Overall (1)
assets, dividends, expenses
Accounts that normally have debit balances are:
a contra asset account
Accumulated Depreciation is:
statement of financial position and income statement
Adjusting entries are made to ensure that: - expenses are recognized in the period in which they are incurred. - revenues are recorded in the period in which services are performed. - _________ __ _______ _______ ___ ______ __________ accounts have correct balances at the end of an accounting period.
decrease assets and increase expenses
Adjustments for prepaid expenses:
non‐current assets, current assets, non‐current liabilities, current liabilities.
In a classified statement of financial position, assets and liabilities are usually shown in the following order:
FIFO cost of goods sold
In a perpetual inventory system, ____ ___ __ _____ ____ will be the same as in a periodic inventory system.
debit, debit
In a worksheet using a perpetual inventory system, Inventory is shown in the following columns: adjusted trial balance _____ and statement of financial position ______.
Debit, Credit
In a worksheet, net income is entered in the following columns: - income statement (_____) - statement of financial position (_______).
freight‐in is added to net purchases.
In determining cost of goods sold in a periodic system: - purchase discounts are deducted from net purchases. - freight‐out is added to net purchases. - purchase returns and allowances are deducted from net purchases. - freight‐in is added to net purchases.
121.7 (Carlos' days in inventory = 365/Inventory turnover = 365/[€285,000/(€80,000 + €110,000)/2)] = 121.7 days)
Carlos Cookware had beginning inventory of €80,000, ending inventory of €110,000, cost of goods sold of €285,000, and sales of €475,000. Carlos' days in inventory is:
(Dr) Accounts Receivable 100 (Cr) Service Revenue 100
Cash of €100 received at the time the service was performed was journalized and posted as a debit to Cash €100 and a credit to Accounts Receivable €100. Assuming the incorrect entry is not reversed, the correcting entry is:
auditing, taxation, and management consulting.
Services performed by a public accountant include: - auditing, taxation, and management consulting. - auditing, budgeting, and management consulting. - auditing, budgeting, and cost accounting. - internal auditing, budgeting, and management consulting.
30,000 (COGS = Sales (£150,000) − Gross profit (£150,000 × 30%) = £105,000. Ending inventory = Cost of goods available for sale (£135,000) − COGS (£105,000) = £30,000)
Songbird Records has sales of £150,000 and cost of goods available for sale of £135,000. If the gross profit rate is 30%, the estimated cost of the ending inventory under the gross profit method is:
credited, debited
When a net loss has occurred, Income Summary is _______ and Retained Earnings is _______.
expense recognition principle
The principle or assumption dictating that efforts (expenses) should be recognized in the period in which a company consumes assets or incurs liabilities to generate revenue is the:
Analyzing, Entering, Posting
The process of recording transactions 1) _________ transactions 2) ________ transactions in a journal 3) _______ journal entries
journalize transactions, post to ledger accounts, prepare unadjusted trial balance, journalize and post adjusting entries.
The proper order of the following steps in the accounting cycle is: - prepare unadjusted trial balance, journalize transactions, post to ledger accounts, journalize and post adjusting entries. - journalize transactions, prepare unadjusted trial balance, post to ledger accounts, journalize and post adjusting entries. - journalize transactions, post to ledger accounts, prepare unadjusted trial balance, journalize and post adjusting entries. - prepare unadjusted trial balance, journalize and post adjusting entries, journalize transactions, post to ledger accounts.
(Dr) Supplies (Cr) Accounts Payable
The purchase of supplies on account should result in:
revenue should be recognized in the accounting period in which a performance obligation is satisfied.
The revenue recognition principle states that:
Sale Discounts, Sale Returns and Allowances
The sales accounts that normally have a debit balance are:
an additional adjusting journal entry for inventory may be needed in a merchandising company.
The steps in the accounting cycle for a merchandising company are the same as those in a service company except: - an additional adjusting journal entry for inventory may be needed in a merchandising company. - closing journal entries are not required for a merchandising company. - a post‐closing trial balance is not required for a merchandising company. - an income statement is required for a merchandising company.
proprietorships, partnerships, corporations.
The three types of business entities are
the economic life of a business can be divided into artificial time periods.
