Intermediate Accounting One- Final

On July 15 , 2024 , Ortiz & Company signed a contract to provide EverFresh Bakery with an ingredient - weighing system for a price of $ 98,400 . The that fit into EverFresh's automated assembly line , Ortiz's system included finely tuned scales proprietary software modified to allow the weighing system to function in EverFresh's automated system , and a one - year contract to calibrate the equipment and software on an as - needed basis . If Ortiz was to provide these goods or services separately , it would charge $ 67,000 for the scales , $ 10,000 for the software , and $ 23,000 for the calibration contract . Ortiz delivered and installed the equipment and software on August 1 , 2024 , and the calibration service commenced on that date . Assume that the scales , software and calibration service are all separate performance obligations . How much revenue will Ortiz recognize in 2024 for this contract ?

$ 85,198

On June 1, Parson Association sold equipment to Arleo and agreed to accept a 3-month, $55,000, 10% interest-bearing note in payment at a time when the prevailing rate of interest for similar transactions was !0%. When the note was collected upon maturity, Parson would recognize interest revenue of:

$1,375

Pita Pal sells fast - food franchises . Pita Pal receives $ 76,000 from a new franchisee for providing initial training , equipment , and furnishings that together have a stand - alone selling price of $ 76,000 . Pita Pal also receives $ 36,300 per year for use of the Pita Pal name and for ongoing consulting services ( starting on the date the franchise is purchased ) . Rachel became a Pita Pal franchisee on March 1 , 2024 , and on May 1 , 2024 Rachel had completed training and was open for business . How much revenue in 2024 will Pita Pal recognize for its arrangement with Rachel ?

$106,250

Following are transactions of a new company during January: Issued 12,000 shares of common stock for $24,000 cash, purchased land for $14,000 by signing a note payable for the full amount, Purchased office equipment for $3200. Received cash of $16,000 for services provided to customers during the month, Purchased $300 of office supplies on account, Paid employees 12,000 dollars for work during the current period. What is the total amount of liabilities following theses six transactions?

$14,300

A company purchased a piece of equipment by paying $21,000 cash. A shipping cost of $1,200 to get the equipment to its factory was also incurred. The fair value of the equipment was $10,200 at the time of purchase. For what amount should the company record the equipment?

$22,200

A company suffered a fire loss on April 20, 2024. The company's last physical inventory was taken January 30, 2024, at which time the inventory totaled $220,000. Sales from January 30 to April 20 were $600,000 and purchases during that time were $450,000. The company consistently reports a 30% gross profit. The estimated inventory loss is:

$250,000

How much must be invested now at 6% interest to accumulate to $50,000 in ten years?

$27,920

On July 15 , 2024 , Ortiz & Company signed a contract to provide EverFresh Bakery with an ingredient - weighing system for a price of $ 94,800 . The system included finely tuned scales that fit into EverFresh's automated assembly line , Ortiz's proprietary software modified to allow the weighing system to function in EverFresh's automated system , and a one - year contract to calibrate the equipment and software on an as - needed basis . If Ortiz was to provide these goods or services separately , it would charge $ 64,000 for the scales , $ 10,000 for the software , and $ 26,000 for the calibration contract . Ortiz delivered and installed the equipment and software on August 1 , 2024 , and the calibration service commenced on that date . Assume that the scales , software and calibration service are viewed as one performance obligation . How much revenue will Ortiz recognize in 2024 for this contract ?

$94,800

During 2024, a company incurred $5,000,000 in exploration costs for each of 20 oil wells drilled in 2024. Of the 20 wells drilled, 14 were dry holes. The company uses the successful efforts method of accounting. Assuming that none of the oil found is depleted in 2024, what oil exploration expense would the company record for this activity in its 2024 income statement?

70 million

The accounting equation can be stated as:

A - L = SE

In a perpetual average cost system:

A new weighted-average unit cost is calculated each time additional units are purchased.

which of the follow is NOT used why analyzing long-term solvency?

Acid-test ratio

Borrowing cash from the bank would have what effect on the accounting equation?

Assets increase and liabilities increase

which of the following is NOT an indicator that the customer is likely to have control over a good?

Assets warehoused by seller-affiliated third party

The allowance for uncollectible accounts is a:

Contra assets account

The quick ratio is typically computed as:

Current assets minus inventory and prepaid items divided by current liabilities

The current ratio is calculated as current assets divided by:

Current liabilities

Childers Service Company provides services to customers totaling $3,000, for which it billed the customers. How would the transaction be recorded?

