Accounting Final
For Year 2 Daisy Corporation reported net income of $60; net sales $800; and average shares outstanding 6. There were no preferred stock dividends. What were the Year 2 earnings per share for Daisy? -$0.40 -$10.00 -$133.33 -$143.33
-$10.00
A plant asset with a cost of $600,000 and accumulated depreciation of $570,000 is sold for $70,000. What is the amount of the gain or loss on disposal of the plant asset? -$70,000 loss. -$40,000 loss. -$40,000 gain. -$70,000 gain.
-$40,000 gain.
ABC Company showed the following information at the end of the first year. What is the company's net income for the year based on the accrual basis of accounting? -$864 -$604 -$214 -$554
-$554
Which of the following is not one of the three forms of business organization? -Corporations -Partnerships -Proprietorships -Investors
-Investors
A very small company would have the most difficulty in implementing which of the following internal control activities? -Separation of duties. -Limited access to assets. -Periodic independent verification. -Sound personnel procedures.
-Separation of duties.
The book value of an asset is equal to the -asset's fair value less its historical cost. -blue book value relied on by secondary markets. -replacement cost of the asset. -asset's cost less accumulated depreciation.
-asset's cost less accumulated depreciation.
Hunter Company reported a net loss of $12,000 for the year ended December 31, 2017. During the year, accounts receivable decreased $28,000, inventory increased $20,000, accounts payable increased by $30,000, and depreciation expense of $24,000 was recorded. During 2017, operating activities -provided net cash of $50,000. -provided net cash of $74,000.
-provided net cash of $50,000.
Refer to HVAC Service. Based on these transactions, what is the total amount of expense that should be reported on the company's income statement for the month? a.$3,000 b.$2,850 c.$350 d.$2,500
b.$2,850
A customer returned damaged goods for credit. Under a perpetual system, which of the seller's accounts decreases? a.sales returns c.sales revenue d.accounts receivable
d.accounts receivable
Use the following data to calculate the current ratio. -2.13 : 1 -1.44 : 1 -2.86 : 1 -2.50 : 1
2.50 : 1
matching part 9
Solvency ratios- Measures of the ability of the company to survive over a long period of time. Relevance- Information that has a bearing on a decision. Economic entity assumption- Economic events can be identified with a particular unit of accountability. Free cash flow- Cash from operating activities less capital expenditures and cash dividends. Intangible assets- Noncurrent assets that do not have physical substance. Earnings per share- (Net income - preferred stock dividends) divided by average common shares outstanding. Comparability- Different companies using the same accounting principles.
Refer to the information provided for Tedder Co. If the company uses the weighted average method of inventory costing, how much is cost of goods sold for January? a.$232 b.$240 c.$230 d.$250
a.$232
Refer to Kaleidoscope Paint. The interest expense on the bonds at June 30, 2019, is a.$24,037 b.$43,267. c.$21,634. d.$22,500.
a.$24,037
Carnegie Jewelers accepted a 9-month, 9% note for $100,000 from a customer on July 1, 2019. The note is due on March 31, 2020. Assuming the company's accounting period ends on December 31, 2019, how much interest revenue should be recognized during 2019 and 2020? 2019 2020 a.$4,500 $2,250 b.$9,000 $ -0- c.$4,500 $4,500 d.$2,250 $4,500
a.$4,500 $2,250
Refer to Kaleidoscope Paint. What is the carrying value of the bonds on the maturity date? a.$500,000 b.$19,255 c.$0 d.$480,745
a.$500,000
Refer to the information for Accent Flooring. At the maturity date, the customer pays the amount due for the note and interest. What entry is required on the books of Accent Flooring on the maturity date assuming that none of the interest had already been recognized? a.Increase Cash by $20,450, increase Interest Revenue by $450, and decrease Notes Receivable by $20,000 b.No entry is required; the customer pays the amount due to Accent Flooring. c.Increase Cash and decrease Notes Receivable by $20,000 d.Increase Cash by $20,450, increase Notes Receivable by $20,000, and increase Interest Revenue by $450
a.Increase Cash by $20,450, increase Interest Revenue by $450, and decrease Notes Receivable by $20,000
Refer to A-One Construction. What is the balance of Accounts Receivable at December 31? a.$545,000 b.$515,000 c.$440,000 d.$530,000
b.$515,000
On the issuance date, the Bonds Payable account has a balance of $55,000,000 and Premium on Bonds Payable has a balance of $5,000,000. These bonds issued at a.$55,000,000. b.$60,000,000. c.$50,000,000. d.a price that cannot be determined without knowing the stated and market interest rates.
b.$60,000,000.
