Midterm #1

Yacht Doc, Inc., had the following balances at December 31, before recording any adjustments: Sales$6,000 Accounts Receivable$1,300 Allowance for Doubtful Accounts$10 credit balance Show the effect of the adjusting entry:

(120) allowance for doubtful accounts no effect (120) doubtful accounts expense

Record the entry for the sale and the cost of the sale of merchandise to a customer on account for $800, which cost $500, by selecting which accounts are debited and which are credited.

-debit cost of goods sold -credit inventory -credit sales revenue -debit accounts receivable

The debit side of the Retained Earnings T-Account will include which of the following after recording the closing entries? (Select all that apply.)

1) Dividends for the month 2) Expenses for the month

The credit side of the Retained Earnings T-Account will include which of the following after recording the closing entries? (Select all that apply.)

1) Revenues for the month 2) Retained Earnings balance at the end of the month

Match the normal balance and financial statement each line item is found. - A. B. C. D. Allowance for Doubtful Accounts - A. B. C. D. Depreciation Expense - A. B. C. D. Doubtful Accounts Expense - A. B. C. D. Cost of Goods Sold - A. B. C. D. Accumulated Depreciation - A. B. C. D. Wages Expense - A. B. C. D. Wages Payable - A. B. C. D. Sales - A. B. C. D. Accounts Receivable - A. B. C. D. Inventory

1)Allowance for Doubtful account=Credit: Balance Sheet 2)Deprecation Expense=Debit: Income Statement 3)Doubtful accounts expense=Debit: Income Statement 4)Cost of Goods Sold=Debit: Income Statement 5)Accumulated Depreciation=Credit: income statement 6)Wagers Expense=Debit: Income Statement 7)Wages Payable=Credit: Balance Sheet 8)Sales=Credit: Income Statement 9)Accounts Receivable=Debit: Balance Sheet 10) Inventory=Debit: Balance sheet

Royal Flush Plumbing, Inc., performed $1,000 of services on account of which it has collected $600. Revenues on the income statement equals? DO NOT INCLUDE $ IN YOUR ANSWER.

1,000

Loco for Cocoa, Inc.'s inventory activity in May was as follows: Inventory, May 1 10 units @ $4 each Purchase, May 7 20 units @ $5 each Sale, May 18 25 units @ $10 each Show the activity in Loco for Cocoa's inventory T account using the above information and assuming the company uses FIFO. Select "Blank" for the side opposite the beginning and ending inventory balances.

1. 40 2. blank 3. 100 4. 115 5. 25 6. blank

Given the Accounts Payable T-account, match the correct description with each number. For the beginning (1. or 2.) and ending balances (5. or 6.), select "Blank" for the side that is opposite the account's normal balance

1. Blank 2. Beginning balance 3. payments to merchandisers 4. purchases on account 5. blank 6. ending balance

Given the Unearned Revenue T-account, match the correct description with each number. For the beginning (1. or 2.) and ending (5. or 6.) balances, select "Blank" for the side that is opposite the account's normal balance.

1. Blank 2. Beginning balance 3. revenues earned 4. collections in advance from customers 5. blank 6. ending balance

List the steps in the accounting cycle in chronological order.

1. Record a journal entry 2. summarize in the ledger (T-accounts) 3. prepare an unadjusted trial balance 4. record and post the adjusting entries 5. prepare an adjusted trial balance 6. prepare financial statements 7. record and post the closing entries 8. prepare a post-closing trial balance

Given the Prepaid Rent T-account, match the correct description with each number. For the beginning(1. or 2.) and ending (5. or 6.) balances, select "Blank" for the side that is opposite the account's normal balance.

1. beginning balance 2. blank 3. payments in advance 4. rent used 5. ending balance 6. blank

Identify the normal balance of each account below. 1Accounts receivable 2Accounts Payable 3Salary Expense 4Dividends 5Equipment 6Depreciation Expense 7Salary Payable 8Supplies 9Supplies Expense 10Sales

1.debit 2.credit 3.debit 4.debit 5.debit 6.debit 7.credit 8.debit 9.debit 10.credit

Calculate the cost of the inventory purchased for the purchasing company: Invoice price of goods is $1,000. Purchase terms are 3/10, n/30 and the invoice is paid one week after it was received. The shipping terms are FOB destination and the shipping costs are $500.

1000+500-(1000*0.03)30 =1470

he invoice price of goods purchased is $10,000 with purchase terms of 2/7, n/30 and FOB shipping point. The invoice is paid within the week of receipt and shipping costs are $200. By what amount should the purchaser's Inventory be increased?

10000

The ending inventory of Papa Razzi Co. is $72,000. If the beginning inventory was $58,000 and the goods available for sale totaled $125,000, the Cost of Goods Sold equals ______. $67,000 $53,000 $111,000 $58,000 None of the above.

125000-72000=53000

The Sweet Dairy Air, Inc. began May with $100 of supplies. It purchased $880 of supplies on account during May. It paid $480 of the amount it owed for its supplies in May. At May 31, it only had $130 of supplies left. Supplies on the Balance Sheet at May 31 equals ______.

130

Tequila Mockingbird, Inc.'s inventory activity in September was as follows: $/UnitQuantityInventory, September 1712Purchase, September 12916Goods Available for Sale Sale, September 251718 Calculate the Cost of Goods Sold using FIFO perpetual.

