Accounting FINAL

On January 2, Alfredo Corporation sold merchandise with a gross price of $100,000 to a customer with terms of 2/10, n/30. How much Sales Discounts would be recorded if payment was received from the customer on January 8? Assume the company uses the Gross Method of recording receivables.

$2,000

Refer to A-One Construction. What is the balance of Accounts Receivable at December 31?

$ 515,000

The excess of current assets over current liabilities.

Working capital

Cash from operating activities less capital expenditures and cash dividends.

Free cash flow

If goods in transit are shipped FOB destination

the seller has legal title to the goods until they are delivered.

Has a credit normal balance

1. revenue account 2. 3. 4.

Plant assets are depreciated because

1. the accrual basis of accounting requires matching of costs to revenues. 2. 3. 4.

If the cash budget showed a projected cash shortage, the company would most likely

arrange to borrow the necessary cash for that period.

Convertible bonds are attractive to bondholders because

they can be converted into stock at the bondholder's option.

Which of the following terms fit this definition: "The area of accounting principally concerned with reporting to external users."

Financial accounting

Which of the following entries is necessary for recording the replenishment of the fund?

Postage Expense 48 Office Supplies Expense 146 Delivery Expense 35 Cash 229

Cost less accumulated depreciation

book value

Treasury Stock is a(n)

contra stockholders' equity account.

Left side of an account.

debit side

A company would be expected to generate small amounts of cash from operations during the

growth phase.

Group 9 - The side which increases an account.

1. Normal account balance

Common stock usually has all of the following features except

1. conversion privilege.

GTO Division has $14,000 in current assets, $2,000 in accounts payable, and $2,000 in unearned sales revenue. What is the division's current ratio?

3.50

Which of the following principles dictates that expenses are recognized in the same accounting period as their related revenue?

Expense recognition (Matching)

In a period of rising prices, which of the following inventory methods generally results in the lowest net income figure?

LIFO method

Expenses should be matched against revenue

in the same period as the revenue that they helped generate.

Given the data below for a firm in its first year of operation, determine net income under the accrual basis of accounting.

$11,750

The interest on a $15,000, 6%, 60-day note receivable is

$150.

Refer to the information provided for Tedder Co. If the company uses the weighted average method of inventory costing, how much is cost of goods sold for January?

1. $240 2. 3. 4.

Kaleidoscope Paint On January 1, 2019, this company issued $500,000, 10-year, 9% bonds for $480,745. The bonds pay interest on June 30 and December 31. The market rate is 10%. The company plans to use the effective interest method of amortizing bond discounts and premiums. Refer to Kaleidoscope Paint. What is the carrying value of the bonds after the first interest payment is made on June 30, 2019?

1. 482,282.

Which one of the following represents the expanded basic accounting equation?

1. Assets + Dividends + Expenses = Liabilities + Common Stock + Revenues

Dietz, Inc. sells merchandise on credit. If a customer pays its balance due within the discount period, what is the effect of the payment on Dietz's accounting equation?

1. Assets decrease and liabilities increase. 2. 3. 4.

If a company uses the allowance method to account for doubtful accounts, when will the company's Stockholders' equity decrease?

1. At the date a customer's account is determined to be uncollected 2. At the date a customer's account is written off When the accounts receivable amount becomes past due At the end of the accounting period when an adjusting entry for bad debts is recorded

Group 9 - Shows the debit and credit effects of specific transactions.

1. Journal

Group 5 - Creditor claims against the assets of the business.

1. Liabilities 2. 3. 4.

Group 5 - A section of the annual report that presents management's views.

1. Management discussion and analysis 2. 3. 4.

Group 3 - Includes only permanent—balance sheet—accounts

1. Post-closing trial balance

Group 9 - journal entries to ledger accounts.

