Accounting Final

To be useful, accounting information must have the fundamental qualitative characteristics of:

relevance and faithful representation

Revenues and expenses are closed to:

retained earnings

Net income is computed as:

revenues - expenses

When goods are shipped FOB destination:

revenues is recognized when the goods are received by the customers

Which entity requires companies issuing publicly traded stock to have their financial statements audited by an outside auditor?

securities and exchange commission

The Balance Sheet is used to prepare the:

statement of cash flows

When a US-based company holds a receivable denominated in a foreign currency, the US company wants the foreign currency to ________ against the US dollar so that the foreign currency can be converted into________.

strengthen; more money

With regard to accounts receivable, a separated account for each customer is kept in a(n):

substadary

In the cash budget, new financing is needed if:

the budgeted cash balance exceeds the cash available before new financing

When inventory is shipped from the seller to the buyer with shipping terms of FOB destination:

the seller has title to the goods while they are in transit

When treasury stock is purchased, accountants record treasury stock at:

the stocks current market value

When working with T-accounts, on important rule to remember is:

to credit an account means to enter an amount on the right-hand side of the T-accounts

Stock invests that are expected to be sold within the near term, with the intent of generating profits on the sale, are called:

trading securities

A LIFO liquidation occurs when ________ fall(s) below the ending inventory quantities in the previous period

ending inventory quantities

Kulvekowski Company prepares cash budgeted cash balance is $1,000,000. The budgeted cash balance is $800,000. The company has budgeted cash payable of $500,000 and budgeted cash receipts of $1,400,000. What amount of cash is available for investing?

$1,100,000

In 2017, First Company purchased Second Company for $19,000,000 cash. At the time of purchase, Second Company's assets had a market value of $25,000,000 and liabilities had a market value of $18,000,000. At the time of purchase, Second Company's assets had a book value of $15,000,000 and the liabilities had book value of $10,000,000. What amount of goodwill is recorded?

$12,000,000

Which accounts are increased by debits?

accounts receivable and utilities expenses

Interest payable, income tax payable and salary payable are all examples of:

accrued liabilities

Hedging foreign currency translation can be accomplished by:

all of the above

An investor who may significantly influence the business account of the Investee should report the Investment using the:

equity method

Cash-basis accounting does NOT record:

expiration of prepaid rent

Winter Company earned revenues of $170,000 in cash and $230,000 on accounts during 2016. Of the $230,000 on account, $66,000 was collected in cash in 2016 and the rest in 2017. The company incurred expenses of $105,000 in 2016, and made payments of $80,000 towards the expenses in 2016. What is the net income in 2016 under accrued accounting?

$295,000

Olde Shoppe has the following information at August 31: -Two deposits made on August 31 were not on the bank statement, totaling $5,300 -The bank collected an EFT payment on a note receivable for $2,780. Of this amount, $250 represented interest on the note. -August 31 balance in Cash was $11,697 -The bookkeeper forgot to record check #1578 for $543 which was cashed by the bank on August 15th -The balance on the bank statement as of August 31 was $10,720 -A check printing fee of $70 was shown on the bank statement. NSF check $200 -Checks #1572, #1606, and $1548, totaling $2,356, were not shown on the bank statement, even though the company had sent the checks What is the adjusted book balance at August 31st?

$13,664

The Pizza Store trades in a delivery car for a newer model. The old delivery car has a cost of $9,000 and accumulated depreciation of $8,000. The Pizza Store pays cash of $5,000. The fair value of the newer car is $20,000. What is the gain or loss for the Pizza Store on exchange of vehicles?

$14,000 gain

New Store has the following information at August 31: -Two deposits made on August 31st were not on the bank statement, totaling $5,300 -The bank collected an EFT payment on a note receivable for $2,750. Of this amount $150 represented interest on the note -August 31 balance in cash was $12,987 -The bookkeeper forgot to record check #1578 for $843, which was cashed by the bank on August 15th -The balance on the bank statement as of August 31 was $11,800 -A check printing fee of $40 was shown on the bank statement NSF checks $100 -Checks #1572, #1606, and #1548, total $2,346, current shown on bank statement, even though the company had sent the checks. What is the adjusted bank balance at August 31st?