138

John Dear, Inc. bought machinery at a cost of $729,000 on January 1, Year 1. Assuming its salvage value is $0 (i.e., it plans to dispose of the machinery and not try to sell it) and its useful life is 10 years, Accumulated Depreciation at December 31, Year 2 equals ______.

145,800

After preparing an unadjusted trial balance using the accounts above, what would the total debit column equal on the unadjusted trial balance?

15,600

Curl Up & Dye, Inc. began Year 2 with $300 of supplies. It purchased $730 of supplies on account during the year. It paid $490 of the amount it owed for its supplies during the year. At December 31, Year 2, it only had $170 of supplies left. Supplies on the Balance Sheet at December 31, Year 2 equals ______.

170

Using the amounts from above, what does Retained Earnings equal on the post-closing trial balance?

1850

On January 1, Year 1, The Sweet Dairy Air, Inc., paid $26,000 for a 4-year advertising campaign beginning on that date and runs the same number of advertisements each month. Prepaid Advertising at December 31, Year 1 equals ______.

19,500

How many of the following accounts have a normal debit balance and are found on the income statement? accounts receivable accumulated depreciation wages expense wages payable depreciation expense sales revenue

2

On May 1, Faux Furs, Inc., collected $25,000 from its customers. One quarter of the $25,000 was earned in May and the rest in June through August. During May, Faux Furs' had $4,000 in expenses of which only $2,000 had been paid. How much higher would Faux Furs' net income be in May if it used cash-basis accounting instead of accrual accounting?

20,750

In its first year of business, Scents for Cents' earned Revenues of $20,000, incurred Expenses of $16,000 and paid a $2,000 Dividend to its shareholders. Given Scents for Cents' incomplete balance sheet at year-end, determine the missing Retained Earnings balance.

2000 Retained Earnings = $0 Beginning Retained Earnings + $4,000 Net Income (from the income statement) - $2,000 Dividends = $2,000. Net Income $4,000 = $15,000 Revenues - $16,000 Expenses.

On May 1, Faux Furs, Inc., collected $24,000 from its customers. One quarter of the $24,000 was earned in May and the rest in June through August. During May, Faux Furs' had $4,000 in expenses of which only $1,000 had been paid. How much higher would Faux Furs' net income be in May if it used cash-basis accounting instead of accrual accounting?

21,000

On November 1, Year 1, Pitts' Pits, Inc., paid $46,000 for a 4-month insurance policy beginning on that date. Prepaid Insurance at December 31, Year 1 equals ______.

23,000

In its first month of business, Lord of the Fries, Inc., collected $38,000 from customers in advance during May. At May 31, it had a balance in its Unearned Revenue of $14,000. What is the amount of Revenue reported on the income statement for the month ended May 31?

24000

On May 1, Faux Furs, Inc., collected $28,000 from its customers. One quarter of the $28,000 was earned in May and the rest in June through August. During May, Faux Furs' had $4,000 in expenses of which only $1,000 had been paid. How much higher would Faux Furs' net income be in May if it used cash-basis accounting instead of accrual accounting?

24000

Stockit, Inc., uses the average cost method and had the following inventory activity for June: $/UnitQuantityBeginning Inventory, June 1103000Purchase, June 15127000Goods Available for Sale Sale, June 25258000 Determine the ending inventory balance at June 30. - A. B. C. D. E. F. Inventory at June 30 on the balance sheet equals: A. $24,000 B. $114,000 C. $22,000 D. $91,200 E. $88,000 F. $22,800

24000

During December, Acme, Inc., performed and billed its customers $26,000 for services on account of which it collected $5,000. How much revenue should Acme record in December?

26,000

On January 1 of its first month of business, Bags Bunny, Inc., paid $30,000 for eight months rent beginning in January. How much will be reported as Prepaid Rent on its balance sheet at January 31?

26,250

During November, Florist Grump, Inc. performed $26,000 of services on account and sent bills to its customers. In November, Florist Grump collected $2,000 from these credit customers. How much revenue should Florist Grump record in November?

26000

On May 1, Faux Furs, Inc., collected $32,000 from its customers. One quarter of the $32,000 was earned in May and the rest in June through August. During May, Faux Furs' had $5,000 in expenses of which only $2,000 had been paid. How much higher would Faux Furs' net income be in May if it used cash-basis accounting instead of accrual accounting?

27,000

On October 1, the accounting firm of Deja Brew, Inc., received $36,000 in advance for services to be performed monthly over the next 12 months, starting in October. The amount as of or for the year ended December, 31 is

27,000 Deferred Revenue on the Balance Sheet

In its first month of business, Brewed Awakenings, Inc., collected $27,000 from customers in advance during May. During May, it performed $6,000 of services. What is the balance of the Deferred Revenue account at the end of the month?

27000-6000=21000

On May 1, Faux Furs, Inc., collected $35,000 from its customers. One quarter of the $35,000 was earned in May and the rest in June through August. During May, Faux Furs' had $4,000 in expenses of which only $2,000 had been paid. How much higher would Faux Furs' net income be in May if it used cash-basis accounting instead of accrual accounting?

28250

On May 1, Faux Furs, Inc., collected $34,000 from its customers. One quarter of the $34,000 was earned in May and the rest in June through August. During May, Faux Furs' had $4,000 in expenses of which only $1,000 had been paid. How much higher would Faux Furs' net income be in May if it used cash-basis accounting instead of accrual accounting?

