ACCT 108 Exam 1

The balance in the Accounts Receivable account decreased from $18,000 at the beginning of the month to $15,000 at the end of the month. Sales on account during the month totaled $130,000. No accounts receivable were written off as uncollectible during the month. Cash collections of accounts receivable during the month totaled: $127,000. $130,000. $133,000. $145,000.

$133,000.

Sales on account during the month totaled $78,000. Cash collections of accounts receivable during the month totaled $72,000. The balance in the Accounts Receivable account at the end of the month was $31,000. No accounts receivable were written off as uncollectible during the month. The balance in the Accounts Receivable account at the beginning of the month was: $25,000. $31,000. $37,000. $43,000.

$25,000.

Cash collected from customers during the year ended December 31, 2022 amounted to $314,000, and accounts receivable decreased by $42,000 during the year. How much were sales on account for the year ended December 31, 2022? (Assume that no cash sales were made during the year and that all sales on account are collectible.) Multiple Choice $230,000. $272,000. $314,000. $356,000.

$272,000.

Sales on account for the year ended December 31, 2022 were $355,000. Accounts receivable increased by $26,000 during the year. How much cash was collected from customers during the year ended December 31, 2022? (Assume that no cash sales were made during the year and that all sales on account are collectible.) Multiple Choice $303,000. $329,000. $355,000. $381,000.

$329,000.

Sales on account for the year ended December 31, 2022 were $355,000. Accounts receivable increased by $26,000 during the year. How much cash was collected from customers during the year ended December 31, 2022? (Assume that no cash sales were made during the year and that all sales on account are collectible.) $303,000. $329,000. $355,000. $381,000.

$329,000. (355-26)

Unquiet Hands, Incorporated borrowed $30,000 on October 1, 2022 at 6% interest with both principal and interest due on September 30, 2023. How much should be in Unquiet Hands, Incorporated's interest payable account at December 31, 2022? $450 $1,800 $0 $1,350

$450

Newman Company purchased CNC router cutting and engraving machinery at a cost of $320,000 in January 2022. The company's estimated useful life of this high-tech equipment is 5 years, and the estimated salvage value is $48,000. Using the straight-line method, the depreciation expense to be recognized for 2022, the first year of the machinery's life, would be: $54,400. $64,000. $73,600. $128,000.

$54,400. (Cost of an Asset - Residual Value)/Useful life of an Asset

Sales on account (all are collectible) amounted to $560,000 during 2022. Accounts receivable were $112,000 on January 1, 2022 and $98,000 on December 31, 2022. How much cash was collected from customers during the year ended December 31, 2022? $462,000. $546,000. $560,000. $574,000.

$574,000. (accounts receivable are apart from sales, so 560 + (112-98))

Speedbag, Incorporated purchased equipment at a cost of $60,000 on July 1, 2023. The expected useful life is 4 years and the asset is expected to have salvage value of $10,000. Speedbag depreciates its assets using the straight-line method. What is the company's depreciation expense for the year ended December 31, 2023? Multiple Choice $6,250 $7,500 $12,500 $15,000

$6,250

Selling, general, and administrative expenses were $80,000; net sales were $390,000; interest expense was $16,000; research and development expenses were $34,000; net cash provided by operating activities was $42,000; income tax expense was $10,000; cost of goods sold was $220,000. Net income was $40,000; accounts receivable decreased by $10,000; inventory increased by $3,000; proceeds from the issuance of long-term debt were $22,500; equipment purchases were $75,000; depreciation expense was $16,000. The net cash provided (used) by operating activities for the period was: Multiple Choice $10,500. $47,000. $49,000. $63,000.

$63,000

Selling, general, and administrative expenses were $80,000; net sales were $390,000; interest expense was $16,000; research and development expenses were $34,000; net cash provided by operating activities was $42,000; income tax expense was $10,000; cost of goods sold was $220,000. Net income was $40,000; accounts receivable decreased by $10,000; inventory increased by $3,000; proceeds from the issuance of long-term debt were $22,500; equipment purchases were $75,000; depreciation expense was $16,000. The net cash provided (used) by operating activities for the period was: $10,500. $47,000. $49,000. $63,000.

$63,000. (61000, creo) Gross Profit (Net Sales - Cost of Goods Sold) -Selling-Operating- General and Admin Expenses- reseach expenses

At the beginning of the year, paid-in capital was $492 and retained earnings was $282. During the year, the stockholders invested $144 and dividends of $36 were declared and paid. Retained earnings at the end of the year were $312. Net income for the year was: $120. $90. $66. $60.

