FA Final

Unearned Revenues

"Deferred Revenues" is another term for.. Unearned Revenues Warranty Expense Service Revenues Nonoperating Income

C. Liabilities Section of the Balance Sheet

"Deferred Revenues" appear in the A. Operating Income section of the Income Statement B. Nonoperating Income section of the Income Statement C. Liabilities Section of the Balance Sheet D. Shareholders' Equity section of the Balance Sheet

No, Operating

Employees are paid $20,000 cash for work that was performed in the prior year. Does this transaction impact the Income Statement? (Yes or No) What type of Cash Flow is involved? (Operating, Investing, Financing, or None)

C. $206,000

(Fun with T-Accounts) Excerpts from the financial statements of Rabbit Corporation are below Prepaid Insurance as of December 31, 2019 $20,000 Prepaid Insurance as of December 31, 2020 $26,000 Insurance Expense on the 2020 Income Statement $200,000 What amount of cash did Rabbit pay for insurance during 2020? A. $174,000 B. $194,000 C. $206,000 D. $226,000

A. Cash Receipts from Customers = $472,000

(Fun with T-Accounts) The 2020 Income Statement for Fedigan Corp. reported sales revenue from account sales of $500,000. The Asset section of Fedigan's 2019 and 2020 Balance Sheets reported the following: 12/31/2020: Accounts Receivable $78,000 Inventory $40,000 Total $118,000 12/31/2019: Accounts Receivable $50,000 Inventory $60,000 Total $110,000 What amount of "Cash Receipts from Customers" did Fedigan report on its 2020 Statement of Cash Flows? A. Cash Receipts from Customers = $472,000 B. Cash Receipts from Customers = $492,000 C. Cash Receipts from Customers = $508,000 D. Cash Receipts from Customers = $528,000

A. $97,000

(Fun with T-Accounts) The 2020 Statement of Cash Flows for Musketeer Corporation reported "Cash Paid for Salaries" of $100,000. The Liabilities section of Musketeer's 2019 and 2020 Balance Sheets reported the following: 12/31/2020: Salaries and Wages Payable $12,000 Unearned Revenue $14,000 Total Liabilities $26,000 12/31/2019: Salaries and Wages Payable $15,000 Unearned Revenue $10,000 Total Liabilities $20,000 What amount of Salaries Expense did Musketeer report on its 2020 Income Statement? A. $97,000 B. $100,000 C. $101,000 D. $103,000

B. $94,000

(Fun with T-Accounts) The 2020 Statement of Cash Flows for Shang Corporation reported "Cash Received for Warranties" of $100,000. The Liabilities section of Shang's 2019 and 2020 Balance Sheets reported the following: 12/31/2020: Salaries and Wages Payable $13,000 Unearned Warranty Revenue $16,000 Total Liabilities $29,000 12/31/2019: Salaries and Wages Payable $15,000 Unearned Warranty Revenue $10,000 Total Liabilities $25,000 What amount of Warranty Revenue did Shang report on its 2020 Income Statement? A. $92,000 B. $94,000 C. $106,000 D. $108,000

D. Inventory Purchases, which is not shown on financial statements.

(Fun with T-Accounts) The inventory T-account is debited by A. Cost of Goods Sold, which is found on the income statement. B. Cost of Goods Sold, which is not shown on financial statements. C. Inventory Purchases, which can be found on the Statement of Cash Flows. D. Inventory Purchases, which is not shown on financial statements.

A. A gain of $10,000

-On their 12/31/2019 Balance Sheet, Gow reported a land balance of $100,000. -Gow's 2020 Statement of Cash Flows reported cash invested in land of $60,000. -Gow's 2020 Statement of Cash Flows reported cash received from the sale of land of $50,000. -On their 12/31/2020 Balance Sheet, Gow reported a land balance of $120,000. The journal entry for Gow's sale of land during 2020 includes... A. A gain of $10,000 B. A loss of $10,000 C. A gain of $30,000 D. A loss of $30,000

A. Bartley paid $3,000 cash to an inventory supplier on February 10

A February 10 transaction (transaction 1 below) had the following impact on Bartley Department Store's Cash and Accounts Payable accounts Cash BB $40,000 (debit) (1) $3,000 (credit) Accounts Payable BB $20,000 (credit) (1) $3,000 (debit) All of Bartley's Accounts Payable arise from transactions with Bartley's inventory suppler. Based on the above we can conclude that A. Bartley paid $3,000 cash to an inventory supplier on February 10 B. Bartley sold products for $3,000 in cash on February 10 C. Bartley sold products for $3,000 on account on February 10 D. Bartley received a delivery of $3,000 in inventory on February 10

D. Bambler received $3,000 in inventory from the inventory supplier on November 12.

A November 12 transaction (transaction 1 below) had the following impact on Bambler Furniture Store's Inventory and Accounts Payable Accounts Inventory BB $20,000 (debit) (1) $ 3,000 (debit) Accounts Payable BB $15,000 (credit) (1) $ 3,000 (credit) All of Bambler's Accounts Payable arise from transactions with Bambler's inventory supplier. Based on the above, we can conclude that A. Bambler sold furniture for $3,000 cash on November 12. B. Bambler sold furniture for $3,000 on account on November 12. C. Bambler paid $3,000 cash to its inventory supplier on November 12 D. Bambler received $3,000 in inventory from the inventory supplier on November 12.

B. Ambler paid $8,000 cash to its inventory supplier on September 21.

A September 21 transaction (transaction 1 below) had the following impact on Ambler Furniture Store's Cash and Accounts Payable Accounts Cash BB $70,000 (debit) (1) $8,000 (credit) Accounts Payable BB $25,000 (credit) (1) $8,000 (debit) All of Ambler's Accounts Payable arise from transactions with Ambler's inventory supplier. Based on the above, we can conclude that A. Ambler sold furniture for $8,000 cash on September 21. B. Ambler paid $8,000 cash to its inventory supplier on September 21. C. Ambler received $8,000 in inventory from the inventory supplier on September 21. D. Both "B" and "C" are correct.

