Accounting

The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 1: Cash$ 4,000 Accounts receivable$ 3,400 Dividends2,000 Common stock3,900 Land3,200 Revenue3,200 Accounts payable1,800 Expense2,200 What is net income that will be shown on Carolina's Year 1 income statement?

$1,000

West Company borrowed $50,000 on September 1, Year 1 from the Valley Bank. West agreed to pay interest annually at the rate of 6% per year. The note issued by West carried an 18-month term. Based on this information the amount of interest expense appearing on West's Year 1 income statement would be:

$1,000.

Harding Corporation acquired real estate that contained land, building and equipment. The property cost Harding $2,280,000. Harding paid $665,000 and issued a note payable for the remainder of the cost. An appraisal of the property reported the following values: Land, $791,000; Building, $2,002,000 and Equipment, $782,000. What value will be recorded for the building?

$1,276,800

Jason Company paid $6,600 for one year's rent in advance beginning on October 1, Year 1. Jason's Year 1 income statement would report rent expense, and its statement of cash flows would report cash outflow for rent, respectively, of

$1,650; $6,600

Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1) issued stock for $64,000 2) borrowed $37,000 from its bank 3) provided consulting services for $63,000 cash 4) paid back $27,000 of the bank loan 5) paid rent expense for $15,000 6) purchased equipment for $24,000 cash 7) paid $4,200 dividends to stockholders 8) paid employees' salaries of $33,000 What is Yowell's notes payable balance at the end of Year 1?

$10,000

At March 31, Cummins Company had a balance in its cash account of $10,300. At the end of March, the company determined that it had outstanding checks of $1,080, deposits in transit of $680, a bank service charge of $35, and an NSF check from a customer for $220. The true cash balance at March 31 is:

$10,045

Assume the perpetual inventory method is used. The company purchased $13,300 of merchandise on account under terms 2/10, n/30. The company returned $2,800 of merchandise to the supplier before payment was made. The liability was paid within the discount period. All of the merchandise purchased was sold for $20,600 cash. What is the net cash flow from operating activities as a result of the four transactions?

$10,310.

The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 1: Cash$ 4,000 Accounts receivable$ 3,400 Dividends2,000 Common stock3,900 Land3,200 Revenue3,200 Accounts payable1,800 Expense2,200 What is the amount of total assets on Carolina's December 31, Year 1 balance sheet?

$10,600

On January 1, Year 1, Friedman Company purchased a truck that cost $50,000. The truck had an expected useful life of 100,000 miles over 8 years and a $9,000 salvage value. During Year 2, Friedman drove the truck 26,000 miles. The company uses the units-of-production method. The amount of depreciation expense recognized in Year 2 is: (Do not round intermediate calculations.)

$10,660.

Owen Company's unadjusted book balance at June 30 is $11,400. The company's bank statement reveals bank service charges of $80. Two credit memos are included in the bank statement: one for $1,170, which represents a collection that the bank made for Owen, and one for $120, which represents the amount of interest that Owen had earned on its interest-bearing account in June. Based on this information, Owen's true cash balance is:

$12,610.

The balance sheet of the Algonquin Company reported assets of $50,000, liabilities of $22,000 and common stock of $15,000. Based on this information only, what is the amount of retained earnings?

$13,000.

Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1) issued stock for $74,000 2) borrowed $42,000 from its bank 3) provided consulting services for $73,000 cash 4) paid back $32,000 of the bank loan 5) paid rent expense for $17,500 6) purchased equipment for $29,000 cash 7) paid $4,700 dividends to stockholders 8) paid employees' salaries of $38,000 What is Yowell's net income for Year 1?

$17,500

On January 1, Year 1, Friedman Company purchased a truck that cost $33,000. The truck had an expected useful life of 8 years and a $7,000 salvage value. The company uses the double-declining balance method. The book value of the truck at the end of Year 1 is: (Do not round intermediate calculations.)

$17,750. $26,500. $19,500. $24,750.

Hancock Medical Supply Company, which had no beginning balance in its Accounts Receivable and Allowance for Doubtful Accounts, recognized $90,000 of service revenue on account during Year 1. During Year 1, Hancock collected $71,000 of cash from accounts receivable. The company estimates that it will be unable to collect 1% of revenue on account. The amount of net realizable value of receivables on the December 31, Year 1 balance sheet would be:

$18,100.

