fruit punch accounting

Goodwill can be recorded as an asset when:

A business is purchased and payment is made in excess if the fair value of the net assets

How is the gain (loss) on a plant asset sale calculated?

Asset sale price - Book value on balance sheet

On which financial statement and at what amount are accounts receivable reported?

Balance sheet at the net realizable value

Which statement is true concerning the straight-line method of depreciation?

Depreciation is recognized evenly over the estimated useful life of the asse

Which statement is true concerning the straight-line method of depreciation

Depreciation is recognized evenly over the estimated useful life of the asset

An estimate of how an asset will be used up over its useful life is known as what?

Depreciation rate

Which of the following estimates are required when calculating depreciation expense? 1. Depreciation rate 2.Useful life 3.Expected maintenance costs 4.Salvage value

Depreciation rate Useful life Salvage value

A company that uses LIFO must sell its oldest goods first

False

A low inventory turnover indicates that a firm is able to sell its inventory more quickly.

False

According to GAAP revenue recognition criteria, in order for revenue to be recognized on the income statement, an amount must be either realized, realizable, or earned.

False

Accrual accounting recognizes revenues only when cash is received and expenses only when cash is paid.

False

Companies should recognize inventory as an expense when purchased

False

Companies that have property, plant, and equipment that increase in market value should recognize a gain on the income statement in the period the increase in value occurs.

False

Depreciation is the recognition of the change in market value of a plant asset over time.

False

Depreciation requires only two estimates—useful life and residual value—both of which are specified by GAAP depending on the asset type.

False

Which of the following is an inventory account for manufacturing companies?

Finished goods

On which financial statement would you look to find the total costs of merchandise that remains and the total that has flowed through a company's accounting system?

Income statement and balance sheet

Cash collected on accounts receivable would produce what effect on the balance sheet?

Increase assets and decrease assets

Under which section of a statement of cash flows would the proceeds received from the sale of long-term depreciable assets most likely appear?

Investing cash flows

Assuming rising prices, which method will give the highest dollar value for cost of goods sold on the income statement?

LIFO

Under which method of inventory cost flows is the cost flow assumed to be in the reverse order in which the expenditures were made?

Last-in, first-out

Which of the following is not necessary in calculating the depreciation expense for the first year for a newly purchased factory forklift?

Market value of the forklift during its useful life

How should intangible assets be disclosed on the balance sheet?

Net of the costs already amortized

Doe, Inc. purchased a bulldozer at a cost of $300,000. The bulldozer has an estimated residual value of $20,000 and an estimated life of 10 years, or 15,000 hours of operation. The bulldozer was purchased on January 1, 2020 and was used 500 hours in 2020 and 3,000 hours in 2021.What method of depreciation will produce the maximum depreciation expense in 2021?

Units-of-production

Why must amounts received in advance from customers be deferred?

The company receiving payment has not earned the amount

Under which section of an income statement would the amount of cost allocated to a particular accounting period for long-term depreciable assets most likely appear?

. Selling, general, & administrative

Determine the items above that should be included in inventory

Sales persons wages = No Utilities in store = No Floor supervisor's salary = No Cost of merchandise sold = Yes Cost of packaging and shipping to buyers = No

Underestimating the allowance for uncollectible accounts can shift income from future periods into the present period.

True

Which of the below cases is not an example of potentially misleading reporting?

Recognizing revenue after goods are delivered

A computer retailer has a 30-day return policy. The company can report revenue on the full amount as soon as the merchandise is sold if returns are immaterial.

True

Adjusting unearned revenues causes a liability to decline.

True

Companies using LIFO are required to disclose the amount at which inventory would have been reported had the company used FIFO. The difference between LIFO and FIFO inventories is called the LIFO reserve.

True

In general, in a period of rising prices, FIFO produces higher gross profits than LIFO.

True

In periods of rising prices, companies that use FIFO inventory costing report higher gross profit as a result of inventory holding gains.

True

Income statement effects of uncollectibles occur at the point of estimation, not when an account is written-off.

True

Manufacturing firms typically report three categories of inventory as raw materials, work-in-process, and finished goods.

True

Once amounts are debited to a plant asset account on the balance sheet, the cost is then allocated to an expense on the income statement as that asset is used in operations.

True

One motive of earnings management is a desire to mislead some financial statement users about a company's financial performance in order to gain economic advantage.

True

One purpose of using accelerated depreciation for tax purposes is it reduces income taxes payable in the early years of life of a plant asset.

True

The balance in Allowance for Uncollectible Accounts represents the amount a company thinks it will not collect from a customer.

True