ACCT 201A FINAL

A trial balance: Select one: a. is a list of accounts with their balances at a given time. b. proves that proper account titles were used. c. will not balance if a correct journal entry is posted twice. d. proves that all transactions have been recorded.

A

Accounts and notes receivable are reported in the current assets section of the balance sheet at: Select one: a. cash (net) realizable value b. net book value. c. lower-of-cost-or-market value. d. invoice cost.

A

Adjustments for unearned revenues: Select one: a. decrease liabilities and increase revenues. b. increase liabilities and increase revenues. c. increase assets and increase revenues. d. decrease revenues and decrease assets.

A

Bennie Razor Company has decided to sell one of its old manufacturing machines on June 30, 2022. The machine was purchased for $80,000 on January 1, 2018, and was depreciated on a straight-line basis for 10 years assuming no salvage value. If the machine was sold for $26,000, what was the amount of the gain or loss recorded at the time of the sale? Select one: a. $18,000 loss. b. $54,000 loss. c. $22,000 gain. d. $46,000 gain.

A

Generally accepted accounting principles are: Select one: a. a set of standards and rules that are recognized as a general guide for financial reporting. b. usually established by the Internal Revenue Service. c. the guidelines used to resolve ethical dilemmas. d. fundamental truths that can be derived from the laws of nature.

A

Good Stuff Retailers accepted $50,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 4% for its credit card use. The entry to record this transaction by Good Stuff Retailers will include a credit to Sales Revenue of $50,000 and a debit(s) to: Select one: a. Cash $48,000 and Service Charge Expense $2,000. b. Accounts Receivable $48,000 and Service Charge Expense $2,000. c. Cash $50,000. d. Accounts Receivable $50,000

A

If beginning inventory is $60,000, cost of goods purchased is $380,000, and ending inventory is $50,000, what is cost of goods sold under a periodic system? Select one: a. $390,000. b. $370,000. c. $330,000. d. $420,000.

A

Net credit sales for the month are $800,000. The accounts receivable balance is $160,000. The allowance is calculated as 7.5% of the receivables balance using the percentage-of-receivables basis. If Allowance for Doubtful Accounts has a credit balance of $5,000 before adjustment, what is the balance after adjustment? Select one: a. $12,000. b. $7,000. c. $17,000. d. $31,000.

A

The LIFO reserve is: Select one: a. the difference between the value of the inventory under LIFO and the value under FIFO. b. an amount used to adjust inventory to the lower-of-cost-or-net realizable value. c. the difference between the value of the inventory under LIFO and the value under average-cost. d. an amount used to adjust inventory to historical cost.

A

The benefits to leasing include each of the following except: Select one: a. higher resale value. b. reduced risk of obsolescence. c. little or no down payment. d. shared tax advantages.

A

What organization issues U.S. accounting standards? Select one: a. Financial Accounting Standards Board. b. International Accounting Standards Committee. c. International Auditing Standards Committee. d. None of the above.

A

Which account will have a zero balance after a company has journalized and posted closing entries? Select one: a. Service Revenue. b. Supplies. c. Prepaid Insurance. d. Accumulated Depreciation

A

Which of these statements about a journal is false? Select one: a. It contains only revenue and expense accounts. b. It provides a chronological record of transactions. c. It helps to locate errors because the debit and credit amounts for each entry can be readily compared. d. It discloses in one place the complete effect of a transaction.

A

Which principle dictates that efforts (expenses) be recorded with accomplishments (revenues)? Select one: a. Expense recognition principle. b. Historical cost principle. c. Periodicity principle. d. Revenue recognition principle.

