Econ 121 Final

The journal entry for the purchase of inventory on account using the periodic inventory system is

Purchases DR Accounts Payable CR

At the end of a recent year, Global Cleaning Service, a full-service house and office cleaning service, had total assets of $3,630 and equity of $2,280. How much were Global Cleaning Service's liabilities? $5,910 $3,630 $1,350 $2,280

$1,350

Yale Co. purchased a bond on October 4 of the current year for $45,000 and classified it as available-for-sale. The market value of the investment at year-end is $42,000. What value will be reported in net income for the adjustment, if any? $42,000 $0 $(3,000) Not enough information is given to determine the amount included in net income.

$0

Suppose Nile.com used the LIFO inventory costing method and the periodic inventory system. Use the Nile.com data in Question 3 to determine Nile.com's cost of goods sold at the end of the month. $1,568 $133 $1,589 $154

$1,589

Assume Nile.com began April with 14 units of inventory that cost a total of $266. During April, Nile.com purchased and sold goods as follows: Apr. 8 Purchase 42 units @ $ 20 14 Sale 35 units @ $ 40 22 Purchase 28 units @ $ 22 27 Sale 42 units @ $ 40 Under the FIFO inventory costing method and the perpetual inventory system, how much is Nile.com's cost of goods sold for the sale on April 14? $1,106 $686 $1,400 $700

$686

Mike Gordon wishes to have $80,000 in five years. If he can earn annual interest of 2%, how much must he invest today? $42,170 $72,480 $76,080 $88,320

$72,480

Clean Water Softener Systems has Cash of $600, Accounts Receivable of $900, and Office Supplies of $400. Clean owes $500 on Accounts Payable and has Salaries Payable of $200. Clean's current ratio is 2.71 2.50 0.63 0.37

2.71

Assume Juniper Natural Dyes made Net Sales Revenue of $90,000 and Cost of Goods Sold totaled $58,000. What was Juniper Natural Dyes's gross profit percentage for this period? (Round your answer to the nearest whole percent.) 36% 3.4 times 64% 17%

36%

Suppose Maestro's had cost of goods sold during the year of $230,000. Beginning merchandise inventory was $35,000, and ending merchandise inventory was $45,000. Determine Maestro's inventory turnover for the year. Round to the nearest hundredth. 6.57 times per year 5.75 times per year 5.11 times per year 17.39 times per year

5.75 times per year

Extended Accounting Equation

A = L + E (common stock + retained Earnings (Revenue - Expenses - Dividends) Increase in Common Stock and Revenue = CR Increase in Expenses and Dividends = DR

PREPAID rent expense ... A,L,E?

ASSET

accumulated depreciation ... A,L, E?

ASSET

League Automobiles sold an automobile for $24,000 on account. The cost of the automobile was $13,440. The sale of the automobile came with one year of free oil changes valued at $360. What would be the journal entry to record the sale?

Accounts Recievable DR 24k Sales Rev CR 23640 Unearned Rev CR 360 Cost of goods sold DR 13440 Merchandise inventory CR 13440

Which of the following accounts is not closed? Depreciation Expense Dividends Service Revenue Accumulated Depreciation

Accumulated Depreciation

Which of the following accounts would be included in the property, plant, and equipment category of the classified balance sheet? Land held for investment Accumulated Depreciation Office Supplies Mortgage Payable

Accumulated Depreciation

What do closing entries accomplish? Zero out the revenues, expenses, and dividends Transfer revenues, expenses, and dividends to the Retained Earnings account Bring the Retained Earnings account to its correct ending balance All of the above

All of the above

Which account does a merchandiser use that a service company does not use? Cost of Goods Sold Merchandise Inventory Sales Revenue All of the above

All of the above

COGS ... A,L,E?

E

Salary EXPENSE... A,L,E?

E

Receiving interest payment increases A,L, or E

EQUITY

Which inventory costing method assigns to ending merchandise inventory the newest—the most recent—costs incurred during the period? First-in, first-out (FIFO) Weighted-average Specific identification Last-in, first-out (LIFO

First-in, first-out (FIFO)

What is the order of the subtotals that appear on a multi-step income statement? Gross Profit, Operating Income, Net Income, Total Other Income and Expenses Operating Income, Gross Profit, Net Income, Total Other Income and Expenses Total Other Income and Expenses, Operating Income, Gross Profit, Net Income Gross Profit, Operating Income, Total Other Income and Expenses, Net Income

Gross Profit, Operating Income, Total Other Income and Expenses, Net Income

Which of the following steps of the accounting cycle is not completed at the end of the period? Journalize transactions as they occur. Journalize and post the closing entries. Prepare the post-closing trial balance. Prepare the financial statements.