Refer to Hesson Properties. How much is still owed to the company by its customers at the end of the month? a.$0 c.$1,000 d.$1,500
c.$1,000
"Revenues" are best described as a.an increase in the financing activities. b.assets used or consumed in the sale of products or services. c.increases in assets resulting from the sale of products or services. d.decreases in assets resulting from the sale of goods or services.
c.increases in assets resulting from the sale of products or services.
On January 1, a company sold a machine for $5,000 that it had used for several years. The machine cost $11,000, and had accumulated depreciation of $4,500 at the time of sale. What gain or loss will be reported on the income statement for the sale of the machine for the year ended December 31? a.gain of $1,500 b.gain of $5,000 c.loss of $1,500 d.loss of $6,500
c.loss of $1,500
All of the following accounts have normal debit balances except a.accounts receivable. b.dividends. c.service revenue. d.supplies expense.
c.service revenue.
Failure to record depreciation expense for the period results in which of the following? a.Net income being overstated. b.No effect on total assets. c.Stockholders' equity being overstated. d.Both a and c
d.Both a and c
Kiss Greetings planned to raise $500,000 by issuing bonds. The bond certificates were printed bearing a stated interest rate of 6%, which was equal to the yield rate of interest. However, before the bonds could be issued, economic conditions forced the yield rate up to 7%. If the life of the bonds is 10 years and interest is paid annually on December 31, how much will the company receive from the sale of the bonds? a.More than $500,000 because the 6% stated rate of interest was less than the yield rate. b.The 6% bonds will not be sold at all. The company will be required to have the certificates reprinted bearing the new yield rate of 7%. c.Exactly $500,000 because the company would still pay interest at the stated rate. d.Less than $500,000 because the 7% yield rate of interest was higher than the stated rate.
d.Less than $500,000 because the 7% yield rate of interest was higher than the stated rate.
Matching the following part 4
Present value of a single amount- The value today of a future amount to be received or paid. Future value of a single amount- The value at a future date of a given amount invested. Compound interest-Return on principal plus interest for two or more periods. Present value of an annuity- Value today of a series of future amounts to be received or paid. Future value of an annuity- The sum of all the payments or receipts plus the accumulated compound interest on them.
If a company determines cost of goods sold each time a sale occurs, it -must have a computer accounting system. -uses a combination of the perpetual and periodic inventory systems. -uses a periodic inventory system. -uses a perpetual inventory system.
uses a perpetual inventory system
At January 1, 2017, Troyer Industries reported Retained Earnings of $350,000. During 2017, Troyer had a net loss of $75,000 and paid dividends to the stockholders of $50,000. At December 31, 2017, the balance in Retained Earnings is -$350,000 debit. -$300,000 credit. -$275,000 debit. -$225,000 credit.
-$225,000 credit.
Refer to Art Shoes. How much interest revenue will the company recognize for the year ended December 31, 2019? a.$2,250 b.$9,000 c.$4,500 d.$ 0
a.$2,250
All of the following accounts have normal credit balances except a.inventory. b.unearned revenue. c.common stock. d.accounts payable.
a.inventory.
A company purchased equipment for $150,000 cash. What is the effect on total assets? a.no net effect b.increase c.Cannot be determined from this limited information. d.decrease
a.no net effect
Each of the following documents is used in the control of cash receipts except a.outstanding checks. b.NSF checks. c.bank deposit slips. d.bank credit memos.
a.outstanding checks.
Transportation-in is a.part of the net cost of purchases. b.an operating expense. c.part of purchase returns and allowances. d.added to transportation-out as part of the calculation of cost of goods sold.
a.part of the net cost of purchases.
Many companies use MACRS (Modified Accelerated Cost Recovery System) depreciation for a.tax purposes because of a desire to report higher expenses in early years in order to pay lower taxes. b.tax purposes because it results in a larger net income in the early years of a plant asset's life. c.financial reporting purposes and a different method for tax purposes. d.financial reporting purposes because depreciation is not allowed for tax purposes.
a.tax purposes because of a desire to report higher expenses in early years in order to pay lower taxes.
On the balance sheet, the cumulative amount of plant and equipment already expensed is reported in an account called
accumulated depreciation.
On May 1, a company borrowed $30,000 from the First National Bank on a 1-year, 6% note. Assuming the company keeps its records on a calendar year basis, an entry is needed on December 31st to increase a.interest expense by $1,800. b.interest payable by $1,200. c.interest payable by $900. d.interest expense by $600.
b.interest payable by $1,200.
If a company uses the direct write-off method of accounting for bad debts, a.It establishes an estimate for the allowance for doubtful accounts. b.When an account is written off, total assets will stay the same. c.It will record bad debt expense only when an account is determined to be uncollected. d.It will reduce the accounts receivable account at the end of the accounting period for estimated uncollected accounts
c.It will record bad debt expense only when an account is determined to be uncollected.