$14,754

Roho Company acquired equipment on July 1, 2016, for $700,000. The residual value is $20,000 and the established life of 5 years or $40,000 hours. Compute the depreciation expense for the years ending December 31, 2016 and December 31, 2017 if Roho Company uses the double-declining-balance method of depreciation.

$140,000

A company completed the following transactions during the month of October: I. Purchased office supplies on account, $4,800 II. Provided services for cash, $22,000 III. Provided services on accounts, $12,000 IV. Collected cash from a customer on account, $7,400 V. Paid the monthly rent of $18,000 What was the company's net income for the month?

$16,000

Jenkins Company began business in June when stockholders invested $85,000 in the business, which in turn issued its common stock to them. Jenkins Company then purchased a building for $40,000 cash and inventory for $21,000 cash, performed services for clients for $10,000 cash, and paid utilities of $7,000 cash. What is the amount of cash at the end of June? ($22,000 + $12,000 - $18,000)

$17,000

Sylavia Company has long-term plant assets with the following information at the end of the year: Net book value, $87,300 Estimated future cash flow, $69,000 Fair Value, $67,000 The amount of impairment loss is?

$20,300

In 1990, Johnson Company purchased a building for $200,000. In 2017, a real estate professional says that the building has a fair value of $1,000,000. In 2017, a similar building down the street recently sold for $900,000. What value, before consideration of accumulated depreciation, is reported for the building on the balance sheet at December 31, 2017?

$200,000

A successful business must generate most of its cash from:

operating activities

*Trevor Company has the following adjusted trial balance....

$24,300

Mariano Company sells 12,000 units of inventory during the first year of operations for $700 each. Mariano Company provides a one year warranty on parts. It's estimated that 4% of units will be defective and that repair costs are estimated to be $70 per unit. In the year of sales warranty contracts are honored on 70 units for a total cost of $4,900. What amount will be reported as estimated warranty liability at the end of the year?

$28,700

Zeman Company prepare a cash budgeted cash balance is $8,000,000. The company has budgeted cash payments of $5,400,000 and budgeted cash payments of $10,300,000. The beginning balance of cash is $0. What amount of new financing is required?

$3,100,000

On January 1, 2017, Gardner Corporation purchased 29% of the common stock outstanding of Lance Corporation for $300,000. During 2017, Lance Corporation reported net income of $80,000 and declared and paid cash dividends of $37,000. The balance of Equity Method Investment Account at December 31, 2017 is:

$312,470

A company incurred the following costs: -Purchase price of land, $280,000 -Survey fees $4,000 -Payment of demolition of old building on land, $40,000 -Back property taxes on land, $3,000 -Paving costs for parking lot, $70,000 -Fence around perimeters of land, $15,000 -Lights in parking lot, $90,000 -Signs for new business, $5,000 What is the cost of land?

$327,000

On January 1, 2017, Plenty of Oil, Inc. purchased an oil field that is estimated to have 15,000,000 barrels of oil for $45,000,000. In 2017, 1,500,000 barrels of oil were extracted and sold. In 2018, 1,800,000 barrels of oil were extracted and sold. The oil field will have no residual value. What is the book value of oil reserved that will be reported on the balance sheet as of December 31, 2018?

$35,100,000

An investor purchased bonds and intends to hold them until the maturity date which is 10 years into the future. The bonds were purchased at a discount. 5 years after the purchase, this Held-to-Maturity Investment in bonds will be reported at _______ on the balance sheet

amortized cost

Jensen Corporation uses the percent of sales method to estimated uncollectibles. Net credit sales for the current year amount to $2,005,000 and management estimates 3% will be uncollectible. The allowance for Doubtful Accounts prior to adjustment has a debit balance of $17,000. After all adjusting entries are made, the balance in allowance for uncollectible accounts will be?