Journalize transactions as they occur.

Which inventory costing method results in the lowest net income during a period of rising inventory costs? Weighted-average Specific identification First-in, first-out (FIFO) Last-in, first-out (LIFO)

Last-in, first-out (LIFO)

Which of the following is most closely linked to accounting conservatism? Lower-of-cost-or-market rule Materiality concept Disclosure principle Consistency principle

Lower-of-cost-or-market rule

The journal entry for the purchase of inventory on account using the perpetual inventory system is

Merchandise Inventory DR Accounts Payable CR

Vega Company expects to pay a 4% bonus on net income after deducting the bonus. Assume the company reports net income of $130,000 before the calculation of the bonus. The journal entry to record the accrued bonus includes a debit to Employee Bonus Payable, $5,000. a debit to Employee Bonus Expense, $5,200. a credit to Employee Bonus Payable, $5,000. a credit to Cash, $5,200.

a credit to Employee Bonus Payable, $5,000.

Amounts owed for products or services purchased on account are called

accounts payable

Company purchases machine for 19k and required installation cost is 6k and insurance while in transit of 1400. what amount would the machine be recorded.

add them all = 26,400

Assets are listed on the balance sheet in the order of their purchase date. adjustments. liquidity. balance.

liquidity.

Internal Control

one of the major purpose of internal control is to ensure that the assets are safeguarded

The two main inventory accounting systems are the perpetual and periodic. purchase and sale. returns and allowances. cash and accrual.

perpetual and periodic.

Faithful Representation concept

requires accounting info to be complete neutral and free from material error

Income statmente reports...

results of operation for a specific period

The two methods of accounting for uncollectible accounts receivable are...

the allowance method and the direct write-off method

A company's own stock that it has issued and repurchased is called outstanding stock. dividend stock. issued stock. treasury stock.

treasury stock.

Adjusting the accounts is the process of subtracting expenses from revenues to measure net income. recording transactions as they occur during the period. updating the accounts at the end of the period. zeroing out account balances to prepare for the next period.

updating the accounts at the end of the period.

Which of the following investments is most likely classified as a held-to-maturity debt investment? 80% stock ownership in a subsidiary 100% ownership in voting stock of a supplier 10-year bonds None of the above

10-year bonds

Panjab Company reported the following information on its financial statements Total Assets, December 31, 2018 $ 400,000 Total Assets, December 31, 2019 440,000 For Year Ended December 31, 2019: Interest Expense 2,000 Net Income 40,000 What is Panjab's rate of return on total assets? 10.0% 9.5% 10.5% None of the above

10.0% = (40k+2k)/((400k+440k)/2)

Dale Corporation has the following data: Net income $ 24,000 Preferred dividends 12,000 Average common stockholders' equity 100,000 Dale's rate of return on common stockholders' equity is 24% 50% 12% 36%

12%= (24k-12k)/100k

Assume Global Cleaning Service had net income of $570 for the year. Global Cleaning Service's beginning and ending total assets were $4,520 and $4,180, respectively. Calculate Global Cleaning Service's return on assets for the year. 12.6% 13.6% 13.1% 7.63%

13.1% = (570/4520) - (4180)

A Celty Airline jet costs $28,000,000 and is expected to fly 200,000,000 miles during its 10-year life. Residual value is expected to be zero because the plane was used when acquired. If the plane travels 1,000,000 miles the first year, how much depreciation should Celty Airline record under the units-of-production method? $2,800,000 $140,000 $560,000 Cannot be determined from the data given

140,000 = (28,000,000/200,000,000)x1,000,000

McDaniel and Associates reported the following amounts on its 2018 income statement: Net income $ 60,500 Income tax expense 12,100 Interest expense 5,000 What was McDaniel's times-interest-earned ratio for 2018? 12.10 15.52 13.10 14.52

15.52= (60500+12100+5000)/5000

Posting a $2,500 purchase of office supplies on account appears as follows:

2 T accounts, for office supplies and accounts receivable. Office supplies. Debit, 2,500. Credit, blank. Accounts payable. Debit, blank. Credit, 2,500.