The time period assumption states that: - companies must wait until the calendar year is completed to prepare financial statements. - companies use the fiscal year to report financial information. - the economic life of a business can be divided into artificial time periods. - companies record information in the time period in which the events occur.
131,000 ($5,000 (Cash) + $40,000 (Salaries and Wages Expense) + $10,000 (Rent Expense) + $15,000 (Dividends) + $61,000 (Equipment) = $131,000)
The trial balance of Jeong Company had accounts with the following normal balances: Cash $5,000, Service Revenue $85,000, Salaries and Wages Payable $4,000, Salaries and Wages Expense $40,000, Rent Expense $10,000, Share Capital—Ordinary $42,000, Dividends $15,000, and Equipment $61,000. In preparing a trial balance, the total in the debit column is:
(Dr) Supplies 800 (Cr) Supplies Expense 800 (This adjusting entry correctly states the Supplies account at NT$800 (NT$0 + NT$800) and the Supplies Expense account at NT$700 (NT$1,500 − NT$800).)
The trial balance shows Supplies NT$0 and Supplies Expense NT$1,500. If NT$800 of supplies are on hand at the end of the period, the adjusting entry is:
(Dr) supplies expense 750 (Cr) supplies 750
The trial balance shows Supplies €1,350 and Supplies Expense €0. If €600 of supplies are on hand at the end of the period, the adjusting entry is:
113,000 (Under FIFO, ending inventory will consist of 5,000 units from the Nov. 8 purchase and 4,000 units from the June 19 purchase. Therefore, ending inventory is (5,000 × £13) + (4,000 × £12) = £113,000)
Tinker Bell Magic Shop has the following: If Tinker Bell has 9,000 units on hand at December 31, the cost of the ending inventory under FIFO is:
RES, SFP, IS, IS, SFP
Determine where items appear on financial statements. (IS = Income Statement, SFP = Statement of Financial Position, RES = Retained earning statement) - Dividends. - Cash. - Salaries and wages expense. - Service revenue. - Accounts payable.
increased 400,000
During 2020, Xia Lin Company's assets decreased ¥500,000 and its liabilities decreased ¥900,000. Its equity therefore:
recognized revenues
Each of the following is a major type (or category) of adjusting entries except: - prepaid expenses. - accrued revenues. - accrued expenses. - recognized revenues.
Beginning Inventory + Cost of Goods Purchased - Ending Inventory
Equation for Cost of Goods Sold (COGS)
tax, statement of financial position, income statement
Factors that affect the selection of an inventory costing method do include: - ___ effects. - _________ __ ________ ________ effects. - _______ __________ effects.
100,000 (Under LIFO, ending inventory will consist of 8,000 units from the inventory at Jan. 1 and 1,000 units from the June 19 purchase. Therefore, ending inventory is (8,000 × £11) + (1,000 × £12) = £100,000)
If Tinker Bell has 9,000 units on hand at December 31, the cost of the ending inventory under LIFO is:
3,900,000
If beginning inventory is HK$600,000, cost of goods purchased is HK$3,800,000, and ending inventory is HK$500,000, cost of goods sold is:
90,000
If net sales are €400,000, cost of goods sold is €310,000, and operating expenses are €60,000, the gross profit is:
lower net income
In periods of rising prices, average‐cost will produce _____ ___ ______than FIFO.
debit, debit, credit
In the unadjusted trial balance of its worksheet for the year ended December 31, 2020, Kim Company reported Equipment of NT$120,000. The year‐end adjusting entries require an adjustment of NT$15,000 for depreciation expense for the equipment. After the adjusted trial balance is completed, what amount should be shown in the financial statement columns? - A _____ of NT$15,000 for Depreciation Expense in the income statement column. - A _____ of NT$120,000 for Equipment in the statement of financial position column. - A ______ of NT$15,000 for Accumulated Depreciation—Equipment in the statement of financial position column.
book of original entry, chronological record, locate errors
Journal: - It is a ___ __ _______ ______. - It provides a _____________ ______ of transactions. - It helps to ______ _______ because the debit and credit amounts for each entry can be readily compared. - It discloses in one place the complete effect of a transaction.
overstated, properly stated
Lee Athletics overstated its inventory by NT$500,000 at December 31, 2019. It did not correct the error in 2019 or 2020. As a result, Lee's equity was __________ at December 31, 2019, and ________ _______ at December 31, 2020. An ending inventory error in one period will have an equal and opposite effect on cost of goods sold and net income in the next period; after two years, the errors have offset each other.
internal, external, external, external
Management is an ________ user. Taxing authorities are _________ users. Present creditors are _________ users. Regulatory authorities are _________ users.
revenues exceed expenses
Net income will result during a time period when:
more representationally faithful, not relevant
Neutrality is one of the enhancing qualities that makes information ____ _______________ ________, ___ ________.
