Accounting Final
A practical shortcut for the denominator in the Return on Equity ratio is
Owners' Equity at the beginning of the period
Soundgarden Company collected $18,200 in May of 2015 for 5 months of service which would take place from October of 2015 through February of 2016. The revenue reported from this transaction during 2015 would be
$10,920.
The Wingo Company sells a single product for $21 per unit. If variable expenses are 70% of sales and fixed costs are $4,200, the break-even point in dollars will be:
$14,000
A machine with a cost of $480,000 has an estimated salvage value of $30,000 and an estimated useful life of 5 years or 15,000 hours. It is to be depreciated using the units-of-activity method of depreciation. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?
$150,000
GRZ Inc. purchased a customized delivery truck in January 2018 for $70,000. They plan to use this truck for 7 years, and the company estimates the truck's salvage value will be $14,000 at the end of its useful life. (The company uses the straight-line method when recording depreciation.) In 2018, GRZ Inc.'s net income was $575,000, and their tax rate was 35%. What is the value of the depreciation tax shield?
$2,800
If total liabilities decreased by $50,000 and stockholders' equity increased by $30,000 during a period of time, then total assets must change by what amount and direction during that same period?
$20,000 decrease
Jean's Vegetable Market had the following transactions during 2014: 1. Issued $50,000 of par value common stock for cash. 2. Repaid a 6 year note payable in the amount of $22,000. 3. Acquired land by issuing common stock of par value $50,000. 4. Declared and paid a cash dividend of $7,000. 5. Sold a long-term investment (cost $3,000) for cash of $6,000. 6. Acquired an investment in IBM stock for cash of $10,000. What is the net cash provided by financing activities?
$21,000
On May 1, 2015, Pinkley Company sells office furniture for $300,000 cash. The office furniture originally cost $750,000 when purchased on January 1, 2008. Depreciation is recorded by the straight-line method over 10 years with a salvage value of $75,000. What depreciation expense should be recorded on this asset in 2015?
$22,500
Cordet's Café has a potential investment of $900,000, which generated a depreciation tax shield of $60,000 and a tax rate of 25% for 2009. How much depreciation expense did Cordet's Café record during 2009?
$240,000
The net income reported on the income statement for the current year was $245,000. Depreciation was $40,000. Account receivable and inventories decreased by $12,000 and $35,000, respectively. Prepaid expenses and accounts payable increased, respectively, by $1,000 and $8,000. How much cash was provided by operating activities?
$339,000
During the year 2015, Dilego Company earned revenues of $90,000, had expenses of $56,000, purchased assets with a cost of $10,000 and paid dividends of $6,000. Net income for the year is
$34,000.
The following data are available for Two-off Company. Increase in accounts payable$120,000Increase in bonds payable (Borrowing Cash) 300,000Sale of investments150,000Issuance of common stock160,000Payment of cash dividends90,000 Net cash provided by financing activities is:
$370,000.
All revenue and expense accounts have been closed at the end of the calendar year for Wang Company. The income summary account has total debits of $490,000 and total credits of $720,000. As of the same date, Retained Earnings has a balance of $175,000 and the Dividends account has a balance of $32,000. What is the new balance of Retained Earnings?
$373,000
Barsuk Company began the year with stockholders' equity of $108,000. During the year, Barsuk issued stock for $147,000, recorded expenses of $420,000, and paid dividends of $28,000. If Barsuk's ending stockholders' equity was $290,000, what was the company's revenue for the year?
$483,000.
Sargent Corporation bought equipment on January 1, 2015. The equipment cost $360,000 and had an expected salvage value of $60,000. The life of the equipment was estimated to be 6 years. The annual depreciation expense using the straight-line method of depreciation is
$50,000.
LRRP Company had credit sales of $650,000. The beginning accounts receivable balance was $15,000 and the ending accounts receivable balance was $140,000. What were the cash collections from customers during the period?
$525,000
Rubble Company reported net income of $70,000 for the year. During the year, accounts receivable increased by $6,000, accounts payable decreased by $5,000 and depreciation expense of $8,000 was recorded. Net cash provided by operating activities for the year is
$67,000.
If fixed costs are $15,000, profit before income taxes is $55,000, revenues are $160,000, variable costs are $90,000, contribution margin is:
$70,000
Bush Company reported net income of $60,000 for the year. During the year, accounts receivable decreased by $8,000, accounts payable increased by $4,000 and depreciation expense of $5,000 was recorded. Net cash provided by operating activities for the year is
$77,000.
The Sacramento Company reported the following for their most recent year Beginning Assets = 1,000 Beginning Liabilities = 700 Beginning Owners' Equity = 300 Beginning Retained Earnings = 150 Revenue = 500 Expense = 425 Net Income = 75 Return on Equity is
25.0%
A plant asset was purchased on January 1 for $60,000 with an estimated salvage value of $12,000 at the end of its useful life. The current year's Depreciation Expense is $6,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $30,000. The remaining useful life of the plant asset is
3 years.
