accounting part 1

A very small company would have the most difficulty in implementing which of the following internal control activities? a. separation of duties b. limited access to assets c. periodic independent verification d. sound personnel procedures

A

An accounting time period that is one year in length is called a. fiscal year b. an interim period c. the time period assumption d. a reporting period

A

Determine the total amount of working capital Koonce Office Supplies Balance Sheet December 21, 2017 a. $360,000 b. $390,000 c. $130,000 d. $180,000

A

If a check correctly written and paid by the bank for $628 is incorrectly recorded on the company's books for $682, the appropriate treatment on the bank reconciliation would be a. add $54 to the books balance b. subtract $54 from the books balance c. deduct $54 from the banks balance d. deduct $628 from the books balance

A

Jackson Company recorded the following cash transactions for the year: Paid $135,000 for salaries Paid $60,000 to purchase office equipment Paid $15,000 for utilities Paid $6,000 in dividends Collected $275,000 from customers What was Jackson's net cash provided by operating activities?

A

Leyland Realty Company received a check for $18,000 on July 1, which represents a 6-month advance payment of rent on a building it rents to a client. Unearned Rent Revenue was credited for the full $18,000. Financials statements will be prepared on July 31. Leyland Realty should make the following adjusting entry on July 31: a. debit unearned rent revenue, $3,000; credit rent revenue, $3,000 b. debit rent revenue, $3,000; credit unearned rent revenue, $3,000 c. debit unearned rent revenue, $18,000; credit rent revenue, $18,000 d. debit cash, $18,000; credit rent reveue, $18,000

A

Manufactured inventory that has begun the production process but is not yet completed is a. work in process b. raw materials c. merchandise inventory d. finished goods

A

Most businesses enterprises in the United States are a. proprietorships and partnerships b. partnerships c. corporations d. government units

A

One of the accounting concepts upon which adjustments for prepayments and accruals are based is a. expense recognition b. cost c. monetary unit d. economic entity

A

Prepaid expenses are a. paid and recorded in an asset account before they are used or consumed b. paid or recorded in an asset account after they are used or consumed c. incurred but not yet paid or recorded d. incurred and already paid or recorded

A

Ratios that measure the income or operating success of a company for a given period of time are a. liquidity ratios b. profitability ratios c. solvency ratios d. trending ratios

A

Sassy Saxophones LIFO Method a. $18,320 b. $18,370 c. $38,480 d. $38,530

A

Trademarks would appear in which balance sheet section a. intangible assets b. investments c. property, plant, and equipment d. current assets

A

Two individuals at a retail store work the same cash register. You evaluate this situation as a. a violation of establishment of responsibility b. a violation of separation of duties c. supporting the establishment of responsibility d. supporting internal independent verification

A

Wang Company had the following transactions during 2016: - sales of $10,800 on account - collected $4,800 for services to be performed in 2017 - paid $2,600 cash in salaries - purchased airline tickets for $600 in December for a trip to take place in 2017 What is Wang's 2016 net income using cash basis accounting? a. $1,600 b. $2,800 c. $13,000 d. $2,200

A

When a perpetual inventory system is used, which of the following is a purpose of taking a physical inventory? a. to check the accuracy of the perpetual inventory records b. to determine cost of goods sold for the accounting period c. to compute inventory ratios d. all are a purpose of taking a physical inventory when a perpetual inventory system is used

A

Which of the following statements is correct? a. due to its liquid nature, cash is the easiest asset to steal b. a good system of internal control will ensure that employees will not be able to steal cash c. it takes two or more employees working together to be able to steal cash d. all of these answer choices are correct

A

Why do generally accepted accounting principles require the application of the revenue recognition principle? a. failure to apply the revenue recognition principle could lead to a misstatement of revenue b. it is easy to apply the revenue recognition principle because revenue issues are always easy to identify and resolve c. recording revenue when cash is received is an objective application of the revenue recognition principle d. accounting software has made the revenue recognition easy to apply

