acct one 2113 final
which on of the following statements is false?
a cost of goods sold accounts is updated after each sale of merchandise under the periodic inventory system
when an inventory system updates the inventory account at the time of each sale, this is known as:
a perpetual system
which of the following items would appear in the current liabilities section of the balance sheet
accrued income taxes
the recognition of cost of goods sold expense in the same period that sales revenues is recognized from the sale of merchandise is a good example of the:
matching principle
which of the following accounts is classified as a long-term liability?
not payable, due in three (3) years
the formula neede to compute "additional paid-in capital excess of par" is:
number of issued shares times (selling price per share - par value per share
all of the following are the types of activities that businesses engage in except:
organizational activies
the number of shares of issued stock equals
outstanding shares plus treasury shares
Srbanes-oxley act
passed by congress 2002 to bring about major reforms in corporate accountability and stewardship.
which one of the following is considered a financing activity?
payment of cash dividend
depreciation each year is computed as followed:
(acquisition cost - Residual Value) / life
which of the following equations represents retained earnings activity?
beg. bal.+net income- dividends= ending balance
retained earnings
beg. retained earnings + net income - dividends= ending retained earnings
bonds are a popular source of financing because
bond interest expense is deductible for tax purposes, while dividends paid on stock are not
Units of production method:
depreciation directly to the wear and tear of the asset.
cost of goods sold
direct costs attributable to the production of the goods sold in a company. This amount includes the cost of the materials used in creating the good along with the direct labor costs used to produce the good. It excludes indirect expenses such as distribution costs and sales force costs.
a 2-for-1 stock split will
double the number of shares of stock and halve the par value per share
the retained earnings account balance for a large corporations is 10 mill. this amount represents
earnings that have not been distributed to shareholders.
all of the following refer to the face rate of interest on a bond except:
effective rate
an invoice received from a supplier for 8,000 on jan 1 with terms 1/15,n/30 means that the company should pay
either 7,900 before jan 16 or 8,000 before the end of the month
statement of retained earnings
explains the change in retained earning during the period
SEC
federal gov. agency that overseas publicly traded companies ultimate authority to determine rules for preparing statements for companies whose stock is sold to the public
balance sheet
financial statement that summarizes assets, liabilities, and owners' equity at a specific point in time, usually the end of a month, quarter, or year
which of the following categories on a statement of cash flows is used to report the cash flow effects of transactions involving a company's stock?
financing activities
the inventory account a manufacturer uses to record the cost of products completed and available for sale is called
finished goods inventory
financial statements are?
how accountants communicate A=L+OE (accounting equation.
which of the the following subtotals or totals would appear in a multiple-step, but not a single-step income statement?
income from operations
an example of a current liability that must be accrued is
income taxes payable
when bonds are issued by a comany, the accounting entry show
increase in assets and increase in liabilities
accumulated depreciation
increases when the monthly adjustment for depreciation is recognized
the purchase of office equipment at a cost of $2600 with an immediate down payment of $1200 and agreement to pay the balance within 60 days is recorded in the accounts by:
increasing office equipment for $2,600, decreasing cash for $1200, and increasing accounts payable for $1400
faithful representation
information should accurately represent what it claims to represent.
Relevant
information that is useful to the decision-making process
on may 1, the chris company borrowed 30,000 from third street bank on a 1-year, 6% note. if the company keeps its records on a calendar year, an adjustment is needed on december 31 to increase
interest payable, 1,200
when is a consolidated financial statement required?
is required if a company owns more than 50 % of another company
coservatism
is the practice of using the least optimistic estimates when two estimates of amounts are about equally likely
"claims to economic resources" are know as:
liabilities and stockholders equity
convertible bonds are attractive to investors because
the can be converted into stock at the issuer's option
the primary purpose of the statement of cash flows is to provide information about
the cash inflows and outflows of a company
which of the following entries causes a decrease in assets and in net income
the entry to record the payment of utilities with cash
which of the following sets of factors is needed to calculate a depreciation on plant and equipment
the estimated life of the asset, its acquisition cost, and its estimated residual life
materiality:
the magnitude of an accounting information omission or misstatement that will affect the judgment of someone relying on the information
book value of asset (straight line):
the original cost of the asset minus the amount of accumulated depreciation
which of the following statements os not correct
the portion of an annual dividend on cumulative preferred stock which has not been paid
a company has issued both common and preferred stock. when a company pays a cash dividend to stockholders,
the preferred stockholders receive a dividend before common stockholder are paid
understandability
the quality of accounting information that makes it comprehensible to those willing to spend the necessary time to understand it.
comparability
the quality that allows a user to analyze two of more companies and look for similarities and difference
which of the following should be classified as an investing activity on the statement of cash flows
the sale of a warehose
straight line depreciation interests
the simplest way to account for the amortization of a bond on a company's financial statements. This method attributes equal interest expense to every accounting period until the bond matures.
deacon company purchased equipment last year for $30,000. the equipment has an estimated useful life of five years. what amount will appear on the income statement for depreciation expense for the month of march, 2014?
