bank reconciliation process, an accountant identified an error. This error involved a company check written for $200 to pay a supplier for goods purchased on credit by the company. The check was erroneously recorded in the company's records for $2,000. Which of the following entries would correct this error in the company's records? a. Cash 1,800 Accounts Receivable 1,800 b. Cash 1,800 Accounts Payable 1,800 c. Accounts Receivable 1,800 Accounts Payable 1,800 d. None of these, as the error should be corrected by the supplier's personnel.

b. Cash 1,800 Accounts Payable 1,800

Suppose a company received a $2,500 utility bill for the month of March but has not yet recorded the transaction or paid the bill. What adjusting entry is necessary at March 31? a. Utilities Expense 2,500 Cash 2,500 b. Utilities Expense 2,500 Utilities Payable 2,500 c. Utilities Payable 2,500 Utilities Expense 2,500 d. No Entry

b. Utilities Expense 2,500 Utilities Payable 2,500

Portey Company Portey uses a perpetual inventory system and had the following inventory transactions for the month of June. June 1 On hand, 100 units at $9.00 each $900.00 4 Purchased 120 units at $9.10 each 1,092.00 5 Sold 150 units 10 Purchased 100 units at $9.50 each 950.00 24 Sold 60 units Total cost of goods available for sale 2,942.00 30 On hand, 110 units Refer to the information provided for Portey. If Portey uses the FIFO inventory costing method, the amount of ending inventory reported on the balance sheet is: a. $1,045.00. b. $1,041.00. c. $1,010.00. d. $1,901.00.

b. $1,041.00

Gump Shrimp Company On January 1, 2011, Gump Shrimp Company purchased a ship for $1,000,000. It has a ten-year useful life and a salvage value of $100,000. The company uses the double-declining-balance method. Refer to the information provided for Gump Shrimp Company. What would be the book value of the ship after ten years? a. $200,000 b. $100,000 c. $400,000 d. $0

b. $100,000

Gump Shrimp Company On January 1, 2011, Gump Shrimp Company purchased a ship for $1,000,000. It has a ten-year useful life and a salvage value of $100,000. The company uses the double-declining-balance method. Refer to the information provided for Gump Shrimp Company. What was the depreciation expense for Gump Shrimp for the year ended December 31, 2012? a. $180,000 b. $160,000 c. $-0- d. $200,000

b. $160,000

Sparrow Corporation The items listed below were identified while preparing a bank reconciliation for the checking account of Sparrow Corporation as of March 31, 2012. Sparrow's balance according to the general ledger ? Bank statement balance $18,500 Outstanding checks 2,700 A customer's NSF check returned by the bank 350 Bank service charges 100 Deposits in transit 1,000 Interest earned on the checking account 60 Refer to the information presented for Sparrow Corporation. Determine the amount of the balance per Sparrow's records before adjustment. a. $17,310 b. $17,190 c. $16,410 d. $16,900

b. $17,190

IPOD CORPORATION IPOD Corporation's end-of-year balance sheet consisted of the following amounts. Cash $250,000 Accounts receivable $500,000 Property, plant & equipment 900,000 Long-term debt 300,000 Capital stock 1,200,000 Accounts payable 100,000 Retained earnings ? Inventory 450,000 Refer to the information provided for IPOD Corporation. What amount should IPOD report on its balance sheet for total assets? a. $2,550,000 b. $2,100,000 c. $2,000,000 d. $1,900,000

b. $2,100,000

IPOD CORPORATION IPOD Corporations' end-of-year Balance Sheet consisted of the following amounts. Cash $180,000 Accounts receivable $700,000 Property, plant & equipment 950,000 Long-term debt 600,000 Capital stock 1,000,000 Accounts payable 350,000 Retained earnings ? Inventory 540,000 Refer to the information provided above for IPOD Corporation. What amount should IPOD report on its balance sheet for total assets? a. $2,190,000 b. $2,370,000 c. $1,420,000 d. $1,830,000

b. $2,370,000

IPOD CORPORATION IPOD Corporation's end-of-year balance sheet consisted of the following amounts. Cash $250,000 Accounts receivable $500,000 Property, plant & equipment 900,000 Long-term debt 300,000 Capital stock 1,200,000 Accounts payable 100,000 Retained earnings ? Inventory 450,000 Refer to the information provided for IPOD Corporation. What is IPOD's retained earnings balance at the end of the current year? a. $400,000 b. $500,000 c. $1,100,000 d. $1,200,000

b. $500,000

Which of the following statements best describes the act of collusion? a. Collusion is one of the necessary outcomes of a system of internal control over financial reporting. b. Collusion is an intentional act of two or more employees to accomplish theft of company assets. c. Collusion is enhanced by an effective system of independent reconciliations and other checks on recorded amounts. d. Collusion is caused by an overstatement of ending inventory.