Sheldon Company began Year 1 with $1,700 in its supplies account. During the year, the company purchased $5,000 of supplies on account. The company paid $2,600 on accounts payable by year end. At the end of Year 1, Sheldon counted $2,900 of supplies on hand. Sheldon's financial statements for Year 1 would show:

$2,900 of supplies; $3,800 of supplies expense

Prior to closing the accounts, Syracuse Company's accounting records showed the following balances: Retained earnings$ 16,800 Service revenue21,750 Interest revenue1,800 Salaries expense12,300 Operating expense3,450 Interest expense900 Dividends2,700 After closing the accounts, Syracuse's retained earnings balance would be

$21,000

The Hoover Company acquired the Burgess Company for $1,200,000 cash. The fair value of Burgess's assets was $1,040,000, and the company had liabilities of $60,000. How much goodwill will be recorded in connection with the acquisition?

$220,000

On January 1, Year 2, Ballard Company spent $16,000 on an asset to improve its quality. The asset had been purchased on January 1, Year 1, for $46,000. The asset had a $10,000 salvage value and a 6-year life. Ballard uses straight-line depreciation. What would be the book value of the asset on January 1, Year 5?

$28,400.

The April 30 bank statement for Trimble Corporation shows an ending balance of $36,967. The unadjusted cash account balance was $30,750. The accountant for Trimble gathered the following information: There was a deposit in transit for $4,736. The bank statement reports a service charge of $99. A credit memo included in the bank statement shows interest earned of $415. Outstanding checks totaled $12,207. The bank statement included a $1,570 NSF check deposited in April. What is the true cash balance as of April 30?

$29,496

Warren Enterprises had the following events during Year 1: The business issued $29,000 of common stock to its stockholders. The business purchased land for $21,000 cash. Services were provided to customers for $25,000 cash. Services were provided to customers for $14,000 on account. The company borrowed $25,000 from the bank. Operating expenses of $21,000 were incurred and paid in cash. Salary expense of $1,700 was accrued. A dividend of $13,000 was paid to the stockholders of Warren Enterprises. Assuming the company began operations during Year 1, What is the amount of retained earnings as of December 31, Year 1?

$3,300

Revenue on account amounted to $8,000. Cash collections of accounts receivable amounted to $5,300. Expenses for the period were $4,100. The company paid dividends of $1,450. What was the amount of net income for the period?

$3,900

Rosewood Company made a loan of $7,400 to one of the company's employees on April 1, Year 1. The one-year note carried a 6% rate of interest. The amount of interest revenue that Rosewood would report during the years ending December 31, Year 1 and Year 2, respectively, would be:

$333 and $111.

The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 1: Cash$ 1,600 Accounts receivable$ 1,000 Dividends800 Common stock1,275 Land1,100 Revenue1,100 Accounts payable600 Expense700 What is net income that will be shown on Carolina's Year 1 income statement?

$400

The Miller Company recognized $131,000 of service revenue earned on account during Year 2. There was no beginning balance in the accounts receivable and allowance accounts. During Year 2, Miller collected $86,000 of cash from accounts receivable. The company estimates that it will be unable to collect 3% of its sales on account. The net realizable value of Miller's receivables at the end of Year 2 was:

$41,070.

On April 1, Year 1, Fossil Energy Company purchased an oil-producing well at a cash cost of $8,370,000. It is estimated that the oil well contains 720,000 barrels of oil, of which only 620,000 can be profitably extracted. By December 31, Year 1, 31,000 barrels of oil were produced and sold. The amount of depletion for Year 1 on this well would be: (Do not round intermediate calculations.)

$418,500.

Vargas Company uses the perpetual inventory method. Vargas purchased 2,100 units of inventory that cost $22.00 each. At a later date the company purchased an additional 2,500 units of inventory that cost $23.00 each. Vargas sold 2,200 units of inventory for $26.00. If Vargas uses a FIFO cost flow method, the amount of cost of goods sold appearing on the income statement will be:

$48,500.

Allegheny Company ended Year 1 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $50,000 and $2,100, respectively. During Year 2, Allegheny wrote off $3,600 of Uncollectible Accounts. After aging its receivables, Allegheny estimates that the ending Allowance for Doubtful Accounts balance should be $3,600. What will Allegheny report as Uncollectible Accounts Expense on its Year 2 income statement?