$66.

The balance sheet shows the following accounts and amounts: Inventory, $42,000; Long-term Debt 62,500; Common Stock $30,000; Accounts Payable $22,000; Cash $66,000; Buildings and Equipment $195,000; Short-term Debt $24,000; Accounts Receivable $54,500; Retained Earnings $102,000; Notes Payable (nine month) $27,000; Accumulated Depreciation $90,000. Total current liabilities on the balance sheet are: $135,500. $163,000. $49,000. $73,000.

$73,000.

The balance sheet shows the following accounts and amounts: Cash $26,000; Short-term Debt $42,000; Buildings and Equipment $840,000; Inventory, $88,000; Notes Payable $120,000; Accumulated Depreciation $220,000; Common Stock $160,000; Accounts Receivable $76,000; Retained Earnings $474,000; Accounts Payable $34,000. Total assets on the balance sheet are: $810,000. $1,030,000. $1,250,000. $734,000.

$810,000.

At the beginning of the fiscal year, the balance sheet showed assets of $2,728 and stockholders' equity of $1,672. During the year, assets increased $148 and liabilities decreased $76. Liabilities at the end of the year totaled: $980. $1,056. $1,672. $1,820.

$980.

Which of the following statements is true regarding the reporting of discontinued operations? --The impact that the discontinued operations had on any previous year results is not shown for comparative purposes. --The income or loss, net of taxes, of the discontinued operations is reported as a separate component of income from continuing operations. --Earnings per share data are not reported separately for discontinued operations. --By reporting discontinued operations as a separate item, net of taxes, all of the effects of the discontinued business segment are excluded from the revenues, expenses, gains, and losses of continuing operations

--By reporting discontinued operations as a separate item, net of taxes, all of the effects of the discontinued business segment are excluded from the revenues, expenses, gains, and losses of continuing operations

Matching revenues and expenses refers to: --having revenues equal expenses. --recording revenues when cash is received. --accurately reflecting the results of operations for a fiscal period. --recording revenues when the extending warranty period for the product sold has expired.

--accurately reflecting the results of operations for a fiscal period.

The concept of matching revenue and expense refers to the fact that: --expenses incurred during a period equal the revenues earned during the period. --all costs incurred in the process of earning revenues during a period are recorded as expenses in that period. --all cash disbursements during a period are subtracted from all cash receipts during the period. --all costs incurred in the process of earning revenues during a period are deferred and expensed in a future period.

--all costs incurred in the process of earning revenues during a period are recorded as expenses in that period.

The principle of full disclosure means that the reporting company must fully disclose: --all client data. --all proprietary information. --all necessary information to prevent a reasonably astute user of financial statements from being misled. --all necessary information to prevent all users of financial statements from being misled.

--all necessary information to prevent a reasonably astute user of financial statements from being misled.

A chart of accounts: --is where transactions are initially recorded. --is where transactions are posted to after they are initially recorded. --serves as an index to the ledger, with each account numbered to facilitate frequent references that are made to it. --is the same as a T-account, with debits on the left and credits on the right.

--serves as an index to the ledger, with each account numbered to facilitate frequent references that are made to it.

The balance sheet of a company: --shows the fair value of the assets at the date of the balance sheet. --reflects the impact of inflation on the replacement cost of the assets. --reports plant and equipment at its opportunity cost. --shows amounts that are not adjusted for changes in the purchasing power of the dollar.

--shows amounts that are not adjusted for changes in the purchasing power of the dollar.

Paid-in Capital represents: --earnings retained for use in the business. --the amount invested in the company by the stockholders. --fair value of the company's common stock. --net assets of the company at the date of the statement.

--the amount invested in the company by the stockholders.

The principle of consistency means that: --the accounting methods used by a company never change --the same accounting methods are used by all companies in an industry. --the effect of any change in an accounting method will be disclosed in the financial statements or notes thereto. --there are no alternative methods of accounting for the same transaction.

--the effect of any change in an accounting method will be disclosed in the financial statements or notes thereto.

n the statement of cash flows, depreciation and amortization expense is added back to net income because: Multiple Choice --these expenses do not affect cash, but were subtracted in the determination of net income. --these expenses affect investing activities, not operating activities. --the cash disbursements for these accrued expenses will be made in a future period. --these expenses are recognized for accounting purposes, but they do not represent economic costs.