b. Collusion is an intentional act of two or more employees to accomplish theft of company assets

Which component of internal control relates to the policies and procedures that management establishes to address the risks that might prevent the organization from achieving its objectives? a. Risk assessment b. Control activities c. Monitoring d. Information and communication

b. Control activities

The initials GAAP stand for: a. General Acceptance of Accounting Procedures. b. Generally Accepted Accounting Principles. c. Generally Accepted Accounting Plans. d. Generally Accepted Accounting Practices.

b. Generally Accepted Accounting Principles.

Which of the following accounts are normally reported as current liabilities on a classified balance sheet? a. Accounts payable and Prepaid insurance b. Income taxes payable and Salaries payable c. Interest payable and Interest receivable d. Capital stock and Accounts payable

b. Income taxes payable and Salaries payable

Max's Tire Center Company Selected data from the financial statements of Max's Tire Center are provided below. 2012 2011 Inventory $55,000 $46,000 Cost of sales 120,000 110,000 Total assets 500,000 490,000 Cash flow from operations 320,000 289,000 Net sales 390,000 360,000 Capital expenditures 15,000 13,000 Refer to the selected data provided for Max's Tire Center. Which of the following would result from a vertical analysis of Max's balance sheet in 2012? a. Inventory is 14.10% of net sales in 2012. b. Inventory is 11% of total assets in 2012. c. Inventory increased by 19.57% during 2012. d. Inventory is 8.20% of total assets in 2012.

b. Inventory is 11% of total assets in 2012.

A check returned by a bank because the issuer's cash account balance could not cover the check is called a(n): a. canceled check. b. NSF check. c. outstanding check. d. certified check.

b. NSF check.

What does the phrase, "Revenue is recognized when earned" mean? a. Revenue is recorded in the accounting records when the goods are sold to a customer, and reported on the income statement when the cash payment is received from the customer. b. Revenue is recorded in the accounting records and reported on the income statement when goods are sold and delivered to a customer. c. Revenue is recorded in the accounting records and reported on the income statement when the cash is received from the customer. d. Revenue is recorded in the accounting records when the goods are received from a supplier, and reported on the income statement when sold to the customer.

b. Revenue is recorded in the accounting records and reported on the income statement when goods are sold and delivered to a customer.

Which inventory cost flow method assigns the average unit cost to all units whether sold or left in ending inventory? a. FIFO b. Weighted average c. LIFO d. Specific identification

b. Weighted average

On the balance sheet, the cumulative amount of depreciation expense recognized to date on a fixed asset is called: a. accumulated amortization. b. accumulated depreciation. c. depreciation expense. d. amortization expense.

b. accumulated depreciation.

An entry made to the right side of an account is always a(n): a. decrease. b. credit. c. increase. d. debit.

b. credit.

Under accrual basis of accounting, expenses are to be matched against revenue: a. if the earnings process is not complete. b. in the same period as the revenue that it helped to generate. c. when cash is collected from the sale of products. d. when payment is made for costs related to revenue.

b. in the same period as the revenue that it helped to generate.

Debit entries are used to: a. increase liability accounts. b. increase asset accounts. c. increase revenue accounts. d. increase stockholders' equity.

b. increase asset accounts.

There are three closing entries. The first one is to close ____, the second one is to close ____, and the last one is to close ____. a. expenses, assets, capital stock b. revenues, expenses, dividends c. dividends, expenses, assets d. capital stock, dividends, assets

b. revenues, expenses, dividends

The going concern assumption is concerned with: a. measuring ongoing business activities at their exchange price at the time of the initial external transaction. b. the company's ability to continue operations long enough to carry out its existing obligations. c. any information that is capable of influencing the decisions of anyone using the financial statements. d. offsetting management's natural optimism by providing a prudent approach to uncertainty in financial statement items.

b. the company's ability to continue operations long enough to carry out its existing obligations.

A company's control environment is primarily influenced by the Tone at the Top. This refers to each of the following except: a. the philosophy and operating style of management. b. the experiential background of management. c. the priority placed upon the company's internal control system. d. the policies and practices that are promoted within the company.

b. the experiential background of management.