A. This is a Financing Cash Flow and will impact the Balance Sheet

A company declared and paid dividends to its shareholders. A. This is a Financing Cash Flow and will impact the Balance Sheet. B. This is a Financing Cash Flow and will impact the Income Statement. C. This is an Operating Cash Flow and will impact the Balance Sheet. D. This is an Operating Cash Flow and will impact the Income Statement.

A. True

A company purchased an industrial machine with an estimated useful life of 10 years and no salvage value. The difference in accumulated depreciation between using the double-declining balance or the straight-line depreciation method for the machine will be smaller at the end of the first year than it is at the end of the second year of the asset's life. A. True B. False

D. Debt to Equity

A company's leverage often is measured using the _____ ratio. A. Return on Equity B. Quick C. Asset Turnover D. Debt to Equity

Yes, None

A firm provided $8,000 in services on account Does this transaction impact the Income Statement? (Yes or No) What type of Cash Flow is involved? (Operating, Investing, Financing, or None)

B. Liquidation preference

A key benefit of being a creditor instead of an owner is A. Unlimited upside potential B. Liquidation preference C. Voting Rights D. More investment opportunities

Yes, Investing

A restaurant chain sold land with a historical cost of $30,000 for $40,000 cash Does this transaction impact the Income Statement? (Yes or No) What type of Cash Flow is involved? (Operating, Investing, Financing, or None)

C. AAA appears to have greater liquidity than BBB.

AAA Corp has a Current Ratio of 3.8 and BBB Corp has a Current Ratio of 1.5. Which of the following is the best interpretation of this information? A. AAA appears to be more profitable that BBB. B. AAA appears to be investing its assets more wisely than BBB. C. AAA appears to have greater liquidity than BBB. D. AAA appears to have more unearned revenue than BBB.

AAA has a higher Return on Equity than BBB

AAA Corporation and BBB Corporation are both clothing retailers. AAA Corp: Equity Multiplier 3.00 Return on Sales 0.08 Asset Turnover 1.0 BBB Corp Equity Multiplier 2.00 Return on Sales 0.05 Asset Turnover 1.6 Answers: AAA has a higher Return on Assets than BBB AAA has a higher Return on Equity than BBB AAA has a lower Return on Assets than BBB AAA has a lower Return on Equity than BBB

D. All of the above are correct

ABC Corporation began operations on January 1, 2020. During 2020, ABC has Service Revenues of $100,000 and Salaries Expense of $70,000. ABC declared and paid $5,000 in dividends during 2020. After ABC records its closing entries at the end of 2020, A. ABC's balance in the Service Revenue account will be $0 B. ABC's balance in the Salaries Expense account will be $0 C. ABC's balance in the Dividends account will be $0 D. All of the above are correct

ABC borrowed $1,000,000.

ABC Corporation issued bonds and collected $1,000,000 cash. Which of the following is correct? ABC borrowed $1,000,000. ABC sold a share of its equity to the bondholders. ABC performed a service and earned $1,000,000 in revenues from the bondholders. ABC made a promise (bond) with the bondholders to give the bondholders a share of ABC's equity at some point in the future.

Balance Sheet

ABC Corporation paid its employees $18,000 on February 8, 2021 for work that the employees performed during January 2021. Which of the following financial statements are affected by the February 8 transaction? Balance Sheet Income Statement Statement of Shareholders' Equity All of the above statements are affected

B. All else equal, Zebra likely has a higher debt to equity ratio than Aardvark.

Aardvark Corp and Zebra Corp are competitors in the same industry. Aardvark has a AA bond rating and Zebra has a CCC bond rating. A. The bonds of both companies would be considered "investment grade." B. All else equal, Zebra likely has a higher debt to equity ratio than Aardvark. C. Investors in Aardvark bonds should expect a higher interest rate than investors in Zebra bonds. D. James Bond

A. Balance Sheet

Accumulated Depreciation appears on the A. Balance Sheet B. Statement of Cash Flows C. Statement of Shareholders' Equity D. Income Statement

C. does not impact the wealth of the shareholders

All else equal, the declaration and payment of a dividend A. increases the wealth of the shareholders B. decreases the wealth of the shareholders C. does not impact the wealth of the shareholders D. Old Town Road

C. The value of the business decreases

All else equal, when a company declares and pays a dividend... A. The retained earnings of the business increases B. The wealth of the owners increases C. The value of the business decreases D. All of the above

C. stays the same

All else equal, when a corporation declares and pays a cash dividend, the wealth of the shareholders... A. increases B. decreases C. stays the same D. Black Lightning

B. One of Nelson's largest customers became insolvent at the end of the year.

All else equal, which of the following might lead to an increase in Nelson Corporation's reported bad debt expense for the year? A. Nelson increased the required credit score that customers must have in order to make purchases. B. One of Nelson's largest customers became insolvent at the end of the year. C. Both "A" and "B" are correct D. Neither "A" nor "B" is correct

C. is appropriate due to materiality.

Altamuro Corporation is a large, successful consulting firm. On January 1, 2020 Altamuro purchased a pencil holder for $2 that is expected to last for 10 years. Altamuro recorded the entire $2 as an expense during 2020. Recording the entire $2 as an expense during 2020... A. violates the conservatism principle. B. is not acceptable since pencil holders are long-term assets. C. is appropriate due to materiality. D. is appropriate due to the consistency principle.