$5,100

Nelson Company experienced the following transactions during Year 1, its first year in operation. Issued $12,000 of common stock to stockholders Provided $4,600 of services on account Paid $3,200 cash for operating expenses Collected $3,800 of cash from accounts receivable Paid a $200 cash dividend to stockholders What is the of net cash flow from operating activities shown on the Year 1 statement of cash flows?

$600

Anton Company uses the perpetual inventory method. Anton purchased 960 units of inventory that cost $5 each. At a later date the company purchased an additional 1,020 units of inventory that cost $7 each. If Anton uses the FIFO cost flow method and sells 1,400 units of inventory, the amount of cost of goods sold will be:

$7,880.

Prior to closing the accounts, Syracuse Company's accounting records showed the following balances: Retained earnings$ 8,450 Service revenue9,150 Interest revenue1,550 Salaries expense6,000 Operating expense2,100 Interest expense1,250 Dividends1,850 After closing the accounts, Syracuse's retained earnings balance would be

$7,950.

Assume the perpetual inventory method is used. 1) The company purchased $12,100 of merchandise on account under terms 3/10, n/30. 2) The company returned $1,600 of merchandise to the supplier before payment was made. 3) The liability was paid within the discount period. 4) All of the merchandise purchased was sold for $18,200 cash. The amount of gross margin from the four transactions is:

$8,015.

The following account balances were drawn from the financial statements of Grayson Company: Cash$ 4,800 Accounts payable$ 1,450 Accounts receivable$ 1,900 Common stock? Land$ 8,400 Retained earnings, January 1$ 3,100 Revenue$ 9,900 Expenses$ 7,450 Based on the above information, what is the balance of Common Stock for Grayson Company?

$8,100

On September 30, the bank statement of Fine Company showed a balance of $11,300. The following information was revealed by comparing the bank statement to the cash balance in Fine's accounting records: Deposits in transit amounted to $4,650 Outstanding checks amounted to $8,500 A $700 check was incorrectly drawn on Fine's account NSF checks returned by the bank were $1,100 Bank service charge was $39 Credit memo for $150 for the collection of one of the company's account receivable Based on the above information, the true cash balance was:

$8,150.

On January 1, Year 1, Missouri Company purchased a truck that cost $58,000. The truck had an expected useful life of 10 years and a $5,000 salvage value. The amount of depreciation expense recognized in Year 2 assuming that Missouri uses the double declining-balance method is:

$9,280.

Anchor Company purchased a manufacturing machine with a list price of $88,000 and received a 2% cash discount on the purchase. The machine was delivered under terms Free On Board shipping point, and freight costs amounted to $2,800. Anchor paid $3,900 to have the machine installed and tested. Insurance costs to protect the asset from fire and theft amounted to $5,000 for the first year of operations. Based on this information, the amount of cost recorded in the asset account would be:

$92,940.

What do the credit terms, 2/15, n/30, mean?

A 2% discount can be deducted if the invoice is paid before the 15th day following the date of the sale.

Which of the following would most likely not be expensed using the straight-line method?

A timber stand

Which of the following is considered a period cost?

Advertising expense for the current month.

Which of the following terms is used to identify the expense recognition for intangible assets?

Amortization

For which of the following bank reconciliation adjustments would an adjusting entry not be necessary?

An error in which the bank charged the company $83 for a check that had been written by another account holder.

Assume the perpetual inventory method is used. The company purchased $12,500 of merchandise on account under terms 3/10, n/30. The company returned $2,000 of merchandise to the supplier before payment was made. The liability was paid within the discount period. All of the merchandise purchased was sold for $19,000 cash. What effect will the return of merchandise to the supplier have on the accounting equation?

Assets and stockholders' equity are decreased by $2,000. Assets and liabilities are decreased by $1,940. Assets and liabilities are decreased by $2,000. None. It is an asset exchange transaction.

Liabilities are shown on the:

Balance sheet

Which of the following financial statements provides information about a company as of a specific point in time?

Balance sheet

Which of the following businesses is most likely to use a specific identification cost flow method?

Car dealership

The transaction, "provided services for cash," affects which two accounts?