Pine Corporation makes adjusting entries monthly. Property, Plant, and Equipment depreciates at a rate of $9,000 per month. No entry for depreciation has been recorded in the month of March. What adjusting entry is necessary at March 31? a. Depreciation Expense 9,000 Property, Plant & Equipment 9,000 b. Accumulated Depreciation 750 Property, Plant, & Equipment 750 c. Depreciation Expense 9,000 Accumulated Depreciation 9,000 d. Property, Plant & Equipment 750 Depreciation expense 750

c. Depreciation Expense 9,000 Accumulated Depreciation 9,000

Jillian Corporation has a $375 petty cash fund. At the end of each month, Jillian's petty cash custodian presents the records of the petty cash transactions. On August 31, there was $33 cash remaining in the fund and the documents supporting the following transactions were presented for reimbursement. August 4 U.S. post office (postage) $72 August 14 Callabaugh supply (office supplies) 219 August 15 Speedy delivery (package delivery) 51 Which of the following entries is necessary for recording the replenishment of the fund on August 31? a. Postage Expense 72 Office Supplies Expense 219 Delivery Expense 51 Cash Over and Short 33 Petty Cash Fund 375 b. Miscellaneous Expenses 342 Petty Cash Fund 342 c. Postage Expense 72 Office Supplies Expense 219 Delivery Expense 51 Cash 342 d. Cash 342 Petty Cash Fund 342

c. Postage Expense 72 Office Supplies Expense 219 Delivery Expense 51 Cash 342

Suppose that a business sells 6-month subscriptions to its monthly magazine. On January 1, the company receives a total of $600 for 10 subscriptions. To record this transaction, the company debits "Cash" for $600 and credits "Unearned Subscription Revenue" for $600. As of January 31, the company has provided one month of magazines and has earned one month of revenue. What adjusting entry is necessary at January 31? a. Unearned Subscription Revenue 600 Subscription Revenue 600 b. Subscription Revenue 600 Unearned Subscription Revenue 600 c. Unearned Subscription Revenue 100 Subscription Revenue 100 d. Subscription Revenue 100 Unearned Subscription Revenue 100

c. Unearned Subscription Revenue 100 Subscription Revenue 100

Portey Company Portey uses a perpetual inventory system and had the following inventory transactions for the month of June. June 1 On hand, 100 units at $9.00 each $900.00 4 Purchased 120 units at $9.10 each 1,092.00 5 Sold 150 units 10 Purchased 100 units at $9.50 each 950.00 24 Sold 60 units Total cost of goods available for sale 2,942.00 30 On hand, 110 units Refer to the information provided for Portey. If Portey uses the LIFO inventory costing method, cost of goods sold for the month of June is: a. $1,917.00. b. $1,901.00. c. $1,932.00. d. $2,942.00.

c. $1,932.00.

The accounts in the ledger of Monroe Entertainment Co. are listed in alphabetical order. All accounts have normal balances. Accounts payable 3,500 Fees earned 4,000 Accounts receivable 4,500 Insurance expense 800 Investment 3,000 Land 3,000 Cash 1,600 Wages expense 1,400 Dividends 2,200 Capital stock 9,000 Prepare a trial balance. The total of the debits is: a. $12,100. b. $9,600. c. $16,500. d. $13,400.

c. $16,500.

While preparing the February 28th bank reconciliation for the checking account for Willow, Inc., the accountant identified the following items: Balance per Willow's company records $46,200 Outstanding checks 1,100 Interest earned on the checking account 50 A customer's NSF check returned by the bank 500 In addition, Willow made an error in recording a customer's check; the amount was recorded in cash receipts as $150, while the bank correctly recorded the amount as $510. What amount will Willow report as its actual cash balance on February 28th? a. $46,250 b. $44,650 c. $46,110 d. $45,890

c. $46,110

Gump Shrimp Company On January 1, 2011, Gump Shrimp Company purchased a ship for $1,000,000. It has a ten-year useful life and a salvage value of $100,000. The company uses the double-declining-balance method. Refer to the information provided for Gump Shrimp Company. What was the book value of the ship at the end of the third year? a. $128,000 b. $200,000 c. $512,000 d. Need more information to determine this answer.

c. $512,000

Peck Company Peck Company reported the following items on its financial statements for the year ending December 31, 2012. Sales $1,560,000 Cost of sales $1,400,000 Selling, general, and administrative expense 40,000 Other expense 30,000 Dividends 10,000 Income tax expense 25,000 Refer to the information provided above for Peck Company. The Income Statement of Peck will report net income for the current year in the amount of: a. $55,000. b. $85,000. c. $65,000. d. $120,000.

c. $65,000.