C. Annual letter from the CEO to shareholders

Amazon communicated the following to stakeholders: "How do you stay ahead of ever-rising customer expectations? There's no single way to do it - it's a combination of many things. But high standards (widely deployed and at all levels of detail) are certainly a big part of it." Where did Amazon communicate this information: A. Footnotes to financial statements B. Management's Discussion and Analysis C. Annual letter from the CEO to shareholders D. Campus Currents

B. $35,000

Ambler Company has Total Assets of $80,000, Total Stockholders' Equity of $45,000 and Retained Earnings of $15,000. What is the amount of Total Liabilities? A. $20,000 B. $35,000 C. $50,000 D. Cannot be determined from the information given

$34,000

Among many other things, Sato Corporation reported the following on its 2019 and 2020 Balance Sheets. 12/31/2020 Accounts Receivable $73,000 Prepaid Insurance $12,000 12/31/2019 Accounts Receivable $70,000 Prepaid Insurance $16,000 Sato paid $30,000 cash for insurance during 2020. What was Sato's 2020 Insurance Expense? Answers: $18,000 $22,000 $26,000 $34,000

A. This transaction is an example of an accrual

Beta Alloys made the following journal entry Accounts Receivable $1,000 Service Revenue $1,000 A. This transaction is an example of an accrual B. This transaction is an example of a deferral C. This transaction is neither an accrual nor a deferral D. Baby Yoda

B. $350,000 credit to Accumulated Depreciation

Ardith Farm Corp. reported the following on its Balance Sheet Tractors $1,000,000 Accumulated Depreciation $250,000 Net Tractor $750,000 Shortly thereafter, it was discovered that significant design flaws in the tractors had significantly impaired the tractors' value and that the tractors were now only worth $400,000. Ardith must record a A. $350,000 credit to Tractor B. $350,000 credit to Accumulated Depreciation C. $600,000 credit to Tractor D. $150,000 credit to Accumulated Depreciation

Higher Income Tax Expense

Assuming that inventory prices are rising, using FIFO instead of LIFO will result in Lower Net Income Higher Income Tax Expense Higher Cost of Goods Sold All of the above

D. All of the above

Assuming that inventory prices are rising, using LIFO instead of FIFO will result in A. higher Cost of Goods Sold B. lower Net Income C. lower income tax expense D. All of the above

B. $20,000

Below are EB Corp's Equipment & Accumulated Depreciation T-Accounts for the most recent year: Equipment _______________________________________ BB 600,000 (debit) 70,000 (debit) 55,000 (credit) EB 615,000 (debit) Accumulated Depreciation (Equipment) ____________________________________________________________ 250,000 BB (credit) 50,000 (credit) 40,000 (debit) 260,000 EB (credit) During the year, EB reported a gain on the sale of equipment of $5,000. How much cash did EB receive from selling the equipment? A. $10,000 B. $20,000 C. $60,000 D. Cannot be determined from the information given.

Accumulated Depreciation on the equipment that was sold during 2020 was $12,000.

Below is the 2020 Accumulated Depreciation T-Account for Osofsky Corporation Accumulated Depreciation (Equipment) 50,000 BB (credit) 30,000 (credit) 12,000 (debit) 68,000 EB (credit) Which of the following is correct? Accumulated Depreciation on the equipment that was sold during 2020 was $12,000. Depreciation expense on the equipment was $12,000 during 2020. Osofsky sold equipment for $12,000 cash. Osofsky's equipment lost $12,000 of value during 2020.

D. $75,000

Benick Industries purchased a new lathe on January 1, 2019 for $300,000. Benick estimates that the lathe will have a useful life of four years and that the company will be able to sell it at the end of the fourth year for $60,000. What is the depreciation expense for 2020 (NOT 2019) under double declining balance depreciation? A. $56,250 B. $60,000 C. $64,750 D. $75,000

C. Both "A" and "B" are correct.

Brevity Corp. borrowed $1,000,000 from National Bank and used the entire $1,000,000 to purchase Parz Corporation. Parz had land ($100,000 FMV), buildings ($400,000 FMV), and equipment ($200,000 FMV) at the time of sale. Brevity also assumed $50,000 of Accounts Payable that Parz owed suppliers at the time of the sale. Which of the following is correct? A. Brevity will debit Goodwill for $350,000. B. Brevity will credit Notes Payable for $1,000,000. C. Both "A" and "B" are correct. D. Neither "A" nor "B" is correct.

No, Financing

Common stock is issued for $500,000 in cash Does this transaction impact the Income Statement? (Yes or No) What type of Cash Flow is involved? (Operating, Investing, Financing, or None)

A. $10,000

Company reported Total Assets of $100,000 and Contributed Capital of $30,000. ABC owes its creditors a total of $60,000. What is ABC's Retained Earnings? A. $10,000 B. $40,000 C. $70,000 D. Cannot be determined from the information

D. Income Statement

Cost of Goods Sold appears on the Balance Sheet Statement of Cash Flows C. Statement of Shareholders' Equity D. Income Statement

A. Under GAAP, Cutrona must include the interest in the operating section of the statement of cash flows in all cases.

Cutrona Company received $1,000 cash in interest. Which of the following is correct? A. Under GAAP, Cutrona must include the interest in the operating section of the statement of cash flows in all cases. B. Under IFRS, Cutrona must include the interest in the operating section of the statement of cash flows in all cases. C. Both "A" and "B" are correct D. Under GAAP, the cash must be placed into a small, unmarked bag and left outside your professor's door.

B. Unearned Revenue

Which of the following accounts would appear on a Balance Sheet? A. Cost of Goods Sold B. Unearned Revenue C. Gain on the Sale of Stock Investments D. None of the above

B. Income Statement

DEF Corporation declared and paid a dividend to its shareholders. This transaction will affect all of DEF's financial statements except for DEF's... A. Balance Sheet B. Income Statement C. Statement of Cash Flows D. Statement of Shareholders' Equity E. All of DEF's financial statements are affected by the dividend

deferred revenue

Deferred expense, Deferred revenue, accrued expense, accrued revenue: Gilpin performed work for a customer that the customer had paid for in advance during the previous month.

Deferred Expense

Deferred expense, Deferred revenue, accrued expense, accrued revenue: Gilpin purchased an office building with cash.

accrued Revenue

Deferred expense, Deferred revenue, accrued expense, accrued revenue: Gordon provided services to customers on account.

deferred revenue

Deferred expense, Deferred revenue, accrued expense, accrued revenue: Gordon received cash from customers for work that Gordon will perform in the future.

accrued revenue

Deferred expense, Deferred revenue, accrued expense, accrued revenue: accounts receivable

deferred expense

Deferred expense, Deferred revenue, accrued expense, accrued revenue: prepaid rent

accrued expense

Deferred expense, Deferred revenue, accrued expense, accrued revenue: salaries payable

deferred revenue

Deferred expense, Deferred revenue, accrued expense, accrued revenue: unearned revenue

None of the above

Deming Contractors was authorized to issue 250,000 shares of $5 par value common stock. The journal entry to record this event... Increases the Common Stock account by $250,000 Increases the Common Stock account by $1,250,000 Increases the Additional Paid in Capital account by $1,250,000 None of the above

B. Dirty might use a useful life for the equipment that is too long.

Dirty Corporation purchased equipment on January 1, 2021 and uses the straight-line method of depreciation. Dirty wants to mislead investors into thinking that the company was more profitable during 2021 than it really was. Which of the following might Dirty do to exaggerate 2021 reported profits? A. Dirty might use a salvage value for the equipment that is too low. B. Dirty might use a useful life for the equipment that is too long. C. Both "A" and "B" are correct. D. Neither "A" nor "B" is correct.