A

Schleis Co. holds Murphy Inc.'s $10,000, 120-day, 9% note. The entry made by Schleis Co. when the note is collected, assuming no interest has previously been accrued, is: Select one or more: a.Cash 10,300 Notes Receivable 10,300 b.Cash 10,000 Notes Receivable 10,000 c.Accounts Receivable 10,300 Notes Receivable 10,000 Interest Revenue 300 d.Cash 10,300 Notes Receivable 10,000 Interest Revenue 300

A &D

A company makes a credit sale of $750 on June 13, terms 2/10, n/30, on which it grants a return of $50 on June 16. What amount is received as payment in full on June 23? Select one: a. $700. b. $686. c. $685. d. $650

B

Adjustments for accrued revenues: Select one: a. increase assets and increase liabilities. b. increase assets and increase revenues. c. decrease assets and decrease revenues. d. decrease liabilities and increase revenues.

B

As a result of a thorough physical inventory, Railway Company determined that it had inventory worth $180,000 at December 31, 2022. This count did not take into consideration the following facts. Rogers Consignment Store currently has goods worth $35,000 on its sales floor that belong to Railway but are being sold on consignment by Rogers. The selling price of these goods is $50,000. Railway purchased $13,000 of goods that were shipped on December 27, FOB destination, that will be received by Railway on January 3. Determine the correct amount of inventory that Railway should report. Select one: a. $230,000. b. $215,000. c. $228,000. d. $193,000.

B

Depreciation is a process of: Select one: a. valuation. b. cost allocation. c. cash accumulation. d. appraisal.

B

Genesis Company buys a $900 machine on credit. This transaction will affect the: Select one: a. income statement only. b. balance sheet only. c. income statement and retained earnings statement only. d. income statement, retained earnings statement, and balance sheet.

B

Hughes Company has a credit balance of $5,000 in its Allowance for Doubtful Accounts before any adjustments are made at the end of the year. Based on review and aging of its accounts receivable at the end of the year, Hughes estimates that $60,000 of its receivables are uncollectible. The amount of bad debt expense which should be reported for the year is: Select one: a. $5,000. b. $55,000. c. $60,000. d. $65,000.

B

If net sales are $400,000, cost of goods sold is $310,000, and operating expenses are $60,000, what is the gross profit? Select one: a. $30,000. b. $90,000. c. $340,000. d. $400,000.

B

Michael Co. accepts a $1,000, 3-month, 12% promissory note in settlement of an account with Tani Co. The entry to record this transaction is: Select one: a.Notes Receivable 1,030 Accounts Receivable 1,030 b.Notes Receivable 1,000 Accounts Receivable 1,000 c.Notes Receivable 1,000 Sales Revenue 1,000 d.Notes Receivable 1,020 Accounts Receivable 1,020

B

Permitting only designated personnel such as cashiers to handle cash receipts is an application of the principle of: Select one: a. segregation of duties. b. establishment of responsibility. c. independent internal verification. d. human resource controls.

B

Physical controls do not include: Select one: a. safes and vaults to store cash. b. independent bank reconciliations. c. locked warehouses for inventories. d. bank safety deposit boxes for important papers.

B

The characteristic of information that evaluates whether it is large enough to impact a decision. Select one: a. Comparability. b. Materiality. c. Cost. d. Consistency.

B

Which is an indicator of profitability? Select one: a. Current ratio. b. Earnings per share. c. Debt to assets ratio. d. Free cash flow.

B

Which is not one of the three forms of business organization? Select one: a. Corporation. b. Creditorship. c. Partnership. d. Sole proprietorship.

B

Which is not part of the recording process? Select one: a. Analyzing transactions. b. Preparing an income statement. c. Entering transactions in a journal. d. Posting journal entries.

B

Which of the following events is not recorded in the accounting records? Select one: a. Equipment is purchased on account. b. An employee is terminated. c. A cash investment is made into the business. d. Company pays dividend to stockholders.

B

A company has purchased a tract of land. It expects to build a production plant on the land in approximately 5 years. During the 5 years before construction, the land will be idle. The land should be reported as: Select one: a. property, plant, and equipment. b. land expense. c. a long-term investment. d. an intangible asset.

C

A company would minimize its depreciation expense in the first year of owning an asset if it used: Select one: a. a high estimated life, a high salvage value, and declining-balance depreciation. b. a low estimated life, a high salvage value, and straight-line depreciation. c. a high estimated life, a high salvage value, and straight-line depreciation. d. a low estimated life, a low salvage value, and declining-balance depreciation.

