Accounting Final

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 double-declining-balance method, what is the Depreciation Expense for Year 2?

$12,000

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 double-declining-balance method, what is the Depreciation Expense for Year 1?

$24,000.

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.

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 double-declining-balance method, what is the Depreciation Expense for Year 3?

$4,000

Kilgore Company experienced the following events during its first accounting period: Issued common stock for $5,000. Earned $3,000 of cash revenue. Paid $4,000 cash to purchase land. Paid cash dividends amounting to $400. Paid $2,200 of cash expenses. The market value of the land at the end of the accounting period was $4,300. Based on this information, the amount of total assets appearing on the year-end balance sheet is:

$5400

Amarillo Company experienced the following events during its first accounting period. Purchased $5,000 of inventory on account. Returned $1,000 of the inventory purchased in Event 1. Paid the remaining balance in Accounts Payable for the inventory purchased in Event 1. Sold inventory purchased in Event 1 for $5,000 to customers on account. At the end of the first accounting period what would be reported on for Net Operating Cash Flow on the Statement of Cash Flows?

($4,000)

Gains and losses are reported:

-non-operating

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 double-declining-balance method, what is the Depreciation Expense for Year 4?

0

Taha Company purchased inventory FOB shipping point and will sell that inventory FOB destination. This means Taha will pay freight-in and freight-out. Freight charges will be $100 each. Only the purchase takes place during the current accounting period. The sale takes place in a future accounting period. By what amount will the freight charges reduce Revenue in the calculation of Net Income for the current accounting period?

0

If interest is accrued in Year 1 and paid in Year 2, when will the Interest Expense appear on the Income Statement?

1

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:

102000

Corazon Company purchased an asset with a list price of $14,000. Corazon paid $500 of transportation in cost, $800 to train an employee to operate the equipment, and $200 to insure the asset against theft after it has been setup in the factory. The asset was purchased under terms 1/20 n/30 and Corazon paid for the asset within the discount period. Based on this information, Corazon would capitalize the asset on its books at

15,160

On December 31, Year 3, Alpha Company had an ending balance of $200,000 in its Accounts Receivable account and an unadjusted (current) balance in its Allowance for Doubtful Accounts account of $300. Alpha estimates Uncollectible Accounts Expense to be 1% of receivables. Based on this information, the amount of uncollectible accounts expense shown on the Year 3 income statement is

1700

Senath Company's annual report reveals net credit sales of $240,000 and average Accounts Receivable of $20,000. The report also shows an average Inventory balance of $10,000 and Cost of Goods Sold of $200,000. Based on this information, the number of days to collect Accounts Receivable is (round to the nearest whole day)

30

Escrow Company's Multistep Income Statement shows Revenue of $100,000, a Gross Margin of $40,000, and Net Income of $10,000. What percentage of revenue is spent on selling and administrative expenses?

30%

Which of the following formulas is used to calculate the number of days to sell inventory?

365/IT

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

Sable Co. paid $400,000 cash for a basket purchase that included land, a building, and equipment. An appraiser estimated the market value of the land to be $100,000, the building to be $350,000, and the equipment to be $50,000. What will be recorded as the purchase price of the equipment?

40,000

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

Escrow Company's Multistep Income Statement shows Revenue of $102,000, a Gross Margin of $42,000, and Net Income of $12,000. What is the value of Escrow's Cost of Good Sold?

60,000

Which is true?

A high inventory turnover ratio produces a low number of days to sell inventory.

When a company incurs accrued expenses:

All Are Correct

Barron Company accepts a credit card as payment for $1,200 of services provided to a customer. The credit card company charges a 5% handling fee for its collection services. Select the answer that shows how the entry to recognize the event would affect Barron's financial statements.

All of the answers describe effects that will occur as a result of recognizing this event.

Which of the following is an internal control procedure designed to protect cash receipts?

All of the answers described internal control procedures designed to protect cash receipts.

Accounts payable will appear on which of the following financial statements?

Balance Sheet A/P

Accounts receivable will appear on which of the following financial statements?

Balance Sheet A/R

Mary Company collected cash from an account receivable. The recognition of the cash collection will affect which of the following financial statements?

Balance sheet and the statement of cash flows

On December 31, Year 1, Kardashian Company recorded an adjusting entry to recognize uncollectible accounts expense. Kardashian had credit sales of $547,000 and estimates uncollectible accounts expense to be one percent of credit sales. Which one of the following journal entries shows how this event would be recorded under the allowance method?

Cash Flow Assets= Liability +Equity (+Revenue -Expense) (5470) (5470) 5470

Westover Company accepts a credit card as payment for $1,000 of services provided to a customer. The credit card company charges a 4% handling charge for its collection services. Select the journal entry that shows how collecting the Account Receivable from the credit card company would be recorded.

DR cash 960

On Decemer 31, Year 1, Kardashian Company recorded an adjusting entry to recognize uncollectible accounts expense. Kardashian had credit sales of $547,000 and estimates uncollectible accounts expense to be one percent of credit sales. Which one of the following journal entries shows how this event would be recorded under the allowance method?

DR-Uncollectible Accounts Expense CR-Allowance for Doubtful Accounts

Westover Company accepts a credit card as payment for $1,000 of services provided to a customer. The credit card company charges a 4% handling charge for its collection services. Select the journal entry that shows how recognizing the service revenue would be recorded.

