ACCT207 Final Exam
Kent Company has used the same inventory method for many years. This is an example of which principle? a. matching b. realization c. cost d. consistency
d. consistency
Which of the following factors does not affect the initial market price of a stock? a. the company's anticipated future earnings b. the par value of the stock c. the current state of the economy d. the expected dividend rate per share
b. the par value of the stock
When prices are increasing, which inventory method will produce the highest cost of goods sold? a. FIFO b. LIFO c. average cost d. cost of goods sold will be the same under these methods
b. LIFO
In which of these inventory approaches is it important to determine the actual cost of a particular inventory item being sold in order to determine cost of goods sold? a. FIFO b. LIFO c. specific identification d. average cost
c. specific identification
The best interpretation of the word "credit" is the a. offset side of an account b. increase side of an account c. right side of an account d. decrease side of an account
c. right side of an account
McKinney corporation had beginning retained earnings of $2,242,000 and ending retained earnings of $2,499,000. During the year they issued common stock totaling $141,000. No dividends were paid. What was their net income for the year? a. $257,000 b. $116,000 c. $398,000 d. $323,000
a. $257,000
Taylor, Inc. had accounts receivable of $310,000 and an allowance for doubtful accounts of $19,500 just before writing off as worthless an account receivable from Burton Company of $1,300. The net realizable value of the accounts receivable before and after the write-off were a. $290,500 before and $289,200 after b. $290,500 before and $290,500 after c. $310,000 before and $308,700 after d. $329,500 before and $328,200 after
a. $290,500 before and $289,200 after
A corporation issues $300,000, 10%, 5-year bonds on January 1, 2020, for $287,400. Interest is paid annually on January 1. If the corporation uses the straight-line method of amortization of bond discount, the amount of bond interest expense to be recognized in December 31, 2020's adjusting entry is a. $32,520 b. $30,000 c. $27,480 d. $2,520
a. $32,520
McLaughlin Company issued common stock for proceeds of $558,000 during 2022. The company paid dividends of $99,000 and issued a long-term note payable for $375,000 in exchange for equipment during the year. The company also purchased treasury stock that had a cost of $81,000. The financing section of the statement of cash flows will report net cash inflows of a. $378,000 b. $834,000 c. $459,000 d. $753,000
a. $378,000
During the year 2018, the inventory of Debra's Gift Shop increased by $50,000 (assume beginning inventory was zero_. If the income statement for the year 2018 reported cost of goods sold of $350,000, purchases during the year must have amounted to a. $400,000 b. $310,000 c. $300,000 d. $350,000
a. $400,000
When straight-line depreciation is in use, the depreciation rate of an asset is equal to a. 1 divided by the life of the asset b. 1 divided by the cost of the asset c. the cost of the asset divided by the life of the asset d. the cost of the asset less its salvage value divided by the life of the asset
a. 1 divided by the life of the asset
An NSF check returned by the bank should be entered in the depositor's accounting records by a debit to a. Accounts Receivable b. an expense account c. Cash d. Cash Over and Short
a. Accounts Receivable
Which of the four inventory approaches transfers the most recent purchase cost to the cost of goods sold and the remaining items in inventory are valued at the oldest acquisition costs? a. LIFO b. FIFO c. average cost d. specific identification
a. LIFO
The acquisition of land by issuing common stock is a. a noncash transaction that is not reported in the body of a statement of cash flows b. a cash transaction and would be reported n the body of a statement of cash flows c. a noncash transaction and would be reported in the body of a statement of cash flows d. only reported if the statement of cash flows is prepared using the direct method
a. a noncash transaction that is not reported in the body of a statement of cash flows
The liability created by a business when it purchases coffee beans and coffee cups on credit from suppliers is termed a(n) a. account payable b. account receivable c. revenue d. expense
a. account payable
Which of the following accounts probably would be listed before the others in a chart of accounts? a. accumulated depreciation - buildings b. insurance expense c. dividends d. notes payable
a. accumulated depreciation - buildings
Which one of the following items is not generally used in preparing a statement of cash flows? a. adjusted trial balance b. comparative balance sheets c. current income statement d. additional information
a. adjusted trial balance
In reconciling a bank statement, which of the following items could cause the cash per bank statement to be greater than the balance of cash shown in the depositor's accounting records? a. an outstanding check b. a check returned to the depositor marked NSF c. check 457 written for $643 was recorded by the depositor as $463 d. a bank service charge
