Financial Accounting - D102

Who are the true owners of a corporation? Common stockholders Preferred stockholders Major bank lenders Board of directors

Common stockholders

Which item is an expense item? Cash Accounts Payable Sales Cost of Goods Sold

Cost of Goods Sold Cost of Goods Sold represents the amount of inventory (an asset) consumed through business operations—giving the inventory to the customer in a sales transaction

How is earnings per share (EPS) computed? Net income divided by the number of shares Total equity divided by sales revenue Total expenses divided by sales revenue Net income divided by total sales revenue

Net income divided by the number of shares

Quiet Flag Industries uses a perpetual inventory system. Beginning inventory for the period was $130,000. Purchases for the period totaled $550,000. A physical count of ending inventory revealed inventory of $100,000. Cost of goods sold according to the perpetual system is $460,000. What is the amount of inventory shrinkage? $130,000 $120,000 $30,000 $60,000

$120,000

On January 1, Dellberg Company has total assets of $400,000, total liabilities of $100,000, and total equity of $300,000. On January 1, Dellberg Company entered into the following two transactions. a. Purchased goods for resale. Total cost of this inventory was $90,000; Dellberg Company paid $10,000 cash and the remainder was put on the company's credit accounts with its suppliers. b. Sold land for cash. The original cost of the land was $80,000. The land was sold for $62,000. After these two transactions, what is the total of Dellberg Company's liabilities? $162,000 $198,000 $190,000 $180,000

$180,000

On January 1, Endothon Company had these assets, liabilities, and equity: Cash$ 100 Inventory 140 Accounts Payable 70 Paid-in Capital 150 Retained Earnings 20 During the year, Endothon Company entered into the following transactions: a. Sold inventory costing $80 for a total of $120. Cash of $30 was received, and the remaining $90 was put on account. b. Paid cash for advertising of $25. c. Paid cash for electricity of $40. What is the total of Endothon Company's total assets at the end of the year?

$215

On January 1, Alliah Company has total assets of $700,000, total liabilities of $300,000, and total equity of $400,000. On January 1, Alliah Company entered into the following two transactions: a. Purchased goods for resale. Total cost of this inventory was $50,000; Alliah Company paid $10,000 cash and the remainder was put on the company's credit accounts with its suppliers. b. Purchased land costing $150,000. Paid $20,000 cash and signed a mortgage note payable for the remaining $130,000. After these two transactions, what is the total of Alliah Company's total liabilities? $340,000 $410,000 $570,000 $470,000

$470,000

Corbin Company received a bank statement at the end of the month. The statement contained these items: Ending balance $3,000 Bank service charge for the month 750 Interest earned and added by the bank to the account balance 20 In comparing the bank statement to the company's own cash records, the controller of Corbin Company found these items: Deposits made but not yet recorded by the bank $5,000 Checks written and mailed but not yet recorded by the bank 3,000 Before making any adjustment suggested by the bank statement, the cash balance according to Corbin's books is $5,730. What is the correct cash balance as of the end of the month? $7,730 $5,000 $7,000 $2,270

$5,000

Endothon Company uses a periodic inventory system. Beginning inventory for the period was $130,000. Purchases for the period totaled $550,000. A physical count of ending inventory revealed inventory of $100,000. What is the cost of goods sold? $580,000 $520,000 $550,000 $450,000

$580,000

100 800 1,000 1,200

1,000

What is a chart of accounts? A list of accounts used by a company to classify transactions The reporting sequence of the income statement A chronological listing of accounts The reporting sequence of the balance sheet

A list of accounts used by a company to classify transactions

On January 1 of Year 1, a company purchased a patent for $400,000. The patent had an original legal life of 20 years, but only eight years remain. The patent is expected to have continued economic value during these eight years. As with almost all intangible assets, the patent is assumed to have zero salvage value at the end of its economic useful life. Assuming that the company uses straight-line amortization, what is the book value of this patent at the end of Year 6? 50,000 300,000 350,000 100,000

100,000

On January 1, a company had these equity account balances: Retained Earnings 200 Paid-In Capital 20 The following information relates to things that happened during the year: Shareholders invested an additional $50 cash in the business. Net loss for the year was $40. Dividends for the year were $10. (Note: It is unusual, but not impossible, for a company to pay dividends even in a year in which it reports a net loss instead of net income.) What is this company's retained earnings at the end of the year? 150 170 220 200

150

Compute ending Retained Earnings. 19,600 17,200 15,200 22,800

17,200

The chief financial officer (CFO) of Scio-Gro Company is very concerned about the company's ability to pay dividends next year. The state corporation charter regulations of Scio-Gro's state dictate that a company can only pay dividends if the amount of retained earnings at the beginning of the year is above zero. Because of poor operating performance in the most recent year, Scio-Gro's CFO is concerned that maybe Scio-Gro's retained earnings balance is now negative. Here is the trial balance for Scio-Gro Company. Compute ending Retained Earnings. 600 200 5,800 19,800

200

What is the meaning of the phrase "10% compounded semiannually"? 10% every six months 10% every two years 5% every six months 5% every year

5% every six months

On January 1 of Year 1, a company purchased a machine for $10,000. The machine is expected to have a 10-year useful life and salvage value of $1,000. Assuming that the company uses straight-line depreciation, what is the book value of this machine at the end of Year 3? 7,300 6,300 7,000 3,000

7,300

Which kind of account is Sales Returns and Allowances? A contra-asset account A contra-revenue account A revenue account An expense account

A contra-revenue account

What is one way that an error can be made in recording a transaction in a journal entry? Revenues, expenses, and dividends are closed to retained earnings. Debit total must be equal to credit total in the trial balance. Cost of goods sold is reported in the income statement. Accounts involved in the journal entry are incorrectly identified.

Accounts involved in the journal entry are incorrectly identified.

Which item is an asset? Capital stock Accounts payable Retained earnings Accounts receivable

Accounts receivable

What does a debit entry to an asset account represent? An expense A revenue A decrease An increase

An increase

What is one cash management tool? Adjusting entries Closing entries Cash budget Retained earnings

Cash budget

In the context of research and development, what is development? The activity of discovering of new knowledge A budgetary approach to project management Creating a plan for new or improved products Applying accelerated depreciation to projects

Creating a plan for new or improved products

On November 1, Whole Pine Inc. purchased inventory costing $1,000 on account. The payment terms are 2/10, n/30. Whole Pine Inc. paid on November 6 in order to receive the 2% discount. Assume that Whole Pine Inc. uses a periodic inventory system. Which debit or credit is included in the journal entry necessary to record the cash payment of this account within the discount period? Credit to Inventory for $1,000 Credit to Purchase Discounts for $20 Credit to Accounts Payable for $1,000 Credit to Inventory for $20

Credit to Purchase Discounts for $20

Freedom Rock Bicycles made retail sales of $1,000 to its customers. The sales tax rate is 6.0%. All sales are cash sales. What is included in the journal entry necessary to record these sales? Debit to Sales Revenue for $1,060 Credit to Sales Revenue for $1,000 Credit to Sales Revenue for $1,060 Debit to Sales Revenue for $1,000

Credit to Sales Revenue for $1,000

1 / 1 Sparkit Company made retail sales of $10,000 to its customers. The sales tax rate is 6.50 percent. All sales are cash sales. What is included in the journal entry necessary to record these sales? Credit to Sales Revenue for $10,650 Debit to Sales Revenue for $10,650 Credit to Sales Tax Payable for $650 Debit to Sales Tax Payable for $650

Credit to Sales Tax Payable for $650

Paradigm Toys estimated Bad Debt Expense for the year to be $10,000. Which debit or credit is included in the adjusting entry to record Bad Debt Expense for the year? Debit Bad Debt Expense for $10,000 Credit Cash for $10,000 Credit Accounts Receivable for $10,000 Debit Allowance for Bad Debts for $10,000

Debit Bad Debt Expense for $10,000

A company made a $1,000 cash payment on a loan. Of the $1,000 cash paid, $300 was for interest expense and $700 was a payment to reduce the loan balance. What is included in the journal entry necessary to record this loan payment? Debit to cash for $1,000 Credit to interest expense for $300 Credit to loan payable for $700 Debit to interest expense for $300

Debit to interest expense for $300

Ridgeland Company uses a periodic inventory system. The company recently purchased inventory and the shipping costs were not included in the cost of inventory, so Ridgeland has to pay the shipping costs separately in cash. The shipping costs are $500. Which debit or credit is included in the journal entry necessary to record the cash payment of these shipping costs? Debit to Transportation Expense for $500 Debit to Accounts Payable for $500 Debit to Freight In for $500 Debit to Inventory for $500

Debit to Freight In for $500

On September 1 of Year 1, Endothon Company paid $36,000 cash for insurance. This $36,000 insurance payment covers the period from September 1 of Year 1 to August 31 of Year 2. On September 1, the payment of the cash was recorded as an asset as prepaid insurance. Which debit or credit is correctly included in the adjusting journal entry necessary on December 31 with respect to this prepaid insurance? Credit to Insurance Expense for $12,000 Credit to Insurance Expense for $24,000 Debit to Insurance Expense for $12,000 Debit to Insurance Expense for $24,000

Debit to Insurance Expense for $12,000

Alliah Company paid $4,100 cash for insurance coverage, which will be in effect for the next year. Which entry is included in the journal entry necessary to record this prepayment of insurance? Debit to retained earnings for $4,100 Debit to prepaid insurance for $4,100 Debit to unearned insurance for $4,100 Debit to cash for $4,100

Debit to prepaid insurance for $4,100

n what date does a company become legally obligated to pay a dividend? Payment date Declaration date Balance sheet date Date of record

Declaration date

What name is given to a 12-month accounting period? Accrual year Recognition year Fiscal year Calendar year

Fiscal year

What is one step in the process of preparing a journal entry? For each account, determine the associated cash flow. For each account, determine if it has increased or decreased. For each account, determine the balance from the prior year. For each account, determine whether the account is consolidated or not.

For each account, determine if it has increased or decreased.

What is a company's gross profit percentage? Net Income ÷ Owners' Equity Gross Profit ÷ Net Income Net Income ÷ Sales Gross Profit ÷ Sales

Gross Profit ÷ Sales Gross profit percentage is computed as Gross Profit divided by Sales.

What can be learned by comparing the inventory records to an end-of-period physical count of inventory? How many purchase discounts were taken during the period How many purchase returns were made during the period How much inventory was lost or stolen during the period How much was paid for freight in during the period

How much inventory was lost or stolen during the period

What three steps are needed to make a journal entry?

Identify which accounts are involved. For each account, determine if it is increased or decreased. For each account, determine by how much it has changed.

Which financial statement provides a detailed explanation of one component in the year-to-year change in the retained earnings balance? Trial balance. Statement of cash flows. Income statement. Balance sheet.

Income statement. The income statement provides a detailed explanation of net income, which is one component of the year-to-year change in retained earnings.

What is income tax expense?

Income tax expense is the sum of all the income tax consequences of all transactions undertaken by a company during a year

What is the impact of posting the correct amount to the wrong expense account? Incorrect totals for individual expense accounts Incorrect total for all of the revenue accounts Incorrect total for all of the expense accounts Incorrect total for net income and total asset accounts

Incorrect totals for individual expense accounts

How does the amount in retained earnings change from one year to the next? Increased by total assets and decreased by dividends Increased by net income and decreased by dividends and net loss Increased by cash and decreased by dividends Increased by net income and cash and decreased by liabilities

Increased by net income and decreased by dividends and net loss

A policy requiring employees to take mandatory vacations is what type of control activity? Physical control of assets Proper authorizations Independent check Adequate documents

Independent check

Which principle requires that the expense associated with a compensated absence be accounted for in the period in which it is earned by the employee? Discount Matching Revenue recognition Allowance

Matching

If an expense is improperly recorded as an asset, what impact does this have on the income statement? Cash balance is overstated. Net income is understated. Net income is overstated. Cash balance is understated.

Net income is overstated.