C

A ledger: Select one: a. contains only asset and liability accounts. b. should show accounts in alphabetical order. c. is a record of all accounts maintained by a company and their amounts. d. provides a chronological record of transactions.

C

A receivable that is evidenced by a formal instrument and that normally requires the payment of interest is: Select one: a. an account receivable. b. a trade receivable. c. a note receivable. d. a classified receivable.

C

Eddy Corporation had net credit sales during the year of $800,000 and cost of goods sold of $500,000. The balance in receivables at the beginning of the year was $100,000 and at the end of the year was $150,000. What was the accounts receivable turnover? Select one: a. 4.0 b. 5.3 c. 6.4 d. 8.0

C

In 2022, Patterson Wholesale Company had net credit sales of $750,000. On January 1, 2022, Allowance for Doubtful Accounts had a credit balance of $18,000. During 2022, $30,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage-of-receivables basis). If the accounts receivable balance at December 31 was $200,000, what is the required adjustment to Allowance for Doubtful Accounts at December 31, 2022? Select one: a. $20,000. b. $75,000. c. $32,000. d. $30,000.

C

In a bank reconciliation, deposits in transit are: Select one: a. deducted from the book balance. b. added to the book balance. c. added to the bank balance. d. deducted from the bank balance.

C

Kersee Company on June 15 sells merchandise on account to Eng Co. for $1,000, terms 2/10, n/30. On June 20, Eng Co. returns merchandise worth $300 to Kersee Company. On June 24, payment is received from Eng Co. for the balance due. What is the amount of cash received? Select one: a. $700. b. $680. c. $686. d. None of the above.

C

Neutrality is an ingredient of: Select one: a.Faithful Representation: YesRelevance: Yes b.Faithful Representation: No Relevance: No c.Faithful Representation: YesRelevance: No d.Faithful Representation: NoRelevance: Yes

C

Stockholders' equity represents: Select one: a. claims of creditors. b. claims of employees. c. claims of owners. d. the difference between revenues and expenses.

C

The balance in retained earnings is not affected by: Select one: a. net income. b. net loss. c. issuance of common stock. d. dividends.

C

The gross profit rate is equal to: Select one: a. net income divided by sales. b. cost of goods sold divided by sales. c. net sales minus cost of goods sold, divided by net sales. d. sales minus cost of goods sold, divided by cost of goods sold.

C

The principles of internal control do not include: Select one: a. establishment of responsibility. b. documentation procedures. c. management responsibility. d. independent internal verification.

C

What are the first step and the final step in the revenue recognition process? Select one: a. The first step is identify the contract with customers, and the final step is allocate the transaction price to the separate performance obligations. b. The first step is identify the separate performance obligations in the contract, and the final step is determine the transaction price. c. The first step is identify the contract with customers, and the final step is recognize revenue when each performance obligation is satisfied. d. The first step is determine the transaction price, and the final step is identify the separate performance obligations in the contract.

C

What is the periodicity assumption? Select one: a. Companies should recognize revenue in the accounting period in which services are performed. b. Companies should match expenses with revenues. c. The economic life of a business can be divided into artificial time periods. d. The fiscal year should correspond with the calendar year.

C

What is the primary criterion by which accounting information can be judged? Select one: a. Consistency. b. Predictive value. c. Usefulness for decision-making. d. Comparability

C

A company can accelerate its cash receipts by all of the following except: Select one: a. offering discounts for early payment. b. accepting national credit cards for customer purchases. c. selling receivables to a factor. d. writing off receivables.

D

A revenue account: Select one: a. is increased by debits. b. is decreased by credits. c. has a normal balance of a debit. d. is increased by credits.