1. Posting

Georgia's Salon ​ The salon sells $50,000 of gift cards in May 2019. These gift cards may be used anytime before their expiration on May 31, 2020. Refer to Georgia's Salon. During May 2019, $10,000 of the gift cards were redeemed for salon services. Which of the following is the correct journal entry to record the redemption of the gift cards?--

1. Prepaid Sales Revenue 10,000 Sales Revenue 10,000 2. 3. 4.

Value today of a series of future amounts to be received or paid.

1. Present value of an annuity

What does the phrase, "revenue is recognized when earned" mean?

1. Revenue is recorded in the accounting records and reported on the income statement when goods are sold and delivered to a customer.

A growing corporation had $180,000 of its $30 par common stock issued before its recent 3-for-1 stock split. The market price of the stock was $120 per share before the split. Which of the following is true as a result of the split?--

1. The market price of the stock tripled. 2. 3. 4.

Rent owed to the lessor under a short-term lease would appear on the balance sheet as

1. current liability.

The current portion of long-term debt would appear on the balance sheet as

1. current liability.

Credit entries are used to

1. increase liability accounts.

On May 1, a company borrowed $30,000 from the First National Bank on a 1-year, 6% note. Assuming the company keeps its records on a calendar year basis, an entry is needed on December 31st to increase

1. interest expense by $600. 2. 3. 4.

Authorized stock represents the

1. maximum number of shares that can be issued for each class of stock.

Gross profit equals the difference between

1. net income and operating expenses. 2. sales revenue and cost of goods sold. sales revenue and operating expenses. sales revenue and cost of goods sold plus operating expenses.

The going concern assumption is concerned with

1. offsetting management's natural optimism by providing a prudent approach to uncertainty in financial statement items. 2. 3. 4.

The principle of conservatism is concerned with

1. the avoidance of overstating assets or income in the preparation of financial statements..

If the amount assigned to ending inventory is incorrect,

1. the balance sheet is affected, but cost of goods sold is not. 2. 3. 4.

Cost of goods sold is equal to

1. the cost of merchandise purchased plus transportation costs plus beginning inventory minus purchase returns and allowances and purchase discounts. 2. 3. 4.

Which of the following companies would most likely have the highest inventory turnover?

A bakery.

Kiss Greetings planned to raise $500,000 by issuing bonds. The bond certificates were printed bearing a stated interest rate of 6%, which was equal to the yield rate of interest. However, before the bonds could be issued, economic conditions forced the yield rate up to 7%. If the life of the bonds is 10 years and interest is paid annually on December 31, how much will the company receive from the sale of the bonds?

Less than $500,000 because the 7% yield rate of interest was higher than the stated rate.

Madson Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 90,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?

b

The category that is generally considered to be the best measure of a company's ability to continue as a going concern is

cash flows from operating activities.

For companies that use a perpetual inventory system, all of the following are purposes for taking a physical inventory except to:

determine ownership of the goods.

Refer to Fabian Woodworks. Based on the information presented above, what method of depreciation will maximize depreciation expense in 2020?

double-declining-balance

The system of accounting in which there are at least two accounts affected in every transaction so that the accounting equation stays in balance is called

double-entry.

Under the accrual basis of accounting:

events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.

Efforts are related to accomplishments

expense recognition principle

Depreciation is a process by which

the cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset.

Which of the following is not one of the three forms of business organization?

Investors

Refer to Hesson Properties. What journal entry is required to record the utility bill?

Utilities Expense 300 Accounts Payable 300

The value at a future date of a given amount invested.

1. Future value of a single amount

c

Assets and liabilities increase. i/c

Events recorded only in periods the company receives or pays cash

Cash basis

Same accounting principles and methods used from year to year within a company.

Consistency

A company rented office space to a tenant on January 1 and received a total of $90,000 for the first nine months of rent. The amount was recorded as Rent Collected in Advance when received. Adjustments are recorded only at the end of every quarter. What effect does the adjustment at March 31 have on the company's net income for the quarter ending March 31?

Increase by $30,000

Officers and others who manage the business.

