Accounting 240 final exam
The following selected financial information relates to Denver Company's beginning inventory, inventory purchases, and sale of inventory for 2016. 01/01/2016 Beginning inventory 15 units @ $24 $ 360 05/31/2016 First purchase 20 units @ $25 500 09/26/2016 Second purchase 10 units @ $26 260 Total 45 units $ 1,120 11/04/2016 Sales 40 units @ $44 $ 1,760 What is the cost of goods sold using the LIFO cost flow method?
$1,000
In 2016, Chavez Company purchased land for $120,000 to use as a future site for its new office building. At the end of 2016, the land was worth $135,000. The company decided not to build the new office and sold the land for $132,000 cash in 2017. How does Chavez Company's sale of land affect its 2017 statement of cash flows?
$132,000 cash inflow from investing activities.
Warner Company received $48,000 cash in advance for services to be performed over the one-year period from September 1, 2015 through August 31, 2016. What amount of revenue will Warner Company report on its 2015 income statement assuming the work is performed evenly throughout the one-year contract period?
$16,000
Hughes Corporation has the following inventory-related information at the end of 2016: Item Quantity Unit Cost Unit Market A 60 $12 $10 B 30 $20 $18 C 45 $30 $28 D 20 $16 $19 If Hughes Corporation applies the lower-of-cost-or-market rule to each individual item, what is the amount of inventory that Hughes will show on its books after the adjustment, if any?
$2,720
Hughes Corporation has the following inventory-related information at the end of 2016: Item Quantity Unit Cost Unit Market A 60 $12 $10 B 30 $20 $18 C 45 $30 $28 D 20 $16 $19 If Hughes Corporation applies the lower-of-cost-or-market rule to the aggregate inventory, what is the amount of inventory that Hawk will show on its books after the adjustment, if any?
$2,780
On September 1, Scott Company established a petty cash fund with $300 cash. A physical count of the petty cash fund on September 30 disclosed $49 in currency and coins. The petty cash vouchers are sorted as follows: Employee meals $75.00 Postage 95.00 Office supplies 83.00 What is the amount of the petty cash fund replenishment on September 30?
$251
The following information is from the 2016 accounting records of Oregon Company: Sales revenue $625,000 Beginning inventory (1/1/2016) $254,000 Purchases $366,000 Historical gross margin ratio 45% What is Oregon Company's estimated gross margin in dollars?
$281,250
As of December 31, 2015, Juneau Company had total cash of $155,000, notes payable of $85,600, and common stock of $52,400. During 2016, Juneau earned $36,000 of cash revenue, paid $20,000 for cash expenses, and paid a $3,000 cash dividend to the stockholders. Assuming no change in notes payable and common stock, determine the amount of retained earnings as of December 31, 2016.
$30,000 Assets = Liabilities + Stockholders' Equity Cash = Notes Payable + Common Stock + Retained Earnings 155,000 = 85,600 + 52,400 + ? Beginning Retained Earnings = $155,000 - $85,600 - $52,400 = $17,000 Revenue - Expenses - Cash Dividends = $36,000 - 20,000 - 3,000 = $13,000 Increase in Retained Earnings Beginning Retained Earnings + 2016 Increase in Retained Earnings = $17,000 + 13,000 = $30,000 Proof: Liabilities + Stockholders' Equity = $85,600 + $52,400 + $30,000 = $168,000 Cash = Notes Payable + Common Stock + Retained Earnings 168,000 = 85,600 + 52,400 + 30,000
Mitchum Corporation sold merchandise on account with a list price of $36,000 and a cost of $20,000. Payment terms were 1/10, n/30. Mitchum shipped the goods FOB destination and paid $1,200 in freight costs. Prior to payment of the invoice, the customer returned merchandise with a list price of $3,600 and a $2,000 cost. The customer paid the amount due within the discount period. What is Mitchum Corporation's net sales amount as a result of these transactions?
