ACC 201 Tophat Review

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: A. $13,300 B. ($1,700) C. $22,700 D. $6,300

A

If goods in transit are shipped FOB destination A. the seller has legal title to the goods until they are delivered. B. the buyer has legal title to the goods until they are delivered. C. the transportation company has legal title to the goods while the goods are in transit. D. no one has legal title to the goods until they are delivered.

A

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? A. They will be acquired within one year. B. They will be converted to cash within one year. C. They will be sold within one year. D. They will be used up within one year.

A

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 A. FIFO method B. LIFO method C. Average-cost method D. Tax method

A

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? A. May 15 B. August 1 C. June 5 D. June 10

A

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: A. $4,500. B. $5,000. C. $7,000. D. $7,500.

A

The accounts Payable account: A. Has a normal credit balance B. Is increased by a debit C. Is an asset D. Is increased when a company receives cash from customers

A

When costs to purchase inventory are rising, using LIFO leads to reporting __ cost of goods sold and __ net income than FIFO. A. higher; lower B. higher; higher C. lower; lower D. lower, higher

A

Which account will have a zero balance after closing entries have been journalized and posted? A. Service revenue. B. Supplies. C. Prepaid Insurance. D. Accumulated Depreciation

A

Which of the following financial statements is concerned with the company at a point in time? A. Balance sheet B. Income statement C. Retained earnings statement D. Statement of cash flows

A

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: A. not be able to issue the bonds because no one will buy them. B. receive a higher issue price as buyers compete for the bonds. C. have to accept a lower issue price to attract buyers. D. have to reprint the bond certificates to change stated interest rate to 5%

B

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 A. $360,000. B. $300,000. C. $240,000. D. $270,000.

B

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? A. $680 B. $686 C. $700 D. $1,000

B

Revenues: A. decrease assets. B. increase stockholders' equity. C. increase liabilities. D. decrease expenses.

B

Which of the following statements regarding issued and outstanding stock is true? A. Outstanding stock includes all stock issued by a corporation. B. Issued stock equals the sum of outstanding stock and treasury stock. C. Issued stock is equal to authorized stock. D. Outstanding stock includes stock in the hands of investors, as well as treasury stock in the hands of the corporation.

B

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? A. $1800 B. $900 C. $750 D. $600

C

Depreciation is the process of: A. valuing an asset at its fair value. B. increasing the value of an asset over the periods in which it is used. C. allocating the cost of an asset to the periods in which it is used. D. writing down an asset to its real value each accounting period.

C

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? A. Debit Purchases and credit Accounts Payable for $6,000 B. Debit Inventory and credit Accounts Receivable for $6,000 C. Debit Inventory and credit Accounts Payable for $6,000 D. Debit Cost of Goods Sold and credit Inventory for $4,500

C

Purrfect Pets, Inc. makes a $10,000 payment on account. This would result in a: A. $10,000 credit to Cash and a $10,000 credit to Accounts Payable. B. $10,000 debit to Cash and a $10,000 debit to Accounts Payable. C. $10,000 debit to Accounts Payable and a $10,000 credit to Cash. D. $10,000 debit to Cash and a $10,000 credit to Accounts Payable.

C

Revenues are recognized when __, even when cash is collected in a different accounting period than the revenue is earned. A. cash is collected B. bills are paid C. services are performed D. customers prepay for goods/services

C

A credit is not the normal balance for which account listed below? A. Common Stock account B. Revenue account C. Liability account D. Dividends account

D

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? A. $93,000 B. $39,000 C. $11,000 D. $65,000

D

The best definition of assets is the A. Cash owned by the company. B. collections of resources belonging to the company and the claims on these resources. C. owners' investment in the business. D. resources belonging to a company that have future benefit to the company.

D

The expense recognition principle ("matching") dictates: A. where on the income statement expenses should be presented. B. when revenues are recognized on the income statement. C. the ordering of current assets and current liabilities on the balance sheet. D. when costs are recognized as expenses on the income statement.

D

The primary source used in the preparation of the financial statements is the: A. Trial balance. B. post-closing trial balance. C. general trial balance. D. adjusted trial balance

D

Tony's Market recorded the following events involving a recent purchase of inventory: Received goods for $80,000, terms 2/10, n/30. Returned $1,600 of the shipment for credit. Paid $400 freight on the shipment. Paid the invoice within the discount period. As a result of these events, the company's inventory A. increased by $76,832. B. increased by $78,800. C. increased by $77,224. D. increased by $77,232.

D