Accounting CFA

On October 1 of Year 1 Zeta Company collected $1,200 cash for services to be provided for one year beginning immediately. The company's fiscal closing date is December 31. Based on this information, the amount of revenue appearing on the Year 1 income statement would be

$300

At the end of the accounting period Anderson Company had $4,500 in accounts receivable and $500 in its allowance for doubtful accounts account. Based on this information the net realizable value of accounts receivable is

$4,000

Keisha Dress Shops experienced the following events during its third accounting period. (1) Sold merchandise that cost $92,000 for $140,000 cash. (2) Paid $30,000 of operating expenses. (3) Paid a $4,000 cash dividend. Based on this information, the amount of the gross margin is

$48,000

On August 1 of Year 1 Presco Enterprises paid $1,200 cash for an insurance policy that would provide protection for a one year term. The company's fiscal closing date is December 31. Based on this information, the amount of insurance expense appearing on the Year 1 income statement would be

$500

Knoll Company started Year 2 with a $500 balance in its Cash account, a $500 balance in its Supplies account and a $1,000 balance in its common stock account. During Year 2 the company experienced the following events. (1) Paid $400 cash to purchase supplies (2) Physical count revealed $100 of supplies on hand at the end of Year 2 Based on this information the amount of supplies expense reported on the Year 2 income statement is

$800

Escrow Company's multistep income statement shows cost of goods sold of $60,000, a gross margin of $42,000, operating income of $12,000 and a $20,000 loss on the sale of land. Based on this information, the net income or (net loss) amounted to

($8,000)

Which of the following shows how paying cash to purchase supplies will affect a company's financial statements?

(chart) nothing changes (NA) (-OA)

On November 1 of Year 1 Falloch, Inc. paid $2,400 cash for a contract allowing the company to use office space for one year. The company's fiscal closing date is December 31. Based on this information, the amount of cash flow from operating activities appearing on the Year 1 statement of cash flows would be

-$2,400

The following information was drawn from the annual reports of two companies. Company A Company B Sales revenue $1,000 $2,000 Cost of Goods Sold (600) (1,100) Gross Margin 400 900 Operating Expenses (220) (700) Operating Income 180 200 Gain on the sale of equipment 150 0 Net Income $ 330 $ 200 Based on this information, Company B's return on sales is

10%

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. The truck was expected to have a four year useful life and an $8,000 salvage value. If Marino uses the straight-line method, the amount of depreciation expense recognized on the Year 2 income statement is

10,000

Walter Company's multistep income statement shows cost of goods sold of $60,000, a gross margin of $42,000, operating income of $12,000 and a $20,000 loss on the sale of land. Based on this information the sales revenue amounted to

102,000

During Year 2, the company experienced the following accounting events. Paid of $500 of its note payable. Earned $700 of cash revenue. Paid $400 of cash expenses. Paid a $100 cash dividend. Based on this information alone, what percent of the company's assets at the end of Year 2 were provided by creditors?

20%

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. The truck was expected to have a four year useful life and an $8,000 salvage value. If Marino uses the straight-line method, the amount of accumulated depreciation shown on the Year 2 balance sheet is

20,000

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. The truck was expected to have a four year useful life and an $8,000 salvage value. If Marino uses the straight-line method, the amount of book value shown on the Year 2 balance sheet is

28,000

The following information was drawn from the annual reports of two companies. Company A Company B Sales revenue $1,000 $2,000 Cost of Goods Sold (600) (1,100) Gross Margin 400 900 Operating Expenses (220) (700) Operating Income 180 200 Gain on the sale of equipment 150 0 Net Income $330 $200 Based on this information, Company A's gross margin percentage is

40%

Smokey Enterprises began operations by receiving $100,000 cash from its sole owner Jessica Jones. During its first year of operations, the business earned $20,000 in cash from operations and paid $15,000 in cash expenses during the year. During its first year of operations, Smokey Enterprises would report net income of

5,000

The accounting records of Coastal Company contained the following account balances. Cash $ 500 Land $ 800 Notes Payable $ 200 Common Stock $ 400 The records also contained an account titled Retained Earnings. Based on this information the balance of the retained earnings account must be

700

Which of the following is a true statement?

A cash revenue is an economic benefit that will cause assets and retained earnings to increase. A cash expense is an economic sacrifice that will cause assets and retained earnings to decrease. A cash dividend is a transfer of assets from a business to its owners that will cause the assets and retained earnings of the business to decrease.

Which of the following shows the effects of purchasing inventory on account?

Asserts and Liabilities increase, nothing else is effected

Which of the following is an accurate depiction of the accounting equation?

Assets = Liabilities + Common Stock + Retained Earnings

Juarez Company acquired $1,200 from the issue of common stock. Which of the following shows how this event will affect the company's accounting equation? The letters "NA" indicate that the component of the equation is not affected.

Assets and Common stock increase 1200

Which of the following shows how the event "collected cash for services to be rendered in the future" affects a company's financial statements?