Financing section of the Statement of Cash Flows

Dividends paid would appear in which section of which financial statement? Operating section of the Statement of Cash Flows Financing section of the Statement of Cash Flows Operating Section of the Income Statement Non-Operating Section of the Income Statement

C. The lawsuit has no effect on Dulski's Debt to Equity ratio

Dulski Corporation was sued by customers during 2020. Dulski denies all claims, but believes it is reasonably possible that the corporation will pay cash to settle the claims. Dulski estimates that the amount of a settlement would be $300,000. What impact does this lawsuit have on Dulski's 2020 year-end debt to equity ratio? A. The lawsuit increases Dulski's Debt to Equity ratio B. The lawsuit decreases Dulski's Debt to Equity ratio C. The lawsuit has no effect on Dulski's Debt to Equity ratio D. Roddy Ricch

$7,000 gain

During 2020, Birch Corporation sold a piece of equipment for $25,000 cash. The equipment that was sold had a historical cost of $30,000. Birch's financial statements at year end included the following: 2020 Accumulated Depreciation-Equipment $88,000 Depreciation Expense (for equipment) $20,000 2019 Accumulated Depreciation-Equipment $80,000 Depreciation Expense (for equipment) $18,000 What was Birch's gain/loss from the sale of equipment during 2020? $5,000 gain $7,000 gain $5,000 loss $7,000 loss

$390,000

During 2020, Goble Booksellers opened ten new locations in the greater metro area. During 2020, the following took place for these new locations: Goble sold $90,000 of books for which it received cash at the time of the sale; sold $230,000 of books on credit, of which $20,000 remains a receivable at the end of 2020; and received $80,000 cash for gift cards, of which $10,000 has not been redeemed by customers as of the end of 2020.How much revenue should Goble recognize for 2020 from these 10 locations? $400,000 $390,000 $380,000 $370,000

B. $30,000

During 2020, Hasson Corp. declared and paid $40,000 in dividends. Hasson's 2019 and 2020 Balance Sheets reported the following: 12/31/2020 Common Stock: $100,000 Retained Earnings: $130,000 ____________________________________________ Total Liabilities & Equity $230,000 12/31/2019 Common Stock: $80,000 Retained Earnings: $140,000 ____________________________________________ Total Liabilities & Equity $220,000 What amount of Net Income did Hasson report on its 2020 Income Statement? A. $20,000 B. $30,000 C. $40,000 D. $50,000

B. $7,000

During 2020, McNelis Corporation purchased $30,000 in equipment for cash. Also during 2020, McNelis sold one piece of equipment for cash at a loss of $1,000. The following balances relate to the plant asset accounts for McNelis at year end: 2020 Equipment $90,000 Accumulated Depreciation ̵Equipment $52,000 Depreciation expense (for equipment) $26,000 2019 Equipment $80,000 Accumulated Depreciation ̵Equipment $38,000 Depreciation expense (for equipment) $21,000 How amount of cash from the sale of equipment did McNelis report in the Investing Activities section of their 2020 Statement of Cash Flows? (This is a long one!) A. $6,000 B. $7,000 C. $8,000 D. $9,000

A. $2,000 loss

During 2020, Rees Corporation sold a piece of equipment for $5,000 cash. The equipment that was sold had a historical cost of $10,000. Rees' financial statements at year end included the following: 2020 2019 Accumulated Depreciation ̵ Equipment $42,000 $30,000 Depreciation expense (for equipment) $15,000 $14,000 What was Rees' gain/loss from the sale of equipment during 2020? A. $2,000 loss B. $2,000 gain C. $3,000 loss D. $3,000 gain

A. The balance in the Cost of Goods Sold account will be $0.

During 2020, Rockville Corp. earned $14,000 in sales revenues and incurred $9,000 in cost of goods sold. After Rockville records closing journal entries on December 31, 2020, A. The balance in the Cost of Goods Sold account will be $0. B. The balance in the Retained Earnings account will be $0. C. Both "A" and "B" are correct. D. Neither "A" nor "B" is correct.

$50,000

During 2020, XYZ Corp. had Net Income of $80,000. XYZ's 2019 and 2020 Balance Sheets reported the following: 2020: Common Stock = $200,000 RE = $310,000 Total Liabilities & Equity = $510,000 2019: Common Stock = $150,000 RE = $280,000 Total Liabilities & Equity = $430,000 What amount of Dividends, if any, did XYZ declare and pay during 2020? $0 $30,000 $50,000 $110,000

C. Both "A" and "B" are correct

During 2020, customers paid Abelarde Theater $5,000 cash for tickets to see a March 24, 2021 performance of the musical "Phantom of the Opera." The performance occurred on March 24, 2021 as expected. Which of the following is correct? A. Abelarde's Total Liabilities decreased by $5,000 on March 24, 2021. B. Abelarde's Shareholders' Equity increased by $5,000 on March 24, 2021. C. Both "A" and "B" are correct. D. Neither "A" nor "B" is correct.

B. $50,000 additional cost of goods sold during 2021

During 2020, suppose that Stallone Corporation's inventory declined in value by $50,000 but that Stallone failed to record the $50,000 loss. Also assume that Stallone sold the inventory during 2021 at a heavily discounted price. All else equal, the failure to record the 2020 loss will cause Stallone to report... A. $50,000 additional net income during 2021 B. $50,000 additional cost of goods sold during 2021 C. $50,000 too much inventory on its 12/31/2021 balance sheet D. $50,000 too little inventory on its 12/31/2021 balance sheet

Barings Bank collapsed after suffering enormous losses from unauthorized and highly speculative investments conducted by an underqualified employee working at Barings' office in Singapore. That employee lied on his application for a United Kingdom broker's license, was known for lewd behavior, and even was arrested once in Singapore for pulling his pants down in a bar.

