ACCT FINAL SI STUDY

Using the accounting equation, stockholders' claims on the resources of the corporation can be expressed as Assets - Liabilities. Assets + Liabilities. Assets + Revenues. Liabilities + Revenues.

Assets - Liabilities.

Financial Accounting.

Is useful to investors and creditors in making decisions Helps to predict cash flow Tells about economic resources, claim to resources, and changes in resources and claims

____ inventory refers to the products that have been started in production, but are still incomplete. Finished goods Merchandise inventory Raw materials Work-in-process

Work-in-process

Which of the following is not found on the Balance Sheet under the Stockholders' Equity ? a Dividends Payable c. Retained Earnings b Capital Stock d. Net Income

d. Net Income

examples Stockholders' Equity.

common stock, retained earning

Operating Activities:

transactions that relate to the primary operations of the company Sell merchandise to customers

Financing Activities:

transactions the company has with investors and creditors Borrow money from bank

The statement of cash flows classifies items as current and noncurrent. operating and nonoperating. operating, investing, and financing. recurring and nonrecurring.

operating, investing, and financing.

Glasser Corp. provided $20,000 of services on account. The account that should be credited is accounts payable. accounts receivable. cash. service revenue.

service revenue.

Relay Corporation provides services with a normal price of $105,000 and a trade discount of $5,000. Terms are 1/10, n/30 and the customers pay within 10 days. The net service revenue is $99,000. c. $104,000. $100,000. d. $105,000.

$99,000 105,000- 5000= 100,000 100,000*1%= 1000 100,000-1000=99,000\

Compute the inventory turnover ratio using the following information: Net sales is $100,000 for the year, costs of goods sold are $40,000, last year's assets in place were $900,000, and this year's assets in place are $1,100,000. Receivables for both years are $50,000. Inventory changed from $30,000 last year to $10,000 this year. 0.4 1 2 4

2 40,000/ ((30,000+10000)/2)= 2 Inventory turnover ratio = Cost of goods sold/ Average Inventory

What is the purpose of financial accounting? A. To provide information for decision-making for external users B. To provide information to internal users of statements C. To help management plan for the future D. To determine profits of a company in the past for stockholders

A. To provide information for decision-making for external users

Total sales - ending inventory= _________

COGS

Equipment that cost $100,000 and has a Book Value of $40,000 is sold for $50,000. Which of the following would not be seen in the entries to record the sales? a Debit Accumulated Depreciation $60,000 b Credit Loss on Sales of Asset of $10,000 c Credit Equipment $100,000 d Debit Cash $50,000

Credit Loss on Sales of Asset of $10,000

Liabilities of a company.

Creditors' (non-owners') claims to resources

examples of Assets

Examples: cash, short-term investments, accounts receivable, notes receivable, inventory (to be sold), supplies, prepaid expenses, long-term investments, equipment, buildings, land, intangibles

On October 12, a company receives cash of $500 for services to be performed later. This transaction would: Decrease the company's cash account Increase the company's service revenue account Increase the company's retained earnings Have no affect on the company's overall statement

Increase the company's retained earnings

Calculate Net Income.

Net Income = Revenues - Expenses

Stockholders' Equity.

Owners' claim to resources

Assets of a company.

Resources of the company Examples: cash, short-term investments, accounts receivable, notes receivable, inventory (to be sold), supplies, prepaid expenses, long-term investments, equipment, buildings, land, intangibles

On July 10, a company reports their cash increases by $10,000. Which of the following would not be reason for this occurrence? The company sold equipment for $10,000 The company bought inventory for $10,000 The company issued common stock for $10,000 The company signed a notes payable from the bank for $10,000

The company bought inventory for $10,000

Shares issued and repurchased by the company are referred to as: Issued stock Authorized stock Treasury stock Not-for profit stock

