Parto 5?

Assuming a 360-day year, the interest charged by the bank, at the rate of 6%, on a 90-day, discounted note payable of $100,000 is

$1,500

On June 1, Scotter Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years or 30,000 hours. ​ Using straight-line depreciation, calculate depreciation expense for the first year

$17,500

A machine was purchased for $35,500, having a useful life of 10 years, and a residual value of $6,000. Compute the annual depreciation expense using the straight-line method.

$2,950

Paleota Company purchased a patent from Finise for $234,000. At the time of purchase, the patent had a remaining useful life of 10 years. Determine the patent amortization expense for the first year.

$23,400

Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 3% of net credit sales will be uncollectible. On January 1, the Allowance for Doubtful Accounts had a credit balance of $2,400. During the year, Abbott wrote off accounts receivable totaling $1,800 and made credit sales of $100,000. There were no sales returns or sales discounts during the year. After the adjusting entry, the December 31, balance in the Bad Debt Expense will be

$3,000

Wright Company sells merchandise with a one-year warranty. This year, sales consisted of 2,000 units. It is estimated that warranty repairs will average $15 per unit sold, and 30% of the repairs will be made this year and 70% next year. In this year's income statement, Wright should show warranty expense of

$30,000

A corporation has 50,000 shares of $100 par value stock outstanding that has a current market value of $180. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately:

$45

Chang Co. issued a $50,000, 120-day, discounted note to Guarantee Bank. The discount rate is 6%. Assuming a 360-day year, the cash proceeds to Chang Co. are

$49,000

An equipment was purchased for $30,000. It has a useful life of 5 years, and a residual value of $4,000. Compute the depreciation expense for the second year using the double-declining-balance method.

$7,200

A fixed asset with a cost of $15,000 and accumulated depreciation of $12,500 is sold for $1,750. What is the amount of gain or loss on disposal of the fixed asset?

$750 loss

On March 15, Silver Co. issued a $80,000, 5%, 90-day note payable to Gold Co. How much will Silver Co. have to pay at maturity? (Assume 360 days in a year)

$81,000

A 60-day, 10% note for $9,000, dated April 15, is received from a customer on account. The face value of the note is...

$9,000

If $1,000,000 of 10% bonds are issued at 98, the amount of cash received from the sale is:

$980,000.

Double Declining Balance

1/ #yrs * 2 = Rate

Vivi Corporation's earnings per share of common stock was $1.50 and a market price of $33.50, calculate the price earnings ratio.

22.3

Orange Inc. had 300,000 shares of $150 par value common stock outstanding at the beginning of the year. During the year, the company issued a 3-for-1 stock split. What is the number of shares outstanding after the split?

900,000 shares

A company purchased an oil well for $25 million with a residual value of $500,000. It is estimated that 10 million barrels can be extracted from the well. Determine depletion expense assuming 3 million barrels are extracted and sold. a.$7,350,000 b.$7,500,000 c.$5,000,000 d.$7,650,000

A

A company sold office furniture costing $16,500 with accumulated depreciation of $14,000 for $1,800 cash. The entry to record the sale would include a.a loss for $700. b.an increase in accumulated depreciation for $14,000. c.a decrease in office furniture for $2,500. d.a decrease in cash for $1,800.

A

Computer equipment was acquired at the beginning of the year at a cost of $56,000 with an estimated residual value of $5,000 and an estimated useful life of 5 years. Determine the second year's depreciation using straight-line depreciation. a.$10,200 b.$22,400 c.$11,200 d.$12,200

A

If a capital expenditure is treated as a revenue expenditure, then a.expenses are overstated and owners' equity is understated. b.expenses are overstated and assets are overstated. c.expenses are understated and owners' equity is overstated. d.net income is overstated and owners' equity is understated.

A

If a fixed asset with an original cost of $18,000 and accumulated depreciation of $2,000 is sold for $15,000, the company must a.recognize a loss on the income statement under other expenses. b.recognize a loss on the income statement under operating expenses. c.recognize a gain on the income statement under other revenues. d.Gains and losses are not to be recognized upon the sell of fixed assets

A

In a normal arm's-length business transaction, long-term liabilities are often secured by a. fixed assets b. signature of the chief executive officer c. accounts receivable d. bonds payable

A

The most widely used depreciation method is a. straight-line b. sum-of-the-years-digits c. declining-balance d. units-of-production

A

The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called a.depletion. b.deferral. c.amortization. d.depreciation.

A

The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called a. depletion b. deferral c. amortization d. depreciation

A

The removal of an old building to make the land ready for its intended use is charged to a.land. b.land improvements. c.buildings. d.operating expenses.

A

The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangible assets is a. amortization b. depletion c. depreciation d. allocation

A

To measure depreciation, all of the following must be known EXCEPT a.market value. b.residual value. c.historical cost. d.estimated life.

A

When a company discards machinery that is fully depreciated, this transaction would be recorded with the following entry a. debit Accumulated Depreciation; credit Machinery b. debit Machinery; credit Accumulated Depreciation c. debit Cash; credit Accumulated Depreciation d. debit Depreciation Expense; credit Accumulated Depreciation

A

When a company sells machinery at a price equal to its book value, this transaction would be recorded with an entry that would include the following: a. debit Cash and Accumulated Depreciation; credit Machinery b. debit Machinery; credit Cash and Accumulated Depreciation c. debit Cash and Machinery; credit Accumulated Depreciation d. debit Cash and Depreciation Expense; credit Accumulated Depreciation

A

Which method of depreciation considers residual value in computing the normal periodic depreciation? a.Straight-line b.MACRS c.Double-declining-balance d.All of these

A

Which of the following is NOT characteristic of the accumulated depreciation account? a.Accumulated depreciation represents cash reserved for asset replacement. b.Accumulated depreciation is a contra-asset account. c.Accumulated depreciation may be disclosed in the notes to the financial statements. d.All of these are characteristic of the accumulated depreciation account.

A

Which of the following is included in the cost of constructing a building? a. insurance costs during construction b. cost of paving parking lot c. cost of repairing vandalism damage during construction d. cost of removing the demolished building existing on the land when it was purchased

A

Which of the following businesses is most likely to use a job order costing system?

A swimming pool installer

The operating expense recorded from uncollectible receivables can be called all of the following except​

Accounts Receivable

Which of the following is a characteristic of accumulated depreciation account?

Accumulated depreciation is reported on the balance sheet as a deduction from the cost of the asset.

Which of the following would be a period costs for a textbooks printing company?

Advertising expenses

capital leases or operating leases

All leases are classified as either capital leases or long-term leases capital leases or operating leases operating leases or current leases long-term leases or current leases

A capital expenditure results in a debit to:

An asset account.

A capital expenditure would appear on the a.income statement under operating expenses. b.balance sheet under fixed assets. c.balance sheet under current assets. d.income statement under other expenses.

B

A characteristic of a fixed asset is that it is a. intangible b. used in the operations of a business c. held for sale in the ordinary course of the business d. none of the above

B

A fixed asset with a cost of $30,000 and accumulated depreciation of $25,000 is sold for $3,500. What is the amount of the gain or loss on disposal of the fixed asset? a.$2,500 loss b.$1,500 loss c.$2,500 gain d.$1,500 gain

B

A fixed asset's estimated value at the time it is to be retired from service is called a. book value b. residual value c. market value d. carrying value

B

A fully depreciated asset must be a.removed from the books. b.kept on the books until sold or discarded. c.disclosed only in the notes to the financial statements. d.recognized on the income statement as a loss.

B

A gain is recorded on the sale of fixed assets when a.the asset is sold for a price less than its book value. b.the asset's book value is less than the cash received. c.accumulated depreciation is less than the cash received. d.None of the above.

B

All leases are classified as either a. capital leases or long-term leases b. capital leases or operating leases c. operating leases or current leases d. long-term leases or current leases

B

Factors contributing to a decline in the usefulness of a fixed asset may be divided into the following two categories a. salvage and functional b. physical and functional c. residual and salvage d. functional and residual

B

In a lease contract, the party who legally owns the asset is the a. lessee b. lessor c. operator d. banker

B

Recording depreciation a.decreases net income and cash flows. b.decreases net income and has no effect on cash flows. c.decreases net income, assets, and cash flows. d.decreases net income and has no effect on assets and cash flows.

B

When a company replaces a component of property, plant and equipment, which statement below does not account for one of the steps to this process? a. book value of the replaced component is written off to depreciation expense b. the asset cost of the replaced component is credited c. any cost to remove the old component is charged to expense d. the identifiable direct costs associated with the new component are capitalized

B

Which of the following is included in the cost of land? a. cost of paving a parking lot b. brokerage commission c. outdoor parking lot lighting attached to the land d. fences on the land

B

Which of the following ratios provides a solvency measure that shows the margin of safety of noteholders or bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis? a. ratio of net sales to assets b. ratio of fixed assets to long-term liabilities c. number of days' sales in receivables d. rate earned on owners' equity

B

Which one of the following is not an internal control procedure for fixed assets? a. limiting access to computers b. allowing the sole user of an asset to determine when it is time to dispose of it c. requiring competitive bids for asset purchases d. purchasing assets only from approved vendors

B

Which of the following accounts is reported in the noncurrent liabilities section of the corporate balance sheet?

Bonds Payable

Which of the following is the effect of impaired goodwill on liquidity and profitability metrics?

Both profitability and liquidity will remain unaffected.

Depreciable cost equals a.cost less accumulated depreciation. b.book value less residual value. c.cost less residual value. d.market value less residual value.

C

If a fixed asset is sold and the book value is less than cash received, the company must a.recognize a loss on the income statement under other expenses. b.recognize a loss on the income statement under operating expenses. c.recognize a gain on the income statement under other revenues. d.Gains and losses are not to be recognized upon the sell of fixed assets.

C

If a revenue expenditure is treated as a capital expenditure, then a.expenses are overstated and owners' equity is understated. b.expenses are overstated and assets are overstated. c.expenses are understated and owners' equity is overstated. d.net income is overstated and owners' equity is understated.

C

In acquiring costs for property, plant and equipment, which stage below is associated with revenue expenditures? a. Acquisition stage b. in-service stage c. preliminary stage d. preacquisition stage

C

Intangible assets are used in operations but a.cannot be specifically identified. b.cannot be sold. c.lack physical substance. d.cannot be long-lived.

C

Land acquired so it can be resold in the future is listed in the balance sheet as a(n) a. fixed asset b. current asset c. investment d. intangible asset

C

The accounting term depreciation measures a.an asset's market value decline. b.the amount of cash a company sets aside for asset replacement. c.the amount of asset cost allocated to expense over periods benefited. d.anticipated losses if sold in the used market.

C

The cost of a patent should be amortized a.over 20 years. b.over its economic life. c.over 20 years or its economic life, whichever is shorter. d.only if an impairment occurs.

C

The depreciation method that does not use residual value in calculating the first year's depreciation expense is a. straight-line b. units-of-production c. declining-balance d. none of the above

C

The exclusive right to use a certain name or symbol is called a a.franchise. b.patent. c.trademark. d.copyright.

C

The exclusive right to use a certain name or symbol is called a a. franchise b. patent c. trademark d. copyright

C

The journal entry for recording an operating lease payment would a. be a memo entry only b. debit the fixed asset and credit Cash c. debit an expense and credit Cash d. debit a liability and credit Cash

C

When the amount of use of a fixed asset varies from year to year, the method of determining depreciation expense that best matches allocation of cost with revenue is a. declining-balance b. straight-line c. units-of-production d. MACRS

C

Which intangible assets are amortized over their useful life? a.Trademarks b.Goodwill c.Patents d.All of these

C

Which intangible assets are amortized over their useful life? a. trademarks b. goodwill c. patents d. all of the above

C

Which of the following below is an example of a capital expenditure? a. cleaning the carpet in the front room b. tune-up for a company truck c. replacing an engine in a company car d. replacing all burned-out light bulbs in the factory

C

Which of the following is NOT a fixed asset? a.Equipment b.Buildings c.Land held for investment d.All of these are fixed assets.

C

Which of the following is an example of a capital expenditure? a.Cleaning the carpet in the front room b.Tune-up for a company truck c.Replacing an engine in a company car d.Replacing all burned-out light bulbs in the factory

C

For the perpetual inventory system, which of the following effects does not occur upon the return from a customer of merchandise sold on account?

C. Increases Purchase Returns and Allowances and decreases Merchandise Inventory

Expenditures that add to the utility of fixed assets for more than one accounting period are

Capital expenditures.

_____ liabilities may arise from past transactions if certain events occur in the future.

Contingent

Unit of Productions

Cost + Residual Value % Hours = Rate per hr

Straight Value

Cost + Residual Value % years = Rate per hour

Which of the following information is provided by job cost sheets?

Cost impact of materials changes

The recording of the jobs shipped and customers billed would increase:

Cost of Goods Sold.

Which of the following is an example of direct materials cost for an automobile manufacturer?

Cost of interior upholstery

A company sold a delivery truck for $18,000 cash. The truck cost $47,500 and had accumulated depreciation of $36,000 as of the date of sale. The entry to record the sale would include a.an increase in accumulated depreciation for $36,000. b.a decrease in delivery truck for $11,500. c.a loss for $6,500. d.a gain for $6,500.

D

A machine was purchased for $60,000. It has a useful life of 5 years and a residual value of $6,000. Under the straight-line method, what is annual depreciation expense? a.$13,200 b.$12,000 c.$11,000 d.$10,800

D

A new machine with a purchase price of $94,000, with transportation costs of $8,000, installation costs of $6,000, and special acquisition fees of $2,000, would have a cost basis of a. $ 96,000 b. $108,000 c. $102,000 d. $110,000

D

All amounts paid to get an asset in place and ready for use are referred to as a.capital expenditures. b.revenue expenditures. c.residual value. d.cost of an asset.

D

All of the following below are needed for the calculation of depreciation except a. cost b. residual value c. estimated life d. book value

D

All things being equal except the ratio of fixed assets to long-term liabilities, a lender would prefer to lend to a company whose ratio is a. 1.0 b. 2.0 c. 3.0 d. 3.5

D

Book value is defined as a.current market value less residual value. b.cost less residual value. c.current market value less accumulated depreciation. d.cost less accumulated depreciation.

D

Equipment was purchased for $30,000. It has a useful life of 5 years and a residual value of $4,000. What is depreciation expense for year two under the double-declining-balance method? a.$5,200 b.$6,000 c.$6,240 d.$7,200

D

Expenditures that add to the utility of fixed assets for more than one accounting period are a.committed expenditures. b.revenue expenditures. c.current expenditures. d.capital expenditures.

D

Expenditures that add to the utility of fixed assets for more than one accounting period are a. committed expenditures b. revenue expenditures c. current expenditures d. capital expenditures

D

Land improvements include a.fences. b.trees and shrubs. c.outdoor lighting. d.All of the above.

D

NBC Company purchased a patent from ABC for $144,000. At the time of purchase the patent had been in existence for 10 years. What is the first year's amortization? a.$7,200 b.$18,000 c.$12,000 d.$14,400

D

On September 1, a machine with a useful life of 8 years and a residual value of $3,000 was purchased for $47,000. What is depreciation expense in the year of purchase under straight-line depreciation assuming a December 31 year-end? a.$3,917 b.$3,667 c.$1,958 d.$1,833

D

Other descriptive titles for fixed assets would include a.plant assets. b.property, plant, and equipment. c.other long-term assets d.`both plant assets and property, plant, and equipment.

D

Salvage value has a similar meaning as a.residual value. b.scrap value. c.book value. d.both residual value and scrap value.

D

The Drilling Company purchased a mining site for $500,000 on July 1, 2010. The company expects to mine ore for the next 10 years and anticipates that a total of 100,000 tons will be recovered. The estimated residual value of the property is $80,000. During 2010 the company extracted 6,500 tons of ore. The depletion expense for 2010 is a.$37,700. b.$42,000. c.$32,500. d.$27,300.

D

The accumulated depletion account is a. an expense account b. an intangible asset account c. reported on the income statement as other expense d. reported on the balance sheet as a deduction from the cost of the mineral deposit

D

The costs incurred for property, plant and equipment can be classified into four stages. Which item below is not one of those stages? a. in-service stage b. preliminary stage c. preacquisition stage d. use stage

D

What type of depreciation occurs when an asset can no longer provide services at the level originally intended? a.Physical depreciation b.Market depreciation c.Cost depreciation d.Functional depreciation

D

When a company exchanges machinery and receives a trade-in allowance less than the book value, this transaction would be recorded with the following entry: a. debit Machinery and Accumulated Depreciation; credit Machinery and Cash b. debit Cash and Machinery; credit Accumulated Depreciation c. debit Cash and Machinery; credit Accumulated Depreciation and Machinery d. debit Machinery, Accumulated Depreciation, and Loss on Disposal; credit Machinery and Cash

D

Which of the following is NOT an intangible asset? a.Goodwill b.Trademark c.Copyrights d.Long-term receivable

D

Which of the following should be included in the acquisition cost of a piece of equipment? a.Transportation costs b.Installation costs c.Testing costs prior to placing the equipment into production d.All of these

D

Which of the following should be included in the acquisition cost of a piece of equipment? a. transportation costs b. installation costs c. testing costs prior to placing the equipment into production d. all of the above

D

Which of the following is a product cost?

Direct labor cost

Predetermined Factory Overhead Rate is calculated as:

Estimated Total Factory Overhead Costs ÷ Estimated Activity Base.

estimated at the time that the asset is placed in service.

Expected useful life is... calculated when the asset is sold. estimated at the time that the asset is placed in service determined each year that the depreciation calculation is made. none of the answers correct

Amortization refers to systematic periodic transfer of the cost of a fixed asset to an expense account. a. True b. False

False

The difference between a fixed asset's initial cost and its current market value is called the asset's depreciable cost. a. True b. False

False

The estimated amount that an asset can be sold for at the end of its useful life is called its book value. a. True b. False

False

The inventory turnover measures how efficiently a company is using its operating assets to generate sales. a. True b. False

False

The issuance of common stock affects both paid-in capital and retained earnings. a. True b. False

False

The primary purpose of a stock split is to reduce the number of shares outstanding in order to encourage more investors to enter the market for the company's shares. a. True b. False

False

_____ occurs due to obsolescence that causes an asset to no longer provide services for which it was intended

Functional depreciation

Which of the following should be included in the acquisition cost of a piece of equipment?

Installation costs

Land acquired so it can be resold in the future is listed in the balance sheet as a(n)

Investment

Accumulated Depreciation

Is a contra asset account.

What does residual value mean?

It is an estimate. It is the amounts something is worth after it's been depreciated.

Which of the following best explains a job order cost system?

It is often used by companies that manufacture custom products for customers or batches of similar products.

Which of the following is true of a direct materials cost?

It is the cost of any material that is an integral part of the finished product.

Which of the following is the subsidiary ledger for work-in-process?

Job cost sheets

Which of the following are the two main types of cost accounting systems for manufacturing operations?

Job order cost and process cost systems

Which of the following is true of job order cost systems?

Job order cost systems are often used by companies that manufacture custom products for customers or batches of similar products.

In which of the following cost accounting systems are perpetual inventory records maintained for materials, work-inprocess, and finished goods inventories?

Job order costing

Which of the following is not an intangible asset?

Long-term receivable

Which of the following businesses is most likely to use process cost accounting system?

Lumber mill

Which of the following statements is true of managerial accounting?

Managerial accounting is primarily concerned with generating information for use by managers.

..............= face interest + maturity

Maturity Value

Accounts receivable are reported on the balance sheet at their:

Net Realizable Value

Which of the following manufacturing costs is an indirect cost of producing a product?

Oil lubricants used for factory machinery

Loss of $30,000

On December 31, Strike Company has decided to sell one of it balling cages. The inital cost of the equipment was $310,000 with an accumulated depreciation of $260,000. Depreciation has been taken up to the end of the year. The company found a company that is willing to buy the equipment for $20,000. What is the amount of the gain or loss on this transaction? Gain of $20,000 Loss of $30,000 No gain or loss Cannot be determined

Where is interest expense listed on the income statement?

Other expense section

Which of the following intangible assets are amortized over their useful life?

Patents

d

QN=1 75 A company must record its expenses incurred to generate the revenue reported. It is about: a. Going-Concern Assumption b. Business Entity Assumption c. Time Period Assumption d. Matching Principle e. Cost Principle

b

QN=106 Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues are all examples of: a. Items that require contra accounts. b. Items that require adjusting entries. c. Asset and equity. d. Asset accounts. e. Income statement accounts.

c

QN=108 An adjusting entry could be made for each of the following except: a. Prepaid expenses. b. Depreciation. c. Owner withdrawals. d. Unearned revenues. e. Accrued revenues.

e

QN=109 An adjusting entry could be made for each of the following except: a. Prepaid expenses. b. Depreciation. c. Supplies d. Unearned revenues. e. Owner capital

Which of the following transactions decreases the profitability of a company?

Recording payroll tax expense

Which of the following below is an example of a capital expenditure?

Replacing an engine in a company car

Which of the following is an example of a capital expenditure?

Replacing an engine in a company car

A fixed asset's estimated value at the time it is to be retired from service is called

Residual value.

On May 18, Rodriguez Co. issued an $84,000, 6%, 120-day note payable on an overdue account payable to Wilson Company. Assume that the fiscal year of Rodriguez ends on June 30. Which of the following relationships is true?

Rodriguez is the borrower and debits Accounts Payable

Which of the following is most likely a period cost?

Salary of telephone receptionist in the sales office

Which of the following is a period cost?

Sales commissions

Which of the following expenditures would be included in the cost of a fixed asset?

Sales taxes

The FICA tax withheld from employees contributes to:

Social Security and Medicare.

Which of the following would be classified as direct materials for an auto manufacturer?

Steel

Which of the following is necessary for a corporation to pay cash dividends?

Sufficient retained earnings

a loss of $1,500

The Bacon Company acquired new machinery with a price of $15,200 by trading in similar old machinery and paying $12,700. The old machinery orginially cost $9,000 and had accumulated depreciation of $5,000. In recording the transaction, Bacon Company should record the new machinery at $16,700 the new machinery at $12,700 a gain of $1,500 a loss of $1,500

reported on the balance sheet as a deduction from the cost of the mineral deposit

The accumulated depletion account is.. an expense account an intangible asset account reported on the income statement as other expense reported on the balance sheet as a deduction from the cost of the mineral deposit

When does an account become uncollectible?

There is no general rule for when an account becomes uncollectible

Which of the following statement is true about intangible assets?

They are not held for resale

Why does the IRS require the direct write off method?

They prefer to see the tax deduction for bad debt expense only when an account receivable is actually written of

What does this mean........ the accounts receivable will be presented on the balance sheet with a reduction called the allowance for doubtful accounts.

This means the net amount of the accounts receivable will be lower and closer to the amount that will actually be collected

Which of the following is a reason to undergo a reverse stock split?

To increase the market value of the stock per share

A 10% stock dividend will increase the book value per share. a. True b. False

True

For proper matching of revenues and expenses, the estimated cost of fringe benefits must be recognized as an expense of the period during which the employee earns the benefits.

True.

Which of the following will be classified as a current liability?