28500

How many of the following accounts (line items) are found on the income statement? Accounts Receivable Sales Revenue Cash Collected from Customers Wages Payable Wages Expense Depreciation Expense Accumulated Depreciation

3

how many of the following accounts have a normal debit balance? Accounts Receivable Unearned Revenue Wages Expense Wages Payable Depreciation Expense Sales Revenue

3

Melon-Cauli Grocers, Inc. had a $10,000 balance in Accounts Payable at the beginning of the month. During the month, it made $60,000 of purchases on account due within one month and paid $40,000 of the amounts owed. The Accounts Payable balance at the end of the month has a ______ balance.

30,000 credit

On May 1, the bank said it may lend money to Nim Com Soup, Inc. The amount will depend on Nim Com Soup's income statement for the month of May. Since the bank did not specify, Nim Com Soup did not follow generally accepted accounting principles (GAAP). It reported net income for the month ended May 31 of $20,000. The revenue included $2,000 of cash collected in advance from customers for services to be performed in June. The revenue also included a $12,000 increase in the value of its land. The expenses excluded $3,000 it owed for services it received in May. What is Nim Com Soup's GAAP Net Income?

3000

Using the information found in the financial statements for the month ended May 31 and the Accounts Receivable T-account, determine its May 31 balance found on the balance sheet. Assume all sales are on account. Balance Sheet at April 30: Accounts Receivable = $2,000 Statement of Cash Flows: Cash Collected from Customers on the Statement of Cash Flows = $6,000 Income Statement: Sales = $7,000 Balance Sheet at May 31: Accounts Receivable =

3000

Using the information found in the financial statements for the month ended May 31 and the Accounts Receivable T-account, determine its May 31 balance found on the balance sheet. Assume all sales are on account. Balance Sheet at April 30: Accounts Receivable = $2,000 Statement of Cash Flows: Cash Collected from Customers on the Statement of Cash Flows = $6,000 Income Statement: Sales = $7,000 Balance Sheet at May 31: Accounts Receivable = ______?

3000

On October 31, Year 1, Pitts' Pits, Inc., paid $48,000 for a 3-month insurance policy beginning on that date. Insurance Expense for the year ended December 31, Year 1 equals ______.

32,000

On October 31, Year 1, Pitts' Pits, Inc., paid $48,000 for a 3-month insurance policy beginning on that date. Insurance Expense for the year ended December 31, Year 1 equals ______.

32000

Curl Up & Dye, Inc. began May with $200 of supplies. It purchased $460 of supplies on account during May. It paid $430 of the amount it owed for its supplies in May. At May 31, it only had $310 of supplies left. Supplies Expense for the month ended May 31 equals ______.

350

Deja Brew, Inc. had Accounts Receivable of $400,000 and an Allowance for Doubtful Accounts with a credit balance of $20,000. Deja Brew then writes off a $5,000 account receivable from Royal Flush Company which went bankrupt. The net realizable values of the accounts receivable before and after this write-off are __________.

380000 before and after

On May 1, the bank said it may lend money to Nim Com Soup, Inc. The amount will depend on Nim Com Soup's income statement for the month of May. Since the bank did not specify, Nim Com Soup did not follow generally accepted accounting principles (GAAP). It reported net income for the month ended May 31 of $20,000. The revenue included $1,000 of cash collected in advance from customers for services to be performed in June. The revenue also included a $12,000 increase in the value of its land. The expenses excluded $3,000 it owed for services it received in May. What is Nim Com Soup's GAAP Net Income?

4000

Cycle Path, Inc., sold 100 bikes to its customers at $400 each. The bikes cost $250. The entry to record this sale includes a ______. (Select all that apply.) 40,000 Cash 40,000 Sales Revenue (25,000) Cost of Goods Sold 25,000 Cost of Goods Sold 25,000 Inventory (25,000) Inventory 15,000 Gross Profit

40000 Cash 40000 Sales Rev (25000) Inventory (25000) Cost of Goods Sold

John Dear, Inc. bought machinery at a cost of $205,000 on January 1, Year 1. Assuming its salvage value is $0 (i.e., it plans to dispose of the machinery and not try to sell it) and its useful life is 10 years, Accumulated Depreciation at December 31, Year 2 equals ______

41000

Thistle Do Nicely had $100 of supplies on May 1. During May, it purchased $400 of supplies on account. It paid $150 of the $400 it owed for its supplies. At May 31, Thistle Do Nicely only had $85 of supplies left. Supplies Expense on the income statement equals ______.

415

Thistle Do Nicely had $100 of supplies on May 1. During May, it purchased $500 of supplies on account. It paid $150 of the $500 it owed for its supplies. At May 31, Thistle Do Nicely only had $45 of supplies left. Supplies on the balance sheet equals ______.

45

Using the accounts receivable method, Curl Up and Dye, Inc., estimates that its adjusted Allowance for Doubtful Accounts should equal $4,000. Prior to adjustment, the Allowance for Doubtful Accounts has a $900 debit balance. Determine the amount and on which year-end financial statement the line item appears. Doubtful Accounts Expense Allowance for Doubtful Accounts

49000 Income Statement 40000 Balance sheet

How many of the above accounts are closed at the end of the accounting period?