$32,076
Yowell Company had the following transactions during March 2016: • Purchased merchandise inventory of $12,500 from Rochester Company with freight terms FOB destination. • Freight costs on the Rochester Company purchase were $400. • Purchased merchandise inventory of $21,500 from Trenton Company with freight terms FOB shipping point. • Freight costs on the Trenton Company purchase were $600. What is the total amount Yowell Company recorded to the Merchandise Inventory account as a result of these transactions?
$34,600 The total amount debited to the Merchandise Inventory account is $34,600 ($12,500 + $21,500 + $600).
On December 31, 2016, Hanover Corporation had the following account balances: Cash $ 24,000 Service Revenue 73,000 Advertising Expense 12,000 Accounts Receivable 20,000 Salaries Payable 2,000 Land 15,000 Retained Earnings, 1/1/2015 18,000 Salaries Expense 28,000 Common Stock 10,000 Dividends 4,000 What is Hanover's balance in Retained Earnings after the temporary accounts are closed at the end of its 2016 accounting period?
$47,000
Powell Company is preparing the closing entries at the end of its 2016 accounting period. Powell Company has normal balances in the following accounts: Service Revenue 50,000 Salaries Expense 12,000 Dividends 5,000 Retained Earnings, 1/1/2016 25,000 What is the balance in Retained Earnings after the closing general journal entries are made? (Hint: Use T-accounts to arrive at your answer)
$58,000
The following selected financial information relates to Jacobs Company's beginning inventory, inventory purchases, and sales of inventory for 2016: 01/01/2016 Beginning inventory 35 units @ $13 $ 455 04/24/2016 First purchase 75 units @ $12 900 10/16/2016 Second purchase 60 units @ $10 600 Total available 170 units $1,955 11/15/2016 Sales 120 units @ $25 $3,000 What is the ending inventory using the LIFO cost flow method?
$635
Grant Company had the following information related to its bank balance and its book balance at October 31, 2016. What is the company's true cash balance on this date? Unadjusted bank balance $8,000 Unadjusted book balance 7,445 Outstanding checks 1,500 Deposits in transit 920 Debit memo for bank service charge 35 Credit memo for interest earned 10
$7,420
The following selected financial information relates to Denver Company's beginning inventory, inventory purchases, and sale of inventory for 2016. 01/01/2016 Beginning inventory 15 units @ $24 $ 360 05/31/2016 First purchase 20 units @ $25 500 09/26/2016 Second purchase 10 units @ $26 260 Total 45 units $ 1,120 11/04/2016 Sales 40 units @ $44 $ 1,760 What is the cost of goods sold using the FIFO cost flow method?
$990
The following selected financial information relates to Denver Company's beginning inventory, inventory purchases, and sale of inventory for 2013. 01/01/2016 Beginning inventory 15 units @ $24 $ 360 05/31/2016 First purchase 20 units @ $25 500 09/26/2016 Second purchase 10 units @ $26 260 Total 45 units $ 1,120 11/04/2016 Sales 40 units @ $44 $ 1,760 What is the cost of goods sold using the weighted-average cost flow method?
$995.60
If Longwood Industries had 20,000 shares of $20 par value common stock outstanding and declared a 5-for-1 stock split, how many shares would then be outstanding and what would be their par value after the split?
100,000 shares outstanding at $4 par
Gleason Corporation has authorized 40,000 shares of $10 par value common stock. The following events occurred during the year. 1. Issued 16,000 shares of the common stock for $12 per share. 2. Purchased back 2,000 shares of the common stock for $14 per share. 3. Reissued 600 of the 2,000 shares (from event 2) at a price of $15 per share. How many shares of common stock will Gleason Corporation show as issued and outstanding after these events are recorded?
16,000 shares issued; 14,600 shares outstanding
The ending inventory for Brewer Company was erroneously written down causing an understatement of $9,800 at the end of 2016. Based on this, which of the following would be overstated?
2016 cost of goods sold, 2016 gross margin, and 2017 net income.
The year-end balance sheet for Omega Corp. is presented below: Omega Corp. Balance Sheet As of December 31, 2016 Assets $48,550 Liabilities $19,000 Stockholders' equity Common stock $17,000 Retained earnings 12,550 Total stockholders' equity 29,550 Total liabilities and stockholders' equity $48,550 Based on this information, what percentage of total assets was provided by investors?