a. an outstanding check
The amount of stock that may be issued according to the corporation's charter is referred to as the a. authorized stock b. issued stock c. unissued stock d. outstanding stock
a. authorized stock
The present value of a $10,000, 5-year bond, will be less than $10,000 if the a. contractual rate of interest is less than the market rate of interest b. contractual rate of interest is greater than the market rate of interest c. bond is convertible d. contractual rate of interest is equal to the market rate of interest
a. contractual rate of interest is less than the market rate of interest
Boyce Company purchased office supplies costing $5,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $1,800 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be a. debit Supplies Expense, $3,200; credit Supplies, $3,200 b. debit Supplies, $1,800; credit Supplies Expense, $1,800 c. debit Supplies Expense, $1,800; credit Supplies, $1,800 d. debit Supplies, $3,200; credit Supplies Expense, $3,200
a. debit Supplies Expense, $3,200; credit Supplies, $3,200
A company that receives money in advance of performing a service a. debits Cash and credits Unearned Service Revenue b. debits Unearned Service Revenue and credits Accounts Payable c. debits Cash and credits Prepaid Insurance d. debits Cash and credits Accounts Receivable
a. debits Cash and credits Unearned Service Revenue
Reporting a net income of $95,000 will a. increase retained earnings b. decrease retained earnings c. increase common stock d. decrease common stock
a. increase retained earnings
The par value of a stock a. is legally significant b. reflects the most recent market price c. is selected by the SEC d. is indicative of the worth of the stock
a. is legally significant
If a company reports a net loss, it a. may still have a net increase in cash b. will not be able to pay cash dividends c. will not be able to get a loan d. will not be able to make capital expenditures
a. may still have a net increase in cash
The order of presentation of activities on the statement of cash flows is a. operating, investing, and financing b. operating, financing, and investing c. financing, operating, and investing d. financing, investing, and operating
a. operating, investing, and financing
The term "accumulated depreciation" as used in accounting is best defined as a. the portion of a plant asset recognized as expense since the asset was acquired b. funds (or cash) set aside to replace the asset being depreciated c. earnings retained n the business that will be used to purchase another asset when the present asset is depreciated d. an expense of doing business
a. the portion of a plant asset recognized as expense since the asset was acquired
Tomassi Company paid $450,000 to acquire a piece of real estate consisting of land and an office building with a parking lot. In this situation a. the purchase price should be apportioned among the Land, Land Improvement, and Building accounts b. the entire purchase price should be debited to the Land account only c. Land, Land Improvement, and Building accounts should each be credited for the respective appraisal value of each item d. allocation of the entire $450,000 to Land results in an understatement of net income in the current and future accounting periods
a. the purchase price should be apportioned among the Land, Land Improvement, and Building accounts
The book value of an asset in the plant and equipment category is a. the undepreciated cost of the asset b. the current replacement cost of the asset c. the original cost of the asset d. the accumulated depreciation on the asset to date
a. the undepreciated cost of the asset
Beacon Food Stores purchased canned goods at an invoice price of $4,000 and terms of 2/10, n/30. Half of the goods had been mislabeled and were returned immediately to the supplier. If Beacon Food pays the remaining amount of the invoice within the discount period, the amount paid should be a. $1,920 b. $1,960 c. $3,920 d. $4,000
b. $1,960
Berg Tooling reports net sales of $325,000, gross profit of $175,000, and net income of $15,000. The company's cost of goods sold is a. $135,000 b. $150,000 c. $140,000 d. $125,000
b. $150,000
At December 31, 2014 Lowery Company had retained earnings of $2,384,000. During 2014 they issued stock for $98,000, and paid dividends of $34,000. Net income for 2014 was $402,000. The retained earnings balance at the beginning of 2014 was a. $2,752,000 b. $2,016,000 c. $2,114,000 d. $2,654,000
b. $2,016,000
The Cash account in the ledger of Hensley, Inc. showed a balance of $3,100 at June 30. The bank statement, however, showed a balance of $3,900 at the same date. The only reconciling items consisted of a $700 deposit in transit, a bank service charge of $7, and a large number of outstanding checks. What is the "adjusted cash balance" at June 30? a. $3,900 b. $3,093 c. $7,600 d. $2,400
b. $3,093
Tomlinson Packaging Corporation began business in 2020 by issuing 50,000 shares of $5 par common stock for $8 per share and 5,000 shares of 6%, $10 par preferred stock for par. At year end, the common stock had a market value of $10. On its December 31, 2020 balance sheet, Tomlinson Packaging would report a. Common Stock of $500,000 b. Common Stock of $250,000 c. Common Stock of $400,000 d. Paid-in Capital of $330,000
