ACC 212 Test 1 Bishal BC

True or False? All corporations acquire financing ONLY by issuing stock for sale on public stock exchanges.

False

cash flows from (used in) investing activities include amounts: a. received from a company's stockholders for the sale of stock. b. received from the sale of the company's office building c. paid for dividends to the company's stockholders d. paid for salaries of employees

b

the account receivable account: a. has a normal credit balance b. is increased by a debit c. is a liability d. is increased when a company received cash from its customers

b

The Accumulated Depreciation account is a(n): A) expense account. B) liability account. C) asset account. D) contra-asset account.

d

If the retained earnings account decreases from the beginning of the year to the end of the year, then a. net income is less than dividends. b. expenses are less than dividends. c. additional investments are less than net losses. d. net income is greater than dividends.

a

The asset account Office Supplies has a balance of $800 at the beginning of the year. The amount on hand at the end of the year is $500. The company has calculated the Supplies Expense for the year to be $3,500. Based on this information, what amount of office supplies was purchased during the year? A) $0 B) $4,000 C) $3,200 D) $3,000

c

operating activity

these cash flows arise directly from running the business to earn profit. they include cash received from selling apps and services, and cash paid for wages, advertising, rent, insurance, supplies, etc.

investing activity

these cash flows arise from buying and selling productive resources with long lives (buildings, land, equipment, software), purchasing investments, and lending to others

financing activity

these cash flows include borrowing from banks, repaying bank loans, receiving cash from stockholders from company stock, or paying dividends to stockholders

true of false? the current ratio can be used to evaluate a company's ability to pay liabilities in the short term, and in general, a higher ratio means better ability to pay.

true

true or false? a debit may increase or decrease an accounting, depending on the type of accouting

true

true or false? an adjusting entry always involves a balance sheet account and an income statement account.

true

true or false? goodrich, inc. signed an agreement to rent a warehouse from ellie co. this is an example of a transaction that should not be recorded

true

true or false? if total assets decrease, then either total liabilities or total stockholders' equity must also decrease.

true

true or false? in general, the higher a company's net profit margin, the better the performance of the company.

true

true or false? when a company prepares a classified balance sheet, liability accounts must be shown in subcategories of current and noncurrent.

true

True or False? Stockholders are owners of a corporation.

True

what is the current ratio equation?

current asset / current liability

if revenues are less than expenses, the company's retained earnings: A. decrease B. increase. C. must be replenished by stockholders. Dare paid to stockholders

A

Which of the following statements about financial accounting is correct? A. financial accounting reports are used primarily by employees to make business decisions related to production. B. financial accounting reports are used primarily by management to understand whether a product line should be discontinued. C. financial accounting reports are primarily prepared to provide information for external decision makers. D. financial accounting reports primarily contain detailed internal records of the company.

C

Crest Co. receives and immediately pays a $5,250 utility bill from the Public Service Utility Company. Public Service Utility Company will record the receipt of this payment with a journal entry that includes a: A) credit to Accounts Payable. B) debit to Utilities Expense. C) debit to Utilities Revenue. D) debit to Cash.

D

Which of the following is typically considered a disadvantage of sole proprietorships? A. income taxes are paid by both the business and its owner. B. the business is considered a separate legal entity from its owners. C. establishing the business usually requires legal assistance. D. owner is personally liable for all debts of the business,

D

which of the following expressions of the accounting equation is correct? A. l+ a = se B. se + a = l C. a = l - se D. se = a - l

D

True or false? You paid $10,000 to buy 1% of the stock in a corporation that is now bankrupt. The company owes $10 million dollars to its creditors. As a result of the bankruptcy, you are responsible for paying $100,000 (or $10 million x 1%) of the amount owed to the creditors.

False

are expenses on a balance sheet?

NO!!!!!!!!!