35.02% Percentage of assets provided by investors = $17,000 ÷ $48,550 = 35.02%
Selected financial information for Baker Corporation is shown below: Sales revenue $350,000 Cost of goods sold 210,000 Gross margin 140,000 Inventory 28,000 What is the average number of days to sell inventory (average days in inventory ratio) for Baker Corporation? (Round your answer to two decimal places)
48.67
Use the following list to identify which situations refer to the inventory cost flow assumption known as LIFO: 1. Produces the highest amount of net income in an inflationary environment. 2. Produces the highest amount of assets in an inflationary environment. 3. Produces the lowest amount of net income in a deflationary environment. 4. Produces the same unit cost for assets and cost of goods sold in an inflationary environment. 5. Produces the lowest amount of net income in an inflationary environment. 6. Produces an asset value that was the same regardless of whether the environment was inflationary or deflationary. 7. Produces the lowest amount of assets in an inflationary environment. 8. Produces the highest amount of assets in a deflationary environment.
5, 7, 8
Bates Hardware purchased merchandise inventory for cash. Which of the following choices accurately reflects how this event would affect the company's financial statements? Assets = Liab. + Equity Rev. − Exp. = Net Inc. Cash Flow a. + − n/a n/a n/a n/a n/a - OA b. + − n/a n/a n/a n/a n/a n/a c. − n/a − n/a + − - OA d. − n/a − n/a + − n/a
A
Bishop Company established a petty cash fund with $250 cash. Which of the following choices accurately reflects how this event would affect the company's financial statements? Assets = Liab. + Equity Rev. − Exp. = Net Inc. Cash Flow a. + − n/a n/a n/a n/a n/a n/a b. + − n/a n/a n/a + − - OA c. + − n/a n/a n/a n/a n/a - OA d. − n/a − n/a + − - OA
A
The American Institute of Certified Public Accountants (AICPA) requires its members to comply with the AICPA Code of Professional Conduct. Which of the following is not covered by this Code of Professional Conduct?
A CPA will guarantee that financial statements are absolutely correct before issuing an audit opinion.
Outstanding checks.
A customer NSF check.
Which of the following statements about the forms of business organizations is incorrect? A disadvantage of the corporate form of business organization is double taxation. A major reason that businesses choose the corporate form of business structure over a partnership is unlimited liability. A partnership agreement defines the responsibilities of each partner and how income and losses will be divided. All of the statements are correct.
A major reason that businesses choose the corporate form of business structure over a partnership is unlimited liability.
On March 1, Monterrey Company purchased merchandise inventory on account with a list price of $20,000 and credit terms of 2/10, n/30. On August 4 (before the invoice was paid), Monterrey Company returned some of the inventory. The list price of the returned merchandise was $2,500. Which of the following is the correct general journal entry to record the payment of the invoice assuming that Monterrey Company pays the amount due within the discount period?
Accounts Payable 350 Merchandise Inventory 350 Accounts Payable 17,150 Cash 17,150
Lincoln Company accepted a check for $1,675 from a customer for a cash purchase of merchandise. The customer did not have sufficient funds to cover the check and the bank adjusted the company's account for the amount of the returned check. What entry is required to record this NSF check?
Accounts Receivable 1,675 Cash 1,675
Which of the following are elements that are typically present when fraud occurs? Pressure Rationalization Opportunity All of the above
All of the above
Suarez Company purchased land for $115,000 cash. Which of the following best describes this transaction type?
Asset exchange transaction
Custer Corporation paid $6,500 cash to rent office space for the six-month period beginning on August 1, 2016. Which of the following transaction types describes the December 31, 2016, adjusting entry to record Rent Expense?
Asset use transaction
Huang Company paid $25,000 cash for operating expenses such as salaries and rent during the current accounting period. Which of the following best describes this transaction type?
Asset use transaction
Hilliard Company experienced an accounting event that was recorded in the company's general journal as indicated below: Debit Credit Cash 43,000 Accounts Receivable 43,000 Which one of the following choices accurately reflects how this event would affect the company's financial statements?
Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash Flow + - n/a n/a n/a n/a n/a + OA
Buccaneer Corporation paid $6,000 in cash dividends to its owners. Which of the following answers in this horizontal financial statements model reflects how this payment of cash dividends would affect Buccaneer Corporation's financial statements?
Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash Flow Cash N. Pay + C. Stk. + Ret. Ear. (6,000) = n/a + n/a + (6,000) n/a - n/a = n/a (6,000) FA
Moore Company provided services to customers for $8,000 cash. Which of the following answers in this horizontal financial statements model reflects how this event would affect Moore Company's financial statements?
Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash Flow Cash N. Pay + C. Stk. + Ret. Ear. 8,000 = n/a + n/a + 8,000 8,000 - n/a = 8,000 8,000 OA
Which of the following choices represents the transaction to record the declaration of a $4,000 cash dividend?
Assets = Liab. + Shareholders' Equity Rev. - Exp. = Net Inc. Cash Flow Cash Com Stk + Pd in Ex + Ret Earn n/a 4,000 n/a n/a (4,000) n/a n/a n/a n/a
The accounting equation is defined as
Assets = Liabilities + Equity
Hammond Company borrowed $20,000 from Neptune Bank. How does this transaction affect the accounting equation?
Assets increase and liabilities increase.
Kincaid Company applies the lower-of-cost-or-market rule to each individual item in its ending inventory. The company determines that it must write down its inventory by $4,000. Which of the following answers reflects how this inventory write-down would affect Kincaid's financial statements? Assets = Liab. + Equity Rev. − Exp. = Net Inc. Cash Flow a. (4,000) = n/a + (4,000) n/a − 4,000 = (4,000) (4,000) OA b. (4,000) = n/a + (4,000) n/a − 4,000 = (4,000) n/a c. (4,000) = n/a + (4,000) n/a − n/a = n/a n/a d. (4,000) = n/a + 4,000 4,000 − n/a = 4,000 n/a
B
The following income statements were drawn from the annual reports of Baird and Apex Companies for 2016: (amounts in thousands) Baird Co. Apex Co. Net sales $32,600 $86,200 Cost of goods sold 17,930 64,650 Gross margin $14,670 $21,550 Less: Operating and selling and admin. expenses 13,040 18,960 Net income $1,630 $2,590 The balance sheet for Baird shows equity of $16,200 and the balance sheet for Apex shows equity of $20,400. If we know that one of the companies is a high-end retailer and the other is a discount store, which of the following statements most correctly characterizes the two companies?
Baird is more likely a "high-end" retailer because it is marking up the price of merchandise by a greater percentage than Apex.
Carver Company, Minton Company, and Cooper Company are all retail companies that sell the same products. These companies have the following selected financial information for 2016: Carver Co. Minton Co. Cooper Co. Net sales $200,000 $240,000 $375,000 Cost of goods sold $110,000 $120,000 $225,000 Net income $20,000 $12,000 $30,000 Which retail company is doing the best job of controlling expenses (i.e., has the highest return on sales)? Carver Company Minton Company Cooper Company Cannot determine from the information provided
Carver Company
Eller Company sold inventory that cost $22,500 for $48,000 cash. Which of the following is the correct journal entry to record this sale?
Cash 48,000 Sales Revenue 48,000 Cost of Goods Sold 22,500 Merchandise Inventory 22,500
Is the normal balance of the following accounts a debit or a credit?
Cash Service Revenue Rent Expense Unearned Revenue Debit Credit Debit Credit
Which of the following internal control procedures is least likely to be used in a restaurant?
Cash registers are balanced monthly.
Finke Company's employees are paid each Friday for hours worked the previous week. At the end of the accounting period, Finke Company accrues $3,200 for earned salaries that have not yet been paid. Which of the following best describes this accrual transaction type?
Claims exchange transaction
Which is not an example of a product cost?
Commissions paid on goods sold last month.
Which of the following equity accounts is found on a corporation's balance sheet, but not on the balance sheet of a sole proprietorship or a partnership?
Common stock.