Cash and Revenue

Which of the following items appears in the investing activities section of the statement of cash flows?

Cash outflow for the purchase of land.

Which of the following items is an example of revenue?

Cash received from customers at the time services were provided

Which resource providers lend financial resources to a business with the expectation of repayment with interest?

Creditors

Which of the following is not a common internal control activity (or procedure)?

Customer service comment cards

Duluth Company collected a $6,000 cash advance from a customer on November 1, Year 1 for work to be performed over a six-month period beginning on that date. If the year-end adjustment is properly recorded, what will be the effect of the adjusting entry on Duluth's Year 1 financial statements?

Decrease liabilities and increase revenues

Which of the following terms is used to identify the process of expense recognition for property, plant and equipment?

Depreciation

Which of the following is considered an accelerated depreciation method?

Double-declining-balance

When the cost of purchasing inventory is declining, which inventory cost flow method will produce the highest amount of cost of goods sold?

FIFO

The term "FOB shipping point" indicates that the seller is responsible for transportation costs. T/F

False

Which of the following groups has the primary responsibility for establishing generally accepted accounting principles for business entities in the United States?

Financial Accounting Standards Board

Which type of accounting information is intended to satisfy the needs of external users of accounting information?

Financial accounting

In which section of a statement of cash flows would the payment of cash dividends be reported?

Financing activities

Financial accounting standards are known collectively as GAAP. What does that acronym stand for?

Generally Accepted Accounting Principles

Which of the following statements is correct regarding accounting treatment of goodwill?

Goodwill is recorded as an asset and is not written off as an expense unless its fair value is less than its book value.

The matching concept most significantly influences which financial statement?

Income statement

Which financial statement(s) is (are) affected when depreciation expense is recognized?

Income statement Balance sheet Statement of cash flows Income statement and balance sheet Income statement, balance sheet, and statement of cash flows

Abbott Company purchased $6,700 of merchandise inventory on account. Abbott uses the perpetual inventory method. How does this transaction affect the financial statements?

Increase inventory and increase accounts payable.

Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1) issued stock for $58,000 2) borrowed $34,000 from its bank 3) provided consulting services for $57,000 cash 4) paid back $24,000 of the bank loan 5) paid rent expense for $13,500 6) purchased equipment for $21,000 cash 7) paid $3,900 dividends to stockholders 8) paid employees' salaries of $30,000 What is Yowell's net cash flow from operating activities?

Inflow of $13,500

Which of the following statements accurately describes a fidelity bond?

Insurance that the company buys to protect itself from loss due to employee dishonesty

Which of the following terms is applied to long-term assets that have no physical substance and provide rights, privileges and special opportunities to businesses?

Intangible assets

Policies and procedures designed to reduce the opportunities for fraud are often called:

Internal controls.

Which inventory costing method will produce an amount for cost of goods sold that is closest to current market value?

LIFO

Which of the following would be classified as a tangible asset?

Land

Packard Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1) Acquired $1,550 cash from the issue of common stock. 2) Borrowed $1,020 from a bank. 3) Earned $1,200 of revenues cash. 4) Paid expenses of $370. 5) Paid a $170 dividend. During Year 2, Packard engaged in the following transactions. (Assume all transactions are cash transactions.) 1) Issued an additional $925 of common stock. 2) Repaid $640 of its debt to the bank. 3) Earned revenues of $1,350 cash. 4) Incurred expenses of $600. 5) Paid dividends of $220. What is the amount of Packard Company's net cash flow from financing activities for Year 2?

Learn Net inflow of $65. Net outflow of $640. Net inflow of $705. Net outflow of $860.

Which of the following would be considered as primarily a merchandising business?

Martin's Supermarket

An audit is useful to financial statement users because it:

Provides reasonable assurance that the financial statements do not have material misstatements.

Which of the following correctly states the proper order of the accounting cycle?

Record transactions, adjust accounts, prepare statements, close temporary accounts

Which of the following would not be considered as primarily a merchandising business?

Regal Cinemas

Which of the following is not a component of the fraud triangle?

Reliance

Gomez Company collected $9,000 on September 1, Year 1 from a customer for services to be provided over a one-year period beginning on that date. How much revenue would Gomez Company report related to this contract on its income statement for the year ended December 31, Year 1? How much would it report as cash flows from operating activities for Year 1?

