Financial Accounting 101 Final Exam

Tropical Paradise borrows $24,000 and agrees to a 5%, five- year installment loan with the bank. Payments of $452.91 are due at the end of each month. How much interest should be recorded for the first month?

$100.00

Use the information below to calculate net revenues. Service Revenue $100,000 Sales Discounts $2,000 Accounts Receivable $15,000 Sales Allowances $7,000 Cash $18,000

$91,000

The asset's cost less accumulated depreciation is called:

Book value

When cash payments are made to stockholders, what is the effect on the company's accounts?

Cash decreases and dividends increase

On which date would a company record a debit to Dividends and a credit to Dividends Payable?

Date of declaration

The adjusting entry to record supplies used during the period includes a:

Debit to Supplies Expense

Which of the following items would be reported at the bottom of the income statement, just before net income?

Discontinued operations

Which statement best describes when expenses should be recorded?

Expenses are recorded when the cost is used to help produce revenue

Outstanding Stock

Share issued and held by investors

Investing activities:

transactions involving the purchase and sale of resources that are expected to benefit the company for several years

Operating activities:

transactions that relate to the primary operations of the company

Financing activities:

transactions the company has with investors and creditors

How much depreciation should be recorded in the first year for a delivery truck purchased on April 1 with a cost of $30,000, an expected life of five years, and an estimated residual value of $5,000? Assume the straight-line method is used.

$ 3,750

A company has the following inventory transactions: Jan. 1 Beginning inventory. 100 units @ $4 ea Jan. 15 Purchase. 100 units @ $5 ea Jan. 31 Purchase 100 units @ $6 ea What would be the cost of goods sold under the FIFO method if 120 units were sold in January?

$ 500

A company makes a basket purchase of land, buildings, and equipment with estimated fair values of $70,000, $150,000, and $30,000, respectively. The purchase price is $210,000. How much should be recorded to the Land account?

$ 58,800

A company has the following inventory transactions: Jan. 1 Beginning inventory. 100 units @ $4 ea Jan. 15 Purchase. 100 units @ $5 ea Jan. 31 Purchase 100 units @ $6 ea What would be the cost of goods sold under the LIFO method if 120 units were sold in January?

$ 700

How much depreciation should be recorded for the first year for a delivery truck with a cost of $30,000, an expected life of six years, and an estimated residual value of $6,000? Assume the double-declining-balance method is used.

$ 8,000

At the end of the year, a company reports the following inventory amounts ($ per unit): Item # of Units Cost Net Realizable Value A 100 $4 $8 B 150 $8 $6 The amount to report for ending inventory using the lower of cost and net realizable value is:

$1,300

On October 1, a company signs a $10,000, 5%, 6-month note payable. How much interest would be recorded by December 31 of the same year?

$125

A home improvement store sells some merchandise to a customer. The price of the merchandise is $200 and the sales tax rate is 6.5%. How much would be recorded in the sales tax payable account?

$13.00

Equipment was purchased for $50,000. The equipment is expected to be used 15,000 hours over its useful life and then have a residual value of $10,000. In the first two years of operation, the equipment was used 2,700 hours and 3,300 hours, respectively. What is the equipment's accumulated depreciation at the end of the second year using the activity-based method?

$16,000

A company purchased land and building from a seller for $900,000. A separate appraisal reveals the fair value of the land to be $200,000 and the fair value of the building to be $800,000. For what amount would the company record land at the time of purchase?

$180,000

If a company borrowed $20,000 on November 1 at the rate of 6% annually, how much interest expense should be accrued at the year-end date of December 31, assuming no accrual has yet been made this year?

$200

If a company pays an employee $100 per day for a five-day work week that runs from Monday to Friday, and December 31 is a Tuesday, what is the amount of the salaries adjustment, assuming that Friday is payday?

$200

At the beginning of the year, Johnson Supply has inventory of $5,200. During the year, the company purchases an additional $20,000 of inventory. An inventory count at the end of the year reveals remaining inventory of $3,000. What amount will Bennett report for cost of goods sold?

$22,200

Madison Outlet has the following inventory transactions for the year: Date Transaction # of Units Unit Total Cost Cost Jan. 1 Beginning inv 10 $200 $2,000 Mar. 14 Purchase 15 300 4,500 $6,500 Jan. 1 - Dec. 31 Total 12 sales to customers What amount would Madison report for ending inventory using weighted-average cost?

