ACCT Final Review

A company that purchases inventory costing $10,000 on terms 2/30, n/60, but first returns one-half of those goods, will receive a discount of what amount if it pays on the last day of the discount period? $0 $100 $200 $5,000

$100

A company was recently formed with $50,000 cash contributed to the company by stockholders for common stock. The company then borrowed $20,000 from a bank and bought $10,000 of supplies on account. The company also purchased $50,000 of equipment by paying $20,000 in cash and issuing a note for the remainder. What is the amount of total assets to be reported on the balance sheet? $110,000 $100,000 $90,000 None of the above

$110,000

If the Allowance for Doubtful Accounts opened with a $10,000 credit balance, had write-offs of $5,000 (with no recoveries) during the period, and had a desired ending balance of $20,000 based on an aging analysis, what was the amount of Bad Debt Expense? $5,000 $10,000 $15,000 $20,000

$15,000

Thornton Industries purchased a machine part-way through the year on July 1 for $45,000 and is depreciating it with the straight-line method over a life of 10 years, using a residual value of $3,000. Depreciation Expense for the machine for that year ended December 31 is $2,100 $2,250 $4,200 $4,500

$2,100

Webby Corporation reported the following amounts on its income statement: service revenues, $32,500; utilities expense, $300; net income, $1,600; and income tax expense, $900. If the only other amount reported on the income statement was for selling expenses, what amount would it be? $2,200 $29,700 $30,000 $30,900

$29,700

A company bundles a product and service that separately sell for $40 and $60, respectively. If the bundled price is $80, how much revenue is recognized for delivering the product? $32 $40 $60 $80

$32

Barber, Inc., depreciates its building on a straight-line basis. A building was purchased on January 1 that had an estimated useful life of 20 years and a residual value of $20,000. The company's Depreciation Expense for that year was $20,000 on the building. What was the original cost of the building? $360,000 $380,000 $400,000 $420,000

$420,000

A $1,000 sale is made on May 1 with terms 2/30, n/60. Items with a $100 selling price are returned on May 3. What amount, if received on May 9, will be considered payment in full? $700 $800 $882 $900

$882

Which of the following regarding the lower of cost or market/net realizable value rule for inventory are true? i) When the value of inventory increases above the original cost of inventory shown in the financial records, the inventory should be increased to that higher value. ii) When the value of inventory drops below the original cost of inventory shown in the financial records, net income is reduced. iii) When the value of inventory drops below the original cost of inventory shown in the financial records, total assets are reduced. (i) only (ii) only (ii) and (iii) All of the above.

(ii) and (iii)

Which of the following statements are true regarding Cost of Goods Sold? i) Cost of Goods Sold represents the costs that a company incurred to purchase or produce inventory in the current period. ii) Cost of Goods Sold is an expense on the income statement. iii) Cost of Goods Sold is affected by the inventory method selected by a company (FIFO, LIFO, etc.). (i) only (ii) and (iii) (ii) only All of the above.

(ii) and (iii)

Sales discounts with terms 2/10, n/30 mean 10 percent discount for payment received within 30 days of the date of sale. 2 percent discount for payment received within 10 days or the full amount (less returns) is due within 30 days. Two-tenths of a percent discount for payment received within 30 days. None of the above.

2 percent discount for payment received within 10 days or the full amount (less returns) is due within 30 days.

Land O' Lakes, Inc., reported (in millions) Income from Operations of $206, Net Income of $160, Interest Expense of $63, and Income Tax Expense of $15. What was this dairy company's times interest earned ratio (rounded) for the year? 1.49 2.53 3.27 3.78

3.78

A bond is issued at a price of 103 and retired early at a price of 97. Which of the following is true? A gain will be reported on the income statement when the bond is issued. A loss will be reported on the income statement when the bond is issued. A gain will be reported on the income statement when the bond is retired. A loss will be reported on the income statement when the bond is retired.

A gain will be reported on the income statement when the bond is retired.