Unearned rent

All of the following below are needed for the calculation of straight-line depreciation except

Units produced

debit Cash and Accumulated Depreciation; credit Machinery

When a company sells machinery at a price equal to its book value, this transaction would be recorded with an entry that would include the following: debit Cash and Accumulated Depreciation; credit Machinery debit Machinery; credit Cash and Accumulated Depreciation

A summary of the materials requisitions completed during a period serves as the basis for transferring the cost of the materials from the Materials account to:

Work-in-Process and Factory Overhead.

The recording of the jobs completed would decrease:

Work-in-Process.

A patent was purchased for $585,000 with a legal life of 20 years. Management estimates that the patent has a 12-year economic life. The entry to record amortization would include:

a decrease in patent for $48,750.

When the contract rate of interest on bonds is less than the market rate of interest, the bonds sell at:

a discount.

A company sold a delivery truck for $22,000 cash. The truck costs $45,800 and had accumulated depreciation of $32,000 as of the date of sale. The entry to record the sale would include:

a gain for $8,200.

A company sold office furniture costing $15,800 with accumulated depreciation of $13,000 for $1,500 cash. The entry to record the sale would include:

a loss for $1300.

When the contract rate of interest on bonds is higher than the market rate of interest, the bonds sell at:

a premium.

A computer equipment was acquired at the beginning of the year at a cost of $56,000 with an estimated residual value of $5,000, and an estimated useful life of 5 years. Determine the second year's depreciation expense using the straight-line method.

a. $10,200

What type of account is Allowance for Doubtful Accounts?

a. Contra asset account

Which of the following statements is a correct representation of the effect of the reinstatement of an accounts receivable account previously written off?

a. Days' sales in receivables increases by the reinstatement of the account.

Which of the following is an accrued expense? a. Rent owed but not yet paid b. Accumulated depreciation c. Inventory in process d. A prepaid advertising expense

a. Rent owed but not yet paid

Which method of depreciation considers residual value in computing the normal periodic depreciation?

a. Straight-line

Which of the following is true of the perpetual inventory system?

a. The amount of merchandise available for sale is continuously updated in the inventory records.

Taxes receivable is classified as:

a. other receivable.

​The process of transferring the cost of an asset to an expense account is called all of the following except

allocation

In accounting for uncollectible receivables, the balance in Allowance for Doubtful Accounts will directly impact the amount of the adjustment when applying which method?

analysis of receivables method

Notes Receivable

are reported at their net realizable value.

Fixed assets are ordinarily presented on the balance sheet:

at its cost less accumulated depreciation.

Direct materials, work-in-process, and finished goods inventory are most likely to be reported on the balance sheet of a(n):

automobile company.

Goodwill is a.amortized similar to other intangibles. b.only written down if an impairment in value occurs. c.charged to expense immediately. d.amortized over 40 years or its economic life, whichever is shorter.

b

The method of determining depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is a. units-of-production b. declining-balance c. straight-line d. time-valuation

b

An employee receives an hourly rate of $30, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $300; cumulative earnings for year prior to current week, $90,700; social security tax rate, 6.0% on maximum of $106,800; and Medicare tax rate, 1.5% on all earnings. What is the net pay for the employee?

b. $1,059.75

Merchandise is ordered on November 12; the merchandise is shipped by the seller and the invoice is prepared, dated, and mailed by the seller on November 15; the merchandise is received by the buyer on November 17; the transaction is recorded in the buyer's accounts on November 18. The credit period begins with what date?

b. November 15

Which of the following is included in the cost of land?

brokerage commission

A 90-day, 8% note for $10,000 dated May 1 is received from a customer on account. The maturity value of the note is (Assume 360 days in a year):

c. $10,200.

Allowance for Doubtful Accounts has an unadjusted balance of $400 at the end of the year, and uncollectible accounts expense is estimated at 1% of net sales. If net sales are $300,000, compute the amount of the adjustment to record the provision for doubtful accounts.

c. $3,000.

During a period of consistently rising prices, the method of inventory costing that will result in reporting the greatest cost of merchandise sold is:

c. LIFO.

_____ is reported as a current asset on balance sheet.

c. Merchandise inventory

The presentation of net accounts receivable on the balance sheet will be most accurate under the:

c. estimate based on analysis of receivables.

What is the definition of depreciable cost

cost + residual value

The book value of an asset is computed as the asset's:

cost less accumulated depreciation.

Depreciable cost is computed as:

cost less residual value

Costs are often classified by their relationship to a segment of operations, called a _____.

cost object

To measure depreciation, which of the following must be known

cost of asset.

When a job is completed and the client is billed, the costs are transferred to an account called the _____.

cost of services account

Research and development costs incurred for developing patents are recorded as:

current operating expenses.

A 90-day, 10% note for $10,000 dated March 15 is received from a customer on account. The face value of the note is:

d. $10,000.

Surist, Inc. purchased merchandise for $300,000, received credit for purchase returns of $20,000, availed purchase discounts of $5,000, and paid transportation in of $12,000. Refer to Surist, Inc. If Surist, Inc. had $30,000 in beginning inventory, and sold goods costing $180,000, what is the ending inventory balance?

d. $137,000

At the end of the current year, Jackson Inc. has an Accounts Receivable balance of $200,000 and Allowance for Doubtful Accounts has a negative balance of $(60,000). What is the net realizable value of the receivables?

d. $140,000

On January 1, a company made a sale of $87,500, on credit. If the credit terms were 2/10, n/30, what would be the amount of the sales discount be if the payment is received on January 9?

d. $1750

Recording depreciation:

decreases net income but has no effect on cash flows

The cost of wages paid to employees directly involved in the manufacturing process of converting materials into finished product is classified as:

direct labor cost.

Increase in the Work-in-Process account occur when:

direct labor is recorded from the time sheets.

Current liabilities are:

due and payable within one year.

Finished goods inventory includes _____.

factory overhead

At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of $500. Net credit sales for the period total $800,000. If bad debt expense is estimated at 1% of net credit sales, the amount of bad debt expense to be recorded in the adjusting entry is $8,500.

false

The balance in Allowance for Doubtful Accounts at the end of the year includes the total of all accounts written off since the beginning of the year.

false

The book value of a fixed asset reported on the balance sheet represents its market value on that date.

false

Most employers are levied a tax on payrolls for:

federal unemployment compensation tax

The ratio measuring the number of dollars of sales earned per dollar of fixed assets is ​the

fixed asset turnover ratio

If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest semiannually would sell at an amount: a. less than face value. b. equal to the face value. c. greater than face value. d. that cannot be determined.

greater than face value.

Rico Inc. issues a 90-day, 4%, $3,000 note on account. This transaction:

has no effect on net assets and earnings per share of the company.

When a company has a high debt ratio, it is an indication of a:

high solvency risk.

If bonds are issued at a premium, the stated interest rate is:

higher than the market rate of interest.

The sale of a finished good on account would:

increase Cost of Goods Sold and decrease Finished Goods; increase Accounts Receivable and increase Sales.

In a job order cost accounting system, the effect of the flow of direct materials into production will be:

increase in Work-in-Process and decrease in Materials Inventory

As interest is recorded on an interest-bearing note, the Interest Expense account is:

increased; the Interest Payable account is increased

Recording direct labor costs in a job order cost accounting system:

increases Work-in-Process and increases Wages Payable.

Which of the following would be classified as another receivable?

interest receivable

Liabilities due beyond one year are classified as _____.

long-term liabilities

Contingent liabilities that are probable but cannot be reasonably estimated are disclosed in the:

notes to the financial statements.

Current assets are usually listed in order

of liquidity

Land improvements include:

outdoor lighting.

The cost of a patent should be amortized :

over 20 years or its economic life, whichever is shorter.

The cost of a product warranty should be included as an expense in the:

period of the sale of the product.

Dividing estimated total factory overhead costs by estimated activity base will give the _____.

predetermined factory overhead rate

The excess of issue price over par of common stock is termed as:

premium

Depreciation on factory equipment is an example of a_____.

product cost

A _____ is prepared when materials that have been ordered are received and inspected.

receiving report

If a fixed asset with an original cost of $18,000 and accumulated depreciation of $2,000 is sold for $15,000, the company must:

recognize a loss on the income statement under other expenses.

The primary purpose of a stock split is to:

reduce the market price of the stock per share.

Glow Co. reacquired 60,000 shares of its common stock at $25 per share. The balance of the treasury stock account is reported on the balance sheet as a(n):

reduction of stockholders' equity.

The finished goods account is a controlling account for the subsidiary:

stock ledger

The reduction of par or stated value of stock by issuance of a proportionate number of additional shares is termed a:

stock split.

Treasury stock is reported in the _____ section of the balance sheet.

stockholders' equity

The accounting profession prefers the allowance method over the direct write off method because

the accounts receivable will be presented on the balance sheet with a reduction called the allowance for doubtful accounts.

The accounting term depreciation measures:

the amount of asset cost allocated to expense over periods benefited.

A gain is recorded on the sale of fixed assets when:

the asset is sold for a price more than its book value.

An asset turnover ratio of 1.87 for a company indicates that:

the company is generating $1.87 of sales revenue for each dollar of long-term operating assets invested.

An activity-based costing system allocates factory overhead rates to products or services using:

the cost of activities based on an activity rate times the number of activity-based usage quantities

The price at which stock is sold depends on a variety of factors such as:

the financial condition and dividend record of the corporation.

The par value per share of common stock represents:

the monetary amount assigned to each share of stock in the articles of incorporation.

Under the Allowance Method.....

the write-off of an account receivable leaves the net realizable value of the accounts receivable unchanged.

When the market rate of interest on bonds is equal to the contract rate, the bonds will sell at:

their face value.

A company uses the allowance method to account for uncollectible accounts receivables. When the firm writes off a specific customer's account receivable

there is no effect on total current assets or total expenses

When does an account become uncollectible?

there is no general rule for when an account becomes uncollectible

The double-declining-balance method is an accelerated depreciation method.

true

Which of the following would most likely be classified as a current liability?

unearned rent

One of the weaknesses of the direct write off method is that it

violates the matching principle

he direct labor and overhead costs of providing services to clients are accumulated in:

work in process.

Goodwill is:

written down only if an impairment in value occurs

The method of determining depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is:

Declining-balance.

The straight-line method of depreciation is appropriate if usage of the asset varies considerably from year to year. a. True b. False

False

When a corporation issues bonds, it executes a contract with the bondholders known as a bond debenture. a. True b. False

False

When using the direct write-off method of accounting for uncollectible receivables, the account Allowance for Doubtful Accounts is debited when a specific account is determined to be uncollectible.

False

As a company records depreciation expense for a period of time, a corresponding cash inflow from investing activities is reported on the statement of cash flows.

False.

The amount of the depreciation expense for the second full year of use of a fixed asset costing $100,000, with an estimated residual value of $5,000 and a useful life of 4 years, is $25,000 by the double-declining-balance method.

True

The balance in Accumulated Depreciation account is deducted from the cost of fixed assets on the balance sheet a. True b. False

True

The debt ratio measures the percent of the company's assets financed by debt. a. True b. False

True

The declaration and issuance of a stock dividend does not affect the total amount of a corporation's assets, liabilities, or stockholders' equity. a. True b. False

True

The declaration of a cash dividend decreases a corporation's stockholders' equity and increases its liabilities. a. True b. False

True

The double-declining-balance method of depreciation is also referred to as an accelerated depreciation method. a. True b. False

True

The main source of paid-in capital is from issuing stock. a. True b. False

True

The merchandise inventory account is found on the balance sheet. a. True b. False

True

The par value of common stock is rarely equal to its market value on the date the stock is issued. a. True b. False

True

The prices of bonds are quoted on bond exchanges as a percentage of the bonds' face value. a. True b. False

True

The reduction in the par or stated value of common stock, accompanied by the issuance of a proportionate number of additional shares, is called a stock split. a. True b. False

True

The total depreciation across the years of an asset's life is the same under the double-declining-balance method or the straight-line method. a. True b. False

True

The total earnings of an employee for a payroll period is referred to as gross pay. a. True b. False

True

The total earnings of an employee for a payroll period is referred to as the net pay. a. True b. False

True

The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business. a. True b. False

True

Treasury stock is a contra-equity account. a. True b. False

True

Under the perpetual inventory system, the cost of merchandise sold is recorded when sales are made. a. True b. False

True

Under the straight-line method, the amount of depreciation expense for the first full year of use of a fixed asset costing $95,000, with an estimated residual value of $5,000, and a useful life of 5 years, will be $18,000. a. True b. False

True

When a corporation issues bonds, it executes a contract with the bondholders known as a bond indenture. a. True b. False

True

When the market rate of interest is more than the contract rate of a bond, the bond will sell for a discount. a. True b. False

True

When the seller offers a sales discount, even if borrowing has to be done, it is generally advantageous for the buyer to pay within the discount period. a. True b. False

True

When the terms of sale are FOB shipping point, the buyer should pay the transportation charges. a. True b. False

True

In order to record a contingent liability, the liability must be probable and reasonably estimated. a. True b. False

True

Intangible assets do not exist physically. a. True b. False

True

Liabilities that are due and payable beyond one year or paid out of noncurrent assets are termed long-term liabilities. a. True b. False

True

Most employers are required to withhold a portion of the earnings of each employee for FICA tax. a. True b. False

True

Net income or loss may appear on the income statement of both a service business and a retail business. a. True b. False

True

Notes Receivable and Accounts Receivable can also be called trade receivables.

True

Obligations that depend on future events and are based on past transactions are contingent liabilities. a. True b. False

True

Obligations that depend on past events and that are based on future transactions are contingent liabilities. a. True b. False

True

One of the conditions for paying a cash dividend is formal action by the board of directors. a. True b. False

True

One of the conditions for paying a cash dividend is sufficient retained earnings. a. True b. False

True

Operating expenses are subtracted from fees earned for a service business and from gross profit for a merchandising business. a. True b. False

True

Paid-in capital and retained earnings are the two major categories of stockholders' equity for a corporation. a. True b. False

True

Preferred stockholders must receive their current-year dividends before the common stockholders can receive any dividends. a. True b. False

True

The acquisition costs of property, plant, and equipment should include all costs necessary to get the asset in place and ready for use. a. True b. False

True

Which of the following statements is a difference between financial accounting and managerial accounting?

Under financial accounting, reports are prepared using GAAP, whereas under managerial accounting, information that is useful to management for its decision making is not recorded using GAAP.

The process that begins with the analysis of transactions and ends with preparing the accounting records for the next accounting period is called the accounting cycle. a. True b. False

a. True

The sales discount account is a contra account to Sales. a. True b. False

a. True

The sum of the face amount and the interest that must be paid at the due date of the note is called maturity value. a. True b. False

a. True

There are two alternatives to reporting cash flows from operating activities in the statement of cash flows: (1) the direct method and (2) the indirect method. a. True b. False

a. True

To arrive at cash flows from operations, it is necessary to convert the income statement from an accrual basis to the cash basis of accounting. a. True b. False

a. True

Under accrual accounting, expenses are recorded when incurred regardless of when paid. a. True b. False

a. True

Under the cash basis of accounting, a business records only transactions involving increases or decreases of its cash. a. True b. False

a. True

Under the cash basis of accounting, expenses are recorded when paid. a. True b. False

a. True

Under the cash basis of accounting, no adjustments are necessary prior to the preparation of the financial statements. a. True b. False

a. True

When companies sell their receivables to other companies, the transaction is called factoring. a. True b. False

a. True

When someone purchases merchandise and incurs the cost of transportation, these costs of purchasing inventory are added to the cost of the inventory. a. True b. False

a. True

Which of the following is not reported as revenue on the income statement? a. Unearned revenue b. Fees revenue c. Commissions revenue d. Rent revenue

a. Unearned revenue

In a period of rising prices, the effect of selecting the FIFO rather than the LIFO method of inventory valuation results in:

a. a higher days' sales in inventory.

Merchandise which is not sold at the end of the year is reported on the balance sheet as _____.

a. accounts receivable

Interest receivable is an example of: a. accrued revenue. b. retained earnings. c. deferred revenue. d. a prepaid expense

a. accrued revenue.

A deferred expense is initially recorded as: a. an asset but becomes an expense over time. b. an expense but becomes an asset over time. c. a liability but becomes an expense over time. d. an expense but becomes a liability over time

a. an asset but becomes an expense over time.

Accrued revenue is shown on a balance sheet as: a. an asset. b. common stock. c. a liability. d. retained earnings

a. an asset.

Accumulated depreciation is a(n): a. contra asset. b. contingent asset. c. revenue expenditure. d. accrued expense.

a. contra asset.

Days' sales in inventory estimates the average number of days it takes to:

a. convert inventory to sales.

Perill Co. has a five-day workweek (Monday through Friday). Employees earn $650 per day. If the month ends on Wednesday, and wages will not be paid until Friday, how much wage expense should be accrued on Wednesday? a. $650 b. $1,950 c. $3,250 d. $1,300

b. $1,950

A machine was purchased for $68,000. It has a useful life of 5 years and a residual value of $8,000. Determine the annual depreciation expense using the straight-line method?

b. $12,000

The estimate of uncollectible accounts receivable based on the sales method violates the matching principle. a. True b. False

b. False

The interest at 6%, on a 60-day note for $5,000 is $300. (Assume 360 days in a year) a. True b. False

b. False

The party promising to pay a note at maturity is the payee. a. True b. False

b. False

The revenue recognition concept states that revenue should be recorded in the same period as the cash is received. a. True b. False

b. False

The use of the lower-of-cost-or-market method of inventory valuation increases the gross profit for the period in which the inventory replacement price declined. a. True b. False

b. False

The due date of a 60-day note dated July 10 is September 9. a. True b. False

b. False

Paying an invoice within the discount period _____.

b. has no effect on the profitability metric

In recording the cost of merchandise sold for cash using a perpetual inventory system, the effect on the accounts is:

b. increase Cost of Merchandise Sold; decrease Merchandise Inventory.

Using a perpetual inventory system, the purchase of $30,000 of merchandise on account would include a(n):

b. increase in Merchandise Inventory.

When purchases of merchandise are made for cash, under the perpetual inventory system, the transaction:

b. increases Merchandise Inventory; decreases Cash.

The credit terms of a sale are normally indicated on a(n):

b. invoice.

Accrued expenses are ordinarily reported on the balance sheet as: a. assets. b. liabilities. c. fixed assets. d. prepaid expenses

b. liabilities.

Unearned rent, representing rent for the next six months' occupancy, would be reported on the landlord's balance sheet as a(n): a. asset. b. liability. c. common stock. d. revenue.

b. liability.

The amount of the promissory note plus the interest earned on the due date is called the:

b. maturity value.

The accounts receivable turnover is computed by dividing:

b. net sales by average accounts receivable.

Cash receipts from interest and dividends are classified as: a. investing activities. b. operating activities. c. either financing or investing activities. d. financing activities

b. operating activities.

In reference to a promissory note, the person who is to receive payment is called the

b. payee.

While calculating the carrying value of a building, its accumulated depreciation is: a. not taken into consideration. b. subtracted from the building's cost. c. added to the building's cost. d. subtracted from the fair market value of the building.

b. subtracted from the building's cost.

Net sales is calculated by _____.

b. subtracting customer refunds from total sales

In case of merchandise return, the inventory account is increased by the amount of cost of the goods returned, and:

b. the estimated returns inventory account is decreased by the same amount.

One of the weaknesses of the direct write-off method is that it:

b. violates the matching principle.

Using accrual accounting, revenue is recorded and reported only: a. when cash is received without regard to when the services are rendered. b. when the services are rendered without regard to when cash is received. c. when cash is received before services are rendered. d. if cash is received after the services are rendered.

b. when the services are rendered without regard to when cash is received.

Capital expenditure is reported on the:

balance sheet under fixed assets.

Georgia Inc. reported operating income of $156,000 and sales of $1,300,000 for the current year end. Determine the company's return on sales.

d. 12%

A company acquired some land for $80,000 to construct a new office complex. Legal fees paid were $2,300, delinquent taxes assumed were $3,400, and $5,850 was paid to remove an old building from which salvaged materials sold for $1,950. What is the cost basis for the land? a.$93,500 b.$91,550 c.$85,700 d.$89,600

d

Which of the following is the formula to calculate gross profit percent?

d. (Sales - Cost of Goods Sold) / Sales

At the end of the fiscal year, if the balance in Factory Overhead is small, it would normally be:

transferred to Cost of Goods Sold.

A capitalized asset will appear on the balance sheet as a long-term asset.

true

The direct write-off method records bad debt expense in the year the specific account receivable is determined to be uncollectible.

true

The double-declining-balance depreciation method calculates depreciation each year by taking twice the straight-line rate times the book value of the asset at the beginning of each year.

true

The declaration of a stock dividend decreases a corporation's stockholders' equity and decreases its liabilities. a. True b. False

False

An employee receives an hourly rate of $27, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $350; cumulative earnings for year prior to current week, $99,700; social security tax rate, 6.0% on maximum of $106,800; and Medicare tax rate, 1.5% on all earnings. What is the gross pay for the employee?

$1,323.00

On September 1, a machine was purchased for $47,000 with a useful life of 8 years, and a residual value of $3,000. What is the depreciation expense in the year of purchase under straight-line method, assuming a December 31 year-end?

$1,833

The following information is available for Amanda Co. for the current year. Common shares outstanding: 150,000 Preferred stock dividend declared and paid: $90,000 Net income: $300,000 Calculate the company's earnings per share.

$1.40

Zennia Company provides its employees with varying amounts of vacation per year, depending on the length of employment. The estimated amount of the current year's vacation cost is $135,000. The journal entry to record the adjusting entry required on December 31, the end of the current year, to record the current month's accrued vacation pay is

$11,250

Prior to the last weekly payroll period of the calendar year, the cumulative earnings of employees A and B are $106,150 and $91,000, respectively. Their earnings for the last completed payroll period of the year are $850 each. Social security tax rate is 6% on maximum of $106,800. All earnings are subject to Medicare tax of 1.5%. Assuming that the payroll will be paid on December 29, what will be the employer's total FICA tax for this payroll period on the two salary amounts of $850 each?

$115.50

Allowance for Doubtful Accounts has a debit balance of 500$ at the end of the year (before adjustment), and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $600,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is

$24,000

The net income reported on the income statement for the current year was $310,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows:

$331,000 *just memorize

During its first year of operations, a company granted employees vacation privileges and pension rights estimated at a cost of $21,500 and $15,000. The vacations are expected to be taken in the next year and the pension rights are expected to be paid in the future 5-30 years. What is the total cost of vacation pay and pension rights to be recognized in the first year?

$36,500

If $4,000,000 of 12% bonds are issued at 103 1/4, the amount of cash received from the sale is:

$4,130,000.

If $500,000 of 8% bonds are issued at 102, the amount of cash received from the sale is:

$510,000

For the year that just ended, a company reports net income of $1,500,000. There are 500,000 shares authorized, 300,000 shares issued, and 250,000 shares of common stock outstanding. What is the earnings per share?

$6.00

A fixed asset with a cost of $52,000 and accumulated depreciation of $47,500 is traded for a similar asset priced at $60,000 (fair market value) in a transaction with commercial substance. Assuming a trade-in allowance of $5,000, at what cost will the new equipment be recorded in the books?

$60,000

A company acquired some land for $75,000 to construct a new office complex. Legal fees paid were $2,750, delinquent taxes assumed were $3,250, and $6,350 was paid to remove an old building. Materials salvaged from the demolition of the building were sold for $2,300. Determine the cost of the land to be reported on the balance sheet.