On January 1, 2018, H.B. Cat Corp. signs a 25-year mortgage note payable. The loan principal is $750,000, interest is 9%, and the annual cash payments are $70,050. On December 31, 2018, H.B. Cat Corp. records its first annual cash payment. The journal entry to record this payment includes:
A debit to Interest Expense for $67,500
Regression analysis is:
A statistical method for estimating fixed and variable costs.
A company has an opportunity cost of capital of 9.5%. Which of the following is the most acceptable investment for this company?
An investment with an NPV of $5.
The basic accounting equation may be expressed as
Assets = Liabilities + Stockholders' Equity or any other order
On September 1, ABC Inc. had supplies of $2,000. During the month, the company purchased supplies for $4,500. On September 30, an inventory of supplies showed $1,000 of supplies on hand. What adjusting journal entry should be made for September?
Beginning Supplies + Purchases - Supplies Expense = Ending Supplies $2,000 + $4,500 - X = $1,000 X = $5,500 We need to decrease supplies by crediting supplies and debiting expense.
Debt =
Credit + x
REM Real Estate received a check for $27,000 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client. Unearned Rent Revenue was credited for the full $27,000. Financial statements will be prepared on July 31. REM Real Estate should make the following adjusting entry on July 31:
Debit Unearned Rent Revenue, $4,500; Credit Rent Revenue, $4,500.
An accountant has debited an asset account for $1,200 and credited a liability account for $500. What can be done to complete the recording of the transaction?
Debit another asset account for $700.
The annual depreciation tax shield is computed as:
Depreciation deduction for the year x tax rate.
In a make-or-buy decision relevant costs would include all of the following except:
Depreciation expense on the plant equipment currently used to make the part
Dividends are an expense
False
Even when there are no sales, total costs include only variable costs.
False
Not-for-profit entities budget on the basis of revenue and expense.(T/F)
False
Quantifying the longer-term implications of short-term actions is difficult. Consequently:
Frequently, only qualitative assessments are possible.
Mumford and Sons Corp. paid a dividend of $5,000 to its shareholders. How would this transaction affect net income?
No effect...Dividends are not an expense
The Worxs Company wants to achieve a profit of $126,000. They currently sell 5,000 units at a price of $72 per unit with variable costs of $32 per unit. Fixed costs total $84,000. In order to achieve their target profit without increasing the selling price, the company will need to
Increase sales by 250 units
benefit of budgeting?
It provides definite objectives for evaluating performance. It facilitates the coordination of activities. It requires all levels of management to plan ahead on a recurring basis.
Net Income =
Revenue - Expenses.
Contribution Margin =
Revenues - Variable Costs
Zen Arcade paid the weekly payroll on January 2 by debiting Salaries and Wages Expense for $47,000. The accountant preparing the payroll entry overlooked the fact that Salaries and Wages Expense of $27,000 had been accrued at year end on December 31. The correcting entry is
Salaries and Wages Payable27,000 Salaries and Wages Expense 27,000
Contribution margin is:
Sales revenue less variable expenses.
Which of the following would not result in unearned revenue?
Services performed on account
Which of the following events cannot be quantified into dollars and cents and recorded as an accounting transaction?
The appointment of a new CPA firm to perform an audit.
When there is a production constraint, the company should first produce the product with:
The highest contribution margin per unit of the constrained resource
The minimum expected rate of return of the management from any project is referred to as the:
The hurdle rate.
If the discount rate increases:
The present value of future cash flows will decrease, if other things remain unchanged
Dividends are not an expense
True
Financial budgets must be completed before the preparation of operational budgets. (T/F)
True
A company can achieve an increase in contribution margin (given no other changes) if:
Variable costs decrease.
On January 14, Edamame Industries purchased supplies of $700 on account. The entry to record the purchase will include
a debit to Supplies and a credit to Accounts Payable.
If a plant asset is retired before it is fully depreciated and no salvage value is received,
a loss on disposal occurs
Liabilities of a company are owed to
creditors
Deerhoof Company purchases equipment of $2,700 and supplies of $400 from Milkman Co. for $3,100 cash. The entry for this transaction will include a
debit to Equipment $2,700 and a debit to Supplies $400 for Deerhoof.
If a company fails to make an adjusting entry to record supplies expense, then
expense will be understated
Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally
expensed when incurred
A trial balance is a listing of
general ledger accounts and their balances
Pare Company reported a net loss of $30,000 for the year ended December 31, 2014. During the year, accounts receivable decreased $15,000, merchandise inventory increased $25,000, accounts payable increased by $30,000, and depreciation expense of $20,000 was recorded. During 2014, operating activities
provided net cash of $10,000.
If unearned revenues are initially recorded in revenue accounts and not all the related services been performed at the end of the accounting period, the failure to make "correcting and adjusting entries will cause
revenues to be overstated.
An error has occurred in the closing entry process if
the balance sheet accounts have zero balances.
Recording depreciation on plant assets affects
the balance sheet and the income statement.
Straight line depreciation is
the most commonly used depreciation method
The direct materials budget details
the quantity of direct materials to be purchased. the cost of direct materials to be purchased.