The Income Statement shows a.net income equal to the amount of cash on the Balance Sheet. b.how much profit the company has earned since it began operations. c.the liquidity of the company on an annual basis. d.a summary of the results of operations for a period of time.
d.a summary of the results of operations for a period of time.
Refer to HVAC Service. The journal entry to record the bill received from WKRP Radio will include a debit to a.cash. b.advertising expense. . d.accounts payable.
d.accounts payable.
Goodwill can be recorded as an asset when a(n) a.business has above normal profitability compared to other businesses in its industry. b.business can determine that it has created customer goodwill and name recognition. c.offer is received to purchase the business at a price in excess of the value of the assets. d.business is purchased and payment is made in excess of the value of the net assets.
d.business is purchased and payment is made in excess of the value of the net assets.
A merchandiser that sells directly to consumers is a -retailer. -wholesaler. -broker. -service enterprise.
retailer
Refer to Bass Tours. Calculate the total current assets. a.$ 732,000 b.$1,022,000 c.$ 842,000 d.$ 842,000
a.$ 732,000
Action Signs recorded credit sales of $10,000 on the gross method. Terms are 2/20, n/30. Select the correct statement about the entry to record this sale. a.Accounts receivable increases $10,000. b.Sales increase $9,800 c.Sales discounts increase $200 d.All of the above are correct
a.Accounts receivable increases $10,000.
A check returned by a bank because the issuer's cash account balance could not cover the check is called a(n) a.NSF check b.outstanding check. c.certified check d.canceled check
a.NSF check
A growing corporation had $180,000 of its $30 par common stock issued before its recent 3-for-1 stock split. The market price of the stock was $120 per share before the split. Which of the following is true as a result of the split? a.The par value of the stock decreased to $10 per share. b.The market price of the stock tripled. c.There were 24,000 shares (6,000 + 18,000) of common stock issued after the split. d.The balance in the common stock account increased to $540,000.
a.The par value of the stock decreased to $10 per share.
Refer to HVAC Service. The journal entry to record the purchase of office equipment and supplies will include a credit to a.accounts payable b.delivery expense c.furniture & supplies d.cash.
a.accounts payable
Plant 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.
at cost less accumulated depreciation.
Suppose a company reports the following information at December 31, 2019: Sales $15,000,000 Cash $ 3,000,000 Unearned Revenue $ 400,000 Dividends $ 1,000,000 Cost of Sales $ 8,500,000 What is the company's Gross Profit? a.$12,000,000 b.$ 6,500,000 c.$ 6,100,000
b.$ 6,500,000
If a company has $10,500,000 of revenues, declares and pays $550,000 in dividends, and has net income of $1,600,000, how much were expenses for the year? a.$1,050,000 b.$8,900,000 c.$2,150,000 d.$9,950,000
b.$8,900,000
GTO Division has $14,000 in current assets, $2,000 in accounts payable, and $2,000 in unearned sales revenue. What is the division's current ratio? a.2.25 b.3.50 c.1.75 d.3.00
b.3.50
Refer to the information provided for Pham Enterprises. What is the company's gross profit ratio for the year ended December 31? a.299.00% b.33.44% c.66.55% d.50.25%
b.33.44%
Refer to Hesson Properties. What journal entry is required to record the cash collected in advance? a.Cash 500Service Revenue 500 b.Cash 500Unearned Revenue 500 c.Accounts Receivable 500Service Revenue 500 d.Unearned Revenue 500Accounts Receivable 500
b.Cash 500Unearned Revenue 500
What is the impact on the accounting equation of recording the accrual of interest expense? a.Both assets and stockholders' equity decrease. b.Liabilities increase and stockholders' equity decreases. c.Both assets and liabilities decrease. d.Liabilities decrease and stockholders' equity increases.
b.Liabilities increase and stockholders' equity decreases.
The Discount on Bonds Payable account is shown on the balance sheet as a.an asset. b.a contra-liability account that reduces the bond to market value at the issue date. c.an expense.
b.a contra-liability account that reduces the bond to market value at the issue date.
Depreciation is b.an effort to achieve proper matching of the cost of operating assets with related revenues. c.the cash allocated each period to maintain a plant asset. d.an accumulation of funds to replace the related plant asset.
b.an effort to achieve proper matching of the cost of operating assets with related revenues.