During Monday's class I covered internal controls and used Barings Bank as an example. Which of the following is correct about Barings Bank? Poor technology controls allowed hackers to transfer at least $100 million of Barings Bank's funds to private bank accounts in Russia. Barings' attempt to recover the funds inadvertently led to another $100 million being stolen. Barings Bank collapsed after suffering enormous losses from unauthorized and highly speculative investments conducted by an underqualified employee working at Barings' office in Singapore. That employee lied on his application for a United Kingdom broker's license, was known for lewd behavior, and even was arrested once in Singapore for pulling his pants down in a bar. Barings Bank invested over 50% of its wealth into Internet-based Corporations that then became worthless. One of the corporations that Barings invested in was not even real, but rather was a fake business created by one of Barings' bank tellers. Barings Bank was victim to an $80 million armed robbery by an organized gang of criminals led by a man named "The Joker."

C. Reduces current year Net Income by $1,000,000

During the current year, Graham Pharmaceuticals performed drug research related to slowing the effects of Alzheimer's disease at a cost of $1,000,000. Graham hopes that the research performed during the current year will yield begin yielding benefits next year and that the benefits will last the company for roughly 20 years. The research... A. Reduces current year Net Income by $50,000 B. Reduces current year Net Income by $500,000 C. Reduces current year Net Income by $1,000,000 D. Does not impact current year Net Income

B. Hawkins will report an ending balance for Salaries Payable that is $10,000 greater than the beginning balance in Salaries Payable.

During the most recent year, Hawkins Corp. reported salaries expense of $200,000 and cash paid for salaries of $190,000. Which of the following is correct? A. Hawkins' will report an ending balance of $10,000 for Salaries Payable. B. Hawkins will report an ending balance for Salaries Payable that is $10,000 greater than the beginning balance in Salaries Payable. C. Hawkins' will report an ending balance of $200,000 for Salaries Payable. D. None of the above

C. Increased Shareholders' Equity by $14,000

Ed's Lawn Service performed lawn services for customers, receiving $10,000 in cash and $4,000 in receivables. This transaction... A. Increased Total Assets by $6,000 B. Increases Total Assets by $10,000 C. Increased Shareholders' Equity by $14,000 D. None of the above

B. $24,000

Excerpts from the financial statements of Dunbar Manufacturing are provided below Prepaid rent as of December 31, 2019 $12,000 Prepaid rent as of December 31, 2020 $15,000 Rent expense on the 2020 Income Statement $21,000 Dunbar's cash payments for rent during 2020 equals... A. $18,000 B. $24,000 C. $33,000 D. $36,000

B. $0 in liabilities related to the lawsuit (though FSP must disclose the lawsuit).

Ford Sisters Pharmaceuticals Corporation (FSP) was sued by consumers who believe that the company's arthritis medicine causes side effects that were not disclosed by the company. FSP rigorously denies the claim, though they acknowledge that there is roughly a 20% chance that they could lose a lawsuit or be forced to make a payment to settle the claims. The amount that FSP could lose is estimated to be $20 million, which is a material amount to FSP. FSP's Balance Sheet should include... A. $0 in liabilities related to the lawsuit (and FSP need not disclose the lawsuit). B. $0 in liabilities related to the lawsuit (though FSP must disclose the lawsuit). C. 20% x $20,000,000 = $4,000,000 in liabilities related to the lawsuit. D. $20,000,000 in liabilities related to the lawsuit.

None of the above

Fuzzywarm corporation bought and sold sweaters as shown below. Year 2020- Model JRE15 Sweaters Available and Sold # of units cost per unit total cost Beginning Inventory 3,000 x $31 each = $93,000 2/14 Purchase 2,000 x $32 each = $64,000 10/22 Purchase 4,000 x $34 each = $136,000 Available for Sale: 9,000 $293,000 Sold during 2020: 8,000 ? Ending Inventory: 1,000 ? Assuming a tax rate of 30%, Fuzzywarm's 2020 Net Income will be $900 higher if Fuzzywarm reports inventory using FIFO instead of LIFO $900 lower if Fuzzywarm reports inventory using FIFO instead of LIFO $1,200 higher if Fuzzywarm reports inventory using FIFO instead of LIFO None of the above

$260,444

Fuzzywarm corporation bought and sold sweaters as shown below. Year 2020- Model JRE15 Sweaters Available and Sold # of units cost per unit total cost Beginning Inventory 3,000 x $31 each = $93,000 2/14 Purchase 2,000 x $32 each = $64,000 10/22 Purchase 4,000 x $34 each = $136,000 Available for Sale: 9,000 $293,000 Sold during 2020: 8,000 ? Ending Inventory: 1,000 ? What is Fuzzywarm's 2020 Cost of Goods Sold under the Weighted Average inventory cost flow assumption? $258,667 $260,000 $260,444 $261,333

B. $700,000

GHI's Balance Sheet reported Total Assets of $1,000,000 and Total Liabilities of $700,000. If GHI decides to liquidate and sells all of its assets for $1,500,000, how much will GHI's creditors receive? A. $300,000 B. $700,000 C. $1,050,000 D. $1,200,000 E. $1,500,000

D. None of the above

Garcia-Orozco Corporation's cash balance decreased by 15% during 2020. Based on this information, A. we can conclude that Garcia-Orozco performed well during 2020. B. we can conclude that Garcia-Orozco performed poorly during 2020. C. we can conclude that Garcia-Orozco performed poorly during 2020 only if the industry average cash balance decreased by less than 15% during 2020. D. None of the above

Retained Earnings increased by $12,000.

Gopal Corporation performed services for $12,000, receiving $5,000 in cash and a $7,000 accounts receivable. Which of the following is correct? Total Assets increased by $5,000. Operating cash flows increased by $12,000. Retained Earnings increased by $12,000. None of the above

increases Total Liabilities by $20,000,000.