$3,380

Madison Outlet has the following inventory transactions for the year: Date Transaction # of Units Unit Total Cost Cost Jan. 1 Beginning inv 10 $200 $2,000 Mar. 14 Purchase 15 300 4,500 $6,500 Jan. 1 - Dec. 31 Total 12 sales to customers What amount would Madison report for cost of goods sold using LIFO?

$3,600

Madison Outlet has the following inventory transactions for the year: Date Transaction # of Units Unit Total Cost Cost Jan. 1 Beginning inv 10 $200 $2,000 Mar. 14 Purchase 15 300 4,500 $6,500 Jan. 1 - Dec. 31 Total 12 sales to customers What amount would Madison report for ending inventory using FIFO?

$3,900

If the liabilities of a company increased by $55,000 during a month and the stockholders' equity decreased by $21,000 during that same month, did assets increase or decrease and by how much?

$34,000 increase

Finnish Motors has the following balance sheet accounts: Land $150,000 Equipment 90,000 Salaries Payable 12,000 Notes Payable 99,000 Supplies 10,000 Cash 25,000 Common Stock 40,000 Retained Earnings 100,000 Accounts Payable ? Prepaid Rent ? If the company has total assets of $290,000, what is the balance of the company's Accounts Payable account?

$39,000

During its first year of business, Oceanic, Inc. has sales of $300,000 and pays warranty claims of $10,400. Oceanic offers a one-year warranty and anticipates that warranty costs will total 5% of sales. What is the balance in Oceanic's Warranty Liability account at the end of the first year?

$4,600

On October 1, a franchise was purchased for $2,000,000. The franchise agreement is for 10 years. What is the amount of amortization expense by the end of the first year, December 31 (using partial year straight-line amortization)?

$50,000

The Cheese Factory incurred the following costs related to acquiring a new piece of equipment: Cost of the equipment $50,000 Sales tax (8%) 4,000 Shipping 3,000 Installation 2,000 Depreciation during the first month 1,000 Total costs $60,000 What is the total recorded cost of the equipment?

$59,000

On April 1, 20X1, Nelsen Inc. accepts a $100,000, 8% note. The note receivable and interest are due on March 31, 20X2 (one year later). On December 31, 20X1, Nelsen will accrue interest revenue of:

$6,000

Equipment was purchased for $50,000. At that time, the equipment was expected to be used eight years and have a residual value of $10,000. The company uses straight-line depreciation. At the beginning of the third year, the company changed its estimated useful life to a total of six years (four years remaining) and the residual value to $8,000. What is depreciation expense in the third year?

$8,000

Schmidt Company's Accounts Receivable balance is $100,000, its adjusted balance in Allowance for Uncollectible Accounts is $4,000, and its bad debt expense is $3,800. The net amount of accounts receivable is:

$96,000

An adjusting entry would be needed for which of the following transactions?

-Accrued salaries -Services provided but unbilled -Interest accrued on a loan payable

Which of the following statements is true?

-Having too much cash represents idle resources that are not being used to produce revenues -One way to assess cash holdings is to compare cash assets to noncash assets -In recent years cash holdings have increased tremendously

Which financial statement would include a line for net income?

-Income statement -Statement of stockholders' equity

An adjusted trial balance

-Lists all accounts and their balances at a particular date after updating account balances for adjusting entries -Is used to prepare the financial statements -Includes balances for revenues, expenses, and dividends

The Fraud Triangle

-Opportunity -Motivation -Rationalization

Auditors are independent parties that help:

-To ensure management has appropriately prepared the company's financial statements. -Investors and creditors in their decisions by adding credibility to the financial statements.

Sports Unlimited reports net income of $240,000, sales revenue of $24 million, and average assets of $3 million. The profit margin is:

1%.

The expanded accounting equation demonstrates that:

1. Revenues increase retained earnings 2. Expenses decrease retained earnings 3. Dividends decrease retained earnings

Jamble Co. reports cash of $40,000, accounts receivable of $60,000, inventory of $150,000, equipment of $350,000, and current liabilities of $100,000. What is Jamble's acid-test ratio?

1.0

The Sports Zone reports net income of $50,000, net sales of $500,000, and average total assets of $400,000. What is their asset turnover?

1.25 times

The Sports Zone reports net income of $50,000, sales of $500,000, and average assets of $400,000. What is their return on assets?

1.25%

The Sports Zone reports net income of $50,000, net sales of $500,000, and average total assets of $400,000. What is their profit margin?

10%

In what order are the following financial statements prepared: (1) balance sheet, (2) income statement, and (3) statement of stockholders' equity?