Assets and liabilities increase, and its a +OA

Ocean Breeze Co. paid $500 cash for expenses related to advertising for the period. Which of the following shows how this event will affect the company's accounting equation? The letters "NA" indicate that the component of the equation is not affected.

Assets and retained earning decrease 500

Fen Company paid a $300 cash dividend. Which of the following shows how this event will affect the company's accounting equation? The letters "NA" indicate that the component of the equation is not affected.

Assets and retained earnings decrease 300

Edwards Shoe Store sold shoes that cost the company $5,700 for $8,200. Which of the following shows how the recognition of the cost of goods sold will affect the Company's financial statement? (Ignore the effects of the associated revenue recognition.)

Assets, Equity and net income decrease expenses increase statement of cash flow not effected

On December 31, Year 1, Kardashian Company recorded an adjusting entry to recognize $5,470 of uncollectible accounts expense. Which of the following shows how this entry will affect Kardashian's financial statements?

Assets, equity and net income- (5,470) Liabilities, Revenue and Statement of cash flow don't change

The following accounting equation represents the financial position of Qualtro Company. Assets = Liabilities + Stockholders' Equity Cash+Land=Notes Payable+Common Stock+ Retained Earnings 400 + 2,200 = 800 + 1,200 + 600 Based on this equation, Qualtro

Can pay 300 cash dividend

Public accountants perform which of the following functions to ensure that financial information provided by a Company to investors is in accordance with G.A.A.P.?

Conduct an audit

Which of the following is not a tangible asset?

Copyright (tangible assets are building, land, gold)

Certain transactions entered into the accounting equation will cause the equation not to balance. This statement is

FALSE

Information in temporary accounts is transferred to the common stock account at the end of an accounting period. This statement is

FALSE

McDonald's will recognize a gain if it generates an amount of revenue that is higher than its operating expenses. This statement is

FALSE

Most companies expect to collect the full balance of all of their accounts receivable. This statement is

FALSE

Product costs are expensed when they are incurred. This statement is

FALSE

Resource owners want to provide resources to businesses with high profit potential because those businesses will pay higher taxes. This statement is

FALSE

Transactions including the phrase "on account" will only impact expense and liability accounts. This statement is

FALSE

Which of the following accurately describes the characteristics of managerial and financial accounting?

FALSE

Generally Accepted Accounting Principles (GAAP) are designed to provide guidance for

Financial Accounting

Which of the following types of businesses require financial information to operate effectively?

For Profit businesses, Government entities, non-profit businesses

When a merchandising company pays cash to purchase inventory

NONE of the AbOVE the amount of total assets increases. the amount of expenses increases. the amount of total assets decreases.

Which of following is the best measure of performance for an accounting period?

Net income

The land that Martin Co. paid $75,000 to purchase in the prior year had an appraised market value of $100,000 at the end of the current reporting period. Which of the following shows how the change in market value will affect the company's accounting equation? The letters "NA" indicate that the component of the equation is not affected.

Nothing is effected

Which of the following is an intangible asset?

Patent Copyright Trademark ALL ARE INTANGIBLE ASSETS

Assume a company has Year 1 beginning common stock of $10,000 and Year 2 ending stockholders' equity of $150,000. Which of the following is true in regards to this scenario?

Revenues have exceeded expenses over the last two accounting cycles

On May 1 of Year 1 Matthew Company collected $2,400 cash for services to be provided for one year beginning immediately. The company's fiscal closing date is December 31. Based on this information, the amount of service revenue and the cash flow from operating activities shown on the Year 1 financial statements would be

Service Revenue- 1,600 Cash flow- 2,400

A company using accrual accounting may report revenue on the income statement even if it does not collect cash. This statement is

TRUE

A cost may be recorded as an expense or as an asset purchase. This statements is

TRUE

Accounting provides a service to society by gathering and reporting information about a company's profit potential. This statement is

TRUE

Businesses earn profits by converting financial, physical, and labor resources into goods and services that satisfy consumer demands. This statement is

TRUE

Common size statements are presented as percentages to promote comparisons between different size companies. This statement is

TRUE

How accounting transactions are recorded will vary depending on the entity perspective taken. This statement is

TRUE

Land is different from other tangible assets in that its utility is not diminished by its use. This statement is

TRUE

Owners of the business who contribute money to the business take more risk than creditors who loan money to the business. This statement is

TRUE

The balance in the allowance for doubtful accounts provides an estimate of the amount of accounts receivable that is expected to be uncollectible. This statement is

TRUE

The ending balances for an accounting period become the beginning balances of the subsequent accounting period. This statement is

TRUE

The net realizable value of accounts receivable represents an estimate of the amount of the accounts receivable that a company realistically expects to collect. This statement is

TRUE

The process of transferring information out of the temporary accounts at the end of an accounting period is called closing. This statement is

TRUE

The three primary types of reporting entities are consumers, resource owners, and businesses.

TRUE

Guadalupe, Inc. provided $5,000 of services in Year 1 but did not collect cash from its customers until Year 2. Select the correct answer from the following options assuming Guadalupe used accrual accounting.