D

Able Towing Company purchased a tow truck for $60,000 on January 1, 2022. It was originally depreciated on a straight-line basis over 10 years with an assumed salvage value of $12,000. On December 31, 2024, before adjusting entries had been made, the company decided to change the remaining estimated life to 4 years (including 2024) and the salvage value to $2,000. What was the depreciation expense for 2024? Select one: a. $6,000. b. $4,800. c. $15,000. d. $12,100.

D

Additions to plant assets are: Select one: a. revenue expenditures. b. debited to the Maintenance and Repairs Expense account. c. debited to the Purchases account. d. capital expenditures.

D

An analysis and aging of the accounts receivable of Raja Company at December 31 reveal these data:Accounts receivable: $800,000Allowance for doubtful accounts per books before adjustment (credit): $50,000Amounts expected to become uncollectible : $65,000What is the cash realizable value of the accounts receivable at December 31, after adjustment? Select one: a. $685,000. b. $750,000. c. $800,000. d. $735,000.

D

Corrieten Company purchased equipment and incurred these costs:Cash price $24,000Sales taxes 1,200Insurance during transit 200Installation and testing 400Total costs $25,800What amount should be recorded as the cost of the equipment? Select one: a. $24,000. b. $25,200. c. $25,400. d. $25,800.

D

Cuso Company purchased equipment on January 1, 2021, at a total invoice cost of $400,000. The equipment has an estimated salvage value of $10,000 and an estimated useful life of 5 years. What is the amount of accumulated depreciation at December 31, 2022, if the straight-line method of depreciation is used? Select one: a. $80,000. b. $160,000. c. $78,000. d. $156,000.

D

Hughes has a debit balance of $5,000 in its Allowance for Doubtful Accounts before any adjustments are made at the end of the year. Based on review and aging of its accounts receivable at the end of the year, Hughes estimates that $60,000 of its receivables are uncollectible. The amount of bad debt expense which should be reported for the year is: Select one: a. $5,000. b. $55,000. c. $60,000. d. $65,000.

D

If a company is concerned about extending credit to a risky customer, it could do any of the following except: Select one: a. require the customer to pay cash in advance. b. require the customer to provide a letter of credit or a bank guarantee. c. contact references provided by the customer, such as banks and other suppliers. d. provide the customer a lengthy payment period to increase the chance of paying.

D

Internal control is used in a business to: Select one: a. safeguard its assets. b. enhance the accuracy and reliability of its accounting records. c. ensure compliance with laws and regulations. d. All of these answer choices are correct.

D

Norton Company purchased 1,000 widgets and has 200 widgets in its ending inventory at a cost of $91 each and a net realizable value of $80 each. The ending inventory under lower-of-cost-or-net realizable value is: Select one: a. $91,000. b. $80,000. c. $18,200. d. $16,000.

D

Paying an account payable with cash affects the components of the accounting equation in the following way: Select one: a. Decreases stockholders' equity and decreases liabilities. b. Increases assets and decreases liabilities. c. Decreases assets and increases stockholders' equity. d. Decreases assets and decreases liabilities.

D

Posting: Select one: a. normally occurs before journalizing. b. transfers ledger transaction data to the journal. c. is an optional step in the recording process. d. transfers journal entries to ledger accounts.

D

Receivables are frequently classified as: Select one: a. accounts receivable, company receivables, and other receivables. b. accounts receivable, notes receivable, and employee receivables. c. accounts receivable and general receivables. d. accounts receivable, notes receivable, and other receivables.

D

Which accounts normally have debit balances? Select one: a. Assets, expenses, and revenues. b. Assets, expenses, and retained earnings. c. Assets, liabilities, and dividends. d. Assets, dividends, and expenses.

D

Which sales accounts normally have a debit balance? Select one: a. Sales Discounts b. Sales Returns and Allowances. c. Both (a) and (b) d. Neither (a) nor (b).

c

The control features of a bank account do not include: Select one: a. having bank auditors verify the correctness of the bank balance per books. b. minimizing the amount of cash that must be kept on hand. c. providing a double record of all bank transactions. d. safeguarding cash by using a bank as a depository.