Dayton Company maintains perpetual inventory records. Dayton determined through a physical count that it had $20,600 of merchandise inventory on hand at the end of the accounting period. The balance in the Merchandise Inventory account was $21,400. The impact of the adjusting entry on the financial statements is
Cost of goods sold increased $800.
Willard Company purchased $700 of supplies on account. A result of this transaction would be to
Credit (right side of T-account) Accounts Payable
The two primary groups of financial resource providers for a business (conversion agent) are
Creditors and investors
Gates Company replenished its petty cash fund with $325. Which of the following choices accurately reflects how this event would affect the company's financial statements? Assets = Liab. + Equity Rev. − Exp. = Net Inc. Cash Flow a. + − n/a n/a n/a + − n/a b. − n/a − n/a + − n/a c. + − n/a n/a n/a + − - OA d. − n/a − n/a + − - OA
D
Rupert Company provided $12,000 of services on account. Which of the following is the correct general journal entry to record this transaction?
Debit Credit Accounts Receivable 12,000 Service Revenue 12,000
Which of the following is the correct journal entry to record the issuance of 3,000 shares of 6% cumulative, $40 stated value, preferred stock at $44?
Debit Credit Cash 132,000 Preferred Stock, $40 Stated Value, 6% cumulative 120,000 Paid-in Capital in Excess of Stated Value—Preferred 12,000
On December 1, 2016, King Company collected $26,000 of cash in advance from a customer for services to be provided from January 1, 2017 through June 30, 2017. Which of the following is the correct general journal entry to record this transaction?
Debit Credit Cash 26,000 Unearned Service Revenue 26,000
Dominion Company's accountant transposed two numbers when recording a check for a cash purchase of merchandise inventory. The check was written for $12,070 but was recorded as $12,700. What entry is required to correct this recording error?
Debit Credit Cash 630 Merchandise Inventory 630
Hanover Company paid $3,600 cash in advance for a one-year insurance policy starting on October 1, 2016. Which of the following is the correct adjusting journal entry to record the portion of insurance used up through December 31, 2016?
Debit Credit Insurance Expense 900 Prepaid Insurance 900
On August 1, Argon Company purchased merchandise inventory on account with a list price of $50,000 and credit terms of 2/10, n/30. Which of the following is the correct journal entry to record the August 1 purchase?
Debit Credit Merchandise Inventory 50,000 Accounts Payable 50,000
Jarvis Company is preparing the closing entries at the end of the accounting period. Jarvis Company's trial balance has normal balances in the following revenue accounts: Service Revenue 50,000 Interest Revenue 2,800 Unearned Service Revenue 10,100 Which of the following represents the closing general journal entry for Jarvis Company's revenue accounts?
Debit Credit Service Revenue 50,000 Interest Revenue 2,800 Retained Earnings 52,800
Gleason Corporation has authorized 40,000 shares of $10 par value common stock. The following events occurred during the year. 1. Issued 16,000 shares of the common stock for $12 per share. 2. Purchased back 2,000 shares of the common stock for $14 per share. 3. Reissued 600 of the 2,000 shares (from event 2) at a price of $15 per share. Which of the following is the correct general journal entry to record the reissue of 600 shares of treasury stock? Gleason Corporation uses the cost method of accounting for treasury stock.
Debit Credit Cash 9,000 Treasury stock 8,400 Gain on sale of treasury stock 600
Clark Company issued a 5% stock dividend on its $10 par value common stock. At the time of the stock dividend, Clark Company had 5,000 shares of common stock issued and outstanding and the common stock had a market value of $15. Which of the following is the correct general journal entry necessary to record the stock dividend?
Debit Credit Retained Earnings 3,750 Common Stock, $10 par value 2,500 Paid-in capital Excess of par common 1,250
Gleason Corporation has authorized 40,000 shares of $10 par value common stock. The following events occurred during the year. 1. Issued 16,000 shares of the common stock for $12 per share. 2. Purchased back 2,000 shares of the common stock for $14 per share. 3. Reissued 600 of the 2,000 shares (from event 2) at a price of $15 per share. Which of the following is the correct journal entry to record the buyback of the 2,000 shares of common stock? Gleason Corporation uses the cost method of accounting for treasury stock.
