accounting 2100

A company resells 10,000 shares of treasury stock for $22 per share. The stock was purchased in the previous year for $18 per share. By how much would net income be affected by the sale of this treasury stock?

There would be no effect on net income from the sale of treasury stock.

What is a direct purpose of internal controls?

To improve the accuracy and reliability of accounting information.

Which of the following represents a characteristic of a liability?

Which of the following represents a characteristic of a liability?

Net income is defined as:

all revenues minus all expenses

Tasty Inn and Out incurred the following costs related to its purchase of equipment. Purchase price$10,000Sales tax (7%)700Annual property insurance500Shipping200Initial safety testing1,000Total costs$12,400 What is the total capitalized cost of the equipment?

$11,900

Madison Outlet has the following inventory transactions for the year: DateTransactionNumbers of UnitsUnit CostTotal CostJanuary 1Beginning inventory10$200$2,000March 14Purchase153004,500 $6,500January 1 to December 31Total sales to customers12 What amount would Madison report for cost of goods sold using LIFO?

$3,600.

Schmidt Company's Accounts Receivable balance is $100,000, its adjusted balance in Allowance for Uncollectible Accounts is $4,000, and its bad debt expense is $3,800. The net amount of accounts receivable is:

$96,000.

Snow Company has the following inventory transactions for the year: DateTransactionNumber of UnitsUnit CostJanuary 1Beginning inventory200$4.00April 20Purchase8004.25September 8Purchase4004.50 Assuming Snow sells 1,000 units, calculate ending inventory under FIFO.

1800

Declaring a cash dividend has what effect on total stockholders' equity?

A decrease in total stockholders' equity.

When a company provides services on account, which of the following accounts is debited?

Accounts Receivable.

Which of the following characteristics is typical of a privately held corporation versus a publicly held corporation?

All of the choices are typical characteristics of privately held corporations.

Accounts receivable are best described as

Assets of the company representing the amount owed by customers.

Which financial statement shows that a company's resources equal claims to those resources?

Balance sheet

Which of the following is considered cash for financial reporting purposes?

Balances in savings accounts.

A bond is a formal debt instrument that promises to pay:

Both a principal amount at the maturity date and periodic interest payments.

Using a perpetual inventory system, the purchase of inventory on account would be recorded as

Debit Inventory; credit Accounts Payable.

On January 18, a company provides services to a customer for $500 and offers the customer terms 2/10, n/30. Which of the following would be recorded when the customer remits payment on January 25?

Debit Sales Discount for $10.

Express Jet borrows $100 million on October 1 for one year at 6% interest. For what amount does Express Jet report interest payable for the year ended December 31 of the current year (three months later)?

$1.5 million.

A company issues 100,000 shares of $1 par value common stock for $17 per share. To record this transaction, the company would credit Common Stock for:

$100,000.

On March 17, Fox Lumber sells materials to Whitney Construction for $12,000, terms 2/10, n/30. Whitney pays for the materials on March 23. What amount would Fox record as revenue on March 17?

$12,000.

At the beginning of the year, Johnson Supply has inventory of $5,200. During the year, the company purchases an additional $20,000 of inventory. An inventory count at the end of the year reveals remaining inventory of $3,000. What amount will Bennett report for cost of goods sold?

$22,200

A company purchased new equipment for $31,000 with a two-year installment note requiring 5% interest. The required monthly payment is $1,360. After the first month's payment, what is the balance of the note?

$29,769.

If Executive Airways borrows $10 million on April 1, 20X1, for one year at 6% interest, how much interest expense does it record for the year ended December 31, 20X1?

$450,000

Airline Accessories obtains a $100,000, three year loan, at 6% interest, with monthly payments of $3,042. What amount would be recorded for interest expense for the first full month?

$500.

Which of the following expenditures should be capitalized?

An improvement to a tangible asset.

Which of the following is not a current liability?

An unused line of credit.

Operating cash flows include which of the following?

Cash paid for supplies.

A long-term asset is recorded at the:

Cost of the asset plus all costs necessary to the asset ready for use.

Suppose a company issues $500,000 of 4% bonds, due in 5 years, with interest payable semiannually. The bonds are issued at face amount. What would the company record at the time of issuance?

Debit Cash $500,000; credit Bonds Payable $500,000.

Travel Planners, Incorporated borrowed $5,000 from First State Bank and signed a promissory note. What entry should Travel Planners record?

Debit Cash, $5,000; Credit Notes Payable, $5,000.

A company owes employee salaries of $5,000 on December 31 for work completed in the current year, but the company doesn't plan to pay those salaries until the following year. What adjusting entry, if any, is needed on December 31?

Debit Salaries Expense for $5,000; Credit Salaries Payable for $5,000.

The revenue recognition principle states that companies typically record revenue:

In the period in which we provide goods and services to customers.

Under cash-basis accounting, companies typically report expenses:

In the same period in which cash is paid.

In which financial statement does a company report its expenses?

Income statement

Which of the following causes the accounting equation not to balance?

Increase assets; increase dividends.

Retained earnings

Increases stockholders' equity.

Financial accounting provides information primarily to:

Investors and creditors.

A company's capital structure refers to:

Its mixture of liabilities and stockholders' equity.

In the language of accounting, the term "debit" always means

Left-hand side.

The advantages of a corporation compared to a sole proprietorship or partnership include:

Limited liability.

Which of the following describes the information reported in the income statement?

Net income for the period is calculated by subtracting expenses from revenues.

Which of the following adjusts the company's balance of cash in a bank reconciliation?

Note received by the bank on behalf of the company.

Which of the following is an example of an accrued revenue?

Providing services to a customer without having yet collected the cash.

Which of the following is not reported as an intangible asset in the balance sheet?

Research and development.

Which of the following refers to the seller reducing the customer's balance owed because of some deficiency in the company's product or service?

Sales Allowance.

Which of the following statements is false regarding the amortization of intangible assets?

The service life of an intangible asset is always equal to its legal life.

A company reports the following in its balance sheet: Total assets of $800,000 and total liabilities of $700,000. Which of the following is true?

Total stockholders' equity equals $100,000.

Which of the following correctly describes a list of accounts and their balances, showing that total debits equal total credits?

Trial Balance

All transactions related to a particular item over a period of time are summarized in a(n):

account

If a company fails to accrue interest on notes payable, which of the following will occur?

Liabilities are understated.

Which of the following is not a primary source of long-term debt financing?

Accounts payable.

Which of the following represents a resource of the company?

Asset

On March 4, Tonkawa Law asks Green Lawn Services for basic lawn maintenance totaling $200. Green Lawn provides maintenance on March 8, and Tonkawa pays for the lawn maintenance on March 12. Under accrual-basis accounting, on which date should Tonkawa record an increase in accounts payable?

March 8 (date of lawn maintenance service).

The primary function(s) of financial accounting is (are) to:

Measure business activities of a company and communicate information about business activities to outside users.

In response to widespread fraudulent reporting in the late 1990's and early 2000's, Congress:

Passed the Sarbanes-Oxley Act.

Which of the following represents an external transaction?

Payment of utility bill.

The process of transferring debit and credit information from the general journal to the general ledger is known as:

Posting

Which of the following generally would not be considered good internal control of cash receipts?

Requiring the employee receiving the cash from the customer to also deposit the cash into the company's bank account. Correct

The balance in the Accumulated Depreciation account represents

The amount charged to depreciation expense since the acquisition of the plant asset.

Inventory is defined as:

items a company intends for sale to customers