$85,050

An employee receives an hourly rate of $27, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $350; cumulative earnings for year prior to current week, $99,700; social security tax rate, 6.0% on maximum of $106,800; and Medicare tax rate, 1.5% on all earnings. What is the net pay for the employee?

$873.77

Assuming a 360-day year, proceeds of $48,750 were received from discounting a $50,000, 90-day note at a bank. The discount rate used by the bank in computing the proceeds was

10.00%

At the end of the current year, Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $2,500,000. An analysis of receivables estimates uncollectible receivables as $25,000. ​ Determine the net realizable value of accounts receivable after adjustment. (Hint: Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance of Doubtful Accounts.)

525,000

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding?

55,000

The following data (in millions) is given for Magenta Inc. for the current year. Total assets $720,000 Total liabilities $411,000 Total stockholders' equity $309,000 Compute the debt ratio. (Round to the nearest whole number.)

57%

Jack Co. issued 675,000 shares at $0.25 per share of common stock. If 75,000 shares were subsequently reacquired, _____ shares are considered outstanding.

600,000

Expenditures for research and development are generally recorded as a.current operating expenses. b.assets and amortized over their estimated useful life. c.assets and amortized over 40 years. d.current assets.

A

Expenditures for research and development are generally recorded as a. current operating expenses b. assets and amortized over their estimated useful life c. assets and amortized over 40 years d. current assets

A

an asset account

A capital expenditure results in a debit to an expense account a capital account a liability account an asset account

used in the operations of a business

A characteristic of a fixed asset is that it is.. intangible used in the operations of a business held for sale in the ordinary course of the business a short-term investment

Which of the following is an effect of payment of cash dividends on a company's financial statements?

A decrease in cash and liability

$1,500

A fixed asset with a cost of $41,000 and accumulated depreciation of $36,500 is traded for a similar asset priced at $60,000. Assuming a trade-in allowance of $3,000, the recognized loss on the trade is $3,000 $4,500 $ 500 $1,500

_____ is an example of a fixed asset.

A machine

$35,000

A machine with a cost of $120,000 has an estimated residual value of $15,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units of production method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours? $5,000 $35,000 $21,000 $45,000

When a company exchanges machinery and receives a trade-in allowance greater than the book value, this transaction would be recorded with the following entry: a. debit Machinery and Accumulated Depreciation; credit Machinery, Cash, and Gain on Disposal b. debit Machinery and Accumulated Depreciation; credit Machinery and Cash c. debit Cash and Machinery; credit Accumulated Depreciation d. debit Cash and Machinery; credit Accumulated Depreciation and Machinery

B

Which of the following expenditures would NOT be included in the cost of an asset? a.Freight costs b.Vandalism c.Sales tax d.Surveying fees

B

................is reported at the time that the allowance for doubtful accounts is created and adjusted. Hence, ...................... is recorded closer to the time of the credit sale.

Bad Debt Expense

A machine with a useful life of 10 years and a residual value of $4,000 was purchased for $30,000. What is annual depreciation under the straight-line method? a.$3,000 b.$3,400 c.$2,600 d.$5,200

C

A patent was purchased for $670,000 with a legal life of 20 years. Management estimates that the patent has an 12-year economic life. The entry to record amortization would include a.an increase in amortization expense for $33,500. b.an increase in research and development expense for $670,000. c.a decrease in patent for $55,833. d.an increase in accumulated amortization for $670,000.

C

Accelerated depreciation is primarily used for a.the financial statements of large companies. b.the financial statements of small companies. c.income tax purposes. d.both financial reporting and income taxes by most companies.

C

Accumulated Depreciation a. is used to show the amount of cost expiration of intangibles b. is the same as Depreciation Expense c. is a contra asset account d. is used to show the amount of cost expiration of natural resources

C

Equipment was purchased for $18,000. It has a useful life of 5 years and a residual value of $2,000. What is depreciation expense for year one under the double-declining-balance method? a.$6,400 b.$3,200 c.$7,200 d.$3,600

C

Fixed assets are ordinarily presented in the balance sheet a.at current market values. b.at replacement costs. c.at cost less accumulated depreciation. d.in a separate section along with intangible assets.

C

Fixed assets are ordinarily presented in the balance sheet a. at current market values b. at replacement costs c. at cost less accumulated depreciation d. in a separate section along with intangible assets

C

Which of the following is an example of direct labor cost for an airplane manufacturer?

Cost of wages of assembly worker

For which of the following businesses would the job order cost system be most appropriate?

Custom cabinet manufacturer

A capital expenditure results in a debit to a. an expense account b. a capital account c. a liability account d. an asset account

D

Credit memorandum is issued by the seller to customers for return of damaged or defective merchandise. a. True b. False

a. True

The journal entry for recording an operating lease payment would

Debit an expense and credit Cash.

When using the allowance method and you know you will have bad debt expense what journal entry would you make?

Debit Allowance, Credit Accounts Receivable

Which of the following is considered a part of factory overhead cost?

Depreciation of factory buildings

In a job order cost accounting system used by a service business, which of the following items would normally not be included as part of overhead?

Direct labor

Which of the following items would be classified as a part of prime cost?

Direct labor cost

Which of the following is most likely to be a product cost?

Drill bits for a drill press used in the plant assembly area

A disadvantage of factoring is that the company selling its receivables immediately receives cash.

False

The debt ratio of Jade Co. and Emerald Inc. are 30% and 51% respectively. This information indicates that:

Emerald Inc.'s operations are financed primarily with debt.

capital expenditures

Expenditures that add to the utility of fixed assets for more than one accounting period are committed expenditures revenue expenditures utility expenditures capital expenditures

The declaration of a cash dividend decreases a corporation's stockholders' equity and decreases its assets. a. True b. False

False

physical and functional

FActors contributing to a decline in the usefullness of a fixed asset may be divided into the following two categories.. salvage and functional physical and funcitonal residual and salvage functional and residual

The recording of the factory labor costs incurred for general factory use would include a debit to:

Factory Overhead.

Which of the following is an example of a factory overhead cost?

Factory heating and lighting cost

A buyer who acquires merchandise under credit terms of 1/10, n/30 has 30 days after the invoice date to take advantage of the cash discount. a. True b. False

False

A corporation has 10,000 shares of $100 par value stock outstanding that has a current market value of $160. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately $32. a. True b. False

False

A corporation has 10,000 shares of $100 par value stock outstanding. If the corporation issues a 5-for-1 stock split, the number of shares outstanding after the split will be 2,000. a. True b. False

False

A current asset account must be increased for revenue expenditures since they benefit only the current period. a. True b. False

False

A defined contribution plan promises employees a fixed annual pension benefit.

False

Before a stock dividend can be declared or paid, there must be sufficient cash. a. True b. False

False

Companies usually compute depletion by using the double-declining-balance method. a. True b. False

False

Expenditures made to extend an asset's life are called revenue expenditures. a. True b.False

False

FICA tax is a payroll tax that is paid only by employers. a. True b. False

False

If 20,000 shares are authorized, 15,000 shares are issued, and 500 shares are reacquired, the number of outstanding shares is 19,500. a. True b. False

False

If 50,000 shares are authorized, 35,000 shares are issued, and 1,000 shares are reacquired, the number of outstanding shares is 36,000. a. True b. False

False

If a company sells a fixed asset for an amount which is less than its book value, a gain must be recognized. a. True b. False

False

If an asset is discarded, a loss is recognized equal to its salvage value. a. True b. False

False

If merchandise costing $2,500, terms FOB destination, 2/10, n/30, with transportation costs of $100, is paid within 10 days, the amount of the purchases discount is $52. a. True b. False

False

If the market rate of interest is 6% and a corporation's bonds bear interest at 7%, the bonds will sell at a discount. a. True b. False

False

If the market rate of interest is 8% and a corporation's bonds bear interest at 7%, the bonds will sell at a premium. a. True b. False

False

If the market rate of interest is 9% and a corporation's bonds bear interest at 7%, the bonds will sell at a premium. a. True b. False

False

If the proceeds from a sale of equipment is greater than the book value of the equipment as on the date of sale, a loss is recorded. a. True b. False

False

It is usual for the credit period to begin with the date the merchandise is received by the buyer. a. True b. False

False

Long-lived assets that are intangible in nature, used in the operations of the business, and not held for sale in the ordinary course of business are called fixed assets. a. True b. False

False

Medicare taxes are paid only by employee. a. True b. False

False

Medicare taxes are withheld from an employee's pay only till the employee has earned a specific amount each year. a. True b. False

False

Most employers are required to withhold federal unemployment taxes from employee earnings. a. True b. False

False

Net sales is equal to sales plus cost of merchandise sold. a. True b. False

False

On the income statement, the merchandise inventory at the beginning of the period is added to sales to yield the cost of merchandise sold during the period. a. True b. False

False

Physical depreciation occurs when changes in customer needs causes a fixed asset to no longer provide services for which it was intended. a. True b. False

False

Purchase discounts reduce sales. a. True b. False

False

Purchases discounts are discounts given to the seller. a. True b. False

False

The accounts receivable turnover measures the length of time in days it takes to collect a receivable.

False

The amount of capital paid-in by the stockholders of the corporation is called legal capital. a. True b. False

False

A company sold 200 shares of common stock with a par value of $5 at a price of $12 per share. Which section of the statement of cash flows will contain this transaction?

Financing activities

The recording of the jobs completed would increase:

Finished Goods

Which of the following is a characteristic of fixed assets?

Fixed assets are long-term or relatively permanent assets.

at cost less accumulated depreciation

Fixed assets are ordinarily presented in the balance sheet at current market values at replacement costs at cost less accumulated depreciation in a separate section along with intangible assets

lessor

In a lease contract, the party who legally owns the asset is the... lessee lessor operator banker

Which of the following statements is true of a traditional production process?

In a traditional production process, supervisors enter materials into manufacturing so as to keep all the manufacturing departments (processes) operating.

A company sold 200 shares of common stock with a par value of $5 at a price of $13 per share. What is the effect on the accounts of this transaction?

Increase cash $2,600; increase common stock $1,000 and increase paid-in capital $1,600

Which of the following should be included in the acquisition cost of a piece of equipment?

Installation Cost, Transportation Cost, Testing costs prior to placing the equipment into production (All of these choices are correct.)

Which of the following is included in the cost of constructing a building?

Insurance costs during construction.

Which of the following is true of asset turnover?

It measures the efficiency with which a company uses its operating assets to generate sales.

Which of the following techniques is used by just-in-time manufacturing?

It organizes the plant in such a way as to reduce product movement from station to station.

Which of the following is the effect on a company's liquidity and profitability metrics when it purchases a piece of equipment?

Its free cash flow decreases.

Which of the following is the effect on the transaction metrics of a company when it records depreciation?

Its profitability increases.

When trying to find ................. you take the face interest * annual rate(%) /360 * amount of days

Maturity

When determining whether to record an asset as a fixed asset, what two criteria must be met?

Must be long lived and must use the asset in a productive manner.

What is the effect of declaring a stock dividend on the liabilities and stockholders' equity section of the balance sheet?

No effect on total liabilities and total stockholders' equity

Gain of $5,000

On December 31, Strike Company has decided to sell one of it balling cages. The inital cost of the equipment was $310,000 with an accumulated depreciation of $260,000. Depreciation has been taken up to the end of the year. The company found a company that is willing to buy the equipment for $55,000. What is the amount of the gain or loss on this transaction? Cannot be determined No gain or loss Gain of $5,000 Gain of $55,000

$30,000

On June 1, 2014, Aaron Company purchased equipment at a cost of $120,000 that has depreciable cost of $90,000 and an estimated useful life of 3 years and 30,000 hours. Using straight line depreciation, calculate depreciaiton expense for the second year. $17,500 $30,000 $12,500 $40,000

The major subdivisions of the Stockholders' Equity section of the balance sheet are:

Paid-in Capital and Retained Earnings.

b

QN=1 47 Which statement is true? a. Expenses increase Owner's equity b. Expenses decrease Owner's equity c. Expenses increase Owner's withdrawal d. Expenses decrease Owner's withdrawal e. None of these

Factors contributing to a decline in the usefulness of a fixed asset may be divided into the following two categories

Physical and functional.

Which of the following costs appear on a balance sheet?

Product Costs

Which of the following transactions will have no effect on the liquidity metric of a company?

Purchasing an asset

e

QN= 107 Which of the following statements is incorrect? a. Adjustments to prepaid expenses, depreciation, and unearned revenues involve previously recorded assets and liabilities. b. Accrued expenses and accrued revenues involve assets and liabilities that had not previously been recorded. c. Adjusting entries can be used to record both accrued expenses and accrued revenues. d. Prepaid expenses, depreciation, and unearned revenues often require adjusting entries to record the effects of the passage of time. e. Adjusting entries affect the cash account.

b

QN= 137 Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and withdrawals accounts for the upcoming period and to update the owner's capital account for the events of the period just finished are referred to as: a. Adjusting entries. b. Closing entries. c. Final entries. d. Work sheet entries. e. Updating entries.

b

QN= 167 The buyer is responsible for the costs of shipping when goods are sold with the terms FOB a. Shipping board b. Shipping point c. Destination d. On board e. None of these

c

QN= 249 The business completed these transactions: 1. Investing $20,000 cash and a building valued at $100,000. 2. Purchased $10,000 of a truck on credit. 3. Paid $20,000 cash for raw material. 4. Selling products and collected$40,000 cash. What was the balance of the cash account after these transactions were posted? a. $130,000 b. $30,000 c. $40,000 d. $140,000 e. $120,000

b

QN= 265 External users of accounting information exclude: a. Shareholders. b. Manager. c. Creditors. d. Government regulators. e. All of these.

e

QN= 37 Lomax Enterprises purchased a depreciable asset for $20,000 on January 1, 2008. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $2,000, what will be the amount of accumulated depreciation on this asset on June 30, 2011? a. $18000 b. $4500 c. $13500 d. $20,000 e. $15750

a

QN= 67 If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have: a. Increased $22,000. b. Decreased $22,000. c. Increased $89,000. d. Decreased $156,000. e. Increased $156,000.

e

QN= 7 Acceptable inventory methods include: a. LIFO method. b. FIFO method. c. Specific identification method. d. Weighted average method. e. All of these.

b

QN= 97 The following transactions occurred during July: 1. Received $900 cash for services provided to a customer during July. 2. Received $2,200 cash investment from Barbara Hanson, the owner of the business. 3. Received $750 from a customer in partial payment of his account receivable which arose from sales in June. 4. Provided services to a customer on credit, $375. 5. Borrowed $6,000 from the bank by signing a promissory note. 6. Received $1,250 cash from a customer for services to be rendered next year. What was the amount of revenue for July? a. $ 900. b. $ 1,275. c. $ 2,525. d. $ 3,275. e. $11,100.

d

QN=1 14 The expense created by allocating the cost of fixed assets to the periods in which they are used, representing the expense of using the assets, is called a. Accumulated depreciation. b. A contra account. c. The matching principle. d. Depreciation expense. e. An accrued account.

a

QN=1 15 Which statement is correct? a. Accumulated Depreciation is a contra asset account b. Depreciation expense is a contra asset account c. Account payable is a contra asset account d. Account receivable is a contra asset account e. Unearned revenue is a contra asset account

c

QN=1 16 Prior to recording adjusting entries, the Office Supplies account had a $359 debit balance. A physical count of the supplies showed $105 of unused supplies available. The required adjusting entry is: a. Debit Office Supplies $105 and credit Office Supplies Expense $105. b. Debit Office Supplies Expense $105 and credit Office Supplies $105. c. Debit Office Supplies Expense $254 and credit Office Supplies $254. d. Debit Office Supplies $254 and credit Office Supplies Expense $254. e. Debit Office Supplies $105 and credit Supplies Expense $254.

c

QN=1 17 If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees, the end-of-period adjusting entry to record the portion of those fees that has been earned is: a. Debit Cash and credit Legal Fees Earned. b. Debit Cash and credit Unearned Legal Fees. c. Debit Unearned Legal Fees and credit Legal Fees Earned. d. Debit Legal Fees Earned and credit Unearned Legal Fees. e. Debit Unearned Legal Fees and credit Accounts Receivable.

d

QN=1 18 On April 1, 2009, a company paid the $1,350 premium on a three-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the year ended December 31, 2009? a. $1,350. b. $450. c. $1,012.50. d. $337.50. e. $37.50.

c

QN=1 19 A company had no office supplies available at the beginning of the year. During the year, the company purchased $250 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year? a. $75. b. $125. c. $175. d. $250. e. $325.

a

QN=1 31 The balance in the prepaid insurance account before adjustment at the end of the year is $4,800, which represents the insurance premiums for four months. The premiums were paid on November 1. The adjusting entry required on December 31 is: a. Debit Insurance Expense, $2,400; credit Prepaid Insurance, $2,400. b. Debit Prepaid Insurance, $2,400; credit Insurance Expense, $2,400. c. Debit Insurance Expense, $1,200; credit Prepaid Insurance, $1,200. d. Debit Prepaid Insurance, $1,200; credit Insurance Expense, $1,200 e. Debit Cash, $4,800; Credit Prepaid Insurance, $4,800.

e

QN=1 42 At the beginning of 2009, Beta Company's balance sheet reported Total Assets of $195,000 and Total Liabilities of $75,000. During 2009, the company reported total revenues of $226,000 and expenses of $175,000. Also, owner withdrawals during 2009 totaled $48,000. Assuming no other changes to owner's capital, the balance in the owner's capital account at the end of 2009 would be: a. $174,000. b. $78,000. c. Cannot be determined from the information provided. d. $120,000. e. $123,000.

d

QN=1 43 After preparing and posting the closing entries to close revenues (and gains) and expenses (and losses) into the income summary, the income summary account has a debit balance of $33,000. The entry to close the income summary account will include: a. A debit of $33,000 to owner withdrawals. b. A credit of $33,000 to owner withdrawals. c. A debit of $33,000 to income summary. d. A debit of $33,000 to owner capital. e. A credit of $33,000 to owner capital.

a

QN=1 44 Which of the following accounts is not increased by a debit? a. Revenue b. Expense c. Asset d. Withdrawal e. None of these

a

QN=1 45 Which of the following statements is true? a. A debit increases an asset while a credit decrease an asset b. A debit decreases an asset while a credit decrease an asset c. A debit increases a liability and a credit decreases a liability d. A debit increases revenues and a credit decreases revenues e. None of these

b

QN=1 46 Which of the following is a liability? a. Account receivable b. Account payable c. Owner's capital d. Owner's withdrawal e. None of these

a

QN=1 48 Which statement is true? a. The double entry system requires every transaction to be recorded in at least two places b. The double entry system requires every transaction to be recorded in at least three places c. The double entry system requires every transaction to be recorded in at least one places d. The double entry system requires every transaction to be recorded in at least four places e. None of these

c

QN=1 49 Which of the following accounts is not increased by a credit a. Revenue b. Liability c. Asset d. Owner's equity e. None of these

b

QN=1 61 Which statement is true? a. A contra-asset account such as Accumulated Depreciation will likely have debit balance b. A contra-asset account such as Accumulated Depreciation will likely have credit balance c. A contra-asset account such as Depreciation will likely have credit balance d. A contra-asset account such as Depreciation will likely have debit balance e. None of these

c

QN=1 73 Which discounts are provided to customers as an incentive for them to pay early a. Credit discounts b. Trade discounts c. Purchase discounts d. Payment discounts e. None of these

a

QN=1 74 Reflects assumption that the business will continue operating instead of being closed or sold. It is about: a. Going-Concern Assumption b. Business Entity Assumption c. Time Period Assumption d. Revenue Recognition Principle e. Cost Principle

b

QN=1 76 A business is accounted for separately from other business entities, including its owner. a. Going-Concern Assumption b. Business Entity Assumption c. Time Period Assumption d. Matching Principle e. Cost Principle

d

QN=1 77 Which are expected to be sold collected or used within one year or the company's operating cycle? a. Non - Current assets b. Non - Current liabilities c. Current liabilities d. Current assets e. None of these

b

QN=1 78 Net Sales minus Cost of Goods Sold equals to: a. Profit b. Gross profit c. Net income d. Profit before tax e. Profit after tax

c

QN=1 79 Which statement is true: a. Merchandise available for sale includes Beginning inventory and ending inventory. b. Merchandise available for sale includes Beginning inventory and cost of goods sold. c. Merchandise available for sale includes Beginning inventory and Net cost of purchases. d. Merchandise available for sale includes ending inventory and Net cost of purchases. e. None of these

a

QN=1 89 The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the owner's capital account is the: a. Income Summary account. b. Closing account. c. Balance column account. d. Profit accounts. e. Loss accounts.

b

QN=1 90 J. Awn, the proprietor of Awn Services, withdrew $8,700 from the business during the current year. The entry to close the withdrawals account at the end of the year, is: a. Debit withdrawal 8,700 and credit cash $ 8,700 b. Debit capital $8,700 and credit withdrawal $ 8,700 c. Debit capital $8,700 and credit expense $ 8,700 d. Debit expense $8,700 and credit income $ 8,700 e. Credit capital $8,700 and debit withdrawal $ 8,700

a

QN=1 92 Accounts receivable refers: a. Money which is owed to a company by a customer for products and services provided on credit b. Money which is owed to a company by a suppliers for products and services provided on credit c. Money which is owed to a company by a bank d. Money which is owed to a company by the investors e. Money which is owed to a company by a customer for products and services provided

d

QN=1 93 Money which a company owes to vendors for products and services purchased on credit. This item appears on the company's balance sheet as a current liability. a. Prepayment b. Account receivable c. Asset d. Account payable e. Cost of goods sold

b

QN=1 94 Something of value that cannot be physically touched, such as a brand, franchise, trademark, or patent is the definition of: a. Tangible assets b. Intangible assets c. Fixed assets d. Current assets e. Non - current assets

c

QN=1 95 Accounts receivable that may become uncollectable and will be written off , is known as: a. Expense b. Account receivable c. Bad debts d. Debts e. Uncollectable account

d

QN=1 96 Calculated as sales minus all costs directly related to those sales. It is about: a. Cost of goods sold b. Expense c. Revenue d. Gross profit e. Profit

a

QN=1 Merchandise inventory includes: a. All goods owned by a company and held for sale. b. All goods in transit. c. All goods on consignment. d. Only damaged goods. e. All goods in the stores of company.

c

QN=10 Acme-Jones Corporation uses a weighted-average perpetual inventory system. August 2, 10 units were purchased at $12 per unit. August 18, 15 units were purchased at $14 per unit. August 29, 12 units were sold. What was the amount of the cost of goods sold for this sale? a. $148.00. b. $150.50. c. $158.40. d. $210.00. e. $330.00.

b

QN=100 At the beginning of January of the current year, Thomas Law Center's ledger reflected a normal balance of $52,000 for accounts receivable. During January, the company collected $14,800 from customers on account and provided additional services to customers on account totaling $12,500. Additionally, during January one customer paid Thomas $5,000 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be: a. $54000 b. $49700 c. $52000 d. $54700 e. $49000

b

QN=101 The accounting principle that requires revenue to be reported when earned is the: a. Matching principle. b. Revenue recognition principle. c. Time period principle. d. Accrual reporting principle. e. Going-concern principle.

c

QN=102 Adjusting entries: a. Affect only income statement accounts. b. Affect only balance sheet accounts. c. Affect both income statement and balance sheet accounts. d. Affect only cash flow statement accounts. e. Affect only equity accounts.

c

QN=103 The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called: a. Accrual basis accounting. b. Operating cycle accounting. c. Cash basis accounting. d. Revenue recognition accounting. e. Current basis accounting.

e

QN=104 Adjusting entries are journal entries made at the end of an accounting period for the purpose of: a. Updating liability and asset accounts to their proper balances. b. Assigning revenues to the periods in which they are earned. c. Assigning expenses to the periods in which they are incurred. d. Assuring that financial statements reflect the revenues earned and the expenses incurred. e. All of these.

d

QN=105 The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is: a. Cash basis accounting. b. The matching principle. c. The time period principle. d. Accrual basis accounting. e. Revenue basis accounting.

b

QN=11 A company has inventory of 10 units at a cost of $10 each on June 1. On June 3, it purchased 20 units at $12 each. 12 units are sold on June 5. Using the FIFO perpetual inventory method, what is the cost of the 12 units that were sold? a. $120. b. $124. c. $128. d. $130. e. $140.

c

QN=110 An adjusting entry could be made for each of the following except: a. Prepaid expenses. b. Depreciation. c. Cash. d. Unearned revenues. e. Accrued revenues.

d

QN=111 An adjusting entry could be made for each of the following except: a. Prepaid expenses. b. Depreciation. c. Unearned revenues. d. Account payable. e. Accrued revenues.

d

QN=112 An adjusting entry could be made for each of the following except: a. Prepaid expenses. b. Depreciation. c. Unearned revenues. d. Revenue. e. Accrued revenues.

d

QN=113 An adjusting entry could be made for each of the following except: a. Prepaid expenses. b. Depreciation. c. Unearned revenues. d. Cost of goods sold. e. Accrued revenues.

c

QN=12 A company has inventory of 15 units at a cost of $2 each on August 1. On August 5, it purchased 10 units at $3 per unit. On August 12 it purchased 20 units at $4 per unit. On August 15, it sold 30 units. Using the FIFO perpetual inventory method, what is the value of the inventory at August 15 after the sale? a. $140. b. $80. c. $60. d. $30. e. $70.

d

QN=120 On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is: a. Debit Prepaid Insurance, $1,800; credit Cash, $1,800. b. Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440. c. Debit Prepaid Insurance, $360; credit Insurance Expense, $360. d. Debit Insurance Expense, $360; credit Prepaid Insurance, $360. e. Debit Insurance Expense, $360; credit Prepaid Insurance, $1,440.

b.