Debit Credit Treasury stock 28,000 Cash 28,000
Gleason Corporation has authorized 40,000 shares of $10 par value common stock. The following events occurred during the year. 1. Issued 16,000 shares of the common stock for $12 per share. 2. Purchased back 2,000 shares of the common stock for $14 per share. 3. Reissued 600 of the 2,000 shares (from event 2) at a price of $15 per share. Which of the following is the correct journal entry to record the issuance of the 16,000 shares of common stock?
Debit Credit cash 192,000 Common Stock $10 par value 1600,000 Paid-in Capital in Excess of par value-common 32,000
The recording rules of double-entry accounting related to assets, liabilities, and stockholders' equity accounts can be summarized as
Debits increase asset accounts; credits increase liability and stockholders' equity accounts
Jason Bowman is a partner of a regional accounting firm. Mr. Bowman was hired by a client to audit the company's books. After extensive work, Mr. Bowman determined that he was unable to perform the appropriate audit procedures. What type of audit report should Mr. Bowman issue with respect to the work that he did accomplish?
Disclaimer of audit opinion
For financial reporting purposes, cash generally includes all of the following except
Employee receivables
Sturgis Company began its operations on March 1, 2016. The following information is from Sturgis Company's accounting records for 2016. 1. Acquired $40,000 from the issuance of common stock. 2. Provided $130,000 of services on account. 3. Purchased $3,200 of supplies on account. 4. Collected $112,000 from accounts receivable. 5. Paid $64,000 for salaries expense. 6. Adjusted the records to reflect the use of supplies. A physical count indicated that $700 of the supplies was still on hand on December 31, 2016. Record the transactions in general ledger accounts under an account equation and select the correct statement.
Ending cash balance is $88,000.
In 2016, Merritt Company purchased land for $60,000 to use as a future site for its new office building. At the end of 2016, the land was worth $67,500. The company decided not to build the new office and sold the land for $66,000 cash in 2017. How does Merritt Company's sale of the land affect its 2017 income statement?
Gain on the sale of land $6,000.
Which of the following best describes where you would find a chronological record of business transactions in the accounting records?
General journal
Accountants establish measurement and reporting rules that business people use to facilitate communication of financial information. The financial accounting measurement rules used in the United States are referred to as
Generally accepted accounting principles
Billings Company, Miller Company, and Gomez Company are all retail companies that sell the same products. These companies have the following selected financial information for 2016: Billings Co. Miller Co. Gomez Co. Net sales $200,000 $240,000 $375,000 Cost of goods sold $110,000 $120,000 $225,000 Net income $20,000 $19,200 $18,750 Which retail company is charging the lowest prices in relation to its cost of goods sold?
Gomez Company
Which of the following procedures is not usually associated with the protection of cash?
Have the same person approve, sign, and record checks.
Which of the following financial statements matches the expenses with revenues that occur when operating a business?
Income statement
During 2016, Albany Industries and Ithaca Company reported net incomes of $90,000 and $130,000, respectively. Both companies had 25,000 shares of common stock issued and outstanding. The market price per share of Albany stock was $47 and the market price for Ithaca stock was $52 per share. Based on this information, which of the following statements is correct?
Investors would likely feel that Albany has greater potential for growth.
The information reported in financial statements is organized into categories known as elements. Which of the following categories is not a financial statement element?
Land
How is the price-earnings (P/E) ratio calculated?
Market price per share divided by earnings per share.
Markham Company incurred $200 of freight costs on inventory sold and shipped to customers FOB destination. Which of the following is an effect on Markham Company's financial statements?
Net income decreased by $200.
Powell Company had following account balances for 2016: Debit Credit Sales Revenue $ 47,500 Cost of Goods Sold $ 26,000 Transportation-out 750 Selling Expenses 4,400 Interest Expense 900 What is Powell Company's operating income for 2016? $15,450 $21,500 $20,750 None of the above
None of the above Operating income = Sales Revenue − Cost of Goods Sold − Transportation-out − Selling Expenses ($47,500 − $26,000 − $750 − $4,400 = $16,350). Interest Expense is shown as a nonoperating item.