Debit Accounts receivable $3,000, credit Service revenue $3,000

On September 3, a privately-owned company exchanged 2,000 shares of its private common stock for equipment. There is no readily available estimate of the stock's fair value. The equipment currently is selling for $80,000. The journal entry to record this transaction includes:

Debit Equipment, $80,000

Research and development costs for projects other than software development should be:

Expensed in the period incurred

In a period when cost are falling and inventory quantities are stable, the lowest taxable income would be reported by using the inventory method of:

FIFO

In a period when costs are rising and inventory quantities are stable, the inventory method that would result in the highest ending inventory is:

FIFO

The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system would be:

FIFO

In the perpetual inventory system, the cost of purchases is debited to:

Inventory

In applying LCM, market cannot be:

Less than net realizable value reduced by an allowance for an approximately normal profit margin.

Which of the following is NOT true about revenue recognition with respects to long-term construction contracts?

Long-term construction contracts typically include multiple performance obligations because of all the different types of goods or services included for each project

In a periodic inventory system, the cost of inventory sold is:

Not recorded at the time goods are sold

The capitalized cost of land EXCLUDES:

Property taxes for the first year owned.

Which of the following is typically true for a bill-and-hold arrangement?

Revenue is recognized at the point in time when the delivery of goods is made

For contracts that include more than one separate performance obligation:

The contract price is allocated to each performance obligation in proportion to the obligations' stand-alone selling prices

Which of the following would be an amount computed using horizontal analysis?

The percentage change in the cash balance from last year to this year

A company does not include in ending inventory any goods that have been shipped to consignees to be sold on consignment The company has a policy of removing those goods from the inventory records at the time of shipment . Which of the following is an accurate statement regarding the company's policy ?

The policy is not correct because the company has title to consignment goods until those goods are sold to a third - party customer

Which of the following is recorded by a credit to accounts receivable?

Write-off of bad debts

The lower of cost or net realize value method for inventory helps to:

avoid reporting inventory at an amount that exceeds the cash it can provide to the company.

The exclusive right to benefit from a creative work, such as a film, is a:

copyright

A journal entry to record receipt of interest on an interest-bearing notes receivable will include a:

credit to interest revenue

An expense account increases with a ___________; a revenue account increases with a __________.

debit; credit

An asset account increases with a _____________; a liability account increases with a ___________.

debit;credit

In a perpetual inventory system, the cost of inventory sold is:

debited to cost of goods sold

A series of equal periodic payments that starts more than one period after the agreement is called a(n):

deferred annuity

Operating cash flows would NOT include:

dividends paid

In accounting for inventory, net realizable value equals:

estimated selling price less any estimated costs of completion, disposal, and transportation.

The statement of cash flows reports cash flows from the activities of:

financing, investing, and operating

George Jones is planning on a cruise for his 70th birthday party. He wants to know how much he should set aside at the beginning of each month at 6% interest to accumulate the sum of $4,800 in five years. He should use a table for the:

future value of an annuity due

In applying LCM, market cannot be:

greater than net realizable value

During periods when costs are rising and inventory quantities are stable, ending inventory will be:

higher under FIFO and LIFO

Ending inventory is equal to the cost of items on hand plus:

items in transit sold f.o.b. destination

A series of equal periodic payments in which the first payment is made one compounding period after the date of the contract is a(n) :

ordinary annuity

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

patent

LeAnn wishes to know how much she should invest now at 7% interest in order to accumulate a sum of $5,000 in four years. She should use a calculation involving the:

present value of a single amount

The value today of receiving an amount in the future is referred to as the:

present value of a single amount

Tammy wants to buy a car that cost $10,000 and wishes to know the amount of the monthly payments, which will be made at the first of the month, with interest of 12% on the unpaid balance. She should use a calculation involving the:

present value of an annuity due

In a periodic inventory system, the cost of purchases is debited to:

purchases

Good will is:

reported as an asset in the balance sheet only when it is purchased in connection with the acquisition of control over another company

Which of the following is most true regarding consignment arrangement?

revenue is recognized upon sale by the consignee to an end customer

Cash flows from investing do NOT include cash flows from:

the purchase of a corporation's own securities

A company uses a periodic inventory system. Beginning inventory on January 1 was understated by $31,000, and its ending inventory on December 31 was understated by $15,900. In addition, a purchase of merchandise costing $21,500 was incorrectly recorded as a $2,150 purchase. None of these errors were discovered until the next year. As a result, cost of goods sold for the current year was:

understated by $34,450

To understand the components of a company's profitability, an analysis may compute the ratio of each major expense classification to total sales. This type of analysis is known as:

vertical analysis