QN=121 Unearned revenue is reported in the financial statements as: a. Revenue on the balance sheet. b. A liability on the balance sheet. c. Unearned revenue on the income statement. d. An asset on the balance sheet. e. An operating activity on the statement of cash flows

b

QN=122 On April 30, 2009, a three-year insurance policy was purchased for $18,000 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the year ended December 31, 2009? a. $500. b. $4,000. c. $6,000. d. $14,000. e. $18,000.

d

QN=123 PPW Co. leased a portion of its store to another company for eight months beginning on October 1, 2009, at a monthly rate of $800. This other company paid the entire $6,400 cash on October 1, which PPW Co. recorded as unearned revenue. The journal entry made by PPW Co. at year- end on December 31, 2009 would include: a. A debit to Rent Earned for $2,400. b. A credit to Unearned Rent for $2,400. c. A debit to Cash for $6,400. d. A credit to Rent Earned for $2,400. e. A debit to Unearned Rent for $4,000.

c

QN=124 On May 1, 2009 Giltus Advertising Company received $1,500 from Julie Bee for advertising services to be completed April 30, 2010. The Cash receipt was recorded as unearned fees and at December 31, 2009, $1,000 of the fees had been earned. The adjusting entry on December 31 Year 1 should include: a. A debit to Unearned Fees for $500. b. A credit to Unearned Fees for $500. c. A credit to Earned Fees for $1,000. d. A debit to Earned Fees for $1,000. e. A debit to Earned Fees for $500.

d

QN=125 The adjusting entry to record the earned but unpaid salaries of employees at the end of an accounting period is: a. Debit Unpaid Salaries and credit Salaries Payable. b. Debit Salaries Payable and credit Salaries Expense. c. Debit Salaries Expense and credit Cash. d. Debit Salaries Expense and credit Salaries Payable. e. Debit Cash and credit Salaries Expense.

a

QN=126 On January 1, Southwest College received $1,200,000 in Unearned Tuition Revenue from its students for the spring semester, which spans four months beginning on January 2. What amount of tuition revenue should the college recognize on January 31? a. $300,000. b. $600,000. c. $800,000. d. $900,000. e. $1,200,000.

e

QN=127 The difference between the cost of an asset and the accumulated depreciation for that asset is called a. Depreciation Expense. b. Unearned Depreciation. c. Prepaid Depreciation. d. Depreciation Value. e. Book Value.

a

QN=128 A company purchased a new truck at a cost of $42,000 on July 1, 2009. The truck is estimated to have a useful life of 6 years and a salvage value of $3,000. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the truck for the year ended December 31, 2009? a. $3,250. b. $3,500. c. $4,000. d. $6,500. e. $7,000.

b

QN=129 A company's Office Supplies account shows a beginning balance of $600 and an ending balance of $400. If office supplies expense for the year is $3,100, what amount of office supplies was purchased during the period? a. $2,700. b. $2,900. c. $3,300. d. $3,500. e. $3,700.

b

QN=13 A company had inventory of 10 units at a cost of $20 each on November 1. On November 2, it purchased 10 units at $21 each. On November 6 it purchased 15 units at $25 each. On November 8, it sold 20 units for $54 each. Using the LIFO perpetual inventory method, what was the cost of the 20 units sold? a. $395. b. $480. c. $375. d. $510. e. $520.

b

QN=156 Under the accrual basis of accounting, expenses are reported in the accounting period when the a. Cash is paid for purchasing b. Expense incurred c. Contracts have been signed d. Trading negotiation has been done e. None of these

c

QN=130 If accrued salaries were recorded on December 31 with a credit to Salaries Payable, the entry to record payment of these wages on the following January 5 would include: a. A debit to Cash and a credit to Salaries Payable. b. A debit to Cash and a credit to Prepaid Salaries. c. A debit to Salaries Payable and a credit to Cash. d. A debit to Salaries Payable and a credit to Salaries Expense. e. No entry would be necessary on January 5.

b

QN=132 What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $7,750 before adjustment, and the unexpired amount per analysis of policies is, $3,250? a. Debit Insurance Expense, $3,250; credit Prepaid Insurance, $3,250. b. Debit Insurance Expense, $4,500; credit Prepaid Insurance, $4,500. c. Debit Prepaid Insurance, $4,500; credit Insurance Expense, $4,500. d. Debit Insurance Expense, $7,750; credit Prepaid Insurance, $7,750. e. Debit Cash, $7,750; Credit Prepaid Insurance, $7,750.

b

QN=133 A company purchased new computers at a cost of $14,000 on September 30, 2010. The computers are estimated to have a useful life of 4 years and a salvage value of $2,000. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the computers for the year ended December 31, 2010? a. $250 b. $750 c. $875 d. $1,000 e. $3,000

a

QN=134 The balance in Tee Tax Services' office supplies account on February 1 and February 28 was $1,200 and $375, respectively. If the office supplies expense for the month is $1,900, what amount of office supplies was purchased during February? a. $1,075 b. $1,500 c. $1,525 d. $2,325 e. $3,100

b

QN=135 Revenues, expenses, and withdrawals accounts, which are closed at the end of each accounting period are: a. Real accounts. b. Temporary accounts. c. Closing accounts. d. Permanent accounts. e. Balance sheet accounts.

c

QN=136 Assets, liabilities, and equity accounts are not closed; these accounts are called: a. Nominal accounts. b. Temporary accounts. c. Permanent accounts. d. Contra accounts. e. Accrued accounts.

c

QN=138 The J. Godfrey, Capital account has a credit balance of $17,000 before closing entries are made. If total revenues for the period are $55,200, total expenses are $39,800, and withdrawals are $9,000, what is the ending balance in the J. Godfrey, Capital account after all closing entries are made? a. $ 8,000. b. $15,400. c. $23,400. d. $17,000. e. $32,400.

b

QN=139 The Income Summary account is used: a. To adjust and update asset and liability accounts. b. To close the revenue and expense accounts. c. To determine the appropriate withdrawal amount. d. To replace the income statement under certain circumstances. e. To replace the capital account in some businesses.

c

QN=14 Acme-Jones Company uses a weighted-average perpetual inventory system. August 2, 8 units were purchased at $12 per unit. August 18, 15 units were purchased at $14 per unit. August 29, 20 units were sold. August 31, 10 units were purchased at $16 per unit. What is the per-unit value of ending inventory on August 31? a. $12.00. b. $13.30. c. $15.38. d. $16.00. e. $17.74.

d

QN=140 Dina Kader withdrew a total of $35,000 from her business during the current year. The entry needed to close the withdrawals account is: a. Debit Income Summary and credit Cash for $35,000. b. Debit Dina Kader, Withdrawals and credit Cash for $35,000. c. Debit Income Summary and credit Dina Kader, Withdrawals for $35,000. d. Debit Dina Kader, Capital and credit Dina Kader, Withdrawals for $35,000. e. Debit Dina Kader, Withdrawals and credit Dina Kader, Capital for $35,000.

d

QN=141 At the beginning of 2009, a company's balance sheet reported the following balances: Total Assets = $125,000; Total Liabilities = $75,000; and Owner's Capital = $50,000. During 2009, the company reported revenues of $46,000 and expenses of $30,000. In addition, owner's withdrawals for the year totaled $20,000. Assuming no other changes to owner's capital, the balance in the owner's capital account at the end of 2009 would be: a. $66,000. b. $86,000. c. $(4,000). d. $46,000. e. Cannot be determined from the information provided.

c

QN=15 Given the following information, determine the cost of the inventory at June 30 using the LIFO perpetual inventory method. June, 1: Beginning inventory 15 units at $20 each June, 15: Sale of 6 units at $50 June, 29: Purchased of 8 units at $25 The cost of goods sold is : a. $200. b. $220. c. $120. d. $275. e. $300.

a

QN=150 Depreciation is: a. The assigning or allocating of a fixed asset's cost to expense over the accounting periods that the asset is likely to be used. b. The assigning or allocating of a tangible asset's cost to expense over the accounting periods that the asset is likely to be used. c. The assigning or allocating of a intangible asset's cost to expense over the accounting periods that the asset is likely to be used. d. The assigning or allocating of a fixed asset's cost to expense over the accounting periods. e. None of these

a

QN=151 The Income Summary account is: a. Temporary account that need to be closed at the end of accounting period. b. Permanent account that need to be closed at the end of accounting period. c. Temporary account that need not to be closed at the end of accounting period. d. Permanent account that need not to be closed at the end of accounting period. e. It depends on business

d

QN=152 A record of financial transactions in order by date and often defined as the book of original entry. This statement is about: a. None of these b. A Ledger c. A Source document d. A General journal e. An Income statement

b

QN=153 The financial statement that reports the revenues and expenses for a period of time such as a year or a month is the a. Balance sheet b. Income statement c. Ledger d. General journal e. None of these

a

QN=154 The financial statement that reports the assets, liabilities, and stockholders' (owner's) equity at a specific date is the a. Balance sheet b. Income statement c. Ledger d. General journal e. None of these

b

QN=155 Under the accrual basis of accounting, revenues are reported in the accounting period when the a. Cash is received b. Service or goods have been delivered c. Contracts have been signed d. Trading negotiation has been done e. None of these

b

QN=157 Unearned Revenues is what type of account? a. Asset b. Liability c. Owner equity d. None of these e. Net Asset

a

QN=158 Which statement is true: a. Depreciation Expense is shown on the income statement in order to achieve accounting's matching principle. b. Depreciation Expense is shown on the balance sheet in order to achieve accounting's matching principle. c. Depreciation Expense is shown on the income statement d. Depreciation Expense is shown on the balance sheet e. None of these

a

QN=159 Which statement is true: a. Generally when an expense or withdraw is involved in a transaction, it will be debit b. Generally when an expense or withdraw is involved in a transaction, it will be credit c. Generally when an make loan or withdraw is involved in a transaction, it will be debit d. Generally when make loan or withdraw is involved in a transaction, it will be credit e. None of these

b

QN=16 A company has inventory of 10 units at a cost of $10 each on June 1. On June 3, it purchased 20 units at $12 each. 12 units are sold on June 5. Using the FIFO periodic inventory method, what is the cost of ending inventories? a. $120. b. $216. c. $128. d. $130. e. $140.

b

QN=160 Which account is noncurrent or long-term asset a. Equipment, supplies, vehicle b. Equipment, building, vehicle c. Equipment, prepaid expense, vehicle d. Equipment, account receivable, vehicle e. None of these

d

QN=162 A liability account that reports amounts received in advance of providing goods or services. It is about: a. Prepaid expense b. Liability c. Revenue d. Unearned revenue e. None of these

a

QN=163 Which statement is about Mary's capital: a. The owner's equity account that contains the amount invested in the sole proprietorship by Mary Smith plus the net income since the company began minus the draws made by Mary Smith since the company began. b. The owner's equity account that contains the amount invested in the sole proprietorship by Mary Smith minus the net income since the company began minus the draws made by Mary Smith since the company began. c. The owner's equity account that contains the amount invested in the sole proprietorship by Mary Smith plus the net income since the company began plus the draws made by Mary Smith since the company began. d. The owner's equity account that contains the amount invested in the sole proprietorship by Mary Smith plus the net income since the company began e. None of these

d

QN=164 When a sale is made with the credit terms of 2/10, net 30, the "2" refers to the: a. Interest rate b. Selling day c. Payment Due date d. Discount rate e. None of these

b

QN=165 On June 1, $800 of goods are sold with credit terms of 1/10, n/30. How much would the seller receive if the buyer pays on June 8? a. 790 b. 792 c. 240 d. 800 e. 232

c

QN=166 The seller is responsible for the costs of shipping its goods to the buyer when the terms of the sale are FOB: a. Shipping board b. Shipping point c. Destination d. On board e. None of these

a

QN=168 All expenditures necessary to bring an item to a salable condition and location. This statement is the definition of: a. Inventory costs b. Cost of goods sold c. Invoice cost d. Freight cost e. None of these

b

QN=169 Which statement is true: a. A wholesaler is an intermediary that buys products from manufacturers or wholesalers and sells them to consumers. b. A retailer is an intermediary that buys products from manufacturers or wholesalers and sells them to consumers. c. A retailer is an intermediary that buys products from manufacturers and sells them to wholesalers. d. A retailer is an intermediary that buys products from manufacturers and sells them to consumers. e. None of these

c

QN=17 A company has inventory of 20 units at a cost of $12 each on August 1. On August 5, it purchased 10 units at $13 per unit. On August 12 it purchased 15 units at $14 per unit. On August 15, it sold 30 units. Using the FIFO periodic inventory method, what is the value of Cost of goods sold on August 15? a. $140. b. $160. c. $370. d. $210. e. $590.

e

QN=170 The inventory system that updates the accounting records for merchandise transactions only at the end of a period. This statement is about: a. FIFO inventory system b. LIFO inventory system c. Weighted inventory system d. Perpetual inventory system e. Periodic inventory system

d

QN=171 The inventory system continually updates accounting records for merchandising transactions. a. FIFO inventory system b. LIFO inventory system c. Weighted inventory system d. Perpetual inventory system e. Periodic inventory system

b

QN=172 Which discounts are offered based on quantities purchased a. Credit discounts b. Trade discounts c. Purchase discounts d. Payment discounts e. None of these

a

QN=18 A company had inventory of 15 units at a cost of $20 each on November 1. On November 2, it purchased 10 units at $22 each. On November 6 it purchased 12 units at $25 each. On November 8, it sold 22 units for $54 each. Using the FIFO perpetual inventory method, what was the cost of the 22 units sold? a. $454. b. $366. c. $450. d. $570. e. $520.

b

QN=180 Which statement is true: a. Ending inventory is equal to merchandise available for sale minus beginning inventory. b. Ending inventory is equal to merchandise available for sale minus cost of goods sold. c. Ending inventory is equal to merchandise available for sale minus net cost of purchases. d. Beginning inventory is equal to merchandise available for sale minus cost of goods sold. e. None of these.

c

QN=181 An estimate of an asset's value at the end of its benefit period is called: a. Asset at cost b. Book value c. Salvage value d. Depreciation expense e. expense

c

QN=182 Which of the following assets is not depreciated? a. Vehicle b. Machine c. Inventory d. Buildings e. All of these are depreciated

d

QN=183 Which statement is true? a. Assets need to depreciate include vehicle, machine, supplies, buildings b. Assets need to depreciate include van, machine, supplies, buildings c. Assets need to depreciate include machine, supplies, buildings d. Assets need to depreciate include vehicle, machine, buildings e. Assets need to depreciate include vehicle, supplies, buildings

b

QN=184 Which statement is true? a. Total asset cost plus accumulated depreciation equals book value. b. Total asset cost minus accumulated depreciation equals book value. c. Total asset plus depreciation expense equals book value. d. Total asset minus depreciation expense equals book value. e. None of these.

e

QN=185 Book value is equal to: a. Total asset cost minus depreciation expense b. Total asset cost plus depreciation expense c. Total asset plus depreciation expense d. Total asset minus depreciation expense e. None of these

d

QN=186 A company purchased a plant asset for $45,000. The asset has an estimated salvage value of $6,000, and an estimated useful life of 10 years. The annual depreciation expense using the straight-line method is a. $3,000 per year. b. $9,300 per year. c. $3,600 per year. d. $3,900 per year. e. $4,500 per year.

c

QN=187 Which accounts used to record amounts owed to suppliers for products or services purchased on credit? a. Unearned revenue b. Trade account receivable c. Trade accounts payable d. Revenue e. prepayment

d

QN=188 Repayment of the loan for the bank $ 2,000 cash a. Debit cash, credit Expense b. Credit cash , debit expense c. Debit cash, credit loan d. Credit cash, debit loan e. None of these

b

QN=19 A company that uses a perpetual inventory system made the following cash purchases and sales: Jan, 1: Purchased 100 units at $10 per unit. Feb, 5: Purchased 60 units at $12 per unit. March, 16: Sold 40 units for $ 16 per unit. Prepare general journal entries to record the March 16 sale assuming a cash sale and the FIFO method is used. a. March 16 Dr Cash 400 Cr Sale revenue 400 Dr COGS 640 Cr Inventories 640 b. March 16 Dr Cash 640 Cr Sale revenue 640 Dr COGS 400 Cr Inventories 400 c. March 16 Dr Sale revenue 640 Cr Cash 640 Dr COGS 400 Cr Inventories 400 d. March 16 Dr Sale revenue 640 Cr Cash 640 Dr Inventories 400 Cr COGS 400 e. None of these

a

QN=191 John, the owner of Matt company, withdrew $8,000 from the business during the current year. The entry to close the withdrawals account at the end of the year, is: a. Debit capital $8,000 and credit withdrawal $ 8,000 b. Debit capital $8,000 and credit cash $ 8,000 c. Debit capital $8,000 and credit expense $ 8,000 d. Debit expense $8,000 and credit income $ 8,000 e. Credit capital $8,000 and debit withdrawal $ 8,000

e

QN=197 The value of an asset as it appears on a balance sheet, equal to cost minus accumulated depreciation is definition of: a. Depreciation cost b. Asset at cost c. Accumulated depreciation d. Depreciation expense e. Book value

a

QN=198 A method of valuing the cost of goods sold that uses the cost of the oldest items in inventory first. What is it? a. FIFO b. LIFO c. Weighted Average d. Specific method e. None of these

b

QN=199 A method of valuing inventory in which the items acquired last are treated as the ones sold first. What is it? a. FIFO b. LIFO c. Weighted Average d. Specific method e. None of these

e

QN=2 Costs included in the Merchandise Inventory account can include: a. Invoice price minus any discount. b. Transportation-in. c. Storage. d. Insurance. e. All of these.