Assume PVH, the makers of Calvin Klein underwear, borrowed $100,000 from the bank to be repaid over the next five years, with principal payments beginning next month. Which of the following best describes the presentation of this debt in the balance sheet as of today (the date of borrowing)? $100,000 in the long-term liability section. $100,000 plus the interest to be paid over the five-year period in the long-term liability section. A portion of the $100,000 in the current liability section and the remainder of the principal in the long-term liability section. A portion of the $100,000 plus interest in the current liability section and the remainder of the principal plus interest in the long-term liability section.

A portion of the $100,000 in the current liability section and the remainder of the principal in the long-term liability section.

Which account is least likely to be debited when revenue is recorded? Accounts Payable Accounts Receivable Cash Deferred Revenue

Accounts Payable

Which of the following best describes the proper presentation of accounts receivable in the financial statements? Accounts Receivable + the Allowance for Doubtful Accounts in the asset section of the balance sheet. Accounts Receivable in the asset section of the balance sheet and the Allowance for Doubtful Accounts in the expense section of the income statement. Accounts Receivable - Bad Debt Expense in the asset section of the balance sheet. Accounts Receivable - the Allowance for Doubtful Accounts in the asset section of the balance sheet.

Accounts Receivable less the Allowance for Doubtful Accounts in the asset section of the balance sheet.

Which of the following accounts would not appear in a closing journal entry? Interest Revenue Accumulated Depreciation Retained Earnings Salaries and Wages Expense

Accumulated Depreciation

Which of the following trial balances is used as a source for preparing the income statement? Unadjusted trial balance Pre-adjusted trial balance Adjusted trial balance Post-closing trial balance

Adjusted trial balance

The inventory costing method selected by a company can affect The balance sheet. The income statement. The statement of retained earnings. All of the above.

All of the above

Which of the following should be capitalized when a piece of production equipment is acquired for a factory? Sales tax Transportation costs Installation costs All of the above

All of the above

Which of the following would the core revenue recognition principle consider a contract? A concert ticket issued by a Ticketmaster customer service representative An order automatically generated by Target's computer system to restock its shelves A rental agreement signed by Gables Residential for an apartment rented by a tenant All of the above

All of the above

If costs are rising, which of the following will be true? The cost of goods sold will be greater if LIFO is used rather than weighted average. The cost of ending inventory will be greater if FIFO is used rather than LIFO. The gross profit will be greater if FIFO is used rather than LIFO. All of the above are true.

All of the above are true.

Which of the following statements would be considered true regarding debits and credits? In any given transaction, the total dollar amount of the debits and the total dollar amount of the credits must be equal. Debits decrease certain accounts and credits decrease certain accounts. Liabilities and stockholders' equity accounts usually end in credit balances, while assets usually end in debit balances. All of the above are true.

All of the above are true.

Which of the following statements would be considered true regarding the balance sheet? One cannot determine the true current value of a company by reviewing just its balance sheet. The balance sheet reports assets only if they have been acquired through identifiable transactions. A balance sheet shows only the ending balances, in a summarized format, of balance sheet accounts in the accounting system as of a particular date. All of the above are true.

All of the above are true.

The T-account is used to summarize which of the following? Increases and decreases to a single account in the accounting system Debits and credits to a single account in the accounting system Changes in a specific account balance over time All of the above describe how T-accounts are used by accountants.

All of the above describe how T-accounts are used by accountants.

In 2016, Coca-Cola Bottling had a receivables turnover ratio of 11.5. Which of the following actions could Coca-Cola take to cause the ratio to increase? Pursue collections more aggressively. Increase the percentages used to estimate bad debts. Factor its receivables. All of the above.

All of the above.