2, 3, 1

A company has 1,000 shares of $20 par stock outstanding and issues a 2-for-1 split. How many shares are outstanding after the split?

2,000

Jamble Co. reports cash of $40,000, accounts receivable of $60,000, inventory of $150,000, equipment of $350,000, and current liabilities of $100,000. What is Jamble's current ratio?

2.5

For the year, Sealy Incorporated reports net sales of $50,000, cost of goods sold of $40,000, and an average inventory balance of $5,000. What is Sealy's gross profit ratio?

20%

Net sales are $100,000 and cost of goods sold is $70,000. Inventory balances for the past two years are $10,000 and $20,000. What is the inventory turnover?

4.67 times per year

The Sports Addition reports net sales of $2 million, cost of goods sold of $1 million, operating expenses of $500,000, and other expenses of $100,000. The Company's gross profit ratio is:

50%

At the beginning of 2021, Clay Ventures has total accounts receivable of $100,000. By the end of 2021, Clay reports net credit sales of $900,000 and total accounts receivable of $200,000. What is the receivables turnover ratio for Clay Ventures?

6.0

Sports Unlimited reports net income of $240,000, sales revenue of $24 million, and average total assets of $3 million. The asset turnover is:

8 times.

A company has a profit margin of 10% and reports net sales of $4,000,000 and average total assets of $5,000,000. Calculate the company's return on assets.

8.0%

Papa's Pizza has the following items for the past year: Net sales are $24,128, net income is $2,223, total assets at the beginning of year are $14,898, and total assets at the end of year are $15,465. What is the profit margin?

9.2%

Which of following best describes a merchandising company?

A company that purchases products that are primarily in finished form for resale to customers.

Accumulated depreciation is:

A contra-asset

At the end of the year, a company reports the following inventory amounts ($ per unit): Item # of Units Cost Net Realizable Value A 100 $4 $8 B 150 $8 $6 The year-end adjustment using the lower of cost and net realizable value would include:

A credit to Inventory for $300

Using the allowance method, the entry to record a write-off of accounts receivable will include

A debit to Allowance for Uncollectible Accounts

The entry to record the estimate for uncollectible accounts includes:

A debit to Bad Debt Expense

A company retires a $50 million bond issue before maturity when the carrying value is $48 million, but the market value is $54 million. The company will record:

A loss of $6 million

If a 10-year bond is issued with a stated rate of 9% when the market rate is 8%, the bonds will be issued at ______?

A premium

The effect of writing off a specific account receivable is:

A reduction in the Allowance for Uncollectible Accounts

Which of the following bonds always matures on a single date?

A term bond

A(n) _______________ summarizes all transactions related to a particular item over a period of time

Account

When a company provides services on account, which of the following accounts is debited?

Accounts Receivable

Recording salaries owed to employees that will not be paid by the company until the following accounting period is an example of a(n):

Accrued expense

Which of the following statements is NOT true of the Sarbanes-Oxley Act of 2002?

All companies in the U.S. fall under its provisions

Over the entire service life of an asset, which depreciation method records the highest total depreciation?

All the methods result in the same total depreciation

Which of the following is a characteristic of adjusting entries?

Allows for proper application of the revenue recognition principle (revenues) or expenses recognition.

The resources of a company are referred to as:

Assets

Which relationship is reflected in the balance sheet?

Assets = Liabilities + Stockholders' Equity

What effect does the payment of dividends have on the accounting equation?

Assets decrease and equity decreases

An alternative form of the accounting equation is:

Assets − Liabilities = Stockholders' Equity

An impairment loss is recorded when:

Book value exceeds estimated future cash flows

Which of the following is an example of a cash inflow from investing activities?

Cash received from the sale of equipment.

Which of the following would NOT be considered a cash equivalent?

Certificate of deposit (CD) that matures one year from now

A list of all account names used to record transactions of a company is referred to as the:

Chart of Accounts

Below is the company's Cash T-account. Cash Beg. 1,200 5,200. 3,100 End. 3,300 The $5,200 amount could represent which of the following?

Collection from customers

Which of the following accounts would appear in the credit column of a trial balance?

Common Stock

Under a perpetual inventory system:

Cost of goods sold is recorded with each sale

Which of the following is equivalent to the book value of an asset?

Cost of the asset less the accumulated depreciation

A long-term asset is recorded at the:

Cost of the asset plus all costs necessary to the asset ready for use

Which of the following transactions would increase the balance of the inventory account for a company using the perpetual inventory system?