What is a use of cash from a financing activity? Paying dividends Buying a building Borrowing money Paying rent

Paying dividends

Which three types of inventory are held in a manufacturing business? Finished goods, manufacturing equipment, and work-in-process Raw materials, accounts payable, and work-in-process Raw materials, work-in-process, and finished goods Work-in-process, finished goods, and cost of goods sold

Raw materials, work-in-process, and finished goods

With a LIFO inventory cost flow assumption, which inventory units are assumed to be remaining at the end of the period to be reported in ending inventory? A mixture of units The cost of goods sold units The new units The old units

The old units

Which account is credited when making closing entries? Rent Expense Prepaid Rent Expense Cash Unearned Revenue

Rent Expense

Which legal right belongs to the owner of a franchise? Right to protection from other companies selling a company product for a specified number of years Right to use another company's business ideas in conducting business for a specified number of years Right to operate a business of a specified type for a specified number of years Right to use a certain symbol or likeness for a specific number of years

Right to use another company's business ideas in conducting business for a specified number of years

Which item is a revenue item? Sales Loan Payable Cash Accounts Receivable

Sales

Which one of these items is a nominal account? Capital Stock Retained Earnings Accounts Payable Sales Revenue

Sales Revenue

What number is ignored in the computation of declining-balance depreciation in the first year of the asset's life? Book value Salvage value Useful life Asset cost

Salvage value

What is an operating activity? Selling goods Repaying loans Selling land Buying buildings

Selling goods

Which financial statement provides a detailed explanation of the year-to-year change in the cash account balance? Statement of retained earnings. Income statement. Balance sheet. Statement of cash flows.

Statement of cash flows. The change in cash during the year is the explained by the sum of the cash flows from operating, investing, and financing activities as reported in the statement of cash flows.

Paradigm Toys purchased inventory costing $1,000 but paid early, so only had to pay $980. What is the proper accounting for the $20 purchase discount? Add to Sales Revenue Subtract from Inventory Cost Add to Accounts Receivable Subtract from Cash

Subtract from Inventory Cost

What is a company's control environment? The closing process wherein the nominal accounts are closed The system of assigning account numbers to ensure the internal consistency of the chart of accounts The system of posting between the general journal and the general ledger The actions, policies, and procedures that reflect the overall attitudes of top management

The actions, policies, and procedures that reflect the overall attitudes of top management

What is net income? The total amount of assets reported in the balance sheet The amount by which revenues exceed expenses The amount of assets consumed through business operations The amount of cash on hand at the end of the year

The amount by which revenues exceed expenses

What is revenue? The amount of cash on hand at the end of the year The amount of assets consumed through business operations The amount of cash, accounts receivable, and inventory totaled The amount of assets created through the sale of goods and services

The amount of assets created through the sale of goods and services

What accounting action is necessary when an asset becomes worthless and must be scrapped? The cost of asset is moved from the asset to the liability side of the balance sheet. The cost of asset and accumulated depreciation are reclassified from long-term assets to current assets. The accumulated depreciation of the asset is moved to the liability side of the balance sheet. The cost of asset and accumulated depreciation must be removed from the books.

The cost of asset and accumulated depreciation must be removed from the books.

For most companies, when assets or liabilities are classified as "current" on the balance sheet, it generally means the related assets or liabilities will be turned into cash or will be required to be paid, respectively, within what time frame? The next month The next year The next six months The next quarter

The next year

How is an internally generated trademark reported on a company's balance sheet? The internally generated trademark is reported at estimated selling price. The internally generated trademark is generally not reported. The internally generated trademark is reported at estimated market value. The internally generated trademark is reported at appraisal value.

The internally generated trademark is generally not reported.

What is amortization? The process of allocating a short-term asset's cost to the years during which the asset is used The process of allocating a natural resource's cost to the years during which the resource is used The process of allocating a tangible asset's cost to the years during which the asset is used The process of allocating an intangible asset's cost to the years during which the asset is used

The process of allocating an intangible asset's cost to the years during which the asset is used

What are financing activities? Those activities whereby cash is obtained from or repaid to owners and creditors. Those activities that are part of the day-to-day business of a company. Those activities associated with forecasting sales and determining the amount and timing of materials purchases, employee hiring, and overhead costs. Those activities associated with buying and selling long-term assets—primarily the purchase and sale of land, buildings, and equipment.

Those activities whereby cash is obtained from or repaid to owners and creditors.

For what can an inventory count be used when a perpetual inventory method is employed? To determine whether any inventory has been lost or stolen To determine the only way purchase returns should be taken To determine whether purchase discounts should be taken To determine the only way to compute cost of goods sold

To determine whether any inventory has been lost or stolen

Which item is considered inventory for a supermarket? Cash register Display shelves Transport equipment Vegetables

Vegetables

When does an accountant perform transaction analysis? When preparing the balance sheet When preparing the income statement When posting the accounts When recording items in the journal

When recording items in the journal

If goods are sold and shipped with FOB destination shipping terms, when does ownership transfer from the seller to the buyer? When the goods are paid for, in cash, by the buyer When the goods are in transit from the seller to the buyer When the goods reach the buyer's location When the goods are loaded into the transport vehicle by the seller

When the goods reach the buyer's location

When should repair and maintenance costs be capitalized? When they are expected to benefit future periods When the amount of the cost of the repair is small When they are in the first year of the life of the asset When the expenditure is made during the first half of the year

When they are expected to benefit future periods

Why is the separation-of-duties control so important with cash? Without separation of duties, the general ledger is maintained by the same person who posts the adjusting entries. Without separation of duties, the adjusting entry process and the closing entry process are done by the same person. Without separation of duties, an employee who takes cash can cover up the shortage by adjusting the accounting records. Without separation of duties, the general ledger is maintained by the same person who posts the closing entries.

Without separation of duties, an employee who takes cash can cover up the shortage by adjusting the accounting records.

Here are inventory purchase and sales data for Synesthor Company. (Note: There was no inventory before the purchase made on January 1.) Purchased on January 1: 100 units, $9 cost per unit Purchased on January 16: 200 units, $8 cost per unit Purchased on January 25: 400 units, $7 cost per unit Sold on January 31: 500 units, $10 selling price per unit Assume that Synesthor Company uses FIFO. What is the cost of ending inventory at the end of January? $3,900 $1,400 $3,600 $1,700

$1,400

On January 1, Alliah Company had these equity account balances. Retained Earnings 150 Paid-in Capital 200 The information relates to things that happened during the year. a. Shareholders invested an additional $40 cash in the business. b. Net income for the year was $30 c. Dividends for the year were $50. What is Alliah Company's retained earnings at the end of the year? $130 $370 $170 $230

$130

During the month of July, Autojor Company entered into these business transactions: a. Sold inventory costing $100 for a total of $180. Cash of $30 was received, and the remaining $150 was put on account. b. Paid cash for employee wages of $15. c. Paid cash dividends of $10. d. Paid cash of $20 for July's rent. e. Paid cash of $25 to buy a new machine. What is the amount of Autojor Company's total expenses for the month of July?

$135.00

Smith Company received a bank statement at the end of the month. The statement contained these items: Ending Balance 12,000 Bank service charge for the month 75 Interest earned and added by the bank to the account balance 130 In comparing the bank statement to its own cash records, the controller of Smith Company found these items: Deposits made but not yet recorded by the bank $6,500 Checks written and mailed but not yet recorded by the bank 3,600 Before making any adjustment suggested by the bank statement, the cash balance according to Smith's books is $14,845. What is the correct cash balance as of the end of the month? $14,900 $12,055 $14,400 $17,745

$14,900

On January 1 of Year 1, Ridgeland Company purchased a machine for $10,000. The machine is expected to have a 10-year useful life and salvage value of $1,000. Assuming that the company uses double-declining-balance depreciation, what is the amount of depreciation expense on this machine for Year 1? $2,000 $1,800 $900 $1,000

$2,000

The following are inventory purchase and sales data for Paradigm Toys. (Note: There was no inventory before the purchase made on January 1.) purchased on January 1: 100 units, $9 cost per unit purchased on January 16: 300 units, $8 cost per unit purchased on January 25: 400 units, $7 cost per unit; sold on January 31: 500 units, $10 selling price per unit Assume that Paradigm Toys uses FIFO. What is the cost of ending inventory at the end of January? $2,100 $2,287 $2,500 $4,000

$2,100

Here are inventory purchase and sales data for Wild Parsley Company. (Note: There was no inventory before the purchase made on January 1.) Purchased on January 1: 100 units, $9 cost per unit Purchased on January 16: 300 units, $8 cost per unit Purchased on January 25: 400 units, $7 cost per unit Sold on January 31: 500 units, $10 selling price per unit Assume that Wild Parsley Company uses LIFO. What is the cost of ending inventory at the end of January ? $2,287 $2,100 $3,600 $2,500

$2,500

On January 1, Pruhart Company had these assets, liabilities, and equity: Cash $100 Inventory 140 Accounts Payable 70 Paid-in Capital 150 Retained Earnings 20 During the year, Pruhart Company entered into the following transactions: a. Sold Inventory costing $80 for a total of $120. Cash of $30 was received, and the remaining $90 was put on account. b. Paid cash for employee wages of $15. c. Paid cash dividends of $10. What is Pruhart Company's net income for the year?

$25.00

The following are inventory purchase and sales data for Alliah Company. (Note: There was no inventory before the purchase made on January 1.) purchased on January 1: 100 units, $9 cost per unit purchased on January 16: 300 units, $8 cost per unit purchased on January 25: 400 units, $7 cost per unit sold on January 31: 500 units, $10 selling price per unit Assume that Alliah Company uses LIFO. What is the cost of goods sold for January? $3,813 $4,000 $3,600 $2,500

$3,600

Here are inventory purchase and sales data for Dellberg Company. (Note: There was no inventory before the purchase made on January 1.) Purchased on January 1: 100 units, $9 cost per unit Purchased on January 16: 300 units, $8 cost per unit Purchased on January 25: 400 units, $7 cost per unit Sold on January 31: 500 units, $10 selling price per unit Assume that Dellberg Company uses the average cost method. What is the cost of goods sold for January? $2,287 $3,813 $4,000 $3,600

$3,813

On January 1 of Year 1, Merrilton Company purchased a machine for $20,000. The machine is expected to have a 6-year useful life and salvage value of $2,000. The company uses double-declining-balance depreciation. What is the amount of depreciation expense on this machine for Year 2? $4,444 $5,000 $3,333 $4,000

$4,444

Here are inventory purchase and sales data for Merrilton Company. (Note: There was no inventory before the purchase made on January 1.) Purchased on January 1: 400 units, $9 cost per unit Purchased on January 16: 500 units, $8 cost per unit Purchased on January 25: 100 units, $7 cost per unit Sold on January 31: 400 units, $10 selling price per unit Assume that Merrilton Company uses the average cost method. What is the cost of ending inventory at the end of January? $5,200 $3,600 $4,980 $3,320

$4,980

On January 1, Corollary Company had these assets, liabilities, and equity: Cash $100 Inventory 140 Accounts Payable 70 Paid-in Capital 150 Retained Earnings 20 During the year, Corollary Company entered into the following transactions. a. Sold Inventory costing $80 for a total of $150. Cash of $30 was received, and the remaining $120 was put on account. b. Paid cash for employee wages of $25. c. Paid $55 cash to suppliers from whom inventory had previously been purchased on account. [Note: The obligation to pay these suppliers had been recorded as Accounts Payable.] d. Collected $75 cash from customers to whom sales had previously been made on account. [Note: This receivable from customers had been recorded as Accounts Receivable.] e. Paid cash dividends of $10. What is Corollary Company's net income for the year? $120 $55 $45 $65

$45

Jay Company received a bank statement at the end of the month. The statement contained these items: Ending balance $8,000 Bank service charge for the month 55 Interest earned and added by the bank to the account balance 30 In comparing the bank statement to the company's own cash records, the controller of Jay Company found these items: Deposits made but not yet recorded by the bank $3,600 Checks written and mailed but not yet recorded by the bank 6,500 Before making any adjustment suggested by the bank statement, the cash balance according to Jay's books is $5,125. What is the correct cash balance as of the end of the month? $2,225 $5,100 $7,975 $6,300