Which of the following statements describes transactions that would be recorded in the accounting system? An exchange of an asset for a promise to pay An exchange of a promise for another promise Both of the above None of the above

An exchange of an asset for a promise to pay

An adjusting journal entry to recognize accrued salaries payable would cause which of the following? A decrease in assets and stockholders' equity A decrease in assets and liabilities An increase in expenses, liabilities, and stockholders' equity An increase in expenses and liabilities and a decrease in stockholders' equity

An increase in expenses and liabilities and a decrease in stockholders' equity

Which of the following would not be a goal of external users reading a company's financial statements? Understanding the current financial state of the company Assessing the company's contribution to social and environmental policies Predicting the company's future financial performance Evaluating the company's ability to generate cash from sales

Assessing the company's contribution to social and environmental policies

Each period, the Cost of Goods Available for Sale is allocated between Assets and Liabilities. Assets and Expenses. Assets and Revenues. Expenses and Liabilities.

Assets and Expenses.

Which of the following correctly expresses the cost of goods sold equation, as used in a periodic system? BI + CGS − P = EI BI + P − EI = CGS BI + P − CGS = EI BI + EI − P = CGS

BI + P − EI = CGS

Which account is least likely to appear in an adjusting journal entry? Cash Interest Receivable Income Tax Expense Salaries and Wages Expense

Cash

Which of the following correctly describes how to report cash? Restricted cash is always reported as a current asset. Cash can be combined with cash equivalents. Cash can be combined with restricted cash. Cash equivalents can be combined with restricted cash.

Cash can be combined with cash equivalents.

Which of the following is not an asset account? Cash Land Equipment Common Stock

Common Stock

Which of the following is not an element of the fraud triangle? Opportunity Control environment Incentive Rationalization

Control environment

Which of the following does not affect Net Sales? Sales Returns and Allowances Sales Discounts Cost of Goods Sold Sales Revenue

Cost of Goods Sold

Which of the following is the entry to be recorded by a law firm when it receives a payment from a new client that will be earned when services are provided in the future? Debit Accounts Receivable; credit Service Revenue. Debit Deferred Revenue; credit Service Revenue. Debit Cash; credit Deferred Revenue. Debit Deferred Revenue; credit Cash.

Debit Cash; credit Deferred Revenue.

Assume a company receives a bill for $10,000 for advertising done during the current year. If this bill is not yet recorded at the end of the year, what will the adjusting journal entry include? Debit to Advertising Expense of $10,000 Credit to Advertising Expense of $10,000 Debit to Accrued Liabilities of $10,000 Need more information to determine

Debit to Advertising Expense of $10,000

Assume the balance in Prepaid Insurance is $2,500, but it should be $1,500. The adjusting journal entry should include which of the following? Debit to Prepaid Insurance for $1,000 Credit to Insurance Expense for $1,000 Debit to Insurance Expense for $1,000 Debit to Insurance Expense for $1,500

Debit to Insurance Expense for $1,000

Under what depreciation method(s) is an asset's book value used to calculate depreciation each year? Straight-line method Units-of-production method Declining-balance method Weighted-average-cost method

Declining-balance method

All else equal, if VFC incurs a 3% fee to factor $10,000 of its Accounts Receivable, its Net Income will Increase by $10,000. Increase by $9,700. Increase by $300. Decrease by $300.

Decrease by $300.

In which of the following situations is an LCM/NRV write-down most likely required? Increasing inventory turnover ratio, decreasing gross profit percentage. Decreasing inventory turnover ratio, decreasing gross profit percentage. Increasing inventory turnover ratio, increasing gross profit percentage. Decreasing inventory turnover ratio, increasing gross profit percentage.

Decreasing inventory turnover ratio, decreasing gross profit percentage.

When a concert promotions company collects cash for ticket sales two months in advance of the show date, which of the following accounts is affected? Accounts Payable Accounts Receivable Prepaid Expense Deferred Revenue

Deferred Revenue

Company A has owned a building for several years. Which of the following statements regarding depreciation is false from an accounting perspective? Depreciation Expense for the year will equal Accumulated Depreciation. Depreciation is an estimated expense to be recorded each period during the building's life. As depreciation is recorded, stockholders' equity is reduced. As depreciation is recorded, total assets are reduced.

Depreciation Expense for the year will equal Accumulated Depreciation.

