ACCOUNTING TEST

Which inventory system updates the inventory account only at the end of the accounting period?

Periodic

Which is the first financial statement that should be prepared after the adjusted trial balance has been prepared?

income statement

Under the periodic inventory system:

inventory must be counted at the end of each accounting period.

A contra-account:

offsets, or reduces, another account.

When goods are sold to a customer with credit terms of 2/15, n/30, the customer will receive a:

A. 2% discount if they pay within 15 days.

How can accrual adjustments for interest earned but not yet collected affect the balance sheet and the income statement?

Accrual adjustments can increase assets and increase revenues.

All of the following accounts will have zero balances on a post-closing trial balance except:

Accumulated Depreciation.

Temporary accounts are closed at what stage of the accounting process?

As the last journal entries at the end of each accounting year.

If a company's ending inventory count was $50,000, cost of goods sold was $27,000, and purchases were $56,000, its beginning inventory must have been:

BI + P = CGAS - EI = CGS

Boron Company has sales of $60,000, beginning inventory of $7,000, purchases of $35,000, and ending inventory of $5,000. The cost of goods sold is:

BI + P = CGAS - EI = CGS (37,000)

4. Adjusting entries affect:

BOTH INCOME AND BALANCE SHEET ACCOUNTS

A company sells goods at a selling price of $20,000. The cost of the goods is $15,000. Under a perpetual inventory system, the journal entries prepared to record the sale will include one with a debit to:

Cost of Goods Sold and a credit to Inventory for $15,000.

5. The deferral adjustment to record the amount of deferred service revenue that is now earned includes a:

DEBIT TO DEFERED REV

The company uses up $5,000 of an existing asset and the company adjusts its accounts accordingly. This is an example of a(n):

DEFFERAL

On October 1, Robertson Company sold inventory in the amount of $5,800 to Alberta, Inc. with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses a periodic inventory system. Alberta pays the invoice on October 8 and takes the appropriate discount. What journal entry will be recorded by Robertson on October 8 if they use the gross method?

Debit Cash and credit Accounts Receivable for $5,800.

On July 1, Darin Company sold inventory costing $4,500 to Dee Company for $6,000, terms 2/10, n/30. Both companies use a perpetual inventory system. What journal entry will be recorded by Dee Company on July 1 assuming they use the gross method?

Debit Inventory and credit Accounts Payable for $6,000

At the beginning of its first year of operations, Henry Corp. purchased $5,000 of supplies, which were debited to the Supplies account. It did not purchase any other supplies during the year. At the end of the year, it has $1,000 of supplies left. The appropriate adjusting journal entry is:

Debit Supplies Expense $4,000 and credit Supplies $4,000

The deferral adjustment to record the amount of unearned service revenue that is now earned includes a:

Debit to Unearned Revenue

If merchandise purchased on credit is returned to the seller for a full refund, what would be the effect on the accounts listed below?

Decrease Inventory; No effect on Cost of Goods Sold; Decrease Accounts Payable

An error must have been made if which of the following accounts appears on the post-closing trial balance with a balance other than zero?

Depreciation Expense

The specific identification method would probably be most appropriate for which of the following goods?

Diamond necklaces at a Tiffany & Co. jewelry store

Which financial statement reports the dividends during the current accounting period?

Dividends are reported on the Statement of Retained Earnings.

Which of the following will occur when inventory costs are decreasing?

FIFO will result in a lower net income and a lower ending inventory than will LIFO.

The Sales Revenue account has a credit balance of $367,200 at year end. After the closing entries have been posted, the account will:

HAVE A ZERO BALANCE

3. An example of an account that could be included in an accrual adjustment for expense is:

INTEREST PAYABLE

2. An example of an account that could be included in an accrual adjustment for revenue is:

INTEREST RECEIVABLE

LIFO and FIFO net income when costs are falling or rising

LIFO results in a higher net income than FIFO when costs are falling.

FIFO uses the ________ cost for cost of goods sold on the income statement and the ________ cost for inventory on the balance sheet.

Oldest; newest

How does the adjustment for depreciation differ from other deferral adjustments?

The depreciation adjustment uses a contra-asset account rather than reducing the asset accounts directly.

Inventory shipped FOB destination and in transit on the last day of the year should be included in:

The inventory balance of the seller

In order to calculate shrinkage:

a perpetual inventory system requires an occasional count of actual inventory.

A company reports Equipment on its classified balance sheet. The balance of the Accumulated Depreciation account appears on a classified balance sheet as:

a subtraction to arrive at the amount of Equipment, Net

Closing entries:

cause the revenue and expense accounts to have zero balances.

When using a perpetual inventory system, the Cost of Goods Sold is recorded:

each time a sale is made.

When a deferral adjustment is made to an asset account, that asset becomes a(n)

expense

Assume a periodic inventory system is used. The LIFO inventory costing method assumes that the cost of the units most recently purchased is the:

first to be assigned to cost of goods sold.

When a deferral adjustment is made to an liability account, that liability becomes a(n)

revenue

post closing zero balances

revenue expenses and dividends (just switch side and add retained earnings)