b. Common Stock of $250,000
If the market interest rate for a bond is higher than the state interest rate, the bond will sell at a. a premium b. a discount c. par d. either a discount of premium
b. a discount
An asset that costs $28,800 and has accumulated depreciation of $6,000 is sold for $21,600. What amount of gain or loss will be recognized when the asset is sold? a. a gain of $1,200 b. a loss of $1,200 c. a loss of $7,200 d. a loss of $7,200
b. a loss of $1,200
The right to receive money in the future is called a(n) a. account payable b. account receivable c. liability d. revenue
b. account receivable
Capital expenditures are recorded as a. an expense b. an asset c. a liability d. income
b. an asset
The usual sequence of steps in the transaction recording process is a. journalize, analyze, post to ledger b. analyze, journalize, post to ledger c. journalize, post to ledger, analyze d. post to the ledger, journalize, analyze
b. analyze, journalize, post to ledger
If the interest expense recorded on an interest payment date is increased a. by the amortization of premium on bonds payable b. by the amortization of discount on bonds payable c. only if the bonds were sold at face value d. only if the market rate of interest is less than the stated rate of interest on that date
b. by the amortization of discount on bonds payable
If a business has received cash in advance of services performed and credits a liability account, the adjusting entry needed after the services are performed will be a. debit Unearned Service Revenue and credit Cash b. debit Unearned Service Revenue and credit Service Revenue c. debit Unearned Service Revenue and credit Prepaid Expense d. debit Unearned Service Revenue and credit Accounts Receivable
b. debit Unearned Service Revenue and credit Service Revenue
An adjusting entry can include a a. debit to an asset and a credit to a liability b. debit to a revenue and a credit to an asset c. debit to a liability and a credit to a revenue d. debit to an expense and a credit to a revenue
b. debit to a revenue and a credit to an asset
When a company performs a service but has not yet received payment, it a. debits Service Revenue and credits Accounts Receivable b. debits Accounts Receivable and credits Service Revenue c.debits Service Revenue and credits Accounts Payable d. makes no entry until cash is received
b. debits Accounts Receivable and credits Service Revenue
Over the term of the bonds, the balance in the Discount on Bonds Payable account will a. fluctuate up and down if the market is volatile b. decrease c. increase d. by unaffected until the bonds mature
b. decrease
Declaring a cash dividend will a. increase retained earnings b. decrease retained earnings c. increase common stock d. decrease common stock
b. decrease retained earnings
When preparing a bank reconciliation, an NSF check will a. increase the balance per depositor's records b. decrease the balance per depositor's records c. increase the balance per the bank statement d. decrease the balance per the bank statement
b. decrease the balance per depositor's records
In a periodic inventory system, the cost of goods sold is a. recorded as sales transactions occur b. determined by a computation which is performed at year-end, after the taking of a complete physical inventory c. equal to the beginning inventory, plus purchases made during the period, less sales revenue for the period d. determined by subtracting the balance in the Gross Profit account from the amount of net sales
b. determined by a computation which is performed at year-end, after the taking of a complete physical inventory
Which of the following is not considered an acceptable inventory cost method according to GAAP? a. first-in, first-out b. first-in, last-out c. last-in, first-out d. average cost
b. first-in, last-out
The relationship between current assets and current liabilities is important in evaluating a company's a. profitability b. liquidity c. market value d. solvency
b. liquidity
The present value of a bond is also know as its a. face value b. market price c. future value d. deferred value
b. market price
A corporation has the following account balances: Common Stock, $1 par value, $80,000; Paid-in Capital in Excess of Par Value, $2,700,000. Based on this information, the a. legal capital is $2,780,000 b. number of shares issued is 80,000 c. number of shares outstanding is 2,780,000 d. average price per share issued is $3,48
b. number of shares issued is 80,000
The term legal capital is a descriptive term for a. stockholders' equity b. par value c. residual equity c. market value
b. par value
Dividends are reported on the a. income statement b. retained earnings statement c. balance sheet d. income statement and balance sheet
b. retained earnings statement
The statement of cash flows a. must be prepared on a daily basis b. summarizes the operating, financing, and investing activities of an entity c. is another name for the income statement d. is a special section of the income statement
b. summarizes the operating, financing, and investing activities of an entity