Costs of incoming freight charges on merchandise inventory

Which of the following is recorded with an adjusting entry associated with a prepaid expense?

Credit an asset

Company A issues 20,000 shares of $5 par common stock at $12.50 per share. The entry to record the issuance would include which of the following?

Credit to Additional Paid-in Capital of$150,000

Credit ALWAYS equals?

Debit

How would an NSF check from a customer be recorded in the accounting records?

Debit Accounts Receivable; Credit Cash

A company has the following aging schedule of its accounts receivable with the estimated percent uncollectible: Age Group Amount Estimated % Receivable Uncollectible Not yet due $175,000 4% 0-60 days past due $40,000 10% 61-120 days past due $10,000 30% More than 120 days past due $5,000 60% Assuming the balance of Allowance for Uncollectible Accounts is $3,000 (credit) before adjustment, which of the following would be recorded in the year-end adjusting entry?

Debit Bad Debt Expense for $14,000

On November 1, 2021, a company receives cash of $6,000 from a customer for services to be provided evenly over the next six months. Deferred revenue is recorded at that time. Which of the following adjusting entries is needed on December 31, 2021?

Debit Deferred Revenue for $2,000; Credit Service Revenue for $2,000

A company owes employee salaries of $5,000 on December 31 for work completed in the current year, but the company doesn't plan to pay those salaries until the following year. What adjusting entry, if any, is needed on December 31?

Debit Salaries Expense for $5,000; Credit Salaries Payable for $5,000

On January 18, a company provides services to a customer for $500 and offers the customer terms 2/10, n/30. Which of the following would be recorded when the customer remits payment on January 25?

Debit Sales Discount for $10

Cooper Law Offices has the following source document from one of its suppliers: Allen Office Supplies Description Quantity. Price per unit Total Legal paper 100 $15 $1,500 Ink cartridge 40 $30 $1,200 ------------------------------------ $2,700 Invoice Number: #127874 Date of purchase: January 17, 2021 Payment due: 30 days from date of purchase What should Cooper record on the date of the purchase?

Debit Supplies; Credit Accounts Payable for $2,700

An increase to an expense account is shown with a ______________. An increase to a revenue account is shown with a ______________.

Debit; Credit

Which of the following ratios best measures financial leverage?

Debt to equity ratio

Which of the following ratios is more useful in evaluating solvency?

Debt to equity ratio.

On December 10, a company pays $500 for advertising to appear on December 20. On which date should the expense be recorded under cash-basis accounting?

December 10

Which of the following would be considered an aggressive accounting practice?

Deciding to remove a loss contingency when the likelihood of an unfavorable decision is probable

Treasury Stock:

Decreases stockholders' equity

How would an NSF check from a customer be treated on a bank reconciliation?

Deduction on the company side

Receiving cash from customers before services are performed results in:

Deferred Revenues

Which of the following items would be found on the "bank side," or the left-hand side, of the bank reconciliation?

Deposits outstanding

Which of the following would be included as an adjustment to net income in the operating activities section of a statement of cash flows using the indirect method?

Depreciation expense

Which of the following correctly describes the nature of depreciation?

Depreciation represents the allocation of the cost of property, plant, and equipment over its service life

Which of the following depreciation methods typically results in the highest depreciation expense during the first year of an asset's life?

Double declining balance method

If an asset is sold at the end of its first year of use, which depreciation method would result in the highest amount of gain (or lowest amount of loss) assuming the asset is used fairly evenly over its life?

Double-declining-balance

The assumption that the assets and liabilities of the business are accounted for on the books of the company but not included in the records of the owner is the:

Economic entity assumption

Which cost flow assumption generally results in the highest reported amount of net income in periods of rising inventory costs?

FIFO

Which inventory method or cost flow assumption most closely resembles the actual physical flow of goods?

FIFO

Fundamental qualitative characteristics of accounting information are:

Faithful representation and relevance

Which of the following items is paid solely by the employer?

Federal and state unemployment taxes

The private sector organization that is currently responsible for setting accounting standards in the United States is the:

Financial Accounting Standards Board

The issuance of a note payable is classified in the statement of cash flows as a(n):

Financing activity.

The payment of cash dividends is classified in the statement of cash flows as a(n):

Financing activity.

The repayment of a note payable is classified in the statement of cash flows as a(n):

Financing activity.

Which of the following inventory accounts consists of items for which the manufacturing process is complete?

Finished Goods

Horizontal analysis examines trends:

For a single company over time

Under the allowance method for uncollectible accounts, the balance of Allowance for Uncollectible Accounts increases when:

Future bad debts are estimated

The body of rules and procedures that guide the measurement and communication of financial accounting information in the United States is known as:

Generally Accepted Accounting Principles (GAAP).

