Financial Accounting Final Study Guide
When goods are sold to a customer with credit terms of 10/3, n/30, the customer will receive a A. 10% discount if they pay within 3 days. B. 3% discount if they pay 10% of the amount due within 30 days. C. 10% discount if they pay within 30 days. D. 3% discount if they pay within 10 days.
A. 10% discount if they pay within 3 days.
A check was correctly written for $673 for the supplies purchased on account. The check was recorded in the journal as $637. The entry to correct this error would: A. Decrease Cash by $36 B. Decrease Cash by $673 C. Increase Supplies by $36 D. Increase Supplies by $673
A. Decrease Cash by $36
Davies Company began January with $17,800 of merchandise inventory. During January, Davies made the following entries for its inventory transactions: Inventory 10,000 Accounts Payable 10,000 Accounts Receivable 12,000 Sales Revenue 12,000 Cost of Goods Sold 6,000 Inventory 6,000 How much was Oceanview's inventory at the end of January? A. $27,800 B. $21,800 C. $10,000 D. $4,000
B. $21,800
A year-end review of Accounts Receivable and estimated uncollectible percentages revealed the following: 1-30 days $50,000 2% 31-60 days $12,000 8.0% 61-90 days $7,000 22.0% Amounts over 90 days past due are written off. The credit balance in Allowance for Uncollectible Accounts was $650. The bad debts expense for the year is: A. $1,000 B. $2,910 C. $2,850 D. $3,500
C. $2,850
Nick's Auto Repair paid $240,000 for a piece of equipment. Nick's Auto Repair uses straight-line depreciation. Currently the equipment has a balance in the accumulated depreciation account of $120,000. If the asset has no residual value and an estimated life of 6 years, for how many years has the asset been depreciated? A. 1 B. 2 C. 3 D. 5
C. 3
A company just began business and made the following four inventory purchases in June: June 1 150 units $ 990 June 10 200 units 1,344 June 15 200 units 1,368 June 28 150 units 1,062 $4,764 A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the average-cost method, the amount allocated to the ending inventory on June 30 is a. $1,361. b. $1,416. c. $1,320. d. $1,344.
a. $1,361.
ABC Company had total assets of $270,000 and total stockholders' equity of $30,000 at the beginning of the year. During the year assets increased by $35,000 and liabilities increased by $25,000. Stockholders' equity at the end of the year changed by a. $10,000 b. $30,000 c. $35,000 d. $40,000
a. $10,000
Apple-A-Day Company has the following inventory data: July 1 Beginning inventory 40 units at $20 $ 800 7 Purchases 140 units at $21 2,940 22 Purchases 20 units at $22 440 $4,180 A physical count of merchandise inventory on July 30 reveals that there are 50 units on hand. Using the LIFO inventory method, the amount allocated to cost of goods sold for July is a. $3,170. b. $3,080. c. $3,110. d. $3,010.
a. $3,170.
. Peninsula Company reported net income of $290,000 for the year. During the year, accounts receivable increased by $21,000, accounts payable decreased by $9,000 and depreciation expense of $45,000 was recorded. Net cash provided by operating activities for the year is a. $305,000. b. $275,000. c. $257,000. d. $290,000.
a. $305,000.
Johnson Company issued 900 shares of no-par common stock for $17,100. Which of the following journal entries would be made if the stock has no stated value? a. Cash 17,100 Common Stock - No-Par Value 17,100 b. Cash 17,100 Common Stock - No-Par Value 900 Paid-in Capital in Excess of Par 16,200 c. Cash 17,100 Common Stock - No-Par Value 900 Paid-in Capital in Excess of Stated Value 16,200 d. Common Stock - No-Par Value 17,100 Cash
a. Cash 17,100 Common Stock - No-Par Value 17,100
A paid dividend a. Decreases assets and stockholders' equity b. Increases assets and stockholders' equity c. Increases assets and decreases stockholders' equity d. Decreases assets and increases stockholders' equity
a. Decreases assets and stockholders' equity
Which of the following statements is NOT true? a. Expenses increase stockholders' equity b. Expenses have normal debit balances c. Expenses decrease stockholders' equity d. Expenses are a negative factor in the computation of net income
a. Expenses increase stockholders' equity
Which of the following adjustments to convert net income to net cash provided by operating activities is not added to net income? a. Gain on Disposal of Equipment. b. Depreciation Expense. c. Patent Amortization Expense. d. Depletion Expense.
a. Gain on Disposal of Equipment.
