Acct. 201

a 90-day note is issued on April 20 has a maturity date of

July 19

a record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is a

account

the length of time covered by a set of periodic financial statements is referred to as the

accounting period

an account used to record the owner's investments in the business is called

common stock

the person who signs a note receivable and promises to pay the principal and interest is the

maker

the broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the

matching principle

beginning inventory plus net cost of purchases is

merchandise available for sale

the 12-month period that ends when the company's activities are at their lowest point is called the

natural business year

a company's cost of goods sold was 4,000. Determine net purchases and ending inventory given goods available for sale were 11,000 and beginning inventory was 5,000

net purchases 6,000. ending inventory 7,000

Wisconsin rentals purchased office supplies on credit. The general journal entry made by Wisconsin rentals will include

credit to accounts payable

management services, inc. provides services to clients. on may 1, a client prepaid management services 60,000 for 6-months contract in advance. management services general journal entry to record this transaction will include a

credit to unearned management fees for 60,000

rocky industries received its telephone bill in the amount of 300 and immediately paid it. Rocky's general journal entry to record this transaction will a

debit to telephone expense for 300

a credit entry

decreases asset and expense accounts and increases liability, common stock and revenue accounts

the accounts receivable turnover is calculated by

dividing net sales by average accounts receivable

A merchandising company

earns net income by buying and selling merchandise

if the credit balance of the allowance for doubtful accounts account exceeds the amount of a bad debit being written of, the entry to record the write-off against the allowance account results in

no effect on the expenses of the current period

a written promise to pay a definite sum of money on a specific future date is

note payable

the operating cycle for a merchandiser that sells only for cash moves from

purchases of merchandise to inventory to cash sales

the account used to record the transfers of assets from a business to its stockholders is

the retained earnings account

the matching principle requires

the use of the allowance method of accounting for bad debts

Broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the

time period principle

the inventory valuation method that tends to smooth out erratic changes in costs

weighted average

western company has an annual reporting period that runs from July 1st through June 30th, based on this information which of the following is a true statement

western has adopted a fiscal year

goods in transit are included in a purchaser's inventory

when the purchaser is responsible for paying freight charges

the buyer who pays cash for an account receivable referred to as

factor

which inventory valuation method assigns a value to the inventory on a the balance sheet that approximates current cost and also mimics the actual flow of goods for most businesses

fifo

the accounting principle that requires financial statements to report all relevant information about the operations and financial condition of a company is called

full discloser

the general ledger of a business

is a collection of all accounts used in a company's information system

merchandise inventory

is a current asset

a promissory note received from a customer in exchange for an account receivable

is a note receivable for the recipient

a promissory note

is a written promise to pay a specific amount of money at a certain date

the acid- test ratio

is also called the quick ratio

the maturity date of a note receivable

is the day the note is due to pay

cost of a goods sold

is the term used for the cost of buying and preparing merchandise for sale

sales invoice

is used by sellers for recording purposes

which of the following identifies the proper order of the accounting cycle

journalize, post, adjusted trial balance

a collection of all accounts used by a business is called a

ledger

source documents include all of the following except: sales tickets, ledgers, checks, purchase orders, bank statements

ledgers

unearned revenues are

liabilities created when a customer pays in advance for products or services before the revenue is earned

during a period of steadily rising costs, the inventory valuation method that yields the lowest reported net income

lifo

the inventory valuation method that results in the lowest taxable income in a period of inflation

lifo

the quality of receivables refers to

the likelihood of collection without loss

the current period's ending inventory is

the next period's beginning inventory

a company had sales of 375,000 and its gross profit was 157,500. its cost of goods sold equal

217,500

a company recieves a 10%, 90 day note for 1,500. the total interest due upon the maturity date is

37.50

a company had sales of 695,000 and its cost of goods sold of 278,000. its gross margin equals

417,000

the interest accrued on 3,600 at 7% for 60 days is

42

which of the following list of events properly reflects the early steps taken in the accounting process?

Analyze each transaction, record relevant transaction, post journal information to ledger accounts, prepare and analyze the trail balance

a debit is used to record

a decrease in the balance of retained earnings

a ledger is

a record containing increases and decreases in a specific asset, liability, equity, revenue, or expense item

adjusting entries

affect both income statement and balance sheet accounts

merchandise inventory inclludes

all goods owned by a company and held for sale

various types of documents and other papers that companies use when they conduct their business: are called source documents, can include sales tickets, are the source of information for recording accounting entries, can be in electronic form

all of the above

The accounting process begins with

analysis of business transactions and events

goods on consignment

are goods shipped by the owner to the consignee who sells the goods for the owner

damaged and obsolete goods

are included in inventory at their net realizable value

physical inventory counts

are necessary to measure and adjust for inventory shrinkage

source documents

are the sources of accounting information

prepaid expenses are

assets that represent prepayments of future expenses

the system of preparing financial statements based on the recognizing revenues when the cash is received and reporting expenses when the cash is paid is called

cash basis accounting

the quick assets are defined as

cash, short-term investments and current receivables

a list of all accounts used by a company and the identification number assigned to each account is a

chart of accounts

the main purpose of adjusting entries is to

record internal transactions and events

the consistency principle

requires a company to consistently use the same accounting method of inventory valuation unless a change will improve financial reporting

the full disclosure principle

requires that when a change in inventory valuation method is made, the notes to the financial statements report the type of change, why it was made and its effect on net income

the accounting principle that requires a revenue to be reported when earned is the

revenue recognition principle

a company had expenses other than cost of goods sold of 51,000. determine sales and gross profit given cost of goods sold was 25,000 and net income was 60,000

sales 136,000, Gross profit 111,000

a company had expenses other than cost of goods sold of 250,000. Determine sales and gross profit given cost of goods sold was 100,000 and net income was 150,000

sales 500,000. Gross profit 400,000

a company had expenses other than cost of goods sold of 175,000. Determine sales and gross profit given cost of goods sold was 622,000 and net loss was 41,000

sales 756,000. Gross profit 134,000

of the following accounts, the one that normally has a credit balance

sales salaries payable

For what reason do most sellers require customers to have their receipts in order to exchange or return purchase items

sellers wish to ensure that the sale in question was rung up on the register in the first place

the materiality principle

states that an amount can be ignored if its effect on financial statements is unimportant to the user's business decisions

interim financial statements refer to financial reports

that cover less than one year, usually spanning one, three or six-month periods

double entry accounting is an accounting system

that records the effects of transaction and other events in at least two accounts with equal debits and credits

the account balance

the difference between the total debits and total credits for an account including the beginning balance