(Dr) Salaries and Wages Expense 3,800
On December 31, Kohl Company correctly made an adjusting entry to recognize $2,000 of accrued salaries payable. On January 8 of the next year, total salaries of $3,800 were paid. Assuming the correct reversing entry was made on January 1, the entry on January 8 will result in a credit to Cash $3,800 and the following debit(s):
statement of financial position only. (This transaction will cause assets to increase by $900 and liabilities to increase by $900.)
On the last day of the period, Jim Otto Company buys a $900 machine on credit. This transaction will affect the:
decreases assets and decreases liabilities
Payment of an account payable affects the components of the accounting equation in the following way.
receipt of cash and sales revenue, cost of goods sold and reduction of inventory
To record the sale of goods for cash in a perpetual inventory system: two journal entries are necessary: one to record the _______ __ ____ ___ _____ _________, and one to record the ____ __ _____ ____ ___ _______ __ _______.
debited to Inventory
Under a perpetual inventory system, when goods are purchased for resale by a company: purchases on account are ________ __ _________.
overstated, understated
When Lopez Company purchased supplies worth $600, it incorrectly recorded a credit to Supplies for $6,000 and a debit to Cash for $6,000. Before correcting this error: Cash is __________ and Supplies is ___________ = Supplies should have been debited (increasing supplies) and Cash should have been credited (decreasing cash).
debited to Purchases
When goods are purchased for resale by a company using a periodic inventory system: purchases on account are _______ __ ___________.
Cost (Cost is a constraint in financial accounting. The other choices are all enhancing qualities of useful information.)
Which item is a constraint(제약) in financial accounting? - Comparability. - Materiality. - Cost. - Consistency.
Cost of Goods Sold
Which of the following accounts will normally appear in the ledger of a merchandising company that uses a perpetual inventory system?
An employee is terminated.
Which of the following events is not recorded in the accounting records? - Equipment is purchased on account. - An employee is terminated. - A cash investment is made into the business. - The company pays a cash dividend.
Goods held on consignment from another company.
Which of the following should not be included in the physical inventory of a company? (consignment = 위탁판매) - Goods held on consignment from another company. - Goods shipped on consignment to another company. - Goods in transit from another company shipped FOB shipping point. - All of the above should be included.
Decreasing the amount of inventory on hand and increasing sales.
Which of these would cause the inventory turnover to increase the most? - Increasing the amount of inventory on hand. - Keeping the amount of inventory on hand constant but increasing sales. - Keeping the amount of inventory on hand constant but decreasing sales. - Decreasing the amount of inventory on hand and increasing sales.
Permanent (real) accounts
Which types of accounts will appear in the post‐closing trial balance? - Permanent (real) accounts. - Temporary (nominal) accounts. - Accounts shown in the income statement columns of a worksheet. - None of these answer choices is correct.
increase, decrease
Debit _______ assets and _______ liabilities
net sales are greater than operating expenses.
Gross profit will result if:
assets, liabilities, and equity, revenues and expenses
- A statement of cash flows summarizes information about the cash inflows (receipts) and outflows (payments) for a specific period of time. - A statement of financial position reports the _____, __________, ___ ______ at a specific date. - An income statement presents the ________ ___ _______ for a specific period of time. - A retained earnings statement summarizes the changes in retained earnings for a specific period of time.
accounting principles, particular unit of accountability, economic events, economic entities
- Basic assumptions are not the same as _________ __________. - The economic entity assumption states that there should be a _________ ____ __ ___________. - The monetary unit assumption allows accounting to measure _______ ______. - Partnerships are ________ ________.