$500
blanton company bought equipment on january 1, 2010 with a cost of 160,00, an estimated residual value of 40,000, and an estimated life of 15 years was depreciated by the straight line method for 4 years. waht is the accumulated depreciation at the end of 2013
32,000
jan 2, 2015 roof master construction inc. issued 500,000, 10-year bonds for 574,540. the bonds pay interest on june 30 and december 31. the face rate is 8% and the market rate is 6%. at the maturity date, besides an interest payment, roof master would repay the bondholders.
500,000
if a company ha C.A. of 220,200 and C.L fo 53,200 the working capital is
51,400
Barton resort incurred the following costs to acquire and prepare land during 2015 for a new parking lot: purchase price for land, 800,000; cost to clear land, 30,000; cost for paving; 40,000; and lighting for the parking lot, 20,000. how much should barton record in the land improvements account?
60,000
bonds in the amount of 100,000 and a life of 10 years were issued by the focus com[any. if the face rate is 6% and interest is paid semiannually, what would be the total amount of interest paid over the life of the bonds
60,000
sales discounts is classified as what type of account
A contra-revenue
which one of the following equations represents retained earnings activity?
Beg. bal.+net income- dividends= ending balance
In order to determine inventory for its balance sheet, it is best for a company to count the inventory at the end of its accounting period.
Both the periodic and perpetual inventory systems
which balance sheet accounts are most affected by operating activities?
C.A. and C.L.
all of the following are included in the acquisition cost of property, plant, and equipment
Maintenance cost
forms of organization entities
Sole proprietorship, partnership, corporation
single-step
all expenses are added together and deducted in a single step from the sum of all rev... R-E (simple)
Straight line method
allocates depreciation expense evenly over the asset's life.
consistency
allows comparison of the financial statements for the same company from one accounting period to the next
depreciation is
an effort to achieve proper matching of the cost of operating assets.
revenues
are the inflows or other enhancements of assets or settlement of liabilities from delivering or providing a goods, or rendering services to customers that constitute the entity's ongoing major or central operations
how should the "purchase of inventory with cash" be reported on the statement of cash flows
as an operating activity
interest payable on a loan becomes a liability
as it accrues
what happens to the accounting equation when the adjustment for depreciation expense for the accounting period is recorded?
assets decrease and stockholders' equity decreases
one effect on the accounting equation when a firm borrows money is
assets increase
services are provided for customers who pay for the services immediately. for this transaction, identify the effects on the accounting equation
assets increase and stockholders' equity increases
carl and stefanie each invest $15,000 in a business and are given shares of stock in Thibeau Industries as evidence of their ownership interests. for this transaction, identify the effect on the accounting equation.
assets increase and stockholders' equity increses
mathcing princibles
associate revenues with the costs necessary to generate them.
when are cash dividends a reduction from the retained earnings account
at the time the dividend is declared
payment is made for land purchased earlier on credit. for this transaction, identify the effect on the accounting equation.
liabilities decrease and assets decrease.
which of the following statements is true with respect to long term liabilities
long term liabilities include bonds, other long term liabilities and deferred income taxes
which of the following is not an operating avtivity
cash payments for dividends to stockholders
which of the following statements regarding contingencies is true?
contingent that are probable and not estimable are disclosed in the notes to the financial statements.
whoch of the following terms bes describes "cost of goods available for sale"?
cost of goods available for sale is allocated into cost of goods on hand and cost of goods sold at the end of the fiscal year
which one of the following accounts most likely would appear on the income statement of a merchandise company, but NOT on the income statement of a service company?
cost of goods sold
which balance sheet accounts are most affected by investing activities
long-term asset
what is the correct method for calculating working capital?
current asset minus current liabilities
the current portion of long-term debt is a balance sheet item for flavorful products company. how would it most likely be classified on the balance sheet.
current liability
which of the following would appear on the balance sheet as a current liability?
premium offers in cereal boxes
FASB
private sector authority to set accounting statndards
PCAOB
responsible for world wide accounting standards
if the landlord has rent________, then the tenant has rent_______.
revenue;expense
which of the following is not an investing activity
sale of merchandise for cash
which of the following is not a financing activity
selling an investment in ibm stock for cash
multiple-step:
subdivides statement into specific sections, with important subtotals
statement of cash flow
summarizes the cash receipts and cash payments during the period from a company's operating, investing, and financing activities.
income statement
summarizes the revenues and expenses for a period of time
which of the following statements is correct
the actual issue price of a bond represents the present value of all future cash flows related to the bond
on august 31, Farrell corporation signed a one-year contract to provide services to Harrils Company for $30,000. Harris will pay for the services on September 1. using the accrual basis of accounting, when should Farrel corporation recognize revenue?
throughout the year as the revenue is earned
which of the following concepts is important to accrual accounting?
time period, because accrual accounting divides earning into time periods
what is the primary objective of financial reporting
to provide useful information for decision making
one effect on the accounting equation when a firm lends money is:
total assets remain the same
which of the following items would be considered a cash equivalent if it was hed at the balance sheet date?
u.s. treasury bill purchased when there were 90 days until maturity
expenses originate from:
using an asset or recognizing liabilities
working capital
working capital= current assets-current liabilities