Big Hitter Corp. is facing a class-action lawsuit in the upcoming year. It is possible, but not probable, that the company will have to pay a settlement of approximately $2,000,000 in the upcoming year. How would this fact be reported, if at all, in the financial statements prepared at the end of the current month using GAAP? Report $2,000,000 as a current liability. Report $2,000,000 as a long-term liability. Describe the potential liability in the notes to the financial statements. Reporting is not required in this case.

Describe the potential liability in the notes to the financial statements.

Which of the following internal control principles underlies the requirement that all customers be given a sales receipt? Segregate duties Establish responsibility Restrict access Document procedures

Document procedures

If beginning inventory is $200 and purchases are $800, which of the following could be true? Ending inventory is $400 and Cost of Goods Sold is $600. Ending inventory is $800 and Cost of Goods Sold is $800. Ending inventory is $200 and Cost of Goods Sold is $200. Ending inventory is $200 and Cost of Goods Sold is $600.

Ending inventory is $400 and Cost of Goods Sold is $600.

Which of the following is not a component of internal control? Environmental assessment Control activities Information and communication Monitoring activities

Environmental assessment

Which of the following best describes Accrued Liabilities? Long-term liabilities. Current amounts owed to suppliers of inventory. Expenses incurred but not paid at the end of the accounting period. Revenues that have been collected but not earned.

Expenses incurred but not paid at the end of the accounting period.

Which of the following is true? FASB creates SEC. GAAP creates FASB. SEC creates CPA. FASB creates GAAP.

FASB creates GAAP.

As of February 29, 2016, American Greetings Corp. had 7,000 full-time and 20,500 part-time employees. Assume in the last pay period of the year, the company paid $8,000,000 to employees after deducting $2,000,000 for employee income taxes, $612,000 for FICA taxes, and $700,000 for other purposes. No payments have been made to the government relating to these taxes. Which of the following statements is true regarding this pay period? FICA Taxes Payable should be $612,000. FICA Taxes Payable should be $1,224,000. Salaries and Wages Expense should be $8,000,000. None of the above is true.

FICA Taxes Payable should be $1,224,000.

Which of the following regarding GAAP is true? GAAP is an abbreviation for generally applied accounting principles. Changes in GAAP always affect the amount of income reported by a company. GAAP is the abbreviation for generally accepted accounting principles. Changes to GAAP must be approved by the Senate Finance Committee.

GAAP is the abbreviation for generally accepted accounting principles.

ACME, Inc., uses straight-line depreciation for all of its depreciable assets. ACME sold a used piece of machinery on December 31 that it had purchased two years earlier on January 1 for $10,000. When the asset was first acquired, its estimated life was five years and the estimated residual value was zero. At the time of disposal, Accumulated Depreciation was $4,000. If the sales price of the used machine was $7,500, the resulting gain or loss on disposal was which of the following amounts? Loss of $2,500 Gain of $3,500 Loss of $1,500 Gain of $1,500

Gain of $1,500

Which of the following is not a name for a specific type of inventory? Finished goods. Merchandise inventory. Raw materials. Goods available for sale.

Goods available for sale

Which of the following describes how assets are listed on the balance sheet? In alphabetical order In order of magnitude, lowest value to highest value In the order they will be used up or turned into cash From least current to most current

In the order they will be used up or turned into cash

Which of the following is not a Sarbanes-Oxley Act requirement intended to reduce fraud opportunities? Increase fines and jail sentences for fraud perpetrators. All public companies establish an audit committee of independent directors. Management of all public companies evaluates and reports on the effectiveness of internal control over financial reporting. External auditors of large public companies evaluate and report on the effectiveness of internal control over financial reporting.

Increase fines and jail sentences for fraud perpetrators.

An increasing inventory turnover ratio Indicates a longer time span between the ordering and receiving of inventory. Indicates a shorter time span between the ordering and receiving of inventory. Indicates a shorter time span between the purchase and sale of inventory. Indicates a longer time span between the purchase and sale of inventory.

Indicates a shorter time span between the purchase and sale of inventory.