Using the data in the preceding question, assume accounts receivable had a beginning balance of $67,400 and net credit sales for the current year totaled $807,800. How many days did it take Schultz to collect its average level of receivables? 49 35 29 26

26 = 4899+67400 = 116300/2 = 58150 -> 807800/58150 = 13.89 -> 365/13.89 = 26 days

Nathville Laundry reported assets of $800 and equity of $480. What is Nathville's debt ratio? 60% 40% 67% Not enough information is provided

40%

Accounting is the information system that measures business activities. communicates the results to decision makers. processes information into reports. All of the above

All of the above

The employer is responsible for which of the following payroll taxes? 6.2% FICA—OASDI tax 1.45% FICA—Medicare tax Federal and state unemployment taxes All of the above

All of the above

Which of the following is a limitation of the direct write-off method of accounting for uncollectibles? The direct write-off method overstates assets on the balance sheet. The direct write-off method does not match expenses against revenue very well. The direct write-off method does not set up an allowance for uncollectibles. All of the above

All of the above

Which cost is not recorded as part of the cost of a building? Real estate commission paid to buy the building Construction materials and labor Concrete for the building's foundation Annual building maintenance

Annual building maintenance

Which method almost always produces the most depreciation in the first year? Units-of-production Straight-line Double-declining-balance All produce the same depreciation in the first year.

Double-declining-balance

Which of the following is not an external user of a business's financial information? Taxing authorities Customers Employees Investors

Employees

A truck costs $50,000 when new and has accumulated depreciation of $35,000. Suppose Wilson Towing exchanges the truck for a new truck. The new truck has a market value of $60,000, and Wilson pays cash of $40,000. Assume the exchange has commercial substance. What is the result of this exchange? No gain or loss Gain of $5,000 Loss of $5,000 Gain of $45,000

Gain of $5,000 50000-35000= -15k 60k-40k= +20k 20k-15k= +5k

Which of the following is not included in continuing operations? Loss on the sale of equipment Gain on the sale on a segment of a business that has been discontinued Salaries expense Interest revenue

Gain on the sale on a segment of a business that has been discontinued

Which intangible asset is recorded only as part of the acquisition of another company? Patent Goodwill Copyright Franchise

Goodwill

Assume that Global Cleaning Service performed cleaning services for a department store on account for $180. How would this transaction affect Global Cleaning Service's accounting equation? Increase both assets and liabilities by $180 Increase both assets and equity by $180 Increase both liabilities and equity by $180 Decrease liabilities by $180, and increase equity by $180

Increase both assets and equity by $180

Using the data in the preceding question, what will the income statement for the year ended December 31 report for this situation? Nothing because the business has not received the cash yet Note receivable of $8,400 Interest revenue of $700 Both b and c

Interest revenue of $700

Hicks Corporation issued $500,000 of 5%, 10-year bonds payable at a price of 92. The market interest rate at the date of issuance was 6%, and the bonds pay interest semiannually. The journal entry to record the first semiannual interest payment using the effective-interest amortization method is

Interst Expense DR 13800 Discount on Bonds Payable CR 1300 Cash CR 12500

Which sequence correctly summarizes the accounting process? Journalize transactions, post to the accounts, prepare a trial balance Journalize transactions, prepare a trial balance, post to the accounts Post to the accounts, journalize transactions, prepare a trial balance Prepare a trial balance, journalize transactions, post to the accounts

Journalize transactions, post to the accounts, prepare a trial balance

Pixel Copies recorded a cash collection on account by debiting Cash and crediting Accounts Payable. What will the trial balance show for this error? Cash is overstated Liabilities are overstated Expenses are overstated The trial balance will not balance

Liabilities are overstated

5. A copy machine costs $45,000 when new and has accumulated depreciation of $44,000. Suppose Print and Photo Center discards this machine and receives nothing. What is the result of the disposal transaction? No gain or loss Gain of $1,000 Loss of $1,000 Loss of $45,000

Loss of $1,000

An audit is an examination of a Company's financial statements and records. T/F

T

Any portion of a long term liability that is due within the next year is reported as a current liability T/F

T

Goodwill is the excess cost of an acquired company over the market value of its net asset T/F

T

The Public Company Accounting Oversight Board oversees the work of auditors of public companies T/F