DR: A/R-960, CC Exp-40 CR: Service Rev - 1000

When using an aging schedule to estimate bad debts requires two steps. Step two is:

Deduct the existing Allowance balance from the balance calculated in Step 1.

Hope Company determined that an $8,000 Account Receivable was uncollectible. Which one of the following shows how the write-off of this receivable will affect Hope's financial statements assuming the write-off was not in excess of the Allowance for Doubtful Accounts?

EMPTY

All permanent accounts are adjusted at the end of an accounting period. This statement is

F

GAAP requires that inventory be shown on the balance sheet at its cost (the price paid) regardless of its current value. This statement is

F

Normally a company closes its books and then adjusts its records to update the account balances before preparing the financial statements. This statement is

F

An aging schedule is used to improve the estimate used in the percent of revenue method of determining the Uncollectible Accounts Expense. This statement is

False

Which of the following formulas is used to calculate the inventory turnover ratio?

GOGS/Inventory

Yang Company recognized accrued salary expense. The recognition will affect which of the following financial statements?

Income statement and the balance sheet

When the Accrued Interest Expense is paid

Interest Payable will be decreased.

If Taha Company pays freight-in charges in cash, the Cash account is credited. Which account is debited?

Inventory

Which of the following statements is true?

Ledger accounts show beginning and ending balances.

The recovery and collection of an Account Receivable that had previously been written off will

Not affect total assets

Beacon Company accepts a credit card as payment for $2,000 of services provided to a customer. The credit card company charges a 3% handling charge for its collection services. Select the answer that shows how the collection of cash from the credit card company will affect Beacon's financial statements.

OA ONLY

Which of the following statements is false?

Prepaid insurance is shown on the income statement.

How would the payment of principal and interest appear on the Statement of Cash Flows?

Principal is a financing activity while Interest is an operating activity.

Which one of the following events would not affect the Income Statement?

Purchased inventory on account

Which of the following most accurately depicts the steps in an accounting cycle?

Record transaction data → Adjust accounts → Prepare Statements →Close temporary accounts

Knoll Company started Year 2 with the following balances: Cash $500 Supplies 500 Common Stock 1,000 During Year 2, the company experienced the following events. Paid $400 cash to purchase supplies Physical count revealed $100 of supplies on hand at the end of Year 2 Based on this information which of the following journal entries would be required to recognize supplies expense at the end of Year 2?

Supplies Expense 800 Supplies 800

The aging method of estimating uncollectible accounts method is based on the assumption that the longer an account receivable remains outstanding, the less likely it is to be collected. This statement is

T

The cash flow associated with buying and selling inventory is not affected by the inventory cost flow method. This statement is

T

If money is borrowed from a creditor at the beginning of an accounting period and both the principal and interest are paid in full during that same accounting period there will be no need to accrue interest expense.

True

If a company pays cash in Year 1 for insurance coverage during Year 2, when will this Insurance Expense appear on the Income Statement?

Year 2

If a company has no earnings this period but does have a positive Retained Earnings balance, can it pay dividends assuming sufficient cash exists?

Yes

profitability is maximized when a company sells inventory with

a high gross margin per unit and a high inventory turnover.

The ledger contains

both permanent and temporary accounts.

Instead of using cash to pay bills, many companies pay with checks because

checks facilitate the separation of duties associated with cash payments.

Which of the following shows how replenishing a petty cash fund will affect a company's financial statements?

debit misc exp, credit cash

The accounts receivable turnover ratio is calculated by

dividing the amount of credit sales by the average balance of Accounts Receivable.

Based on this information alone Brown Company should depreciate its long-term assets using

double declining bal dep

A deferral:

exists when a company pays cash before recognizing the associated expense.

Baltimore Company accepts a credit card as payment for $950 of services provided to a customer. The credit card company charges a 4% handling charge for its collection services. Select the answer that shows how the entry to record the event would affect Baltimore's financial statements

exp 38

The adjusting entry to accrue interest expense will:

increase Interest Expense

The journal entry to recognize the write down of inventory based on the lower of cost or market rule will

increase the amount of expenses.

The Gross Margin appears on a

multi-step IS

When using an aging schedule to estimate bad debts requires two steps. Step one is:

multiply the account balance in each aging category by that category's percentage likelihood of non-payment, then total these amounts.

When a merchandising company sells inventory it will:

recognize revenue and expense.

The percent of receivables allowance estimation method is a two step process. The first step calculates:

the ending balance of the Allowance account

The following adjusted trial balance was drawn from the records of the Dakota Company. Account Title Debit Credit Cash $500 Equipment 2,000 Accounts Payable $1,000 Common Stock 700 Retained Earnings 600 Service Revenue 900 Operating Expenses 600 Dividends 100 Totals $3,200 $3,200 Based on the information in the Adjusted Trial Balance:

the total of the credit column in the Post-closing Trial Balance will be $2,500.

When a company establishes a petty cash fund:

total assets not affected

An operating cycle is the length of time it takes to:

turn inv to cash

If a company provides services in Year 1 but does not collect that cash from the customers until Year 2, in which year will the revenue be recognized?

yr 1