Harrison Motorcycle Corp. was sued after it was alleged that serious design flaws in its motorcycles led to mutliple accidents. Harrison believes that there is an 80% likelihood that the case will be settled out of court for $20,000,000. The journal entry that Harrison will record... reduces Total Assets by $20,000,000. increases Total Liabilities by $20,000,000. Harrison will not record a journal entry. However, Harrison must disclose information about the lawsuit in a footnote to its financial statements. Harrison will not record a journal entry and does not need to disclose information about the lawsuit in a footnote to its financial statements.

D. $1,300,000 Credit to Cash

Hoboken Consulting Corp. purchased a building that will act as an office site for $1,300,000 cash. This transaction results in a A. $1,300,000 Debit to Contributed Capital B. $1,300,000 Credit to Contributed Capital C. $1,300,000 Debit to Cash D. $1,300,000 Credit to Cash E. None of the above

Keep less inventory in its warehouses

If Epsilon Company desires to reduce the cash conversion cycle, Epsilon should Answers: Pay its accounts payable more quickly and efficiently. Keep less inventory in its warehouses Increase sales by giving customers a longer time to pay their bills None of the above

A. Most liquid to least liquid

In which order do we present current assets on the balance sheet? A. Most liquid to least liquid B. Least liquid to most liquid C. Highest balance to lowest balance D. Lowest balance to highest balance

C. Both "A" and "B"

JKL Corporation provided services for $8,000 on account. This transaction A. Increased Total Assets B. Increased Shareholders' Equity C. Both "A" and "B" D. Neither "A" nor "B"

D. $128,000

JKL Corporation's financial statements reported the following Net Income..................................$100,000 Depreciation Expense...................... $15,000 Decrease in Accounts Receivable........$6,000 Increase in Salaries Payable...............$7,000 What is JKL's Net Cash Flow from Operating Activities? A. $113,000 B. $114,000 C. $116,000 D. $128,000

D. All of the above are correct.

JQ Corp. bought land 12 years ago for $100,000. The sale of the land for $160,000 cash would... A. increase retained earnings by $60,000. B. increase total assets by $60,000. C. decrease the land account by $100,000. D. All of the above are correct.

B. Kansas' Book Value increased by $100,000

Kansas Restaurants is a fast food chain. Kansas sold some of its land to a real estate developer for $800,000 cash. Kansas had paid $700,000 for the land several years earlier. At the time of the land sale... A. Kansas' revenues increased by $800,000. B. Kansas' Book Value increased by $100,000 C. Both "a" and "b" are correct D. Neither "a" nor "b" is correct

Korra estimates that it will collect $190,000 of its Accounts Receivable

Korra Corportion reported the following on its 12/31/2020 Balance Sheet: Accounts Receivable $200,000 Allowance for Doubtful Accounts (10,000) Net Accounts Receivable $190,000 Which of the following is correct? Answers: Korra has given up on trying to collect $10,000 of its accounts receivable. Korra's customers owe $190,000 to Korra Corporation. Korra had $10,000 in "write-offs" during 2020. Korra estimates that it will collect $190,000 of its Accounts Receivable.

Kraus will report a Cash Inflow from Investing Activities of $68,000 on its 2021 Statement of Cash Flows.

Kraus Software Corporation purchased land for $50,000 during 2009 and sold that land on March 24, 2021 for $68,000 cash. The journal entry that Kraus will record on March 24, 2021 includes a debit to land of $68,000. The journal entry that Kraus will record on March 24, 2021 includes a credit to land of $68,000. The journal entry that Kraus will record on March 24, 2021 increases Total Assets by $68,000. Kraus will report a Cash Inflow from Investing Activities of $68,000 on its 2021 Statement of Cash Flows.

C. $6,000 higher if they report inventory using FIFO instead of LIFO

Krishnan Furniture bought and sold office chairs as shown below: Model RU51 Lamps Available and Sold # of units cost per unit total cost Beginning 3,000 x $40 each = $120,000 3/19 Purchase 2,000 x $43 each = $86,000 10/22 Purchase 4,000 x $46 each = $184,000 Available for Sale: 9,000 $390,000 Units Sold 8,000 ? Ending Inventory 1,000 ? Assuming a tax rate of 30%, Krishnan's Ending Inventory will be A. $4,200 higher if they report inventory using FIFO instead of LIFO B. $4,200 higher if they report inventory using LIFO instead of FIFO C. $6,000 higher if they report inventory using FIFO instead of LIFO D. $6,000 higher if they report inventory using LIFO instead of FIFO

A. $1,800 higher if they report inventory using FIFO instead of LIFO

Krishnan Furniture bought and sold office chairs as shown below: Model RU51 Lamps Available and Sold # of units cost per unit total cost Beginning 3,000 x $40 each = $120,000 3/19 Purchase 2,000 x $43 each = $86,000 10/22 Purchase 4,000 x $46 each = $184,000 Available for Sale: 9,000 $390,000 Units Sold 8,000 ? Ending Inventory 1,000 ? Assuming a tax rate of 30%, Krishnan's Income Tax Expense will be A. $1,800 higher if they report inventory using FIFO instead of LIFO B. $4,200 higher if they report inventory using FIFO instead of LIFO C. $4,200 lower if they report inventory using FIFO instead of LIFO D. $7,200 higher if they report inventory using FIFO instead of LIFO

$165,000

Kurtz Company reported Total Liabilities of $100,000. Owners have invested $55,000 into the business in return for their shares. Kurtz's Retained Earnings equals $10,000. What is Kurtz's Total Assets? $100,000 $145,000 $155,000 $165,000

C. $20,000

Langton Corp. purchased a printing machine on January 1 for $36,000. The machine is expected to have a 6-year life and a salvage value of $6,000. Using the double-declining method, accumulated depreciation on the machine after two years will be... A. $8,000 B. $16,667 C. $20,000 D. $24,000

C. Linley's Return on Equity = 5.65%

Linley company reported the following information (in millions): Net Sales: $11,000 Beginning Total Shareholders' Equity: $4,200 Net Income: $260 Ending Total Shareholders' Equity: $5,000 Return on Equity = Net Income / Average Total Shareholders' Equity. Based on this formula, A. Linley's Return on Equity = 4.19% B. Linley's Return on Equity = 5.20% C. Linley's Return on Equity = 5.65% D. Linley's Return on Equity = 6.19%