A company billed a client for services performed on January 10. The customer paid one-half of the amount owed on January 20 and the other one-half on February 24. When should the company record the related Service Revenue? A) On January 10 B) On January 20 C) One-half on January 20 and the other half on February 24 D) At year-end in an adjusting entry

a

Consider the following journal entry: Software 18,000 Cash 7,200 Note Payable 10,800 Which of the following explanations best describes this journal entry? A) The company buys $18,000 of software, pays cash of $7,200, and signs a note for $10,800. B) The company receives $7,200 in cash and $10,800 in notes payable in exchange for selling $18,000 of software. C) The company buys $18,000 of software, pays $7,200 cash, and promises to cancel a debt owed to the company in the amount of $10,800. D) The company sells $18,000 of software, receives $7,200 in cash, and pays off $10,800 it owes on the software.

a

On June, 30, 2015, a company purchased a two-year insurance policy for $18,000, paying cash and debiting Prepaid Insurance for the entire two-year premium amount. The adjusting entry on December 31, 2015 includes a: A) credit to Prepaid Insurance $4,500. B) credit to Insurance Expense $4,500. C) credit to Prepaid Insurance $9,000. D) debit to Insurance expense $9,000.

a

The accrual adjustment recorded to adjust for revenues earned but not yet collected will cause: A) assets to increase B) assets to decrease C) liabilities to increase D) liabilities to decrease

a

The deferral adjustment to record the amount of unearned service revenue that is now earned includes a: A) debit to Unearned Revenue B) credit to Unearned Revenue C) debit to Service Revenue D) credit to Accounts Receivable

a

The purpose of recording an adjusting entry for salaries and wages is to record wages: A) incurred but not yet paid. B) paid during the accounting period. C) paid in the prior accounting period. D) to be incurred in the next accounting period.

a

The statement of cash flows for a company contained the following: • Cash flows from operating activities in the amount of $29,000 • Cash flows from investing activities in the amount of$30,000 • Cash flows from (used by) financing activities in the amount of ($45,000) What was the change in cash for the period? a. $14,000 increase b. $15,000 increase c. $14,000 decrease d. $15,000 decrease

a

What is the main difference between accrual and deferral adjustments? A) Deferral adjustments are required to update previously recorded items whereas accrual adjustments are required to include items not previously recorded. B) Deferral adjustments are required under the cash basis of accounting whereas accrual adjustments are required under the accrual basis of accounting. C) Deferral adjustments are required to include items not previously recorded whereas accrual adjustments are required to update previously recorded items. D) Deferral adjustments are used for expenses whereas accrual adjustments are used for revenues.

a

Which of the following groups of accounts contains only those that normally have credit balances? A) Accounts Payable, Service Revenue, and Retained Earnings B) Cash, Equipment, and Common Stock C) Notes Payable, Salaries and Wages Payable, and Rent Expense D) Cash, Accounts Receivable, and Retained Earnings

a

alpha sold $2,000 of services to Beta on credit. Beta promised to pay for it next next. Alpha will report a $2,000: a. accounting receivable b. account payable c. increase in cash, since beta is sure to pay next month d. net loss

a

A company pays its workforce on Fridays for a five-day workweek ending on that day. The payroll for a week is $100,000. If the accounting year-end falls on a Tuesday, the adjusting journal entry to record this will include a A) debit to Salaries and Wages Expense $100,000. B) debit to Salaries and Wages Expense $40,000. C) credit to Salaries and Wages Payable $60,000. D) credit to Salaries and Wages Payable $100,000.

b

Adjusting entries are typically prepared: A) at the beginning of the accounting period. B) at the end of the accounting period. C) on a daily basis. D) on a weekly basis.

b

Adjusting entries are: a. not necessary if the accounting system is operating properly. b. usually required before financial statements are prepared. c. made whenever management desires to change an account balance. d. made to balance sheet accounts only.

b

As prepaid expenses expire with the passage of time, the correct adjusting entry will be a: a. debit to an asset account and a credit to an expense account. b. debit to an expense account and a credit to an asset account. c. debit to an asset account and a credit to an asset account. d. debit to an expense account and a credit to an expense account.

b

Ashley's Accessory Shop started the year with total assets of $90,000 and total liabilities of $40,000. During the year the business recorded $120,000 in revenues, $60,000 in expenses, and dividends of $20,000. Stockholders' equity at the end of the year was a. $60,000. b. $90,000. c. $40,000. d. $50,000.