c

QN=20 A company that uses a perpetual inventory system made the following cash purchases and sales: Jan, 1: Purchased 100 units at $10 per unit. Feb, 5: Purchased 60 units at $12 per unit. March, 16: Sold 40 units for $ 16 per unit. Prepare the general journal entry to record the March 16 sale assuming a cash sale and the LIFO method is used: a. Dr Cash 640 Cr Sale revenue 640 Dr COGS 450 Cr Inventories 450 b. Dr Cash 640 Cr Sale revenue 640 Dr COGS 840 Cr Inventories 840 c. Dr Cash 640 Cr Sale revenue 640 Dr COGS 480 Cr Inventories 480 d. Dr Sale revenue 640 Cr cash 640 Dr COGS 480 Cr Inventories 480 e. None of these

a

QN=200 A condition in which a company's expenses exceed its revenues. What does that mean: a. A loss b. A gain c. A profit d. A net income e. A net sale

b

QN=201 Items used in business operations, such as office pens and paper are several samples of: a. Office expense b. Office supplies c. Office equipment d. Prepayment e. None of these

b

QN=202 The company buys a new car for personal use is recorded with below entry: a. Debit cash and credit withdrawal b. Credit cash and debit withdrawal c. Credit account payable ad debit withdrawal d. Credit cash and debit expense e. None of these

a

QN=203 Borrow $ 1,000 loan to pay for new equipment of the company is recorded with: a. Debit equipment and credit loan b. Credit equipment and debit loan c. Debit cash and credit loan d. Credit cash and debit loan e. None of these

b

QN=204 The company buys a new building for personal use is recorded with below entry: a. Debit cash and credit withdrawal b. Credit cash and debit withdrawal c. Credit account payable ad debit withdrawal d. Credit cash and debit expense e. None of these

b

QN=205 On June 1, 2010, The company paid $1,000 cash for the loan owing the bank before. Recording this transaction. a. Debit cash and credit loan b. Credit cash and debit loan c. Debit account payable and credit loan d. Credit account payable and debit loan e. None of these

a

QN=224 Costs included in the Merchandise Inventory account can include: a. Invoice price minus any discount, Transportation-in, Storage, Insurance b. Invoice price plus any discount, Transportation-in, Storage, Insurance c. Invoice price minus any discount, Transportation-out, Storage, Insurance d. Invoice price minus any discount, Transportation-in, cost of good sold e. All of these

a

QN=206 Which is true about account receivable: a. Money which is owed to a company by a customer for products and services provided on credit. b. Money which is owed to a company by a customer for products and services provided. c. Money which is borrowed by a company for products and services bought on credit. d. Money which is borrowed by a company for products and services bought. e. None of these

a

QN=207 Which statement is true: a. Prepaid expense is considered an asset on the balance sheet b. Prepaid expense is considered a liability on the balance sheet c. Prepaid expense is considered an expense on the income statement d. Prepaid expense is considered a loss on the income statement e. None of these

b

QN=208 Which statement is true: a. Unearned revenue is considered an asset on the balance sheet b. Unearned revenue is considered a liability on the balance sheet c. Unearned revenue is considered an expense on the income statement d. Unearned revenue is considered a loss on the income statement e. None of these

a

QN=209 Which statement is true: a. Account payable is considered a liability on the balance sheet b. Account payable is considered a liability on the statement of owner equity c. Account payable is considered a liability on the income statement d. Account payable is considered a liability on the cash flow statement e. None of these

e

QN=21 4 Which accounts don't need to do closing entries? a. Revenue b. Expense c. Income Summary d. Withdrawals e. Current asset

d

QN=21 A company that uses a perpetual inventory system made the following cash purchases and sales: Jan, 1: Purchased 100 units at $10 per unit. Feb, 5: Purchased 60 units at $12 per unit. March, 16: Sold 40 units for $ 16 per unit. Prepare the general journal entry to record the March 16 sale assuming a cash sale and the weighted average method is used. a. Dr Cash 640 Cr Sale revenue 640 Dr COGS 450 Cr Inventories 450 b. Dr Cash 640 Cr Sale revenue 640 Dr COGS 340 Cr Inventories 340 c. Dr Cash 640 Cr Sale revenue 640 Dr COGS 470 Cr Inventories 470 d. Dr Cash 640 Cr Sale revenue 640 Dr COGS 430 Cr Inventories 430 e. None of these

b

QN=210 Which is the process that resets revenue, expense and withdrawal account balances to zero at the end of the period a. Adjusting account b. Closing process c. Recording transaction d. Prepare trial balance e. Prepare financial statement

d

QN=211 Which accounts belong to Temporary Accounts? a. Asset, liability, withdrawal, income summary b. Revenue, asset, withdrawal, income summary c. Revenue, expense, liability, income summary d. Revenue, expense, withdrawal, income summary e. Revenue, expense, withdrawal, asset

c

QN=212 Which accounts belong to Permanent Accounts ? a. Revenue, asset, liability b. Revenue, expense, income summary c. Asset, liability, owner capital d. Revenue, expense, withdrawal e. Asset, liability, revenue

e

QN=213 Which accounts need to do closing entries? a. Close Revenue accounts to Income Summary b. Close Expense accounts to Income Summary c. Close Income Summary account to Owner's Capital. d. Close Withdrawals account to Owner's Capital e. All of these

b

QN=215 Which accounts don't need to do closing entries? a. Revenue b. Non - current asset c. Income Summary d. Withdrawals e. Expense

c

QN=216 Which accounts don't need to do closing entries? a. Revenue b. Income Summary c. Current Liability d. Withdrawals e. Expense

c

QN=217 Which accounts don't need to do closing entries? a. Revenue b. Income Summary c. Non - current Liability d. Withdrawals e. Expense

c

QN=218 Which accounts don't need to do closing entries? a. Revenue b. Income Summary c. Intangible asset d. Withdrawals e. Expense

d

QN=219 Which accounts don't need to do closing entries? a. Revenue b. Income Summary c. Withdrawals d. Gross profit e. Expense

b

QN=22 A company had inventory of 10 units at a cost of $20 each on November 1. On November 2, it purchased 10 units at $22 each. On November 6 it purchased 6 units at $25 each. On November 8, it sold 22 units for $54 each. Using the FIFO perpetual inventory method, what was the cost of the 22 units sold? a. $570 b. $470 c. $670 d. $370 e. $740

c

QN=220 Which statement is true? a. Revenue and expense accounts are permanent accounts and should be closed at the end of the accounting period. b. Revenue and withdrawal accounts are permanent accounts and should be closed at the end of the accounting period. c. Revenue and expense accounts are temporary accounts and should be closed at the end of the accounting period. d. Revenue and asset accounts are temporary accounts and should be closed at the end of the accounting period. e. Liability and asset accounts are temporary accounts and should be closed at the end of the accounting period.

b

QN=221 Which statement is true? a. Income summary and withdrawals accounts are permanent accounts and should be closed at the end of the accounting period. b. Income summary and withdrawals accounts are temporary accounts and should be closed at the end of the accounting period. c. Income summary and withdrawals accounts are temporary accounts and don't need to be closed at the end of the accounting period. d. Income summary and Liability accounts are temporary accounts and should be closed at the end of the accounting period. e. Income summary and asset accounts are temporary accounts and should be closed at the end of the accounting period.

d

QN=222 Which statement is true? a. Current liabilities include accounts receivable, unearned revenues, and salaries payable. b. Current liabilities include prepayment, unearned revenues, and salaries payable. c. Current liabilities include revenue, unearned revenues, and salaries payable. d. Current liabilities include accounts payable, unearned revenues, and salaries payable. e. Current liabilities include expense, unearned revenues, and salaries payable.

e

QN=223 Costs included in the Merchandise Inventory account can include: a. Invoice price minus any discount. b. Transportation-in. c. Storage. d. Insurance. e. All of these.

d

QN=225 The inventory valuation method that identifies each item in ending inventory with a specific purchase and invoice is the: a. Weighted average inventory method. b. First-in, first-out method. c. Last-in, first-out method. d. Specific identification method. e. Retail inventory method.

a

QN=244 Selling products for cash $300 and $700 on credit. Show the general journal entry to record this transaction. a. Debit Cash $ 300 Debit Account Receivable $700 Credit Revenue $1,000 b. Debit Cash $300 Debit Account Payable $700 Credit Revenue $1,000 c. Debit Account Receivable $700 Credit Unearned Revenue $700 d. Debit Unearned Revenue $700 Credit Account Receivable $700 e. Debit Cash $ 700 Credit Revenue $700

e

QN=226 Which statement is true? a. The cost of an inventory item includes its invoice cost plus any discount, and plus any added costs necessary to put it in a place and condition for sale. b. The cost of an inventory item includes its invoice cost plus any discount, and minus any added costs necessary to put it in a place and condition for sale. c. The cost of an inventory item includes its invoice cost minus any discount, and minus any added costs necessary to put it in a place and condition for sale. d. The cost of an inventory item includes its invoice cost minus any discount e. The cost of an inventory item includes its invoice cost minus any discount, and plus any added costs necessary to put it in a place and condition for sale.

b

QN=227 A company had inventory of 5 units at a cost of $20 each on November 1. On November 2, it purchased 10 units at $22 each. On November 6 it purchased 6 units at $25 each. On November 8, it sold 18 units for $54 each. Using the LIFO perpetual inventory method, what was the cost of the 18 units sold? a. $395. b. $410. c. $450. d. $510. e. $520.

b

QN=228 A company has sales of $350,000, Account Receivable of 50,000 and estimates that 0.7% of its sales are uncollectible. The estimated amount of bad debts expense is a. $350 b. $2,450. c. $3,450. d. $300 e. $530

a

QN=229 The useful life of a fixed asset is: a. The length of time it is productively used in a company's operations. b. Never related to its physical life. c. Its productive life, but not to exceed one year. d. Don't need to be determined. e. Determined by law.

c

QN=23 Which of the following is not considered as subcategory of owner's Equity? a. Revenue b. Withdrawal c. Assets d. Expense e. Contributed capital

d

QN=230 Nelson Company purchased equipment on July 1 for $27,500 and decided to depreciate the equipment on the straight-line method over its useful life of five years. Assuming the equipment's salvage value is $3,500, the amount of monthly depreciation expense Nelson should recognize is: a. $2,400 b. $ 200 c. $4,800 d. $ 400 e. $ 450

e

QN=231 Tangible assets include: a. Vehicle b. Equipment. c. Buildings. d. Machinery. e. All of these.

b

QN=232 Which statement is true about tangible asset? a. Tangible assets are assets held for sale b. Tangible assets are assets held for operating activity of the company c. Tangible assets are assets acquired by loan d. Tangible assets are assets never reduce value e. Tangible assets are assets increase value over the time

b

QN=233 A company purchased new computers at a cost of $14,000 on October 1, 2010. The computers are estimated to have a useful life of 4 years and a salvage value of $2,000. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the computers for the year ended December 31, 2010? a. $250 b. $750 c. $875 d. $1,000 e. $3,000

a

QN=234 A company purchased new computers at a cost of $28,000 on January 1, 2010. The computers are estimated to have a useful life of 5 years and have a salvage value of 3,000. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the computers for the year ended December 31, 2010? a. $5,000 b. $6,000 c. $3,000 d. $5,600 e. $6,500

b

QN=235 Provide descriptions for this transaction: Debit expense $2,000 and Credit supplies $2,000 a. Purchased supplies by cash b. Used supplies c. Counted supplies d. Purchased supplies on credit e. None of these

c

QN=236 Provide descriptions for this transaction: Debit supplies $1,000 and Credit Account Payable $1,000 a. Used supplies. b. Purchased supplies. c. Purchased supplies on credit. d. Counted supplies. e. Transfer supplies into inventory.

e

QN=237 Provide descriptions for this transaction: Credit cash $ 2,000 and Debit Account Payable $ 2,000 a. Buying for cash. b. Selling for cash. c. Selling on credit. d. Buying on credit. e. Paid accounts payable.

b

QN=238 Provide descriptions for this transaction: Debit cash $ 5,000 and Credit Account Receivable $5,000 a. Buying on credit. b. Received cash for an account receivable. c. Buying for cash. d. Selling for cash. e. Selling on credit.

e

QN=239 Provide descriptions for this transaction: Credit supplies $ 2,000 and Debit expense $ 2,000 a. None of these b. Selling supplies on credit worth of $2,000 c. Buying supplies for cash worth of $ 2,000 d. Buying supplies on credit worth of $ 2,000 e. Used supplies in business worth of $ 2,000

c

QN=24 The properties used in operation activities of a business is call: a. Revenue b. Withdrawal c. Assets d. Expense e. Liabilities

d

QN=240 Provide descriptions for this transaction: Credit cash and debit owner equity a. Investing by owner in cash b. Paid expense of business c. Withdrawal of cash from business by owner for personal use d. Withdrawal of cash from business by owner for personal use or paid expense of business e. None of these

b

QN=241 Invested $10,000 cash, and $15,000 of computer equipment. Prepare journal entries to record the above transactions a. Debit Cash $ 25,000 Credit Capital $25,000 b. Debit Cash $ 10,000 Debit Equipment $ 15,000 Credit Capital $25,000 c. Credit Cash $ 10,000 Credit Equipment $ 15,000

e

QN=242 On June 1, paid $200 cash for office supplies. Prepare journal entries to record the above transactions on June 1. a. Debit Cash $ 200 Credit office supplies $200 b. Debit office supplies expense $200 Credit Cash $ 200 c. Debit Cash $ 200 Credit office supplies expense $200 d. Debit equipment $200 Credit Cash $ 200 e. Debit office supplies $200 Credit Cash $ 200

d

QN=243 Textron Stores purchased a van that cost $35,000. The firm made a payment of $5,000 cash and the balance on credit. Show the general journal entry to record this transaction. a. Debit Cash $5,000 Debit Account payable $30,000 Credit Van $35,000 b. Debit Cash $5,000 Debit Account payable $30,000 Credit van $ 35,000 c. Debit Van $ 5,000 Credit Cash $5,000 d. Debit Van $35,000 Credit Cash $5,000 Credit Account payable $30,000 e. Debit Van $30,000 Credit Account payable $30,000

b

QN=245 The account used to record the transfers of assets from a business to its owner (personal use) is: a. A revenue account. b. The owner's withdrawals account. c. The owner's capital account. d. An expense account. e. A liability account.

d

QN=246 If Jones, the owner of Hardware company, uses cash of the business to purchase a family car, the business should record this use of cash with an entry to: a. Debit Expense and credit Cash. b. Credit Expense and Debit Cash. c. Debit Cash and credit Withdrawals. d. Debit Withdrawals and credit Cash. e. Debit car and credit Cash.

d

QN=247 If Smith, the owner of a restaurant, uses cash of the business to pay for renting his house, the business should record this use of cash with an entry to: a. Debit Expense and credit Cash. b. Credit Expense and Debit Cash. c. Debit Cash and credit Withdrawals. d. Debit Withdrawals and credit Cash. e. Debit car and credit Cash.

e

QN=248 If Hussan, the owner of Hardware company, uses cash of the business to purchase a motorcycle for his travelling, the business should record this use of cash with an entry to: a. Debit Expense and credit Cash. b. Credit Expense and Debit Cash. c. Debit Cash and credit Withdrawals. d. Debit Motorcycle and credit Cash. e. Debit Withdrawals and credit Cash.

a

QN=25 Which of the following is a liability? a. Account payable b. Account receivable c. Cash d. Inventory e. expense

e

QN=250 John set up a new business and completed these transactions: 1. Open new restaurant, by investing $30,000 cash and equipment valued at $10,000. 2. Purchased $1,000 of kitchen utility on credit. 3. Paid $1,500 cash for the staff's salary. 4. Service meals to customers and collected$4,000 cash What was the balance of the cash account after these transactions were posted? a. $46,500 b. $42,500 c. $45,500 d. $31,500 e. $32,500

b

QN=251 At the beginning of January of the current year, a Law company has a normal balance of $50,000 for accounts receivable. During January, the company collected $14,000 from customers and provided additional services to customers on account totaling $12,000. Additional, company used service of $ 1,000 on credit. At the end of January, the balance in the accounts receivable account should be: a. $49,000. b. $48,000. c. $36,000 d. $26,000 e. $76,000

a

QN=252 Cooley company has the balance in the accounts payable at the beginning of March was $1,000. During the month of March, Cooley company purchased from Dell company on account totaling $2,000. Also during this month, Cooley company paid $500 on its accounts payable for Dell company. In addition, Cooley company was paid $8,000 by a customer for services to be provided in the future. What is the balance in accounts payable at the end of March? a. $2,500. b. $10,500. c. $8,000 d. $12,500 e. $2,000

b

QN=253 On June 30, 2009, Apricot Co. paid $7,500 cash for a service that will be performed during two-year period. On June 30, 2009 Apricot should record: a. A credit to an expense for $7,500 and debit cash $ 7,500 b. A debit to a prepaid expense for $7,500 and credit cash $ 7,500 c. A debit to a prepaid expense for $7,500 and credit account payable $ 7,500 d. A credit to a prepaid expense for $7,500 and debit cash $ 7,500 e. A debit to expense for $7,500 and credit cash $ 7,500

c

QN=254 A company had no office supplies available at the beginning of the year. During the year, the company purchased $250 of office supplies. On December 31, $75 of office supplies remained. How much should the company report as office supplies expense for the year? a. $75. b. $125. c. $175. d. $250. e. $325.

c

QN=255 Office supplies available at the beginning of the year are 0. During the year, the company purchased $250 of office supplies. On December 31, $90 of office supplies remained. How much should the company report as office supplies expense for the year? a. $75. b. $125. c. $160 d. $250. e. $325.

a

QN=256 Office supplies available at the beginning of the year are 0. During the year, the company purchased $3000 of office supplies. On December 31, $1000 of office supplies remained. Additional company's insurance expense is $ 1000. How much should the company report as office supplies expense for the year? a. $2000 b. $3000 c. $1000 d. $4000 e. $5000

b

QN=257 The company has no office supplies available at the beginning of the year. During the year, the company purchased $500 of office supplies on credit. On December 31, there is $100 of office supplies remained. How much should the company report for the year as office supplies expense? a. $600 b. $400 c. $100 d. $300 e. $500

d

QN=258 Which statement is true about revenue: a. Revenue is reported in the financial statements as a liability on the balance sheet. b. Revenue is reported in the financial statements as an asset on the balance sheet. c. Revenue is reported in the financial statements as an owner's equity on the balance sheet. d. Revenue is reported in the financial statements on the income statement. e. Revenue is reported in the financial statements on the cash flow statement.

e

QN=259 Selling 1,000 products for a customer and collected $2,000 cash. Recording this transaction: a. Debit Cash $ 1,000 and credit Revenue $1,000 b. Credit Cash $ 2,000 and Debit Revenue $2,000 c. Debit Cash $2,000 and Unearned Revenue $2,000 d. Credit Cash $ 2,000 and Debit Unearned Revenue $2,000 e. Debit Cash $ 2,000 and credit Revenue $2,000

e

QN=26 Which of the following is not a liability? a. Account payable b. Note payable c. Short term loan d. Long term loan e. Short term investment

a

QN=260 The summary amounts below appear in the Income Statement and Balance Sheet columns of a company's December 31 work sheet. Prepare the necessary closing entries into INCOME SUMMARY Asset : $15,000 Liability: $14,000 Revenue: $ 10,000 Withdrawal: $1,000 a. Debit Revenue: $10,000 Credit Income summary: $10,000 b. Debit Income summary: $10,000 Credit Revenue: $10,000 c. Debit owner capital: $10,000 Credit Revenue: $10,000 d. Debit owner capital: $1,000 Credit Withdrawal: $1,000 e. Debit Withdrawal: $1,000 Credit owner capital: $1,000

e

QN=261 The summary amounts below appear in the Income Statement and Balance Sheet columns of a company's December 31 work sheet. Prepare the necessary closing entries into INCOME SUMMARY Asset : $10,000 Revenue: $ 15,000 Unearned revenue: $1,000 a. Debit unearned Revenue: $1,000 Credit Income summary: $1,000 b. Credit unearned Revenue: $1,000 Debit Income summary: $1,000 c. Credit Revenue: $15,000 Debit Income summary: $15,000 d. Debit owner capital: $10,000 Credit Withdrawal: $10,000 e. Debit Revenue: $15,000 Credit Income summary: $15,000

b

QN=262 The summary amounts below appear in the Income Statement and Balance Sheet columns of a company's December 31 work sheet. Prepare the necessary closing entries into INCOME SUMMARY Asset : $15,000 Liability: $14,000 Expense: $ 8,000 Withdrawal: $1,000 a. Debit Expense: $8,000 Credit Income summary: $8,000 b. Credit Expense: $8,000 Debit Income summary: $8,000 c. Credit withdrawal: $1,000 Debit Income summary: $1,000 d. Credit Asset: $15,000 Debit Income summary: $15,000 e. Debit owner capital: $1,000 Credit Withdrawal: $1,000

d

QN=263 The summary amounts below appear in the Income Statement and Balance Sheet columns of a company's December 31 work sheet. Prepare the necessary closing entries into OWNER CAPITAL Asset : $15,000 Liability: $14,000 Withdrawal: $1,000 a. Debit Withdrawal: $1,000 Credit Owner Capital: $1,000 b. Debit expense: $1,000 Credit Owner Capital: $1,000 c. Debit Owner Capital: $1,000 Credit expense: $1,000 d. Debit Owner Capital: $1,000 Credit Withdrawal: $1,000 e. Debit income summary: $1,000 Credit Withdrawal: $1,000

a

QN=264 The operating functions of a business exclude: a. Borrowing. b. Purchasing. c. Marketing. d. Distribution. e. All of these.

a

QN=266 The rule that financial statements will be prepared with the assumption that the business will continue operating instead of being closed or sold, is the: a. On - Going-concern principle. b. Accrual basic principle. c. Matching principle. d. Cost Principle. e. Consistency principle.

b

QN=267 The accounting principle that requires accounting information to be based on actual cost instead of current value, is the: a. Accounting equation. b. Cost principle. c. On - Going-concern principle. d. Accrual principle. e. Consistency principle.

c

QN=268 The difference between a company's assets and its liabilities is: a. Net income. b. Expense. c. Equity. d. Revenue. e. Net loss.

e

QN=269 Which is true about Expenses: a. The same as net income. b. The excess of expenses over assets. c. Resources owned or controlled by a company. d. Company's earning activities that contribute to increase owner's equity . e. The costs of assets or services used to generate revenue.

a

QN=27 Which of the following is not a category or element of the balance sheet? a. Expense b. Liabilities c. Assets d. Account payable e. Loan

d

QN=270 Which is true about Revenues: a. The same as net income. b. The excess of expenses over assets. c. Resources owned or controlled by a company. d. Company's earning activities that contribute to increase owner's equity . e. The costs of assets or services used.

b

QN=271 If assets are $199,000 and liabilities are $132,000, then equity equals a. $32,000. b. $67,000. c. $99,000. d. $131,000. e. $198,000.

b

QN=272 A cash outflow from the company into its owner is called a(n): a. Liability. b. Withdrawal. c. Expense. d. Profit. e. Investment.

b

QN=273 Assets created by selling goods and services on credit are: a. Accounts payable. b. Accounts receivable. c. Liabilities. d. Expenses. e. Equity.

b

QN=274 Photometer Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation? a. Assets, $30,000 increase; liabilities, no effect; equity, $30,000 increase. b. Assets, $30,000 decrease; liabilities, $30,000 decrease; equity, no effect. c. Assets, $30,000 decrease; liabilities, $30,000 increase; equity, no effect. d. Assets, no effect; liabilities, $30,000 decrease; equity, $30,000 increase. e. Assets, $30,000 decrease; liabilities, no effect; equity $30,000 decrease.

d

QN=275 How does Lead Company record by the billing of a client for $15,000 of service completed? a. +$15,000 accounts receivable, -$15,000 accounts payable. b. +$15,000 accounts receivable, +$15,000 accounts payable. c. +$15,000 accounts receivable, +$15,000 cash. d. +$15,000 accounts receivable, +$15,000 revenue. e. +$15,000 accounts receivable, -$15,000 revenue.

d

QN=276 Moffat Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. What is the entry need to record when Moffat Company bill of a client for $25,000 of contract completed? a. +$25,000 accounts receivable, -$25,000 accounts payable. b. +$25,000 accounts receivable, +$25,000 accounts payable. c. +$25,000 accounts receivable, +$25,000 cash. d. +$25,000 accounts receivable, +$25,000 revenue. e. +$25,000 accounts receivable, -$25,000 revenue.

