SIUE Accting 200 Exam Review

7. Which of the following is the correct order of subtotals that appear on a multi-step income statement? A. Gross profit, Operating income, Net income B. Gross profit, Net sales revenue, Net income C. Net income, Operating income, Net income D. Operating income, Gross profit, Net income

A. Gross profit, operating income, Net income

Changing from the LIFO (Last-In, First-Out) to the identification method of valuing inventory ignores the principle of ____________________. A. consistency B. conservatism C. materiality D. disclosure

A. consistency

On the _____________, cash dividends become a liability of a corporation. A. declaration date B. payment date C. last day of the fiscal year D. date of record

A. declaration date

The statement of stockholders' equity _______________________________. A. reports the number of shares and any changes during the year in preferred, common, and treasury stock B. is not required by IFRS C. does not show the changes to the Retained Earnings account because that information is provided in the statement of retained earnings D. is required to be presented along with the statement of retained earnings

A. reports the number of shares and any changes during the year in preferred, common, and treasury stock

When using the allowance method, after a company has previously written off an account, ______. A. when a customer pays on an account that has been written off, the company needs to reverse the write-off to the Allowance for Bad Debts account and then record the receipt of cash B. the company does not need to re-establish the receivable account C. the company continues to send monthly statements to the customers whose accounts have been written off D. the company cannot collect from these customers because their accounts have been written off

A. when a customer pays on an account that has been written off, the company needs to reverse the write-off to the Allowance for Bad Debts account and then record the receipt of cash

The financial statements are prepared from the __________________. A. unadjusted trial balance B. adjusted trial balance C. chart of accounts D. statement of retained earnings

B. adjusted trial balance

Which of the following is used by both internal and external users? A. Costing Reports B. Trial Balance C. Chart of Accounts D. Balance Sheet

D. Balance Sheet

7. Which of the following statements is true of a corporation? A. Shareholders can be required to pay debts of the corporation. B. Shareholders are authorized to sign contracts or make business commitments on behalf of the corporation. C. Shares of stock cannot be readily purchased and sold by investors on an organized stock exchange. D. Corporations pay income tax on corporate earnings, and shareholders pay income tax on corporate dividends.

D. Corporations pay income tax on corporate earnings, and shareholders pay income tax on corporate dividends.

7. In times of rising prices, which inventory method normally results in lowest net income? A. Specific Identification B. Weighted Average C. FIFO D. LIFO

D. LIFO

Which of the following are NOT included in a post-closing trial balance? A. Common Stock and liabilities B. Assets and liabilities C. Retained Earnings and assets D. Revenues and expenses

D. Revenues and expenses

7. Which of the following items are reconciling items on the book side of the reconciliation? A. bank service charge and outstanding checks B. outstanding checks and correction of book error C. deposit in transit and NSF check D.bank service charge and correction of book error

D. bank service charge and correction of book error

No journal entries are required for the reconciling items on the bank side because _____________. A. those transactions are already included in the bank balance B. the adjusted balances on both sides are the same amounts C. the amounts are immaterial D. those transactions have already been recorded in the company's ledger

D. those transactions have already been recorded in the company's ledger.

1. Which of the following principles states that a business should report anticipated gains? A. disclosure B. materiality concept C. consistency D. conservatism

Disclosure, Materiality concept, Consistency

Bond premium is a contra-asset account. True or False

False

Net Income is equal to Sales Revenue for most companies. True or False

False

A company cannot report a gain or loss when buying or selling its own stock. True or False.

True

Accumulated Depreciation is a contra-asset account. True or False

True

Bond discount is a contra-liability account

True

Current Liabilities must be paid either in cash or with goods and services within one year or within the entity's operating cycle is longer than a year. True or False

True

Deferred expenses are also called prepaid expenses. True or False

True

Investors use the time-interest-earned ratio to evaluate a company's ability to pay interest. True or False

True

The consistency principle states that a business should use the same accounting methods and procedures from period to period. True or False

True

The journal entry for the purchase of treasury includes a credit to cash. Ture or False

True

The steps of the accounting cycle are followed throughout the accounting period. True or False

True

Warranty Expenses is shown on the income statement at the estimated amount. True or False

True

1. Which of the following principles states that a business should not report anticipated gains? A. disclosure B. materiality concept C. consistency D. conservatism

Conservatism- is an accounting principle that anticipates losses, not gains.

1. A restaurant is being sued because a customer claims to have found a bug in her chili. The company's lawyers believe there is only a remote possibility that the lawsuit will result in an actual liability. Which of the following actions should be taken by the company's management? A. The liability should be estimated and accrued as an expense. B. The situation should be described in a note to the financial statements. C. The possible liability should not be shown in the financial statements. D. An expense must be matched to the period in which the incident occurred.

C. The possible liability should not be shown in the financial statements.

The accountant of Zeus Legal Services failed to make an adjusting entry for supplies that had been used for the year. Assume the supplies were initially recorded as an asset. Which of the following statements is true? A. The total liabilities will be overstated. B. The total assets will be understated. C. The total assets will be overstated. D. The equity will be understated.

C. The total assets will be overstated.