T

The expense associated with the cost of uncollectible accounts receivable is called bad debts expense T/F

T

Consider the overall effects on Global Cleaning Service from selling and performing services on account for $6,400 and paying expenses totaling $2,500. What is Global Cleaning Service's net income or net loss? Net income of $3,900 Net loss of $3,900 Net income of $6,400 Net income of $8,900

Net income of $3,900

Swell Company has a lawsuit pending from a customer claiming damages of $100,000. Swell's attorney advises that the likelihood the customer will win is remote. GAAP requires at a minimum that this contingent liability be disclosed in the footnotes. disclosed in the footnotes, with ranges of potential loss. recorded as a journal entry, as well as disclosed in the footnotes. No disclosure is required.

No disclosure is required

Suppose Print and Photo Center in the preceding question sold the machine for $1,000. What is the result of this disposal transaction? Loss of $44,000 Gain of $1,000 Loss of $1,000 No gain or loss

No gain or loss

Assume Intervale Railway is considering investing in Pale Co. stock for three months. The investment will represent 5% of the voting stock of Pale Co. How would the investment be classified? Significant influence equity investment No significant influence equity investment Held-to-maturity debt investment Controlling interest equity investment

No significant influence equity investment

With good internal controls, the person who handles cash can also account for cash payments. account for cash receipts from customers. issue credits to customers for sales returns. None of the above

None of the above

Bendi Corp. purchased 1,000 shares of Kala Corp. for $16 per share. The investment represents 5% ownership, and Bendi does not have significant influence. The fair value at year-end is $15 per share. Assuming no other transactions occurred, where would the $1 per share difference be reported on the year-end financial statements? Other Income and (Expense) Other Comprehensive Income Operating Income None of the above

Other Income and (Expense)

Which of the following is an example of a deferral (or prepaid) adjusting entry? Recording the usage of office supplies during the period. Recording salaries expense for employees not yet paid. Recording revenue that has been earned but not yet received. Recording interest expense incurred on a notes payable not due until next year.

Recording the usage of office supplies during the period.

Get Fit Now gains a client who prepays $540 for a package of six physical training sessions. Get Fit Now collects the $540 in advance and will provide the training later. After four training sessions, what should Get Fit Now report on its income statement assuming it uses the accrual basis accounting method? Service revenue of $360 Service revenue of $540 Unearned service revenue of $360 Cash of $180

Service revenue of $360

Which type of business organization is owned by only one owner? Corporation Partnership Sole proprietorship Items a, b, and c are all correct.

Sole proprietorship

Which of the following characteristics best describes a corporation? A business with a single owner Is not taxed Stockholders not personally liable for entity's debts Not a separate taxable entity

Stockholders not personally liable for entity's debts

The balance sheet reports the financial position on a specific date. results of operations on a specific date. financial position for a specific period. results of operations for a specific period.

financial position on a specific date.

A small stock dividend decreases common stock. has no effect on total equity. increases Retained Earnings. Items a, b, and c are correct.

has no effect on total equity.

On January 1, 2018, a business borrowed $18,000 on a five-year, 5% note payable. At December 31, 2018, the business should record interest payable of $900. note receivable of $18,000. cash payment of $18,000. nothing. (The note is already on the books.)

interest payable of $900.

A worksheet is a journal used to record transactions. is a financial statement that reports net income during the period. is an internal document that helps summarize data for the preparation of financial statements. is a ledger listing the account balances and changes in those accounts.

is an internal document that helps summarize data for the preparation of financial statements.

Suppose Yummy Treats Bakery issues common stock in exchange for a building. Yummy Treats Bakery should record the building at the par value of the stock given. its book value. its market value. a value assigned by the board of directors.

its market value.

Your business purchased office supplies of $2,500 on account. The journal entry to record this transaction is as follows:

office supplies DR 2500 Accounts payable CR 2500

The two basic sources of stockholders' equity are assets and equity. preferred and common. retained earnings and dividends. paid-in capital and retained earnings.

paid-in capital and retained earnings.

Encryption: avoids the need for separation of duties. creates firewalls to protect data. cannot be broken by hackers. rearranges messages by a special process.

rearranges messages by a special process.

Known liabilities of estimated amounts are ignored. (Record them when paid.) reported on the balance sheet. reported on the income statement. reported only in the notes to the financial statements.

reported on the balance sheet.