a

QN=277 A company might provide a service or product on credit. "On credit" implies that the cash payment will occur: a. on a later date b. on selling day c. on previous day d. No due date e. No ability to collect

b

QN=278 A company might buy a service or product on credit. "On credit" implies that the cash payment will occur: a. On buying day b. on a later date c. on previous day d. No due date e. No obligation to pay

a

QN=279 Provide descriptions for this transaction: Increase cash $1,000 and Increase equity $,1000 a. Investment of cash in business by owner or performed services for cash b. Investment of cash in business by owner c. Performed services for cash d. Collected cash from customers e. None of these

a

QN=28 Newton Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Newton Company wrote off the $3,000 uncollectible account of its customer, P. Best. The journal entry on May 3 is: a. Dr allowance for doubtful debts 3000 Cr account receivable 3000 b. Dr bad debt expense 3000 Cr account receivable 3000 c. Dr bad debt expense 3000 Cr Allowance for doubtful debt 3000 d. Dr account receivable 3000 Cr bad debt expense 3000 e. Dr Accounts receivable 3000 Cr Cash 3000

b

QN=280 Provide descriptions for this transaction: Debit office supplies $2,000 and credit liability $,2000 a. Buying office supplies by cash $2,000 b. Buying office supplies on credit $2,000 c. Arrange office supplies contract on credit $2,000 d. Arrange office supplies contract by cash $2,000 e. None of these

b

QN=281 Provide descriptions for this transaction: Debit office supplies $8,000 and credit liability $,8000 a. Buying office supplies by cash $8,000 b. Buying office supplies on credit $8,000 c. Arrange office supplies contract on credit $8,000 d. Arrange office supplies contract by cash $8,000 e. None of these

b

QN=282 Provide descriptions for this transaction: Debit inventory $8,000 and credit liability $,8000 a. Buying inventory by cash $8,000 b. Buying inventory on credit $8,000 c. Arrange inventory contract on credit $8,000 d. Arrange inventory contract by cash $8,000 e. None of these

b

QN=283 Provide descriptions for this transaction: Debit inventory $8,000 and credit liability $,8000 a. Buying inventory by cash $8,000 b. Buying inventory on credit $8,000 c. Arrange inventory contract on credit $8,000 d. Arrange inventory contract by cash $8,000 e. None of these

a

QN=284 Provide descriptions for this transaction: Debit inventory $8,000 and credit cash $,8000 a. Buying inventory by cash $8,000 b. Buying inventory on credit $8,000 c. Arrange inventory contract on credit $8,000 d. Arrange inventory contract by cash $8,000 e. None of these

b

QN=285 Provide descriptions for this transaction: Debit insurance expense $8,000 and credit Insurance - prepaid expense $,8000 a. Paid insurance fee by cash $8,000 b. Adjusting prepaid expense at the end of period $8,000 c. Arrange insurance contract on credit $8,000 d. Arrange inventory contract by cash $8,000 e. None of these

a

QN=286 Provide descriptions for this transaction: Debit Cash $8,000 and credit Unearned revenue $,8000 a. Received payment in advance from customers by cash $8,000 b. Paid in advance for supplies by cash $8,000 c. Adjusting revenue at the end of period $8,000 d. Adjusting unearned revenue at the end of period $8,000 e. None of these

a

QN=287 Provide descriptions for this transaction: Debit Cash $8,000 and credit Unearned revenue $,8000 a. Received payment in advance from customers by cash $8,000 b. Paid in advance for supplies by cash $8,000 c. Adjusting expense at the end of period $8,000 d. Adjusting unearned revenue at the end of period $8,000 e. None of these

d

QN=288 Provide descriptions for this transaction: Debit unearned revenue $8,000 and credit revenue $,8000 a. Received payment in advance from customers $8,000 b. Paid in advance for supplies by cash $8,000 c. Adjusting expense at the end of period $8,000 d. Adjusting unearned revenue at the end of period $8,000 e. None of these

d

QN=289 Provide descriptions for this transaction: Debit unearned revenue $8,000 and credit revenue $8,000 a. Received payment in advance from customers $8,000 b. Paid in advance for supplies by cash $8,000 c. Adjusting expense at the end of period $8,000 d. Adjusting unearned revenue at the end of period $8,000 e. None of these

c

QN=29 A company has $20,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 6% of outstanding receivables are uncollectible. The current debit balance (before adjustments) in the allowance for doubtful accounts is $800. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for: a. $1200 b. $500 c. $400 d. $1000 e. None of these

b

QN=290 Adjusting depreciation expense of fixed asset at $8,000. Recording this transaction: a. Debit depreciation $8,000 and credit accumulated depreciation expense $,8000 b. Debit depreciation expense $8,000 and credit accumulated depreciation expense $,8000 c. Debit depreciation expense $8,000 and credit fixed asset $,8000 d. Debit depreciation expense $8,000 and credit accumulated asset $,8000 e. None of these

c

QN=291 Taylor Company uses the direct write-off method of recording uncollectible accounts receivable. Recently, a customer informed Taylor that he would be unable to pay $300 owed to Taylor. Taylor's proper journal entry to reflect this event would be: a. Dr. Uncollectible Accounts Expense 300 Cr. Allowance. for Uncollectible Accounts 300 b. Dr. Allowance. for Uncollectible Accounts 300 Cr. Accounts Receivable 300 c. Dr. Uncollectible Accounts Expense 300 Cr. Accounts Receivable 300 d. Dr. revenue 300 Cr. Accounts Receivable 300 e. None of these

c

QN=292 Branz Company had credit sales during the current year which amounted to $700,000. Historically, 3% of credit sales are uncollectible. If Branz uses the allowance method of recording uncollectible accounts, a proper journal entry for the year would be: a. Dr. Accounts Receivable 21,000 Cr. Allow. for Uncollectible Accounts 21,000 b. Dr. Uncollectible Accounts Expense 21,000 Cr. Accounts Receivable 21,000 c. Dr. Uncollectible Accounts Expense 21,000 Cr. Allow. for Uncollectible Accounts 21,000 d. Dr. Allow. for Uncollectible Accounts 21,000 Cr. Accounts Receivable 21,000 e. None of these

d

QN=293 Flynn Company uses an allowance method for recording uncollectible. At the due date of that account receivable, Flynn determined that $4,000 due from Mitchell will not be collected and should be write off. The entry Flynn should record to write off the Mitchell account is: a. Dr. Uncollectible Accounts Expense 4,000 Cr. Accounts Receivable 4,000 b. Dr. revenue 4,000 Cr. Accounts Receivable 4,000 c. Dr. Uncollectible Accounts Expense 4,000 Cr. Allow. for Uncollectible Accounts 4,000 d. Dr. Allow. for Uncollectible Accounts 4,000 Cr. Accounts Receivable 4,000 e. None of these

a

QN=295 Inventory accounts should be classified in which section of a balance sheet? a. Current assets b. Investments c. Intangible assets d. Tangible assets e. Non-current assets

d

QN=296 Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year. January 2 Beginning Inventory: 500 units at $3.00 April 7 Purchased : 1,100 units at $3.20 June 30 Purchased : 400 units at $4.00 December 7 Purchased : 1,600 units at $4.40 Sales during the year were 2,700 units at $5.00. If Hefty used the periodic LIFO method, cost of goods sold would be: a. $2,780 b. $3,960 c. $9,700 d. $10,880 e. $10,000

c

QN=297 Of the following account types, which would be increased by a debit? a. Liabilities and expenses. b. Assets and equity. c. Assets and expenses. d. Equity and revenues. e. None of these

c

QN=298 The proper journal entry to record Ransom Company's billing of clients for $500 of services rendered is: a. Dr. Cash 500 Cr. Accounts Receivable 500 b. Dr. Accounts Receivable 500 Cr. capital Stock 500 c. Dr. Accounts Receivable 500 Cr. Service Revenue 500 d. Dr. Cash 500 Cr. Service Revenue 500 e. None of these

d

QN=299 The trial balance: a. Is a formal financial statement. b. Is used to prove that there are no errors in the journal or ledger. c. Provides a listing of every account in the chart of accounts. d. Provides a listing of the balance of each ledger account. e. None of these

e

QN=3 During a period of steadily rising costs, the inventory valuation method that yields the lowest reported net income is: a. Specific identification method. b. Average cost method. c. Weighted-average method. d. FIFO method. e. LIFO method.

a

QN=30 Electron borrowed $15,000 cash from TechCom by signing a promissory note. TechCom's entry to record the transaction should include a: a. Debit to Notes Receivable for $15,000. b. Debit to Accounts Receivable for $15,000. c. Credit to Notes Receivable for $15,000. d. Debit Notes Payable for $15,000. e. Credit to Cash for $15,000.

c

QN=300 Realistic Company purchased a new truck on January 1, 20X1. The truck cost $20,000, has a four-year life, and a $4,000 residual value. The company has a December 31 year end. If Realistic Company depreciates the truck by the straight-line method, how much should Realistic report as the book value of the truck at the end of 20X3? a. $1,600 b. $4,000 c. $8,000 d. $16,000 e. $15,000

b

QN=31 The amount due on the maturity date of a $12,000, 60-day 8%, note receivable is: a. $6,000. b. $12,000. c. $160. d. $12,160. e. $5,920.

c

QN=32 The company has $1679 credit sales at year end. Experiences show that 4% of credit sales may not be collectable. What is the estimated bad debt expense to be record at year end? a. $1200 b. $419 c. $67.16 d. $100 e. None of these

a

QN=33 A vehicle had an estimated useful life of 8 years. The vehicle cost $23,000 and its estimated salvage value is $1,500. The depreciation expense (using straight line method) for a year is: a. $ 2687.50. b. $ 3546.50. c. $ 2875.00. d. $10,750.00. e. $ 2,856.25.

d

QN=34 A company used straight-line depreciation for an item of equipment that cost $12,000, had a salvage value of $2,000, and had a five-year useful life. What is the depreciation expense for one year? a. $1000. b. $1800. c. $2400. d. $2000. e. $2160.

d

QN=35 Orange Company purchased equipment on July 1 for $28,500 and decided to depreciate the equipment on the straight-line method over its useful life of five years. Assuming the equipment's salvage value is $4,500, the amount of monthly depreciation expense Nelson should recognize is: a. $2,400 b. $ 200 c. $4800 d. $400 e. $ 450

c

QN=36 Thomas Enterprises purchased a depreciable asset on January 1, 2008 at a cost of $100,000. The asset is expected to have a salvage value of $15,000 at the end of its five-year useful life. Balance of accumulated depreciation of this asset at the end of 2009 is a. $27540 b. $21600 c. $34000 d. $17000 e. $90000

e

QN=38 Accounting is an information and measurement system that: a. Identifies business activities. b. Records business activities. c. Communicates business activities. d. Helps people make better decisions. e. All of these.

b

QN=39 Internal users of accounting information include: a. Shareholders. b. Managers. c. Lenders. d. Suppliers. e. Customers.

a

QN=4 The inventory valuation method that results in the lowest taxable income in a period of inflation is: a. LIFO method. b. FIFO method. c. Weighted-average cost method. d. Specific identification method. e. Gross profit method.

e

QN=40 External users of accounting information include: a. Shareholders. b. Customers. c. Creditors. d. Government regulators. e. All of these.

b

QN=41 The accounting assumption that requires every business to be accounted for separately from other business entities, including its owner or owners is known as the: a. Objectivity principle. b. Business entity assumption. c. Going-concern assumption. d. Revenue recognition principle. e. Cost principle.

a

QN=42 The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the: a. Going-concern principle. b. Business entity principle. c. Objectivity principle. d. Cost Principle. e. Monetary unit principle.

c

QN=43 Which of the following accounting principles would require that all goods and services purchased should be recorded at cost? a. Going-concern principle. b. Continuing-concern principle. c. Cost principle. d. Business entity principle. e. Consideration principle.

b

QN=44 An example of a financing activity is: a. Buying office supplies. b. Obtaining a long-term loan. c. Buying office equipment. d. Selling inventory. e. Buying land.

a

QN=45 An example of an operating activity is: a. Paying wages. b. Purchasing office equipment. c. Borrowing money from a bank. d. Selling stock. e. Paying off a loan.

b

QN=46 Operating activities: a. Are the means organizations use to pay for resources like land, buildings and equipment. b. Involve using resources to research, develop, purchase, produce, distribute and market products and services. c. Involve acquiring and disposing of resources that a business uses to acquire and sell its products or services. d. Are also called asset management. e. Are also called strategic management.

c

QN=47 An example of an investing activity is a. Paying wages of employees. b. Withdrawals by the owner. c. Purchase of land. d. Selling inventory. e. Contribution from owner.

d

QN=48 Net Income: a. Decreases equity. b. Represents the amount of assets owners put into a business. c. Equals assets minus liabilities. d. Is the excess of revenues over expenses. e. Represents owners' claims against assets.

d

QN=49 If equity is $300,000 and liabilities are $192,000, then assets equal: a. $108,000. b. $192,000. c. $300,000. d. $492,000. e. $792,000.

d

QN=71 The financial statement that reports whether the business earned a profit and also lists the types and amounts of the revenues and expenses is called: a. A Balance sheet. b. A Statement of owner's equity. c. A Statement of cash flows. d. An Income statement. e. A Statement of financial position.

c

QN=5 Which of the following inventory costing methods will always result in the same values for ending inventory and cost of goods sold regardless of whether a perpetual or periodic inventory system is used? a. FIFO and LIFO b. LIFO and weighted-average cost c. Specific identification and FIFO d. FIFO and weighted-average cost e. LIFO and specific identification

a

QN=50 Resources owned or controlled by a company that are expected to yield future benefits are: a. Assets. b. Revenues. c. Liabilities. d. Owner's Equity. e. Expenses.

b

QN=51 Gross increases in equity from a company's earnings activities are: a. Assets. b. Revenues. c. Liabilities. d. Owner's Equity. e. Expenses.

c

QN=52 The difference between a company's assets and its liabilities, or net assets is: a. Net income. b. Expense. c. Equity. d. Revenue. e. Net loss.

e

QN=53 Creditors' claims on the assets of a company are called: a. Net losses. b. Expenses. c. Revenues. d. Equity. e. Liabilities.

d

QN=54 Decreases in equity that represent costs of assets or services used to earn revenues are called: a. Liabilities. b. Equity. c. Withdrawals. d. Expenses. e. Owner's Investment.

b

QN=55 The description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the: a. Income statement equation. b. Accounting equation. c. Business equation. d. Net income. e. Trial balance. f. Balance sheet.

c

QN=56 Another name for equity is: a. Net income. b. Expenses. c. Net asset. d. Revenue. e. Net loss.

e

QN=57 Which of the following statements is true about assets? a. They are economic resources owned or controlled by the business. b. They are expected to provide future benefits to the business. c. They appear on the balance sheet. d. Claims on them can be shared between creditors and owners. e. All of these.

b

QN=58 A payment to an owner for personal use is called a(n): a. Liability. b. Withdrawal. c. Expense. d. Contribution. e. Investment.

a

QN=59 Distributions by a business to its owners are called: a. Withdrawals. b. Expenses. c. Assets. d. Retained earnings. e. Net Income.

a

QN=6 An overstatement of ending inventory will cause a. An overstatement of assets and equity on the balance sheet. b. An understatement of assets and equity on the balance sheet. c. An overstatement of assets and an understatement of equity on the balance sheet. d. An understatement of assets and an overstatement of equity on the balance sheet. e. No effect on the balance sheet.

c

QN=60 The assets of a company total $700,000; the liabilities, $200,000. What are the claims of the owners? a. $900,000. b. $700,000. c. $500,000. d. $200,000. e. It is impossible to determine unless the amount of this owners' investment is known.

d

QN=61 On June 30 of the current year, the assets and liabilities of Phoenix Phildell are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of owner's equity as of July 1 of the current year? a. $8,300 b. $13,050 c. $20,500 d. $31,100 e. $40,400

b

QN=62 Assets created by selling goods and services on credit are: a. Accounts payable. b. Accounts receivable. c. Liabilities. d. Expenses e. Equity.

d

QN=63 How would the accounting equation of Boston Company be affected by the billing of a client for $10,000 of consulting work completed? a. +$10,000 accounts receivable, -$10,000 accounts payable. b. +$10,000 accounts receivable, +$10,000 accounts payable. c. +$10,000 accounts receivable, +$10,000 cash. d. +$10,000 accounts receivable, +$10,000 revenue. e. +$10,000 accounts receivable, -$10,000 revenue.

e

QN=64 Zion Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It buys office equipment on credit for $75,000. What would be the effects of this transaction on the accounting equation? a. Assets increase by $75,000 and expenses increase by $75,000. b. Assets increase by $75,000 and expenses decrease by $75,000. c. Liabilities increase by $75,000 and expenses decrease by $75,000. d. Assets decrease by $75,000 and expenses decrease by $75,000. e. Assets increase by $75,000 and liabilities increase by $75,000.

c

QN=65 Viscount Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are: a. Total assets decrease and equity increases. b. Both total assets and total liabilities decrease. c. Total assets, total liabilities, and equity are unchanged. d. Both total assets and equity are unchanged and liabilities increase. e. Total assets increase and equity decreases.

d

QN=66 If the liabilities of a business increased $75,000 during a period of time and the owner's equity in the business decreased $30,000 during the same period, the assets of then business must have: a. Decreased $105,000. b. Decreased $45,000. c. Increased $30,000. d. Increased $45,000. e. Increased $105,000.

a

QN=68 If the liabilities of a company increased $74,000 during a period of time and equity in the company decreased $19,000 during the same period, what was the effect on the assets? a. Assets would have increased $55,000. b. Assets would have decreased $55,000. c. Assets would have increased $19,000. d. Assets would have decreased $19,000. e. None of these.

c

QN=69 If a company paid $38,000 of its accounts payable in cash, what was the effect on the assets, liabilities, and equity? a. Assets would decrease $38,000, liabilities would decrease $38,000, and equity would decrease $38,000. b. Assets would decrease $38,000, liabilities would decrease $38,000, and equity would increase $38,000. c. Assets would decrease $38,000, liabilities would decrease $38,000, and equity would not change. d. There would be no effect on the accounts because the accounts are affected by the same amount. e. None of these.

b

QN=70 If assets are $365,000 and equity is $120,000, then liabilities are: a. $120,000. b. $245,000. c. $365,000. d. $485,000. e. $610,000.

c

QN=72 A balance sheet lists: a. The types and amounts of the revenues and expenses of a business. b. Only the information about what happened to equity during a time period. c. The types and amounts of assets, liabilities, and equity of a business as of a specific date. d. The inflows and outflows of cash during the period. e. The assets and liabilities of a company but not the owner's equity.

b

QN=73 A company acquires equipment for $75,000 cash. This represents a(n): a. Operating activity. b. Investing activity. c. Financing activity. d. Revenue activity. e. Expense activity.

c

QN=74 A company borrows $125,000 from the Eastside Bank and receives the loan proceeds in cash. This represents a(n): a. Operating activity. b. Investing activity. c. Financing activity. d. Revenue activity. e. Expense activity.

a

QN=75 Flash had cash inflows from operations $62,500; cash outflows from investing activities of $47,000; and cash inflows from financing of $25,000. The net change in cash was: a. $40,500 increase. b. $40,500 decrease. c. $134,500 decrease. d. $134,000 increase. e. $9,500 increase.

d

QN=76 Flash has beginning equity of $257,000, net income of $51,000, withdrawals of $40,000 and investments by owners of $6,000. Its ending equity is: a. $223,000. b. $240,000. c. $268,000. d. $274,000. e. $208,000.

c

QN=77 A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of owner's equity? a. $17,000. b. $29,000. c. $71,000. d. $88,000. e. $105,000.

b

QN=78 An account used to record the owner's investments in the business is called a(n): a. Withdrawals account. b. Capital account. c. Revenue account. d. Expense account. e. Liability account.

b

QN=79 Withdrawal account, revenues account, expenses account and income summary account are a. Permanent accounts b. Temporary accounts c. Equity accounts d. Closing accounts e. None of these above

b

QN=8 A company had the following purchases during the current year: Jan: 10 units at $ 120 Feb: 20 units at $130 May: 15 units at $140 Sep: 12 units at $150 Nov: 10 units at $160 On December 31, there were 26 units remaining in ending inventory. These 26 units consisted of 2 from January, 4 from February, 6 from May, 4 from September, and 10 from November. Using the specific identification method, what is the cost of the ending inventory? a. $3,500. b. $3,800. c. $3,960. d. $3,280. e. $3,640.

b

QN=80 The account used to record the transfers of assets from a business to its owner is: a. A revenue account. b. The owner's withdrawals account. c. The owner's capital account. d. An expense account. e. A liability account.

c

QN=81 Unearned revenues are: a. Revenues that have been earned and received in cash. b. Revenues that have been earned but not yet collected in cash. c. Liabilities created when a customer pays in advance for products or services before the revenue is earned. d. Recorded as an asset in the accounting records. e. Increases to owners' capital.

d

QN=82 Prepaid expenses are: a. Payments made for products and services that do not ever expire. b. Classified as liabilities on the balance sheet. c. Decreases in equity. d. Assets that represent prepayments of future expenses. e. Promises of payments by customers.

d

QN=83 A debit is: a. An increase in an account. b. The right-hand side of a T-account. c. A decrease in an account. d. The left-hand side of a T-account. e. An increase to a liability account.

c

QN=84 The right side of a T-account is a(n): a. Debit. b. Increase. c. Credit. d. Decrease. e. Account balance.

d

QN=85 Which of the following statements is incorrect? a. The normal balance of accounts receivable is a debit. b. The normal balance of owner's withdrawals is a debit. c. The normal balance of unearned revenues is a credit. d. The normal balance of an expense account is a credit. e. The normal balance of the owner's capital account is a credit.

e

QN=86 A credit is used to record: a. A decrease in an expense account. b. A decrease in an asset account. c. An increase in an unearned revenue account. d. An increase in a revenue account. e. All of these.

d

QN=87 A simple account form widely used in accounting as a tool to understand how debits and credits affect an account balance is called a: a. Withdrawals account. b. Capital account. c. Drawing account. d. T-account. e. Balance column sheet.

c

QN=88 Which of the following statements is correct? a. The left side of a T-account is the credit side. b. Debits decrease asset and expense accounts, and increase liability, equity, and revenue accounts. c. The left side of a T-account is the debit side. d. Credits increase asset and expense accounts, and decrease liability, equity, and revenue accounts. e. In certain circumstances the total amount debited need not equal the total amount credited for a particular transaction

c

QN=89 Which is true about An account balance: a. Always a debit. b. Is the difference between the total debits and total credits for an account c. Is the difference between the total debits and total credits for an account including the beginning balance d. None of these e. Always a credit.

e

QN=9 A company had inventory on November 1 of 5 units at a cost of $20 each. On November 2, they purchased 10 units at $22 each. On November 6 they purchased 6 units at $25 each. On November 8, 8 units were sold for $55 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale? a. $304 b. $296 c. $288 d. $280 e. $276

c

QN=90 Of the following accounts, the one that normally has a credit balance is: a. Cash. b. Office Equipment. c. Sales Salaries Payable. d. Owner, Withdrawals. e. Sales Salaries Expense.

e

QN=91 A debit is used to record: a. A decrease in an asset account. b. A decrease in an expense account. c. An increase in a revenue account. d. An increase in the balance of an owner's capital account. e. An increase in the balance of the owner's withdrawals account.

d

QN=92 Wisconsin Rentals purchased office supplies on credit. The general journal entry made by Wisconsin Rentals will include a: a. Debit to Accounts Payable. b. Debit to Accounts Receivable. c. Credit to Cash. d. Credit to Accounts Payable. e. Credit to Wisconsin Rentals, Capital.

b

QN=93 An asset created by prepayment of an expense is: a. Recorded as a debit to an unearned revenue account. b. Recorded as a debit to a prepaid expense account. c. Recorded as a credit to an unearned revenue account. d. Recorded as a credit to a prepaid expense account. e. Not recorded in the accounting records until the earnings process is complete.

b

QN=94 On September 30, the Cash account of Value Company had a normal balance of $5,000. During September, the account was debited for a total of $12,200 and credited for a total of $11,500. What was the balance in the Cash account at the beginning of September? a. A $0 balance. b. A $4,300 debit balance. c. A $4,300 credit balance. d. A $5,700 debit balance. e. A $5,700 credit balance.

b

QN=95 On April 30, Holden Company had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May? a. $ 5,000. b. $47,000. c. $52,000. d. $57,000. e. $32,000.

c

QN=96 During the month of February, Hoffer Company had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the January 31 beginning cash balance? a. $700. b. $1,100. c. $2,900. d. $0. e. $4,300.

d

QN=98 If Tim Jones, the owner of Jones Hardware proprietorship, uses cash of the business to purchase a family automobile, the business should record this use of cash with an entry to: a. Debit Salary Expense and credit Cash. b. Debit Tim Jones, Salary and credit Cash. c. Debit Cash and credit Tim Jones, Withdrawals. d. Debit Tim Jones, Withdrawals and credit Cash. e. Debit Automobiles and credit Cash.

c

QN=99 Zed Bennett opened an art gallery and as a dealer completed these transactions: 1. Started the gallery, Artery, by investing $40,000 cash and equipment valued at $18,000. 2. Purchased $70 of office supplies on credit. 3. Paid $1,200 cash for the receptionist's salary. 4. Sold a painting for an artist and collected a $4,500 cash commission on the sale. 5. Completed an art appraisal and billed the client $200. What was the balance of the cash account after these transactions were posted? a. $12,230. b. $12,430. c. $43,300. d. $43,430. e. $61,430.