A

The element of the annual report that presents an opinion regarding the fairness of the presentation of the financial position and results of operations is the: Select one: a. auditor's opinion. b. balance sheet c. comparative statements. d. Income statement.

A

The lower-of-cost-or-net realizable value rule for inventory is an example of the application of: Select one: a. the conservatism convention. b. the historical cost principle. c. the materiality concept. d. the economic entity assumption.

A

Under a perpetual inventory system, when goods are purchased for resale by a company: Select one: a. purchases on account are debited to Inventory. b. purchases on account are debited to Purchases. c. purchase returns are debited to Purchase Returns and Allowances. d. freight costs are debited to Freight-Out.

A

Which financial statement reports assets, liabilities, and stockholders' equity? Select one: a. Balance sheet. b. Income statement. c. Retained earnings statement. d. Statement of cash flows.

A

Which is not one of the three primary business activities? Select one: a. Advertising. b. Financing. c. Investing. d. Operating.

A

Which of the following is an example of a financing activity? Select one: a. Buying delivery equipment. b. Buying inventory. c. Issuing shares of common stock. d. Selling goods on account.

A

Current assets are listed: Select one: a. by order of expected conversion to cash. b. by importance. c. by longevity. d. alphabetically.

A

The multiple-step income statement for a merchandising company shows each of these features except: Select one: a. gross profit. b. cost of goods sold. c. a sales section. d. an investing activities section.

D

The reconciling item in a bank reconciliation that will result in an adjusting entry by the depositor is: Select one: a. outstanding checks. b. deposit in transit. c. a bank error. d. bank service charge

D

The use of prenumbered checks in disbursing cash is an application of the principle of: Select one: a. establishment of responsibility. b. segregation of duties. c. physical controls. d. documentation procedures.

D

Which is an advantage of corporations relative to partnerships and sole proprietorships? Select one: a. Harder to transfer ownership. b. Lower taxes. c. Most common form of organization. d. Reduced legal liability for investors.

D

During the year ended December 31, 2022, Bjornstad Corporation had the following results: net sales $267,000, cost of goods sold $107,000, net income $92,400, operating expenses $55,400, and net cash provided by operating activities $108,950. What was the company's profit margin? Select one: a. 40%. b. 60%. c. 20.5%. d. 34.6%.

D

Each of the following is a major type (or category) of adjusting entry except: Select one: a. prepaid expenses. b. accrued revenues. c. accrued expenses. d. unearned expenses.

D

Kam Company has the following units and costs. Units Unit CostInventory, Jan. 1 8,000 $11Purchase, June 19 13,000 12Purchase, Nov. 8 5,000 13If 9,000 units are on hand at December 31, what is the cost of the ending inventory under LIFO? Select one: a. $113,000 b. $108,000. c. $99,000. d. $100,000.

D

Net income will result during a time period when: Select one: a. assets exceed liabilities. b. assets exceed revenues. c. expenses exceed revenues. d. revenues exceed expenses.

D

The element of a corporation's annual report that describes the corporation's accounting methods is: Select one: a. auditor's report. b. income statement. c. management discussion and analysis. d. notes to the financial statements.

D

During 2022, Gibson Company assets decreased $50,000 and its liabilities decreased $90,000. Its stockholders' equity therefore: Select one: a. increased $40,000. b. decreased $140,000. c. decreased $40,000 d. increased $140,000.

A

For 2022, Spanos Corporation reported net income $26,000, net sales $400,000, and weighted-average common shares outstanding 4,000. There were preferred dividends of $2,000. What was the 2022 earnings per share? Select one: a. $6.00. b. $6.50 c. $99.50. d. $100.00.

A

Which of the following statements about a periodic inventory system is true? Select one: a. Companies determine cost of goods sold only at the end of the accounting period. b. Companies continuously maintain detailed records of the cost of each inventory purchase and sale c. The periodic system provides better control over inventories than a perpetual system. d. The increased use of computerized systems has increased the use of the periodic system.