The Sarbanes-Oxley Act: created the Private Company Accounting Board. allows accountants to audit and to perform any type of consulting work for a public company. stipulates that violators of the act may serve 20 years in prison for securities fraud. requires that an outside auditor must evaluate a public company's internal controls.

requires that an outside auditor must evaluate a public company's internal controls

The revenue recognition principle requires time to be divided into annual periods to measure revenue properly. revenue to be recorded only after the business has satisfied its performance obligation. expenses to be matched with revenue of the period. revenue to be recorded only after the cash is received.

revenue to be recorded only after the business has satisfied its performance obligation.

Michelle Darby receives cash from customers. Her other assigned job is to post the collections to customer accounts receivable. Her company has weak assignment of responsibilities. ethics. computer controls. separation of duties.

separation of duties.

A bond that matures in installments at regular intervals is a term bond. serial bond. periodic bond. terminal bond.

serial bond.

On February 1, Clovis Wilson Law Firm contracted to provide $3,000 of legal services for the next three months and received $3,000 cash from the client. Assuming Wilson records deferred revenues using the alternative treatment, what would be the adjusting entry recorded on February 28?

service revenue DR 2000 Unearned revenue CR 2000

The petty cash fund had an initial impress balance of $100. It currently has $20 and petty cash tickets totaling $75 for office supplies. The entry to replenish the fund would contain a credit to Cash Short & Over for $5. a credit to Petty Cash for $80. a debit to Cash Short & Over for $5. a debit to Petty Cash for $80.

a debit to Cash Short & Over for $5.

Flipco signed a 10-year note payable on January 1, 2018, of $800,000. The note requires annual principal payments each December 31 of $80,000 plus interest at 5%. The entry to record the annual payment on December 31, 2019, includes a debit to Interest Expense for $36,000. a debit to Interest Expense for $40,000. a credit to Notes Payable for $80,000. a credit to Cash of $120,000.

a debit to Interest Expense for $36,000. = (800k-80k) x .05

Daniels's bonds payable carry a stated interest rate of 5%, and the market rate of interest is 7%. The issue price of the Daniels's bonds will be at par value. a premium. face value. a discount.

a discount. Premium State interest > market rate Discount - State interest < market rate

The adjusted trial balance shows amounts that may be out of balance. account balances after adjustments. assets and liabilities only. revenues and expenses only.

account balances after adjustments.

The detailed record of the changes in a particular asset, liability, or stockholders' equity is called an account. a journal. a ledger. a trial balance

an account.

Suppose Nile.com used the weighted-average inventory costing method and the perpetual inventory system. Use the Nile.com data in Question 3 to compute the weighted-average unit cost of the company's inventory on hand at April 8. Round weighted-average unit cost to the nearest cent. $21.00 $19.75 $19.50 Cannot be determined from the data given

$19.75

Austin Sound sold inventory for $300,000, terms 2/10, n/30. Cost of goods sold was $152,000. How much sales revenue will Austin Sound report from the sale? $152,000 $294,000 $148,960 $300,000

$294,000 = 300k - (300k x .02)

JC Manufacturing purchased inventory for $5,300 and also paid a $260 freight bill. JC Manufacturing returned 45% of the goods to the seller and later took a 2% purchase discount. Assume JC Manufacturing uses a perpetual inventory system. What is JC Manufacturing's final cost of the inventory that it kept? (Round your answer to the nearest whole number.) $2,997 $2,337 $3,117 $2,857

$3,117

Not an example of a closing entry

DR salaries payable CR Income summary

What account does a merchandiser use that a service company does not use? Service Revenue Property Plant and Equipment COGS All of the above

COGS

Which of the following accounts may appear on a post-closing trial balance? Cash, Salaries Payable, and Retained Earnings Cash, Salaries Payable, and Service Revenue Cash, Service Revenue, and Salaries Expense Cash, Salaries Payable, and Salaries Expense

Cash, Salaries Payable, and Retained Earnings

Which of the following accounts would appear on a post closing trial balance?

Cash, interest payable, and retained earnings

Which principle or concept states that businesses should use the same accounting methods and procedures from period to period? Disclosure Conservatism Consistency Materiality

Consistency

Which of the following accounts would be closed at the end of the year using the perpetual inventory system? Cost of Goods Sold Merchandise Inventory Accounts Receivable Accounts Payable

Cost of Goods Sold

Suppose Dave's Discount's Merchandise Inventory account showed a balance of $8,000 before the year-end adjustments. The physical count of goods on hand totaled $7,400. Dave uses a perpetual inventory system. To adjust the accounts, which entry would the company make?