--these expenses do not affect cash, but were subtracted in the determination of net income.

Which of the following is not a transaction to be recorded in the accounting records of a company? -Investment of cash by the owners -Sale of product to customers -Receipt of a plaque recognizing the company's encouragement of employee participation in the United Way fund drive -Receipt of services from a "quick-print" shop in exchange for the promise to provide advertising design services of equivalent value

-Receipt of a plaque recognizing the company's encouragement of employee participation in the United Way fund drive

Retained Earnings represents: -the amount invested in the company by the stockholders -cash that is available for dividends. -cumulative net income that has not been distributed to stockholders as -dividends. -par value of common stock outstanding.

-cumulative net income that has not been distributed to stockholders as -dividends.

The purpose of the income statement is to show the: -change in the fair value of the assets from the prior income statement. -market value per share of stock at the date of the statement. -revenues collected during the period covered by the statement. -net income or net loss for the period covered by the statement.

-net income or net loss for the period covered by the statement.

The balance sheet shows the following accounts and amounts: Cash $13,000; Short-term Debt $21,000; Buildings and Equipment $420,000; Inventory, $44,000; Notes Payable $60,000; Accumulated Depreciation $110,000; Common Stock $80,000; Accounts Receivable $38,000; Retained Earnings $237,000; Accounts Payable $17,000. Total assets on the balance sheet are: 367,000 405,000 515,000 625,000

405,000

Which of the following is an accurate statement regarding a statement of cash flows? Multiple Choice Only cash items that affect the income statement are included. Only material cash items that affect the income statement are included. All material operating, investing, and financing activities are included. Immaterial financing activities that affect cash do not need to be included.

All material operating, investing, and financing activities are included.

The balance sheet equation can be represented by: Assets = Liabilities + Stockholders' Equity Assets − Liabilities = Stockholders' Equity Net Assets = Stockholders' Equity All of the answers are correct.

All of the answers are correct.

Which of the accounts listed below would appear on a company's income statement? Income Tax expense Accumulated Depreciation Notes payable land sales common stock cost of good sold Equipment Accounts receivable Rent expense supplies buildings service revenue cash

Income Tax expense. Yes Accumulated Depreciation No Notes payable No land No sales Yes common stock No cost of good sold Yes Equipment No Accounts receivable No Rent expense Yes supplies No buildings No service revenue Yes cash No

In an advertiser's records, a newspaper ad submitted and published this week with the agreement to pay for it next week would: decrease assets and decrease expenses. increase liabilities and increase expenses. decrease assets and increase revenue. increase assets and decrease liabilities.

increase liabilities and increase expenses.

debit entry will: always decrease the account balance. always increase the account balance. increase the balance of a revenue account. increase the balance of an expense account.

increase the balance of an expense account.

The earnings per share of common stock calculation: Multiple Choice is made by dividing net income by the number of shares of common stock authorized at the end of the year. is complicated by the declaration of cash dividends during the year. includes gains or losses from treasury stock transactions. is complicated by the presence of preferred stock in the capital structure.

is complicated by the presence of preferred stock in the capital structure

The earnings per share of common stock calculation: Multiple Choice is made by dividing net income by the number of shares of common stock authorized at the end of the year. is complicated by the declaration of cash dividends during the year. includes gains or losses from treasury stock transactions. is complicated by the presence of preferred stock in the capital structure.

is complicated by the presence of preferred stock in the capital structure.

A fiscal year: is always the same as the calendar year. is frequently selected based on the company's operating cycle. must always end on the same date each year. must end on the last day of a month.

is frequently selected based on the company's operating cycle.

A journal: is where transactions are initially recorded. is where transactions are posted to after they are initially recorded. serves as an index to the ledger is the same as a source document, such as an invoice from a supplier or a copy of a credit purchase made by a customer.

is where transactions are initially recorded.

A ledger: --is where transactions are initially recorded. --is where transactions are posted to after they are initially recorded. --is the same as a chart of accounts, with each account numbered to facilitate frequent references that are made to it. --is the same as a source document, such as an invoice from a supplier or a copy of a credit purchase made by a customer.

is where transactions are posted to after they are initially recorded.

The gross profit ratio is useful to the manager for each of the following purposes except that: Multiple Choice it can be used to determine the selling price to set for an item. it can be used to estimate the amount of inventory lost in a fire. it can be used to determine the amount available from a given amount of revenue to cover operating expenses. it can be used to estimate the amount of operating expenses for a period.

it can be used to estimate the amount of operating expenses for a period.

