Study Guide

Eli company sells novelty items and offers terms of 1/10, n/30 to credit customers One customer, Faulkner, Inc., purchased 100 Sweet-16 party decor packs with a list price of $20 each on March 5, 2019..

1,980

Firework

1.6

Lowery company

204

40

Payables

wholesaler

debit notes payable debit interest expense and credit cash

operating assets with no physical properties are called

intangible assets

what is the impact on the accounting equation of recording the accrual of interest expense

liabilities increase and stockholders equity decreases

Depreciation is a process by which

the cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset

At the year end inventory count, if goods in transit are shipped FOB destination, they should be included in the inventory count of

the seller

For which type of merchandise would a company most likely use the specific identification method of inventory costing?

Fine jeweler

generally accepted accounting principles require that research and development costs to develop a new product be

expensed in the period incurred.

On January 1, 2012, a company sold a machine for $5,000 that it had used for several years. The machine cost $11,000, and had accumulated depreciation of $4,500 at the time of sale. What gain or loss will be reported on the income statement for the sale of the machine?

Loss of 1500

Bihary company has a beginning balance in its inventory account of $2,250 and the ending balance is $1,500. Cost of goods sold is $9,750. According to the cost of goods sold model, what was the amount of inventory purchased during the year?

9,000

Which one of the following accounts most likely would appear on the income statement of a merchandise company, but not on the income statement of a service company?

Cost of goods sold

Equipment with a residual value of $50,000 at the end of 10 years was acquired at the beginning of 2019 for $500,000. Assuming the use of the straight-line depreciation method, the journal entry to record depreciation expense for 2021 will have a debit to

Depreciation Expense and a credit to Accumulated Depreciation for $45,000

A manufacturing company's weekly payroll is $80,000 for a 5-day work week beginning each Monday and ending each Friday. The last time salaries and wages were recorded was Friday, December 26. What adjustment is needed on December 31, the last day of the company's fiscal period?

Increase wages expense by $48,000

On October 1st, a company borrowed $60,000 from eighth national bank on a year-1, 7% note. If the company fiscal year ends on December 31st, a year-end adjusting entry is required to increase

Interest payable to $1,050

Equipment purchased at the beginning of 2012 for $200,000 with residual value of $20,000 is being depreciated over a 5-year period using the double-declining-balance method. Which of the following statements is correct concerning the financial statementsat December 31, 2012?

The accumulated depreciation account balance is now $80,000.

A company purchased land and incurred the following costs:Purchase Price $500,000Excavation Costs $50,000Razing Old Building $12,500Broker Fees $10,000Cost of a Parking Lot $25,000What is the cost of the land?

$572,500

Lemkey

260

Parlato Corp. has an inventory turnover rate of 8 times. Calculate the company's average days to sell inventory.

45.625

Go cars has 200 in cash, 500 in accounts receivable, 400 in marketable securities, and 700 in inventory

450

There are some liabilities, such as income taxes payable and the estimated warranty liability, for which the amounts must be estimated so they can be recorded in the same period as the related revenues. Failure to record these amounts in the same period as the related revenues is a violation of the:

Matching principle

Cost of Goods Sold is equal to

Units Sold x Weighted Average Cost per Unit

The effect of recording depreciation for the year is a(n)

decrease in assets and a decrease in net income

when the market value of inventory items has decline below their cost, which method would be the most appropriate in complying with GAAP?

lower of cost or market

not be amortized but should be reviewed annually for impairment

not be amortized but should be reviewed annually for impairment

On April 1, 2013, Guyton Sails accepted a $12,000 advance payment for maintaining a customer's fleet of sail boats. The contract is for a twelve month period. In May 2013, the company performed $1,200 worth of repairs. What is the remaining liability that would appear on the company's balance sheet at the end of May?

10,000

Assets classified as property, plant, and equipment are reported at:

Each assets original cost less depreciation since acquisition

This company has a weekly payroll of $10,000 for its employees who work Monday through Friday. Federal and state income taxes are withheld in the amounts of $1,700 and $400, respectively, and FICA taxes are withheld at a mandatory rate of 7.65% (6.2% for Social Security and 1.45% for Medicare). In addition, the federal and state unemployment taxes are applied at rates of 2% and 5%, respectively. The company's year-end is December 31.

Medicare tax payable will be credited in the amount of $145