Accounting Exam 2

Unearned fees

Balance sheet

There is really no benefit in preparing financial statements in any particular order

False

the specific identification inventory method should be used when the inventory consists of identical, low-cost units that are purchased and sold frequently

False

Cost flow is in the order in which costs were incurred when using

First in first out or FIFO

Merchandise is sold for cash. The selling price of the merchandise is $6,000 and the sale is subject to a 7% state sales tax. The journal entry to record the sale would include credit to

Sales tax Payable for $420

Which of the accounts below would not appear in the balance sheet columns of the end-of-period spreadsheet

Service Revenue

Freight-in is considered a cost of purchasing inventory

True

Under the perpetual inventory system, when a sale is made, both the sale and cost of goods sold are recorded

True

Stockholders' equity is

added to liabilities and the two are equal to liabilities

Notes receivable due in 390 days appear on the

balance sheet in the non current assets section

which document authorizes the purchase of the inventory from an approved vendor

the purchase order

Alpha Company has current assets of $74,524, total assets of $203,310, total net income of $67,913, current liabilities of $60,100, and total liabilities of $150,600 What is Alpha Company's current ratio

1.24

Retained Earnings

Balance Sheet

Supplies

Balance sheet

accumulated depreciation

Balance sheet

The inventory costing method that reports the most current prices in ending inventory is

FIFO

If title on merchandise purchases passes to the buyer when the goods are delivered to the buyer, the terms are

FOB destination

Cash and other assets that may resonably be expected to be realized in cash, sold, or consumed through the normal operations of a business, usually longer than one year, are called current assets

False

Freight-in amount paid by the company to deliver merchandise sold to a customer

False

Most retailers record all credit card sales are credit sales

False

The usual presentation of the retained earnings statement is (1) Beginning balance, (2) Net income or loss, (3) Dividends , (4) Stockholders' contributions, (5) Ending balance

False

Depreciation Expense

Income statement

Fees earned

Income statement

Supplies expense

Income statement

The journal entry to record the receipt of inventory purchased for cash in a perpetual inventory system would be

Jan. 1 Inventory 1500 Cash 1500

Which of the following accounts should be closed to Income Summary at the end of the fiscal year

Service Revenue

Which of the statements below indicates that a company earned a net income for the period

The sum of the credits exceeds the sum of the debits in the Income statement columns on the end-of-period spreadsheet

Liabilities that will be due within one year or less and that are to be paid out of current assets are called current liabilities

True

One of the two internal control procedures over inventory is to properly report inventory on the financial statements

True

Under a periodic inventory system, the cost of inventory on hand at the end of the accounting period is determined by a physical count of the inventory

True

Accumulated Depreciation appears on the

balance sheet in the property, plant, and equipment section

A business's current assets divided by its current liabilities is equal to its

current ratio

On march 1, a company collects revenue in advance for the next twelve months and credits a liability account. The adjusting entry at year end on the end-of-period spreadsheet would

decrease a liability account

On sept 1, the company pays rent for twelve months in advance and debits an asset account. At year end, the adjusting entry on the end-of-period spreadsheet would

increase an expense account

When goods are shipped FOB destination and the seller pays the freight charges, the buyer

makes no journal entry for the freight

a fiscal year for a business

ordinarily begins on the first day of a month and ends on the last day of the following twelfth month

The primary difference between the periodic and perpetual inventory systems is that a

periodic system determines the inventory on hand only at the end of the accounting period

The inventory system employing accounting records that continuously disclose the amount of inventory is called

perpetual

When comparing a retail business to a service business, the financial statement that changes the least is the

retained earnings statement

Gross profit is equal to

sales less cost of goods sold

The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a

single-step statement

The accounting cycle requires three trial balances be done. In what order should they be prepeared

unadjusted, adjusted, post-closing

Once the adjusting entries are posted, the adjusted trial balance is prepared to

verify that the debits and credits are in balance

In credit terms of 3/15, n/45, the "3" represents the

percent of the cash discount

Who is responsible for the freight costs when the terms are FOB shipping point

the buyer

Common Stock

Balance Sheet