$5,100

Whole Pine Company uses a periodic inventory system. The new accountant has come from a company where a perpetual inventory system was used and is still a little confused with the workings of a periodic system. For example, it is now the end of the period, and the accountant is not sure how to determine cost of goods sold. With a perpetual system, the cost of goods sold is tracked, in real time, automatically by the system. Beginning Inventory for the period was $100,000. Purchases for the period totaled $550,000. A physical count revealed Ending Inventory of $130,000. What is the Cost of Goods sold? $520,000 $580,000 $450,000 $550,000

$520,000

George Company received a bank statement at the end of the month. The statement contained these items: Ending balance $7,500 Bank service charge for the month 40 Interest earned and added by the bank to the account balance 200 In comparing the bank statement to the company's own cash records, the controller of George Company found these items: Deposits made but not yet recorded by the bank $2,000 Checks written and mailed but not yet recorded by the bank 3,500 Before making any adjustment suggested by the bank statement, the cash balance according to George's books is $5,840. What is the correct cash balance as of the end of the month? $4,500 $6,000 $4,340 $7,660

$6,000

Quiet Flag Industries uses a perpetual inventory system. Beginning inventory for the period was $100,000. Purchases for the period totaled $550,000. A physical count of ending inventory revealed inventory of $130,000. Cost of goods sold according to the perpetual system is $460,000. What is the amount of inventory shrinkage? $190,000 $130,000 $60,000 $30,000

$60,000

On January 1, Endothon Company has total assets of $700,000, total liabilities of $400,000, and total equity of $300,000. On January 1, Endothon Company entered into the following two transactions: a. Purchased goods for resale. Total cost of this inventory was $50,000; Endothon Company paid $10,000 cash and the remainder was put on the company's credit accounts with its suppliers. b. Sold land for cash. The original cost of the land was $80,000. The land was sold for $62,000. After these two transactions, what is the total of Endothon Company's total assets? $798,000 $722,000 $758,000 $740,000

$722,000

On January 1, Company Synesthor has total assets of $700,000, total liabilities of $400,000, and total equity of $300,000. On January 1, Company Synesthor entered into the following two transactions: a. Purchased goods for resale. Total cost of this inventory was $90,000; Company Synesthor paid $50,000 cash and the remainder was put on the company's credit accounts with its suppliers. b. Sold land for cash. The original cost of the land was $62,000. The land was sold for $80,000. After these two transactions, what is the total of Company Synesthor's total assets? $808,000 $740,000 $798,000 $758,000

$758,000

January 1 of Year 1, Pruhart Company purchased a machine for $20,000. The machine is expected to have a 9-year useful life and salvage value of $2,000. The company uses straight-line depreciation. What is the book value of this machine at the end of Year 6? $6,667 $8,000 $6,000 $10,000

$8,000

The liabilities of a company are $46,200, and its owners' equity is $35,800. What is the amount of this company's assets? $10,400 $35,800 $46,200 $82,000

$82,000 Assets = Liabilities + Equity

On January 1, Merrilton Company had these assets, liabilities, and equity: Cash $100 Inventory 140 Accounts Payable 70 Paid-in Capital 150 Retained Earnings 20 During the year, Merrilton Company entered into the following transactions: a. Sold inventory costing $80 for a total of $100. Cash of $30 was received, and the remaining $70 was put on account. b. Paid cash for wages of $25. c. Paid cash dividends of $10. What is Merrilton Company's net income (or net loss) for the year?

($5.00)

On January 1, Dellberg Company had these equity account balances. Retained Earnings 150 Paid-in Capital 20 This information relates to things that happened during the year. a. Shareholders invested an additional $50 cash in the business. b. Net income for the year was $80. c. Dividends for the year were $10. What is Dellberg Company's retained earnings at the end of the year? 270 120 290 220

220

On January 1 of Year 1, a company purchased a machine for $100,000. The machine is expected to have a five-year useful life and salvage value of $5,000. Assuming that the company uses double-declining balance depreciation, what is the amount of depreciation expense on this machine for Year 2? 20,000 18,000 40,000 24,000

24,000

If the payment terms are 3/15, n/60, what is meant by the "3/15"? 3% discount if payment is made within 15 days 3% discount if payment is made within 75 days 3% discount if payment is made within 45 days 3% discount if payment is made within 60 days

3% discount if payment is made within 15 days

On January 1 of Year 1, Quiet Flag Industries purchased a machine for $30,000. The machine is expected to have an eight-year useful life and salvage value of $6,000. Assuming that the company uses double-declining balance depreciation, what is the amount of depreciation expense on this machine for Year 1? 7,000 7,500 6,500 6,000

7,500

1 / 1 On January 1 of Year 1, Quiet Flag Industries purchased a machine for $20,000. The machine is expected to have a 5-year useful life and salvage value of $1,000. Assuming that the company uses double-declining-balance depreciation, what is the amount of depreciation expense on this machine for Year 1? 7,600 3,800 4,000 8,000

8,000

What is a classified balance sheet? A balance sheet that separates liabilities from equities A balance sheet that is for a period of time rather than as of a point in time A balance sheet that is not publicly disclosed A balance sheet that distinguishes between current and long-term assets

A balance sheet that distinguishes between current and long-term assets

What is a general journal? A schedule reconciling the sum of assets with the sum of liabilities and equities A collection of accounts used in the normal course of business The record of the minutes of the meetings of the board of directors A chronological record of all transactions of a business

A chronological record of all transactions of a business

How are dividends typically recorded with debits and credits? A debit, representing an increase in assets A debit, representing a reduction in equity A credit, representing a reduction in assets A credit, representing an increase in equity

A debit, representing a reduction in equity

What does a debit entry to a liability account represent? A revenue An expense An increase A decrease

A decrease

What does a debit entry to an equity account represent? A decrease A revenue A cash revenue An increase

A decrease

In what setting might a company use special journals as well as a general journal? Companies with very few cash transactions Companies with very few purchase transactions A large company with many transactions A small company with few transactions

A large company with many transactions

Endothon Company is involved in litigation over who must clean up a toxic waste site near one of the company's factories. It is probable, but not certain, that the company will be required to pay for the cleanup. How should the company report this lawsuit in its financial statements? A liability in the balance sheet; no disclosure in the financial statement notes No liability in the balance sheet; some disclosure in the financial statement notes No liability in the balance sheet; no disclosure in the financial statement notes A liability in the balance sheet; some disclosure in the financial statement notes

A liability in the balance sheet; some disclosure in the financial statement notes

With an average inventory cost flow assumption, which inventory units are assumed to be sold first? The old units The new units A mixture of units The consignment units

A mixture of units

How does a mortgage loan differ from an ordinary loan? A mortgage loan is related to a specific asset. A mortgage loan has no interest. A mortgage loan cannot be repaid early. A mortgage loan is classified as equity on the balance sheet.

A mortgage loan is related to a specific asset.

What is owners' equity? The sum of operating, investing, and financing cash flows An economic resource that is owned or controlled by a company A residual amount representing the net assets available after all obligations have been satisfied An obligation to pay cash, transfer other assets, or provide services to someone else

A residual amount representing the net assets available after all obligations have been satisfied

In which type of business would accrual basis accounting result in the same income measure as cash basis accounting? A small manufacturing business, in which routine inventory items are produced in bulk now, stored for two or three years, and then sold to customers A large manufacturing business, in which orders are received now, cash advances are collected from customers now, and delivery of manufactured products occurs many years from now A medium-sized construction business, in which most of the assets are long-term construction equipment items that can last for up to 15 years A small business, in which all sales amounts are collected in cash at the time of the sale and all expenses are paid in cash immediately

A small business, in which all sales amounts are collected in cash at the time of the sale and all expenses are paid in cash immediately

How does a person compute the net balance in Accounts Receivable that is reported in the balance sheet? Sales − Cost of Goods Sold Accounts Receivable − the Allowance for Bad Debts Allowance for Bad Debts − Sales Discounts Sales − the Allowance for Bad Debts

Accounts Receivable − the Allowance for Bad Debts

Which statement is correct? Cash basis accounting provides a more accurate picture of a company's profitability. Asset basis accounting provides a more accurate picture of a company's profitability. Accrual basis accounting provides a more accurate picture of a company's profitability. Valuation basis accounting provides a more accurate picture of a company's profitability.

Accrual basis accounting provides a more accurate picture of a company's profitability.

What are investing activities? Activities associated with forecasting sales and overhead costs Activities that are part of the day-to-day business of a company Activities associated with buying and selling long-term assets like land, buildings, and equipment Activities whereby cash is obtained from or repaid to owners and creditors

Activities associated with buying and selling long-term assets like land, buildings, and equipment

What is the proper accounting for the inbound inventory shipping costs called "freight in"? Add to Administrative Expense Add to Inventory Cost Add to Accounts Receivable Add to Cost of Goods Sold

Add to Inventory Cost

Frank Elsholz is the chief financial offer (CFO) for a large aviation parts company. Frank has been tasked with improving internal controls by ensuring that adequate documentation is being generated, supporting the orders for each part and implementing, internally, overall checks and balances over the ordering, receipt, and storage of parts in inventory inside the company. What are the two detective controls that Frank has been tasked with implementing in this situation? Adequate documents and independent checks Segregation of duties and physical control Proper authorizations and physical control Independent checks and segregation of duties

Adequate documents and independent checks

What is bad debt expense? Amount of wear and tear on long-lived assets during the year Amount of gross profit divided by sales for the year Amount of inventory lost, stolen, or sold during the year Amount of uncollectible accounts created by credit sales during the year

Amount of uncollectible accounts created by credit sales during the year

What is a promissory note? An agreement to pay back a borrowed amount, with interest. An agreement between a buyer of a product and the seller of that product. An agreement between an employer and an employee with respect to wages. An agreement to repurchase goods that are deemed to be defective.

An agreement to pay back a borrowed amount, with interest.

What is one way that an error can be made when posting to the general ledger? A closing entry amount is posted to retained earnings. An asset amount is posted to an expense account. An accounts payable amount is posted as a liability. An inventory amount is posted as an asset.

An asset amount is posted to an expense account.

What is an asset? The sum of operating, investing, and financing cash flows An economic resource that is owned or controlled by a company An obligation to pay cash or provide services to someone else A residual amount representing the net amount available after all obligations have been satisfied

An economic resource that is owned or controlled by a company

What is a sales discount? The amount of cash collected from customers An incentive for the buyer to pay more quickly The difference between selling price and sales tax A supplier reduction in inventory purchase cost

An incentive for the buyer to pay more quickly

In an accounting context, what is a contingency? An uncertain circumstance that will not be resolved until a future event occurs An amount received in advance from a customer to help pay for the construction of a specially ordered item A bank loan that a company has arranged in advance, but which has not yet been taken A loss or a gain on the sale of an item of property, plant, or equipment

An uncertain circumstance that will not be resolved until a future event occurs

Paul Jones has worked for the Candle Retail Company since the company was originally started 10 years ago. The company has now grown to a size where it is important to set up more sophisticated internal controls, including separation of duties within the company, starting with controls over the ordering of raw materials and payments of the related supplier invoices. What are the three specific functions that Paul should keep separate when setting up more sophisticated internal controls over the raw material ordering and payment functions? Recording, physical possession, and posting Approving, evaluating, and ordering Physical possession, adjusting, and posting Approving, recording, and physical possession

Approving, recording, and physical possession

During Year 1, it is claimed that Synesthor Company's operations caused some damage to the air and water in its community. This claim is currently under government investigation. If the investigation reveals that Synesthor Company did in fact cause damage to the air and water, Synesthor Company will be required to pay a fine of $500,000. The investigation is expected to be completed in September of Year 2. In which case should Synesthor Company report a liability for the environmental fine in the balance sheet on December 31 of Year 1? As of December 31, Year 1, it is possible that Synesthor Company will have to pay the fine. As of December 31, Year 1, Synesthor Company has already paid the fine. As of December 31, Year 1, it is probable that Synesthor Company will have to pay the fine. As of December 31, Year 1, there is a remote likelihood that Synesthor Company will have to pay the fine.