Wing Company Cash $234,000 Accounts payable $97,000 Inventories 121,000 Notes payable (due 2020) 211,000 Land 453,000 Accounts receivable 46,000 Refer to the information provided for Wing Company. Calculate current liabilities. a. $354,000 b. $143,000 c. $97,000 d. $211,000

c. $97,000

Stephan, Inc. Stephan, Inc. has an inventory turnover rate of 8 times. Refer to the information provided for Stephan, Inc. Calculate the company's days-in-inventory ratio. a. 120.75 days b. 150 days c. 45.625 days d. 365 days

c. 45.625 days

Medina Enterprises The following selected financial information is available for Medina for the year ended December 31, 2012. Net sales $450,000 Inventory, 1/1/12 $48,400 Cost of goods sold 299,500 Inventory, 12/31/12 49,670 Refer to the information provided for Medina Enterprises. Calculate Medina's days-in-inventory ratio. a. 60.53 days b. 58.98 days c. 59.76 days d. 39.77 days

c. 59.76 days

Which financial statement would you refer to in order to determine how many resources (assets) the company owns? a. Income statement b. Statement of retained earnings c. Balance sheet d. Statement of cash flows

c. Balance sheet

Which one of the following financial statements reports an entity's financial position at a specific date? a. Income statement b. Statement of retained earnings c. Balance sheet d. Statement of cash flows

c. Balance sheet

Which one of the following would never be considered a cash equivalent? a. Money market funds b. Corporate commercial paper c. Common stock issued by a corporation d. U.S. Treasury bills

c. Common stock issued by a corporation

If assets are expected to be realized in cash, sold, or consumed within one year, how are they reported on a classified balance sheet? a. Current liabilities b. Property, plant, and equipment c. Current assets d. Intangible assets

c. Current assets

Which of the following terms best describes a distribution of the net income of a corporation to its owners? a. Retained earnings b. Revenue c. Dividends d. Liquidation of assets

c. Dividends

Which of the following concepts relates to separating the reporting of business and personal economic transactions? a. Cost principle b. Objectivity assumption c. Economic entity assumption d. Monetary unit assumption

c. Economic entity assumption

Which inventory costing method results in the highest inventory balance during a period of rising purchase prices? a. LIFO b. Both FIFO and LIFO result in the same inventory balance. c. FIFO d. Weighted average cost

c. FIFO

On December 31, Strike Company decided to sell one of its batting cages. The initial cost of the equipment was $215,000 with an accumulated depreciation of $185,000. Depreciation has been taken up to the end of the year. Strike found a company that is willing to buy the equipment for $55,000. What is the amount of the gain or loss on this transaction? a. Cannot be determined b. Gain of $55,000 c. Gain of $25,000 d. No gain or loss

c. Gain of $25,000

Which inventory cost flow method assigns the cost of the most recent items purchased to cost of goods sold? a. Specific identification b. Weighted average c. LIFO d. FIFO

c. LIFO

Which of the following qualitative characteristics of useful accounting information implies that only items that meet or exceed certain thresholds will affect decisions? a. Conservatism b. Relevance c. Materiality d. Comparability

c. Materiality

Which of the following underlying assumptions for the conceptual framework is the reason the dollar is used in the preparation of financial statements? a. Economic entity b. Time period c. Monetary unit d. Continuity

c. Monetary unit

If the depreciation method is known, which of the following sets of factors is needed to calculate depreciation on plant and equipment? a. The estimated salvage value of the asset, its replacement cost, and its market value b. The asset's historical cost, replacement cost, and its estimated salvage value c. The useful life of the asset, its historical cost, and its estimated salvage value d. The asset's replacement cost, its estimated life, and its estimated salvage value

c. The useful life of the asset, its historical cost, and its estimated salvage value

Which of the following is not a requirement of a company's top managers under the Sarbanes-Oxley Act? a. They must certify that they are primarily responsible for the company's internal controls over financial reporting. b. They must certify that the company's financial statements are fairly presented. c. They may deny responsibility for certain financial reporting matters if they are not knowledgeable about the proper accounting procedures for those transactions. d. They must give an opinion about the effectiveness of the company's internal control over financial reporting.

c. They may deny responsibility for certain financial reporting matters if they are not knowledgeable about the proper accounting procedures for those transactions.