. A corporation purchases 20,000 shares of its own $20 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders' equity? a. Increase by $700,000. b. Decrease by $400,000. c. Decrease by $700,000. d. Decrease by $300,000.
a. Increase by $700,000.
1. The two fundamental qualities of useful information are a. Relevance and faithful representations b. Verifiability and timelessness c. Comparability and flexibility d. Understandability and consistency
a. Relevance and faithful representations
Which account will have a zero balance after closing entries have been journalized and posted? a. Service revenue. b. Supplies. c. Prepaid Insurance. d.Accumulated Depreciation.
a. Service revenue.
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 to a. add $54 to the book's balance. b. subtract $54 from the book's balance. c. deduct $54 from the bank's balance. d. deduct $628 from the book's balance.
a. add $54 to the book's balance.
Investing activities include a. collecting cash on loans made. b. obtaining cash from creditors. c. obtaining capital from owners. d. repaying money previously borrowed.
a. collecting cash on loans made.
. The date on which a cash dividend becomes a binding legal obligation is on the a. declaration date. b. date of record. c. payment date. d. last day of the fiscal year-end.
a. declaration date.
. The board of directors of Yancey Company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on July 15, 2020. The dividend is to be paid on August 15, 2020, to stockholders of record on July 31, 2020. The effects of the journal entry to record the declaration of the dividend on July 15, 2020, are to a. decrease stockholders' equity and increase liabilities. b. decrease stockholders' equity and decrease assets. c. increase stockholders' equity and increase liabilities. d. increase stockholders' equity and decrease assets.
a. decrease stockholders' equity and increase liabilities.
The declining-balance method of depreciation produces a(n) a. decreasing depreciation expense each period. b. increasing depreciation expense each period. c. declining percentage rate each period. d.constant amount of depreciation expense each period
a. decreasing depreciation expense each period.
In calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is a. deducted from net income. b. added to net income. c. ignored because it does not affect income. d. ignored because it does not affect expenses.
a. deducted from net income.
The use of prenumbered checks is an example of a. documentation procedures. b. independent internal verification. c. establishment of responsibility. d. segregation of duties.
a. documentation procedures.
With an interest-bearing note, the amount of assets received upon issuance of the note is generally a. equal to the note's face value. b. greater than the note's face value. c. less than the note's face value. d.equal to the note's maturity value
a. equal to the note's face value.
Deposits in transit a. have been recorded on the company's books but not yet by the bank. b. have been recorded by the bank but not yet by the company. c. have not been recorded by the bank or the company. d. are customers' checks that have not yet been received by the company.
a. have been recorded on the company's books but not yet by the bank.
Goods purchased for future use in the business, such as supplies, are called: a. prepaid expenses. b. revenues. c. stockholders' equity. d. liabilities.
a. prepaid expenses.
Before adjusting entries, unearned revenues are: a. recorded as liabilities before they are recognized as revenue. b. recognized as revenue and recorded as liabilities before they are received. c. recognized as revenue but not yet received or recorded. d. recognized as revenue and already received and recorded.
a. recorded as liabilities before they are recognized as revenue.
If goods in transit are shipped FOB destination a. the seller has legal title to the goods until they are delivered. b. the buyer has legal title to the goods until they are delivered. c. the transportation company has legal title to the goods while the goods are in transit. d.no one has legal title to the goods until they are delivered.
a. the seller has legal title to the goods until they are delivered.
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. $11,760
Newell Company purchased equipment on January 1, 2021 at a total cost of $394,000. The equipment has an estimated salvage value of $60,000 and an estimated useful life of 5 years. What is the amount of accumulated depreciation at December 31, 2022 if the straight-line method of depreciation is used? a. $66,800. b. $133,600. c. $260,400. d. $327,200.
b. $133,600.
Financial information is presented below: Operating expenses $ 45,000 Sales returns and allowances 3,000 Sales discounts 7,000 Sales revenue 160,000 Cost of goods sold 96,000 The amount of net sales on the income statement would be a. $153,000. b. $150,000. c. $160,000. d. $157,000.
b. $150,000.
At the beginning of the year, Uptown Athletic had an inventory of $600,000. During the year, the company purchased goods costing $2,250,000. If Uptown Athletic reported ending inventory of $750,000 and sales of $3,000,000, their cost of goods sold and gross profit rate would be a. $1,500,000 and 70%. b. $2,100,000 and 30%. c. $1,500,000 and 30%. d. $2,100,000 and 70%.
b. $2,100,000 and 30%.