A disadvantage of the corporate form of organization is a. professional management b. tax treatment c. ease of transfer of ownership d. lack of mutual agency
b. tax treatment
The accounting records of Golden Company showed cash of $15,250 at June 30. The balance per the bank statement at June 30 was $15,125. The only reconciling items were deposits in transit of $3,200, outstanding checks totaling $4,100, an NSF check for $1,000 returned by the bank which Golden had not yet charged back to the customer, and a bank service charge of $25. The preparation of the bank reconciliation should indicate that Golden's adjusted cash balance at June 30 is a. $14,475 b. $15,375 c. $14,225 d. $15,525
c. $14,225
At October 1, 2014, Metz Industries had an Accounts Payable balance of $70,000. During the month, the company made purchases on account of $50,000 and made payments on account of $80,000. At October 31, 2014, the Accounts Payable balance is a. $70,000 debit b. $10,000 credit c. $40,000 credit d. $80,000 credit
c. $40,000 credit
On June 1, 2014, England Inc. reported a cash balance of $21,000. During June, England made deposits of $8,000 and made disbursements totaling $24,000. What is the cash balance at the end of June? a. $5,000 credit balance b. $29,000 debit balance c. $5,000 debit balance d. $3,000 credit balance
c. $5,000 debit balance
Land is purchased for $456,000. Additional costs include a $30,300 fee to a broker, a survey fee of $3,400, $2,750 to construct a fence, and a legal fee of $12,500. What is the cost of the land? a. $456,000 b. $486,300 c. $502,200 d. $504,950
c. $502,200
Alt Corp. issues 5,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to a. Common Stock $50,000 and Paid-in Capital in Excess of Stated Value $20,000 b. Common Stock $70,000 c. Common Stock $50,000 and Paid-in Capital in Excess of par Value $20,000 d. Common Stock $50,000 and Retained Earnings $20,000
c. Common Stock $50,000 and Paid-in Capital in Excess of par Value $20,000
During periods of inflation, when comparing LIFO with FIFO a. LIFO inventory and cost of sales would be higher b. LIFO inventory and cost of sales would be lower c. LIFO inventory would be lower and cost of sales would be higher d. LIFO inventory would be higher and cost of sales would be lower
c. LIFO inventory would be lower and cost of sales would be higher
If Norben Company issues 6,000 shares of $5 par value common stock for $210,000, the account a. Common Stock will be credited for $210,000 b. Paid-in Capital in Excess of Par Value will be credited for $30,000 c. Paid-in Capital in Excess of Par Value will be credited for $180,000 d. Cash will be debited for $180,000
c. Paid-in Capital in Excess of Par Value will be credited for $180,000
When the LIFO costing method is in use, the seller a. must sell the most recently acquired units first b. must sell the oldest unit in inventory first c. assumes that the most recently acquired units are sold first d. assumes that the oldest units in inventory are sold first
c. assumes that the most recently acquired units are sold first
The cost of the transportation of inventory purchased a. are expensed in the current period b. increases income c. becomes part of the cost of inventory d. reduces the sales price
c. becomes part of the cost of inventory
On July 1, the Fisher Shoe Store paid $18,000 to Acme Realty for 6 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by the Fisher Shoe Store is a. debit Rent Expense, $18,000; credit Prepaid Rent, $3,000 b. debit Prepaid Rent, $3,000; credit Rent Expense, $3,000 c. debit Rent Expense, $3,000; credit Prepaid Rent, $3,000 d. debit Rent Expense, $18,000; credit Prepaid Rent, $15,000
c. debit Rent Expense, $3,000; credit Prepaid Rent, $3,000
They payment of a cash dividend would be classified as a(n) a. operating activity b. investing activity c. financing activity d. significant noncash activity
c. financing activity
If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest annually would sell at an amount a. less than face value b. equal to face value c. greater than face value d. that cannot be determined
c. greater than face value
When preparing a bank reconciliation, deposits in transit will a. increase the balance per depositor's records b. decrease the balance per depositor's records c. increase the balance per bank statement d. decrease the balance per bank statement
c. increase the balance per bank statement
Which of the following statements is not a characteristic of the LIFO method of pricing inventory? a. during a period of rising prices, LIFO tends to minimize the amounts of income taxes owed b. the cost of goods sold is measured in relatively current costs c. inventory is valued at relatively current costs d. during a period of falling prices, LIFO tends to maximize the amounts of income taxes owed
c. inventory is valued at relative current costs
The authorized stock of a corporation a. only reflects the initial capital needs of the company b. is indicated in its by-laws c. is indicated in its charter d. must be recorded in a formal accounting entry
c. is indicated in its charter
Financing activities involve a. lending money b. acquiring assets c. issuing debt d. acquiring long-lived assets
c. issuing debt