Internal users

Debts and obligations of a business are referred to as

liabilities.

Outstanding shares represent the

number of shares that are currently held by stockholders.

All of the following statements regarding retained earnings are true except

retained earnings represents a claim on cash.

Checks presented for payment and paid by the bank are known as

canceled checks.

Net Income may be defined as follows

The excess of revenues over expenses for the time period

A merchandiser that sells directly to consumers is a

retailer.

Liquidity

1. All of the above.

The Income Statement shows

a summary of the results of operations for a period of time.

Group 5 - A report prepared by management that presents financial information.

1. Annual report 2. 3. 4.

Refer to the information provided for Aaron Corporation. Calculate gross margin.

$144,500

Given the data below for a firm in its first year of operation, determine net income under the cash basis of accounting.

$7,700

A list of all asset, liability, stockholders' equity, revenue, expense, and dividend accounts which are used by the company is called a(n)

1. Chart of Accounts.

Group 5 - Officers and others who manage the business.

1. Internal users 2. 3. 4.

Refer to Hesson Properties. What journal entry is required to record the collections on account from customers?

Cash 500 Accounts Receivable 500

Which of the following methods will result in the highest depreciation in the first year?

Declining-balance

(Net income - preferred stock dividends) divided by average common shares outstanding.

Earnings per share

Economic events can be identified with a particular unit of accountability.

Economic entity assumption

Which of the following is not one of the main factors that contribute to fraudulent activity?

Incompatible duties.

On January 1, 2019, a company's balance in retained earnings was $275,000. During 2019, the company earned net income of $23,500 and paid $11,200 in dividends. Calculate the retained earnings balance at December 31, 2019.

$287,300

Georgia's Salon ​ The salon sells $50,000 of gift cards in May 2019. These gift cards may be used anytime before their expiration on May 31, 2020. Refer to Georgia's Salon. On May 31, 2020, all but $1,500 of the gift cards had been redeemed for salon services. Which of the following is the correct journal entry to record for the expired gift cards?

Unearned Sales Revenue 1,500 Sales Revenue 1,500

Working capital is

used to evaluate a company's liquidity and short-term debt paying ability.

An insurance company received advance payments from clients during 2019 of $12,000. At December 31, 2019, $10,000 of the advance payments still had not been earned. After the adjustments are recorded and posted at December 31, 2019, what will the balances be in the Unearned Insurance Revenue and Insurance Revenue accounts? ​

$10,000 $2,000

Distributions of cash from a corporation to its stock holders.

Dividends

Powers Corporation received a cash advance of $500 from a customer. As a result of this event,

assets increased by $500.

Group 4 - Future economic benefits.

1. Assets

Group 5 - A separate legal entity under state laws.

1. Corporation 2. 3. 4.

Refer to the information provided for Tedder Co. Which of the following entries correctly records the purchase assuming the units were acquired on credit under terms of 2/10, n/30? --

1. Purchases 264.60Purchase discounts 5.40Accounts payable 270.00 2. 3. 4.

A very small company would have the most difficulty in implementing which of the following internal control activities?

Separation of duties.

Measures of the ability of the company to survive over a long period of time.

Solvency ratios

Which one of the following relationships shows the proper structure of a corporation?

Stockholders select the board of directors, who select officers.

Failure to record dividends paid would result in which of the following?

Stockholders' equity being overstated.

Which depreciation method is most frequently used in businesses today?

Straight-line.

Depreciation is

an effort to achieve proper matching of the cost of operating assets with related revenues.

The book value of an asset is equal to the

asset's cost less accumulated depreciation.

All of the following would be considered internal control weaknesses except

it takes two days to get a check written because of the approvals required.

The interest charged on a $400 note payable, at the rate of 6%, on a 90-day note would be

$6

Refer to the information provided for Pham Enterprises. What is the company's gross profit ratio for the year ended December 31?

1. 50.25% 2. 3. 4.

Group 9 - Left side of an account.