$43,150

On July 2017, Brownlee Corporation issues $1,400,000 of 10 year, 6% bonds dated July 1, 2017 at 9%. Brownlee uses straight-line method of amortization. Interest is paid each July 1 and January 1. Brownlee Corporation fiscal year end is January 30. The interest expense recognition for first semiannual interest pay on January 1, 2018 is?

$48,300

Lori Question

$55,000

A company purchased medical equipment for $190,000 on January 1, 2016. The company determined that the yearly depreciation expense is 19,000. What will be the ending balance in the Accumulated Depreciation Medical Equipment at December 31, 2018?

$57,000

Gengler Company acquired three pieces of equipment for $1,600,000. Equipment #1 is appraised at $740,000, equipment #2 is appraised at $560,000 and equipment #1 is? (Do NOT round any intermentary calculations, and round to nearest dollar)

$586,139

Marjorie Corporation acquired a building on January 1, 2016, for $700,000. The building had an estimated useful life of 20 years and an estimated salvage value of $29,000. On January 1, 201, Marjorie Corporation determined that the building could only be used for another 10 years and there would be no salvage value. Compute depreciation expense for the year ending, December 31, 2018 if Marjorie Corporation uses straight-line depreciation.

$63,290

If the interest rate on a note is 10.5% and the principal was $60,000. What is the maturity value of the note, if the term of the note is 7 months? (Record to nearest dollar)

$63,675

Given the following data, calculate cost of goods sold using the FIFO costing method: 1/1 beginning inventory 29 units at $8 per unit 2/25 purchases of inventory 19 units at $12 per unit 5/20 purchase of inventory 25 units at $12 per unit 8/15 purchase of inventory 12 units at $14 per unit 10/17 purchase of inventory 9 units at $15 per unit 12/31 ending inventory 22 units

$748

Boston Company sells 20 items for $1,100 per unit, and has a cost of goods sold percent of 60%. The gross profit to be reported for selling 20 items is:

$8,800

On January 1, 2017, bonds with a face value of $94,000 were sold. The bonds with a face value of $94,000 were sold.... The present value is $1 for 10 periods.... 10%?

$82,295

On January 4, 2017, Margaret's Cafe acquired is four years or $42,500 hours. the estimated residual value is $10,000. What is the depreciation for 2017, if Margaret's Cafe uses the asset $14,300 hours and uses the units-of-production method of depreciation?

$85,800

On December 31, 2017, James Company has an accounts receivable balance of $324,000 before any year end adjustments. The allowance for Doubtful Accounts has a $1,100 credit balance. The company prepares the following aging schedule for accounts receivable: Total balance, $324,000 1-30 days, $157,000 31-60 days, $89,000 61-90 days, $51,000 Over 90 days $27,000 Percent uncollectible 1%, 2%, 4%, and 21% respectively. What is the uncollectible Accounts Expense at December 31, 2017?

$9,960

Flander's Company has total assets of $400,000 and total liabilities of $270,000. The company collects an accounts receivable of $20,000. After this transaction, the company's debt ratio will be: (round your final answer to 2 decimal places)

0.68

Which type of lease will NOT increase a company's assets or long-term liabilities?

an operating lease

Dooley Company had current assets of $1,592, current liabilities of $1,423, total assets of $1,692 and long-term liabilities of $1,210. If Dooley acquires inventory by executing a six-month note for $1,500, what is the new current ratio? (Round your final answer to 2 decimal places). *(add 6-month note payable + current assets and liabilities. Total assets / total liabilities)

1.06

Bamboo Industries, Inc. has $39,000 in cash and cash equivalents, $19,000 in short-term investments, $129,000 on net current receivables, $58,000 in inventory and $18,000 in prepaid expenses. The total current liabilities of the firm are $240,000. Bamboo Industry current ratio is? (Round to 2 decimal places).