What happens to the accounting equation when the adjustment is recorded to recognize earned revenue previously recorded as unearned revenue? a.assets decrease and liabilities decrease b.liabilities decrease and stockholders' equity increases c.stockholders' equity increases and decreases by the same amount d.assets increase and liabilities increase
b.liabilities decrease and stockholders' equity increases
Outstanding shares represent the a.maximum number of shares that can be sold by the corporation. b.number of shares that are currently held by stockholders. c.number of shares that the corporation has sold. d.number of previously issued shares that have been repurchased by the corporation.
b.number of shares that are currently held by stockholders.
Refer to Fantasy Cruise Lines. What will be the book value of the ship at the end of its useful life? a.Need more information to determine this answer. b.$200,000 c.$100,000 d.$ -0-
c.$100,000
A company's unadjusted bank balance is $3,000. Outstanding checks amount to $500 and deposits in transit total $300. Based on this information alone, what is the company's adjusted cash balance for the purpose of preparing a bank reconciliation? a.$3,300 b.$2,700 c.$2,800
c.$2,800
During January, Gaston Wholesalers experienced some difficulties with cash flow so it approached one of its vendors about a payment extension. The vendor agreed to the extension on the condition that the company sign a 30-day note that includes 9% interest. What journal entry is needed to record the retirement of the note on the maturity date? a.Debit accounts payable, debit interest expense, and credit notes payable. b.Debit notes payable, credit interest expense, and credit cash. c.Debit notes payable, debit interest expense, and credit cash. d.Debit notes payable and credit cash.
c.Debit notes payable, debit interest expense, and credit cash.
Failure to record dividends paid would result in which of the following? a.Net income being understated. b.An increase in total liabilities. c.Stockholders' equity being overstated. d.Net income being overstated.
c.Stockholders' equity being overstated.
If a company erroneously records a $50 check received from a customer as $500 in its records, which of the following must occur when reconciling its bank statement? a.The company must increase the balance per its records by $500. b.The company must decrease the balance per its records by $500. c.The company must decrease the balance per its records by $450.
c.The company must decrease the balance per its records by $450.
If a corporation issues cumulative, participating preferred stock, which of the following is true regarding the rights of the preferred stockholders? a.They will received a fixed dividend regardless of the amount of dividends declared. b.They will have an option to convert their shares to common stock at a specified date. c.They will share in the dividends that exceed a specified amount. d.They must forego dividends for any periods when no dividends are declared
c.They will share in the dividends that exceed a specified amount.
A list of all active accounts and their balances at a particular date, which is used to prove the equality of debits and credits, is a a.Journal. b.General Ledger. c.Trial Balance. d.Chart of Accounts.
c.Trial Balance.
An addition to employee compensation whereby the corporation provides a right to purchase stock at a set price is called a.the conversion privilege. b.treasury stock. c.a stock option. d.a call option.
c.a stock option.
A high accounts receivable turnover ratio indicates -the company's sales are increasing. -a large proportion of the company's sales are on credit. -customers are making payments very quickly. -customers are making payments slowly.
customers are making payments very quickly.
Net Income appears on which financial statement(s)? a.Both the Balance Sheet and the Income Statement b.Balance Sheet only c.Income Statement only d.The Income Statement, Statement of Cash Flows and the Statement of Retained Earnings
d.The Income Statement, Statement of Cash Flows and the Statement of Retained Earnings
Par value represents the a.amount for which any treasury shares have been acquired by the corporation. b.amount for which treasury shares may be reissued. c.current market price of the stock. d.arbitrary amount that establishes a minimum price for the stock when it is first issued.
d.arbitrary amount that establishes a minimum price for the stock when it is first issued.
The payment of Accounts Payable results in a(n) a.increase in liabilities and decrease in stockholders' equity. b.decrease in liabilities and increase in stockholders' equity. c.decrease in liabilities and increase in assets. d.decrease in both liabilities and assets
d.decrease in both liabilities and assets
Credit entries are used to a.increase dividends. b.increase expense accounts. c.increase asset accounts. d.increase liability accounts.
d.increase liability accounts.
Cost of goods sold is equal to a.the cost of merchandise purchased plus transportation costs plus beginning inventory minus purchase returns and allowances and purchase discounts. b.the cost of merchandise purchased plus transportation costs less ending inventory. c.the total amount of merchandise purchased during the year. d.the cost of merchandise purchased plus transportation costs plus beginning inventory minus purchase returns and allowances and purchased discounts minus ending inventory.
d.the cost of merchandise purchased plus transportation costs plus beginning inventory minus purchase returns and allowances and purchased discounts minus ending inventory.
matching part 8
Current ratio- Current assets divided by current liabilities. Materiality- An item important enough to influence the decision of an investor or creditor. Consistency- Same accounting principles and methods used from year to year within a company. Liquidity ratios- Measures of the short-term ability of the enterprise to pay its maturing obligations. Working capital- The excess of current assets over current liabilities.