A. $0

Lucky Corporation's Balance Sheet reported Total Assets of $3,000,000 and Total Liabilities of $2,200,000. If Lucky decides to liquidate and sell all of its assets for $2,000,000, how much will Lucky's shareholders receive? A. $0 B. $200,000 C. $800,000 D. $1,000,000

D. $31,000

Mabry Corp. had a beginning Accounts Receivable balance of $400,000 and a beginning Allowance for Doubtful Accounts balance of $26,000. During the year, Mabry made credit sales of $3,000,000 and cash collections of $2,950,000. Also during the year, Mabry wrote off uncollectible accounts receivable totaling $25,000. Mabry uses the percentage of sales method to determine bad debt expense. Mabry estimates that 1% of current year sales will not be collected. What is Mabry's balance in the Allowance for Doubtful Accounts at the end of the year? A. $25,000 B. $27,000 C. $29,000 D. $31,000

Mando's Cash Paid to Suppliers = $230,000

Mando Corporation's Accounts Payable: 20,000 BB (credit) 236,000(credit) 230,000 (debit) 26,000 EB Which of the following is correct? Answers: Mando's Cost of Goods Sold = $230,000. Mando's Cash Paid to Suppliers = $230,000. Mando's Inventory Purchases = $230,000. Mando's Cash Collected from Customers = $230,000

Mozgiel has not yet sold the inventory.

Mozgiel Corporation has an "unrealized loss" on its inventory. This means that... Mozgiel has not yet made a journal entry to record the loss. Mozgiel has not yet sold the inventory. Mozgiel sold the inventory for less than its historical cost. The loss is not real. Mozgiel's inventory has not dropped in value.

D. Cannot be determined from the information given.

Notes Payable would appear as a _____ on a corporation's Balance Sheet. A. Current Liability B. Long-term Liability C. Shareholders' Equity account D. Cannot be determined from the information given.

A. $393,000

Oates Corporation had Sales Revenue of $600,000 and Cost of Goods Sold of $400,000 during 2020. Oates also reported the following balances: 12/31/2020 12/31/2019 Inventory $50,000 $55,000 Accounts Payable $42,000 $40,000 How much cash did Oates Corporation pay to its inventory suppliers during 2020? A. $393,000 B. $397,000 C. $403,000 D. $405,000

D. Cannot tell from the information given

Oberdorfer Corp. reported Net Income of $10,000,000. Shareholders' of Oberdorfer should be... A. Pleased B. Displeased C. Indifferent D. Cannot tell from the information given

A. $0 in liabilities related to the lawsuit (and Old Balance need not disclose the lawsuit).

Old Balance Sneaker Corporation was sued for $1 million by a customer who was displeased that his Old Balance sneakers did not significantly improve his ability to jump. The customer filed the lawsuit without the help of an attorney, and Old Balance believes that it is extremely unlikely that the company would lose a lawsuit or be forced to make a payment to settle the claims. Old Balance's Balance Sheet should include... A. $0 in liabilities related to the lawsuit (and Old Balance need not disclose the lawsuit). B. $0 in liabilities related to the lawsuit (though Old Balance must disclose the lawsuit). C. $1,000,000 in liabilities related to the lawsuit. D. Matt Damon

B. $428,000

On 1/1/2020, Baxter Corp. had an Accounts Receivable balance of $400,000 and an Allowance for Doubtful Accounts balance of $20,000. During 2020, Baxter made credit sales of $3,000,000 and cash collections of $2,950,000. Also during 2020, Baxter wrote off uncollectible accounts receivable totaling $22,000. Based on an aging schedule, uncollectible amounts are estimated to total $25,000 as of 12/31/2020. Baxter uses the Aging Schedule approach to recording bad debt expense. What is the balance in the Accounts Receivable account as of 12/31/2020? (Please note that the question is asking for the A/R Balance, not the Net Realizable Value of A/R.) A. $425,000 B. $428,000 C. $447,000 D. $453,000

C. $27,000

On 1/1/2020, Baxter Corp. had an Accounts Receivable balance of $400,000 and an Allowance for Doubtful Accounts balance of $20,000. During 2020, Baxter made credit sales of $3,000,000 and cash collections of $2,950,000. Also during 2020, Baxter wrote off uncollectible accounts receivable totaling $22,000. Based on an aging schedule, uncollectible amounts are estimated to total $25,000 as of 12/31/2020. Baxter uses the Aging Schedule approach to recording bad debt expense. The adjusting journal entry to record Bad Debt Expense for 2020 would include a debit to Bad Debt Expense of $_________. (Don't forget to make a T-account!) A. $23,000 B. $25,000 C. $27,000 D. $29,000

C. $40,000

On 1/1/2020, Chatas Corp. had an Accounts Receivable balance of $700,000 and an Allowance for Doubtful Accounts balance of $38,000. During 2020, Chatas made credit sales of $8,000,000 and cash collections of $8,400,000. Also during 2020, Chatas wrote off uncollectible accounts receivable totaling $37,000. Chatas uses the percentage of sales method to determine bad debt expense. Chatas estimates that 0.5% of current year sales will not be collected. Chatas' journal entry to record 2020 bad debt expense will include a credit to the Allowance for Doubtful Accounts of... A. $38,000 B. $39,000 C. $40,000 D. $41,000

$29,000

On 1/1/2020, Mitala Corp. had an Accounts Receivable balance of $400,000 and an Allowance for Doubtful Accounts balance of $30,000. During 2020, Mitala made credit sales of $4,000,000 and cash collections of $4,100,000. Also during 2020, Mitala wrote off uncollectible accounts receivable totaling $28,000. Based on an aging schedule, uncollectible amounts are estimated to total $31,000 as of 12/31/2020. Mitala uses the Aging Schedule approach to recording bad debt expense. What is Mitala's 2020 Bad Debt Expense? $27,000 $29,000 $31,000 $33,000