A

Barnes Company showed the following balances at the end of its first year Cash - $14,000 Prepaid Insurance - $700 Accounts Receivable - $3,500 Accounts Payable - $2,800 Notes Payable - $4,200 Common Stock - $5,400 Dividends - $700 Revenues - $29,000 Expenses - $17,500 What amount did Barnes Company show as total credits? a. $42,100 b. $41,400 c. $40,700 d. $42,800

B

Based on the following data, what is the amount of current assets? Accounts Payable - $62,000 Accounts Receivable - $100,000 Cash - $70,000 Intangible Assets - $100,000 Inventory - $138,000 Long-term Investments - $160,000 Long-term Liabilities - $200,000 Short-term investments - $80,000 Notes Payable - $56,000 Property, plant, and equipment - $1,340,000 Prepaid Insurance - $2,000 a. $232,000 b. $390,000 c. $252,000 d. $250,000

B

Bradshaw Corporation and Newell Corporation Based on this information, what is the amount of Bradshaw's earnings per share (rounded to two decimals) for 2017? a. $2.76 b. $2.50 c. $1.25 d. $1.32

B

Conway Company purchased merchandise inventory with an invoice price of $12,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Conway Company pays within the discount period? a. $12,000 b. $11,760 c. $10,800 d. $11,040

B

Crawford Company started the year with $60,000 in its Common Stock account and a credit balance in Retained Earnings of $44,000. During the year, the company earned net income of $48,000 and declared and paid $20,000 of dividends. In addition, the company sold additional common stock amounting to $28,000. As a result the amount of its retained earnings at the end of the year would be a. $160,000 b. $72,000 c. $132,000 d. $100,000

B

Crowder Corporation recorded the return of $200 of goods originally sold on credit to Discount Industries. Using the periodic inventory approach, Crowder would record this transaction as: a. inventory & accounts receivable b. sales returns and allowances & accounts receivable c. accounts payable & sales returns and allowances d. accounts receivable & sales returns and allowances

B

Determine the total amount of working capital Eddy Auto Supplies Balance Sheet December 31, 2017 a. $606,000 b. $351,000 c. $381,000 d. $261,000

B

During February 2017, its first month of operations, the owner of Schwenn Enterprises invested cash of $100,000. Schwenn had cash sales of $20,000 and paid expenses of $35,000. Assuming no other transactions impacted the cash account, what is the balance in Cash at February 28? a. $15,000 credit b. $85,000 debit c. $120,000 debit d. $65,000 credit

B

Financial information is presented below : The amount of net sales on the income statement would be a. $153,000 b. $150,000 c. $160,000 d. $157,000

B

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation? a. check for $63 recorded by the company as $36 b. deposit of $600 recorded by the bank as $60 c. a returned $300 check recorded by the bank of $30 d. check for $75 recorded by the company as $57

B

Given the data below for a firm in its first year of operation, determine net income under the accrual basis of accounting - cash received from customers $45,000 - accounts receivable 12,000 - cash paid for expenses 26,000 - accounts payable (related to expenses) 3,000 - prepaid rent for next period 7,000 a. $19,000 b. $28,000 c. $21,000 d. $12,000

B

If Hostell company has net sales of $500,000 and cost of goods sold of $350,000, Hostell gross profit rate is a. 70% b. 30% c. 43% d. 100%

B

If a company is given credit terms of 2/10, n/30, it should a. hold off paying the bill until the end of the credit period, while investing the money at 10% annual interest during this time b. pay within the discount period and recognize a savings c. pay within the credit period but don't take the trouble to invest the cash while waiting to pay the bill d. recognize that the supplier is desperate for cash and withhold payment until the end of the credit period while negotiating a lower sales price

B

Inventory costing methods place primary reliance on assumptions about the flow of a. good b. costs c. resale prices d. values

B

The expense recognition principle matches a. customers with businesses b. expenses with revenues c. assets with liabilities d. creditors with businesses

B

The partnership form of business organization a. is a separate legal entity b. is a common form of organization for service-type businesses c. enjoys an unlimited life d. has limited liability

B

The proprietorship form of business organization _____________. a. must have at least two owners in most states b. generally receives favorable tax treatment relative to a corporation c. combines the records of the business with the personal records of the owner d. is classified as a separate legal entity