The cash register total including sales taxes is $38,160. If the sales tax rate is 6%, what amount must be remitted to the state for February's sales taxes? a. $2,290 b. $2,160 c. $2,152 d. It cannot be determined.
b. $2,160
The interest on a $20,000, 6%, 60-day note receivable is (assume 360 days in a year) a. $1,200. b. $200. c. $400. d. $600.
b. $200.
Land costing $125,000 was sold for $355,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land? a. $155,000. b. $355,000. c. $310,000. d. $230,000.
b. $355,000.
Bagley Company's accounts receivable arising from sales to customers amounted to $120,000 and $105,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $457,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is a. $457,000. b. $472,000. c. $562,000. d.$442,000
b. $472,000.
If Martinelli Corporation realizes a gain of $81,000 on a cash sale of equipment having a book value of $600,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is a. $519,000. b. $681,000. c. $600,000. d. $81,000.
b. $681,000.
Grantham Corporation reports the following ledger account balances at June 30, 2022: Cash $1,662 Accounts receivable 2,098 Inventory 3,124 Prepaid rent 86 Equipment 300 Accumulated depreciation-equipment 52 Accounts payable 82 Unearned rent revenue 122 Common stock 206 Retained earnings 6,610 Service revenue 368 Interest revenue 56 Salaries and wages expense 160 Insurance expense 66 Assuming that all of the accounts have normal balances, what are total credits on the company's trial balance at June 30, 2022? a. $7,440. b. $7,496. c. $7,444. d. $7,526.
b. $7,496
Roberts Company had net income of $890,000 for the year ending 12/31/2022. Depreciation expense for 2022 is $110,000. During the year, accounts receivable and inventory increased by $60,000 and $160,000, respectively. Prepaid expenses and accounts payable decreased $8,000 and $16,000, respectively. There was also a loss on the sale of equipment of $12,000. How much cash was provided by operating activities in 2022? a. $760,000. b. $784,000. c. $1,080,000. d. $1,128,000.
b. $784,000.
6. Monmouth Corporation began the year with retained earnings of $310,000. During the year, the company issued $420,000 of common stock, and recorded revenues of $1,300,000 and expenses of $1,200,000. Monmouth's retained earnings was $330,000. How much in dividends did Monmouth declare during the year? a. $60,000 b. $80,000 c. $110,000 d. $170,000
b. $80,000
Under the Allowance method, when an account becomes uncollectible and must be written off a. Allowance for Doubtful Accounts should be credited. b. Accounts Receivable should be credited. c. Bad Debt Expense should be credited. d. Sales Revenue should be debited.
b. Accounts Receivable should be credited.
Which of the following would be subtracted from net income using the indirect method? a. Depreciation expense. b. An increase in accounts receivable. c. An increase in accounts payable. d. A decrease in prepaid expenses.
b. An increase in accounts receivable.
5,000 bonds with a face value of $1,000 each, are sold at 102. The entry to record the issuance is a. Cash .......................................................................... 5,100,000 Bonds Payable................................................................... 5,100,000 b. Cash .......................................................................... 5,000,000 Premium on Bonds Payable................................................ 100,000 Bonds Payable................................................................... 5,100,000 c. Cash .......................................................................... 5,100,000 Premium on Bonds Payable................................................ 100,000 Bonds Payable................................................................... 5,000,000 d. Cash .......................................................................... 5,100,000 Discount on Bonds Payable................................................ 100,000 Bonds Payable
b. Cash .......................................................................... 5,000,000 Premium on Bonds Payable................................................ 100,000 Bonds Payable
West County Bank agrees to lend Drake Builders Company $400,000 on January 1, 2022. Drake Builders Company signs a $400,000, 6%, 6-month note. The entry made by Drake Builders Company on January 1, 2022 to record the proceeds and issuance of the note is a. Interest Expense.................................................................... 6,000 Cash. ............................................................................. 194,000 Notes Payable.................................................................... 400,000 b. Cash ............................................................................. 400,000 Notes Payable.................................................................... 400,000 c. Cash ............................................................................. 400,000 Interest Expense................................................................... 12,000 Notes Payable.................................................................... 412,000 d. Cash ............................................................................. 400,000 Interest Expense................................................................... 12,000 Notes Payable.................................................................... 400,000 Interest Payable................................................................. 12,000
b. Cash ............................................................................. 400,000 Notes Payable
The following data was collected from the accounting records of Alpha, Inc., for the month of June. 300 units were sold during the month. Alpha currently uses the FIFO method of valuing inventory. Beginning inventory 140 units at $12 per unit Purchases 250 units at $15 per unit What would have been the difference in Alpha's cost of goods sold under the LIFO costing method? a. Cost of goods sold would have been $270 lower. b. Cost of goods sold would have been $270 higher. c. Cost of goods sold is the same under both methods. d. The difference cannot be determined using this information.