Cost of goods sold DR 600 Merchandise Inventory CR 600

Which of the following organizations is responsible for the creation and governance of accounting standards in US.?

Financial Accounting Standards Board

Which of the following statements concerning reversing entries is true? Reversing entries are required by Generally Accepted Accounting Principles. Reversing entries are most often used with accrual-type adjustments. Reversing entries are dated December 31, the end of the fiscal year. Reversing entries are recorded before adjusting entries.

Reversing entries are most often used with accrual-type adjustments.

Which of the following is not a closing entry?

Salaries Payable DR Income Summary CR

Net loss = ...

Total DR exceeds total credit because Rev = CR and Expenses DR

What is the amount of bad debts expense?

Total accounts written off as uncollectible

Which situation indicates a net loss within the Income Statement section of the worksheet? Total credits exceed total debits Total debits exceed total credits Total debits equal total credits None of the above

Total debits exceed total credits

At December 31, 2018, Stevenson Company overstated ending inventory by $36,000. How does this error affect cost of goods sold and net income for 2018? Overstates cost of goods sold and understates net income Understates cost of goods sold and overstates net income Leaves both cost of goods sold and net income correct because the errors cancel each other Overstates both cost of goods sold and net income

Understates cost of goods sold and overstates net income

When a plant asset is disposed of, the business must...

bring the depreciation up to date

purchase of treasury stock ...

decreases total equity

Brickman Corporation uses the allowance method to account for uncollectible receivables. At the beginning of the year, Allowance for Bad Debts had a credit balance of $1,000. During the year Brickman wrote off uncollectible receivables of $2,100. Brickman recorded Bad Debts Expense of $2,700. What is Brickman's year-end balance in Allowance for Bad Debts? $1,600 $4,800 $3,700 $600

$1,600 = 2700+1000-2100 or Bad debts expense + credit balance - uncollectible receivables

Brickman's ending balance of Accounts Receivable is $19,500. Use the data in the preceding question to compute the net realizable value of Accounts Receivable at year-end. $16,800 $19,500 $17,400 $17,900

$17,900 = 19500 - 2700 - 1000 + 2100 or Accounts Receivable - Allowance for Bad debts

An employee has year-to-date earnings of $115,400. The employee's gross pay for the next pay period is $5,000. If the FICA—OASDI is 6.2% and the wage base is $118,500, how much FICA—OASDI tax will be withheld from the employee's pay? (Answer is rounded to whole dollar.) $192 $210 $310 $73

$192 = (118500 - 115400) x .062

Wells Electric (WE) owed Estimated Warranty Payable of $1,200 at the end of 2017. During 2018, WE made sales of $120,000 and expects product warranties to cost the company 3% of the sales. During 2018, WE paid $2,300 for warranties. What is WE's Estimated Warranty Payable at the end of 2018? $2,300 $2,500 $3,600 $4,800

$2,500 = (120k x .03) = 3600 - 2300 = 1300 + 1200 = 2500

During the year, Bernard Company had net credit sales of $45,000. At the end of the year, before adjusting entries, the balance in Accounts Receivable was $12,500 (debit) and the balance in Allowance for Bad Debts was $650 (credit). If the company uses an income statement approach to estimate bad debts at 5%, what is the ending balance in the Allowance for Bad Debts account? $1,275 $1,600 $2,250 $2,900

$2,900 = (45000 x .05) + 650

Jackson Health Foods has 8,000 shares of $2 par common stock outstanding, which were issued at $15 per share. Jackson also has a deficit balance in Retained Earnings of $86,000. How much is Jackson's total stockholders' equity? $16,000 $120,000 $206,000 $34,000

$34,000 = (8k x 15) - 86k

Winston Corporation has 9,000 shares of 4%, $10 par cumulative preferred stock and 47,000 shares of common stock outstanding. Winston declared no dividends in 2017 and had no dividends in arrears prior to 2017. In 2018, Winston declares a total dividend of $54,000. How much of the dividends go to the common stockholders? $54,000 $50,400 $46,800 None; it all goes to preferred stockholders.