The Company will recognize $5,000 of revenue in Year 1 and $5,000 of cash flow from operations in Year 2.

Watt Company was established in January, Year 1. During Year 1 the company experienced the following events. Collected $6,000 cash from the issue of common stock. Borrowed $3,000 cash from the state bank. Earned $4,000 of cash revenue. Paid $2,000 cash expenses. The company was liquidated at the end of Year 1. Based on this information

The stockholder would receive $8,000

On June 1 of Year 1 Zoe Company collected $1,800 cash for medical services to be provided for one year beginning immediately. The company's fiscal closing date is December 31. Based on this information the amount of unearned revenue and service revenue shown on the Year 1 financial statements would be

Unearned Revenue- 750 Service Revenue-1,050

If a Company performs and completes all services in year 1, but does not receive cash for the services until year 2, in which year should the Company record revenue?

Year 1

GreyCo and Sons earns $6,900 of revenue on account in Year 1. Cash collections of receivables amount to $6,300 in Year 1 with the remainder being collected in Year 2. Based on this information alone the company's financial statements would show

a balance of $600 in accounts receivable at the beginning Year 2.

AmRon Company sold land that had cost $25,000 for $26,500. Based on this information, the company's year-end financial statements would show

a cash inflow from investing activities of $26,500 on the statement of cash flows.

Which of the following is an accurate definition of the term asset?

a resource that will be used to produce revenue

Capitalizing the cash cost of a piece of equipment is

an asset exchange event

Paying cash to purchase inventory is

an asset exchange transaction

Simpson Company paid cash to purchase land. This event is

an asset exchange transaction

Sims Company earned cash revenue by providing services to its customers. This event is

an asset source transaction

Sims Company received cash from the issue of a note payable to a bank. This event is

an asset source transaction

Sims Company received cash from the issue of common stock. This event is

an asset source transaction

Barnett Company paid a cash dividend. This event is

an asset use transaction

Which of the following best describes an accrued expense?

an expense that is recognized prior to being paid

Which of the following is not a source of assets?

creditors, investors and operations are all example of source assets

On December 31, Year 1 Adam Company incurred $3,000 of accrued salary expense. The Year 2 recognition of the cash payment for these expenses

decreased the amount of liabilities shown on year 2 balance sheet

Lawyers Inc. accepted a $12,000 retainer for which the company agreed to provide services in the future. Recognizing this event would

defer the recognition of revenue, caused the companies assets to increase, causes the companies liabilites to increase (ALL OF THE ABOVE)

Which term describes a distribution of the Company's assets back to the owners of the business?

dividend

Accrued revenue

exists when a company receives cash after recognizing the associated revenue.

Deferred revenue

exists when a company receives cash before recognizing the associated revenue.

Liabilities

have priority in business liquidations

When a company purchases supplies on account

liabilities increase

If total assets increase, then

liabilities, common stock or retained earning must increase

The gross margin appears on a

multistep income statement

Unearned Revenue

occurs when a Company receives a benefit from a customer but have not yet earned that benefit.

Maria Company began Year 2 with $85,000 in its Land account. During Year 2 the company made two separate purchases of land. The first purchase of land cost $52,000. The second purchase of land cost $94,000. Based on this information the company's accounting records will have

one land account. two land accounts. three land accounts.

Bookmyer Company experienced a business event that affected its financial statements as indicated below. Which of the following events could have caused these effects?

paid cash to purchase supplies

Which of the following is an asset source event?

received cash from the issue of stock, borrowed cash from creditors, earned cash revenue

When a merchandising company sells inventory it will

recognize revenue and expenses

Paul Savage purchased a restaurant named Burger Haven from Larry Jones. The purchase would cause the number of reporting entities to

remain constant

Revenue

represents all the benefits earned during an accounting period.

When a company earns revenue on account

the asset account, accounts receivable, increases. A revenue account increases, liabilities are not affected

If a company recognizes accrued salary expense

the employees have completed work bot have NOT been paid

When a company incurs accrued expenses

the liability account, accounts payable, increases. stockholders' equity decreases. assets are not affected.

Alpha Company's December 31, Year 1 balance sheet showed $1,700 cash, $1,000 common stock, and $700 retained earnings. The company experienced the following event during Year 2. (1) On March 1, paid $1,200 to purchase insurance coverage for one year beginning immediately. Based on this information alone,

the year 2 balance sheet would show $200 of prepaid insurance

Ellen Elder and her brother, Buster started Elder Company when they each invested $600 in the company. After the investments there will be?

three reporting entities

John Hamilton borrowed $500,000 from Stone Creek Bank to open a new restaurant called Sauce-It-Up. John transferred $450,000 of the cash he borrowed to the restaurant on first day of the year. This statement includes how many reporting entities?

three reporting entities

On August 1 of Year 1 Accounting Associates collected $1,200 cash for consulting services to be provided for one year beginning immediately. The company's fiscal closing date is December 31. Based on this information, the amount of unearned revenue appearing on the Year 2 balance sheet would be

zero