B

The relationship between current assets and current liabilities is important in evaluating a company's a. profitability b. liquidity c. market value d. solvency

B

The right to receive money in the future is called a(n) a. account payable b. account receivable c. liability d. revenue

B

Tidwell Company's goods in transit at December include sales made and purchases made. Which items should be included in Tidwell's inventory at December 31? a. 2 & 3 b. 1 & 4 c. 1 & 3 d. 2 & 4

B

Which of the following is not an internal control activity for cash? a. the number of persons who have access to cash should be limited b. the functions of record keeping and maintaining custody of cash should be combined c. surprise audits of cash on hand should be made occasionally d. all cash receipts should be recorded promptly

B

A business organized as a corporation a. is not a separate legal entity b. requires that stockholders be personally liable for the debts of the business c. is owned by its stockholders d. has tax advantages over a proprietorship or partnership

C

A local retail shop has been operating as a sole proprietorship. The business is growing and now the owner wants to incorporate. Which of the following is NOT a reason for this owner to incorporate? a. ability to raise capital for expansion b. desire to limit the owner's personal liability c. the prestige of operating as a corporation d. the ease in transferring shares of the corporation's stock

C

After a business transaction has been analyzed and entered in the journal, the next step in the recording process is to transfer the information to a. the company's bank b. stockholders' equity c. ledger accounts d. financial statements

C

An account consists of a. a title, a debit balance, and a credit balance b. a title, a left side, and a debit balance c. a title, a debit side, and a credit side d. a title, a right side, and a debit balance

C

An employee assigned to counting computer monitors in boxes should a. estimate the number if there is a large quantity to be counted b. read each box and rely on the box description for the contents c. determine that the box contains a monitor d. rely on the warehouse records of the number of computer monitors

C

Andrea's Fashions sold merchandise for $190,000 cash during the month of July. Returns that month totaled $4,000. If the company's gross profit rate is 40%, Andrea's will report monthly net sales revenue and cost of goods sold of a. $190,000 and $114,000 b. $186,000 and $74,400 c. $186,000 and $111,600 d. $190,000 and $111,600

C

C Corporation - fiscal year ending October 31, 2017 Based on the accrual basis of accounting, what is C Corporation's net income for the year ending October 31, 2017? a. $132,000 b. $116,000 c. $106,000 d. $140,000

C

Debts and obligations of a business are referred to as a. assets b. equities c. liabilities d. expenses

C

Determine the total dollar amount of assets to be classified as investments Carne Auto Supplies Balance Sheet December 31, 2017 a. $0 b. $320,000 c. $180,000 d. $280,000

C

During January 2017, its first month of operation, Osborn Enterprises earned net income of $6,800 and paid dividends to the owners of $2,000. At January 31, the balance in Retained Earnings will be a. $0 b. $6,800 credit c. $4.800 credit d. $2,000 debit

C

Greese Company purchased office supplies costing $7,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $2,500 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be: a. debit supplies expense, $2,500; credit supplies, $2,500 b. debit supplies, $4,500; credit supplies expense, $4,500 c. debit supplies expense, $4,500; credit supplies, $4,500 d. debit supplies, $2,500; credit supplies expense, $2,500

C

Jack and Jill form a partnership. Jack runs the business in New York, while Jill vacations in Hawaii. During the time Jill is away from the business, Jack increases the debts of the business by $20,000. Which of the following statements is TRUE regarding this debt? a. only jack is personally liable for the debt, since he has been the managing partner during that time b. only jill is personally liable for the debt of the business, since jack has been working and she has not c. both jack and jill are personally liable for the business debt d. neither jack nor jill is personally liable for the business debt, since the partnership is a separate legal entity

C

Joe is a warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. As assessment of this situation indicates a. documentation procedures are violated b. independent internal verification is violated c. segregation of duties is violated d. establishment of responsibility is violated

C

Olympus Climber Company FIFO Method a. $930 b. $990 c. $2,010 d. $2,070

C

On July 1 the Fisher Shoe Store paid $24,000 to Acme Realty for 6 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by the Fisher Shoe Store is: a. debit rent expense, $24,000; credit prepaid rent, $4,000 b. debit prepaid rent, $4,000; credit rent expense, $4,000 c. debit rent expense, $4,000; credit prepaid rent, $4,000 d. debit rent expense, $24,000; credit prepaid rent, $20,000

