Final Accounting 201A

An accountant has debited an asset account for $900 and credited a liability account for $600. What can be done to complete the recording of the transaction?

Debit a stockholders equity account for $300

A change in the estimated useful life of equipment requires

That the amount of periodic depreciation be changed in the current year and in future years

A high accounts receivable turnover ratio indicates:

Customers are making payments slowly.

Which of the following methods of computing depreciation is production based?

Units-of-activity

The balance in the Accumulated Depreciation account represents the

amount charged to expense since the acquisition of the plant asset.

what doesn't describe an account as an important part of the financial information system is

an account is a source document

The book value of an asset is equal to the

asset's cost less accumulated depreciation

Resources owned by a business are referred to as

assets

If market rate of interest is greater than the contractual rate of interest, bonds will sell

at a discount

Which of the following factors doesn't affect the initial market price of a stock?

The par value of the stock

Under allowance method, when a specific account is written off

Total assets will be uncharged

When collection is made on Accounts Receivable

Total assets will remain the same

Present value of a bond is also known as

market price

A 90- day note dated June 30th 2022 would mature on:

# of days from note-(number of all days of next month+ number of all days of next month)= remaining days into mature month

Aber Company buys land for $145,000 in 2021. As of 3/31/2022, the land has appreciated in value to $151,000. On 12/13/22, the land has an appraised value of $155,400. By what amount should the Land account be increased in 2022?

$0

Determine total amount of working capital:

(Cash+ account receivables+ inventory+ prepaid insurance)-(accounts payable+ salaries and wages payable)

How to calculate current ratio From balance sheet

(Cash+ accounts receivables+ inventory+ prepaid insurance)/(account payable + salaries and wages payable)

Outstanding stock of the west corporation included 40,000 shares of $5 par common stock and 10,000 shares of 5%, $10 par non-cumulative preferred stock. In 2019, West declared and paid dividends of $4,000. In 2020, West declared and paid dividends of $20,000. How much of the 2020 dividend was distributed to preferred shareholders?

(Preferred shares*preferred par value)*dividend rate= amount of dividend distributed to preferred shareholders ( 10,000 * $10 ) x .05= $5,000

Davies Company purchased merchandise inventory with an invoice price of $15,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Davies Company pays within the discount period?

(Purchase price*(1-.02))

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

(Sale amount-return)*(1-.03)

June 1st 150 units $1,040 June 10th 200 units $1,560 June 25th 200 units $1,680 June 28th 150 units $1,320 (total inventory) $5,600 Physical count of merchandise inventory on June 30th reveals that there re 210 units on hand. Using the average cost method, amount allocated to ending inventory on June 30th is:

(Total purchase cost/total number of units)* units on hand= amount allocated to ending inventory

Bonds with a face value of $600,000 and a quoted price of 104.25 have a selling price of:

(face value*quoted price in percentage form)=selling price

Oakville Inc. purchased a 12-month insurance policy on March 1, 2022 for $2400. At March 31, 2022, the adjusting journal entry to record expiration of this asset will include:

(insur. Pol. Cost. /12)=entry to record expiration

Brokaw Industries signs a 40,000 9% 6-month note payable on Sept. 1,2021. How much interest expense will Brokaw report in its 2022 financial statements?

(note amount*interest rate*2/12)= interest expense that should be reported

Stans Market recorded the following events involving a recent purchase of inventory: Received goods for $120,000, terms 2/10, n/30. Returned $2400 of the shipment for credit. Paid $600 freight on the shipment. Paid the invoice within discount period. The companies inventory is

(purchased amount-return)*(1-discount period percentage)+freight=inventory

Which of the following statements is true regarding inventory cost flow assumptions?

A company may use more than one costing method concurrently.

Which of the following isn't classified properly as a current asset?

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

Which of the following statements reflects the transferability of ownership rights in a corporation?

A stockholder may dispose of part or all of his shares.

Which of the following is not properly classified as property, plant and equipment?

A truck held for resale by an automobile dealership

Interest rate for a three-month loan would normally be stated in terms of which of the following rates of interest?

Annual

Kwantum Corporation has total assets of $3,600,000, common stock of $936,000, and retained earning of $570,000 at Dec 31st What are the creditors claims on their assets to date?

Assets-common stock-retained earnings=assets

Ottos tune-up shop follows the revenue recognition principle. Otto services a car on August 31st. The customer picks up the vehicle on Sept. 1 and mails the payments to Otto on Sept. 5th. Otto receives the check in the mail on Sept. 6th. When should Otto show that the revenue was recognized?

August 31

An assumption about cost flow is used:

Because prices usually change and tracking which units have been sold is difficult.

Primary difference between prepaid and accrued expenses is that prepaid expenses have

Been recorded and accrued expenses have not

When using the periodic system the physical inventory count is used to determine:

Both the cost of the goods in ending inventory and the sales value of goods sold during the period.