b

At the end of the month, the adjusting journal entry to record the use of supplies would include a debit to: A) Supplies and a credit to Supplies Expense. B) Supplies Expense and a credit to Supplies. C) Supplies and a credit to Service Revenue. D) Supplies and a credit to Cash.

b

Baylor Service Corp. redeemed $1,000 of gift cards that customers used to pay for services that were performed by the company. The related adjusting entry would include a debit to: A) Accounts Receivable and a credit to Service Revenue. B) Unearned Revenue and a credit to Service Revenue. C) Cash and a credit to Unearned Revenue. D) Cash and a credit to Service Revenue.

b

Borrowing money is an example of a(n) a. delivering activity. b. financing activity. c. investing activity. d. operating activity.

b

Broadway, Inc.'s trial balance was in balance at the end of the period and showed the following accounts: Account Balance Accounts Payable $ 30,600 Cash 62,100 Common Stock 30,000 Equipment 13,500 Land 45,000 Notes Payable 60,000 What is the balance of the credit column on Broadway's trial balance? A) $241,200 B) $120,600 C) $90,600 D) $90,000

b

In the first month of operations, the total of the debit entries to the Cash account amounted to $1,200 and the total of the credit entries to the Cash account amounted to $800. The Cash account has a a. $800 credit balance. b. $400 debit balance. c. $1,200 debit balance. d. $400 credit balance.

b

Constable Co. reported the following information at December 31, Year 1: Accounts Payable $ 6,750 Accounts Receivable 14,025 Cash 35,235 Common Stock 135,000 Equipment 74,250 Inventory 46,800 Notes Payable due December 31, Year 3 3,750 Retained Earnings, December 31, Year 1 21,135 Wages Payable 3,675 What is the amount of current liabilities on the classified balance sheet? A) $14,175 B) $10,425 C) $170,310 D) $6,750

b Current liabilities = Accounts Payable + Wages Payable = $6,750 + $3,675 = $10,425

Constable Co. reported the following information at December 31, Year 1: Accounts Payable $ 6,750 Accounts Receivable 14,025 Cash 35,235 Common Stock 135,000 Equipment 74,250 Inventory 46,800 Notes Payable due December 31, Year 3 3,750 Retained Earnings, December 31, Year 1 21,135 Wages Payable 3,675 What is the amount of current assets on the classified balance sheet? A) $170,310 B) $96,060 C) $49,260 D) $123,255

b current a = cash + AR + inventory = 35,235 + 14,025 + 46,800 = 96,060

A company reported Salaries and Wages Payable of $750 at the beginning of the year and $2,500 at the end of the year. The income statement for the year reported Salaries and Wages Expense of $56,200. How much cash was paid for salaries and wages during the year? A) $52,950 B) $52,950 C) $54,450 D) $53,700

c

Antel is a tenet of Baber. On July 1, Antel paid Baber $1,200 for 3 months of rent. On July 31, Antel's adjusting entries will include one with a debit to: A) Rent Expense for $1200 and a credit to Prepaid Rent for $1,200. B) Prepaid Rent for $1200 and a credit to Cash for $1,200. C) Rent Expense for $400 and a credit to Prepaid Rent for $400. D) Prepaid Rent for $400 and a credit to Rent Expense for $400.

c

Baldwin Company purchased equipment for $420,000 and planned to use it when the company expanded one of its product lines. However, six months later, the company changed its plans and sold the equipment to Stick, Inc. for $420,000. Stick signed a note for $420,000 that is due in 60 days. The journal entry prepared by Baldwin Company to record the sale of the equipment would include which of the following? a. credit to notes receivable b. debit to cash c. credit to equipment d. debit to accounts payable

c

Elston Company compiled the following financial information as of December 31, 2012: Revenues $420,000 Common stock 90,000 Equipment 120,000 Expenses 375,000 Cash 105,000 Dividends 30,000 Supplies 15,000 Accounts payable 60,000 Accounts receivable 45,000 Retained earnings, 1/1/12 225,000 Elston's retained earnings on December 31, 2012 are: a. $225,000 b. $270,000 c. $240,000 d. $ 15,000

c

If the Prepaid Rent account is not adjusted at the end of the period, what effect will this have on the financial statements? A) Liabilities will be overstated and net income will be understated. B) Assets will be understated and net income will be understated. C) Assets will be overstated and net income will be overstated. D) Cash will be overstated and net income will be overstated.