Disc Company purchased equipment at the beginning of 2010 for $200,000. The company decided to depreciate the equipment over a 5-year period using the straight-line method. The company estimated the equipment's salvage value at $20,000. The journal entry to record depreciation expense for 2011 is a debit to: a. accumulated depreciation and a credit to equipment for $40,000. b. depreciation expense and a credit to accumulated depreciation for $40,000. c. depreciation expense and a credit to accumulated depreciation for $36,000. d. depreciation expense and a credit to equipment for $36,000.

c. depreciation expense and a credit to accumulated depreciation for $36,000.

Expenses can be matched against revenues: a. when cash is collected from the sale of products. b. when payment is made for costs related to revenue. c. in the same period as the revenue that it helped to generate. d. if the earnings process is not complete.

c. in the same period as the revenue that it helped to generate.

Credit entries are used to: a. increase dividends. b. increase expense accounts. c. increase liability accounts. d. increase asset accounts.

c. increase liability accounts.

Land is not depreciated because: a. its revenue generating potential is limited by wear and tear. b. it has a useful life that is limited to the period of time a company is in business. c. it will provide future benefits for the company for an unlimited period of time. d. it appreciates in value.

c. it will provide future benefits for the company for an unlimited period of time.

A trial balance is a(n): a. financial statement which can be used in place of a balance sheet. b. optional financial statement used only by creditors. c. tool used to prove the equality of debits and credits in the general ledger. d. list of accounts and their balances taken from the chart of accounts.

c. tool used to prove the equality of debits and credits in the general ledger.

Which of the following journal entries is recorded as a result of the bank reconciliation process to record a NSF check for $250? a. Cash 250 Accounts Payable 250 b. Cash 250 Accounts Receivable 250 c. Accounts Receivable 250 Petty Cash 250 d. Accounts Receivable 250 Cash 250

d. Accounts Receivable 250 Cash 250

Which of the following entries properly closes a temporary account? a. Dividends 200 Retained Earnings 200 b. Retained Earnings 20,000 Service Revenue 20,000 c. Accumulated Depreciation 1,600 Retained Earnings 1,600 d. Retained Earnings 400 Salaries Expense 400

d. Retained Earnings 400 Salaries Expense 400

Trump Company Other revenues $110,000 General and administrative expenses $250,000 Dividends $120,000 Gross profit $750,000 Selling expenses $220,000 Income tax expense $117,000 Refer to the information provided for Trump Company. By what amount will net income on a single-step income statement differ from net income on a multi-step income statement if Trump Company prepares both formats? a. $12,000 b. $8,000 c. $6,000 d. $0

d. $0

Portey Company Portey uses a perpetual inventory system and had the following inventory transactions for the month of June. June 1 On hand, 100 units at $9.00 each $900.00 4 Purchased 120 units at $9.10 each 1,092.00 5 Sold 150 units 10 Purchased 100 units at $9.50 each 950.00 24 Sold 60 units Total cost of goods available for sale 2,942.00 30 On hand, 110 units Refer to the information provided for Portey. If Portey uses the LIFO inventory costing method, ending inventory at June 30th is: a. $1,041.00 b. $1,092.00 c. $1,024.82 d. $1,010.00

d. $1,010.00

Portey Company Portey uses a perpetual inventory system and had the following inventory transactions for the month of June. June 1 On hand, 100 units at $9.00 each $900.00 4 Purchased 120 units at $9.10 each 1,092.00 5 Sold 150 units 10 Purchased 100 units at $9.50 each 950.00 24 Sold 60 units Total cost of goods available for sale 2,942.00 30 On hand, 110 units Refer to the information provided for Portey. If Portey uses the moving average inventory costing method, ending inventory at June 30th is: a. $1,010.27. b. $1,015.00. c. $1,041.00. d. $1,024.82.

d. $1,024.82

Your answer: Portey Company Portey uses a perpetual inventory system and had the following inventory transactions for the month of June. June 1 On hand, 100 units at $9.00 each $900.00 4 Purchased 120 units at $9.10 each 1,092.00 5 Sold 150 units 10 Purchased 100 units at $9.50 each 950.00 24 Sold 60 units Total cost of goods available for sale 2,942.00 30 On hand, 110 units Refer to the information provided for Portey. If Portey uses the FIFO inventory costing method, cost of goods sold for the month of June is: a. $1,932.00. b. $2,942.00. c. $1,917.00. d. $1,901.00.

d. $1,901.00.