What assets should be amortized using the straight-line method? Land Intangible assets with limited lives Intangible assets with unlimited lives All of the above

Intangible assets with limited lives

If a 5 percent note receivable for $100,000 is created on January 1, 2018, and it has a maturity date of December 31, 2021, No interest revenue will be recorded in 2018. The note receivable will be classified as a current asset. Interest Revenue of $5,000 will be recorded in 2018. None of the above.

Interest Revenue of $5,000 will be recorded in 2018.

Which of the following is FALSE when a bond is issued at a premium? The bond will issue for an amount above its face value. Interest expense will exceed the cash interest payments. The market interest rate is lower than the stated interest rate. The issue price will be quoted at a number greater than 100.

Interest expense will exceed the cash interest payments.

A company wishes to report the highest earnings possible according to GAAP. Therefore, when calculating depreciation for financial reporting purposes, It will follow the MACRS depreciation rates prescribed by the IRS. It will estimate the shortest lives possible for its assets. It will estimate the longest lives possible for its assets. It will estimate lower residual values for its assets.

It will estimate the longest lives possible for its assets.

Which inventory method provides a better matching of current costs with sales revenue on the income statement but also results in older values being reported for inventory on the balance sheet? FIFO Weighted Average LIFO Specific Identification

LIFO

If a publicly traded company is trying to maximize its perceived value to decision makers external to the corporation, the company is most likely to report too small a value for which of the following on its balance sheet? Assets Liabilities Retained Earnings Common Stock

Liabilities

Which of the following does not impact the calculation of the cash interest payments to be made to bondholders? Face value of the bond. Stated interest rate. Market interest rate. The length of time between payments.

Market interest rate.

Which of the following items is not a specific account in a company's accounting records? Accounts Receivable Net Income Sales Revenue Deferred Revenue

Net Income

If a company incorrectly records a payment as an asset, rather than as an expense, how will this error affect net income in the current period? Net income will be too high. Net income will be too low. Net income will not be affected by this error. It's a mystery; nobody really knows.

Net income will be too high.

When recording depreciation, which of the following statements is true? Total assets increase and stockholders' equity increases. Total assets decrease and total liabilities increase. Total assets decrease and stockholders' equity increases. None of the above are true.

None of the above are true.

When an account receivable is "recovered" Total assets increase. Total assets decrease. Stockholders' equity increases. None of the above.

None of the above.

Which of the following does not enhance internal control? Assigning different duties to different employees Ensuring adequate documentation is maintained Allowing access only when required to complete assigned duties None of the above—all enhance internal control.

None of the above—all enhance internal control.

Which of the following is false regarding a perpetual inventory system? Physical counts are never needed because records are maintained on a transaction-by-transaction basis. The Inventory records are updated with each inventory purchase, sale, or return transaction. Cost of Goods Sold is increased as sales are recorded. A perpetual inventory system can be used to detect shrinkage.

Physical counts are never needed because records are maintained on a transaction-by-transaction basis.

If the receivables turnover ratio decreased during the year, The days to collect also decreased. Receivables collections slowed down. Sales Revenues increased at a faster rate than Accounts Receivable increased. None of the above.

Receivables collections slowed down.

A company indicates the condition of goods obtained on which of the following documents? Purchase requisition Purchase order Receiving report Supplier invoice

Receiving report

What document signals that a company should record the purchase of goods on account? Purchase requisition Purchase order Receiving report Supplier invoice

Receiving report

Which of the following accounts normally has a debit balance? Deferred Revenue Rent Expense Retained Earnings Sales Revenue

Rent Expense

Mountain Gear, Inc., buys bikes, tents, and climbing supplies from Rugged Rock Corporation for sale to consumers. What type of company is Mountain Gear, Inc.? Service Retail merchandiser Wholesale merchandiser Manufacturer

Retail merchandiser

Which of the following regarding retained earnings is false? Retained earnings is increased by net income. Retained earnings is a component of stockholders' equity on the balance sheet. Retained earnings is an asset on the balance sheet. Retained earnings represents earnings not yet distributed to stockholders in the form of dividends.