Liabilities are generally classified on a balance sheet as

Current liabilities and long-term liabilities

A system of internal control

Can be rendered ineffective by employee collusion

Moss County Bank agrees to lend the Sadowski Brick Company $500,000 on January 1. Sadowski Brick Company signs a $500,000, 6% 9-,month note. The entry made by Sadowski Brick Company on January 1st to record the proceeds and issuance of the note is

Cash 500,000 Notes Payable 500,000

A company purchased land for $350,000 cash. The real estate brokers commission was $25,000 and $35,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land is

Cash for land + real estate brokers commission + demolish = cost of land under historical cost principle

Rodgers Company purchased equipment and these costs were incurred: Cash price $ 55,000 Sales taxes $ 3,600 Insurance during transit $ 640 Installation and testing $ 860 Total costs $ 60,100 Rodgers will record the acquisition cost of the equipment as

Cash price+ sales tax + insurance + installation = cost of equipment

All of the following statements regarding convertible bonds are true except: 1. Convertible bonds sell at a higher price and pay a lower rate of interest than those without the conversion option 2. Convertible bonds can be converted into common stock at the option of the issuing company 3. Convertible bond stockholders benefit if the market price of common stock increases substantially 4. Bondholders with convertible bonds receive interest on the bonds until conversion

Convertible bonds can be converted into common stock at the option of the issuing company

In periods of rising prices, which is an advantage of using the LIFO inventory costing method?

Cost of goods sold will include the latest (most recent) costs and thus will be more realistic.

The retailer considers Visa and MasterCard sales as

Credit sales

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

Maximum benefit from independent internal verification is obtained when

Discrepancies are reported to management

Bonding involves all of the following except:

Employees don't commit inappropriate acts because of the threat of prosecution and their loyalty to the employer.

In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the

FIFO method

A merchandiser will earn an operating income of exactly $0 when

Gross profit equals operating expenses

Which of the following isn't one of the main factors that contribute to fraudulent activity?

Incompatible duties

Having one person responsible for the related activities of ordering merchandise, receiving goods, and paying for them:

Increases the potential for errors and fraud.

Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account?

Inventory

A debit balance in the Allowance for Doubtful accounts

Indicates that actual bad debt write offs have exceeded previous provisions for bad debts.

All of the following statements are true regarding the average collection period except:

It should generally exceed the credit term period.

Two key parties to a promissory note are the

Maker and the payee

Which of the following wouldn't be included in the definition of cash?

NSF checks

The accounts receivable turnover is computed by dividing

Net credit sales by average receivables

If the retained earnings account increases from the beginning of the year to end if the year, then

Net income is greater than dividends

Which of the following would not be subtracted from the balance per books on a bank reconciliation?

Outstanding Checks

Which one of the following isn't an objective of a system of internal controls?

Overstate liabilities in order to be conservative

Ace Inc has 10,000 shares of 4%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2020. What is the annual dividend on the preferred stock?

Preferred shares*Par Value/dividend percent= annual dividend on preferred stock

An adjusted trial balance

Proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made.

Lankston Company began the year by issuing $120,000 of common stock for cash. The company recorded revenues of $1,100,000, expenses of $960,000, and paid dividends of $60,000. What was Lankston's net income for the year?

Revenues-expenses=net income

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

The incorporation date

What is the rationale for the internal control principle, segregation of duties?

The work of one employee should, without duplication of effort, provide a reliable basis for evaluating the work of another employee.

Which of the following statements is correct with respect to inventories?

Under FIFO, ending inventory is based on latest units purchased

For 2022, Fielder Inc. reported net income of $42,000 had average shares outstanding of $16,000 paid preferred dividends of $10,000 and common dividends of $5000. What was 2022 earnings per share?

[(net income - preferred dividends)/ average share outstanding]= yearly earnings per share

if expenses are paid in cash, then

assets will decrease

Current portion of long-term debt should

be reclassified as a current liability

Which statement is true? 1. It takes two or more employees working together to be able to steal cash. 2. a bad system of internal control will ensure that employees will not be able to steal cash. 3. due to its liquid nature, cash is easiest asset to steal. 4. all of the statements.

cash is easiest asset to steal because of its liquidity

Chief accounting officer in a company is known as

controller

Bonds that may be exchanged for common stock at the option of the bondholders are called

convertible bonds

Treasury stock is

corporation's own stock, which has been reacquired and held for future use

Inventory costing methods place primary reliance on assumptions about the flow of

costs

A debit to an asset account indicates:

decrease in asset

The declining balance method of depreciation produces

decreasing depreciation expense each period

Tidwell Company's goods in transit at December 31 include sales made: 1. FOB destination 2. FOB shipping point and purchases made 3. FOB in transit 4. FOB shipping point Which items should be included in Tidwell's inventory at Dec 31st?

destination

Interest charged on a $300,000 note payable, at the rate of 6%, on a 90-day note would be:

face value * percentage rate*# of days on note/360 days= interest charged

Sale or transfer of accounts receivable in order to raise funds is called

factoring

What isn't an advantage of the corporate form of business organization?

favorable tax advantages

borrowing money is an example of

financing activity

Sales revenue less cost of goods sold is called

gross profit

Secured bonds are bonds that

have specific assets of the issuer pledged as collateral

debits

increase assets and decreases liabilities

Adjustments for accrued revenues:

increase assets and increased revenues

Treasury shares plus outstanding shares equal

issued stock

What of the following can't be depreciated

land

Regular dividends are declared out of

retained earnings

A retailer that collects sales taxes is acting as an agent for the

taxing authority

retained earnings

the amount of net income kept in the corporation for future use

What is true not true bout a 2-for-1 split?

total contributed capital increases