1. Debit

Debit entries are used to

1. increase asset accounts. 2. 3. 4.

If a company's bonds are callable,

1. the bondholder has the right to sell an option on the bond. 2. 3. 4.

Includes only permanent-balance sheet-accounts

post-closing trial balance

Expenses paid before they are incurred

prepaid expenses

Dividends in arrears on cumulative preferred stock

should be disclosed in the notes to the financial statements

Evidence that a transaction has taken place.

source document

Income statement accounts are also known as which of the following?

temporary accounts

At the year-end inventory count, if goods in transit are shipped FOB destination, they should be included in the inventory count of

the seller.

The revenue recognition principle dictates that revenue should be recognized in the accounting period in which it is:

earned

In the reconciliation of a bank statement, deposits in transit should be

added to the unadjusted bank statement balance.

The payment of Accounts Payable results in a(n)

decrease in both liabilities and assets.

Refer to A Better Mousetrap. What amount should the company recognize as interest revenue on the maturity date of the note?

$3,750

An item important enough to influence the decision of an investor or creditor.

Materiality

A customer returned damaged goods for credit. Under a perpetual system, which of the seller's accounts decreases?

accounts receivable

A Premium on Bonds Payable account would appear on the balance sheet as

an increase to a long-term liability.

The primary purpose of the statement of cash flows is to

provide information about the cash receipts and cash payments during a period.

Each of the following items is considered a cash equivalent except

a 180-day note issued by a local government.

Refer to the information provided for Aaron Corporation. Calculate net income.

$65,500

Refer to A-One Construction. If the aging approach is used to estimate bad debts, what amount should be recorded as bad debt expense?

1. $29,200 2. 3. 4.

Parlato Corp. has an inventory turnover rate of 8 times. Calculate the company's average days to sell inventory.

45.625

An internal Control system is important to a business because it

All of the above

Which of the following is not a current liability?

Bonds Payable

Consumed assets or services.

Expenses

Information that has a bearing on a decision.

Relevance

Plant assets are ordinarily presented in the balance sheet

at cost less accumulated depreciation.

A list of all the accounts used by a company.

chart of accounts

Fabian Woodworks ​ This company purchased a truck at a cost of $12,000. The truck has an estimated residual value of $2,000 and an estimated life of 5 years, or 100,000 hours of operation. The truck was purchased on January 1, 2019, and was used 27,000 hours in 2019 and 26,000 hours in 2020. Refer to Fabian Woodworks. If the company uses the straight-line method of depreciation, what is the book value at December 31, 2021?

$ 6,000

An oil company purchased 10,000 acres of land on January 1, 2019, for $5,000,000, on which it developed an underground oil site. The company spent $11,000,000 to prepare the site for operation but believes that 500,000 barrels of oil can be extracted from the site over 5 years after drilling begins. The land has a residual value of $250,000. Assuming 50,000 barrels of oil were extracted from the land in 2021, how much depletion would be recorded?

$1,575,000

Refer to the information provided for Klump Co. If the company uses the (moving) Average Cost inventory costing method, ending inventory at June 30th is:

$1,819.86

Refer to Art Shoes. How much interest revenue will the company recognize for the year ended December 31, 2019?

$2,250

A company's unadjusted bank balance is $3,000. Outstanding checks amount to $500 and deposits in transit total $300. Based on this information alone, what is the company's adjusted cash balance for the purpose of preparing a bank reconciliation?

$3,200-i/c

Carnegie Jewelers accepted a 9-month, 9% note for $100,000 from a customer on July 1, 2019. The note is due on March 31, 2020. Assuming the company's accounting period ends on December 31, 2019, how much interest revenue should be recognized during 2019 and 2020?

$4,500 $4,500-i/c

A corporation has 5,000 shares of $5 par, 6% cumulative preferred stock outstanding and 25,000 shares of $2 par common stock outstanding. No dividends have been paid for the past 2 years. If the company wishes to distribute $2 per share to the common stockholders this year, what is the total amount of dividends that must be paid?