Which of the following items is subtracted from the unadjusted bank balance to determine the company's true cash balance?
Outstanding checks.
Pratt Corporation has the following shares of stock outstanding at the end of 2016: Preferred stock, 6% cumulative, $10 stated value, 10,000 shares Common stock, $10 par value, 50,000 shares Dividends were not paid to preferred stockholders in 2014 and 2015. If Pratt Corporation pays $60,000 in total dividends in 2016, how much will each class of stock receive?
Preferred Common $18,000 $42,000
Which of the following events is an asset exchange transaction?
Recorded the purchase of supplies for cash
Warner Company received $48,000 cash in advance for services to be performed over the one-year period from September 1, 2015 through August 31, 2016. Using a horizontal financial statements model, which of the following statements does not correctly reflect the effect of this transaction when Warner Company collects the cash?
Revenue is increased.
Closing is the process of transferring the temporary account balances to the Retained Earnings account at the end of the accounting period. Which of the following are temporary accounts?
Revenue, expense, and dividend accounts The temporary accounts include revenue, expense, and dividend accounts. At the beginning of the accounting period, the temporary accounts have zero balances. Asset, liability, and equity accounts are permanent accounts. Permanent account balances carry forward from one accounting period to the next.
Which of the following best distinguishes the rights of preferred stockholders from the rights of common stockholders?
Right to receive dividends before common stockholders.
Which of the following inventory cost flow methods would an automobile dealership most likely use for its new car sales?
Specific identification Specific identification matches the actual cost of the specific item sold. This method is frequently used for high-priced, low-turnover items such as automobiles.
On which of the following financial statements would you expect to find financing, operating, and investing activities?
Statement of cash flows
Which of the following is an incorrect statement when comparing the FIFO, LIFO, and weighted average inventory cost flow methods?
The Internal Revenue Service requires that companies using LIFO for income tax purposes must use FIFO for financial reporting purposes.
At the beginning of 2016, Stillwater Company had a $250 balance in its Supplies account. During the year the company paid $1,500 cash for additional supplies. The physical count of supplies on hand at the end of 2016 was $1,400. Which of the following statements related to Stillwater Company's 2016 transactions is incorrect?
The account Supplies represents a liability on the balance sheet.
The land that Birmingham Company purchased on April 15, 2016, for $120,000 cash had an appraised market value of $135,000 on December 31, 2016. How does this change in the market value of the land affect the accounting equation?
The accounting equation is not affected
Which of the following statements is an incorrect statement about the appropriation of retained earnings?
The appropriated amount is shown as a cash outflow from financing activities.
A company receives numerous checks in the mail every day. Which of the following would be a weak internal control procedure for this company?
The person opening the mail records the cash receipts to the customer account receivables.
Which of the following is an incorrect statement?
The same individual should record inventory transactions and count the inventory to reduce the likelihood of an inventory-related fraud occurrence.
On December 31, 2016, Everett Corporation had the following account balances in its general ledger: Cash $ 28,000 Service Revenue 146,000 Advertising Expense 24,000 Accounts Receivable 40,000 Salaries Payable 4,000 Land 30,000 Retained Earnings, 1/1/2016 16,000 Salaries Expense 56,000 Common Stock 20,000 Dividends 8,000 Prepare an adjusted trial balance for Everett Corporation at December 31, 2016, and determine the correct statement.
The total debits equal $186,000.
Radford Company was started on January 2, 2016. During its first year of operations, Radford Company provided $86,000 in consulting services to its clients on account and collected $69,000 of this amount. Use the horizontal financial statements model to record these transactions and determine which of the following statements is incorrect.
Total assets increased by $69,000.
Which of the following groups of accounts are increased with credits?
Unearned Revenue, Accounts Payable, and Common Stock
A CPA conducts an audit on a company's financial statements and finds that the statements are materially correct and are in compliance with GAAP without reservation or exception. What form of opinion will the CPA firm issue on these statements?
Unqualified opinion
Which of the following is an incorrect statement related to internal controls?
Which of the following is an incorrect statement related to internal controls?