A company has total assets of $350,000 consisting of current assets of $115,000, property, plant, and equipment of $200,000, and other assets of $35,000. The company has total liabilities of $100,000 consisting of current liabilities of $65,000 and other liabilities of $35,000. What is the current ratio? a.1.15 b.1.77 c.5.38 d.3.50
b.1.77
On June 30, a company had $1,924 in its cash account according to its general ledger. This included a deposit of $174 that was in transit on June 30th. The June 30th bank statement contained the following information: Bank statement balance $2,178 Bank service charge 14 Collection of notes receivable 136 NSF check 32 Assuming outstanding checks of $338, what is the company's adjusted cash balance at June 30th? a.$1,840 b.$2,014 c.$2,178 d.$1,880
b.$2,014
Two friends decide to launch a new business by investing $25,000 each in Hot Spot Tanning. They are given shares of stock as evidence of their ownership interest. What effect does this transaction have on the accounting equation? a.Assets and liabilities decrease. b.Assets and liabilities increase. c.Assets and contributed capital increase. d.Liabilities increase and retained earnings decrease.
c.Assets and contributed capital increase.
If a company uses the allowance method to account for doubtful accounts, when will the company's Stockholders' equity decrease? a.When the accounts receivable amount becomes past due b.At the date a customer's account is written off c.At the end of the accounting period when an adjusting entry for bad debts is recorded d.At the date a customer's account is determined to be uncollected
c.At the end of the accounting period when an adjusting entry for bad debts is recorded
Madson Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 90,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?
-Cash: 900,000 Unearned Subscription -Revenue: 900,000
A business organized as a separate legal entity from its owners is a: -Government unit -Partnership -Proprietor -Corporation
-Corporation
A credit sale of $1,400 is made on July 15, terms 2/10, net/30, on which a return of $100 is granted on July 18. What amount is received as payment in full on July 24? -$1,400 -$1,274 -$1,350 -$1,372
-$1,274
Given the data below for a firm in its first year of operation, determine net income under the accrual basis of accounting. -$11,750 -$14,000 -$9,500 -$12,200
-$11,750
If total assets are $100,000, liabilities are $60,000, and Common Stock is $25,000, the Retained Earnings of the firm is: -$185,000 -$135,000 -$160,000 -$15,000
-$15,000
The interest on a $15,000, 6%, 60-day note receivable is -$75. -$900. -$450. -$150.
-$150.
On January 15, Nifty Company sells merchandise on account to Martinez Associates for $5,000 with terms 3/10, n/30. On January 20, Martinez returns merchandise worth $1,000 to Nifty. On January 24, payment is received from Martinez for the balance due. What is the amount of cash received? -$4,000 -$3,880 -$3,850 -$2,800
-$3,880
The interest charged on a $400 note payable, at the rate of 6%, on a 90-day note would be -$6 -$2 -$24 -$12
-$6
United Services and Supplies reports net income of $60,000 and cost of goods sold of $360,000. If US&S's gross profit rate was 40%, net sales were -$600,000. -$900,000. -$960,000. -$660,000.
-$600,000.
Given the data below for a firm in its first year of operation, determine net income under the cash basis of accounting. -$7,700 -$9,950
-$9,950
Which of the following companies would most likely have the highest inventory turnover? -An art gallery. -An automobile manufacturer. -A piano manufacturer. -A bakery.
-A bakery.
An internal Control system is important to a business because it -Involves procedures adopted by a business to encourage adherence to prescribed managerial policies and safeguard assets -Helps ensure that accurate and reliable accounting records are produced -Is a system which promotes operational efficiencies and protects the business assets from waste, fraud, and theft -All of the above
-All of the above
Which one of the following represents the expanded basic accounting equation? -Assets + Dividends + Expenses = Liabilities + Common Stock + Revenues -Assets - Liabilities - Dividends = Common Stock + Revenues - Expenses -Assets = Revenues + Expenses - Liabilities
-Assets + Dividends + Expenses = Liabilities + Common Stock + Revenues
Which of the following correctly identifies normal balances of accounts?