A

Which of the following was not a result of the Sarbanes-Oxley Act? Select one: a. Companies must file financial statements with the Internal Revenue Service. b. All publicly traded companies must maintain adequate internal controls. c. The Public Company Accounting Oversight Board was created to establish auditing standards and regulate auditor activity. d. Corporate executives and boards of directors must ensure that controls are reliable and effective, and they can be fined or imprisoned for failure to do so.

A

Which statement about an account is true? Select one: a. An account consists of a title, a debit side, and a ledger side. b. An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items. c. There are separate accounts for specific assets and liabilities but only one account for stockholders' equity items. d. The left side of an account is the credit, or decrease, side.

A

Which statement presents information as of a specific point in time? Select one: a. Balance sheet. b. Income statement. c. Retained earnings statement. d. Statement of cash flows.

A

Which types of accounts will appear in the post-closing trial balance? Select one: a. Permanent accounts. b. Temporary accounts. c. Expense accounts. d. None of the above.

A

Bufford Corporation had reported the following amounts at December 31, 2022: sales revenue $184,000, ending inventory $11,600, beginning inventory $17,200, purchases $60,400, purchase discounts $3,000, purchase returns and allowances $1,100, freight-in $600, and freight-out $900. Calculate the cost of goods available for sale. Select one: a. $69,400. b. $74,100. c. $56,900. d. $197,700.

B

Carlos Company had beginning inventory of $80,000, ending inventory of $110,000, cost of goods sold of $285,000, and sales of $475,000. Carlos's days in inventory is: Select one: a. 73 days. b. 121.7 days. c. 102.5 days. d. 84.5 days.

B

Colleen Mooney earned a salary of $400 for the last week of September. She will be paid on October 1. The adjusting entry for Colleen's employer at September 30 is: Select one: a.No entry is required. b.Salaries and Wages Expense 400 Salaries and Wages Payable 400 c.Salaries and Wages Expense 400 Cash 400 d.Salaries and Wages Payable 400 Cash 400

B

Cost of goods available for sale consists of two elements: beginning inventory and: Select one: a. ending inventory. b. cost of goods purchased. c. cost of goods sold. d. All of the answer choices are correct.

B

The effects on the basic accounting equation of performing services for cash are to: Select one: a. increase assets and decrease stockholders' equity. b. increase assets and increase stockholders' equity. c. increase assets and increase liabilities. d. increase liabilities and increase stockholders' equity.

B

The financial statements for Macias Corporation contained the following information: Accounts receivable $5,000, Sales Revenue $75,000, Cash $15,000, Sales and Wages Expense $20,000, Rent expense $10,000. What was the company net income? Select one: a. $15,000 b. $45,000 c. $60,000 d. $65,000

B

What section of a statement of cash flows indicates the cash spent on new equipment during the past accounting period? Select one: a. The financing activities section. b. The investing activities section. c. The operating activities section. d. The statement of cash flows does not give this information.

B

When goods are purchased for resale by a company using a periodic inventory system: Select one: a. purchases on account are debited to Inventory. b. purchases on account are debited to Purchases. c. purchase returns are debited to Purchase Returns and Allowances. d. freight costs are debited to Purchases.

B

When there is a change in estimated depreciation: Select one: a. previous depreciation should be corrected. b. current and future years' depreciation should be revised. c. only future years' depreciation should be revised. d. None of the above.

B

Which statement about users of accounting information is incorrect? Select one: a. Management is considered an internal user. b. Regulatory authorities are considered internal users. c. Present creditors are considered external users. d. Taxing authorities are considered external users.

B

Davidson Electronics has the following: Units Unit CostInventory, Jan. 1 5,000 $ 8Purchase, April 2 15,000 10Purchase, Aug. 28 20,000 12If Davidson has 7,000 units on hand at December 31, the cost of ending inventory under the average-cost method is: Select one: a. $84,000. b. $70,000. c. $56,000. d. $75,250.

D

Adjustments for prepaid expenses: Select one: a. decrease assets and increase revenues. b. decrease expenses and increase assets. c. decrease assets and increase expenses. d. decrease revenues and increase assets.

