acc 201 final exam

Tony's Market recorded the following events involving a recent purchase of inventory:

increased by $77,232.

When costs to purchase inventory are rising, using LIFO leads to reporting ______ cost of goods sold and ______ net income than FIFO.

higher; lower

Revenues:

increase stockholders' equity.

Revenues are recognized when __________, even when cash is collected in a different accounting period than the revenue is earned.

Services are performed

In a classified balance sheet, assets and liabilities are classified according to whether they are current or noncurrent. Which of the following statements is not correct about current assets?

They will be acquired within one year.

The primary source used in the preparation of the financial statements is the:

post-closing trial balance.

The Accounts Payable account:

has a normal credit balance

Which account will have a zero balance after closing entries have been journalized and posted?

Service Revenue

Purrfect Pets, Inc. makes a $10,000 payment on account. This would result in a:

$10,000 debit to Accounts Payable and a $10,000 credit to Cash.

On average, 5% of total accounts receivable has been uncollectible in the past. At the end of the year, the balance of accounts receivable is $100,000 and the allowance for doubtful accounts has an unadjusted credit balance of $500. Credit sales during the year were $150,000. Using the aging of accounts receivable method, the estimated bad debt expense would be:

$4,500.

McLeod Corporation is a merchandising company. The year began with inventory of $27,000, Purchases for the year were $52,000, and the Ending Inventory was $14,000.What is the Cost of Goods Sold that would be reported on the income statement?

$65,000

On June 15, Oakley Inc. sells inventory on account to Sunglass Hut (SH) for $1,000, terms 2/10, n/30. On June 20, SH returns to Oakley inventory that SH had purchased for $300. On June 24, SH completely fulfills its obligation to Oakley by making a cash payment. What is the amount of cash paid by SH to Oakley?

$686

A 1-year, $15,000, 12 percent note is signed on April 1. If the note is repaid on September 1 of the same year, how much interest expense is incurred?

$750

During 2016, a company provided services for cash of $21,000 and services on credit of $15,000. The company collected accounts receivable of $8,000 and incurred operating expenses of $22,700, $14,000 of which were paid during the year. The amount of net income (loss) for the year is:

13,300

If total liabilities decreased by $25,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same time period?

20,000 decrease

Jimmy's Repair Shop started the year with total assets of $300,000 and total liabilities of $240,000. During the year the business recorded $630,000 in revenues, $330,000 in expenses, and dividends of $60,000. Stockholders' equity at the end of the year was

300,000

Which of the following would not be classified as a current asset?

Accounts Payable

Which of the following would not be reported on the balance sheet?

Advertising Expense

Which of the following financial statements is concerned with the company at a point in time?

Balance sheet

On July 1, Darin Company sold inventory costing $4,500 to Dee Company for $6,000, terms 2/10, n/30. Both companies use the gross method. What journal entry will be recorded by Dee Company on July 1?

Debit Inventory and credit Accounts Payable for $6,000

A credit is not the normal balance for which account listed below?

Dividends Account

In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the

FIFO

If a purchaser using a perpetual inventory system pays the transportation costs, then the

Inventory account is increased

On Time Computer Repair uses accrual basis accounting. A computer was repaired on May 15. The customer picked up the computer on June 1 and mailed the payment on June 5. On Time Computer Repair received the check in the mail on June 10. The revenue should be recognized as earned on which date?

May 15

Sales revenue equals $367,810, sales returns & allowances are $10,000, and sales discounts total $14,180. The cost of goods sold is $216,490, operating expenses are $28,500, and the company incurs $31,640 of income tax expense. Which of the following statements is correct?

Net sales equal $343,630 and gross profit is $127,140.

Depreciation is the process of:

allocating the cost of an asset to the periods in which it is used.

Because interest rates have fallen, a company retires bonds which had been issued at their face value of $200,000. The company bought the bonds back at 97. This retirement would be recorded with a:

debit of $200,000 to Bonds Payable, a credit of $6,000 to Gain on Bond Retirement, and a credit of $194,000 to Cash.

IBM is planning to issue $1,000 bonds with a stated interest rate of 7% and a maturity date of July 15, 2022. If interest rates fall in the economy so that similar financial investments pay 5%, IBM will:

receive a higher issue price as buyers compete for the bonds.

The best definition of assets is the

resources belonging to a company that have future benefit to the company.

If goods in transit are shipped FOB destination

the seller has legal title to the goods until they are delivered.

The expense recognition principle ("matching") dictates:

when costs are recognized as expenses on the income statement.