-Assets: Debit -Liabilities: Credit -Common Stock: Credit -Revenues: Credit -Expenses: Debit
Which of the following is not a current liability? -Salaries and Wages Payable -Accounts Payable -Taxes Payable -Bonds Payable
-Bonds Payable
A corporation purchased a three-year insurance policy on December 1, Year A for $7,200. Assuming that the. corporation debited the prepaid insurance account in recording the original transaction, the adjusting entry on December 31, Year A, the company's yearend, will include a: -Debit to prepaid insurance for $200 -Credit to prepaid insurance for $200 -Credit to insurance expense for $7,000 -Debit to insurance expense for $7,000
-Credit to prepaid insurance for $200
Cash, Accounts Receivable and Prepaid Insurance will be classified on a balance sheet as -Intangible assets -Property, plant and equipment -Long-term assets -Current assets
-Current assets
What is the order in which assets are generally listed on a classified balance sheet? -Current and long-term -Current; property, plant and equipment; long-term investments; intangibles -Current; property, plant and equipment; intangibles; long-term investments -Current; long-term investments; property, plant and equipment, intangibles
-Current; long-term investments; property, plant and equipment, intangibles
Which of the following methods will result in the highest depreciation in the first year? -Sum-of-year's-digits. -Time valuation. -Straight-line. -Declining-balance.
-Declining-balance.
Retained Earnings is reduced by which of the following? -Net Income -Collection of an Account Receivable -Dividends -Purchase of an asset
-Dividends
The revenue recognition principle dictates that revenue should be recognized in the accounting period in which it is: -Earned and collected -Collected -Most likely to be collected -Earned
-Earned
Which of the following principles dictates that expenses are recognized in the same accounting period as their related revenue? -Expense recognition (Matching) -Time Period (Periodicity) -Cash Basis -Cost (Measurement)
-Expense recognition (Matching)
If a company fails to adjust for accrued expenses, what effect will this have on that month's financial statements? -Failure to make an adjustment does not affect the financial statements. -Expenses will be understated and net income and stockholders' equity will be overstated. -Assets will be overstated and net income and stockholders' equity will be under-stated. -Assets will be overstated and net income and stockholders' equity will be overstated.
-Expenses will be understated and net income and stockholders' equity will be overstated.
In a period of declining prices, which of the following inventory methods generally results in the lowest balance sheet figure for inventory? -Average cost method -LIFO method -FIFO method -Need more information to answer
-FIFO method
Which of the following terms fit this definition: "The area of accounting principally concerned with reporting to external users." -Matching principle -Managerial accounting -Double-entry concept -Financial accounting
-Financial accounting
Which of the following is not one of the main factors that contribute to fraudulent activity? -Opportunity. -Incompatible duties. -Financial pressure. -Rationalization.
-Incompatible duties.
In a period of rising prices, which of the following inventory methods generally results in the lowest net income figure? -Average cost method -LIFO method -Need more information to answer
-LIFO method
Which of the following would be deducted from the balance per bank on a bank reconciliation? -Outstanding checks. -Deposits in transit. -Notes collected by the bank.
-Outstanding checks.
If common stock is issued for an amount greater than par value, the excess should be credited to -Cash. -Retained Earnings. -Paid-in Capital in Excess of Par Value. -Legal Capital.
-Paid-in Capital in Excess of Par Value.
Match the items below by entering the appropriate code letter in the space provided.
-Periodicity assumption: The economic life of a business can be divided into artificial time periods -Cash basis: Events recorded only in periods the company receives or pays cash -Revenue recognition principle: Revenue is recognized when the performance obligation is satisfied. -Prepaid expenses: Expenses paid before they are incurred -Expense recognition principle: Efforts are related to accomplishments -Accrued revenues: Revenues earned but not yet received -Depreciation: A cost allocation process -Post-closing trial balance: Includes only permanent—balance sheet—accounts -Accrued expenses: Expenses incurred but not yet paid -Book value: Efforts are related to accomplishments
Which of the following would be unethical? -Recording accrued interest revenue. -Recording accrued salaries and wages expense. -Recording backdated revenue. -Recording prepaid expense adjustments.
-Recording backdated revenue.
Ending retained earnings for a period is equal to beginning -Retained earnings + Net income + Dividends -Retained earnings - Net income - Dividends -Retained earnings + Net income - Dividends -Retained earnings - Net income + Dividends
-Retained earnings + Net income - Dividends
Which one of the following relationships shows the proper structure of a corporation? -Stockholders select officers, who select the board of directors. -Officers select board of directors, who select the stockholders. -Officers select stockholders, who select the board of directors. -Stockholders select the board of directors, who select officers.
-Stockholders select the board of directors, who select officers.
Which depreciation method is most frequently used in businesses today? -Straight-line. -Declining-balance. -Units-of-activity. -Double-declining-balance.
-Straight-line.
Net Income may be defined as follows -The cost of assets consumed or services used in the process of generating revenues -The increase in assets arising from the sale of a product or service -The excess of expenses over revenues for the time period -The excess of revenues over expenses for the time period
-The excess of revenues over expenses for the time period
Which of the following is not a significant date with respect to dividends? -The declaration date. -The incorporation date. -The record date. -The payment date.
-The incorporation date.