Retained earnings is an asset on the balance sheet.

An adjusted trial balance Shows the ending balances in a debit and credit format before posting the adjusting journal entries. Is prepared after closing entries have been posted. Is a tool used by financial analysts to review the performance of publicly traded companies. Shows the ending balances resulting from the adjusting journal entries in a debit-and-credit format.

Shows the ending balances resulting from the adjusting journal entries in a debit-and-credit format.

A New York bridal dress designer that makes high-end custom wedding dresses and needs to know the exact cost of each dress most likely uses which inventory costing method? FIFO LIFO Weighted Average Specific Identification

Specific Identification

When expenses exceed revenues in a given period, Stockholders' equity will not be impacted. Stockholders' equity will be increased. Stockholders' equity will be decreased. One cannot determine the impact on stockholders' equity without information about the specific revenues and expenses.

Stockholders' equity will be decreased.

The Simon Company and the Allen Company each bought a new delivery truck on January 1. Both companies paid exactly the same cost, $30,000, for their respective vehicles. Two years later, on December 31, the book value of Simon's truck was less than the Allen Company's book value for the same vehicle. Which of the following are acceptable explanations for the difference in book value? Both companies elected straight-line depreciation, but the Simon Company used a longer estimated life. The Simon Company estimated a lower residual value, but both estimated the same useful life and both elected straight-line depreciation. Because GAAP specifies rigid guidelines regarding the calculation of depreciation, this situation is not possible. None of the above explain the difference in book value.

The Simon Company estimated a lower residual value, but both estimated the same useful life and both elected straight-line depreciation.

Which of the following is not one of the four basic financial statements? The balance sheet The audit report The income statement The statement of cash flows

The audit report

Which of the following is false regarding the balance sheet? The accounts shown on a balance sheet represent the basic accounting equation for a particular business. The retained earnings balance shown on the balance sheet must agree with the ending retained earnings balance shown on the statement of retained earnings. The balance sheet summarizes the net changes in specific account balances over a period of time. The balance sheet reports the amount of assets, liabilities, and stockholders' equity of a business at a point in time.

The balance sheet summarizes the net changes in specific account balances over a period of time.

For many years, Carefree Company has estimated Bad Debt Expense using the aging of accounts receivable method. Assuming Carefree has no write-offs or recoveries, its estimate of uncollectible receivables resulting from the aging analysis equals Bad Debt Expense for the current period. The ending balance in the Allowance for Doubtful Accounts for the period. The change in the Allowance for Doubtful Accounts for the period. Both (a) and (c).

The ending balance in the Allowance for Doubtful Accounts for the period.

Which of the following is not one of the items required to be shown in the heading of a financial statement? The financial statement preparer's name The title of the financial statement The financial reporting date or period The name of the business entity

The financial statement preparer's name

Which of the following is true regarding the income statement? The income statement is sometimes called the statement of operations. The income statement reports revenues, expenses, and liabilities. The income statement only reports revenue for which cash was received at the point of sale. The income statement reports the financial position of a business at a particular point in time.

The income statement is sometimes called the statement of operations.

This year your company has purchased less expensive merchandise inventory but has not changed its selling prices. What effect will this change have on the company's gross profit percentage this year, in comparison to last year? The ratio will not change. The ratio will increase. The ratio will decrease. Cannot determine.

The ratio will increase.

To determine if a bond will be issued at a premium, discount, or face value, one must know which of the following pairs of information? The face value and the stated interest rate on the date the bonds were issued. The face value and the market interest rate on the date the bonds were issued. The stated interest rate and the market interest rate on the date the bonds were issued. You can't tell without having more information.

The stated interest rate and the market interest rate on the date the bonds were issued.