$54,500

United Services and Supplies reports net income of $60,000 and cost of goods sold of $360,000. If US&S's gross profit rate was 40%, net sales were

$600,000.

If a company has $10,500,000 of revenues, declares and pays $550,000 in dividends, and has net income of $1,600,000, how much were expenses for the year?

$8,900,000

A landscaping company operates five days per week with a daily payroll of $16,000. Employees are paid every Saturday for the workweek just completed (Monday through Friday). The last day of the month is Wednesday, March 31. What is the amount of Wages Expense recorded on the next payday, Saturday, April 3?

1. $ -0- 2. 3. 4.

A company borrowed $100,000 on a one-year, 10% note on September 1, with interest and principal to be paid at maturity. How much interest payable will be reported on the balance sheet at November 30?

1. $ 2,500

Calculate total sales for a company that reported a net loss of $1,500,000 and total expenses of $2,900,000.

1. $1,400,000

Fantasy Cruise Lines ​ On January 1, 2019 the company purchased a ship for $1,000,000. It has a 10-year useful life and a residual value of $100,000. The company uses the double-declining-balance method. Refer to Fantasy Cruise Lines. What will be the book value of the ship after 10 years?

1. $100,000

On April 1, 2019, Guyton Sails accepted a $12,000 advance payment for maintaining a customer's fleet of sail boats. The contract is for a twelve month period. In May 2019, the company performed $1,200 worth of repairs. What is the remaining liability that would appear on the company's balance sheet at the end of May?

1. $12,000 2. 3. 4.

A company had beginning accounts receivable of $175,000. All sales were on account and totaled $550,000. Cash collected from customers totaled $650,000. Calculate the ending accounts receivable balance.

1. $275,000 2. 3. 4.

Keller Company issued $1,000,000, 8%, 7 year bonds with interest payable semiannually when the yield rate was 8%. The bonds issued at

1. $887,037. 2. $1,112,963.-i/c $1,000,000. c.This question cannot be answered without the time value of money tables.

If a business has current assets of $62,000, total assets of $350,000, current liabilities of $31,000, and total liabilities of $125,000, then its current ratio will be

1. 3.0 2. 3. 4.

Net Income appears on which financial statement(s)?--

1. Both the Balance Sheet and the Income Statement 2. 3. 4.

A list of all active accounts and their balances at a particular date, which is used to prove the equality of debits and credits, is a

1. Chart of Accounts. 2. 3. 4.

Group 9 - A list of all the accounts used by a company.

1. Chart of accounts

Different companies using the same accounting principles.

1. Comparability

Return on principal plus interest for two or more periods.

1. Compound interest

Group 8 - Current assets divided by current liabilities.

1. Current ratio

During January, Gaston Wholesalers experienced some difficulties with cash flow so it approached one of its vendors about a payment extension. The vendor agreed to the extension on the condition that the company sign a 30-day note that includes 9% interest. What journal entry is needed to record the retirement of the note on the maturity date?

1. Debit notes payable, credit interest expense, and credit cash. 2. 3. 4.

Refer to Hesson Properties. What journal entry is required to record the purchase of the carts? --

1. Equipment 1,500 Accounts Payable 1,500 2. 3. 4.

The sum of all the payments or receipts plus the accumulated compound interest on them.

1. Future value of an annuity

Suppose a corporation issues 5,000 shares of $1 par common stock for $30 per share. In addition to the increase in cash, what effect does this transaction have on the accounting equation?

1. Gain on stock issuance increases $145,000. 2. 3. 4.

A company has total assets of $350,000 consisting of current assets of $115,000, property, plant, and equipment of $200,000, and other assets of $35,000. The company has total liabilities of $100,000 consisting of current liabilities of $65,000 and other liabilities of $35,000. What is the current ratio?