Treasury stock

Equipment was purchased for $50,000. At the time, the equipment was expected to be used for 15,000 hours over its useful life and then have a residual value of $10,000. In the first two years of operation, the hours the machine was used were 2700 and 3300 respectively. What is the equipment's accumulated depreciation at the end of the second year using the activity based method? a $16000 b. $7200 c. $8000 d. $20,000

a $16000 (cost-residual)/estimated activity usage= Depreciation rate Depreciation rate * Actual usage 50,000-10000= 40,000/15000= 2.66666667 2.66666667* 2700= 7200 2.66666667* 3300=8800 16000

Mayfair Company uses an allowance method to account for bad debts. They estimate that 5% of the outstanding Accounts Receivable will be uncollectible. At the end of the year, Mayfair has outstanding accounts receivable of $750,000, and a credit balance in the Allowance for Doubtful Accounts of $9,000. Mayfair should record bad debt expense of: a $28,500 c. $46,500 b $37,500 d. $55,500

a $28,500

examples Liabilities of a company.

accounts payable, accrued expenses, notes payable, taxes payable, unearned revenue, bonds payable

Beginning Accounts Receivable were 10,000. All sales were on account and totaled 900,000. Cash collected from customers totaled $750,000, and $60,000 of accounts were written off. Calculate the ending Accounts Receivable balance. a $220,000 c. $80,000 b $100,000 d. Unable to be determined

b $100,000 10000+900000= 910,000 910,00-750,000-60,000= 100,000

On January 1st, Kensington Industrial pays $36,000 for insurance to cover them for two years. What is the balance in their Prepaid Insurance account on October 31st of the same year? a $6000 c. $22,500 b $21000 d. $9,000

b $21000 360000/24= 15000 36000-15000=21000

Winchester Warehouse purchases $3,200 worth of inventory with terms of 2/10, n/30 on july 28th. How much money does Winchester pay to the seller if they pay on August 1st? a $3,150 c. $3,168 b $3,136 d. $3200

b $3,136 3200* 2%= 64 3200-64= 3136

During the year, Pizza Company, Inc. had $100,000 in revenues, $40,000 in expenses, and paid $3,000 in dividends. Net income equals ______. a $57,000 c. $63,000 b $60,000 d. $100,000

b $60,000 100000-40000=60000

An asset with an estimated 5 year useful life and an estimated residual value of $5,000 was purchased for $22,000 cash plus a $500 delivery fee on the first day of the fiscal year. Using the straight line method, determine the depreciation expense for the second fiscal year? a3,400 b. 3,500 c. 4,500 d. 4,800

b 3500 cost -residual value/ useful life 22,000+500= 22,500-5000= 17500/5= 3500

Using the allowance method, the entry to record a write off of accounts receivable would include a a debit to bad debt expense b A debit to allowance for uncollectible accounts c A debit to service revenue d No entry

b A debit to allowance for uncollectible accounts Dr. Allowance for doubtful accounts Cr. Accounts Receivable

Accumulated depreciation decreases the balance of: a Long term liabilities c. Stockholders' Equity b Assets d. Accumulated depreciation is a net income account

b Assets

Torresdale Pizza borrowed $5,000 from the bank on October 1, 2012. The note carried a one-year term and a 12% rate of interest. The adjusting entry on Torresdale's books to record accrued interest expense on December 31, 2021 is: a Debit to Interest Expense and credit to Interest Payable for $600 b Debit to Interest Expense and credit to Interest Payable for $150 c Debit to Interest Expense and credit to cash for $150 d Debit to Interest Expense $600 and credit to Interest Payable for $150

b Debit to Interest Expense and credit to Interest Payable for $150 5000*12%*3/12= 150 Dr. Interest expense 150 Cr. Interest payable 150