Total assets on a balance sheet prepared on any date must agree with which of the following? The sum of total liabilities and net income as shown on the income statement The sum of total liabilities and common stock The sum of total liabilities and retained earnings The sum of total liabilities and common stock and retained earnings

The sum of total liabilities and common stock and retained earnings

Which of the following statements regarding the statement of cash flows is false? The statement of cash flows separates cash inflows and outflows into three major categories: operating, investing, and financing. The ending cash balance shown on the statement of cash flows must agree with the amount shown on the balance sheet at the end of the same period. The total increase or decrease in cash shown on the statement of cash flows must agree with the "bottom line" (net income or net loss) reported on the income statement. The statement of cash flows covers a period of time.

The total increase or decrease in cash shown on the statement of cash flows must agree with the "bottom line" (net income or net loss) reported on the income statement.

How many of the following statements regarding goodwill are true? Goodwill is not reported unless purchased in an exchange. Private companies can elect to amortize goodwill over 10 years or less. Impairment of goodwill results in a decrease in net income. None One Two Three

Three

When a company using the allowance method writes off a specific customer's account receivable from the accounting system, how many of the following are true? -Total stockholders' equity remains the same. -Total assets remain the same. -Total expenses remain the same. None One Two Three

Three

Which of the following is not required by the Sarbanes-Oxley Act? Top managers of public companies must sign a report certifying their responsibilities for the financial statements. Public companies must maintain an audited system of internal control to ensure accuracy in accounting reports. Public companies must maintain an independent committee to meet with the company's independent auditors. Top managers of public companies must be members of the American Institute of Certified Public Accountants.

Top managers of public companies must be members of the American Institute of Certified Public Accountants.

When using the allowance method, as Bad Debt Expense is recorded, Total assets remain the same and stockholders' equity remains the same. Total assets decrease and stockholders' equity decreases. Total assets increase and stockholders' equity decreases. Total liabilities increase and stockholders' equity decreases.

Total assets decrease and stockholders' equity decreases.

On December 31, an adjustment is made to reduce Deferred Revenue and report Service Revenue generated. How many accounts will be included in this adjusting journal entry? None One Two Three

Two

The duality of effects can best be described as follows: When a transaction is recorded in the accounting system, at least two effects on the basic accounting equation will result. When an exchange takes place between two parties, both parties must record the transaction. When a transaction is recorded, both the balance sheet and the income statement must be impacted. When a transaction is recorded, one account will always increase and one account will always decrease.

When a transaction is recorded in the accounting system, at least two effects on the basic accounting equation will result.

The expense recognition principle ("matching") controls Where on the income statement expenses should be presented. When revenues are recognized on the income statement. The ordering of current assets and current liabilities on the balance sheet. When costs are recognized as expenses on the income statement.

When costs are recognized as expenses on the income statement.

When should a company report the cost of an insurance policy as an expense? When the company first signs the policy When the company pays for the policy When the company receives the benefits from the policy over its period of coverage When the company receives payments from the insurance company for its insurance claims

When the company receives the benefits from the policy over its period of coverage

Assume Speedo International received $400,000 for long-term promissory notes that were issued on November 1. The notes pay interest on April 30 and October 31 at the annual rate of 6 percent, which was comparable to other interest rates in the market at that time. Which of the following journal entries would be required at December 31? Debit Credit a. Interest Expense 4,000 Interest Payable 4,000 b. Interest Expense 4,000 Cash 4,000 c. Interest Expense 4,000 Interest Payable 8,000 Cash 12,000 d. Interest Expense 8,000 Interest Payable 4,000 Cash 12,000

a

Upon review of the most recent bank statement, you discover that a check was made out to your supplier for $76 but was recorded in your Cash and Accounts Payable accounts as $67. Which of the following describes the actions to be taken when preparing your bank reconciliation? Answer Balance per Bank Balance per Book a. Decrease No change b. Increase Decrease c. No change Decrease d. Decrease Increase

c. No change Decrease

Upon review of your company's bank statement, you discover that you recently deposited a check from a customer that was rejected by your bank as NSF. Which of the following describes the actions to be taken when preparing your company's bank reconciliation? Answer Balance per Bank Balance per Book a. Decrease No change b. Increase Decrease c. No change Decrease d. Decrease Increase

c. No change Decrease