b. Cost of goods sold would have been $270 higher.
Incurring an expense a. Decreases assets and liabilities b. Decreases stockholders' liability c. Leaves stockholders' equity unchanged d. Is basically the same as a liability
b. Decreases stockholders' liability
Which of the following bank reconciliation items would not result in an adjusting entry? a. Bank Service charge. b. Deposits in transit. c. NSF check of a customer. d. Collection of a note by the bank.
b. Deposits in transit.
A revenue generally a. Increases assets and liabilities b. Increases assets and stockholders' equity c. Increases assets and decreases stockholders' equity d. Leaves total assets unchanged
b. Increases assets and stockholders' equity
Which of the following is an asset? a. Mortgage payable b. Investments c. Common stock d. Retained earnings
b. Investments
In a period of increasing prices, which inventory flow assumption will result in the lowest net income? a. FIFO b. LIFO c. Average cost method d.Net income for the period will be the same under all assumptions.
b. LIFO
Dividends are reported on the a. Income statement b. Retained earnings statement c. Balance sheet d. Income statement and balance sheet
b. Retained earnings statement
The historical cost principle requires that when assets are acquired, the be recorded at a. Market value b. The amount paid for them c. Selling price d. List price
b. The amount paid for them
If the state rate for a bond is lower than the market interest rate, the bond will sell at a. a premium. b. a discount. c. par. d. either a discount or premium.
b. a discount.
The usual sequence of steps in the transaction recording process is a. journalize, analyze, post to the ledger. b. analyze, journalize, post to the ledger. c. journalize, post to the ledger, analyze. d. post to the ledger, journalize, analyze
b. analyze, journalize, post to the ledger.
The current portion of long-term debt should a. be paid immediately. b. be reclassified as a current liability. c. be classified as a long-term liability. d. not be separated from the long-term portion of debt.
b. be reclassified as a current liability.
If a business has received cash in advance of services and credits a liability account, the adjusting entry needed after the services are performed will be: a. debit Unearned Service Revenue and credit Cash. b. debit Unearned Service Revenue and credit Service Revenue. c. debit Unearned Service Revenue and credit Prepaid Expense. d. debit Unearned Service Revenue and credit Accounts Receivable.
b. debit Unearned Service Revenue and credit Service Revenue.
An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $3,200 debit balance, the adjustment to record bad debts for the period will require a a. debit to Bad Debt Expense for $9,000. b. debit to Bad Debt Expense for $12,200. c. debit to Bad Debt Expense for $5,800. d. credit to Allowance for Doubtful Accounts for $9,000.
b. debit to Bad Debt Expense for $12,200.
As prepaid expenses expire with the passage of time, the correct adjusting entry will be a: a. debit to an asset account and a credit to an expense account. b. debit to an expense account and a credit to an asset account. c. debit to an asset account and a credit to an asset account. d. debit to an expense account and a credit to an expense account.
b. debit to an expense account and a credit to an asset account.
. In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is a. added to net income. b. deducted from net income. c. ignored because it does not affect cash. d. not reported on a statement of cash flows.
b. deducted from net income.
The expense recognition principle matches: a. customers with businesses. b. expenses with revenues. c. assets with liabilities. d. creditors with businesses.
b. expenses with revenues.
The reconciliation of the cash register tape with the cash in the register is an example of a. other internal controls. b. independent internal verification. c. establishment of responsibility. d. segregation of duties.
b. independent internal verification.
A debit balance in the Allowance for Doubtful Accounts a. is the normal balance for that account. b. indicates that actual bad debt write-offs have exceeded previous provisions for bad debts. c. indicates that actual bad debt write-offs have been less than what was estimated. d. cannot occur if the percentage of receivables method of estimating bad debts is used.
b. indicates that actual bad debt write-offs have exceeded previous provisions for bad debts.