1.77

Refer to A-One Construction. If the aging approach is used to estimate bad debts, what should the balance in the Allowance for Doubtful Accounts be after the bad debts adjustment?

29,200

Some of the steps in the accounting cycle are listed below. Select the choice that places these steps in the correct order. 1.Close the accounts. 2.Post transactions to accounts in the ledger. 3.Journalize daily transactions. 4.Record and post adjustments. 5.Prepare financial statements.

3, 2, 4, 5, 1

Refer to the information provided for Pham Enterprises. What is the company's average-days-to-sell inventory measure?

59.76 days

Current assets divided by current liabilities.

Current ratio

What is the order in which assets are generally listed on a classified balance sheet?

Current; long-term investments; property, plant and equipment, intangibles

Retained Earnings is reduced by which of the following?

Dividends

Noncurrent assets that do not have physical substance.

Intangible assets

A check returned by a bank because the issuer's cash account balance could not cover the check is called a(n)

NSF check

Which of the following would be unethical?

Recording backdated revenue.

If a company erroneously records a $500 deposit as $50 in its records, which of the following must occur when reconciling its bank statement?

The company must increase the balance per its records by $450.

The Discount on Bonds Payable account is shown on the balance sheet as

a contra-liability account that reduces the bond to market value at the issue date.

If the market interest rate for a bond is higher than the stated interest rate, the bond will sell at

a discount.

This company purchased a semi truck at the beginning of 2019 at a cost of $100,000. The truck had an estimated life of 5 years, an estimated residual value of $20,000, and will be depreciated using the straight-line method. On January 1, 2021, the company made major repairs of $30,000 to the truck that extended the life 3 years. Thus, starting with 2021, the truck has a remaining life of 5 years and a new salvage value of $8,000. Refer to Fernbank Farms. When calculating depreciation for 2021, the company's accountant should

add the $30,000 to the book value at December 31, 2020, and then allocate the revised depreciation basis over the remaining adjusted useful life of 5 years.

What happens to the accounting equation when the adjustment for depreciation expense for the accounting period is recorded?

assets decrease and stockholders' equity decreases

Failure to record depreciation expense for the period results in which of the following?

both a & c Net income being overstated. Stockholders' equity being overstated.

A high accounts receivable turnover ratio indicates

customers are making payments very quickly.

The purchase of an asset on credit

increases assets and liabilities.

Accumulated Depreciation

is a adjunct account.-i/c

Long-term debt generally includes

obligations that extend beyond one year.

The journal entries required for purchase and sales transactions using the perpetual system are more complex than under the periodic system but offer the advantage of

providing management with more complete information from which to control inventories.

The statement of cash flows

summarizes the operating, financing, and investing activities of an entity.

Many companies use MACRS (Modified Accelerated Cost Recovery System) depreciation for:

tax purposes because of a desire to report higher expenses in early years in order to pay lower taxes.

At the year-end inventory count, if goods in transit are shipped FOB shipping point, they should be included in the inventory count of:

the buyer.

A credit sale of $1,400 is made on July 15, terms 2/10, net/30, on which a return of $100 is granted on July 18. What amount is received as payment in full on July 24?

$1,274

For Year 2 Daisy Corporation reported net income of $60; net sales $800; and average shares outstanding 6. There were no preferred stock dividends. What were the Year 2 earnings per share for Daisy?

$10.00

Fabian Woodworks ​ This company purchased a truck at a cost of $12,000. The truck has an estimated residual value of $2,000 and an estimated life of 5 years, or 100,000 hours of operation. The truck was purchased on January 1, 2019, and was used 27,000 hours in 2019 and 26,000 hours in 2020. Refer to Fabian Woodworks. If the company uses the units-of-production method, what is the depreciation rate per hour for the equipment?

$0.10

Group 5 - Consumed assets or services.

1. Expenses 2. 3. 4.

Measures of the short-term ability of the enterprise to pay its maturing obligations.

Liquidity ratios.