The accounting concept/principle being applied when an adjustment is made is usually: matching revenue and expense. consistency. original cost. materiality.

matching revenue and expense.

The Statement of Changes in Stockholders' Equity shows: the change in cash during a year. revenues, expenses, and liabilities for the period. net income and dividends for the period. paid-in capital and long-term debt at the end of the period.

net income and dividends for the period.

The first caption in most income statements in annual reports is: Multiple Choice gross sales. net sales. earned revenues. sales, less sales returns and allowances.

net sales.

Consolidated financial statements report financial position, results of operations, and cash flows for: parent corporation and its subsidiaries a parent corporation alone two corporations that are owned by the same individual a parent corporation and its 100% owned subsidiaries only.

parent corporation and its subsidiaries

Recognition of revenue in accrual accounting requires: that cash be received. only that the amount of cash to be received from the sale of a product or service be known. only that a product be delivered or a service be performed. that the revenue be realized or realizable, and earned.

that the revenue be realized or realizable, and earned.

The going concern concept refers to a presumption that: the entity will be profitable in the coming year. the entity will not be involved in a merger within a year. the entity will continue to operate in the foreseeable future. top management of the entity will not change in the coming year.

the entity will continue to operate in the foreseeable future.

The effect of an adjustment is: to correct an entry that was not in balance. to increase the accuracy of the financial statements. to record cash receipts and payments not previously recorded .to close the books.

to increase the accuracy of the financial statements.

An item that cost $270 is sold for $360. The gross profit ratio for this item is: 20% 25% 33.3% 60%

15% ((360-270)/360)

Listed below are a number of accounts. Identify the asset and non asset accounts. Land Common Stock Merch Inventory equipment Costs of goods sold Acc Receivable Interest expense Supplies Long-term Debt cash sales accounts payable buildings Retained earnings

Land Asset Common Stock. Nonasset Merch Inventory. Asset equipment. Asset Costs of goods sold. Nonasset Acc Receivable. Asset Interest expense. Nonasset Supplies. Asset Long-term Debt. Nonasset cash. Asset sales. Nonasset accounts payable Nonasset buildings. Asset Retained earnings. Nonasset

The balance sheet might also be called: Statement of Financial Position. Statement of Assets Statement of Changes in Financial Position Statement of Equity.

Statement of Financial Position.

The balance in the Wages Payable account was $20,000 at the beginning of the month. Wages accrued during the month totaled $38,000. Wages paid during the month were $43,000. The balance of the Wages Payable account at the end of the month was $15,000. The balance of the Wages Payable account at the end of the month was $38,000. Wages expense for the month totaled $43,000. Wages expense for the month totaled $58,000.

The balance of the Wages Payable account at the end of the month was $15,000.

Stockholders' equity refers to which of the following? A listing of the organization's assets and liabilities The ownership rights of the stockholders of the company Probable future sacrifices of economic benefits The amount of resources controlled by the company

The ownership rights of the stockholders of the company

Most entities satisfy the accounting criteria for recognizing an expense when: a commitment is made to purchase a product or service. cash is paid to a supplier. a cost is incurred in the revenue generating process. a dividend is paid to stockholders.

a cost is incurred in the revenue generating process.

When a firm purchases supplies for its business: the supplies account should always be debited. the supplies expense account should always be debited. either the supplies account or the supplies expense account should be credited. an adjustment will probably be required as supplies are used.

an adjustment will probably be required as supplies are used.

The accountant at WooSah! USA made an adjusting entry at the end of February to accrue interest on a note receivable from a customer. The effect of this entry is to: decrease ROI for February. increase ROI for February. decrease working capital at February 28. decrease the acid-test ratio at February 28.

increase ROI for February.

A credit entry will: increase an asset account. increase a liability account. decrease paid-in capital increase an expense account.

increase a liability account.

In the seller's records, the sale of merchandise on account would: increase assets and increase expenses .increase assets and decrease liabilities. increase assets and increase paid-in capital. increase assets and decrease revenues.

increase assets and increase expenses

A newspaper ad submitted and published this week, with the agreement to get paid for it next week would, in the newspaper's records: increase assets and increase revenues .increase assets and decrease liabilities. increase assets and increase expenses. have no effect on total assets.

increase assets and increase revenues