A ledger a. contains only asset and liability accounts. b. is a collection of the entire group of accounts maintained by a company. c. provides a chronological record of transactions. d.should show accounts in alphabetical order.
b. is a collection of the entire group of accounts maintained by a company.
On the dividend record date, a. a dividend becomes a current obligation. b. no entry is required. c. an entry may be required if it is a stock dividend. d. Dividends Payable is debited
b. no entry is required.
The board of directors of Bosco Company declared a cash dividend on November 15, 2020, to be paid on December 15, 2020, to stockholders owning the stock on November 30, 2020. Given these facts, the date of November 30, 2020, is referred to as the a. declaration date. b. record date. c. payment date. d. ex-dividend date.
b. record date.
Gilkey Corporation began the year with retained earnings of $310,000. During the year, the company issued $420,000 of common stock, recorded expenses of $1,200,000, and paid dividends of $80,000. If Gilkey's ending retained earnings was $330,000, what was the company's revenue for the year? a. $1,220,000 b. $1,300,000 c. $1,640,000 d. $1,720,000
c. $1,300,000
Olympus Climbers Company has the following inventory data: July 1 Beginning inventory 30 units at $19 $ 570 7 Purchases 105 units at $20 2,100 22 Purchases 15 units at $22 330 $3,000 A physical count of merchandise inventory on July 30 reveals that there are 48 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is a. $930. b. $990. c. $2,010. d. $2,070.
c. $2,010.
Morton Corporation purchased equipment for $26,000. Morton also paid $1,000 for freight and $200 for insurance while the equipment was in transit. Sales tax amounted to $1,560. For the first year of use insurance was $700 and maintenance was $1,300. How much should Morton Corporation capitalize as the cost of the equipment? a. $26,000 b. $27,560 c. $28,760 d. $30,760
c. $28,760
In the first month of operations, the total of the debit entries to the Cash account amounted to $7,000 and the total of the credit entries to the Cash account amounted to $4,000. At the end of the month, 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. $3,000 debit balance
Jenks Company developed the following information about its inventories in applying the lower-of-cost-or-net-realizable-value (LCNRV) basis in valuing inventories: Product Cost NRV A $114,000 $120,000 B 80,000 76,000 C 160,000 162,000 After Jenks applies the LCNRV rule, the value of the inventory reported on the balance sheet would be a. $354,000. b. $358,000. c. $350,000. d. $362,000.
c. $350,000.
The interest charged on a $300,000 note payable, at the rate of 6%, on a 90-day note would be (Assume 360 days in a year for calculation) a. $18,000. b. $9,000. c. $4,500. d. $1,500.
c. $4,500.
On January 1, 2022, M. Johanson Company purchased equipment for $54,000. The company is depreciating the equipment at the rate of $750 per month. The book value of the equipment at December 31, 2022 is: a. $0. b. $9,000. c. $45,000. d.$54,000.
c. $45,000.
. These accounts balances at December 31 relate to Splash Sport, Inc.: Accounts Payable $85,100 Paid-in Capital in Excess of Par $95,000 Accounts Receivable $18,450 Preferred Stock, 10%, $100 Par $30,000 Common Stock $713,000 Retained Earnings $103,100 Treasury Stock $7,500 Notes Receivable $11,000 Bonds Payable $30,000 What is total stockholders' equity for Splash Sports, Inc.? A. $922,600 B. $952,600 C. $933,600 D. $941,100
c. $933,600
ABC Company issued 20,000 shares of common stock. HL purchased 3,000 shares. How many shares are issued and outstanding? A. 20,000 issued and 20,000 outstanding B. 17,000 issued and 17,000 outstanding C. 20,000 issued and 17,000 outstanding D. None of the above are true
c. 20,000 issued and 17,000 outstanding
Which of the following is not a current liability on December 31, 2022? a. Interest payable due December 31, 2023 b. An Accounts Payable due January 31, 2023 c. A Note Payable due December 31, 2024 d. Accrued salaries payable from 2022
c. A Note Payable due December 31, 2024
Which of the following assets is not properly classified as property, plant, and equipment? a. A building used as a factory b. Land used in ordinary business operations c. A truck held for resale by an automobile dealership d. Land improvements, such as parking lots and fences
c. A truck held for resale by an automobile dealership
3. Which one of the following is NOT a liability? a. Unearned Service Revenue b. Accounts Payable c. Accounts Receivable d. Interest Payable
c. Accounts Receivable
4. Ending retained earnings for a period is equal to a. Beginning Retained Earnings + Net Income + Dividends b. Beginning Retained Earnings - Net Income - Dividends c. Beginning Retained Earnings + Net Income - Dividends d. Beginning Retained Earnings - Net Income + Dividends
c. Beginning Retained Earnings + Net Income - Dividends
Which of the following accounts normally have debit balances? a. Sales Discounts b. Sales Returns and Allowances. c. Both Sales Discounts and Sales Returns and Allowances have debit balances. d. Neither Sales Discounts or Sales Returns and Allowances have debit balances.