Which of the following statements is false about debits and credits? a Liabilities are decreased by debits b Debits increase accounts and credits decrease them c Credits increase some items listed under assets d Credits always increase Net Income

b Debits increase accounts and credits decrease them

Sales returns, Sales discount, and Sales allowance all: a Increase overall revenue b Decrease overall revenue c Have no effect on revenue d Increase the asset amount

b Decrease overall revenue

The sale of a building would be reported on the Statement of Cash Flows as what kind of activity? a Financing c. Operating b Investing d. Not reported on the Statement of Cash Flows

b Investing

A restaurant collects $12,000 from selling gift cards that will be given as Christmas gifts. From December 26th to 30th, the restaurant records 2,000 of revenue from receivers of the gift cards. Which of the following will be recorded as a balance after year-end adjustments on december 31st? a Revenue of $12,000 b Unearned Revenue of $10,000 c Accounts Receivable of $10,000 d Cash of $2000

b Unearned Revenue of $10,000 Dr. Cash 12000 Cr. Unearned Revenue 12000 Dr. Unearned Revenue 2000 Cr. Sales revenue 2000 (12000-2000=10000)

A company reports the following: Sales Revenue 12,000, rent expense 2,000, cost of goods sold 5000, and insurance expense 3,000. What should the company report as its gross profit? a $2000 b. $7000 c. $10,000 d. $8,000

b. $7000 Sales revenue - cogs= gross profit 12,000-5000=7000

GPS, Inc.'s sales were $200,000, cost of goods sold was $150,000 and net income was $20,000. Its average inventory was $25,000. The gross profit ratio equals ______. a 10% b. 25% c. 33% d. 75%

b. 25% Gross profit ratio = Gross Profit/Net Sales Sales revenue - cogs= gross profit 200,000-150,000= 50000 50,000/200,000= 25%\

Which financial statement shows that a company's resources equal the claim to those resources a Income statement b. Balance sheet c Statement of SE d. Statement of cash flows

b. Balance sheet

Which financial statement would you analyze to determine if a company distributed any of its profits to its shareholders Balance Sheets c. Income Statement b. Statements of Stockholders Equity d. Both a and b

b. Statements of Stockholders Equity

The fraud triangle consists of: a Opportunity, motivation, and experience b Motivation, error, and experience c Opportunity, motivation, and rationalization d None of the above

c Opportunity, motivation, and rationalization

When are revenues and expenses recognized under the accrual basis of accounting? a When cash is received, and expenses when cash is paid b When cash is received, and expenses when the costs are incurred c When earned, and expenses when the cost are incurred d When earned, and expenses when cash is paid

c When earned, and expenses when the cost are incurred

Quartz Instruments had retained earnings of $145,000 at December 31, 2018. Net income for 2019 was $90,000, and dividends for 2019 were $30,000. What amount of retained earnings should be reported at December 31, 2019? $140,000 c. $205,000 $175,000 d. $235,000

c. $205,000 145,000+90,000-30,000= 205,000

Financial Accounting information should be based on the formal standards referenced to as: a GASB b. IASB c. GAAP d.GAPP

c. GAAP

A disadvantage to selling on account is customers do not always pay. it does not create an asset. it is difficult to estimate sales. the sale cannot be recorded until the customer pays.

customers do not always pay.

Depreciation expense is recorded so that a A company can better estimate the market value of the depreciated assets b The balance sheet value of plant assets will more accurately reflect the replacement cost of the assets c Cash will be available at the end of the asset's useful life in order to replace it d Expenses are matched against revenues using a reasonable allocation method

d Expenses are matched against revenues using a reasonable allocation method

Frankford company had $14,000 worth of inventory at the end of 2012. In 2013, the company purchases $120,000 worth of inventory and records Cost of Goods Sold of $93,000. What is the inventory balance at the end of 2013? a $27,000 c. $14,000 b $13,000 d. $41,000 Beginning inventory + purchases-Cogs= ending inventory

d. $41,000 Beginning inventory + purchases-Cogs= ending inventory

Investing Activities:

purchase and sale of resources that provide benefit for several years Purchase equipment

In a periodic inventory system, freight-in costs are expensed in the period incurred. recognized in a temporary freight-in account. recorded directly in the inventory account. recorded only at the end of the period.

recognized in a temporary freight-in account.