Final

A company purchased a delivery van for $28,000 with a salvage value of $3,000 on September 1, Year 1. It has an estimated useful life of 5 years. Using the straight-line method, how much depreciation expense should the company recognize on December 31, Year 1?

$1,667

A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life. In the first year, 15,000 bolts were produced. In the second year, production increased to 19,000 units. using the units-of-production method, what is the book value of the machine at the end of the second year?

$108,400

The interest accrues on $7,500 at 6% for 90 days is:

$112.50

A company has beginning inventory of 10 units at a cost of $10 each on February 1. On February 3, it purchases 20 units at $12 each. 12 units are sold on February 5. Using the FIFO periodic inventory method, what is the cost of the 12 units that are sold?

$124

Garza Company had sales of $135000, sales discounts of $2000, and sales returns of $3200. Garza Company's net sales equals:

$129,800

The following information is available for the Travis Travel Agency. After these closing entries what will be the balance in the Jay Travis, capital account? Total revenues............... $125000 Total Expenses................ $60000 Jay Travis Capital.......... $80000 Jay Travis, Withdrawals......... $15000

$130,000

Pure water's complete assets and liabilities are accounts receivable ($800), equipment ($10000), accounts payable ($4200), prepaid rent ($2000), supplies ($400), Bank loan ($1600), and tools ($300). Pure water's total assets are:

$13500

A company had no office supplies available at the beginning of the year. During the year, the company purchased $250 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year?

$175

Merchant Company purchased property for a building site. The costs associated with the property were: Purchase price $185,000 Real estate commissions 15,000 Legal fees 700 Expenses of clearing the land 2,000 Expenses to remove old building 4,000 What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building?

$206,700 to Land; $0 to Building

A company had the following purchases during the current year: January: 10 units at $120 February: 20 units at $125 May: 15 units at $130 September: 12 units at $135 November: 10 units at $140 On December 31, there were 26 units remaining in ending inventory. Using the LIFO inventory valuation method, what is the cost of the ending inventory?

$3,200

A Company had the following purchases during the current year: January: 10 units at $120 February: 20 units at $125 May: 15 units at $130 September: 12 units at $135 November: 10 units at $140 On December 31, there were 26 units remaining in ending inventory. Using the FIFO inventory valuation method, what is the cost of the ending inventory?

$3,540

On January 1, Southwest College received $1200000 in unearned tuition revenue from its students for the spring semester, which spans 4 months beginning on January 2. What amount of tuition revenue should the college recognize on January 31?

$300,000

The unadjusted trial balance columns of a company's work sheet show the balance in the office supplies account as $750. The adjustments columns show that $425 of these supplies were used during the period. The amount shown as office supplies in the balance sheet columns of the work sheet is:

$325 Debit

Jasper company is a wholesaler that buys merchandise in large quantities. Its supplier's catalog indicates a list price of $500 on merchandise Jasper intends to purchase, and offers a 30% trade discount for large quantity purchases. The cost of shipping for the merchandise is $7 per unit. Jasper's total purchase price per unit will be:

$357

A company has sales of $695000 and cost of goods sold of $278000. Its gross profit equals:

$417,000

On May 1, a two-year insurance policy was purchased for $18000 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31?

$5,270

A company receives a 10%, 120-day note for $1500. The total interest due on the maturity date is:

$50.00

Pure Water's complete assets and liabilities are accounts receivable ($800), equipment ($10000), accounts payable ($4200), prepaid rent ($2000), supplies ($400), bank loan ($1600), and tools ($300). Pure Water's total liabilities are:

$5800

On March 31 a company needed to estimate its ending inventory to prepare its first quarter financial statements. The following information is available: Beginning inventory, January 1: $4,000 Net sales: $80,000 Net purchases: $78,000 The company's gross margin ratio is 25%. Using the gross profit method, the cost of goods sold would be:

$60,000

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. what would be the depreciation expense for the first year of its useful life using the double-declining-balance method?

$680

Hasham purchases inventory from overseas and incurs the following cost; the merchandise cost is $80,000, credit terms 1/10, n/30, applicable only to the $80,000; FOB shopping point freight charges are $2,500; insurance during transit is $300; and import duties are $1,500. Hasham paid within the discount period. Compute the cost that should be assigned to the inventory.

$83,500

Based on the following information from Raptor Company's balance sheet, calculate the current ratio. Current Assets- $87000 Investments- $50000 Plant Assets- $250000 Current Liabilities- $39000 Long-term Liabilities- $90000 Raptor, Capital- $258000

1.06

A company earned $2000 in net income for October. Its net sales for October were $10000. Its profit margin is:

20%

A company's gross profit was $83750 and its net sales were $347800. Its gross margin ratio equals:

24.1%

A buyer failed to take advantage of the vendor's credit terms of 2/15, n/45, but instead paid the invoice in full at the end of 60 days. By not taking advantage of the cash discount, the equivalent annual interest lost on the amount of the purchase is:

24.3%

A company had net sales of $600000, total sales of $750000, and an average accounts receivable of $75000. Its accounts receivable turnover equals:

8.00

Unearned revenue is reported in the financial statements as:

A liability on the balance sheet

An asset's book value is $18,000 on December 31, Year 5. The asset has been depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, Year 5 for $15,000, the company should record:

A loss on sale of $3,000

A promissory note received from a customer in exchange for an account receivable is recorded by the payee as:

A note receivable

Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2000 uncollectible account of its customer, A. Hopkins. On July 10, Gideon received a check for the full amount of $2000 from Hopkins. The entry or entries Gideon makes to record the write off of the account on May 3 is:

Allowance for Doubtful Accounts.........................2,000 Accounts Receivable—A. Hopkins........................ 2,000

The dividend account:

Appears on the statement of retained earnings

Land improvements are:

Assets that increase the usefulness of land, but that have a limited useful life an are subject to depreciation

The total cost of an asset less its accumulated depreciation is called:

Book value

Archie corporation's trial balance included debits to expense accounts of $125000, credits to revenue accounts of $175000, and debits to the dividends account of $50000. Based on this information, the company's ending retained earnings is:

Cannot be determined

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

Cash basis accounting

Which of the following would not cause stockholder's equity to fluctuate?

Collection of accounts receivable

In applying the lower of cost or market method to inventory valuation, market is defined as:

Current replacement cost

J. Awn, the proprietor of Awn services, withdrew $8700 from the business during the current year. The entry to close the withdrawals account at the end of the year is:

Debit J. Awn, Capital $8700; credit J. Awn, withdrawals $8700

Richards billed patients for $12000 of services rendered. The appropriate journal entry to record this transaction is:

Debit accounts receivable/ credit revenue

Richards corporation provided services for cash in the amount of $1000. The appropriate journal entry to record this transaction is:

Debit cash/ Credit Revenue

A company purchased $1800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. The correct journal entry to record the purchase on July 5 is:

Debit merchandise inventory $1800; Credits accounts payable $1800

A company made no adjusting entry for accrued and unpaid employee salaries of $9000 on December 31. The entry to record the adjusting entry should have been:

Debit salary expense, $9000/ Credit salaries payable, $9000

An error is indicated if the following account has a balance appearing on the post-closing trial balance:

Depreciation Expense- Office Equipment

Assets can best be described as:

Economic resources owned by a company and expected to benefit the future

The closing process is necessary in order to:

Endure that net income or net loss and owner withdrawals for the period are closed into the owner's capital account

Betterments are:

Expenditures making a plant asset more efficient or productive

Journals and ledgers are synonymous terms:

False

The balance sheet furnishes the net income figure for the statement of retained earnings, which in turn allows the determination of revenues for a period:

False

The income statement summarizes the revenues, expenses, and dividends paid.

False

To engage in the practice of public accounting usually requires one to be licensed as a Certified Public Accountant (CPA)

False

Total assets cost plus depreciation expense equals book value.

False

An annual reporting period consisting of any twelve consecutive months is known as:

Fiscal year

Financial statements are typically prepared in the following order:

Income statement, statement of owner's equity, balance sheet

What can cause stockholders' equity to fluctuate?

Investments by shareholders, Dividends, Providing servicing at a profit or loss

Merchandise inventory:

Is a current asset

A promissory note:

Is a written promise to pay a specified amount of money at a certain date

The accrual basis of accounting:

Is generally accepted for external reporting because it is more useful than cash basis for most business decisions

Cost of goods sold:

Is the term used for the expense of buying and preparing merchandise for sale.

The current Ratio:

Is used to help evaluate a company's ability to pay its debts in the near future

Which of the following assets is not depreciated?

Land

The person who signs a note receivable and promises to pay the principal and interest is the:

Maker

On May 1, Anders Company purchased merchandise in the amount of $5800 from shilling, with credit terms of 2/10, n/30. Anders uses the perpetual inventory system. The journal entry or entries that Anders will make on May 1 is:

Merchandise Inventory...............................$5,800 Accounts Payable........................................................ $5,800

Of the following items, which may be found on both an income statement and the statement of retained earnings?

Net loss/ net income

Consignment goods are:

Not reported in the consignor's inventory since they do not have possession of the inventory

Assets, liabilities, and equity accounts are not closed; these accounts are called:

Permanent accounts

Which of the following is the usual final step in the accounting cycle?

Preparing a post closing trial balance

A liability will be created and recorded for:

Purchases on account

Purchasing an item of equipment for cash will cause total assets, total liabilities, and stockholder's equity to:

Remain unchanged, remain unchanged, remain unchanged respectively

Acceptable methods of assigning specific costs to inventory and cost of goods sold include all of the following except:

Retail method

Of the following accounts, which would not ordinarily be included in a balance sheet?

Revenues

Which of the following is considered a revenue item?

Sales on account

The current period's ending inventory is:

The next period's beginning inventory

Depletion is:

The process of allocating the cost of natural resources to the period when it is consumed

Amortization is:

The systematic allocation of the cost of an intangible asset to expense over its estimated useful life.

Jordan erroneously credited a liability account rather than a revenue account. Therefore:

Total assets are not affected

A company using the percentage of sales method for estimating bad debts has sales of $350000 and estimates that 1.0% of its sales are uncollectible. The estimated amount of bad debts expense is $3500.

True

Stockholder's equity can consist of both capital stock and retained earnings.

True

The matching principle requires use of the allowance method of accounting for bad debts:

True

The percent of sales method for bad debts estimation uses only income statement account balances to estimate bad debts:

True

Goods in transit are included in a purchaser's inventory:

when the purchaser is responsible for paying freight charges