As of December 31, Year 1, it is probable that Synesthor Company will have to pay the fine.

For financial reporting purposes, how is inventory shrinkage typically reported in the financial statements? As part of Cost of Goods Sold As part of Allowance for Bad Debts As part of Purchase Returns and Allowances As part of Administrative Expense

As part of Cost of Goods Sold

When a machine is purchased, what is the proper accounting for the costs paid for shipping and installation? As part of cost of goods sold in the year of the machine purchase As a liability in the current asset section of the balance sheet As part of the cost of the machine As an operating expense in the year of the machine purchase

As part of the cost of the machine

What is the expanded accounting equation?

Assets = Liabilities + Owner's Equity (Paid-in Capital) + (Revenues - Expenses - Dividends) Think of R-E-D pen

What is the normal order of a chart of accounts? Sales, expenses, owners' equity, assets, and liabilities Liabilities, expenses, assets, owners' equity, and sales Assets, liabilities, owners' equity, sales, and expenses Owners' equity, liabilities, assets, expenses, and sales

Assets, liabilities, owners' equity, sales, and expenses

Alliah Company is purchasing a large inventory of tutus for their line of dance wear. If the tutus are sold and shipped with FOB shipping point shipping terms, when does ownership of the goods transfer from the seller to Atliah Company? At the point of delivery; thus, the goods belong to Alliah while in transit At the point of shipping; thus, the goods belong to the seller while in transit At the point of shipping; thus, the goods belong to Alliah while in transit At the point of delivery; thus, the goods belong to the seller while in transit

At the point of shipping; thus the goods belong to Alliah while in transit

In the journal entry to record salary payments to employees, why is the amount of Salary Expense not equal to the amount of Salaries Payable? Because of payroll taxes Because of property taxes Because of company income taxes Because of sales taxes

Because of payroll taxes

At the end of the year, what amount is reflected in the Retained Earnings balance before the closing entries are made and posted? Beginning Retained Earnings Assets − Liabilities Cash − Dividends Net Income

Beginning Retained Earnings

How is the ending Retained Earnings balance computed? Net Income + Cash − Dividends Beginning Retained Earnings + Net Income − Dividends Net Income + Cash − Total Liabilities Beginning Retained Earnings + Cash − Total Liabilities

Beginning Retained Earnings + Net Income − Dividends

Through what mechanism do the owners of a corporation—the shareholders—govern the corporation? Initial public offering Chief financial officer Chief operating officer Board of directors

Board of directors

Which of these items is a source of cash for a financing activity? Buying a building Borrowing money Paying rent Paying dividends

Borrowing money

Which of these items is a use of cash in an investing activity? Buying a machine Collecting cash from customers Borrowing cash from a bank Selling an old building

Buying a machine

What caution needs to be exercised when using a declining-balance depreciation method to compute depreciation expense during the final years of an asset's life? Must increase the useful life to double the initial number of years Cannot report depreciation expense as an expense in the income statement Cannot reduce book value below salvage value Must decrease the useful life to half the initial number of years

Cannot reduce book value below salvage value

Which account is shown in a post-closing trial balance? Cash Cost of Goods Sold Dividends Sales Revenue

Cash

Here are some financial statement items for Sparkit Company. Cash flow from investing activities during the year Retained earnings at the beginning of the year Cash flow from operating activities during the year Net income for the year Cash flow from financing activities during the year Cash balance at the beginning of the year Which items are needed to compute Sparkit's ending cash balance for the year? Retained earnings at the beginning of the year, cash flow from operating activities during the year, cash flow from investing activities during the year, and cash flow from financing activities during the year Cash balance at the beginning of the year, cash flow from operating activities during the year, cash flow from investing activities during the year, and cash flow from financing activities during the year Cash balance at the beginning of the year, net income during the year, cash flow from investing activities during the year, and retained earnings at the beginning of the year Net income for the year, cash flow from operating activities during the year, cash flow from investing activities during the year, and cash flow from financing activities during the year

Cash balance at the beginning of the year, cash flow from operating activities during the year, cash flow from investing activities during the year, and cash flow from financing activities during the year

Which statement is true regarding sales taxes? Cash collected from sales taxes must be forwarded to the correct government agency. Cash collected from sales taxes is used by the company to pay for employee benefits. Sales taxes increase the reported sales revenue of a company. Sales taxes increase the reported operating expenses of a company.

Cash collected from sales taxes must be forwarded to the correct government agency.

The revenue recognition principle states that revenues are recorded when two main criteria have been met. One of those criteria is that the earnings process is substantially complete. What is the other criterion? Cash has been collected or collectibility is reasonably assured. Standard forecasting procedures are implemented. Necessary documentation has been filed with the appropriate government agency. Revenue targets for the period have been reached.

Cash has been collected or collectibility is reasonably assured.

Bullzai Company was started last year when the shareholders invested $70 cash into the company. At that time, Bullzai also borrowed $100 cash from a local bank. Bullzai then purchased inventory for $120 cash. This year Bullzai Company sold all of the inventory for $55 cash (that is NOT a typographical error; the amount received for all of the inventory was only $55 cash). Assuming that there is no interest on the loan, which statement is true with respect to Bullzai Company's balance sheet after the sale of the inventory? Cash is $105. Total Owners' Equity is $135. Total Owners' Equity is $70. Inventory is $65.

Cash is $105.

Here are some financial statement items for the year for Kretsmart Company: cash paid for dividends cash received from new loans cash paid to employees for wages cash paid to purchase a new building cash received from customers cash received from the sale of land cash received as new investment from owners What is included in the computation of Kretsmart's total cash from investing activities? Cash paid to purchase a new building and cash received from the sale of land Cash paid to employees for wages and cash received from customers Cash paid for dividends, cash received from new loans, and cash received as a new investment from owners Cash received from new loans and cash received as new investment from owners

Cash paid to purchase a new building and cash received from the sale of land

Here are some financial statement items for the year for Endothon Company: Cash paid for dividends Cash paid to employees for wages Cash paid to purchase a new building Cash received from customers Cash received from the sale of land Cash paid for rent Cash received as new investment from owners Which items should be included in the computation of Endothon's operating cash flow for the year? Cash paid to purchase a new building and cash received from the sale of land Cash received from customers, cash paid for rent, and cash paid to employees for wages Cash paid for dividends and cash received as new investment from owners Cash received from customers and cash paid for dividends

Cash received from customers, cash paid for rent, and cash paid to employees for wages

Alliah Company has these accounts in its financial records at the end of the year: Land Retained Earnings Accounts Receivable Loans Payable Accounts Payable Capital Stock Cash Which accounts are assets? Additional Paid-In Capital and Capital Stock Capital Stock and Retained Earnings Accounts Payable and Loans Payable Cash, Accounts Receivable, and Land

Cash, Accounts Receivable, and Land

Bullzai Company's financial records include these accounts at the end of the year: Land Accounts Receivable Buildings Inventory Loans Payable Accounts Payable Retained Earnings Capital Stock Cash Which set of items composes a complete listing of Bullzai's current assets? Cash, inventory, and capital stock Cash, retained earnings, and capital stock Cash, buildings, and land Cash, accounts receivable, and inventory

Cash, accounts receivable, and inventory

What happens to the dividends account at the end of the year? Closed to the cash account Closed to the retained earnings account Reported as an expense in the income statement Reported as an asset in the balance sheet

Closed to the retained earnings account

For balance sheet purposes, what, under the accounting rules, is defined as cash? Checks Money on deposit at banks Coins and currency Coins, currency, checks, and money on deposit at banks

Coins, currency, checks, and money on deposit at banks

Which of these items is a source of cash for an operating activity? Selling an old, used machine Borrowing cash from a bank Buying a building Collecting cash from customers

Collecting cash from customers

Which item is closed to a zero balance at the end of each accounting period? Loans Payable Retained Earnings Cash Cost of Goods Sold

Cost of Goods Sold

On August 17, a credit sale was made for $1,000. Terms for the sale were 2/10, n/30. Cash for the sale was collected on August 21. What debit or credit should be included in the journal entry to record the cash collection on August 21? Credit Accounts Receivable for $1,000 Credit Sales Discounts for $20. Debit Accounts Payable for $1,000. Debit Sales Discounts for $1,000.

Credit Accounts Receivable for $1,000

On January 16, a credit sale was made for $300. Terms for the sale were 3/15, n/30. Cash for the sale was collected on February 14. Which debit or credit should be included in the journal entry to record the cash collection on February 14? Credit Accounts Receivable for $300 Debit Accounts Receivable for $300 Debit Sales Discounts for $9 Credit Sales Discounts for $9

Credit Accounts Receivable for $300

On July 15, goods were sold for $10,000; cash of $2,000 was received, and the $8,000 remainder was on account. The customer returned the goods before paying any of the remaining $8,000 on account. What debit or credit should be included in the journal entry on the books of the seller to record the return of the goods? Credit Accounts Receivable for $8,000. Debit Accounts Receivable for $8,000. Debit Accounts Receivable for $10,000. Credit Cash for $10,000.

Credit Accounts Receivable for $8,000.

Strime Company's controller estimated bad debt expense using the percentage of accounts receivable method. Total sales for the year were $500,000. The ending balance in accounts receivable was $100,000. An examination of the outstanding accounts at the end of the year indicates that approximately 12 percent of these accounts will ultimately prove to be uncollectible. Before any adjustment, the balance in the Allowance for Bad Debts is $700 (credit). Total accounts written off as uncollectible during the year were $14,700. Which debit or credit is included in the adjusting entry to record bad debt expense for the year? Credit Allowance for Bad Debts for $12,700. Debit Allowance for Bad Debts for $11,300. Credit Allowance for Bad Debts for $11,300. Debit Allowance for Bad Debts for $12,700.

Credit Allowance for Bad Debts for $11,300

Autojor Company estimated bad debt expense for the year to be $21,000. Which debit or credit is included in the adjusting entry to record bad debt expense for the year? Credit Allowance for Bad Debts for $21,000. Debit Allowance for Bad Debts for $21,000 Credit Accounts Receivable for $21,000. Debit Accounts Receivable for $21,000.

Credit Allowance for Bad Debts for $21,000.

On July 15, Quiet Flag Industries sold goods for $10,000 cash. Just three days later, the customer returned the goods and was given a full cash refund. Which debit or credit should be included in the journal entry on the books of the seller to record the return of the goods? Credit Sales Returns and Allowances for $10,000 Credit Accounts Receivable for $10,000 Credit Cash for $10,000 Debit Accounts Receivable for $10,000

Credit Cash for $10,000

What are bad debts? Credit customers who do not pay Sales returns and allowances not taken Inventory suppliers who do not deliver Sales discounts not taken

Credit customers who do not pay

On January 1 of Year 1, Pruhart Company purchased a machine for $20,000. The machine is expected to have a 10-year useful life and salvage value of $3,000. What is included in the journal entry necessary to record depreciation expense on this machine at the end of Year 1? (Note: the company uses straight-line depreciation.) Credit to Depreciation Expense for $2,000 Credit to Accumulated Depreciation for $2,000 Credit to Depreciation Expense for $1,700 Credit to Accumulated Depreciation for $1,700

Credit to Accumulated Depreciation for $1,700

On January 1 of Year 1, Whole Pine Inc. purchased a machine for $35,000. The machine is expected to have a 10-year useful life and salvage value of $1,000. Assuming that the company uses straight-line depreciation, what is included in the journal entry necessary to record depreciation expense on this machine at the end of Year 1? Credit to Accumulated Depreciation for $3,400 Debit to Accumulated Depreciation for $3,400 Debit to Depreciation Expense for $3,500 Credit to Depreciation Expense for $3,500

Credit to Accumulated Depreciation for $3,400

On April 24, Orange Zest Company declared a dividend of $2 per share to be paid on August 10 to shareholders of record on June 6. There are 10,000 shares outstanding. What is included in the journal entry necessary to record the payment of the dividends on August 10? Debit to Cash for $20,000 Credit to Cash for $20,000 Debit to Dividends Payable for $10,000 Credit to Dividends Payable for $10,000