C

The LIFO inventory method assumes that the cost of the latest units purchased are a. the last to be allocated to cost of goods sold b. the first to be allocated to ending inventory c. the first to be allocated to cost of goods sold d. not allocated to cost of goods sold or ending inventory

C

The current ratio is a. current assets plus current liabilities b. current assets minus current liabilities c. currents assets divided by current liabilities d. current assets times current liabilities

C

The entry to record the return of goods from a customer would include a a. debit to sales revenue b. credit to sales revenue c. debit to sales returns and allowances d. credit to sales returns and allowances

C

The left side of an account is a. blank b. a description of the account c. the debit side d. the balance of the account

C

The normal balance of any account is the a. left side b. right side c. side which increases that account d. side which decreases that account

C

Trumpeting Trumpets FIFO Method a. $18,320 b. $18,370 c. $38,480 d. $38,530

C

Using the following balance sheet and income statement data, what is the earnings per share? Current Assets - $32,000 Current Liabilities - $16,000 Average Assets - $160,000 Total Assets - $120,000 Net Income - $42,000 Stockholders' equity - $78,000 Total Liabilities - $42,000 Average common shares outstanding was 15,000 a. $5.20 b. $8.00 c. $2.80 d. $0.36

C

Which accounts normally have credit balances? a. revenues, liabilities, and dividends b. revenues, liabilities, and assets c. revenues, liabilities, and retained earnings d. revenues, liabilities, and expenses

C

Which of the following is NOT an advantage of the corporate form of business organization? a. no personal liability b. easy to transfer ownership c. favorable tax treatment d. easy to raise funds

C

Which of the following is an example of a deferral adjusting entry? a. accrued expense b. accrued revenue c. prepaid expense d. all of these choices are correct

C

Which of the following items does not result in an adjustment in the merchandise inventory account under a perpetual system? a. a purchase of merchandise b. a return of merchandise inventory to the supplier c. payment of freight costs for goods shipped to a customer d. payment of freight costs for goods received from a supplier

C

Which one of the following questions is MOST likely asked by an internal human resources director for the company? a. which product line is most profitable? b. what price for our product will maximize the company income? c. what average pay raise is affordable for employees this year? d. should any product lines be eliminated?

C

A current asset is a. the last asset purchased by a business b. an asset which is currently being used to produce a product or service c. usually found as a separate classification in the income statement d. expected to be converted to cash or used in the business within a relatively short period of time

D

A revenue account a. is increased by debits b. is decreased by credits c. has a normal balance of a debit d. is increased by credits

D

A small neighborhood barbershop that is operated by its owner would likely be organized as a a. joint venture b. partnership c. corporation d. proprietorship

D

Adjusting entries affect at least a. one revenue and one expense account b. one asset and one liability account c. one revenue and one balance sheet account d. one income statement account and one balance sheet account

D

Bonding involves all of the following EXCEPT a. the company obtains insurance protection against misappropriation of assets by a dishonest employee b. the insurance company screens employees before they are added to the policy c. the company informs employees that the insurance company will vigorously prosecute all offenders d. employees do not commit inappropriate acts because of the threat of prosecution and their loyalty to the employee

D

Charlene Cosmetics Company Average Cost Method a. $1,639 b. $1,824 c. $1.764 d. $1,680

D

Determine the total dollar amount of assets to be classified as property, plant, and equipment Eddy Auto Supplies Balance Sheet December 21, 2017 a. $1,029,000 b. $774,000 c. $834,000 d. $564,000

D

Earnings available to common stockholders is equal to a. total revenues b. net income + preferred dividends c. preferred dividends - net income d. net income - preferred dividends

D

If a company fails to adjust a prepaid rent account for rent that has expired, what effect will this have on that month's financial statements? a. failure to make an adjustment does not affect the financial statements b. expenses will be overstated and net income and stockholders' equity will be understated c. assets will be overstated and net income and stockholders' equity will be understated d. assets will be overstated and net income and stockholders' equity will be overstated