Revenue of $3,000; Cash flow from operating activities of $9,000

Which internal control procedure addresses the idea that the likelihood of employee fraud or theft is reduced if collusion is required to accomplish it?

Separation of duties

Which of the following accounts would not appear on a balance sheet?

Service Revenue.

Which method of depreciation is used by most U.S. companies for financial reporting purposes?

Straight-line

Which of the following statements about the balance in a revenue account at the beginning of an accounting period is true?

The beginning balance of a revenue account will always be zero.

Middleton Company uses the perpetual inventory method. The company purchased an item of inventory for $115 and sold the item to a customer for $200. What effect will the sale have on the company's inventory account?

The inventory account will decrease by $200. The inventory account will decrease by $115. The inventory account will decrease by $85. There is no effect on the inventory account.

Chow Company earned $4,500 of cash revenue, paid $2,500 for cash expenses, and paid a $950 cash dividend to its stockholders. Which of the following statements is true?

The net cash inflow from operating activities was $2,000.

Which of the following is not an advantage of accepting credit cards from retail customers?

There are fees charged for the privilege of accepting credit cards.

How does the purchase of inventory on account under the perpetual inventory method affect the financial statements?

Total assets and total liabilities both increase.

The Wilson Company purchased $33,000 of merchandise from the Poole Wholesale Company. Wilson also paid $2,600 for freight costs to have the goods shipped to its location. Which of the following statements regarding the necessary entries for the transactions is true? Wilson uses the perpetual inventory system.

Total increases to the inventory account would be $35,600.

The following information is available for Trinkle Company for the month of June: The unadjusted balance per the bank statement on June 30 was $54,018. Deposits in transit on June 30 were $2,295. A debit memo was included with the bank statement for a service charge of $24. A $3,912 check written in June had not been paid by the bank. The bank statement included a $1,400 credit memo for the collection of a note. The principal of the note was $1,375, and the interest collected amounted to $25. Required Determine the true cash balance as of June 30. (Hint: It is not necessary to use all of the preceding items to determine the true balance.)

True cash balance: $52,401

A discount given to encourage prompt payment is called:

a cash discount. a sales discount by the seller. a purchase discount by the buyer. all of these answer choices are correct.

In the reconciliation of the June bank statement, a deposit made on June 30 did not appear on the June bank statement. In preparing the bank reconciliation, this deposit in transit should be:

added to the unadjusted bank balance.

The Cost of Goods Sold account is classified as:

an expense.

The party that issues a promissory note is known as the:

borrower and maker.

In preparing the April bank reconciliation for Oscar Company, it was discovered that on April 10 a check was written to pay delivery expense of $45 but the check was erroneously recorded as $54 in the company's books. The correction the error of this error would increase:

cash and decrease delivery expense by $9.

The year-end adjusting entry to recognize uncollectible accounts expense will:

decrease assets and decrease stockholders' equity.

The recognition of depletion expense:

decreases assets and stockholders' equity, and does not affect cash flow.

In a bank reconciliation, a customer's NSF check included with the bank statement is:

deducted from the company's cash balance to get the true cash balance. added to the bank's cash balance to get the true cash balance. deducted from the bank's cash balance to get the true cash balance. added to the company's cash balance to get the true cash balance.

In a company's bank reconciliation, an outstanding check is a check that:

has been issued by the company but has not been presented to the bank for payment.

Expenses are shown on the:

income statement

The bank statement for Tetra Company contained the following items: a bank service charge of $10; a credit memo for interest earned, $15; and a $50 NSF check from a customer. The company had outstanding checks of $100 and a deposit in transit of $300. The adjustment to record the customer's NSF check will:

increase the Accounts Receivable balance and decrease the Cash account balance.

The amount of accounts receivable that is actually expected to be collected is known as the:

net realizable value.

At the end of the current accounting period, Ringgold Company recorded depreciation of $15,000 on its equipment. The effect of this entry on the company's balance sheet is to decrease:

stockholders' equity and decrease assets.

Yi Company provided services to a customer for $5,500 cash. As a result of this event:

total assets increased and net income increased.

The most favorable audit opinion that a company can receive is a(n):

unqualified opinion.