c. Both Sales Discounts and Sales Returns and Allowances have debit balances.
5,000 bonds with a face value of $1,000 each, are sold at 97. The entry to record the issuance is a. Cash .......................................................................... 4,850,000 Bonds Payable................................................................... 4,850,000 b. Cash .......................................................................... 4,850,000 Discount on Bonds Payable................................................ 150,000 Bonds Payable................................................................... 5,000,000 c. Cash .......................................................................... 4,850,000 Premium on Bonds Payable................................................ 150,000 Bonds Payable................................................................... 5,000,000 d. Cash .......................................................................... 5,000,000 Discount on Bonds Payable................................................ 150,000 Bonds Payable................................................................... 4,850,000
c. Cash .......................................................................... 4,850,000 Premium on Bonds Payable................................................ 150,000 Bonds Payable................................................................... 5,000,000
. Which of the following would be added to net income using the indirect method? a. An increase in accounts receivable. b. An increase in prepaid expenses. c. Depreciation expense. d. A decrease in accounts payable.
c. Depreciation expense.
The difference between ending inventory using LIFO and ending inventory using FIFO is referred to as a. FIFO reserve. b. inventory reserve. c. LIFO reserve. d.periodic reserve.
c. LIFO reserve.
Which of the following would be added to the balance per books on a bank reconciliation? a. Outstanding checks. b. Deposits in transit. c. Notes collected by the bank. d. NSF check.
c. Notes collected by the bank.
Under the concept of establishment of responsibility, how many people should have the ultimate responsibility? a. Everyone in the organization. b. An individual and his/her supervisor. c. Only one individual. d. The CEO.
c. Only one individual.
. If Norben Company issues 6,000 shares of $5 par value common stock for $210,000, the account a. Common Stock will be credited for $210,000. b. Paid-in Capital in Excess of Par Value will be credited for $30,000. c. Paid-in Capital in Excess of Par Value will be credited for $180,000. d. Cash will be debited for $180,000.
c. Paid-in Capital in Excess of Par Value will be credited for $180,000.
. If common stock is issued for an amount greater than par value, the excess should be credited to a. Cash. b. Retained Earnings. c. Paid-in Capital in Excess of Par Value. d. Legal Capital.
c. Paid-in Capital in Excess of Par Value.
Which of the following transactions has no effect on retained earnings? a. Incurred expense b. Paid dividends c. Purchase land d. Earned revenue
c. Purchase land
Which of the following is not an intangible asset that is reported on the balance sheet? a. Goodwill. b. Trademarks. c. Research and development expenditures. d. Copyrights.
c. Research and development expenditures.
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. Revenues, liabilities, and retained earnings
Bad Debt Expense is considered a. an avoidable cost in doing business on a credit basis. b. an internal control weakness. c. a necessary risk of doing business on a credit basis. d. avoidable unless there is a recession.
c. a necessary risk of doing business on a credit basis.
Bad Debt Expense is reported on the income statement as a. part of cost of goods sold. b. an expense subtracted from net sales to determine gross profit. c. an operating expense. d. a contra revenue account.
c. an operating expense.
Depreciation is a process of a. asset devaluation. b. cost accumulation. c. cost allocation. d. asset valuation.
c. cost allocation.
An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $2,400 credit balance, the adjustment to record bad debts for the period will require a a. debit to Bad Debt Expense for $9,000. b. debit to Allowance for Doubtful Accounts for $6,600. c. debit to Bad Debt Expense for $6,600. d. credit to Allowance for Doubtful Accounts for $9,000.
c. debit to Bad Debt Expense for $6,600.
The direct write-off method of accounting for bad debts a. uses an allowance account. b. uses a contra asset account. c. does not require estimates of bad debt losses. d. is the preferred method under generally accepted accounting principles.
c. does not require estimates of bad debt losses.