A Better Mousetrap The company sold merchandise to a customer on December 1, 2019, for $100,000. The customer paid with a promissory note that has a term of 6 months and an annual interest rate of 9%. The company's accounting period ends on December 31. Refer to A Better Mousetrap. What amount should the company recognize as interest revenue on December 31, 2019?

$750

Georgia's Salon ​ The salon sells $50,000 of gift cards in May 2019. These gift cards may be used anytime before their expiration on May 31, 2020. Refer to Georgia's Salon. Which of the following is the correct journal entry to record the sale of the gift cards?

. Cash 50,000 Unearned Sales Revenue 50,000

Eli Company Eli Company sells novelty items and offers terms of 1/10, n/30 to credit customers. One customer, Faulkner, Inc., purchased 100 Sweet-16 party decor packs with a list price of $20 each on March 5, 2019. Refer to the information provided for Eli Company. If the customer pays the invoice on March 31, 2013, how much sales discount will Eli Company recognize?

1. $200 2. 3. 4.

The supplies account has a balance of $1,000 on January 1. During January, the company purchased $25,000 of supplies on account and the liability was appropriately recorded. A count of supplies at the end of January indicates a balance of $3,000. Which one of the following is a correct amount to be reported on the company's financial statements for the month ending January 31?

1. Supplies Expense - $26,000 2. 3. 4.

Refer to HVAC Service. The journal entry to record the purchase of office equipment and supplies will include a credit to

1. accounts payable.

Goodwill can be recorded as an asset when a(n)

1. business can determine that it has created customer goodwill and name recognition. 2. 3. 4.

Each of the following documents is used in the control of cash disbursements except

1. outstanding checks. 2. 3. 4.

Refer to HVAC Service. The journal entry to record payment for the office equipment and supplies will include a debit to--

1. prepaid expenses. 2. 3. 4.

A current liability includes obligations which must be repaid

1. within one year or within the operating cycle, whichever is shorter. 2. 3. 4.

An accounting record of increases and decreases in specific assets, liabilities, and stockholders' equity items.

ACCOUNT 2. 3. 4.

Group 5 - Future economic benefits.

ASSETS

A business organized as a separate legal entity from its owners is a:

Corporation

Which of the following would be deducted from the balance per bank on a bank reconciliation?

Outstanding checks.

Ending retained earnings for a period is equal to beginning

Retained earnings + Net income - Dividends

How is the Balance Sheet linked to the other financial statements?

Retained earnings is reported on the Balance Sheet.

Adjusting entries are made to ensure that:

all of these answer choices are correct.

Academy Grill Supply On October 1, 2019, the company received a $50,000 promissory note from a customer. The annual interest rate is 6%. Principal and interest will be collected in cash at the maturity date of September 30, 2020. Refer to Academy Grill Supply. The effect on the company's financial statements on December 31, 2019 is as follows

assets and Stockholders' equity increase.

Two methods of accounting for uncollectible accounts are the

direct write-off method and the allowance method.

Bonds sell at a premium when the

market rate of interest is less than the stated interest rate at the time of issue

A list of accounts and their balances at a given time.

trial balance 2. 3. 4.

If a company determines cost of goods sold each time a sale occurs, it

uses a perpetual inventory system.

A current liability is a debt that can reasonably be expected to be paid

within one year, or the operating cycle, whichever is longer.

Which of the following is not a significant date with respect to dividends?

The incorporation date.

Which of the following is the most appropriate and modern definition of accounting?

The information system that identifies, records, and communicates the economic events of an organization to interested users.

A corporation purchased a three-year insurance policy on December 1, Year A for $7,200. Assuming that the. corporation debited the prepaid insurance account in recording the original transaction, the adjusting entry on December 31, Year A, the company's yearend, will include a:

Credit to prepaid insurance for $200

Cash, Accounts Receivable and Prepaid Insurance will be classified on a balance sheet as

Current assets

If a company fails to adjust for accrued expenses, what effect will this have on that month's financial statements?

