multiple choice

paid $4200 on account for supplies purchased last period. all supplies were used last period. expense to be recognized: (accrual basis accounting)

$0

Journal

Record of all transactions affecting a company

which of the following is not listed in a post closing trial balance

Service revenue

which of the following statements correctly describes the reporting of cash

Cash is listed first in the current assets section.

which of the following would not be considered a cash equivalent

Certificate of deposit (CD) that matures one year from now

which of the following is correct with respect to a bank reconciliation

Subtract NSF checks from the company's balance.

account

Summary of the effects of all transactions related to a particular item over a period of time

The principles of internal control do not include

management responsibility

which single piece of information best explains most companies stock price performance?

net income

the amount of cash that is actually expected to be collected on accounts receivable is referred to as

net realizable value

Purchasing land with cash would have what effect on the accounting equation?

no effect

a company accounts for possible bad debts using the allowance method. When an actual bad debt occurs, what effect does it have on the accounting equation

no effect

which of the following best describes an important function of financial accounting

To Support the efficient distribution of society's resources

what is the concept behind separation of duties in establishing internal control

Employee fraud is less likely to occur when access to assets and access to accounting records are separated.

which of the following generally would be considered a good internal control over cash payments

Ensure checks are serially numbered and signed only by authorized employees.

which of the following methods can Bernie use for tax purposes

FIFO and weighted average only

service life

How long the company expects to receive benefits from the asset before disposing of it; also referred to as useful life

The revenue recognition principle states that companies typically record revenue

In the period in which we provide goods and services to customers.

which method is available to turn for financial reporting purposes?

LIFO only

trial balance

List of accounts and their balances

closing entries are:

Made to transfer the balances of temporary accounts to retained earnings.

which of the following describes the information reported in the income statement

Net income for the period is calculated by subtracting expenses from revenues.

On November 15, Meier Company received $3,000 cash from a customer for services that were performed on November 1. On which date should the revenue be recorded under cash basis account

November 15

Which of the following transactions decreases stockholders equity

Pay salaries for the current period

all transactions related to a particular item over a period of time or summarize in a(n)

account

A debit is used to decrease which of the following accounts

accounts payable

when a company provides services on account, which of the following accounts is debited

accounts receivable

Financial statements are prepared from which of the following trial balances

adjusted trial balance

which of the following statements is not true of the Sarbanes-Oxley act of 2002

all companies in the US fall under its provisions

using the perpetual inventory system what is the effect of a sale of inventory on assets

assets increased by the sales price of the inventory, assets decreased by the cost of the inventory

Committee of Sponsoring Organizations (COSO) of the Treadway Commission provided a framework for

designing an internal control system

analyze transactions

determine the dual effect of business events on the accounting equation

The use of pre-numbered checks and disbursing cash is an application of the principal

documentation procedures

permitting only designated personnel such as cashiers to handle cash receipts is an application of the principal

establishment of responsibility

cost of goods sold is what type of account

expense account

which of the following does not represent an external business transaction

expiration of an insurance policy over time

under accrual basis counting companies typically report expenses

in the same period as the revenue they help to generate

a company provides services on account. Indicate how this transaction would affect assets, stockholders equity, and revenues

increase, increase, increase

major differences between service companies and retail or manufacturing companies is that realtors and manufacturers must account for

inventory, cost of goods sold

Which element of the fraud triangle do companies have the greatest ability to eliminate?

opportunity

if a company place is cash receipts from the day and a safe or bank deposit box, this would be an example of

physical control

Internal control is used in a business to enhance the accuracy and reliability of its accounting records and to

safeguard its assets

when customers purchase goods on account, spitz manufacturing offers them a 2% reduction on the amount owed if they pay within 10 days. this is an example of

sales discount

cash equivalents refer to

short-term investments that have a maturity date no longer than three months from the date of purchase

what is a direct purpose of internal controls

to improve the accuracy and reliability of accounting information

The LIFO adjustment is used internally to convert the inventory

to the LIFO basis

everyone in the company has an impact on the operations and effectiveness of internal control, but who must take final responsibility

top executives

which of the following best describes the information reported in the balance sheet

total assets equal total liabilities plus stockholders equity

post

transfer balances from the journal to the ledger

The act of collusion refers to:

two or more people acting in coordination to circumvent internal controls

employees worked in the current period But will not be paid until the following period $4300. expense to be recognized: (accrual basis accounting)

$4300

paid $6300 cash for advertising for the current period. expense to be recognized: (accrual basis accounting)

$6300

Which of the following items would be found on the bank side or the left hand side of the bank reconciliation

Deposit outstanding

Clark uses the perpetual inventory system Clark sells goods to a customer on account for $1000. The cost of the goods sold was $700. Which of the following entries are required

-debit cost of goods sold $700, credit inventory $700 -debit accounts receivable $1000, credit sales revenue $1000

from a financial accounting perspective, internal controls refer to a companies plan to

-safeguard the companies assets -improve the accuracy and reliability of accounting information -prevent miss use of company funds by employees and fraudulent or errant financial reporting

Accumulated Depreciation

A contra asset account representing the total depreciation taken to date.

which of the following is a characteristic of adjusting entries

Allows for proper application of the revenue recognition principle (revenues) or the matching principle (expenses)

allocating the cost of a tangible asset over its service life

depreciation

The framework for designing an internal control system is provided by the

Committee of Sponsoring Organizations (COSO) of the Treadway Commission

On December 10, a company pays $500 for advertising to appear on December 20. On which date should the expense be recorded under accrual-basis accounting?

December 20

How would an NSF check from a customer be treated on a bank reconciliation?

Deduction on the company side

In response to the corporate accounting scandals and to public outrage over seemingly widespread unethical behavior of top executives such as Enron and WorldCom, Congress passed the...

Sarbanes-Oxley Act, also known as the Public Company Accounting Reform and Investor Protection Act of 2002 and commonly referred to as SOX.

On September 9, clearmore services Receives a request for services from a customer. The service is scheduled for September 15. On September 15, the services provided, and the customer pays one week later on September 22. Using accrual basis accounting on which date should clearmore services record service

September 15 (date of service)

The balance in retained earnings represents

The amount of income earned over the company's life minus the dividends paid to shareholders over the company's life.

residual value

The amount the company expects to receive from selling the asset at the end of its service life; also referred to as salvage value

Net accounts receivable

The difference between total accounts receivable and the allowance for uncollectible accounts

how does the amortization Schedule for an installment note such as a car loan differ from an amortization schedule for bonds

The final carrying value is zero in an amortization schedule for an installment note

which financial statement shows that accompanies resources equal claims to those resources

balance sheet

equal to the original cost of the asset minus the current balance in accumulated depreciation

book value

which of the following might be included in cash equivalents on the balance sheet

certificates of deposit, treasury bills, money market funds

A periodic inventory system measures cost of goods sold by

counting inventory at the end of the period

Inventory is classified as

current asset

How would an NSF check from a customer be recorded in the accounting records

debit accounts receivable, credit cash

Summer leasing received $10,200 from a customer to cover 24 months of rent in advance. How should summer record this transaction?

debit cash, credit deferred revenue

Using a perpetual inventory system, the purchase of inventory on account would be recorded as:

debit inventory, credit accounts payable