c

On a classified balance sheet, companies usually list assets a. in alphabetical order. b. with the largest dollar amounts first. c. in the order in which they are expected to be converted into cash. d. in the order of acquisition.

c

Which of the following statements about revenue and expense accounts is correct? A) Revenue accounts are a subset of assets, and expense accounts are subcategories of liabilities. B) Both revenue accounts and expense accounts are subcategories of assets. C) Both revenue accounts and expense accounts are subcategories of Retained Earnings. D) Revenue accounts are a subcategory of Cash and expense accounts are a subcategory of Accounts Payable.

c

Which of the following would not be reported as an asset on the balance sheet? a. Accounts Receivable b. Supplies c. Retained Earnings d. Cash

c

crystal lodging recorded $330,000 in revenues, $247,500 in expenses, and $45,000 of dividends for the year. the company began the year with total assets of $285,000 and stockholder's equity of $130,500. what net income (loss) was reported by crystal lodging for the year? a. $37,500 b. $94,500 c. $82,500 d. $49,500

c

which of the following is an asset?a. common stock b. retained earnings c. notes receivable d. notes payable

c

Cash Beginning Balance 371,700 (a) 44,100 (c) 18,000 (b) 114,900 (d) 17,400 (e) 22,200 (f) 36,000 (g) 33,600 (beginning bal, a & b = debits) What is the ending balance of the Cash account? a. 657,900 b. 339,900 c. 85500 d. 403,500

d

If a company pays back money borrowed from a bank, which of the following would be included in the journal entry to record this transaction? A) Credit Notes Payable and debit Common Stock B) Debit Cash and credit Notes Payable C) Debit Cash and credit Common Stock D) Credit Cash and debit Notes Payable

d

In an accrual adjustment for expenses incurred but not yet paid: A) a liability is decreasing since cash is being paid for an expense incurred at the time of the adjustment B) the liability recorded when cash was received is increasing as the expense is incurred C) the liability recorded when cash was received is decreasing as the expense is incurred D) a liability is increasing since cash will be paid in the future due to the expense incurred

d

In recording an accrual adjustment to account for revenues earned but not yet collected: A) an asset is decreased since cash is being paid at the time of the adjustment B) the asset recorded when cash was paid is decreased as the revenue is earned C) the asset recorded when cash was paid is increased as the revenue is earned D) an asset is increased since cash will be collected at a later date

d

The Smith Corp. began business this year and entered into the following transactions during the year. The company issued common stock in exchange for cash of $80,000 from stockholders, borrowed $40,000 from a bank, bought $12,000 of inventory on account, and purchased $32,000 of equipment by paying $12,000 in cash and issuing a note for the remainder. What is the amount of total assets to be reported on the balance sheet at the end of the year? a. $104,000 b. 120,000 c. 128,000 d. 152000

d

With a classified balance sheet, current assets are usually listed: A) in alphabetical order. B) in the order of when the assets were acquired. C) from the largest to smallest dollar amount. D) in the order of liquidity

d

true or false? A company does not need to record the receipt of a bill for utilities used during this year if the company will not pay the bill until next year.

false

true or false? adjusting entries often involved cash

false

true or false? eagle company used $50,000,000 of its cash to pay off debt, as a result, eagle's stockholder's equity will decrease $50,000,000.

false

true or false? every transaction increases at lease one account and decreases at least one account

false

true or false?One of the purposes of the closing entries is to bring the balances in all asset, liability, revenue, and expense accounts down to zero to start the next accounting period.

false

what is the net profit margin equation?

net income / rev -higher ratio = better performance