C

As of December 31, 2022, Rockford Corporation has assets of $3,500 and stockholders' equity of $1,500. What are the liabilities for Rockford as of December 31, 2022? Select one: a. $1,000 b. $1,500 c. $2,000 d. $2,500

C

Debits: Select one: a. increase both assets and liabilities. b. decrease both assets and liabilities. c. increase assets and decrease liabilities. d. decrease assets and increase liabilities

C

Gross profit will result if: Select one: a. operating expenses are less than net income. b. net sales are greater than operating expenses. c. net sales are greater than cost of goods sold. d. operating expenses are greater than cost of goods sold.

C

In periods of rising prices, LIFO will produce: Select one: a. higher net income than FIFO. b. the same net income as FIFO. c. lower net income than FIFO. d. higher net income than average-cost.

C

Kam Company has the following units and costs. Units Unit CostInventory, Jan. 1 8,000 $11Purchase, June 19 13,000 12Purchase, Nov. 8 5,000 13If 9,000 units are on hand at December 31, what is the cost of the ending inventory under FIFO? Select one: a. $99,000. b. $108,000. c. $113,000. d. $117,000.

C

Queenan Company computes depreciation on delivery equipment at $1,000 for the month of June. The adjusting entry to record this depreciation is as follows: Select one: a.Depreciation Expense 1,000 Accumulated Depreciation-Queenan Company 1,000 b.Depreciation Expense 1,000 Equipment 1,000 c.Depreciation Expense 1,000 Accumulated Depreciation-Equipment 1,000 d.Equipment Expense 1,000 Accumulated Depreciation-Equipment 1,000

C

The correct order of presentation in a classified balance sheet for the following current assets is: Select one: a. accounts receivable, cash, prepaid insurance, inventory. b. cash, inventory, accounts receivable, prepaid insurance. c. cash, accounts receivable, inventory, prepaid insurance. d. inventory, cash, accounts receivable, prepaid insurance.

C

The trial balance shows Supplies $1,350 and Supplies Expense $0. If $600 of supplies are on hand at the end of the period, the adjusting entry is: Select one: a.Supplies 600 Supplies Expense 600 b.Supplies 750 Supplies Expense 750 c.Supplies Expense 750 Supplies 750 d.Supplies Expense 600 Supplies 600

C

To record the sale of goods for cash in a perpetual inventory system: Select one: a. only one journal entry is necessary to record cost of goods sold and reduction of inventory. b. only one journal entry is necessary to record the receipt of cash and the sales revenue. c. two journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods sold and reduction of inventory. d. two journal entries are necessary: one to record the receipt of cash and reduction of inventory, and one to record the cost of goods sold and sales revenue.

C

When is a physical inventory usually taken? Select one: a. When the company has its greatest amount of inventory. b. When a limited number of goods are being sold or received. c. At the end of the company's fiscal year. d. Both (b) and (c).

C

Which of the following did not result from the Sarbanes-Oxley Act? Select one: a. Independence of auditors increased. b. Penalties for fraudulent activity increased. c. Tax rates on corporations increased. d. Top management must now certify the accuracy of financial information.

C

Which of the following is not an element of the fraud triangle? Select one: a. Rationalization. b. Financial pressure. c. Segregation of duties. d. Opportunity.

C

Which of the following items in a cash drawer at November 30 is not cash? Select one: a. Money orders. b. Coins and currency. c. An NSF check. d. A customer check dated November 28.

C

Which of the following would affect the gross profit rate? (Assume sales remains constant.) Select one: a. An increase in advertising expense. b. A decrease in depreciation expense. c. An increase in cost of goods sold. d. A decrease in insurance expense.

C

Which of these statements about Visa credit card sales is incorrect? Select one: a. The credit card issuer conducts the credit investigation of the customer. b. The retailer is not involved in the collection process. c. The retailer must wait to receive payment from the issuer. d. The retailer receives cash more quickly than it would from individual customers.