5

Eel Electronics paid $4,000 of the $5,000 its employees had earned during the period. Eel Electronics should report Wages Expense of ______ on the income statement and Wages Payable of ______ on the balance sheet prepared in accordance with generally accepted accounting principles.

5,000 and 1,000

Kincaid Company's Retained Earnings balance on january 1 was $6,000. During the current year, Kincaid earned $6,400 in revenues and incurred $4,200 in expenses. Kincaid paid $2,500 in dividends, all in cash. After the closing entries are made, Kincaid's Retained Earnings balance on December 31 will be ______.

5,700

Florist Gump, Inc. purchased land at a cost of $5,000 on February 2, 2000. At December 31, 2014, the land is worth $53,000 according to an appraiser. At what amount should the land be reported on Florist Gump's balance sheet at December 31, 2014?

5000

In its first month of business, Eel Electronics sold $5,000 of goods to customers of which $3,000 has been collected. Using accrual accounting, Eel Electronics should report revenues of ______.

5000

Wok On Water, Inc.'s employees had worked during its first month of May and earned $5,000. Wok on Water had paid $3,000 of the amount owed. How much will be reported as Wages Expense on its May income statement?

5000

Lox, Stock & Bagel, Inc. bought machinery at a cost of $512,000 on January 1, Year 1. It plans to dispose of the machinery after 10 years of use. Depreciation Expense for the year ended December 31, Year 2 equals ______.

51,200

On January 1 of its first month of business, Juan in a Million, Inc., paid $68,000 for four months rent beginning in January. How much will be reported as Prepaid Rent on its balance sheet at January 31?

51000

An aging-of-accounts receivable indicates that the amount of the Allowance for Doubtful Accounts should be $7,200. The Allowance for Doubtful Accounts prior to adjustment has a credit balance of $2,000. The amount of the adjusting entry should be ______. $9,200 $5,200 $2,000 $7,200

5200

On September 30, Year 1, Royal Flush Pluming, Inc., issued a $30,000, 7%, 5-month note. At year end, December 31, Year 1, when the adjusting entry is recorded for theyear, the debit to Interest Expense equals $_______.

525

During the year, Proffitts, Inc., had revenue of $83,000 and expenses of $28,000. During the year, it collected $17,000 from its customers and paid $3,000 of its expenses and $20,000 of dividends to its owners. Net income for the year equals ______.

55,000

Lox, Stock & Bagel, Inc. bought machinery at a cost of $555,000 on January 1. If its salvage value is $0 (i.e., it plans to not sell the machinery when it is done using it) and its useful life is 10 years, Depreciation Expense for the year ended December 31, Year 1 equals ______.

55,500

During the year, Proffitts, Inc., had revenue of $83,000 and expenses of $26,000. During the year, it collected $10,000 from its customers and paid $3,000 of its expenses and $20,000 of dividends to its owners. Net income for the year equals ______.

57,000

In its first month of business, Sea World Cruises, Inc., collected $20,000 from customers in advance during May. At May 31, it had a balance in its Deferred Revenue of $14,000. What is the amount of Revenue earned that had been collected in advance?

6000

At December 31, Year 1, Lord of the Fries, Inc.'s assets were $60,000 and liabilities were $40,000. At December 31, Year 2, its assets are $110,000 and liabilities are $50,000. During the year, it did not issue new stock and did not declare or pay dividends. Calculate net income for Year 2.

60000-40000 110000-50000 60000+20000 Look up this one its wrong

The Sweet Dairy Air, Inc., had $230 of prepaid advertising at the beginning of the year. During the year, Sweet Dairy Air, Inc., paid in advance $630 for advertising. At the end of the year, $140 of prepaid advertising remained. Advertising Expense for the year ended equals ______.

630-140+230

Using the information in the Accounts Receivable ledger account shown below:Determine the missing amounts on the financial statements1. Cash Collected from Customers on the Statement of Cash Flows equals [a].2. Sales on the Income Statement equals [b].3. The amount not yet collected on the Balance Sheet equals [c].

700 900 300

Using the information in the Accounts Receivable ledger account shown below: Determine the missing amounts on the financial statements 1. Cash Collected from Customers on the Statement of Cash Flows equals . 2. Sales on the Income Statement equals . 3. The amount not yet collected on the Balance Sheet equals

700 bottom right 900 bottom left 300 bottom bottom left

Land is purchased at a cost of $7,000. At year end, based on appraised values, the land's value increased to $42,000. At what amount should the land be reported on the year-end balance sheet?

7000

A company started the year with $400 of supplies. During the year, the company purchased additional supplies costing $1,600 on account of which it paid $600 later in the year. There were $800 of supplies on hand at the end of the year. An adjusted trial balance prepared at the end of the year will show a Supplies with a ______ balance.

800 debit

For the month of December, Troy's gross pay was $80,000. Income taxes withheld totals $15,000. The FICA (Social Security and Medicare) rate is 7.65%. What is Troy's net pay in December?

80000*0.0765=6120+15000 80000-21120=58880

On January 1 of its first month of business, Juan in a Million, Inc., paid $11,000 for four months rent beginning in January. How much will be reported as Prepaid Rent on its balance sheet at January 31?

8250

During the year, A Salt & Buttery, Inc., had revenue of $84,000 of which $7,000 was collected from customers. It also had expenses of $31,000 of which $3,000 was paid. The owners were paid $20,000 in dividends. Net income for the year equals

84000-31000

On January 1 of its first month of business, Juan in a Million, Inc., paid $37,000 for four months rent beginning in January. How much will be reported as Rent Expense on its income statement for the month ended January 31?