Credit to Cash for $20,000

Whole Pine Company has issued 10,000 new common shares at a par value of $10,000 to shareholders in exchange for $200,000 cash. The shares are $1 par common shares. What is included in the journal entry necessary to record this issuance of shares? Debit to Common Stock, $1 par for $10,000 Credit to Paid-in Capital in Excess of Par for $200,000 Debit to Paid-in Capital in Excess of Par for $200,000 Credit to Common Stock, $1 par for $10,000

Credit to Common Stock, $1 par for $10,000

Here is the end-of-year account balance information from the accounting records of Elekix Company. Cost of Goods Sold $9,000 Accounts Payable 1,100 Capital Stock 2,000 Cash 400 Sales Revenue 10,000 Dividends 700 Retained Earnings (beginning) 1,000 Inventory4,000 Which debit or credit would appear in the closing entries for the year? Debit to Accounts Payable for $1,100 Credit to Cost of Goods Sold for $9,000 Credit to Sales Revenue for $10,000 Debit to Dividends for $700

Credit to Cost of Goods Sold for $9,000

Oliver operates a sizeable newspaper delivery service. On the last day of each month, Oliver receives a statement from the newspaper publisher detailing how much money Oliver earned that month from delivering papers. On the 10th day of the following month, Oliver receives the cash for the preceding month's deliveries. On December 31, Oliver received a statement from the newspaper publisher notifying him that he had earned $13,700 for his December deliveries. Because December 31 is the end of Oliver's fiscal year, he makes adjusting entries at that time. Which debit or credit is correctly included in the adjusting journal entry necessary on December 31 to record the revenue that Oliver has earned but not yet received? Credit to Accounts Receivable for $13,700 Credit to Accounts Payable for $13,700 Debit to Delivery Revenue for $13,700 Credit to Delivery Revenue for $13,700

Credit to Delivery Revenue for $13,700

On May 29, Whole Pine Inc. declared a dividend of $1.00 per share to be paid on September 18 to shareholders of record on June 6. There are 100,000 shares outstanding. What is included in the journal entry necessary to record the declaration of the dividends on May 29? Debit to Cash for $100,000 Credit to Dividends Payable for $100,000 Debit to Dividends Payable for $100,000 Credit to Dividends for $100,000

Credit to Dividends Payable for $100,000

On March 23, Endothon Company declared a dividend of $2.00 per share to be paid on July 12 to shareholders of record on June 6. There are 10,000 shares outstanding. What is included in the journal entry necessary to record the declaration of the dividends on March 23? Debit to Dividends Payable for $20,000 Credit to Dividends Payable for $20,000 Debit to Cash for $20,000 Credit to Dividends for $20,000

Credit to Dividends Payable for $20,000

On January 1 of Year 1, a company purchased a franchise for $100,000. The franchise is expected to have a five-year economic useful life. As with almost all intangible assets, the franchise is assumed to have zero salvage value at the end of its economic useful life. Assuming that this company uses straight-line amortization, what is included in the journal entry necessary to record amortization expense on this franchise at the end of Year 1? Credit to Franchise for $100,000 Credit to Amortization Expense for $20,000 Credit to Franchise for $20,000 Credit to Amortization Expense for $100,000

Credit to Franchise for $20,000

On May 1, Pruhart Tech borrowed $8,000 under a one-year loan agreement. The annual interest rate is 13%. As of the end of the year, no entry has yet been made to record the accrued interest on the loan. Which debit or credit is correctly included in the adjusting journal entry necessary on December 31 to record the unpaid interest? Debit to Interest Expense for $8,000 Debit to Interest Payable for $8,000 Credit to Interest Payable for $693 Credit to Interest Expense for $1,040

Credit to Interest Payable for $693

On October 1 of Year 1, Quiet Flag Industries made a $50,000 cash loan to another company. The interest rate on the loan is 13 percent. No cash payments will be collected on the loan until September 30 of Year 2. Which debit or credit is correctly included in the adjusting journal entry necessary on Quiet Flag's books (the lender) on December 31 with respect to this loan? Credit to Interest Revenue for $1,625 Debit to Interest Revenue for $4,875 Debit to Interest Revenue for $1,625 Credit to Interest Revenue for $4,875

Credit to Interest Revenue for $1,625

Paradigm Toys has issued 100,000 new shares to shareholders in exchange for $2,000,000 cash. The shares are $1 par common shares. What is included in the journal entry necessary to record this issuance of shares? Credit to Paid-in Capital in Excess of Par for $1,900,000 Debit to Common Stock, $1 par for $2,000,000 Credit to Common Stock, $1 par for $2,000,000 Debit to Paid-in Capital in Excess of Par for $1,900,000

Credit to Paid-in Capital in Excess of Par for $1,900,000

A company has issued 100,000 new shares to shareholders in exchange for $2,000,000 cash. The shares are $5 par preferred shares. What is included in the journal entry necessary to record this issuance of shares? Debit to Paid-In Capital in Excess of Par for $1,500,000 Credit to Preferred Stock, $5 par for $500,000 Debit to Preferred Stock, $5 par for $500,000 Credit to Paid-In Capital in Excess of Par for $2,000,000

Credit to Preferred Stock, $5 par for $500,000

Freedom Rock Bicycles purchased inventory on account for $7,000. The inventory inspector at Freedom Rock Bicycles did not approve of the quality of the inventory, and so returned it. Of course, Freedom Rock Bicycles now does not have to pay for the inventory. Assuming that Freedom Rock Bicycles uses a periodic inventory system, which debit or credit is included in the journal entry necessary to record the return of this inventory? Credit to Inventory for $7,000 Credit to Freight In for $7,000 Credit to Accounts Payable for $7,000 Credit to Purchase Returns for $7,000

Credit to Purchase Returns for $7,000

On September 1 of Year 1, the company received $3,600 cash for rent in advance. This $3,600 rental receipt covers the period from September 1 of Year 1 to August 31 of Year 2. On September 1, the receipt of the cash was recorded as a liability. Which debit or credit is correctly included in the adjusting journal entry necessary on December 31 with respect to this rent received in advance? Credit to Rent Revenue for $2,400 Debit to Rent Revenue for $2,400 Debit to Rent Revenue for $1,200 Credit to Rent Revenue for $1,200

Credit to Rent Revenue for $1,200

1 / 1 Here are the payroll data for the employees of Strime Company: Federal Withholding Taxes Payable $6,000 FICA Taxes Payable, Employees 3,200 State Withholding Taxes Payable 2,000 Salaries Payable50,000 What is included in the journal entry necessary to record these employee payroll data? Credit to Salaries Payable for $61,200 Credit to Salaries Expense for $50,000 Credit to Salaries Expense for $61,200 Credit to Salaries Payable for $50,000

Credit to Salaries Payable for $50,000

Here are payroll data for the employees of Paradigm Toys: Federal Withholding Taxes Payable $75,000 Salaries Payable 600,000 FICA Taxes Payable, Employees 39,000 State Withholding Taxes Payable24,000 What is included in the journal entry necessary to record these employees' payroll data? Debit to Salaries Payable for $600,000 Debit to Salary Expense for $600,000 Credit to Salaries Payable for $600,000 Credit to Salary Expense for $600,000

Credit to Salaries Payable for $600,000

On October 1, a company received $2,400 in advance for 12 months of service to be provided, with the service period beginning on October 1. This $2,400 was recorded as Unearned Service Revenue. The service is provided evenly throughout the year. As of the end of the year, no entry has yet been made to adjust the amount initially recorded. Which debit or credit is correctly included in the adjusting journal entry necessary on December 31? Debit to Service Revenue for 1,800 Credit to Service Revenue for 600 Credit to Unearned Service Revenue for 600 Debit to Unearned Service Revenue for 1,800

Credit to Service Revenue for 600

1 / 1 Eva is an employee of Alliah Company. Eva earns a salary of $400 per day. In addition, for every five days that she works, Eva earns the right to take a paid sick day at some point in the future. Ignoring any payroll taxes and assuming that Eva's salary has not yet been paid in cash, what is included in the journal entry necessary to record Eva's salary for the most recent pay period, which involved 25 working days? Debit to Salaries Payable for $12,000 Debit to Sick Days Payable for $2,000 Credit to Salaries Expense for $12,000 Credit to Sick Days Payable for $2,000

Credit to Sick Days Payable for $2,000

On January 1 of Year 1, Corollary Company purchased a trademark for $20,000. The trademark is expected to have a 10-year economic useful life. As with almost all intangible assets, the trademark is assumed to have zero salvage value at the end of its economic useful life. Assuming that the company uses straight-line amortization, what is included in the journal entry necessary to record amortization expense on this trademark at the end of Year 1? Credit to Trademark for $2,000 Credit to Amortization Expense for $20,000 Credit to Trademark for $20,000 Credit to Amortization Expense for $2,000

Credit to Trademark for $2,000

On September 1 of Year 1, the company received $3,600 cash for rent in advance. This $3,600 rental receipt covers the period from September 1 of Year 1 to August 31 of Year 2. Assuming that this is not an adjusting journal entry, which debit or credit is correctly included in the journal entry necessary to record this cash received for rent in advance? Debit to Rent Revenue for $3,600 Credit to Unearned Rent for $3,600 Debit to Unearned Rent for $3,600 Credit to Rent Revenue for $3,600

Credit to Unearned Rent for $3,600

Strime Company collected cash of $1,300 on account for credit sales previously recorded. Which entry is included in the journal entry necessary to record this cash collection on account? Credit to accounts payable for $1,300 Debit to accounts payable for $1,300 Debits to accounts receivable for $1,300 Credit to accounts receivable for $1,300

Credit to accounts receivable for $1,300

A company issued 10,000 shares of common stock for $30 per share in cash. What is included in the journal entry necessary to record this issuance of shares? Debit to capital stock for $300,000 Debit to cash for $10,000 Credit to capital stock for $300,000 Credit to cash for $300,000

Credit to capital stock for $300,000

Which Excel spreadsheet tool is used to create a drop-down list in a cell? Filter Data Validation Table Consolidation

Data Validation

On January 16, a credit sale was made for $600. Terms for the sale were 4/20, n/60. Cash for the sale was collected on January 28. What debit or credit should be included in the journal entry to record the sale on January 16? Debit Sales Discounts for $576. Credit Sales Discounts for $24. Credit Cash for $576. Debit Accounts Receivable for $600.

Debit Accounts Receivable for $600.

During the year, Kretsmart Company wrote off accounts in the amount of $20,000 as being uncollectible. Which debit or credit is included in the summary journal entry to record the write-off of uncollectible accounts during the year? Credit Allowance for Bad Debts for $20,000 Debit Allowance for Bad Debts for $20,000 Credit Bad Debt Expense for $20,000 Debit Bad Debt Expense for $20,000

Debit Allowance for Bad Debts for $20,000

Endothon Company estimated bad debt expense for the year to be $7,000. Total accounts written off as uncollectible during the year were $7,300. Which debit or credit is included in the summary journal entry to record the write-off of uncollectible accounts during the year? Credit Allowance for Bad Debts for $7,300 Credit Bad Debt Expense for $7,300 Debit Allowance for Bad Debts for $7,300 Debit Bad Debt Expense for $7,300

Debit Allowance for Bad Debts for $7,300

Kretsmart Company uses the allowance method to account for bad debts, which it has estimated to be $10,000 for the year. Total accounts written off as uncollectible during the year were $8,000. At year end, which debit or credit is included in the summary journal entry to record the write-off of uncollectible accounts during the year? Credit Bad Debt Expense for $10,000. Credit Allowance for Bad Debts for $8,000. Debit Bad Debt Expense for $10,000. Debit Allowance for Bad Debts for $8,000.