Under the accrual basis of accounting: a. cash must be received before revenue is recognized. b. net income is calculated by matching cash outflows against cash inflows. c. events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received. d. the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles.
c. events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.
Recording depreciation each period is necessary in accordance with the a. going concern principle. b. historical cost principle. c. expense recognition principle. d. asset valuation principle.
c. expense recognition principle
. The payment of a cash dividend would be classified as a(n) a. operating activity. b. investing activity. c. financing activity. d.significant noncash activity
c. financing activity.
Under the allowance method, Bad Debt Expense is recorded a. when an individual account is written off. b. when the loss amount is known. c. for an amount that the company estimates it will not collect. d. several times during the accounting period.
c. for an amount that the company estimates it will not collect.
A trial balance is a listing of a. transactions in a journal. b. the chart of accounts. c. general ledger accounts and balances. d.the totals from the journal pages.
c. general ledger accounts and balances.
Accrued expenses are: a. paid and recorded in an asset account before they are used or consumed. b. paid and 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.
c. incurred but not yet paid or recorded.
Financing activities involve a. lending money. b. acquiring investments. c. issuing debt. d. acquiring long-lived assets.
c. issuing debt.
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. ledger accounts.
The custodian of a company asset should a. have access to the accounting records for that asset. b. be someone outside the company. c. not have access to the accounting records for that asset. d. be an accountant.
c. not have access to the accounting records for that asset.
Cash receipts from interest and dividends from investment in securities are classified as a. financing activities. b. investing activities. c. operating activities. d.either financing or investing activities
c. operating activities.
Accrued revenues are: a. received and recorded as liabilities before they are recognized. b. recognized and recorded as liabilities before they are received. c. performed but not yet received or recorded. d.recognized and already received and recorded.
c. performed but not yet received or recorded.
The internal control principle related to not having the same person authorize and pay for goods is known as a. establishment of responsibility. b. independent internal verification. c. separation of duties. d. rotation of duties.
c. separation of duties.
The LIFO inventory method assumes that the cost of the latest units purchased is 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 first to be allocated to cost of goods sold.
APS Company issued 20,000 shares of $1 par common stock for $40 per share during 2022. The company paid dividends of $48,000 and issued long-term notes payable of $440,000 during the year. What amount of cash flows from financing activities will be reported on the statement of cash flows? a. $12,000 net cash inflow. b. $352,000 net cash inflow. c. $705,000 net cash outflow. d. $1,192,000 net cash inflow.
d. $1,192,000 net cash inflow.
A factory machine was purchased for $140,000 on January 1, 2022. It was estimated that it would have a $28,000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 40,000 hours in the 5 years. If the actual number of machine hours ran in 2022 was 4,000 hours and the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2022 would be a. $14,000. b. $22,400. c. $28,000. d. $11,200.
d. $11,200.
Equipment with a cost of $640,000 has an estimated salvage value of $60,000 and an estimated life of 4 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used for 3,000 hours? a. $160,000. b. $175,000. c. $165,000. d. $145,000.
d. $145,000.
. Zoum Corporation had the following transactions during 2022: 1) Issued $250,000 of par value common stock for cash. 2) Recorded and paid wages expense of $120,000. 3) Declared and paid a cash dividend of $20,000. 4) Sold a long-term investment (cost $6,000) for cash of $6,000. 5) Recorded cash sales of $800,000. 6) Bought inventory with cash of $320,000. 7) Acquired an investment in Zynga stock with cash of $42,000. 8) Repaid a 6-year note payable in the amount of $440,000. What is the net cash provided by operating activities? a. $610,000. b. $580,000. c. $480,000. d. $360,000.
d. $360,000.
A PP&E asset with a cost of $110,000 and accumulated depreciation of $15,000 is sold for $100,000. What is the amount of the gain or loss on disposal of the PP&E asset? a. $10,000 loss. b. $5,000 loss. c. $10,000 gain. d. $5,000 gain.
d. $5,000 gain.
Bonds with a face value of $600,000 and a quoted price of 98½ have a selling price of a. $589,500. b. $588,300. c. $588,030. d. $591,000.
d. $591,000.
Financial information is presented below: Operating expenses $ 42,000 Sales returns and allowances 12,000 Sales discounts 3,000 Sales revenue 165,000 Cost of goods sold 96,000 The profit margin would be (Assume no other revenues, expenses, gains, or losses) a. .36. b. .18. c. .06. d. .08.
d. .08.