9250

Doolittle & Dalley, Inc., provided $800 of services on account.

Account Receivable800 Revenue800

Which of the following are true statements about the qualitative characteristics of accounting information?

Accounting information should be relevant and free from bias. Both GAAP and IFRS require the same qualitative characteristics of accounting information

When a business makes a sale on account, the asset created is a(n) ______?

Accounts Receivable

Indicate the financial statement where you would expect to find each line item

Accounts Receivable - Balance Sheet Cash Collected from Customers - Statement of Cash Flows Sales - Income Statement Unearned Revenue - Balance Sheet Cost of Goods Sold - Income Statement Cash Paid for Merchandise - Statement of Cash Flows Inventory - Balance Sheet Accounts Payable - Balance Sheet

When Pans on Fire delivers pans to its customers and bills its customer accounts for $800, it should record a debit to ______ and a credit to ______.

Accounts Receivable and Cost of Goods Sold; Sales Revenue and Inventory

Accounts Receivable, Net equals ______. Accounts Receivable plus the Allowance for Doubtful Accounts and increases when a customer's account is written off. Accounts Receivable less the Allowance for Doubtful Accounts and remains the same after a customer's account is written off. Sales less Doubtful Accounts Expense and decreases when a customer's account is written off. Accounts Receivable less Doubtful Accounts Expense and remains the same when a customer's account is written off.

Accounts Receivable less the Allowance for Doubtful Accounts and remains the same after a customer's account is written off.

The adjusting entry to record the estimated doubtful accounts includes a credit to

Allowance for Doubtful Accounts

The following data was extracted from the records of Shear-Lock Combs, Inc.: $/Unit Quantity Beginning Inventory 16150 Purchases20300Goods Available for Sale Sales Revenue35400 What is the gross profit using the FIFO method? $6,600 $7,600 $7,400 $6,400

Answer-The gross profit using the FIFO method is = $6600. Explanation- Gross profit = Sales- Cost of goods sold = (400 units*$35 per unit)-$7400 = $14000-$7400 = $6600 Where - Cost of goods sold = (150 units*$16 per unit)+(250 units*$20 per unit) = $2400+$5000 = $7400

In April, Clean Dirt, Inc. paid for advertising to be run in May. In May, the advertisement was run in the local paper. Select the correct answer for each the questions below.Under cash-basis accounting, Advertising Expense is recorded in which month?Under accrual accounting, Advertising Expense is recorded in which month?

April May

On February 20, Wursthaus, Inc., paid for $500 of the sausages purchased on account on January 21. Show the effect of this transaction on the accounting equation below.

Assets - (500) Cash Liabilities - (500) Accounts Payable Shareholders' Equity - 0 No effect

On February 12, Wursthaus, Inc., sold 600 sausages @ $10.00 each on account. The sausages cost $6.00 each. Show the effect of both the sale and the cost of the sale on the accounting equation below:

Assets - 6,000 Accounts Receivable; (3,600) InventoryLiabilities - 0 No EffectShareholders' Equity - 6,000 Sales; (3,600) Cost of Goods Sold

Which accounts are increased by debits?

Assets, expenses and dividends

Stacos Bell, Inc.'s inventory activity in May was as follows: $/UnitQuantity Inventory, May 11220Purchase, May 71510Goods Available for Sale Sale, May 181824 Record the effect of the May 18 sale on account and cost of the sale on the accounting equation assuming average cost method is used.

Assets= 432 Accounts Receivable (312) Inventory Liabilities= No effect Shareholder's Equity= 432 Sales (312) Cost of Goods sold

Which financial statement reports how much is left to sell at the end of the period? Income Statement Statement of Shareholders' Equity Statement of Cash Flows Balance Sheet

Balance sheet

Record the purchase of $800 of merchandise on account by selecting which accounts would be debited and credited. (Select all that apply.)a. credit Cost of Goods Sold b. debit Accounts Payable c. debit Inventory d. credit Inventory e. credit Accounts Payable f. debit Cost of Goods Sold g. credit cash h. debit cash

C,E

If a company debited an expense, the credit may have been to ______. (Select all that apply.)

Cash an asset such as Prepaid Insurance, Supplies, Inventory, or Accumulated Depreciation a payable account such as Supplies Payable, Utilities Payable, Interest Payable

Squid Roe, Inc., collected $900 owed from customers for services previously recorded.

Cash 900 (Debit) Accounts Receivable 900 (Credit)

Which of these would be reported as cash flows from investing activities? (Select all that apply.) Cash paid for advertising Cash paid for rent Cash paid for employee wages Cash paid to build a new corporate headquarters Cash paid to buy equipment Cash received from owners in exchange for stock

Cash paid to buy equipment Cash paid to build a new corporate headquarters

In June, Dewey, Cheatum & Howe, Inc., received $1,000 from a customer for services performed in July. Select the correct answer for each the questions below.Under cash-basis accounting, revenue is recorded in which month?Under accrual accounting, revenue is recorded in which month?