Which of the following is the most appropriate and modern definition of accounting? -The information system that identifies, records, and communicates the economic events of an organization to interested users. -A means of collecting information. -The interconnected network of subsystems necessary to operate a business. -Electronic collection, organization, and communication of vast amounts of information.
-The information system that identifies, records, and communicates the economic events of an organization to interested users.
If the market interest rate for a bond is higher than the stated interest rate, the bond will sell at -a premium. -a discount. -par. -either a discount or premium.
-a discount.
Adjusting entries are made to ensure that: -expense are recognized in the period in which they are incurred. -revenues are recorded in the period in which the performance obligation is satisfied. -balance sheet and income statement accounts have correct balances at the end of an accounting period. -all of these answer choices are correct.
-all of these answer choices are correct.
The current portion of long-term debt should -be paid immediately. -be reclassified as a current liability. -be classified as a long-term liability. -not be separated from the long-term portion of debt.
-be reclassified as a current liability.
The category that is generally considered to be the best measure of a company's ability to continue as a going concern is -cash flows from operating activities. -cash flows from investing activities. -cash flows from financing activities. -usually different from year to year.
-cash flows from operating activities.
Treasury Stock is a(n) -contra asset account. -retained earnings account. -asset account. -contra stockholders' equity account.
-contra stockholders' equity account.
All of the following are examples of internal control procedures except -using prenumbered documents. -reconciling the bank statement. -customer satisfaction surveys. -insistence that employees take vacations.
-customer satisfaction surveys.
A company receives $348, of which $28 is for sales tax. The journal entry to record the sale would include a -debit to Sales Taxes Expense for $28. -debit to Sales Taxes Payable for $28. -debit to Sales Revenue for $348. -debit to Cash for $348.
-debit to Cash for $348.
For companies that use a perpetual inventory system, all of the following are purposes for taking a physical inventory except to: -check the accuracy of the records. -determine the amount of wasted raw materials. -determine losses due to employee theft. -determine ownership of the goods.
-determine ownership of the goods.
Two methods of accounting for uncollectible accounts are the -allowance method and the accrual method. -allowance method and the net realizable method. -direct write-off method and the accrual method. -direct write-off method and the allowance method.
-direct write-off method and the allowance method.
This company purchased a truck at a cost of $12,000. The truck has an estimated residual value of $2,000 and an estimated life of 5 years, or 100,000 hours of operation. The truck was purchased on January 1, 2019, and was used 27,000 hours in 2019 and 26,000 hours in 2020. Refer to Fabian Woodworks. Based on the information presented above, what method of depreciation will maximize depreciation expense in 2019? -All methods produce the same expense in 2019. -double-declining-balance -straight-line -units-of-production
-double-declining-balance
Under the accrual basis of accounting: -cash must be received before revenue is recognized. -net income is calculated by matching cash outflows against cash inflows. -events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received. -the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles.
-events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.
The common characteristic possessed by all assets is -long life. -great monetary value. -tangible nature. -future economic benefit.
-future economic benefit.
Receivables might be sold to -lengthen the cash-to-cash operating cycle. -take advantage of deep discounts on the cash realizable value of receivables. -generate cash quickly. -finance companies at an amount greater than cash realizable value.
-generate cash quickly.
A company would be expected to generate small amounts of cash from operations during the -introductory phase. -growth phase. -maturity phase. -decline phase
-growth phase.
The purchase of an asset on credit -increases assets and stockholders' equity. -increases assets and liabilities. -decreases assets and increases liabilities. -leaves total assets unchanged.
-increases assets and liabilities.
Debts and obligations of a business are referred to as -assets. -equities. -liabilities. -expenses.
-liabilities.
The primary purpose of the statement of cash flows is to -provide information about the investing and financing activities during a period. -prove that revenues exceed expenses if there is a net income. -provide information about the cash receipts and cash payments during a period. -facilitate banking relationships.
-provide information about the cash receipts and cash payments during a period.
The journal entries required for purchase and sales transactions using the perpetual system are more complex than under the periodic system but offer the advantage of -requiring the use of the average cost method. -delaying the majority of the accounting effort until year-end -providing management with more complete information from which to control inventories -requiring the additional control of a physical inventory count whenever accurate inventory amounts are needed.
-providing management with more complete information from which to control inventories
All of the following statements regarding retained earnings are true except -retained earnings represents a claim on cash. -a debit balance in Retained Earnings indicates a deficit. -some companies may restrict availability of retained earnings for dividends. -retained earnings is net income that a company retains in a business.
-retained earnings represents a claim on cash.
Gross profit equals the difference between -net income and operating expenses. -sales revenue and cost of goods sold. -sales revenue and operating expenses. -sales revenue and cost of goods sold plus operating expenses.