Which of the following intangible assets are not amortized?

Goodwill

After the closing entries are posted to the accounts, all temporary accounts:

Have zero balances

The following statements pertain to recording transactions. Which of them are true? I. Total debits should equal total credits. II. It is possible to have multiple debits or credits in one journal entry. III. Assets are always listed first in journal entries. IV. Some journal entries will have debits only.

I and II.

The revenue recognition principle states that companies typically record revenue:

In the period in which we provide goods and services to customers

Under accrual-basis accounting, companies typically report expenses:

In the same period as the revenue they help to generate

Purchasing office supplies on account will:

Increase assets and increase liabilities

Which of the following items would be added back to net income in the operating activities section of a statement of cash flows (using the indirect method)?

Increase in the balance in accounts payable

Which of the following is a primary advantage of forming a corporation?

Increased ability to raise capital and transfer ownership

Which of the following best describes the primary role of auditors in financial reporting?

Independent party hired by management to express a professional opinion of the extent to which the company's financial reporting is in compliance with generally accepted accounting principles

The PE ratio:

Indicates how a stock is trading relative to its current earnings

Which of the following statements is true?

Interest paid on debt is a tax- deductible expense

Fan Company purchases inventory on account. The entry to record this purchase using a perpetual inventory system would include a debit to:

Inventory

Which of the following is classified as a liquidity ratio?

Inventory turnover ratio.

The purchase of an intangible asset is classified in the statement of cash flows as a(n):

Investing activity.

The sale of an intangible asset for cash is classified in the statement of cash flows as a(n):

Investing activity.

Financing activities include:

Issuing common stock to stockholders

Inventory is defined as

Items a company intends for sale to customers.

During a period of rising prices, which inventory cost flow assumption would result in the highest cost of goods sold, and thereby the lowest net income?

LIFO

Which cost flow assumption must be used for financial reporting if it is also used for tax reporting?

LIFO

Which of the following is an advantage of leasing an asset over purchasing an asset on the installment basis?

Leasing reduces the upfront cash needed to use an asset

What does the word debit mean?

Left side

Creditors' claims to a corporation's resources are referred to as:

Liabilities

We can identify investing activities from additional information and changes in:

Long-term asset accounts.

The two functions of financial accounting are:

Measure and Communicate

If a company uses the allowance method of accounting for uncollectible accounts and writes off a specific account:

Net accounts receivable do not change

On November 15, Meier Company received $3,000 cash from a customer for services that were performed on November 1. On which date should the revenue be recorded under cash-basis accounting?

November 15

Consider the following accounts: Dividends Insurance ExpenseCash Service Revenue How many of these accounts are increased with credits?

One

The cash collected from a customer would be recorded as which type of activity in the statement of cash flows?

Operating Activity

Which of the following sections of a statement of cash flows will be different depending on which method (direct or indirect) is chosen to prepare it?

Operating activities

Which of the following is the correct sequence of presenting the activities in the statement of cash flows?

Operating activities, investing activities, financing activities.

The purchase of inventory for cash is classified in the statement of cash flows as a(n):

Operating activity.

The sale of inventory to a customer for cash is classified in the statement of cash flows as a(n):

Operating activity.

Which level of profitability is considered profit from normal operations?

Operating income

Ambassador Hotels purchases one year of fire insurance coverage on December 1 for $24,000 ($2,000 per month), debiting Prepaid Insurance. On December 31, Ambassador would record the following year-end adjusting entry: a.Insurance Expense 24,000 Prepaid Insurance 24,000 b.Insurance Expense 2,000 Prepaid Insurance 2,000 c.Insurance Expense 22,000 Prepaid Insurance 22,000

Option b

An inventory error that understates the amount of ending inventory will result in which of the following in the current year?

Overstated cost of goods sold

Which of the following items would be categorized as an investing activity on a statement of cash flows?

Paid for the purchase of equipment using cash

An exclusive 20-year right to manufacture a product or to use a process is a:

Patent

Which of the following is an exclusive right to manufacture a product or to use a process?

Patent

Which of the following cash transactions would be included in the financing activities section of a statement of cash flows?

Payment of dividends

Which of the following costs would be expensed?

Performing a tune-up on a delivery truck

Which of the following assumptions indicates that the life of a company can be divided into artificial time periods for periodic reporting?