Cash-basis - June Accrual - July

Record the adjusting entry on December 31 for wages owed to employees that will be paid in January, the next accounting period. (Select all that apply.) debit Prepaid Wages Expense credit Cash credit Wages Payable credit Wages Expense debit Wages Payable credit Deferred Revenue debit Wages Expense

Credit wages payable Debt wages expense

Jello, Inc.'s inventory activity in May was as follows: $/UnitQuantityInventory, May 1810Purchase, May 7630Goods Available for Sale Sale, May 181525 Jello uses the average cost method. Jello's Inventory balance at May 30 equals ____. - A. B. C. D. E. F. G. Inventory at May 30 equals: A. $150.00 B. $375.00 C. $200 D. $97.50 E. $260.00 F. $175.00 G. $162.50

D

Equipment is recorded as an asset and then expensed as it is used. This is an "accrual" or "deferral"?

Deferral

The adjusting entry to record the amount of supplies used during the period is a result of an "accrual" or "deferral"?

Deferral

If a company credited Revenues, the debit may have been to ______. (Select all that apply.)

Deferred Revenue Accounts Receivable Cash

The adjusting entry to record the estimated doubtful accounts includes a debit to ______. Doubtful Accounts Expense Accounts Receivable Sales Allowance for Doubtful Accounts This is a trick question; there is no such adjusting entry.

Doubtful Accounts Expense

True or false: Net income equals the net amount of cash collected during the accounting period.

False

Which of the following requires the useful lives of a company's equipment be reported in the notes to the financial statements?

Full Disclosure Principle

In its first year of business, Scents for Cents' earned Revenues of $20,000, incurred Expenses of $16,000 and paid a $2,000 Dividend to its shareholders. Given Scents for Cents' incomplete balance sheet at year-end, determine the missing Supplies balance.

Given Total Assets = Total Liabilities + Shareholders' Equity (= $30,000), Supplies can be calculated by deducting all of the other asset balances ($27,000) from the Total Assets ($30,000) to get $3,000 (=$30,000 - 27,000).

For the month of December, Payless, Inc.'s gross payroll was $120,000. Income taxes withheld totals $22,000. The FICA (Social Security and Medicare) rate is 7.65%. How much cash will Payless, Inc., have to pay to the government for income taxes and FICA on the gross payroll of $120,000? Remember that the company is responsible for paying for both the employee's and the company's share of FICA.

Gross Payroll = 120000 Income taxes =22000 120000*0.0765= 9180 =9180 Add 22000+9180+9180= 40360

Land is reported on the balance sheet at its original purchase price. From the list of assumptions and principles, which one best supports this accounting treatment?

Historical Cost Principle

Miss Krupt, accountant of Dewey, Cheatum and Howe, increased the company's long-term assets to their fair market values on the balance sheet. Which of the following assumptions/principles did she violate?

Historical Cost Principle

Which is violated if Jim's Jambs, Inc., revalued its assets at their higher fair market values on its balance sheet?

Historical Cost Principle

Cellit, Inc., sold $4,000 of merchandise that was shipped on December 29, FOB destination. The goods arrived on January 4. Given Cellit's yearend is December 31, should Cellit include or exclude this merchandise from its inventory?

Include

Indicate whether the following merchandise in transit should be included or excluded from the company's inventory at year end, December 31. 1. $2,000 of merchandise purchased from a supplier, shipped FOB shipping point on December 29, in transit at year-end. 2. $1,000 of merchandise shipped to a customer on December 30, FOB destination. The goods arrived at the customer's location on January 5.

Include Include

Indicate whether the following merchandise in transit should be included or excluded from the company's inventory at December 31. Match Selected Match 1. $3,000 of merchandise shipped to a customer on December 30, FOB destination. The goods arrived at the customer's location on January 5. 2. $10,000 of merchandise purchased from a supplier, shipped FOB destination on December 28, in transit at year-end.

Include Exclude

Which of the following statements is true?

Income statement accounts are temporary accounts, while balance sheet accounts are permanent accounts.

Writing off an uncollectible account of $75 will have the following effect on the accounting equation: decrease assets $75, decrease liabilities $75 decrease assets $75, increase liabilities $75 increase assets $75, decrease liabilities $75 no net effect on assets

No net effect on assets

Which of the following accounts are liabilities?

Notes Payable Taxes Payable Wages Payable

On November 27, Beyer, Inc., ordered merchandise from Cellar Company. Cellar shipped the merchandise to Beyer on November 29, FOB shipping point. The merchandise arrived at Beyer's warehouse on December 1. Beyer paid for the merchandise on January 2. When should Cellar recognize revenue? November 27 November 29 December 1 January 2

November 29

Florist Gump, Inc., purchased $10,000 of merchandise on account with discount terms of 2/10, n/30 on June 12. It used the gross method when the purchase was recorded. Florist Gump paid the invoice on June 30. Record the payment of this invoice.

Purchase of Inventory on June 12 = $10,000 Discount terms = 2/10, means 2% discount if the payment made to creditors within 10 days Journal entry for Gross method of Inventory purchase. Debit Purchases $10,000 Credit Accounts payable $10,000 Payment is made on June 30 which is beyond 10 days from the date of purchase. When payment is made journal entry is Debit Accounts payable $10,000 Credit Cash $10,000 Explanationfor step 1 If payment is made within discount terms then journal entry will be Debit Accounts payable $10,000 Credit Purchase discounts $200 Credit Cash $9,800 __________________________________________________ Debit Accounts payable for $10,000 Credit Cash for $10,000

On January 1 of its first month of business, Juan in a Million, Inc., paid $29,000 for four months rent beginning in January. How much will be reported as Rent Expense on its income statement for the month ended January 31?