-sales revenue and cost of goods sold.
Dividends in arrears on cumulative preferred stock -are considered to be a non-current liability. -are considered to be a current liability. -only occur when preferred dividends have been declared. -should be disclosed in the notes to the financial statements.
-should be disclosed in the notes to the financial statements.
The statement of cash flows -must be prepared on a daily basis. -summarizes the operating, financing, and investing activities of an entity. -is another name for the income statement. -is a special section of the income statement.
-summarizes the operating, financing, and investing activities of an entity.
If goods in transit are shipped FOB destination -the seller has legal title to the goods until they are delivered. -the buyer has legal title to the goods until they are delivered. -the transportation company has legal title to the goods while the goods are in transit. -no one has legal title to the goods until they are delivered.
-the seller has legal title to the goods until they are delivered.
Working capital is -calculated by dividing current assets by current liabilities. -used to evaluate a company's liquidity and short-term debt paying ability. . -calculated by subtracting current assets from current liabilities.
-used to evaluate a company's liquidity and short-term debt paying ability.
A current liability is a debt that can reasonably be expected to be paid -within one year, or the operating cycle, whichever is longer. -between 6 months and 18 months. -out of currently recognized revenues. -out of cash currently on hand.
-within one year, or the operating cycle, whichever is longer.
Which of the following is not classified properly as a current asset? -Supplies -Debt investments -A fund to be used to purchase a building within the next year -A receivable from the sale of an asset to be collected in two years
A receivable from the sale of an asset to be collected in two years
Matching part 6
Account- The entire group of accounts maintained by a company. Posting-Transferring journal entries to ledger accounts. Normal Account balance-The side which increases an account. Chart of Accounts- A list of all the accounts used by a company. Ledger- An accounting record of increases and decreases in specific assets, liabilities, and stockholders' equity items. Debit- Left side of an account. Source Document-Evidence that a transaction has taken place. Journal- Shows the debit and credit effects of specific transactions. Trial balance- A list of accounts and their balances at a given time. Revenue Account-Has a credit normal balance
match the following part 3
Dividends- Distributions of cash from a corporation to its stock holders Expenses- Consumed assets or services Sole Proprietorship- Ownership is limited to one person Internal users- officers and others who manage the company Liabilities- Creditor claims against the assets of the business Corporation- A separate legal entity under state laws Annual Report- A report prepared by management that presents financial information Management discussion and analysis- A section of the annual report that presents managements views Investing Activities- Future economic benefits Assets- involves acquiring the resources necessary to run the business
matching part 10
Dividends- Distributions of cash from a corporation to its stock holders. Expenses- Consumed assets or services. Internal users- Officers and others who manage the business. Liabilities- Creditor claims against the assets of the business. Assets- Future economic benefits.
Matching question part 2
Posting - Transferring journal entries to ledger accounts. Normal account balance - The side which increases an account. Chart of accounts - A list of all the accounts used by a company. Debit - Left side of an account. Journal - Shows the debit and credit effects of specific transactions.
Match the following part 5
Prepaid expenses-Expenses paid before they are incurred Book value-Cost less accumulated depreciation Post-closing trial balance- Includes only permanent-balance sheet-accounts Accrued revenues- Revenues earned but not yet received Accrued expenses- Expenses incurred but not yet paid
matching part 7
Present value of a single amount- The value today of a future amount to be received or paid. Future value of a single amount- The value at a future date of a given amount invested. Compound interest- Return on principal plus interest for two or more periods. Present value of an annuity- Value today of a series of future amounts to be received or paid. Future value of an annuity- The sum of all the payments or receipts plus the accumulated compound interest on them.
If the cash budget showed a projected cash shortage, the company would most likely - make fewer purchases of inventory so they could control costs. - lay off workers for that period. - arrange to borrow the necessary cash for that period. -cut salaries for that period.
arrange to borrow the necessary cash for that period.
Powers Corporation received a cash advance of $500 from a customer. As a result of this event, -assets increased by $500. -equity increased by $500. -liabilities decreased by $500. -Both assets and equity increased by $500.
assets increased by $500
Refer to Fernbank Farms. What is the truck's book value at December 31, 2021? a.$62,000 b.$80,000 d.$98,000
b.$80,000
The balance in the retained earnings account represents a.the amount of cash available for dividends. b.accumulated revenues from all prior years of operations. c.accumulated earnings that have not been distributed to stockholders. d.cash in the bank.
c.accumulated earnings that have not been distributed to stockholders.
Checks presented for payment and paid by the bank are known as a.certified checks. b.outstanding checks. c.NSF checks. d.canceled checks.
d.canceled checks.