credit, debit, individual accounting record
- The right side of an account is the ______ side and the left side of an account is the _____ side. - An account is an __________ _________ ______ of increases and decreases in specific asset, liability, and equity items. - There are separate accounts for specific assets, liabilities, and equities.
trial balance
A _____ ________ is a list of accounts with their balances at a given time.
a long-term investment
A company has purchased a tract of land. It expects to build a production plant on the land in approximately 5 years. During the 5 years before construction, the land will be idle. The land should be reported as:
6,860
A credit sale of NT$7,500 is made on June 13, terms 2/10, net/30. A return of NT$500 is granted on June 16. The amount received as payment in full on June 23 is:
collection of the entire group of accounts maintained by a company
A ledger: - contains all account types-asset, liability, and equity accounts. - usually shows accounts in account number order. - is a _________ __ ___ ______ _____ __ _________ __________ __ _ ________.
credits
A revenue account is increased by ______.
a £100 dividend is debited to Dividends for £1,000 and credited to Cash for £100
A trial balance will not balance if: - a correct journal entry is posted twice. - the purchase of supplies on account is debited to Supplies and credited to Cash. - a £100 dividend is debited to Dividends for £1,000 and credited to Cash for £100. - a £450 payment on account is debited to Accounts Payable for £45 and credited to Cash for £45.
overstated, understated. (Because ending inventory is too low, cost of goods sold will be too high (overstated) and since cost of goods sold (an expense) is too high, net income will be too low (understated).)
Atlantis Aquarium's ending inventory is understated NT$122,000. The effects of this error on the current year's cost of goods sold and net income, respectively, are:
have an assets‐and‐revenues‐account relationship.
Adjustments for accrued revenues: - have a liabilities‐and‐revenues‐account relationship. - have an assets‐and‐revenues‐account relationship. - decrease assets and revenues. - decrease liabilities and increase revenues.
decrease liabilities and increase revenues
Adjustments for unearned revenues:
preparing a worksheet.
All of the following are required steps in the accounting cycle except: - journalizing and posting closing entries. - preparing financial statements. - journalizing the transactions. - preparing a worksheet.
Service Revenue
An account that will have a zero balance after closing entries have been journalized and posted is:
(Dr) Salaries and Wages Expense 400 (Cr) Salaries and Wages Payable 400
Anika Winter earned a salary of €400 for the last week of September. She will be paid on October 1. The adjusting entry for Anika's employer at September 30 is: - No entry is required. - (Dr) Salaries and Wages Expense 400 (Cr) Salaries and Wages Payable 400 - (Dr) Salaries and Wages Expense 400 (Cr) Cash 400 - (Dr) Salaries and Wages Payable 400 (Cr) Cash 400
215,000 (The inventory held on consignment by Rogers should be included in Railway's inventory balance at cost (€35,000). The purchased goods of €13,000 should not be included in inventory until January 3 because the goods are shipped FOB destination. Therefore, the correct amount of inventory is €215,000 (€180,000 + €35,000))
As a result of a thorough physical inventory, Railway Ltd. determined that it had inventory worth €180,000 at December 31, 2020. This count did not take into consideration the following facts. Rogers Consignment currently has goods that would cost €35,000 on its sales floor that belong to Railway but are being sold on consignment by Rogers. The selling price of these goods is €50,000. Railway purchased €13,000 of goods that were shipped on December 27, FOB destination, that will be received by Railway on January 3. Determine the correct amount of inventory that Railway should report.
1,500
As of December 31, 2020, Stoneland AG has assets of €3,500 and equity of €2,000. What are the liabilities for Stoneland AG as of December 31, 2020?
11,000
Before posting a payment of €5,000, the Accounts Payable of Green Grocers had a normal balance of €16,000. The balance after posting this transaction was:
cost of goods purchased.
Cost of goods available for sale consists of two elements: beginning inventory and
reverse order
Current assets are listed in the ______ _____ of expected conversion to cash (liquidity).