$46,800

Sahara Company's Cash account shows an ending balance of $650. The bank statement shows a $29 service charge and an NSF check for $150. A $240 deposit is in transit and outstanding checks total $420. What is Sahara's adjusted cash balance? $291 $829 $471 $470

$471 = 650-29-150

Harvard Co. purchased a bond on December 1 of the current year for $30,000 and classified the investment as trading. The market value of the investment at year-end is $36,000. What value will be reported in net income for the adjustment? $36,000 $(6,000) $6,000 $30,000

$6,000

Liberty Corporation reported beginning and ending total assets of $25,000 and $22,000, respectively. Its net sales for the year were $18,800. What was Liberty's asset turnover ratio? 0.75 0.85 0.80 1.25

0.80 = 18,800/ ((22000+25000)/2)

At year-end, Schultz, Inc. has cash of $11,600, current accounts receivable of $48,900, merchandise inventory of $37,900, and prepaid expenses totaling $5,100. Liabilities of $55,900 must be paid next year. What is Schultz's acid-test ratio? 1.08 0.21 1.76 Cannot be determined from the data given

1.08 = (48900 + 11600)/55900

Sedlor Properties purchased office supplies on account for $800. Which journal entry records the payment on account of those office supplies?

Accounts Payable DR 800 Cash CR 800

Which of the following statements is correct? Prepaid Expenses are decreased with a debit. Unearned Revenue is increased with a debit. Rent Expense is increased with a credit. Accounts Payable is increased with a credit.

Accounts Payable is increased with a credit.

Which of the following is true of accrual basis accounting and cash basis accounting? Accrual accounting records revenue only when it is earned. Accrual accounting is not allowed under GAAP. Cash basis accounting records all transactions. All of the above are true

Accrual accounting records revenue only when it is earned.

Jade Larson Antiques owes $20,000 on a truck purchased for use in the business. Assume the company makes timely principal payments of $5,000 each year at December 31 plus interest at 8%. Which of the following is true? After the first payment is made, the company owes $15,000 plus three years' interest. After the first payment, $15,000 would be shown as a long-term liability. After the first payment is made, $5,000 would be shown as the current portion due on the long-term note. Just before the last payment is made, $5,000 will appear as a long-term liability on the balance sheet.

After the first payment is made, $5,000 would be shown as the current portion due on the long-term note.

Best Appliances owns 90% of the voting stock of Wratchet, Inc. Which of the following is true? The financial statements of Best would be consolidated into Wratchet. Wratchet would be considered the parent entity. Best would be considered the parent entity. Both a and c are correct.

Best would be considered the parent entity.

Vasquez issued a $400,000 face value, 8%, 20-year bond at 95. Which of the following is the correct journal entry to record the retirement of the bond at maturity?

Bonds Payable 400k Cash 400k

Sassy's trial balance shows $200,000 face value of bonds with a discount balance of $2,000. The bonds mature in 10 years. How will the bonds be presented on the balance sheet? Bonds payable $198,000 (net of $2,000 discount) will be listed as a long-term liability. Bonds payable $200,000 will be listed as a long-term liability. A $2,000 discount on bonds payable will be listed as a contra current liability. Bonds payable $200,000 will be listed as a long-term liability. Bonds payable $200,000 will be listed as a long-term liability. A $2,000 discount on bonds payable will be listed as a current liability.

Bonds payable $198,000 (net of $2,000 discount) will be listed as a long-term liability.

Payment by check is an important internal control over cash payments because the check must be signed by an authorized official. before signing the check, the official reviews the invoice supporting the payment. Both a and b None of the above

Both a and b

Separation of duties is important for internal control of cash receipts. cash payments. Neither of the above Both a and b

Both a and b

Suppose Value Home and Garden Imports issued 400,000 shares of $0.10 par common stock at $4 per share. Which journal entry correctly records the issuance of this stock?

Cash DR 1.6m Common stock CR 40k Paid in capita CR 1.56m

How should you record a capital expenditure? Debit a liability Debit capital Debit an expense Debit an asset

Debit an asset

The left side of an account is used to record which of the following? Debit or credit, depending on the type of account Increases Credits Debits

Debits

A company invested $45,000 in Yale Co. stock. The investment represented 5% of the voting stock of Yale Co. If the Yale Co. stock investment paid dividends, what account would be credited? Equity Investments Interest Revenue Dividend Revenue Cash

Dividend Revenue

Which characteristic of a corporation is a disadvantage? Mutual agency Double taxation Limited liability None are disadvantages.