Debit Allowance for Bad Debts for $8,000

Bullzai Company estimated bad debt expense for the year to be $100,000. Which debit or credit is included in the adjusting entry to record bad debt expense for the year? Debit Bad Debt Expense for $100,000 Credit Bad Debt Expense for $100,000 Debit Allowance for Bad Debts for $100,000 Credit Accounts Receivable for $100,000

Debit Bad Debt Expense for $100,000

Orange Zest Company estimated Bad Debt Expense using the percentage of accounts receivable method. Total sales for the year were $500,000. The ending balance in Accounts Receivable was $100,000. An examination of the outstanding accounts at the end of the year indicates that approximately 12% of these accounts will ultimately prove to be uncollectible. Before any adjustment, the balance in the Allowance for Bad Debts is $700 (debit). Total accounts written off as uncollectible during the year were $14,700. Which debit or credit is included in the adjusting entry to record Bad Debt Expense for the year? Debit Bad Debt Expense for $11,300 Credit Bad Debt Expense for $12,700 Debit Bad Debt Expense for $12,700 Credit Bad Debt Expense for $11,300.

Debit Bad Debt Expense for $12,700

On January 16, a credit sale was made for $200. Terms for the sale were 3/15, n/30. Cash for the sale was collected on January 25. Which debit or credit should be included in the journal entry to record the cash collection on January 25? Debit Sales Discounts for $6 Credit Accounts Receivable for $194 Debit Cash for $200 Credit Sales Discounts for $6

Debit Sales Discounts for $6

On March 23, goods were sold for $20,000 cash. A week later, the dissatisfied customer returned the goods. What debit or credit should be included in the journal entry on the books of the seller to record the return of the goods? Credit Accounts Receivable for $20,000. Credit Sales Returns and Allowances for $20,000 Debit Sales Returns and Allowances for $20,000 Debit Accounts Receivable for $20,000

Debit Sales Returns and Allowances for $20,000.

How are the items arranged in a journal entry? Credit first, debit second Debit first, credit second Debits and credits aligned in the same column Debit indented to the right

Debit first, credit second

On January 1 of Year 1, a company purchased a machine for $20,000. The machine was expected to have a 10-year useful life and salvage value of $2,000. The company uses straight-line depreciation. At the end of Year 4 (after depreciation expense for the year had been recorded), the machine was sold for $14,000 cash. What is included in the journal entry necessary to record the sale of this machine at the end of Year 4 for $14,000 cash? Debit to Accumulated Depreciation for $12,800 Credit to Gain for $1,200 Debit to Loss for $1,200 Credit to Accumulated Depreciation for $7,200

Debit to Accumulated Depreciation for $12,800

On January 1 of Year 1, Bullzai Company purchased a machine for $10,000. The machine was expected to have a 10-year useful life and salvage value of $2,000. The company uses straight-line depreciation. At the end of Year 3 (after depreciation expense for the year had been recorded), the machine was sold for $7,000 cash. What is included in the journal entry necessary to record the sale of this machine at the end of Year 3 for $7,000 cash? Debit to Accumulated Depreciation for $2,400 Credit to Machine for $7,600 Debit to Accumulated Depreciation for $7,600 Credit to Loss for $600

Debit to Accumulated Depreciation for $2,400

On January 1 of Year 1, Orange Zest Company purchased a machine for $10,000. The machine was expected to have a 5-year useful life and salvage value of $2,000. The company uses straight-line depreciation. At the end of Year 3 (after depreciation expense for the year had been recorded), the machine was sold for $7,000 cash. What is included in the journal entry necessary to record the sale of this machine at the end of Year 3 for $7,000 cash? Debit to Gain for $1,800 Debit to Machine for $5,200 Debit to Accumulated Depreciation for $4,800 Debit to Accumulated Depreciation for $5,200

Debit to Accumulated Depreciation for $4,800

On January 1 of Year 1, a company purchased a machine for $10,000. The machine was expected to have a five-year useful life and salvage value of $3,000. The company uses straight-line depreciation. At the end of Year 3 (after depreciation expense for the year had been recorded), the machine was sold for $4,000 cash. What is included in the journal entry necessary to record the sale of this machine at the end of Year 3 for $4,000 cash? Credit to Accumulated Depreciation for $4,200 Credit to Loss for $1,800 Debit to Accumulated Depreciation for $5,800 Debit to Loss for $1,800

Debit to Accumulated Depreciation for $5,800

On January 1 of Year 1, Whole Pine Company purchased a patent for $20,000. The patent had an original legal life of 20 years, but only 5 years remain. The patent is expected to have continued economic value during these 5 years. As with almost all intangible assets, the patent is assumed to have zero salvage value at the end of its economic useful life. Assuming the company uses straight-line amortization, what is included in the journal entry necessary to record amortization expense on this patent at the end of Year 1? Debit to Patent for $4,000 Debit to Amortization Expense for $4,000 Debit to Patent for $1,000 Debit to Amortization Expense for $1,000

Debit to Amortization Expense for $4,000

On January 1 of Year 1, Corollary Company purchased a machine for $10,000. The machine is expected to have a 10-year useful life and salvage value of $1,000. Assuming that the company uses straight-line depreciation, what is included in the journal entry necessary to record depreciation expense on this machine at the end of Year 1? Debit to Depreciation Expense for $900 Debit to Machine for $900 Debit to Accumulated Depreciation for $1,000 Debit to Depreciation Expense for $1,000

Debit to Depreciation Expense for $900

On March 23, Corollary Company declared a dividend of $4 per share to be paid on July 12 to shareholders of record on June 6. There are 50,000 shares outstanding. What is included in the journal entry necessary to record the declaration of the dividends on March 23? Debit to Dividends Payable for $200,000 Debit to Dividends for $200,000 Debit to Cash for $200,000 Credit to Dividends for $200,000

Debit to Dividends for $200,000

Pruhart Company purchased franchise rights from another company for $100,000. Pruhart paid $35,000 cash and signed a note payable agreeing to pay the remaining $65,000 in the future. What is included in the journal entry necessary to record this franchise purchase? Debit to Franchise for $100,000 Credit to Franchise for $65,000 Debit to Franchise for $35,000 Credit to Franchise for $35,000

Debit to Franchise for $100,000

Dellberg Company has a long-term loan on which it is making annual payments of $50,000. This year, the $50,000 payment is composed of $41,000 in interest and $9,000 that actually goes toward repaying the loan. What is included in the journal entry necessary to record this $50,000 cash loan payment? Credit to Interest Expense for $41,000 Debit to Interest Expense for $41,000 Credit to Loan Payable for $50,000 Debit to Loan Payable for $50,000

Debit to Interest Expense for $41,000

On February 1 of Year 1, Sparkit Company received $100,000 cash from a one-year bank loan. The interest rate on the loan is 8 percent. No payments are due on the loan until January 31 of Year 2. Which debit or credit is correctly included in the adjusting journal entry necessary on December 31 with respect to this loan? Debit to Interest Expense for $7,333 Credit to Interest Expense for $8,000 Debit to Interest Payable for $7,333 Credit to Interest Payable for $8,000

Debit to Interest Expense for $7,333

Kretsmart Company purchased inventory. The shipping costs were not included in the cost of inventory, so Kretsmart has to pay the shipping costs separately in cash. The shipping costs are $500. Assuming that Kretsmart Company uses a perpetual inventory system, which debit or credit is included in the journal entry necessary to record the cash payment of these shipping costs? Debit to Inventory for $500 Debit to Freight in for $500 Debit to Accounts Payable for $500 Debit to Transportation Expense for $500

Debit to Inventory for $500

A company has a long-term loan on which it is making annual payments of $30,000. This year, the $30,000 payment is composed of $5,000 in interest and $25,000 that actually goes toward repaying the loan. What is included in the journal entry necessary to record this $30,000 cash loan payment? Credit to Loan Payable for $25,000 Credit to Loan Payable for $30,000 Debit to Loan Payable for $25,000 Debit to Loan Payable for $30,000

Debit to Loan Payable for $25,000

Quiet Flag Industries has a long-term loan on which it is making annual payments of $10,000. This year, the $10,000 payment is composed of $6,000 in interest and $4,000 that actually goes toward repaying the loan. What is included in the journal entry necessary to record this $10,000 cash loan payment? Debit to Interest Expense for $4,000 Debit to Loan Payable for $4,000 Credit to Interest Expense for $6,000 Credit to Loan Payable for $4,000

Debit to Loan Payable for $4,000

Alliah Company purchased a machine for $10,000. Alliah paid $2,000 cash and signed a note agreeing to pay the remaining $8,000 over the next five years. What is included in the journal entry necessary to record this machine purchase? Debit to Cash for $2,000 Debit to Machine for $2,000 Debit to Machine for $10,000 Debit to Notes Payable for $8,000

Debit to Machine for $10,000

Orange Zest Company has a five-year, $100,000 note payable on which it has been making annual interest payments of $10,000. This is the final year of the note, and the company has made a $110,000 payment to pay this year's interest as well as to repay the note itself. What is included in the journal entry necessary to record this $110,000 cash payment? Credit to Interest Payable for $10,000 Credit to Note Payable for $100,000 Debit to Interest Payable for $10,000 Debit to Note Payable for $100,000

Debit to Note Payable for $100,000

Dellberg Company purchased a patent from another company for $10,000 cash. What is included in the journal entry necessary to record this patent purchase? Credit to Owners' Equity for $10,000 Debit to Cash for $10,000 Credit to Patent for $10,000 Debit to Patent for $10,000

Debit to Patent for $10,000

Here are payroll data for the employees of Corollary Marketing: Federal Unemployment Taxes Payable $2,000 FICA Taxes Payable, Employer 16,000 State Unemployment Taxes Payable 10,000 What is included in the journal entry necessary to record these employees' payroll data? Debit to FICA Taxes Payable, Employer for $16,000 Debit to Payroll Tax Expense for $28,000 Credit to Federal Unemployment Taxes Payable for $12,000 Credit to Payroll Tax Expense for $28,000

Debit to Payroll Tax Expense for $28,000

Here are payroll tax data related to the employees of Whole Pine Company: Federal Unemployment Taxes Payable $ 400 FICA Taxes Payable, Employer 3,200 State Unemployment Taxes Payable 2,000 What is included in the journal entry necessary to record these payroll tax data? Credit to Payroll Tax Expense for $5,600 Debit to Payroll Tax Expense $3,600 Debit to Payroll Tax Expense for $5,600 Credit to Payroll Tax Expense for $3,600

Debit to Payroll Tax Expense for $5,600

On May 1 of Year 1, the company paid $2,400 cash for rent. This $2,400 rental payment covers the period from May 1 of Year 1 to April 30 of Year 2. Assuming that this is not an adjusting journal entry, which debit or credit is correctly included in the journal entry necessary to record this cash payment for rent? Debit to Prepaid Rent for $2,400 Debit to Cash for $2,400 Debit to Retained Earnings for $2,400 Debit to Accounts Receivable for $2,400

Debit to Prepaid Rent for $2,400

Endothon Company purchased inventory on account for $3,000. Endothon Company also uses a periodic inventory system. Which debit or credit is included in the journal entry necessary to record the purchase of inventory on account? Debit to Purchases for $3,000 Debit to Cash for $3,000 Debit to Accounts Payable for $3,000 Debit to Inventory for $3,000

Debit to Purchases for $3,000

On May 1 of Year 1, Bullzai, Inc., paid $2,400 cash for rent. This $2,400 rental payment covers the period from May 1 of Year 1 to April 30 of Year 2. On May 1, the payment of the cash was recorded as an asset as prepaid rent. Which debit or credit is correctly included in the adjusting journal entry necessary on December 31 with respect to this prepaid rent? Debit to Rent Expense for $1,600 Credit to Rent Expense for $1,600 Debit to Rent Expense for $800 Credit to Rent Expense for $800

Debit to Rent Expense for $1,600

On June 1, a company paid $1,200 in advance for 12 months of rent, with the rental period beginning on June 1. This $1,200 was recorded as Prepaid Rent. Which debit or credit is correctly included in the adjusting journal entry necessary on December 31? Debit to Prepaid Rent for 700 Credit to Prepaid Rent for 500 Debit to Rent Expense for 700 Credit to Cash for 500