Gump Shrimp Company On January 1, 2011, Gump Shrimp Company purchased a ship for $1,000,000. It has a ten-year useful life and a salvage value of $100,000. The company uses the double-declining-balance method. Refer to the information provided for Gump Shrimp Company. What was the depreciation expense for Gump Shrimp for the year ended December 31, 2011? a. $90,000 b. $180,000 c. $100,000 d. $200,000

d. $200,000

A machine with a cost of $80,000 has an estimated salvage value of $5,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-activity method. What is the amount of depreciation for the second full year, during which the machine was used for 5,000 hours? a. $5,000 b. $26,667 c. $15,000 d. $25,000

d. $25,000

IPOD CORPORATION IPOD Corporations' end-of-year Balance Sheet consisted of the following amounts. Cash $180,000 Accounts receivable $700,000 Property, plant & equipment 950,000 Long-term debt 600,000 Capital stock 1,000,000 Accounts payable 350,000 Retained earnings ? Inventory 540,000 Refer to the information provided above for IPOD Corporation. What is IPOD's retained earnings balance at the end of the current year? a. $2,370,000 b. $1,950,000 c. $1,420,000 d. $420,000

d. $420,000

Medina Enterprises The following selected financial information is available for Medina for the year ended December 31, 2012. Net sales $450,000 Inventory, 1/1/12 $48,400 Cost of goods sold 299,500 Inventory, 12/31/12 49,670 Refer to the information provided for Medina Enterprises. What is the inventory turnover ratio for 2012? a. 6.030 times b. 9.177 times c. 6.188 times d. 6.108 times

d. 6.108 times

Which of the following should be included in the acquisition cost of a piece of equipment? a. Installation costs b. Testing costs prior to placing the equipment into production c. Transportation costs d. All of these

d. All of these

Which of the following best describes the term "current assets"? a. The amount of claim that the owners have in the business in the current year. b. The amount of total profits earned by a business since it began operations plus all other resources. c. The cumulative profits earned by a business less any dividends distributed in the current period. d. Assets expected to be converted into cash within one year or one.

d. Assets expected to be converted into cash within one year or one.

While preparing a bank reconciliation, which of the following items would be added to the bank statement balance? a. Bank service charges b. Interest earned on the bank account c. Outstanding checks d. Deposits in transit

d. Deposits in transit

Which statement demonstrates the financial success or failure of the company over that specific period of time? a. Balance sheet b. Statement of changes in stockholders' equity c. Statement of retained earnings d. Income statement

d. Income statement

Max's Tire Center Company Selected data from the financial statements of Max's Tire Center are provided below. 2012 2011 Inventory $55,000 $46,000 Cost of sales 120,000 110,000 Total assets 500,000 490,000 Cash flow from operations 320,000 289,000 Net sales 390,000 360,000 Capital expenditures 15,000 13,000 Refer to the selected data provided for Max's Tire Center. Which of the following would result from a horizontal analysis of Max's balance sheet? a. Inventory is 11.0% of total assets in 2012. b. Total assets are $500,000 in 2012. c. Inventory increased by 26% during 2012. d. Inventory increased by 19.57% during 2012.

d. Inventory increased by 19.57% during 2012.

On January 1, 2011, James Company sold a machine for $10,000 that it had used for several years. The machine was purchased at $22,000, and had accumulated depreciation of $9,000 at the time of sale. What gain or loss will be reported on the income statement for the sale of the machine? a. Loss of $13,000 b. Gain of $3,000 c. Gain of $10,000 d. Loss of $3,000

d. Loss of $3,000

Adjustments for which of the following involves the cash account? a. Deferred liabilities b. Deferred revenues c. Accrued expenses d. None of these

d. None of these

Which of the following is not considered to be a cash equivalent? a. A certificate of deposit with a term of 75 days when acquired b. A money market account with a stock brokerage firm c. Corporate commercial paper due in 60 days after purchase d. U.S. Treasury bills with an original maturity of six months

d. U.S. Treasury bills with an original maturity of six months

Which of the following accounts is decreased by a debit entry? a. Cash b. Insurance expense c. Prepaid insurance d. Unearned revenue

d. Unearned revenue

The amount of inventory expensed during the year is reported on the income statement as: a. administrative expenses. b. sales revenue. c. operating expenses. d. cost of goods sold.

d. cost of goods sold.