The net realizable value is used for purposes of valuing out of date merchandise in inventory. a. True b. False

a. True

The person who is to be paid when a note matures is called the payee. a. True b. False

a. True

Which of the following is considered under the straight-line method but not under double-declining-balance method?

The asset's salvage value

depreciable cost/estimated useful life

The calculation for annual depreciation using the straight-line depreciation method is initial cost/estimated useful life depreciable cost/estimated useful life depreciable cost * estimated useful life initial cost*estimated useful life

On which of the following dates, a company incurs liability for a dividend?

The date of declaration

It should be noted that the Internal Revenue Service requires

The direct write off method

initial cost- residual value

The formula for depreciate cost is initial cost + residual value initial cost - residual value initial cost - accumulated depreciation depreciation = initial cost

Which of the following factors affects the accounting for contingent liabilities?

The likelihood of occurring and measurement

declining balance

The method of determining depreciation that yields successive reductions in the periodic depreciation change over the estimated life of the asset is units-of production declining-balance straight line time-valuation

Which of the following is a reason for a corporation to buy back its own stock?

To reissue as bonuses to employees

A bond is simply a form of an interest-bearing note. a. True b. False

True

A buyer who acquires merchandise under credit terms of 1/10, n/30 has 10 days after the invoice date to take advantage of the cash discount. a. True b. False

True

A buyer who acquires merchandise under credit terms of 1/10, n/30 has 10 days after the invoice date to take advantage of the cash discount. a. True b. False

True

A corporation has 10,000 shares of $100 par value stock outstanding. If the corporation issues a 4-for-1 stock split, the number of shares outstanding after the split will be 40,000. a. True b. False

True

A corporation has 10,000 shares outstanding of $25 par value and a current market value of $100 per share. If the corporation issues a 5-for-1 stock split, the market value of the stock will fall to approximately $20. a. True b. False

True

Bonds are sold at face value when the contract rate is equal to the market rate of interest. a. True b. False

True

Bonds payable due in 2020 are reported on the balance sheet as long-term liabilities. a. True b. False

True

Cash dividends are not paid on shares of treasury stock. a. True b. False

True

Discounts taken by the buyer for early payment of an invoice are called purchases discounts by the buyer. a. True b. False

True

During the first year of operations, a company granted warranties on its products. The estimated cost of the product warranty liability at the end of the year is $12,750. The product warranty expense of $12,750 should be recorded in the year the related product sale is made. a. True b. False

True

During the first year of operations, employees earned vacation pay of $50,000. The vacations will be taken during the second year. The vacation pay expense should be recorded in the first year of operations. a. True b. False

True

Earnings per common share is one factor that influences the decision to use debt financing or equity financing. a. True b. False

True

FICA tax becomes a liability to the federal government at the time the employees are paid. a. True b. False

True

FICA tax is a payroll tax that is paid by both the employee and the employer. a. True b. False

True

Federal unemployment compensation tax becomes an employer's liability at the time the employees are paid. a. True b. False

True

Federal unemployment compensation tax is a tax that is paid only by employers. a. True b. False

True

Federal unemployment compensation taxes that are collected by the federal government are not paid directly to the unemployed but are allocated among the states for use in state programs. a. True b. False

True

Fixed assets are reported at their book value on the balance sheet. a. True b. False

True

For accounting purposes, stated value is treated the same way as par value. a. True b. False

True

For proper matching of revenues and expenses, the estimated cost of fringe benefits must be recognized as an expense of the period during which the employee earns the benefits. a. True b. False

True

Goodwill refers to the excess of purchase price of a business over the fair value of its net assets. a. True b. False

True

Gross profit percent is calculated by dividing gross profit by net sales. a. True b. False

True

If 20,000 shares are authorized, 14,000 shares are issued, and 500 shares are held as treasury stock, a cash dividend of $1 per share would amount to $13,500.

True

If 50,000 shares are authorized, 35,000 shares are issued, and 2,000 shares are reacquired, the number of outstanding shares is 33,000. a. True b. False

True

If 50,000 shares are authorized, 37,000 shares are issued, and 2,000 shares are reacquired, the number of outstanding shares is 35,000. a. True b. False

True

If paid-in capital in excess of par-—preferred stock is $80,000, preferred stock is $500,000, paid-in capital in excess of par—common stock is $50,000, common stock is $1,000,000, and retained earnings is $230,000, the total stockholders' equity is $1,860,000. a. True b. False

True

If prior to the last weekly payroll period of the calendar year, the cumulative earnings for an employee are $75,200, earnings subject to social security tax are $106,800, and the tax rate is 7.5%, the employer's social security tax on the $800 gross earnings paid on the last day of the year is $60.

True

If the market rate of interest is 7% and a corporation's bonds bear interest at 8%, the bonds will sell at a premium. a. True b. False

True

In a perpetual inventory system, merchandise returned to vendors reduces the merchandise inventory account. a. True b. False

True

When the amount of use of a fixed asset varies from year to year, the method of determining depreciation expense that best matches allocation of cost with revenue is:

Units-of-production.

A characteristic of a fixed asset is that it is:

Used in the operations of a business.

debit Accumulated Depreciaition; credit Machinery

When a company discards machinery that is fully depreciated, this transaction would be recorded with the following entry debit Accumulated Depreciation; credit Machinery debit Machinery; credit Accumulated Depreciaiton debit Cash; credit Accumulated Depreciaiton debit Depreciaiton Expenses; credit Accumulated Depreciaiton

debit Machinery, Accumulated Depreciation, and Loss on Disposal; credit Machinery and Cash

When a company exchanges machinery and receives a trade-in allowance less than the book value, this transaction would be recorded with the following entry: debit Machinery and Accumulated Depreciation; credit Machinery and Cash debit Cash and Machinery; credit Accumulated Depreciation debit Cash and Machinery; credit Accumulated Depreciaiton and Machinery debit Machinery, Accumulated Depreciaiton, and Loss on Disposal; credit Machinery and Cash

book value of the replaced component is written off to depreciation expense

When a company replaces a component of property, plant and equipment, which statement below does not account for one of the steps in the process? book value of the replaced component is written off to depreciation expense the asset cost of the replaced component is credited any cost to remove the old component is charged to expense the identifiable direct costs associated with the new component are capitalized

When do you estimate the years life?

When you place in service

patents

Which intangible assets are amortized over their useful life? trademarks goodwill patents all of the above

insurance costs during construction

Which of the following is included in the cost of constructing a building? insurance costs during construction cost of paving parking lot cost of repairing vandalism damage during construction cost of removing the demolished building existing on the land when it was purchased

all are correct

Which of the following should be included in the acquisition cost of a place of equipment? transportation costs installation costs testing cards prior to placing the equipment into production all are correct

Accounts receivable arising from trade transactions amounted to $62,000 and $78,000 at the beginning and end of the year, respectively. Net income reported on the income statement for the year was $125,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method are: a. $109,000. b. $141,000. c. $125,000. d. $140,000.

a. $109,000.

Allowance for Doubtful Accounts has an unadjusted balance of $500 at the end of the year, and an analysis of accounts in the customers' ledger indicates doubtful accounts of $15,000. Compute the adjusted balance in the allowance for doubtful accounts?

a. $15,000

Ariel Inc. uses the allowance method of accounting for uncollectible accounts receivable and estimates that 2% of the credit sales of $1,650,000 for the year ended will be uncollectible. Allowance for Doubtful Accounts has a negative unadjusted balance of $(1,600) at the end of the year. Determine the amount of the adjustment to record the provision for doubtful accounts.

a. $33,000

The following data is available for an item of JNC Inc. for the month of March: March 1: Inventory_15 units at $10 each March 15: Purchase_ 30 units at $18 each March 31: Purchase_ 24 units at $15 each Sale 30 units Using the first-in, first-out method, what is JNC Inc.'s cost of ending inventory for March?

a. $630

If the cost of an item of inventory is $70, the current replacement cost is $65, and the sales price is $85, the amount included in inventory according to the lower-of-cost-or-market method is: .

a. $65

On June 1, Unidevo, Inc. purchased $1,700 worth of supplies on account. Prior to the purchase, the balance in the supplies account was $0. On December 31, the fiscal year-end for Unidevo, it is determined that $800 of supplies still remain. What is the balance in the supplies account after adjustment? a. $800 b. $900 c. $0 d. $1,700

a. $800

SQC Inc. had sales of $3,000,000, cost of merchandise sold of $2,100,000, and average inventory of $140,000. What is SQC Inc.'s days' sales in inventory? (Round the answer to the nearest whole number.)

a. 24 days

86. Dana Inc. showed the following data for the year end: Cash sales: $4,100,000 Credit sales: 5,900,000 Accounts receivable, beginning of the year: 600,000 Accounts receivable, end of the year: 400,000 Calculate Dana Inc.'s days' sales in receivables.

a. 30 days

Which of the following is normally the result of cash being received or paid before the revenue is earned or the expense is incurred? a. A deferred expense b. An accrued expense c. A contra asset d. An intangible asset

a. A deferred expense

When cash is received in payment of an account receivable, which section of the Statement of Cash Flows is affected? a. Cash Flow from Operating Activities b. Cash Flow from Investing Activities c. Cash Flow from Financing Activities d. There is no effect on the Statement of Cash Flows.

a. Cash Flow from Operating Activities

78. When cash is paid to suppliers on account, which section of the Statement of Cash Flows is affected? a. Cash Flow from Operating Activities. b. Cash Flow from Investing Activities. c. Cash Flow from Financing Activities d. There is no effect on the Statement of Cash Flows.

a. Cash Flow from Operating Activities.

XYZ Co. paid $1,000 in dividends to stockholders. How does this transaction affect the accounts of XYZ? a. Cash will decrease by $1,000 and retained earnings will decrease by $1,000. b. Cash will decrease by $1,000 and expenses will increase $1,000. c. Cash will decrease by $1,000 and revenues will decrease $1,000. d. Net income will decrease by $1,000.

a. Cash will decrease by $1,000 and retained earnings will decrease by $1,000.

Both accounts receivable and notes receivable represent claims that are expected to be collected in cash. a. True b. False

a. True

Cost of Merchandise Sold is used in accounting for transactions by sellers of merchandise. a. True b. False

a. True

XYZ Co. received $3,000 in payments from clients for services billed in a previous month. Which accounts will be affected and by what amounts under the accrual basis of accounting? a. Cash will increase by $3,000 and accounts receivable decrease by $3,000. b. Cash will increase by $3,000 and revenues will increase $3,000. c. Accounts receivable will increase by $3,000 and revenue will increase by $3,000. d. Accounts receivable will increase by $3,000 and cash will increase by $3,000

a. Cash will increase by $3,000 and accounts receivable decrease by $3,000.

Which of the following is not considered when figuring net purchases?

a. Cost of goods sold

Which of the following refers to the arrangements between buyers and sellers regarding the payments for merchandise?

a. Credit terms

Speedy Company's weekly payroll of $250 is paid on Fridays (five-day work week). Assume that the last day of the month falls on Thursday. Which of the following is the required month-end adjusting entry? a. Increase Salaries Expense $200 and increase Salaries Payable $200 b. Increase Salaries Expense $50 and increase Salaries Payable $50 c. Increase Salaries Payable $200 and increase Cash $200 d. Increase Salaries Expense $250 and increase Cash $250

a. Increase Salaries Expense $200 and increase Salaries Payable $200

Flyer Co. billed a client for flying lessons given in January. The payment was received in February. Under the accrual basis of accounting, when should Flyer Co. record the revenue? a. January b. February c. Some in January and some in February d. Flyer Co. should not record any revenue

a. January

Identify the item that should be treated as a deferred expense by a company. a. Prepaid advertising b. Unpaid wages c. Unearned rent d. Notes receivable

a. Prepaid advertising

Which of the following is the effect of the payment of dividends by a company to its stockholders? a. The company's liquidity decreases, while profitability remains unchanged. b. The company's profitability and liquidity remains unchanged. c. The company's profitability and liquidity decrease. d. The company's profitability increases, while its liquidity decreases.

a. The company's liquidity decreases, while profitability remains unchanged.

Which of the following statements is true?

a. The revenue activities of a service business involve providing services to customers.

Which of the following occurs when a seller pays a customer a refund?

a. The seller decreases the balance of the cash account and the customer refunds payable account.

Which of the following is the effect of purchasing merchandise for cash on a company's liquidity and profitability metrics?

a. There is no effect on liquidity and profitability.

Which of the following is the effect of purchasing merchandise on account with credit terms 2/10, n/30?

a. There is no effect on the liquidity and profitability metrics.

"Brand name" recognition is an example of goodwill. a. True b. False

a. True

A criticism of the single-step income statement is that gross profit and income from operations are not readily available for analysis. a. True b. False

a. True

All receivables that are expected to be realized in cash within a year are presented in the current assets section of the balance sheet. a. True b. False

a. True

An adjusting entry would adjust an expense account so that the expense is reported when incurred. a. True b. False

a. True

An adjusting entry would adjust revenue so that it is reported when earned and not when cash is received. a. True b. False

a. True

Available discounts taken by the buyer for early payment of an invoice are termed sales discounts by the seller. a. True b. False

a. True

Average cost is a method of inventory valuation. a. True b. False

a. True

During deflationary periods, the use of the LIFO method of costing inventory will result in a greater amount of net income than would result from the use of the FIFO method of inventory costing. a. True b. False

a. True

During inflationary periods, the use of the FIFO method of costing inventory will result in a greater amount of net income than would result from the use of the LIFO method of costing inventory. a. True b. False

a. True

During inflationary periods, the use of the LIFO method of costing inventory will result in a lesser amount of net income than would result from the use of the average method of inventory costing. a. True b. False

a. True

Expenses on the income statement are assets used up or services consumed in the process of generating revenues. a. True b. False

a. True

If cash dividends of $145,000 were declared during the year and the decrease in dividends payable from the beginning to the end of the year was $7,000, the statement of cash flows would report $152,000 in the financing activities section. a. True b. False

a. True

If land costing $75,000 was sold for $135,000, the amount reported in the investing activities section of the statement of cash flows would be $135,000. a. True b. False

a. True

If payment is due by the end of the month in which the sale is made, the invoice terms are expressed as n/eom. a. True b. False

a. True

In a multiple-step income statement, sales will be reduced by sales discounts and customer refunds and allowances to arrive at net sales. a. True b. False

a. True

In a perpetual inventory system, merchandise returned to vendors reduces the merchandise inventory account. a. True b. False

a. True

In valuing damaged merchandise for inventory purposes, net realizable value is the estimated selling price less any direct cost of disposal. a. True b. False

a. True

Inventories of merchandising and manufacturing businesses are reported as current assets on the balance sheet. a. True b. False

a. True

Liabilities that will not be due for more than one year are called long-term liabilities. a. True b. false

a. True

Lower-of-cost-or-market is a method of inventory valuation. a. True b. False

a. True

Merchandise Inventory is presented on the balance sheet in the current assets section. a. True b. False

a. True

Merchandise inventory shrinkage will decrease Retained Earnings. a. True b. False

a. True

Merchandise is sold for $2,500, terms FOB destination, 2/10, n/30, with transportation costs of $150. If $500 of the merchandise is returned prior to payment and the invoice is paid within the discount period, the amount of the sales discount is $40. a. True b. False

a. True

Of the three widely used inventory costing methods (FIFO, LIFO, and average), the FIFO method of costing inventory is based on the assumption that costs are charged against revenues in the order in which they were incurred. a. True b. False

a. True

On the income statement in the single-step form, the total of all expenses is deducted from the total of all revenues. a. True b. False

a. True

Physical assets of a long-term nature are referred to as fixed assets. a. True b. False

a. True

Purchases of merchandise increase the merchandise inventory account under the perpetual inventory system. a. True b. False

a. True

Receiving cash in advance of performing a service creates a liability for the company. a. True b. False

a. True

Revenue from sources other than the primary operating activity of a business is called other revenue. a. True b. False

a. True

Sales discounts is used in accounting for transactions with customers. a. True b. False

a. True

The FIFO method of costing inventory is based on the assumption that costs should be charged against revenues in the order in which they were incurred. a. True b. False

a. True

The accrual basis of accounting requires revenue to be recorded when the service is performed. a. True b.false

a. True

The accrual basis recognizes liabilities at the time the business incurs the obligation to pay for the services or goods purchased. a. True b. False

a. True

The difference between the total receivables and the balance in Allowance for Doubtful Accounts at the end of a period is referred to as the net realizable value of the receivables. a. True b. False

a. True

The direct write-off method records uncollectible accounts expense in the year the specific account receivable is determined to be uncollectible. a. True b. False

a. True

The due date of a 90-day note dated July 15 is October 13. (Assume 360 days in a year) a. True b. False

a. True

The effect of a customer refund and allowance is a reduction in sales revenue and a decrease in cash or accounts receivable. a. True b. False

a. True

The fixed asset section of a balance sheet may also be labeled as property, plant, and equipment. a. True b. False

a. True

The indirect method of preparing the statement of cash flows reconciles net income with net cash flows from operating activities. a. True b. False

a. True

The matching concept requires expenses to be recorded in the same period that the related revenue is recorded. a. True b. False

a. True

The maturity value of a 12%, 60-day note for $1,000 is $1,020. (Assume 360 days in a year) a. True b. False

a. True

Cash and other assets that are expected to be converted to cash or sold or used up within one year or less through the normal operations of the business are called: a. current assets. b. intangible assets. c. fixed assets. d. notes receivable.

a. current assets.

On the statement of cash flows prepared by the indirect method, a $50,000 gain on the sale of investments would be: a. deducted from net income in converting the net income reported on the income statement to cash flows from operating activities. b. added to net income in converting the net income reported on the income statement to cash flows from operating activities. c. added to cash received from the sale to determine cash flows from investing activities. d. deducted from cash received from the sale to determine cash flows from investing activities.

a. deducted from net income in converting the net income reported on the income statement to cash flows from operating activities.

Merchandise purchased on account by a company has no effect on its working capital because:

a. inventory and accounts payable are increased by the same amount.

A note receivable due in five years is listed on the balance sheet under the caption:

a. investments.

If a company has an accounts receivable turnover ratio of 15, the company:

a. is converting its accounts receivable to cash 15 times per year.

In reference to a promissory note, the person who makes the promise to pay is called the:

a. maker.

In credit terms of 1/10, n/30, the "10" represents the:

a. number of days in the discount period.

The quick ratio is computed as _____. a. quick assets divided by current liabilities b. quick assets divided by current assets c. current assets divided by stockholders' equity d. current liabilities divided by current assets

a. quick assets divided by current liabilities

When the allowance method for recognising uncollectible accounts receivable is used, the allowance account will have a positive balance at the end of the period if:

a. the write-offs during the period exceed the beginning balance.

Using accrual accounting, expenses are recorded and reported only: a. when they are incurred, whether or not cash is paid. b. when they are incurred and paid at the same time. c. if they are paid before they are incurred. d. if they are paid after they are incurred.

a. when they are incurred, whether or not cash is paid.

On April 1, Tenity, Inc. paid $3,300 for an insurance premium on a three-year insurance policy. At the end of December, Tenity's fiscal year-end, what should be the balance in the prepaid insurance account? a. $1,100 b. $2,475 c. $3,300

b. $2,475

Surist, Inc. purchased merchandise for $300,000, received credit for purchase returns of $20,000, availed purchase discounts of $5,000, and paid transportation in of $12,000. Refer to Surist, Inc. What is the total cost of merchandise purchased?

b. $287,000

Based on the following information, what would be recorded as purchases discount if the invoice is paid within the discount period? 1. $5,000 of merchandise inventory was ordered on April 2, 2016. 2. $2,000 of this merchandise was received on April 5, 2016. 3. On April 6, 2016, an invoice dated April 4, 2016, with terms of 2/10, net 30 for $2,150 which included a $150 prepaid freight cost, was received. 4. On April 10, 2016, $500 of the merchandise was returned to the seller.

b. $30

A sales invoice included the following information: merchandise price, $6,000; terms 2/10, n/eom. Assuming that a credit for merchandise returned of $600 is granted prior to payment, and that the invoice is paid within the discount period, what is the amount of cash received by the seller?

b. $5,292

Merchandise subject to terms 2/10, n/30, FOB shipping point, is sold on account to a customer for $35,000. The seller issued a credit memorandum for $8,000 prior to payment. What is the amount of the cash discount allowable?

b. $540

The unearned rent account has a balance of $60,000. If $4,000 of the $60,000 is unearned at the end of the accounting period, the amount of the adjusting entry is: a. $64,000. b. $56,000. c. $60,000. d. $4,000.

b. $56,000.