RENT EXPENSE =7250

On January 1, Year 1, Nothing Bundt Cakes, Inc., purchased equipment for $10,000 with an estimated useful life of five years at which time the equipment will be taken to the dump. Given the financial statements for the year ended and at December 31, Year 2, match each description with the appropriate financial statement and amount.

Reports the amount of usefulness used during the period - $2,000 Income Statement Reports the amount of usefulness remaining at the end of the period. - $6,000 Balance Sheet

The credit side of the Retained Earnings T-Account will include which of the following after recording the closing entries? (Select all that apply.)

Retained Earnings balance at the end of the month. Net Income for the month.

Which is violated if an advertising company increases its net income in the period it collects the cash from its customers, which is often months before the advertisement is completed and run?

Revenue and recognition principle

During the year, Proffitts, Inc., had revenue of $62,000 and expenses of $25,000. During the year, it collected $7,000 from its customers and paid $3,000 of its expenses and $20,000 of dividends to its owners. Net income for the year equals ______.

Revenue-Expenses 62000-25000 37000

Calculate the missing Operating Expenses in the following multi-step income statement:

Sales Revenue - Cost of Goods Sold = Gross Profit Gross Profit - Operating Expenses = Operating Income Operating Income - Interest Expense = Net income

Indiana Bones, Inc., purchased $400 of supplies on account during May. Indiana bones paid $150 of the $400 it owed for its supplies. At May 31, Indiana Bones had $100 of supplies left. Which of the following statements is true about the May financial statements? Cash Paid for Supplies on the ______. statement of cash flows will equal $(100) statement of cash flows will equal $(150) balance sheet will equal $(150) statement of cash flows will equal $(400) income statement will equal $(150)

Statement of Cash flows will equal 150

Which financial statement reports the activity in stock and retained earnings during the period? Income Statement Statement of Shareholders' Equity Statement of Cash Flows Balance Sheet

Statement of Shareholder's equity

On July 19, Lettuce Eat Company ordered $100 of supplies, promising to pay for them in August. The supplies were delivered to Lettuce Eat on July 21 and Lettuce Eat paid $100 for them on August 10. The journal entry that Lettuce Eat made on August 10 would include a debit to ______.

Supplies Payable

The journal entry to record the purchase of supplies on account is debit

Supplies and credit Supplies Payable

The journal entry to record the purchase of supplies on account is debit ______. Supplies Expense and credit Cash Supplies and credit Cash Supplies Expense and credit Supplies Payable Supplies and credit Supplies Payable

Supplies and credit supplies payable

Which statement below best explains credit terms of 2/10, n/30? The buyer will receive a 2 percent discount if it pays within 30 days. The buyer will receive a 10 percent discount if it pays within 2 days. The buyer will receive a 10 percent discount if it pays within 30 days. The buyer will receive a 2 percent discount if it pays within 10 days.

The buyer will receive a 2 percent discount if it pays within 10 days.

During August, WVU collected $6,000,000 in advance ticket sales for football games to be played in September. The games were played in September as scheduled. The $6,000,000 will be reported as ______.

Unearned Revenue on the Balance Sheet August 31

On May 10, Lord of the Fries, Inc., sold $100 of inventory to a customer for $300 on account. Record the May 10 sale entry and then record the cost of the sale. DO NOT INCLUDE $ SIGNS IN YOUR ANSWER.

account receivable 300 sales revenue 300 cost of goods sold 100 inventory 100

Which of the following have normal credit balances? (Select all that apply.)

accounts payable notes payable common stock

When a company makes a payment for amounts owed from prior purchases of inventory, it will record a debit to ______ and a credit to ______.

accounts payable; cash

The adjusting entry to record revenue earned but not yet billed to customers includes a debit to ______.

accounts receivable

On May 31, Squid Roe, Inc., recorded the adjusting entry to recognize $800 of revenues earned but not yet billed.

accounts receivable 800 sales revenue 800

Which report is constructed immediately prior to preparing the financial statements with the purpose of demonstrating that the accounts balance?

adjusted trial balance

The qualitative characteristic "Comparability" means that information _

allows users to make comparisons across financial statements

Cash-basis accounting may distort net income when a company ______.

collects cash in advance of providing services to customers pays for expenses in advance of when the resources are used makes credit sales

Identify the normal balance of each account below. service revenue notes payable interest expense dividends inventory accumulates depreciation unearned revenue

credit credit debit debit debit credit credit

The beginning balance in Lucre's Notes Payable was $50,000. During the month, Lucre borrowed $60,000 cash from Last National Bank and then paid First National Bank the $40,000 it had borrowed five months prior. The balance in Lucre's Notes Payable is now a ______.

credit of $70,000

On May 1, its first month of business, Squid Roe, Inc., recorded the receipt of $900 in advance for services to be performed over the three months as Unearned Revenue. Record the May 31 adjusting entry to recognize the first month of revenue earned. (Select all that apply.)

credit revenue $300 debit Unearned revenue $300

The adjusting entry to record depreciation on equipment includes a ______. (Select all that apply.)

credit to accumulated depreciation debit to depreciation expense

Record the adjusting entry on December 31 for wages owed to employees that will be paid in January, the next accounting period. (Select all that apply.)