Periodicity

If a company places cash receipts from the day in a safe or bank deposit box, this would be an example of:

Physical control

Which of the following is a primary advantage of owning preferred stock?

Preference over common stockholders in the distribution of assets in the event of dissolution

Which of the following accounts would be debited when a company pays $12,000 in advance for one year of rent?

Prepaid Rent

Which step in the process of measuring external transactions involves assessing the equality of total debits and total credits for the period?

Prepare a trial balance

Which of the following transactions would result in an account receivable?

Providing services to customers on account

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

Purchase of a building.

Which of the following cash transactions would be included in the investing activities section of a statement of cash flows?

Purchasing a building

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

Receipt of cash from the issuance of common stock.

Which of the following is considered a liquidity ratio?

Receivables turnover ratio

Which of the following is not a characteristic of adjusting entries?

Reduce the balances of revenue, expense, and dividend accounts to zero

Which of the following accounts would appear in a company's income statement?

Rent Expense

Chan Sports purchases one year of rent on November 1 for $12,000 ($1,000 per month), debiting Prepaid Rent. On December 31, Chan Sports would record the following year-end adjusting entry:

Rent Expense 2,000 Prepaid Rent 2,000

Cost of goods sold is:

Reported in the income statement

Which of the following is not recorded as an intangible asset in the balance sheet?

Research and development

The assets of a company represent:

Resources that will be used to benefit the company

Which account would NOT be closed during the closing process?

Retained Earnings

Which of the following accounts would you find on a post-closing trial balance?

Retained Earnings

The amounts recorded when the company sells products or provides services to customers are referred to as:

Revenues

Which of the following is not a balance sheet item?

Revenues

Which of the following is typically considered a current liability?

Salaries payable

Which of the following cash transactions would affect the amount of investing cash flows reported in the statement of cash flows?

Sale of equipment

When using vertical analysis, we express income statement items as a percentage of:

Sales

Which of the following refers to the seller reducing the customer's balance owed because of some deficiency in the company's product or service?

Sales Allowance

Gross profit is defined as:

Sales Revenue - COGS

A multiple-step income statement provides the advantage of:

Separating revenues and expenses based on their different types of activities.

On September 9, Clearmore Services receives a request for services from a customer. The service is scheduled for September 15. On September 15, the service is provided, and the customer pays one week later on September 22. Using accrual-basis accounting, on which date should Clearmore Services record service revenue?

September 15 (date of service)

Issued Stock

Shares actually sold (= Outstanding + Treasury)

Authorized Stock

Shares available to sell (= Issued +Unissued)

Treasury Stock

Shares issued and repurchased by the company

When a company pays employees' salaries for the current period, how will the basic accounting equation be affected?

Stockholders' equity decreases

The current ratio measures

The ability of a company to pay its current obligations.

When a periodic inventory system and the FIFO method are used, which of the following is correct?

The amount of cost of goods sold will be the same under a perpetual system and the FIFO method.

Which of the following would be recorded as an expense under cash-basis accounting?

The company purchases office supplies with cash and does not use the supplies

Which of the following would be recorded as an expense under accrual-basis accounting?

The company uses utilities in the current period but does not pay cash

Which of the following represents the balance of Cost of Goods Sold at the end of the year?

The cost of inventory sold during the year

Which of the following is used to provide a chronological record of all transactions affecting a firm?

The journal

The receivables turnover ratio is a measure of:

The number of times during a year that the average accounts receivable balance is collected

A company's inventory turnover ratio measures:

The number of times the company sells its average inventory balance during the year

Which of the following statements is true for bonds issued at a discount?

The stated interest rate < market rate

How does the stockholders' equity section of the balance sheet differ from the statement of stockholders' equity?

The stockholders' equity section shows the balances at a point in time and the statement of stockholders' equity shows activity over time

Which of the following statements is true with respect to warranty liabilities?

The warranty liability account is debited as actual repairs are made

What would be the effect on total assets if a company purchased land for $200,000 cash?

There would be zero effect on total assets

Which of the following is considered a solvency ratio?

Times interest earned ratio

What is the difference between accrual-basis accounting and cash-basis accounting?

Timing

Everyone in the company has an impact on the operations and effectiveness of internal control, but who must take final responsibility?

Top executives

When using vertical analysis, we express balance sheet items as a percentage of:

Total assets

Which of the following intangible assets would not be subject to amortization?

Trademarks with an indefinite life

Posting is the process of:

Transferring the debit and credit information from the journal to individual accounts in the general ledger

One disadvantage of the corporate form of business is:

double taxation