The purpose of the ledger is to a. record chronologically the day's transactions b. keep a record of documentation to support each transaction c. keep in one place all information about changes in specific account balances d. make sure that all assets, liabilities, etc., have normal balances at all times
c. keep in one place all information about changes in specific account balances
If a company fails to adjust an Unearned Rent Revenue account for rent that has been earned, what affect will this have on that month's financial statements? a. assets will be understated and revenues will be understated b. liabilities will be understated and revenues will be understated c. liabilities will be overstated and revenues will be understated d. assets will be overstated and revenues will be understated
c. liabilities will be overstated and revenues will be understated
Under the allowance method, when a receivable that had been previously written off is collected a. net income is increased b. net assets are increased c. neither net income nor net assets are affected d. both net assets and net income are increased
c. neither net income nor net assets are affected
During 2022, Lowes Company sold equipment with a book value of $120,000 for proceeds of $145,000. The company purchased new equipment for $320,000 by signing a long-term note payable. No other transactions impacted long-term asset accounts during 2022. The investing section of the statement of cash flows will report a. net cash outflows of $295,000 b. net cash inflows of $175,000 c. net cash inflows of $145,000 d. net cash inflows of $25,000
c. net cash inflows of $145,000
When the account Allowance for Doubtful Accounts is used, writing off of an uncollectible accounts receivable will a. reduce income b. reduce an expense c. not change income or total assets d. increase total assets
c. not change income or total assets
Which of the following clarifies information presented in the financial statements, as well as expanding upon it where additional detail is needed? a. auditor's report b. management discussion and analysis section c. notes to the financial statements d. president's state of the company report
c. notes to the financial statements
The carrying value of bonds will equal the market price a. at the close of every trading day b. at the end of the fiscal period c. on the date of issuance d. every six months on the date interest is paid
c. on the date of issuance
In a perpetual inventory system, two entries usually are made to record each sales transaction. The purposes of these entries are best described as follows a. one entry recognizes the sales revenue, and the other recognizes the cost of goods sold b. one entry records the purchase of the merchandise and the other records the sale c. one entry records the cost of goods sold, and the other reduces the balance in the Inventory account d. one entry updates the general ledger, and the other updates the subsidiary ledgers
c. one entry records the cost of goods sold, and the other reduces the balance of the Inventory account
Cash receipts from interest and dividends are classified as a. financing activities b. investing activities c. operating activities d. either financing or investing activities
c. operating activities
The primary purpose of the statement of cash flows is to a. provide information about the investing and financing activities during a period b. prove that revenues exceed expenses if there is a net income c. provide information about the cash receipts and cash payments during a period d. facilitate banking relationships
c. provide information about the cash receipts and cash payments during a period
An accelerated depreciation method a. results in reporting higher earnings every year b. depreciates an asset over a shorter life than does the straight-line method c. recognizes more depreciation expense in the early years of an asset's useful life and less in the later years d. is required for assets that become technologically obsolete before they physically wear out
c. recognizes more depreciation expense in the early years of an asset's useful life and less in the later years
Jayson Products uses a perpetual inventory system. At year-end, the Inventory account had a balance of $280,000, but a complete year-end physical inventory indicated goods on hand costing only $273,000. Jayson should a. reduce its cost of goods sold by $7,000 b. record a $7,000 current liability c. reduce the balance in its Inventory control account and inventory subsidiary ledger by $7,000 d. reduce the balance in the Inventory control account and record a current liability, both in the amount of $7,000
c. reduce the balance in its Inventory control account and inventory subsidiary ledger by $7,000
The most important information needed to determine if companies can pay their current obligations is the a. net income for this year b. projected net income for next year c. relationship between current assets and current liabilities d. relationship between short-term and long-term liabilities
c. relationship between current assets and current liabilities