Expenses will be understated and net income and stockholders' equity will be overstated.

In a period of declining prices, which of the following inventory methods generally results in the lowest balance sheet figure for inventory?

FIFO method

The value at a future date of a given amount invested.

Future value of a single amount

Group 5 - Involves acquiring the resources necessary to run the business.

Involves acquiring the resources necessary to run the business. 2. 3. 4.

Shows the debit and credit effects of specific transactions.

Journal

The side which increases an account.

Normal account balance

If common stock is issued for an amount greater than par value, the excess should be credited to

Paid-in Capital in Excess of Par Value.

The economic life of a business can be divided into artificial time periods

Periodicity assumption

Transferring journal entries to ledger accounts.

Posting

The value today of a future amount to be received or paid.

Present value of a single amount

Value today of a series of future amounts to be received or paid.

Present value of an annuity

Revenue is recognized when the performance obligation is satisfied.

Revenue recognition principle

Revenues earned but not yet received

accrued revenues

All of the following are examples of internal control procedures except

customer satisfaction surveys.

Which of the following correctly identifies normal balances of accounts?

d

The common characteristic possessed by all assets is

future economic benefit.

Receivables might be sold to

generate cash quickly.

The entire group of accounts maintained by a company.

ledger

Hunter Company reported a net loss of $12,000 for the year ended December 31, 2017. During the year, accounts receivable decreased $28,000, inventory increased $20,000, accounts payable increased by $30,000, and depreciation expense of $24,000 was recorded. During 2017, operating activities

provided net cash of $50,000.

If total assets are $100,000, liabilities are $60,000, and Common Stock is $25,000, the Retained Earnings of the firm is:

$15,000

At January 1, 2017, Troyer Industries reported Retained Earnings of $350,000. During 2017, Troyer had a net loss of $75,000 and paid dividends to the stockholders of $50,000. At December 31, 2017, the balance in Retained Earnings is

$225,000 credit.

On January 15, Nifty Company sells merchandise on account to Martinez Associates for $5,000 with terms 3/10, n/30. On January 20, Martinez returns merchandise worth $1,000 to Nifty. On January 24, payment is received from Martinez for the balance due. What is the amount of cash received?

$3,880

A plant asset with a cost of $600,000 and accumulated depreciation of $570,000 is sold for $70,000. What is the amount of the gain or loss on disposal of the plant asset?

$40,000 gain.

What is the company's net income for the year based on the accrual basis of accounting?

$554

Group 3 - Expenses incurred but not yet paid

1. Accrued expenses

Group 3 - Revenues earned but not yet received in cash or recorded

1. Accrued revenues

Group 3 - Cost less accumulated depreciation

1. Book value

A cost allocation process

1. Depreciation 2. 3. 4.

Group 5 - Distributions of cash from a corporation to its stock holders.

1. Dividends 2. 3. 4.

Group 2 - The sum of all the payments or receipts plus the accumulated compound interest on them.

1. Future value of an annuity

Group 4 - Creditor claims against the assets of the business.

1. Liabilities

Group 3 - Expenses paid before they are incurred

1. Prepaid expenses

Group 5 - Ownership is limited to one person.

1. Sole proprietorship 2. 3. 4.

The current portion of long-term debt should

1. be classified as a long-term liability. 2. be reclassified as a current liability. 3. be paid immediately. 4. not be separated from the long-term portion of debt.-i/c

A company receives $348, of which $28 is for sales tax. The journal entry to record the sale would include a

1. debit to Sales Taxes Expense for $28. 2. debit to Sales Taxes Payable for $28. debit to Sales Revenue for $348. debit to Cash for $348.

Use the following data to calculate the current ratio.

2.50 : 1

Which of the following is not classified properly as a current asset?

A receivable from the sale of an asset to be collected in two years

Return on principal plus interest for two or more periods.

Compound interest