D

In a classified balance sheet, assets are usually classified as a. current assets; long-term assets; property, plant, and equipment; and intangible assets b. current assets; long-term investments; property, plant, and equipment; and common stocks c. current assets; long-term investments; tangible assets; and intangible assets d. current assets; long-term investments; property, plant, and equipment; and intangible assets

D

Of the following companies, which one would not likely employ the specific identification method for inventory costing? a. music store specializing in organ sales b. farm implement dealership c. antique shop d. hardware store

D

Piper Pipes LIFO Method a. $18,320 b. $18,380 c. $34,480 d. $38,530

D

Sampsons Company Periodic Sysytem - COGS Purchased a. $660,420 b. $708,420 c. $717,220 d. $691,620

D

Stan's Market recorded the following events involving a recent purchase of inventory: - received goods for $120,00, terms 2/10, n/30 - returned $2,400 of the shipment for credit - paid $600 freight on the shipment - paid the invoice within the discount period As a result of these events, the company's inventory a. increased by $115,248 b. increased by $118,200 c. increased by $115,836 d. increased by $115,848

D

The journal entry to record a credit sale ignoring cost of goods sold is a. cash & sales revenue b. cash & service revenue c. accounts receivable & sales returns and allowances d. accounts receivable & sales revenue

D

The primary difference between a periodic and perpetual inventory system is that a periodic system a. keeps a record showing the inventory on hand at all time b. provides better control over the inventories c. records the cost of the sale on the date the sale is made d. determines the inventory on hand only at the end of the accounting period

D

The receipt of cash in advance from a customer a. increases assets and stockholders' equity b. increases assets and decreases stockholders' equity c. increases assets and liabilities d. none of these answer choices are correct

D

The statement of cash flows would disclose the payment of a dividend a. nowhere on the statement b. in the operating activities section c. in the investing activities section d. in the financing activities section

D

Which assets normally have debit balances? a. assets, expenses, and revenues b. assets, expenses, and retained earnings c. assets, liabilities, and dividends d. assets, expenses, and dividends

D

Using accrual accounting, expenses are recorded and reported only a. when they are incurred whether or not cash is paid b. when they are incurred and paid at the same time c. if they are paid before they are incurred d. if they are paid after they are incurred

A

When expenses exceed revenues, which of the following is TRUE? a. a net loss results b. a net income results c. assets equal liabilities d. assets are increased

A

Which of the following is an advantage of corporations relative to partnerships and sole proprietorships? a. reduced legal liability for investors b. harder to transfer ownership c. lower taxes d. common form of organization

A

Alpha First Company just began business LIFO Method a. $1,456 b. $1,508 c. $1,848 d. $1,824

B

Financial information is presented below : Gross Profit would be a. $49,000 b. $42,000 c. $45,000 d. $52,000

B

Baker Bakery Company FIFO Method a. $1,456 b. $1,508 c. $1,824 d. $1,848

C

In the first month of operations, the total of the debit entries to the Cash account amount to $7,000 and the total of the credit entries to the Cash account amounted to $4,000. The cash account has a a. $4,000 credit balance b. $7,000 debit balance c. $3,000 debit balance d. $3,000 credit balance

C

Sampsons Company Periodic System - COGS Sold a. $702,220 b. $697,820 c. $681,020 d. $719,020

C

A debit to an asset account indicates a(n) a. error b. credit was made to a liability account c. decrease in the asset d. increase in the asset

D

An accountant has debited an asset account for $1,000 and credited a liability account for $500. What can be done to complete the recording of the transaction? a. nothing further must be done b. debit a stockholders' equity account for $500 c. debit another asset account for $500 d. credit a different asset account for $500

D

Financial information is presented below : Profit margin would be a. .28 b. .09 c. .30 d. .10

D

For 2017 Fielder Corporation reported net income of $32,000; net sales $400,000; and average share outstanding 16,000. There were no preferred dividends. What was the 2017 earnings per share? a. $0.08 b. $0.50 c. $25.00 d. $2.00

D

Quiet Phones Company LIFO Method a. $930 b. $990 c. $2,010 d. $2,070

D