Armstrong Company recently acquired a new computer system. Which of the following costs associated with the computer should not be debited to the Equipment account? a. insurance coverage purchased by Armstrong to cover the computer during shipment from the manufacturer b. wages paid to system programmers hired to prepare the new computer for use c. replacement of several circuit boards damaged during installation d. installation of new electrical power supplies required for the computer
c. replacement of several circuit boards damaged during installation
Ending retained earnings for a period is equal to beginning a. retained earnings + net income + dividends b. retained earnings - net income - dividends c. retained earnings + net income - dividends d. retained earnings - net income + dividends
c. retained earnings + net income - dividends
To arrive at net sales a. add sales discounts to sales b. subtract the cost of goods sold from the sales price c. subtract sales returns and sales discounts from sales d. subtract accounts receivable from sales
c. subtract sales returns and sales discounts from sales
The credit term 2/10, n/30 means a. that after 10 days 2% interest is charged b. that there is a 10% discount if payment is received within 30 days c. that there is a 2% discount if payment is received within 10 days, otherwise, full payment is due within 30 days d. there is a 10% discount if paid immediately and 2% if paid within 30 days
c. that there is a 2% discount if payment is received within 10 days, otherwise, full payment is due within 30 days
In recording an accounting transaction in a double-entry system a. the number of debit accounts must equal the number of credit accounts b. there must always be entries made on both sides of the accounting equation c. the amount of the debits must equal the amount of the credits d. there must only be two accounts affected by any transaction
c. the amount of the debits must equal the amount of the credits
A gain is recognized on the disposal of plant assets when a. the sales price is greater than the residual value but less than the book value b. the sales price is less than both the book value and the residual value c. the sales price is greater than the book value and greater than the residual value d. the sales price is greater than the book value and less than the residual value
c. the sales price is greater than the book value and greater than the residual value
Which of the following should not be classified as inventory in the balance sheet of a large automobile dealership? a. pickup trucks offered for sale b. used cars taken in trade and offered for sale on the company's used-car lot c. spark plugs, oil filters, and other parts that are intended for the use by the service department in repairing and servicing customers' cars d. "Company cars" provided to specific company executives for their personal use
d. "company cars" provided to specific company executives for their personal use
APS Company issued 20,000 shares of $1 par common stock for $40 per share during 2022. The company paid dividends of $48,000 and issued long-term notes payable of $440,000 during the year. What amount of cash flows from financing activities will be reported on the statement of cash flows? a. $12,000 net cash inflow b. $352,000 net cash inflow c. $705,000 net cash outflow d. $1,192,000 net cash inflow
d. $1,192,000 net cash inflow
Clark Imports sold a depreciable plant asset for cash of $35,000. The accumulated depreciation amounted to $70,000, and a loss of $5,000 was recognized on the sale. Under these circumstances, the original cost of the asset must have been a. $65,000 b. $75,000 c. $100,000 d. $110,000
d. $110,000
Harvard Company purchased equipment having an invoice price of $11,500. The terms of sale were 2/10, n/30, and Harvard paid within the discount period. In addition, Harvard paid a $160 delivery charge, $185 installation charge, and $931 sales tax. The amount recorded as the cost of this equipment is a. $11,845 b. $12,776 c. $11,615 d. $12,546
d. $12,546
Land is purchased for $256,000. Additional costs include a $15,300 fee to a broker, a survey fee of $2,400, $1,750 to construct a fence, and a legal fee of $8,500. What is the cost of the land? a. $256,000 b. $271,300 c. $283,950 d. $282,200
d. $282,200
At September 1, 2014, Baxter Inc. reported Retained Earnings of $282,000. During the month, Baxter generated revenues of $40,000, incurred expenses of $24,000, purchased equipment for $10,000 and paid dividends of $4,000. What is the balance in Retained Earnings at September 30, 2014? a. $282,000 debit b. $16,000 credit c. $284,000 credit d. $294,000 credit
d. $294,000 credit
On January 1, 2020, $4,000,000, 5-year, 10% bonds, were issued for $4,240,000. Interest is paid annually on January 1. If the issuing corporation sues the straight-line method to amortize premium on bonds payable, the monthly amortization amount is a. $35,332 b. $48,000 c. $4,800 d. $4,000
d. $4,000
Bonds with a face value of $500,000 and a quoted price of 102.25 have a selling price of a. $601,125 b. $510,125 c. $510,013 d. $511,250
d. $511,250
On January 1, 2020, $3,000,000, 10-year, 10% bonds, were issued for $2,910,000. Interest is paid annually on January 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, the monthly amortization amount is a. $29,100 b. $9,000 c. $2,424 d. $750