An equipment was purchased for $15,000. It has a useful life of 5 years and a residual value of $4,000. Determine the depreciation expense for the first year using the double-declining-balance method?

b. $6,000

Galaxy, Inc. had the following merchandise transactions in October: Purchases $80,000 Purchase returns 8,000 Purchase discounts 7,200 Transportation in 3,000 What is the total cost of merchandise purchased for Galaxy, Inc?

b. $67,800

Jonas Company's inventory has the following values: Cost: $1,000 Estimated selling price: 1,500 Selling expenses: 600 Under the lower-of-cost-or-market method, Jonas Company's inventory will be valued at:

b. $900. estimated selling price- selling expense

If sales is $1,000,000, cost of merchandise sold is $750,000, and average inventory is $220,000, how much would be inventory turnover?

b. 3.4

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method? a. A decrease in inventory b. A decrease in accounts payable c. Preferred dividends declared and paid d. A decrease in accounts receivable

b. A decrease in accounts payable

The document issued by the seller that informs the buyer of the details of customer refund is called a debit memorandum. a. True b. False

b. False

When merchandise that was sold on account is returned, which accounts are affected?

b. Customer refunds payable, accounts receivable, merchandise inventory, and estimated returns inventory

"Market," as used in the phrase "lower of cost or market" for valuing inventory, refers to the price at which the inventory is being offered for sale by its owner. a. True b. False

b. False

11. Accrued expenses are expenses that have been incurred and paid. a. True b. False

b. False

A buyer who acquires merchandise under credit terms of 1/10, n/30 has 30 days after the invoice date to take advantage of the cash discount. a. True b. False

b. False

A criticism of a single-step income statement is that net income is not available for analysis. a. True b. False

b. False

A sale of $600 on account subject to a sales tax of 5% would increase account receivable by $570. a. True b. False

b. False

Accrual accounting does not require that the accounting records be updated prior to preparing financial statements. a. True b. False

b. False

Allowance for Doubtful Accounts is a contra liability account. a. True b. False

b. False

At the end of a period before the accounts are adjusted, Allowance for Doubtful Accounts has a balance of $250, and net sales on account for the period total $500,000. If uncollectible accounts expense is estimated at 1% of net sales on account, the current provision to be made for uncollectible accounts expense is $4,997.50. a. True b. False

b. False

Credit purchase is taken into account while calculating accounts receivable turnover ratio. a. True b. False

b. False

Customer refunds and allowances is a contra-asset account. a. True b. False

b. False

During inflationary periods, the value of inventory that appears on the balance sheet using FIFO method will be more than its current replacement cost. a. True b. False

b. False

Every company must use the cash basis of accounting. a. True b. False

b. False

Freight in is the amount paid by the seller to deliver merchandise sold to a customer. a. True b. False

b. False

Generally accepted accounting principles do not normally allow the use of the allowance method of accounting for uncollectible accounts. a. True b. False

b. False

If merchandise costing $2,500, terms FOB destination, 2/10, n/30, with prepaid transportation costs of $100, is paid within 10 days, the amount of the purchases discount is $48. a. True b. False

b. False

If the ownership of merchandise passes to the buyer when the seller delivers the merchandise for shipment, the terms are stated as FOB destination. a. True b. False

b. False

In a transaction where purchased merchandise has been returned, the buyer will increase the Customer Refunds Payable account and the seller will increase the Purchases Returns and Allowances account. a. True b. False

b. False

It is easy to objectively determine the physical decline in the ability of fixed assets to provide service. a. True b. False

b. False

Land is an example of a current asset. a. True b. False

b. False

Merchandise inventory shrinkage will increase Merchandise Inventory. a. True b. False

b. False

Net income is reduced when a specific receivable is written off under the analysis of receivables method. a. True b. False

b. False

On the income statement, customer refunds and allowances and customer discounts are added to gross sales to yield net sales. a. True b. False

b. False

On the income statement, sales discounts are normally deducted from sales to yield the cost of merchandise sold. a. True b. False

b. False

Receivables not expected to be collected within one year are reported in the fixed assets section of the balance sheet. a. True b. False

b. False

Repayments of bonds would be shown as a cash outflow in the investing section of the statement of cash flows. a. True b. False

b. False

Rights that are short-term in nature are called intangible assets. a. True b. False

b. False

Sales discounts are granted by the seller to customers for payment at the end of the month. a. True b. False

b. False

Sales to customers who use bank credit cards, such as MasterCard and VISA, are generally treated as credit sales. a. True b. False

b. False

The balance of the allowance for doubtful accounts is added to accounts receivable on the balance sheet. a. True b. False

b. False

To determine cash payments for operating expenses for the cash flow statement using the direct method, a decrease in prepaid expenses is added to operating expenses other than depreciation. a. True b. False

b. False

To determine cash payments for operating expenses for the cash flow statement using the direct method, depreciation expense is added to net income. a. True b. False

b. False

Under the accrual basis of accounting, net cash flows from operating activities on the statement of cash flows will normally be the same as net income. a. True b. False

b. False

Under the accrual basis of accounting, the accounting records are normally updated after the preparation of the financial statements. a. True b. False

b. False

Under the direct write-off method, an attempt is made to match Bad Debt Expense to sales revenues in the same accounting period. a. True b. False

b. False

When merchandise that was sold is returned, the seller decreases accounts payable. a. True b. False

b. False

A&M Co. provided services of $1,000,000 to clients on account. How does this transaction affect A&M's accounts? a. Increase accounts receivable and cash by $1,000,000 each b. Increase accounts receivable and revenues by $1,000,000 each c. Increase accounts receivable and unearned revenues by $1,000,000 each d. Increase cash and decrease accounts receivable by $1,000,000 each

b. Increase accounts receivable and revenues by $1,000,000 each

Eagle Eye, Inc., a corporation, received an additional investment of $6,000 cash in exchange for shares of common stock. How does this transaction affect Eagle Eye's accounts? a. Increase in stock expense and decrease cash by $6,000 each b. Increase common stock and increase cash by $6,000 each c. Increase common stock and increase revenue by $6,000 each d. Increase common stock and decrease retained earnings by $6,000 eac

b. Increase common stock and increase cash by $6,000 each

On April 1, Smart, Inc. paid $7,200 for an insurance premium on a three-year insurance policy. How does this transaction affect Smart's accounts? a. Increase insurance expense and decrease cash by $7,200 each b. Increase prepaid insurance and decrease cash by $7,200 each c. Increase unearned insurance and decrease cash by $7,200 each d. Increase prepaid insurance and decrease retained earnings by $7,200 each

b. Increase prepaid insurance and decrease cash by $7,200 each

Which of the following is the effect of depreciation being recorded by a company? a. Its cash flow decreases. b. Its net income decreases. c. Its quick assets decrease. d. Its common stock increases.

b. Its net income decreases.

If merchandise inventory is being valued at cost and the price level is steadily falling, which method of costing will yield the largest gross profit?

b. LIFO

The inventory costing method that assigns the most recent costs to cost of good sold is:

b. LIFO.

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

b. Last-in, first-out

71. Electrodo Co. purchased land for $55,000 with $20,000 paid in cash and $35,000 in notes payable. What effect does this transaction have on the accounts under the accrual basis of accounting? a. Net increase in assets and liabilities of $55,000 b. Net increase in assets of $35,000 and a net increase in liabilities of $35,000 c. Net increase in assets of $55,000 and a net decrease in liabilities of $35,000 d. Net increase in assets of $75,000 and a net decrease in liabilities of $30,000

b. Net increase in assets of $35,000 and a net increase in liabilities of $35,000

Merchandise is ordered on November 12; the merchandise is shipped by the seller and the invoice is prepared, dated, and mailed by the seller on November 15; the merchandise is received by the buyer on November 17; the transaction is recorded in the seller's accounts on November 15. If the credit terms are 1/10, n/30, the discount period begins with what date?

b. November 15

_____ is the process that begins with analyzing transactions and ends with preparing financial statements. a. Liquidity reporting b. The accounting cycle c. Amortization of accounts d. Cost reporting

b. The accounting cycle

Which of the following should be shown on a statement of cash flows under the financing activity section? a. The purchase of a long-term investment in the common stock of another company b. The payment of cash to retire a long-term note c. The proceeds from the sale of a building d. The issuance of a long-term note to acquire land

b. The payment of cash to retire a long-term note

Which of the following statements is true about a retail business?

b. The revenue activities of a retail business involve the buying and selling of merchandise.

Which of the following accounts would require an adjustment when making an adjusting entry for a deferral? a. Accrued interest b. Unearned rent c. Salary expense d. Notes receivable

b. Unearned rent

The two methods of accounting for uncollectible receivables are the:

b. allowance method and the direct write-off method.

The reduction in the ability of a fixed asset to provide service over time is called: a. deferral recognition. b. depreciation. c. consolidation. d. accumulation.

b. depreciation

Inventory costing methods place primary emphasis on assumptions about:

b. flow of costs.

Merchandise subject to the credit terms 2/10, n/30, FOB shipping point, is sold to a customer on account for $20,125. The seller issued a credit memorandum for $4,600 prior to payment. What is the amount of the cash discount allowable if the payment is made within 10 days of the invoice date?

c. $310.50

90. ASE Company sold goods, receiving $35,000 in cash and $15,000 on credit. How much revenue should it record under the accrual basis of accounting? a. $35,000 b. $15,000 c. $50,000 d. $50,000

c. $50,000

On June 1, Unidevo, Inc. purchased $2,300 worth of supplies on account. Prior to the purchase, the balance in the supplies account was $350. On December 31, the fiscal year-end for Unidevo, it is determined that $500 of supplies still remain. What is the balance in the supplies account after adjustment? a. $0 b. $1,800 c. $500 d. $2,300

c. $500

A sales invoice included the following information: merchandise price, $8,000; terms 2/10, n/eom. Assuming that a credit for merchandise returned of $1,000 is granted prior to payment, and that the invoice is paid within the discount period, what is the amount of cash received by the seller?

c. $6,860

St. Nick Corporation's Toy-Making Supplies account showed a beginning balance of $200 and supplies purchased of $800. There were $400 of supplies on hand at year-end. The year-end adjustment would include an increase in Toy- Making Supplies Expense for a. $1,000. b. $800. c. $600. d. $400.

c. $600

Use the following data to calculate cost of merchandise sold under FIFO method. September 1: Beginning Inventory 15 units at $20 each September 10: Purchase 20 units at $25 each September 20: Purchase 25 units at $28 each September 30: Ending Inventory 30 units

c. $675

If Johnson, Inc. sold $800,000 worth of merchandise, had $100,000 returned, and then the balance paid during the 1% discount period, how much was Johnson's net sales?

c. $693,000

The balance in the office supplies account on May 1 was $6,380, supplies purchased during June were $4,740, and the supplies on hand at May 31 were $2,360. The amount to be used for the appropriate adjusting entry is: a. $8,740. b. $4,740. c. $8,760. d. $13,480. d. $13,480.

c. $8,760.

Merchandise with an invoice price of $10,000 is purchased subject to terms of 2/10, n/30, FOB destination. Transportation costs paid by the seller totaled $300. What is the net cost of the merchandise?

c. $9,800

Orange Co. sells merchandise on credit to Zea Co. in the amount of $9,000. The invoice is dated on September 15 with terms of 1/15, net 45. What is the amount of the discount, and up to what date must the invoice be paid in order for the buyer to take advantage of the discount?

c. $90, September 30

If net sales is $550,000, beginning inventory is $110,000, and ending inventory is $125,000, how much would be the accounts receivables turnover?

c. 4.7

101. Which one of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a. A gain on the sale of land b. A decrease in accounts payable c. An increase in accrued liabilities d. Dividends paid on common stock

c. An increase in accrued liabilities

Zilova Inc. issues a credit memo of $850 to a customer. What is the effect of this transaction on profitability and liquidity?

c. Both profitability and liquidity remain unchanged.

QRT Co. received $1,560 advance from Zync Inc. as rent for the use of a building owned by QRT Co. How does this transaction affect QRT's accounts if QRT recognizes a liability on receipt of the rent? a. Cash is increased, and sales revenue is increased. b. Cash is increased, and rent income is decreased. c. Cash is increased, and unearned rent is increased. d. Cash is increased, and prepaid rent is increased.

c. Cash is increased, and unearned rent is increased.

If merchandise inventory is being valued at cost and the price level is consistently rising, which method of costing will yield the highest inventory?

c. FIFO

If merchandise inventory is being valued at cost and the price level is steadily rising, the method of costing that will yield the highest net income is:

c. FIFO.

Which of the following is true about quick ratio? a. It is computed as quick assets multiplied by current liabilities. b. It includes cash, inventory, and short-term investments. c. If it is less than 1.0, it raises liquidity concerns for creditors. d. It is a suitable measure to derive the profitability of the company.

c. If it is less than 1.0, it raises liquidity concerns for creditors.

Allowance for Doubtful Accounts has an unadjusted balance of $800 at the end of the year, and an analysis of accounts in the customers' ledger indicates doubtful accounts of $15,000. Which of the following records the proper provision for doubtful accounts?

c. Increase Uncollectible Accounts Expense, $14,200; increase Allowance for Doubtful Accounts, $14,200

Which of the following metrics is affected when a business makes prepayment of rent? a. Profitability b. Leverage c. Liquidity d. Contingency

c. Liquidity

Which of the following transactions will affect the liquidity metric of a company? a. Supplies used for manufacturing a product b. Salary owed but not paid c. Services provided but not billed to the customer d. Depreciation charged on fixed asset

c. Services provided but not billed to the customer

Deferred revenue is initially recorded as: a. revenue but becomes a liability over time. b. an asset but becomes revenue over time. c. a liability but becomes revenue over time. d. revenue but becomes an asset over time.

c. a liability but becomes revenue over time.

The updating of accrual accounting records before preparing financial statements is referred to as the: a. consolidation process. b. full disclosure process. c. adjustment process. d. money measurement process.

c. adjustment process.

Days' sales in receivables estimates the average number of days it takes to:

c. collect accounts receivables.

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a:

c. credit memorandum.

The liabilities that are due to be paid usually within a year or less are called: a. long-term liabilities. b. deferred liabilities. c. current liabilities. d. contingent liabilities

c. current liabilities.

Using a perpetual inventory system, the return of merchandise purchased on account includes a(n):

c. decrease in Merchandise Inventory.

Jack Inc. offers a credit term of n/30. This means that the company: a. receives money from the customers 30 days after the of sale of the goods.

c. expects to collect receivables every 30 days.

A transaction in which a company sells its receivables and immediately receives cash for operating and other needs is called _____.

c. factoring

When merchandise sold is assumed to be in the order in which the expenditures were made, the inventory costing

c. first-in, first-out.

Merchandise not sold at the end of the period is reported as:

c. merchandise inventory.

Expenses not related to the primary operations of the business are sometimes reported as: a. administrative expense. b. operating expense. c. other expense. d. all of these.

c. other expense.

Sometimes a(n) _____ is offered to buyers as a means of encouraging them to pay before the end of the credit period.

c. sales discount

Losses on discarding fixed assets are _____.

capital expenditures

The cost incurred to extend an asset's useful life is recorded as:

capital expenditures

One of the ways in which just-in-time processing is accomplished in manufacturing and non manufacturing processes is by:

combining processing functions into work centers and cross-training workers to perform more than one function.

The Modified Accelerated Cost Recovery System is used to:

compute depreciation for tax purposes.

Allowance for Doubtful Accounts is classifed as a(n)

contra-asset

The periodic interest to be paid on bonds is identified in the bond indenture and is expressed as a percentage of the face amount of the bond. This percentage or rate of interest is called the:

contract rate.

Perill Co. has a five-day workweek (Monday through Friday). Employees earn $650 per day. How much cash will be paid on Friday? a. $650 b. $1,950 c. $1,300 d. $3,250

d. $3,250

After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $500,000 and Allowance for Doubtful Accounts has a balance of $25,000. What is the net realizable value of the accounts receivable?

d. $475,000

The following data is available for an item of LCC Inc. for the month of March: March 1 Inventory 15 units at $10 each March 15 Purchase 30 units at $18 each March 31 Purchase 20 units at $15 each Sale 30 units Using the last-in, first-out method, what is ABC Inc.'s cost of ending inventory for March?

d. $510

Silver Co. sold merchandise to Copper Co. on account, $75,000, terms 2/10, net 30. The cost of the merchandise sold is $55,000. Silver Co. issued a credit memorandum for $10,000 for merchandise returned that originally cost $9,000. Copper Co. paid the invoice within the discount period. What is amount of net sales from the transactions?

d. $63,700

Use the following data to calculate the cost of ending inventory under average cost method. September 1: Beginning Inventory 20 units at $10 each September 10: Purchase 25 units at $20 each September 20: Purchase 40 units at $25 each September 30: Ending Inventory 35 units

d. $700

ABC Inc. provided the following data for the year end: Cost of goods sold: $4,680,000 Inventory at the beginning of the year: 678,000 Inventory at the end of the year: 570,000 What is ABC Inc.'s days' sale in inventory? (Assume 360 days in a year)

d. 48 days ((678,000+570,000)/2) / $4,680,000/365= 48days

Which of the following statements is prepared with various sections, subsections, and captions? a. A statement of current assets b. A statement of stockholders' equity c. A pro forma contra asset statement d. A classified balance sheet

d. A classified balance sheet

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a. An increase in inventory b. A decrease in accounts payable c. Preferred dividends declared and paid d. A decrease in accounts receivable

d. A decrease in accounts receivable

Which of the following is an example of an intangible asset? a. Goodwill b. Patents c. Copyrights d. All of these

d. All of these

Since merchandise inventory is normally sold within a year, how is it reported on the balance sheet?

d. As a current asset

Which of the following transactions will affect the profitability metric of a company? a. Rent received in advance b. Prepaid insurance c. Purchase of supplies on account d. Fees received in cash for services provided

d. Fees received in cash for services provided

Under which method of inventory costing is the ending inventory assumed to be composed of the most recent costs?

d. First-in, first-out

Allowance for Doubtful Accounts has an unadjusted balance of $1,100 at the end of the year, and an analysis of customers' accounts indicates doubtful accounts of $12,900. Which of the following records the proper provision for doubtful accounts?

d. Increase Uncollectible Accounts Expense, $11,800; increase Allowance for Doubtful Accounts, $11,800

Which of the following is true of an accrual? a. It is normally the result of cash being received or paid before the revenue is earned or the expense is incurred. b. It is initially recorded as an asset but becomes an expense over time. c. It is initially recorded as a liability but become revenue over time. d. It is normally the result of cash being received or paid after revenue has been earned or an expense has been incurred.

d. It is normally the result of cash being received or paid after revenue has been earned or an expense has been incurred.

Which of the following is the effect of issue of additional common stock by a company on its liquidity and profitability metrics? a. Its profitability increases. b. Its profitability and liquidity increase. c. Its profitability and liquidity remain unaffected. d. Its liquidity increases.

d. Its liquidity increases.

Which of the following businesses is a retail business?

d. Kohl's

Which of the following assets never loses its ability to provide service and, as a result, does not need to be depreciated? a. A copyright b. Office equipment c. A patent d. Land

d. Land

Which transaction would be recorded in a cash basis system of accounting? a. Purchase of equipment by signing a note b. Purchase of supplies on credit c. Sale of goods against a note d. Sale of goods for cash

d. Sale of goods for cash

The due date of a 60-day note dated July 12 is:

d. September 10.

X&Y Co. received $4,000 in payments from clients for services billed in a previous month. What effect does this transaction have on the accounts under the accrual basis of accounting? a. Total assets increase by $4,000. b. Assets will increase by $4,000 and revenues will increase $4,000. c. Total assets will be decrease by $4,000. d. The net effect on assets is zero.

d. The net effect on assets is zero.

When an adjusting entry is made to record insurance expense and reduce the prepaid insurance account, which section of the statement of cash flows is affected? a. Cash Flow from Operating Activities b. Cash Flow from Investing Activities c. Cash Flow from Financing Activities d. There is no effect on the statement of cash flows.

d. There is no effect on the statement of cash flows.

When an entry is made to adjust the supplies account and recognize supplies expense for the period, which section of the statement of cash flows is affected? a. Cash Flow from Operating Activities b. Cash Flow from Investing Activities c. Cash Flow from Financing Activities d. There is no effect on the statement of cash flows.

d. There is no effect on the statement of cash flows.

Unearned interest is categorized as: a. a fixed asset. b. stockholders' equity. c. an intangible asset. d. a liability

d. a liability

The expired amount of a prepaid expense is recorded as: a. accrued revenue. b. a contra asset. c. a liability. d. an expense.

d. an expense.

In August, Falcon Inc. received cash in advance of rendering services to its clients. If only a few of those services were provided by December 31, the year-end adjustment would: a. increase unearned revenue and decrease revenue. b. increase accounts payable and decrease revenue. c. increase cash and decrease accounts receivable. d. decrease unearned revenue and increase revenue.

d. decrease unearned revenue and increase revenue.

The cost of goods sold is subtracted from sales to arrive at _____.

d. gross profit

The difference between sales and cost of goods sold for a retail business is:

d. gross profit

The inventory costing method that considers the ending inventory to be composed of units of the merchandise acquired earliest is called:

d. last-in, first-out.

In credit terms of 1/10, n/30, the "1" represents the:

d. percent of the cash discount.

A written promise to pay a sum of money on demand or at a definite time is called a(n):

d. promissory note.

The accrual basis of accounting recognizes: a. revenues when cash is received and expenses when cash is paid. b. revenues when earned and expenses when cash is paid. c. revenues when cash is received and expenses when incurred. d. revenues when earned and expenses when incurred.

d. revenues when earned and expenses when incurred.

Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in: a. the cash flows from financing activities section. b. the cash flows from investing activities section. c. a separate schedule. d. the cash flows from operating activities section.

d. the cash flows from operating activities section.

The analysis of receivables method of costing inventory is based on the assumption that:

d. the longer an account receivable is outstanding, the less likely that it will be collected.

When a company exchanges machinery and receives a trade-in allowance less than the book value, this transaction would be recorded with which of the following entry?

debit Machinery, Accumulated Depreciation, and Loss on Exchange of Machinery; credit Machinery and Cash

The journal entry used to record the payment of a discounted note is

debit Notes Payable; credit Cash

When a company receives an interest-bearing note receivable, it will

debit Notes Receivable for the face value of the note

On July 1, Mark Co. issued $3,000,000 of 10-year, 8% bonds at par. Interest on the bonds is payable semiannually on December 31 and June 30. On payment of interest, net assets of the company:

decrease by $120,000.

ABC Co. has a gross payroll of $18,000. The FICA tax rate is 7.65% of the gross payroll, and the federal and state withholding are $1,600 and $963 respectively. On recording the payroll tax liability, net assets of the company:

decrease by $14,060.

Emerald Co. has 50,000 shares at $12 par common stock outstanding. If the company decides to buy 20% of its shares for $15 per share, the total stockholders' equity will:

decrease by $150,000.

On November 21 of the current year, Maroon Inc. reacquired 50,000 shares of its common stock at $4 per share. As a result of this transaction, net assets of the company:

decrease by $200,000.

A company issues 5,000 shares of $15 par common stock. As a result, the earnings per share of the company _____.

decreases

Joe Co. paid a notes payable of $6,000 with interest. As a result of this transaction, the company's:

earnings per share decreases.

The _____ is determined by transactions between buyers and sellers of similar bonds.

effective interest rate

For a manufacturing business, work-in-process inventories consist of inventories which have _____.

entered the manufacturing process but not been completed

The effect of recording a capital expenditure as a revenue expenditure is that:

expenses are overstated, and owners' equity is understated.

If a revenue expenditure is treated as a capital expenditure, then:

expenses are understated and owners' equity is overstated.

If the cost of direct materials is not a significant portion of the total product cost, it may be classified as:

factory overhead costs.

Which of the following is true of just-in-time processing?

is a management approach that focuses on reducing time and cost and eliminating poor quality.

On July 1, George Co. issued $3,000,000 of 10-year, 8% bonds at par. Interest on the bonds is payable semiannually on December 31 and June 30. As a result of this transaction, net assets of the company:

is not effected.

A(n) _____ provides product costs for each quantity of a product that is manufactured

job order costing

A fully depreciated asset must be:

kept on the books until sold or discarded.

The cost of removal of an old building to make the land ready for its intended use is charged to:

land

A(n) _____ is a contract for the use of an asset for a period of time without having to buy the asset.

lease

On December 31, Strike Company sold one of its batting cages for $20,000. The equipment had an initial cost of $310,000 and had accumulated depreciation of $260,000. Depreciation has been recorded up to the end of the year. What is the amount of the gain or loss on this transaction?

loss 0f $30,000

On December 31, Strike Company traded-in one of its batting cages for another one that has a cost of $500,000. Strike receives a trade-in allowance of $11,000. The old equipment had an initial cost of $215,000 and has accumulated depreciation of $185,000. Depreciation has been recorded up to the end of the year. The difference will be paid in cash. What is the amount of the gain or loss on this transaction?

loss of $19,000

the document authorizing the issuance of materials from the storeroom for use in manufacturing is called:

materials requisition.

Which of the following are criteria for determining whether to record an asset as a fixed asset?

must be long lived and used by the company in its normal operations

The asset turnover is calculated as _____.

net sales divided by average long-term operating assets

Does Allowance for Doubtful Accounts have a normal credit or a normal debit balance?

normal credit balance

The amount of time spent by each employee and the labor costs incurred for each individual job or for factory overhead are recorded on the:

time tickets.

On the balance sheet, the amount shown for the Allowance for Doubtful Accounts is equal to the

total estimated uncollectible accounts as of the end of the year

The exclusive right to use a certain name or symbol is called a

trademark.