Double taxation

Which of the following requires accounting information to be complete, neutral, and free from material error? Faithful representation concept Cost principle Economic entity assumption Going concern assumption

Faithful representation concept

Generally Accepted Accounting Principles (GAAP) are currently formulated by the Financial Accounting Standards Board (FASB). Securities and Exchange Commission (SEC). Institute of Management Accountants (IMA). American Institute of Certified Public Accountants (AICPA).

Financial Accounting Standards Board (FASB).

Assume that the weekly payroll of In the Woods Camping Supplies is $300. December 31, end of the year, falls on Tuesday, and In the Woods will pay its employee on Friday for the full week. What adjusting entry will In the Woods make on Tuesday, December 31? (Use five days as a full workweek.)

Salaries Expenses DR 120 Salaries payable CR 120

A company sells $180,000 (sales price) of goods and collects sales tax of 8%. What current liability does the sale create? Sales tax payable of $14,400 Sales revenue of $194,400 Unearned revenue of $14,400 None; the company collected cash up front.

Sales tax payable of $14,400

Which of the following is not part of the definition of internal control? Separation of duties Safeguard assets Encourage employees to follow company policies Promote operational efficiency

Separation of duties

At December 31 year-end, Crain Corporation has an $8,400 note receivable from a customer. Interest of 10% has accrued for 10 months on the note. What will Crain's financial statements report for this situation at December 31? The balance sheet will report the note receivable of $8,400. The balance sheet will report the note receivable of $8,400 and interest receivable of $700. Nothing because the business has not received the cash yet. The income statement will report a note receivable of $8,400.

The balance sheet will report the note receivable of $8,400 and interest receivable of $700. 8400x.01x(10/12)=700 total balance x interest rate x #months/12 = interest

The debt to equity ratio is calculated as Total assets / Total equity. Current liabilities / Total equity. Total liabilities / Total assets. Total liabilities / Total equity.

Total liabilities / Total equity.

Which of the following accounts is a liability? Accounts Receivable Service Revenue Unearned Revenue Prepaid Rent Expense

Unearned Revenue

Which method is used to compute depletion? Double-declining-balance method Straight-line method Depletion method Units-of-production method

Units-of-production method

A & D Window Cleaning performed $450 of services but has not yet billed customers for the month. If A & D fails to record the adjusting entry, what is the impact on the financial statements? balance sheet: assets understated; equity overstated income statement: expense understated balance sheet: liabilities overstated; equity understated income statement: revenues understated balance sheet: assets overstated, equity understated income statement: expenses understated balance sheet: assets understated, equity understated income statement: revenues understated

balance sheet: assets understated, equity understated income statement: revenues understated

The document that explains all the differences between the company's cash records and the bank's figures is called a(n) bank collection. electronic fund transfer. bank statement. bank reconciliation.

bank reconciliation.

When recording credit card or debit card sales using the net method, cash received equals sales. cash received equals sales minus the fee assessed by the card processing company. cash received equals sales plus the fee assessed by the card processing company. cash isn't received by the seller until the customer pays his or her credit card statement.

cash received equals sales minus the fee assessed by the card processing company.

If Intervale Railway invests $100,000 in 5% bonds at face value that the company intends to hold until the bond maturity date, the interest revenue recognized when each semiannual interest payment is received would be recorded as a credit to Cash, $2,500. credit to Interest Revenue, $2,500. debit to Held-to-Maturity Debt Investments, $2,500. debit to Dividend Revenue, $2,500.

credit to Interest Revenue, $2,500

If a company owns 25% of the voting stock of Pink Co. and can exercise significant influence, dividends received will be credited to Equity Investments--Pink Co. credited to Dividend Revenue. debited to Equity Investments--Pink Co. credited to Cash.

credited to Equity Investments--Pink Co.

The entry to record a write-off of an uncollectible account when using the direct write-off method involves a debit to Allowance for Bad Debts. credit to Cash. debit to Accounts Receivable. debit to Bad Debts Expense.

debit to Bad Debts Expense.

Assume that a company paid $6 per share to purchase 1,100 shares of its $3 par common stock as treasury stock. The purchase of treasury stock increased total equity by $3,300. decreased total equity by $3,300. decreased total equity by $6,600. increased total equity by $6,600.

decreased total equity by $6,600.