Debit to Rent Expense for 700

Mateo Williams is an employee of Ridgeland Company. Mateo earns a salary of $100 per day. In addition, for every 10 days that he works, Mateo earns the right to take a paid sick day at some point in the future. Ignoring any payroll taxes and assuming that Mateo's salary has not yet been paid in cash, what is included in the journal entry necessary to record Mateo's salary for the most recent pay period, which involved 10 working days? Debit to Sick Days Payable for $100 Debit to Salaries Expense for $1,100 Credit to Sick Days Payable for $1,000 Credit to Salaries Expense for $1,100

Debit to Salaries Expense for $1,100

1 / 1 Diego Patel is an employee of Myton Company. Diego earns a salary of $200 per day. In addition, for every five days that he works, Diego earns the right to take a paid sick day at some point in the future. Ignoring any payroll taxes and assuming Patel's salary has not yet been paid in cash, what is included in the journal entry necessary to record Diego's salary for the most recent pay period, which involved 10 working days? Credit to Salaries Expense for $2,400 Debit to Salaries Expense for $2,400 Debit to Salaries Payable for $400 Credit to Salaries Payable for $400

Debit to Salaries Expense for $2,400

Here are payroll data for the employees of Endothon Company: State Withholding Taxes Payable $6,000 Salaries Payable 100,000 Federal Withholding Taxes Payable 13,000 FICA Taxes Payable, Employees 6,500 What is included in the journal entry necessary to record these employee payroll data? Debit to Salaries Payable for $100,000 Debit to Salary Expense for $125,500 Debit to Salaries Payable for $125,500 Debit to Salary Expense for $100,000

Debit to Salary Expense for $125,500

Here is the end-of-year account balance information from the accounting records of Kamelon Company. Cost of Goods Sold $9,000 Accounts Payable 1,100 Capital Stock 2,000 Cash 400 Sales Revenue 10,000 Dividends 700 Retained Earnings (beginning) 1,000 Inventory 4,000 Which debit or credit would appear in the closing entries for the year? Debit to Accounts Payable for $1,100 Debit to Cost of Goods Sold for $9,000 Debit to Sales Revenue for $10,000 Debit to Dividends for $700

Debit to Sales Revenue for $10,000

During the month, a company made retail sales of $100,000 to its customers. The sales tax rate is 7.00%. All sales are cash sales. All of those sales were properly recorded. At the end of the month, a company sends the necessary sales tax cash amount to the government. What is included in the journal entry necessary to record the cash payment of these sales taxes to the government? Debit to Sales Revenue for $7,000 Credit to Sales Revenue for $7,000 Debit to Sales Tax Payable for $7,000 Credit to Sales Tax Payable for $7,000

Debit to Sales Tax Payable for $7,000

Jaunty Coffee Co. purchased a trademark from another company for $1,000 cash. What is included in the journal entry necessary to record this trademark purchase? Debit to Operating Expense for $1,000 Debit to Trademark for $1,000 Credit to Operating Expense for $1,000 Credit to Trademark for $1,000

Debit to Trademark for $1,000

A company has internally created a valuable trademark over the past few years. The company has decided to protect its legal rights and has registered the trademark. The cost of this registration process was $5,000, which was paid in cash. What is included in the journal entry necessary to record this trademark registration? Debit to Trademark for $5,000 Debit to Operating Expense for $5,000 Credit to Operating Expense for $5,000 Credit to Trademark for $5,000

Debit to Trademark for $5,000

A company pays its employees on Friday at the end of the day for work done during that five-day workweek. Total wages for a five-day workweek are $16,000. In the current year, December 31 occurred on a Tuesday, so two days of wages were earned but not paid by the end of day on December 31. Which debit or credit is correctly included in the adjusting journal entry necessary on December 31 to record the wages that this company has not yet paid? Debit to Wages Payable for $6,400 Credit to Wages Payable for $9,600 Debit to Wages Expense for $6,400 Credit to Wages Expense for $9,600

Debit to Wages Expense for $6,400

A company paid cash dividends of $3,000. What is included in the journal entry necessary to record this payment of cash dividends? Debit to cash for $3,000 Debit to dividends (or retained earnings) for $3,000 Debit to operating expenses for $3,000 Debit to paid-in capital for $3,000

Debit to dividends (or retained earnings) for $3,000

Dellberg Company paid $850 cash for its electricity bill for last month. To this point, nothing had been recorded in the books with respect to this electricity bill. Which entry is included in the journal entry necessary to record this cash payment? Debit to accounts payable for $850 Debit to utilities expense for $850 Credit to accounts payable for $850 Credit to utilities expense for $850

Debit to utilities expense for $850

What is the difference between depreciation and amortization? Amortization is for periods of five years or less; depreciation is for periods of more than five years. Depreciation is for tangible assets; amortization is for intangible assets. Depreciation is the label for this process as applied to tangible assets; amortization is the label for the process applied to intangible assets. Depreciation is for periods of five years or less; amortization is for periods of more than five years. Amortization is for tangible assets; depreciation is for intangible assets.

Depreciation is for tangible assets; amortization is for intangible assets.

At the end of the year, before any closing entries are made, which account typically has a debit balance? Dividends Long-Term Debt Sales Revenue Capital Stock

Dividends

What is the proper accounting for most costs associated with developing a patent? Expense Deferred expense Asset Revenue

Expense

An accountant for a company mistakenly posted an expense amount as an asset in the general ledger. What is the financial statement impact of this error? Expenses are too high, so reported net income is too low. Revenues are too low, so reported net income is too low. Expenses are too low, so reported net income is too high. Revenues are too high, so reported net income is too high.

Expenses are too low, so reported net income is too high.

How does the time period concept impact the process of financial reporting? Financial statements are provided only under special circumstances, usually once every five years. Financial statements are provided at the time a corporation issues new shares. Financial statements are not provided until the owners are preparing to sell the business. Financial statements are provided on a regular basis, at least once a year.

Financial statements are provided on a regular basis, at least once a year.

What are the major activities in the cash flow statement? Financing, operating, and investing Net income, investing, and financing Net income, distributions, and financing Distributions, operating, and investing

Financing, operating, and investing

What is inventory? Goods manufactured or purchased and held for sale in the normal course of business Goods expected to be used as long-term equipment in the normal course of business Goods used to store property, plant, and equipment in the normal course of business Goods expected to be used as short-term supplies in the normal course of business

Goods manufactured or purchased and held for sale in the normal course of business

Which statement best describes the main features of inventories? Goods used by a company on a long-term basis, usually more than five years Goods used by company employees on a daily basis Goods due from customers who have purchased on account Goods purchased and held for sale

Goods purchased and held for sale

Where and when should an expense already paid in cash be reported if it cannot be directly matched with an associated revenue? In the balance sheet as a liability in the accounting period in which it is incurred In the income statement as an expense in the accounting period in which it is incurred In the balance sheet as an asset in the accounting period in which it is incurred In the income statement as an asset in the accounting period in which it is incurred

In the income statement as an expense in the accounting period in which it is incurred

An important internal control is making sure the requirement that all employees working for a company take their mandatory vacation time they are allowed to take each year. This policy allows an employee to cover the job responsibilities for other employees throughout the year and cross-train other employees on a variety of job functions within the company. Which type of control activity is this type of requirement? Physical control over assets and records Independent check Adequate documents and records Segregation of duties

Independent check

What is interest expense?

Interest is the rent paid to use someone else's money

What happens to any remaining undepreciated cost when an asset is scrapped? It is recorded as a gain. It is recorded as a liability. It is recorded as a loss. It is recorded as accumulated depreciation.

It is recorded as a loss.

In order to compute the present value of a future amount, a person needs to know the amount and the interest rate. Which additional quantity does a person need to know in order to do this computation? Length of time Liability category Currency Asset category

Length of time

When computing present and future values, to what does the term "compounding" refer? Increasing the present value to its future value. Frequency with which interest is added to the principal. Length of time over which the value is computed. Reducing the future value to its present value.

Length of time over which the value is computed.

Here are some data from Quiet Flag Industries' financial statements: Inventory Accounts Payable Number of Shares Outstanding Capital Stock (also called Paid-In Capital) Accounts Receivable Cash Retained Earnings Net Income Building Loans Payable Which items are used to compute Quiet Flag's earnings per share (EPS)? Cash, Loans Payable, and Retained Earnings Accounts Receivable, Capital Stock, and Retained Earnings Cash, Inventory, Accounts Receivable, and Building Net Income and Number of Shares Outstanding

Net Income and Number of Shares Outstanding

What is a company's return on sales or profit margin?

Net Income ÷ Sales

A company is involved in litigation over who must clean up a toxic waste site near one of the company's factories. It is possible that the company will be required to pay for the cleanup. How should the company report this lawsuit in its financial statements? No liability in the balance sheet; some disclosure in the financial statement notes A liability in the balance sheet; some disclosure in the financial statement notes A liability in the balance sheet; no disclosure in the financial statement notes No liability in the balance sheet; no disclosure in the financial statement notes

No liability in the balance sheet; some disclosure in the financial statement notes

Merrilton Company has been sued by a group of shareholders who claim that they were deceived by the company's financial reporting practices. It is possible that the company will lose this lawsuit. How should the company report this lawsuit in its financial statements? A liability in the balance sheet; some disclosure in the financial statement notes No liability in the balance sheet; no disclosure in the financial statement notes A liability in the balance sheet; no disclosure in the financial statement notes No liability in the balance sheet; some disclosure in the financial statement notes

No liability in the balance sheet; some disclosure in the financial statement notes

Are dividends included in the net income calculation?

No. Dividends are NOT included in the computation of net income. Dividends are a distribution of profits to the owners.

What is an accurate description of accounts payable? Obligation arising from the purchase of inventory on account Obligation arising from the sale of office supplies on account Obligation arising from the payment of income taxes on account Obligation arising from the sale of equipment on account

Obligation arising from the purchase of inventory on account

What represents an obvious error a controller should be concerned about in the general ledger? Omitting completely the posting of a series of transactions The posting of closing entries The posting of adjusting entries Including accurately the posting of a a series of transactions

Omitting completely the posting of a series of transactions

For a public company, who must compose the audit committee? Company controller Chief financial officer Outside directors Chief executive officer

Outside directors

What are control activities? Policies and procedures to provide reasonable assurance that the company is in compliance with all IRS income tax regulations Policies and procedures to provide reasonable assurance that the company is in compliance with all posting and closing procedures Policies and procedures to provide reasonable assurance that the company is in compliance with all SEC securities regulations Policies and procedures to provide reasonable assurance that the company's established objectives will be met

Policies and procedures to provide reasonable assurance that the company's established objectives will be met

What is a benefit of owning preferred shares rather than common shares? Preferred shareholders have the right to their dividends in full before common shareholders receive any dividends at all. Preferred shareholders have the right to all corporate assets once obligations to lenders and common shareholders are met. Preferred shareholders have the right to maintain their same percentage ownership if new shares are issued. Preferred shareholders have the right to vote in corporate matters, whereas common shareholders do not.

Preferred shareholders have the right to their dividends in full before common shareholders receive any dividends at all.

Endothon Company paid its property taxes on July 1 of Year 1. Those property taxes relate to the period from July 1 of Year 1 through June 30 of Year 2. As of December 31, Year 1, what item will appear in Endothon's financial statements with respect to these property taxes? Unpaid Property Tax Liability Unpaid Property Tax Revenue Prepaid Property Tax Asset Prepaid Property Tax Liability

Prepaid Property Tax Asset

With respect to bad debts, what is the direct write-off method? Including bad debt expense in the computation of cost of goods sold Estimating and recognizing bad debt expense in the same period in which the associated sale takes place Including bad debt expense as a subtraction from the sales amount rather than as a separate expense Recognizing bad debt expense after confirming that a specific customer is not going to pay

Recognizing bad debt expense after confirming that a specific customer is not going to pay

What is the proper accounting treatment if the market value of a franchise exceeds its cost at the time of acquisition? Record the franchise asset at cost. Record the franchise asset at market value. Record the franchise asset at the excess of cost over market value. Record the franchise asset at the excess of market value over cost.

Record the franchise asset at cost.