75,250 (Under the average‐cost method, total cost of goods available for sale needs to be calculated in order to determine average cost per unit. The total cost of goods available is £430,000 = (5,000 × £8) + (15,000 × £10) + (20,000 × £12). The average cost per unit = (£430,000/40,000 total units available for sale) = £10.75. Therefore, ending inventory is (£10.75 × 7,000) = £75,250)
Davidson Electronics has the following: If Davidson has 7,000 units on hand at December 31, the cost of ending inventory under the average‐cost method is:
increase assets and increase equity. (assets and liabilities are not related to each other)
Performing services on account will have the following effects on the components of the basic accounting equation: - increase assets and decrease equity. - increase assets and increase equity. - increase assets and increase liabilities. - increase liabilities and increase equity.
journal entries to ledger accounts
Posting transfers _______ ______ __ ______ _______
16,000 (Under the LCNRV basis, net realizable value is defined as the estimated selling price in the normal course of business, less estimated costs to complete and sell. Therefore, ending inventory would be valued at 200 widgets × HK$80 each = HK$16,000)
Rickety Company purchased 1,000 widgets and has 200 widgets in its ending inventory at a cost of HK$91 each and a net realizable value of HK$80 each. The ending inventory under LCNRV is:
(Dr) Depreciation Expense 1,000 (Cr) Accumulated Depreciation—Equipment 1,000
Rivera Shipping Company computes depreciation on delivery equipment at ¥1,000 (amounts in thousands) for the month of June. The adjusting entry to record this depreciation is as follows. - (Dr) Depreciation Expense 1,000 (Cr) Accumulated Depreciation—Rivera Shipping 1,000 - (Dr) Depreciation Expense 1,000 (Cr) Equipment 1,000 - (Dr) Depreciation Expense 1,000 (Cr) Accumulated Depreciation—Equipment 1,000 - (Dr) Equipment Expense 1,000 (Cr) Accumulated Depreciation—Equipment 1,000
Identification, Recording, Communication
The Accounting Process
worksheet
The __________ is a working tool of the accountant.
performance obligation is satisfied, expenses are incurred
The accrual basis of accounting - Events that change a company's financial statements are recorded in the periods in which the events occur. - Revenue is recognized in the period in which services are performed. - This basis is in accordance with International Financial Reporting Standards. - Revenue is recorded when the ____________ __________ __ ___________, and expense is recorded when _________ ___ ________.
assets, liabilities, share capital—ordinary, dividends, revenues, expenses.
The order of the accounts in the ledger is: - assets, revenues, expenses, liabilities, share capital—ordinary, dividends. - assets, liabilities, share capital—ordinary, dividends, revenues, expenses. - share capital—ordinary, assets, revenues, expenses, liabilities, dividends. - revenues, assets, expenses, liabilities, share capital—ordinary, dividends.
equality of the total debit balances and the total credit balances, provides the primary basis, either debit or credit
The adjusted trial balance: - An adjusted trial balance proves the ________ __ ____ _______ _____ ________ ___ ___ _____ ______ ________ in the ledger after all adjustments are made. - The adjusted trial balance _______ ___ _______ _____ for the preparation of financial statements. - The adjusted trial balance lists the account balances segregated by the balance in the account - _____ ____ __ ______. - The adjusted trial balance is prepared after the adjusting entries have been journalized and posted.
Revenues, Expenses, Income Summary, Dividends
The closing process involves separate entries to close (1) expenses, (2) dividends, (3) revenues, and (4) income summary. The correct sequencing of the entries is:
prepaid insurance, inventory, accounts receivable, cash.
The correct order of presentation in a classified statement of financial position for the following current assets is: - accounts receivable, cash, prepaid insurance, inventory. - prepaid insurance, inventory, accounts receivable, cash. - cash, accounts receivable, inventory, prepaid insurance. - inventory, cash, accounts receivable, prepaid insurance.
Net Sales - Cost of goods sold
The equation for Gross Profit
Cost of Goods Sold / Average Inventory
The equation for Inventory Turnover
Liabilities + Share Capital + Retained Earnings + Revenues − Expenses − Dividends
The expanded accounting equation is: Assets =
statement of financial position
The financial statement that reports assets, liabilities, and equity is the:
assets should be recorded at their cost
The historical cost principle states that:
investing activities section. (An investing activities section appears on the statement of cash flows)
The income statement for a merchandising company shows each of the following features except: - gross profit. - cost of goods sold. - a sales section. - investing activities section.