d. $750
If Pratt Company issues 5,000 shares of $5 par value common stock for $210,000, the account a. Common Stock will be credited for $185,000 b. Paid-in Capital in Excess of Par Value will be credited for $210,000 c. Paid-in Capital in Excess of Par Value will be credited for $235,000 d. Cash will be debited for $210,000
d. Cash will be debited for $210,000
All of the following accounts normally have a debit balance except a. Transportation-in b. Cost of Goods Sold c. Sales Returns & Allowances d. Purchase Returns & Allowances
d. Purchase Returns & Allowances
If a company fails to adjust a Prepaid Rent account for rent that has expired, what affect will this have on the month's financial statements? a. failure to make an adjustment does not affect the financial statements b. expenses will be overstated and net income and stockholders' equity will be understated c. assets will be overstated and net income and stockholders' equity will be understated d. assets will be overstated and net income and stockholders' equity will be overstated
d. assets will be overstated and net income and stockholders' equity will be overstated
An accountant has debited an asset account for $1,000 and credited a liability account for $500. What can be done to complete the recording of the transaction? a. nothing further must be done b. debit a stockholders' equity account for $500 c. debit another asset account for $500 d. credit a different asset account for $500
d. credit a different asset account for $500
The balance in the prepaid rent account before adjustment at the end of the year is $15,000 and represents three months rent paid on December 1. The adjusting entry required on December 31 is a. debit Prepaid Rent, $5,000; credit Rent Expense, $5,000 b. debit Prepaid Rent, $10,000; credit Rent Expense, $10,000 c. debit Rent Expense, $15,000; credit Prepaid Rent, $15,000 d. debit Rent Expense, $5,000; credit Prepaid Rent, $5,000
d. debit Rent Expense, $5,000; credit Prepaid Rent, $5,000
Gomez Corporation issues 900, 10-year, 8%, $1,000 bonds dated January 1, 2020, at 96. The journal entry to record the issuance will show a a. debit to Cash of $900,000 b. credit to Discount on Bonds Payable for $36,000 c. credit to Bonds Payable for $864,000 d. debit to Cash for $864,000
d. debit to Cash for $864,000
The common characteristic possessed by all assets is a. long life b. great monetary value c. tangible nature d. future economic benefit
d. future economic benefit
The Unearned Service Revenue account is classified as a(n) a. asset b. revenue c. expense d. liability
d. liability
The issuance of debt to purchase assets would be classified as a(n) a. operating activity b. investing activity c. financing activity d. none of these answers are correct
d. none of these answers are correct
Adjusting entries affect at least a. on revenue and one expense account b. one asset and one liability account c. one revenue and one balance sheet account d. one income statement account and one balance sheet account
d. one income statement account and one balance sheet account
The best definition of assets is the a. cash owned by the company b. collections of resources belonging to the company and the claims on these resources c. owners' investment in the business d. resources belonging to a company that have future benefit to the company
d. resources belonging to a company that have future benefit to the company
A law firm received $2,000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause a. expenses to be overstated b. net income to be overstated c. liabilities to be understated d. revenues to be understated
d. revenues to be understated
An architecture firm earned $2,000 for architecture services provided with the fee to be paid in the future. No entry was made at the time the service was provided. If the fee has not been paid by the end of the accounting period and no adjusting entry is made, this would cause a. revenues to be overstated b. net income to be overstated c. liabilities to be understated d. revenues to be understated
d. revenues to be understated
Which of the follow methods of measure the cost of goods sold most closely parallels the actual physical flow of the merchandise? a. LIFO b. FIFO c. average cost d. specific identification
d. specific identification
Harris Corporation's inventory of a particular product includes 200 units purchased at a per-unit cost of $50, an another 100 units purchased at a unit cost of $60. If Harris sells 10 units of this product, the cost of goods sold will be a. $500 b. $550 c. $660 d. the answer will depend upon the inventory cost flow assumption in use
d. the answer will depend upon the inventory cost flow assumption in use
Which of the following would not be considered as part of the cost of equipment recently purchased? a. sales tax b. transportation charges c. installation and setup charges d. the cost to repair damage incurred after dropping the equipment
d. the cost to repair damage incurred after dropping the equipment
Expenses are incurred a. only on rare occasions b. to produce assets c. to produce liabilities d. to generate revenues
d. to generate revenues