1.1

Marian Company reported the following item for the month of July: Sales Revenue $477,300 Cost of goods sold $320,000 Beginning Inventory $67,400 Ending Inventory $73,000 Inventory turnover is? (Round to 2 decimal places)

4.55

Marian Company reported the following item for the month of July: Sales Revenue $630,000 Cost of goods sold $310,000 Beginning Inventory $67,400 Ending Inventory $81,200 The gross profit percent is? (Round to nearest percent)

51%

Calculate Campany's total asset turnover based on the following information for the current year: Net Income, $800,000 Asset at beginning of the year, $100,000 Asset at ending of the year, $120,000 Net Sales, $900,000

8.18

The accounting equation can be stated as:

assets = liabilities + paid in capital + retained earnings

The Balance Sheet reports:

assets, liabilities and stockholders' equity

Dividends are declared by the:

Board of Directors

Bookkeeper recorded a payment on account as $170 instead of the correct amount of $710. What journal entry is required?

Debit accounts payable for $540 and credit cost for $540

On December 1, Macy Company sold merchandise with a selling price of $6,000 on an account to Mrs. Jorgenson, with terms 5/10, n/30. On December 3rd, Mrs. Jorgenson returned merchandise with a selling price of $500. Mrs. Jorgenson paid the amount due on December 9th. What journal entry did Macy Company prepare on December 9th?

Debit cash for $5,225 and credit accounts receivable receivable for $5,225

Which inventory costing method provides the most realistic measures of net income?

LIFO

Ongoing expenses incurred by the entity, other than the direct expenses for merchandise are called:

operating expense

Which financial statements cover a period of time?

Income statement, Statement of Stockholders' Equity, & Statement of Cash Flows

Where are statement dividends reported of the statement of cash flows?

does not appear anywhere on the statement of cash flows

The three factors that influence business and accounting decisions are:

economic, legal and ethical

Trevino Company has decided to factor its accounts receivable in order to get the immediate receipt of cash. The journal entry to record the factoring of the receivables would include:

a debit to cash, debit to financing expenses and credit to Accounts Receivable

A business offers credit terms of 2/15, n/30. These terms indicated that:

a discount of 2% can be taken if the invoice is paid within 15 days of the invoice date

The cost of goods sold model is

beginning inventory

If a company wants to maximize earning per share it would issue:

bonds instead of stocks

A good predictor of future cash flows include:

cash receipts & cash payments of current year

The accounts of Local Company at May 31, 2017 are as follows: Accounts Payable, $23,500 Accounts Receivable, $15,600 Cash, $68,000 Common Stock, $32,000 Dividends, $3,000 Insurance Expense, $2,100 Retained Earnings, $25,800 Salary Expense, $1,100 Sales Revenue, $10,000 Supplies, $1,500 What are the first four lines, in proper order, on the trial balance at May 31, 2017?

cash, accounts receivable, supplies, accounts payable

The following accounts are up-to-date and need no adjustment at the end of the period:

cash, land and common stock

a type of financial statement fraud that is accomplished by shipping more to customers than they order, with the expectation that they will return some or all of the merchandise is called?

channel stuffing

Bonds that the issuer may pay off at a prearranged price whenever the issuer chooses before the maturity dates are:

collagable bonds

An internal control system can be circumvented by:

collusion, management override, and human limitations

Which of the following is NOT included in the cost of a building that was constructed by the company?

cost of removing an unwanted building from the property

Following Generally US Accepted Accounting Principles, how is a change in accounting estimating handled?

current and future years only

The chronological order of dates for cash dividends are:

date of declaration, date of record, date of payment

The Daisy Company had net credit sales of $850,000 for the year. Cash sales for the year were $1,170,000. It is receivables at the beginning of the year were $43,000 and at the end of the year they had increased to $86,000. The Daisy Company has credit terms of net 30 days compute the days sales outstanding and evaluate the ratio as strong or weak

days sales outstanding 28 days; strong

Unsecured bonds are called _______. Secured bonds are __________.