ABC Company purchases supplies of $1,200 and pays $600 cash, with the remainder on account. The journal entry to record the payment on the remainder on account would be: a. Supplies 600 Accounts Receivable 600 Cash 1,200 b. Supplies 1,200 Accounts Payable 600 Cash 600 c. Supplies 600 Cash 600 Accounts Payable 1,200 d. Accounts Payable 600 Cash 600
d. Accounts Payable 600 Cash 600
Which accounts 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. Assets, expenses, and dividends
Which of the following is the appropriate general journal entry to record the declaration of cash dividends? a. Cash Dividends Cash b. Dividends Payable Cash c. Paid-in Capital Dividends Payable d. Cash Dividends Dividends Payable
d. Cash Dividends Dividends Payable
Which accounts appear on which financial statement? Balance sheet Income statement a. Cash, revenues, land Expenses, payables b. Receivables, land, payables Expenses, supplies c. Expenses, payables, cash Revenues, receivables, land d. Cash, receivables, payables Revenues, expenses
d. Cash, receivables, payables Revenues, expenses
The above transaction (Question #11): a. Increases both total assets and total liabilities by $1,200. b. Decreases total assets and increases total liabilities by $600. c. Increases both total assets and total liabilities by $600. d. Decreases both total assets and total liabilities by $600.
d. Decreases both total assets and total liabilities by $600.
An NSF check should appear in which section of the bank reconciliation? a. Addition to the balance per books. b. Deduction from the balance per bank. c. Addition to the balance per bank. d. Deduction from the balance per books.
d. Deduction from the balance per books.
Which of the following is NOT one of the three forms of business organization? a. Corporations b. Partnerships c. Proprietorships d. Investors
d. Investors
The going concern assumption assumes that the business a. Will be liquidated in the near future b. Will be purchased by another business c. Is in a growth industry d. Will remain in operation for the foreseeable future
d. Will remain in operation for the foreseeable future
. Treasury stock is a. stock issued by the U.S. Treasury Department. b. stock purchased by a corporation and held as an investment in its treasury. c. corporate stock issued by the treasurer of a company. d. a corporation's own stock, which has been reacquired and held for future use.
d. a corporation's own stock, which has been reacquired and held for future use.
Using the indirect method, if equipment is sold at a gain, the a. sale proceeds received are deducted in the operating activities section. b. sale proceeds received are added in the operating activities section. c. amount of the gain is added in the operating activities section. d.amount of the gain is deducted in the operating activities section
d. amount of the gain is deducted in the operating activities section.
Accumulated Depreciation is a(n): a. expense account. b. stockholders' equity account. c. liability account. d. contra asset account.
d. contra asset account.
Treasury stock should be reported in the financial statements of a corporation as a(n) a. investment. b. liability. c. deduction from total paid-in capital. d. deduction from total paid-in capital and retained earnings.
d. deduction from total paid-in capital and retained earnings.
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 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. determines the inventory on hand only at the end of the accounting period.
Under the direct write-off method of accounting for uncollectible accounts, Bad Debt Expense is debited a. when a credit sale is past due. b. at the end of each accounting period. c. whenever a pre-determined amount of credit sales have been made. d. when an account is determined to be uncollectible.
d. when an account is determined to be uncollectible.
The balance in the prepaid rent account before adjustment at the end of the year is $12,000 and represents three months rent paid on December 1. The adjusting entry required on December 31 is: a. debit Prepaid Rent, $4,000; credit Rent Expense $4,000. b. debit Prepaid Rent, $8,000; credit Rent Expense, $8,000. c. debit Rent Expense, $12,000; credit Prepaid Rent, $12,000. d.debit Rent Expense, $4,000; credit Prepaid Rent, $4,000.
d.debit Rent Expense, $4,000; credit Prepaid Rent, $4,000.
The Vintage Laundry Company purchased $8,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $1,500 on hand. The adjusting entry that should be made by the company on June 30 is: a. debit Supplies Expense, $1,500; credit Supplies, $1,500. b. debit Supplies, $7,000; credit Supplies Expense, $7,000. c. debit Supplies, $1,500; credit Supplies Expense, $1,500. d.debit Supplies Expense, $7,000; credit Supplies, $7,000.
d.debit Supplies Expense, $7,000; credit Supplies, $7,000.