C

Which statement correctly describes the reporting of cash? Select one: a. Cash cannot be combined with cash equivalents. b. Restricted cash funds may be combined with cash. c. Cash is listed first in the current assets section. d. Restricted cash funds cannot be reported as a current asset.

C

Which statement is incorrect concerning the adjusted trial balance? Select one: a. An adjusted trial balance proves the equality of the total debit balances and the total credit balances in the ledger after all adjustments are made. b. The adjusted trial balance provides the primary basis for the preparation of financial statements. c. The adjusted trial balance does not list temporary accounts. d. The company prepares the adjusted trial balance after it has journalized and posted the adjusting entries.

C

Adjusting entries are made to ensure that: Select one: a. expenses are recognized in the period in which they are incurred. b. revenues are recorded in the period in which the performance obligation is satisfied. c. balance sheet and income statement accounts have correct balances at the end of an accounting period. d. All of the above.

D

All of the following are required steps in the accounting cycle except: Select one: a. journalizing and posting closing entries. b. preparing an adjusted trial balance. c. preparing a post-closing trial balance. d. prepare financial statements from the unadjusted trial balance.

D

Companies can use free cash flow to: Select one: a. pay additional dividends. b. acquire more property, plant, and equipment. c. pay off debts. d. All of the above.

D

Considerations that affect the selection of an inventory costing method do not include: Select one: a. tax effects. b. balance sheet effects. c. income statement effects. d. perpetual versus periodic inventory system.

D

The following ratios are available for Reilly Inc. and O'Hare Inc.Reily: Current Ratio 2:1 | Debt to Assets Ratio 75% | EPS $3.50O'Hare: Curent Ratio 1.5:1 | Debt to Assets Ratio 40% | EPS $2.75Compared to O'Hare Inc., Reilly Inc. has: Select one: a. higher liquidity, higher solvency, and higher profitability. b. lower liquidity, higher solvency, and higher profitability. c. higher liquidity, lower solvency, and higher profitability. d. higher liquidity and lower solvency, but profitability cannot be compared based on information provided.

D

Which of the following control activities is not relevant when a company uses a computerized (rather than manual) accounting system? Select one: a. Establishment of responsibility. b. Segregation of duties. c. Independent internal verification. d. All of these control activities are relevant to a computerized system.

D

Which of the following should not be included in the physical inventory of a company? Select one: a. Goods held on consignment from another company. b. Goods shipped on consignment to another company. c. Goods in transit from another company shipped FOB shipping point. d. All of the above should be included.

D

Which of the following statements is false? Select one: a. If an intangible asset has a finite life, it should be amortized. b. The amortization period of an intangible asset can exceed 20 years. c. Goodwill is recorded only when a business is purchased. d. Research and development costs are expensed when incurred, except when the research and development expenditures result in a successful patent.

D

Which of these statements about promissory notes is incorrect? Select one: a. The party making the promise to pay is called the maker. b. The party to whom payment is to be made is called the payee. c. A promissory note is not a negotiable instrument. d. A promissory note is more liquid than an account receivable.

D

Which of these would cause inventory turnover to increase the most? Select one: a. Increasing the amount of inventory on hand. b. Keeping the amount of inventory on hand constant but increasing sales. c. Keeping the amount of inventory on hand constant but decreasing sales. d. Decreasing the amount of inventory on hand and increasing sales.

D

n a classified balance sheet, assets are usually classified as: Select one: a. current assets; long-term assets; property, plant, and equipment; and intangible assets. b. current assets; long-term investments; property, plant, and equipment; and common stock. c. current assets; long-term investments; tangible assets; and intangible assets. d. current assets; long-term investments; property, plant, and equipment; and intangible assets.

D

Which one of these statements about the accrual basis of accounting is false? Select one: a. Companies record events that change their financial statements in the period in which events occur, even if cash was not exchanged. b. Companies recognize revenue in the period in which the performance obligation is satisfied. c. This basis is in accordance with generally accepted accounting principles. d. Companies record revenue only when they receive cash and record expense only when they pay out cash.

D.