debentures and mortgage bonds

On May 1, a business provided legal services to a client and billed the client $3,700. The client promised to pay the business in one month. Which journal entry should the business record on May 1st?

debit accounts receivable for $3,700 and credit service revenue for $3,700

Uptown Department Store use the perpetual inventory system and has ending with a historical cost of $620,000. The current replacement cost of the inventory is $598,000. The net realizable value is $670,000. Before any adjustments at the end of the period, the cost of goods sold account has a balance of $920,000. Which journal entry is required under U.S. GAAP?

debit cost of goods sold for $22,000 and credit inventory for $22,000

On January 1, 2017, Benson Company purchased $120,000. 6% bonds at a price of $93 and a maturity date of January 1, 2022. Benson Company plans to hold bonds until their maturity date. Interest is paid semiannually, on January 1 and July 1. Benson Company has a calendar year and uses straight-line amortization method for discount and premiums. The adjusting entry on December 31, 2017 is:

debit to Interest Receivable $3,600, debit held to maturity investment in bonds for $840, and credit interest revenue $4,440

A business received the current months utility bill for $1,625, and immediately paid it. Which journal entry is prepared?

debit utilities expense for $1,625 and credit cash for $1,625

Assume its the first year of operations. When taxable income exceeds pretax accounting income, accountants record a(n):

deferred tax asset

In present value calculations, the process of determining the present value of a single sum of money is called:

discounting

The stable-monetary-unit assumption:

enables accountants to ignore the effect of inflation or the accounting records

Under the effective interest method of amortization, the bond cash payment on each interest date is calculated by multiplying the:

face value of the bond times the stated interest rate for the approximate time period

On each balance sheet after the purchase date, investment in long-term available-for-sale securities are reported at:

fair value

Cash received from the issuance of bonds would be reported on a statement of cash flows under:

financing activities

Comprehensive income includes net income plus:

foreign currency translation gain

When a foreign subsidiary's balance sheet is translated into U.S. Dollars, a ________ is calculated.

foreign currency translation gain or loss

The type of fraud committed by company managers, who make false and misleading entries in the books in order to improve a companies financial statements, is called:

fraudulent financial reporting

a stock split:

has no effect on total stockholders' equity

The expense recognition principle requires the recognition of expenses:

in the same period in which the related revenues are earned

On January 1, 2017, total assets for Wininger Technologies were $140,000; on December 31, 2017, total assets were $155,000. On January 1, 2017, total liabilities were $111,000, on December 31, 2017, total liabilities were $118,000. What is the amount of the change and the direction of the change in Wininger Technologies stock-holders' equity for 2017?

increase of 8,000

The LIFO Reserve can increase only when:

inventory cost of rising

Increases & decreases in the long-term assets are reported on the statement of cash flows as:

investing activities

The calculation to determine the number of outstanding shares of stock is the number of:

issued shares - number of treasury shares

Information for the trial balance is obtained from the:

ledger

Advantages of a corporation include:

limited liability of the stockholders' for the corporations debts

When customer checks are received in the mail, which employees are involved in processing the checks?

mailroom employee, accounting department employee, controller, treasurer, cashier in treasurers department

The three main components of the fraud triangle are:

motive, opportunity and rationalization

Free cash flows equals:

net cash provided by operating accounts minus cash payments earmarked for invests in plant assets

A company purchased a parcel of land using a long-term note payable. Using the direct method, where is this transaction reported on the statement of cash flows?

noncash investing & financing activities

Comprehensive income is

not used to determine net income or earnings per share

A companies main source of cash should be:

operating activities

When a US-based company has a payable denomination in a foreign currency, the US company wants the foreign currency to ____ and the US dollar to ________.

weaken; strengthen