What is the meaning of the term "debit"? Recorded on the left side Recording of a decrease Recording of an increase Recorded on the right side

Recorded on the left side

In the context of accounting, what is the meaning of the word "journalizing"? Copying transaction data from a ledger to a journal Copying transaction data from a journal to a ledger Recording a transaction in a journal entry Transmitting summarized data to the accountants preparing the financial statements

Recording a transaction in a journal entry

What is accrual accounting? Recording the amount of revenues and the amount of expenses when cash is received or paid Recording the amount of revenues and the amount of expenses when budgets are approved and adopted Recording revenues and expenses when earned or incurred, not when cash is received or paid Recording the amount of revenues and the amount of expenses when process cycles are complete

Recording revenues and expenses when earned or incurred, not when cash is received or paid

What is cash basis accounting? Recording revenues when cash is received and expenses when cash is paid Payment of all income taxes in cash in the period legally required Separation of accounting items into operating, investing, and financing activities Recording revenues when earned and expenses when incurred

Recording revenues when cash is received and expenses when cash is paid

In the context of present values and future values, what is the meaning of the word "discount"? Increase a present amount to its future value. Reduce a present amount to its future value. Reduce a future amount to its present value. Increase a future amount to its present value.

Reduce a future amount to its present value.

Which of these items is a use of cash in a financing activity? Paying wages Selling goods Buying buildings Repaying loans

Repaying loans

What is a statement of cash flows? Report of the operating, investing, and financing cash flows of a company during a period. Report of the total of the balances of all of a company's bank accounts. Report of the revenues and expenses of a company during a period. Report of the assets, liabilities, and equity of a company as of a point in time.

Report of the operating, investing, and financing cash flows of a company during a period.

What is an income statement? Report of the assets, liabilities, and equity of a company as of a point in time Report of the total of the balances of all of a company's bank accounts Report of the revenues and expenses of a company during a period Report of the operating, investing, and financing cash flows of a company during a period

Report of the revenues and expenses of a company during a period

To which item on the balance sheet does net income articulate? Retained Earnings Sales Capital Stock Cash

Retained Earnings Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividends

Which are components of an income statement? Retained earnings and dividends Current and noncurrent assets Short-term and accrued liabilities Revenue and expenses

Revenue and expenses

What legal right belongs to the owner of a patent? Right to use another company's business ideas in conducting business for a specified number of years Right to operate a business of a specified type for a specified number of years Right to protection from other companies selling the product for a specified number of years Right to use a certain symbol or likeness for a specific number of years

Right to protection from other companies selling the product for a specified number of years

What is "gross profit"? Total Revenues − Total Expenses Sales − Cost of Goods Sold. Total Assets − Total Liabilities Accounts Receivable − Accounts Payable

Sales − Cost of Goods Sold The difference between Sales and Cost of Goods Sold represents the difference between a company's total retail selling prices to customers and those items' total wholesale purchase costs from suppliers.

Here are some accounts from Endothon Company's financial records: Cost of Goods Sold Cash Sales Inventory Interest Expense Accounts Payable What should be used to compute Endothon's net income? Inventory and Accounts Payable Cash, Inventory, and Accounts Payable Cash and Accounts Payable Sales, Cost of Goods Sold, and Interest Expense

Sales, Cost of Goods Sold, and Interest Expense

Bullzai Inc. has recently taken part in the following business transactions: Borrowed cash from a bank. Purchased a building. Sold an old, used machine. Collected cash from customers. Which of these items is a source of cash from an investing activity? Collecting cash from customers Borrowing cash from a bank Buying a building Selling an old, used machine

Selling an old, used machine

1 / 1 Malik Martin is the assistant manager in a supermarket. As he reviewed the company's business reports for the year, he found one labeled "Inventory Shrinkage Report." This report detailed that inventory shrinkage for his supermarket in the past year was 10 percent. What does this information mean for Mr. Martin's supermarket? Ninety percent of the inventory was on consignment in the past year. Ninety percent of the inventory was subject to purchase discounts in the past year. Ten percent of the inventory was lost or stolen in the past year. Ten percent of the inventory was in transit in the past year.

Ten percent of the inventory was lost or stolen in the past year.

What is the relationship between the cash balance and the amount of retained earnings? The amount of cash is always more than the balance in retained earnings. The amount of cash is always less than the balance in retained earnings. The amount of cash is always equal to the balance in retained earnings. The amount of cash has no direct relationship to the retained earnings.

The amount of cash has no direct relationship to the retained earnings.

What is depreciation expense? The amount of uncollectible accounts created by credit sales during the year The amount of gross profit divided by sales for the year The amount of wear and tear on long-lived assets during the year The amount of inventory lost, stolen, or sold during the year

The amount of wear and tear on long-lived assets during the year

Why is the interest rate on a mortgage loan typically lower than the interest rate on an ordinary loan? The asset purchased with the mortgage loan proceeds serves as collateral for the loan. Mortgage loans typically last for a shorter time period than do ordinary loans. Mortgage loans are typically obtained from inventory suppliers, whereas ordinary loans are obtained from banks. Interest on a business mortgage loan is tax deductible, whereas interest on an ordinary loan is not.

The asset purchased with the mortgage loan proceeds serves as collateral for the loan.

In a corporation, who has the power to properly authorize the payment of dividends? The board of directors The purchasing agent The controller The accounts payable clerk

The board of directors

How does the use of a cash register in a supermarket illustrate separation of duties? The cash register keeps the cash in an organized place so the supervising manager can periodically count it. The cash register provides physical security for the amount of cash. The cash register maintains the record of how much cash should be in the drawer. The cash register can only be opened by a cashier or manager with a key or code.

The cash register maintains the record of how much cash should be in the drawer.

What does owners' equity represent? The difference between total assets and total liabilities The difference between current liabilities and long-term liabilities The difference between current assets and long-term assets The difference between total liabilities and total owners' equity

The difference between total assets and total liabilities

Why do companies sometimes pay managers with a combination of a fixed salary plus an earnings-based bonus rather than just pay a higher fixed salary? The earnings-based bonus plan causes the managers to work harder to increase the net income of the company. he earnings-based bonus plan is a way for shareholders to receive extra cash dividends from the company. The earnings-based bonus plan reduces the amount of property taxes that the company must pay. The earnings-based bonus plan is a way to reduce the amount of annual interest payments to banks.

The earnings-based bonus plan causes the managers to work harder to increase the net income of the company.

Without the proper separation of duties, how might a dishonest warehouse employee conceal the theft of inventory? The employee handling the inventory can also falsify production documents. The employee handling the inventory can destroy the relevant inventory accounting records. The employee handing the inventory can steal the inventory from the warehouse. The employee handling the inventory can also falsify the inventory accounting records.

The employee handling the inventory can also falsify the inventory accounting records.

With respect to a valuable trademark that a company has internally developed, which costs are capitalized? The legal filing costs associated with registration The developed trademark's estimated purchase cost The estimated cost savings from owning the trademark The legal determination of the value of the trademark

The legal filing costs associated with registration

Maya Kalani, a financial statement analyst, is currently doing an analysis of the income statement of a local company. At the bottom of the income statement, she sees a note saying that the company uses the FIFO method of inventory valuation. With a FIFO inventory cost flow assumption employed by the company, which inventory units can Maya assume are remaining at the end of the period to be reported in ending inventory? The cost of goods sold units A mixture of units The new units The old units

The new units

With a FIFO inventory cost flow assumption, which inventory units are assumed to be sold first? The consignment units The old units The new units A mixture of units

The new units

Which statement is true with respect to the present value of $100 to be received five years from now? The present value is more than $100. The present value is more than $200. The present value is less than $100. The present value is equal to $200.

The present value is less than $100.

Oliver Costa owns a small business where he internally develops, manufactures, and sells decorative figurines directly to customers. To create his figurines, he owns assets including tools, machines, raw materials used to produce the figurines, and a large stock of the completed figurines themselves. As Costa prepares his balance sheet for the first time, he must classify his assets into their various appropriate categories. Which of Costa's assets is classified as inventory on the balance sheet? The raw materials and the completed figurines The completed figurines and the tools used to produce the figurines The machines and the completed figurines The machines and the tools used to produce the figurines

The raw materials and the completed figurines

What is articulation? The relationship among financial statements whereby an item on the income statement or statement of cash flows helps explain the period-to-period change in an item on the balance sheet The process of recording, analyzing, and summarizing a company's transactions in order to be able to prepare the financial statements The relationship between the total of the assets on the balance sheet and the total of the liabilities and equities on the balance sheet The process of separating cash flows into three categories: operating, investing, and financing

The relationship among financial statements whereby an item on the income statement or statement of cash flows helps explain the period-to-period change in an item on the balance sheet How the three primary financial statements, (BS, IS, & statement of cash flows) tie together the income statement helps explain the change in the retained earnings balance in the balance sheet the statement of cash flows explains the change in the cash balance in the balance sheet

At the end of a period, what happens to balances existing in real accounts? They are subtracted from the balances in the nominal accounts. They are carried forward to the next period. They are closed to zero at the period's end. They are added to the balances in the nominal accounts.

They are carried forward to the next period.

When land is purchased, what is the proper accounting for the costs paid for commissions, legal fees, and clearing and grading? They are recorded as part of the cost of the land. They are recorded as a subtraction from equity in the balance sheet. They are recorded as part of cost of goods sold in the year of the land purchase. They are recorded as an operating expense in the year of the land purchase.

They are recorded as part of the cost of the land.

Why are daily cash deposits important? They prevent the accumulation of a large amount of cash. They keep the ledger accounts separate from the journal accounts. They maintain the balance between the nominal and the real accounts. They maintain the balance between the accounts payable and the accounts receivable.

They prevent the accumulation of a large amount of cash.

What is the general presumption with respect to accounting for advertising costs? They should be capitalized. They should be depreciated. They should be amortized. They should be expensed.

They should be expensed.

According to the accounting rules, what are operating activities? Those activities associated with forecasting sales and determining the amount and timing of materials purchases, employee hiring, and overhead costs Those activities associated with buying and selling long-term assets—primarily the purchase and sale of land, buildings, and equipment Those activities that are part of the day-to-day business of a company Those activities whereby cash is obtained from or repaid to owners and creditors

Those activities that are part of the day-to-day business of a company

In making a journal entry, why is it important to know whether an account increased or decreased? To determine whether the transaction impacts the income statement To determine whether the transaction will be posted to the ledger To determine whether the transaction impacts the balance sheet To determine whether the account should be debited or credited

To determine whether the account should be debited or credited

Soren Zincmann is the owner of a small business. Historically, Soren has been terrible at maintaining proper records, so he has decided to start a new business budgeting system. As a first step toward this goal, Soren wants to gather information on how he spent his money each month over the past year. Searching through his records, he realizes that, except for the monthly rent on his business office, he paid every other expense in cash. Why is it important to make all payments with a check or an electronic transfer? To speed the posting of accounts receivable To maintain the correct balances in the closing entries To quickly record cost of goods sold To maintain good documentation

To maintain good documentation

What does it mean to capitalize a cost? To record it as cost of goods sold To record it as an expense To record it as an asset To record it as part of equity

To record it as an asset

According to the accounting equation, what is the correct computation of owners' equity? Total Assets + Liabilities Cash - Bank Loan Balance Total Assets - Liabilities Cash + Bank Loan Balance

Total Assets - Liabilities

What is "net income"?

Total Revenues − Total Expenses

A company issued capital stock to new investors in exchange for $100,000 cash. What is the effect of this transaction on the accounting equation? Total liabilities and owners' equity increase. Total assets increase and owners' equity decreases. Total assets and owners' equity increase. Total liabilities increase and owners' equity decreases.

Total assets and owners' equity increase.

When are inventory records updated with respect to perpetual and periodic inventory systems? With a periodic system, inventory records are updated whenever a purchase or a sale is made. With a perpetual system, inventory records are updated whenever a purchase or a sale is made. With a perpetual system, inventory records are not updated when a sale is made; only the dollar amount of the sale is recorded. With a periodic system, inventory records are updated only when cash is collected; no Accounts Receivable are recorded.

With a perpetual system, inventory records are updated whenever a purchase or a sale is made.