credit wages payable debit wages payable

The normal balance of Sales Revenue is a ______ because it is a(n) ______.

credit, shareholders' equity

The normal balance of Accounts Payable is a ______ because it is a(n) ______.

credit; liability

A company paid $500 for supplies that it purchased last month. The decrease in liabilities would be recorded with a ______ to Supplies Payable.

debit

Accounts receivable accounts payable salary payable sales accumulated depreciation depreciation expense salary expense unearned revenue common stock supplies

debit credit credit credit credit debit debit credit credit debit

Which of the following adjusting entries represent accruals that adjust for amounts earned or incurred that are owed? (Select all that apply.)

debit accounts receivable and credit revenue debit wages expense and credit wages payable

Bank 'n' Roll, Inc., pays its employees once a month and records the expense at the time of payment. On May 31, Bank 'n' Roll, Inc., paid its employees $10,000 for work performed in May. The entry to record the payment includes a ______. (Select all that apply.)

debit to Wages Expense for $10,000 credit to Cash for $10,000

A company pays $100,000 per week payroll for a 40-hour, five-day work week ending on Fridays. The adjusting entry on December 31, which is a Tuesday, is a ______.

debit to Wages Expense for $40,000 and a credit to Wages Payable for $40,000

A company started the year with $400 of supplies. During the year, the company purchased an additional $1,200 of supplies on account of which it paid $1,000. There were $700 of supplies on hand at the end of the year. An adjusting entry prepared at the end of the account period includes a _______.

debit to supplies expense for $900

Expenses are increased with ______.

debits because they decrease shareholders' equity

Which of the following adjusting entries represent deferral adjustments that adjust for amounts expired or used during the period? (Select all that apply.)

debut insurance expense and credit prepaid insurance debit supplies expense and credit supplies

The entry to close expense accounts ______.

decreases retained earnings

The debit side of the Retained Earnings T-Account will include which of the following after recording the closing entries? (Select all that apply.)

dividends net loss when revenue <expenses

The main goal of both U.S. GAAP and IFRS is to ______.

ensure that companies produce useful information for capital provider

Thistle Do Nicely had $200 of supplies on May 1. During May, it purchased $400 of supplies on account. It paid $350 of the $400 it owed for its supplies. At May 31, Thistle Do Nicely only had $150 of supplies left. Supplies Expense on the ______.

income statement will equal $450 200+400-150

When a company receives cash in advance for services it has not yet performed, it records a(n) ______.

liability called Unearned revenue

Which of the following transactions will increase an asset and increase shareholders' equity?

performing a service on account for a customer

When a company pays cash in advance for rent that is to be used over the next two years, the company records a debit to ______ and a credit to ______.

prepaid rent; cash

Journals are used to ______.

record transactions chronologically

Characteristics of useful information include

relevancy and faithful representation and comparability and verifiability

Squid Roe, Inc., had Salary Expense of $900 on its adjusted trial balance. Record the entry to close this expense at the end of the accounting period. DO NOT INCLUDE $ SIGNS IN YOUR ANSWER

retained earnings 900 salary expense 900

The adjusting entry to record revenue earned but not yet billed to customers includes a credit to ______.

revenue

Revenue for the year totaled $900. Record the entry to close revenues at the end of the year. DO NOT INCLUDE $ SIGNS IN YOUR ANSWER.

revenue 900 retained earnings 900

During its first month, Pita Pan, Inc., purchased $600 of supplies on account. Pita Pan paid $100 of the $600 it owed for its supplies. At May 31, Pita Pan only had $200 of supplies left. Which of the following statements is true about the May financial statements

statement of cash flows will equal $(100)

Sew Chic, Inc., purchased $500 of supplies on account during May. Sew Chic paid $200 of the $500 it owed for its supplies. At May 31, Sew Chic only had $50 of supplies left. Which of the following statements is true about the May financial statements? Cash Paid for Supplies on the ______.

statement of cash flows will equal (200)

Record the adjusting entry to show that $300 of supplies were used during the month. DO NOT INCLUDE $ SIGNS IN YOUR ANSWER.

supplies expense 300 supplies 300

IFRS are

the International Financing Reporting Standards

Accounts Receivable is ______.

the amount the company expects to collect from sales made on account

The dollar amount shown on the Balance Sheet for Supplies represents ______.

the cost of supplies that remain unused at the end of the period

Revenue is recorded when

the goods or services are delivered even if the cash has not yet been collected

Which statement about a journal entry is NOT true?

the journal entry shows the balance in each account

Revenues are recorded when ______. the work is completed on the job, whether or not the cash is received work is begun on the job the company signs a contract cash is received from the customer

the work is completed on the job, whether or not the cash is received

What is a good starting point for determining which accounts require adjustment?

unadjusted trial balance

On May 1, its first month of business, Squid Roe, Inc., recorded the receipt of $800 in advance from customers for services to be performed over the next four months starting May 1.Record the May 31 adjusting entry to recognize the first month of revenue earned. DO NOT INCLUDE $ SIGNS IN YOUR ANSWER.

unearned revenue 200 revenue 200

On July 31, Squid Roe, Inc., recorded the adjusting entry of $900 for wages owed to employees that will be paid in August, the next accounting period.

wages expense 900 wages payable 900

Deferring revenue or expense means that the amount ______.

will be reported as revenue or expense in a later period