D. $32,000

On 1/1/2020, Morales Corporation had a beginning Accounts Receivable balance of $500,000 and a beginning Allowance for Doubtful Accounts balance of $30,000. During the year, Morales collected $3,000,000 cash from customers and made credit sales of $2,900,000. Also during the year, Morales gave up on trying to collect $26,000 from customers who went bankrupt. Based on an aging schedule, uncollectible amounts are estimated to total $32,000 as of 12/31/2020. Morales uses the Aging Schedule approach to recording bad debt expense. What is Morales' balance in the Allowance for Doubtful Accounts as of 12/31/2020? A. $26,000 B. $28,000 C. $30,000 D. $32,000

$14,064

On 1/1/2021 Goat-fil-A Corporation borrowed $200,000 from the bank at 9% interest. Goat-fil-A agreed to make four installment payments of $61,734 at the end of each year on December 31. What is Goat-fil-A's interest expense for 2022 (the second year of the loan)? $12,444 $14,064 $16,380 $18,000

D. $86,368

On 1/1/2021 Termaat Corp. borrowed $100,000 from the bank at 8% interest. Termaat agreed to make six installment payments of $21,632 at the end of each year on December 31. After Termaat makes the first $21,632 payment on 12/31/2021, Termaat's Notes Payable balance will equal... A. $81,068 B. $83,333 C. $84,128 D. $86,368

A. Short-term Investments 4,500 Unrealized gain 4,500

On 10/12, Muvunankiko purchased 1,000 shares of ABC, Inc. stock for $70 per share. Muvunankiko's intent was to convert the ABC stock into cash within a year. On 12/31, Muvunankiko still owned 900 shares of ABC stock. The fair market value of those shares at year end was $75 each. What adjusting journal entry will Muvunankiko record on 12/31? A. Short-term Investments 4,500 Unrealized gain 4,500 B. Unrealized gain 4,500 Short-term Investments 4,500 C. Unrealized gain 4,500 Unearned Revenue 4,500 D. None of the above

A. Treasury Stock 80,000 Cash 80,00

On 12/31/2019, LaQua and Sebastian (L&S) Softball Supplies Corp. reported the following: Common Stock, $1 par value (1,000,000 shares authorized, 600,000 shares issued and outstanding) ..... $600,000 Additional Paid in Capital - Common Stock $1,500,000 Retained Earnings....................................................$2,000,000 Total Shareholders' Equity....................................$4,100,000 During 2020, the following four transactions and events occurred: 1/5/2020: L&S sold 50,000 shares of the $1 par common stock for $5 per share 2/16/2002: L&S purchased 20,000 shares of its own stock on the open market for $4 a share 7/15/2020: L&S raised $700,000 in cash by issuing bonds L&S reported Net Income of $1,000,000 The 2/16/2020 journal entry to record L&S's purchase of its own stock is... A. Treasury Stock 80,000 Cash 80,000 B. Treasury Stock 20,000 Additional Paid in Capital - TS 60,000 Cash 80,000 C. Treasury Stock 60,000 Additional Paid in Capital - TS 20,000 Cash 80,000 D. Treasury Stock 60,000 Loss on Purchase of Treasury Stock 20,000 Cash 80,000

D. $1.63

On 12/31/2019, LaQua and Sebastian (L&S) Softball Supplies Corp. reported the following: Common Stock, $1 par value (1,000,000 shares authorized, 600,000 shares issued and outstanding) ..... $600,000 Additional Paid in Capital - Common Stock $1,500,000 Retained Earnings....................................................$2,000,000 Total Shareholders' Equity....................................$4,100,000 During 2020, the following four transactions and events occurred: 1/5/2020: L&S sold 50,000 shares of the $1 par common stock for $5 per share 2/16/2002: L&S purchased 20,000 shares of its own stock on the open market for $4 a share 7/15/2020: L&S raised $700,000 in cash by issuing bonds L&S reported Net Income of $1,000,000 Which amount below is the best estimate of L&S's 2020 Earnings per Share? A. $0.97 B. $1.49 C. $1.59 D. $1.63

B. $5,270,000

On 12/31/2019, LaQua and Sebastian (L&S) Softball Supplies Corp. reported the following: Common Stock, $1 par value (1,000,000 shares authorized, 600,000 shares issued and outstanding) ..... $600,000 Additional Paid in Capital - Common Stock $1,500,000 Retained Earnings....................................................$2,000,000 Total Shareholders' Equity....................................$4,100,000 During 2020, the following four transactions and events occurred: 1/5/2020: L&S sold 50,000 shares of the $1 par common stock for $5 per share 2/16/2002: L&S purchased 20,000 shares of its own stock on the open market for $4 a share 7/15/2020: L&S raised $700,000 in cash by issuing bonds L&S reported Net Income of $1,000,000 What amount of Total Shareholders' Equity will L&S report on its 12/31/2020 Balance Sheet? A. $4,730,000 B. $5,270,000 C. $5,430,000 D. $5,970,000

A. Reduce Haas' Net Income

On April 1, 2020, Haas Drug Corporation acquired Innovatrix Corporation and all of its assets for $10,000,000 and allocated $3,000,000 of the purchase price to Goodwill. The expected synergies between Hass and Innovatrix never materialized and thus the Goodwill was determined to be impaired. The journal entry to record the impairment of Goodwill will... A. Reduce Haas' Net Income B. Increases Haas' Total Liabilities C. Both "A" and "B" D. Neither "A" nor "B"

A. $5,000 Debit to Accounts Payable

On April 12, Borden Electronics purchased $5,000 in inventory on account. On May 10, Borden paid its inventory supplier $5,000 cash to settle its bill. The journal entry that Borden will make on May 10 includes a A. $5,000 Debit to Accounts Payable B. $5,000 Credit to Accounts Payable C. $5,000 Debit to Inventory D. $5,000 Credit to Inventory E. None of the above

$4,000 Credit to Accounts Payable

On April 12, Peters Electronics purchased $4,000 in inventory on account. The journal entry that Peters will make on April 12 includes a $4,000 Debit to Accounts Payable $4,000 Credit to Accounts Payable $4,000 Debit to Cost of Goods Sold $4,000 Credit to Inventory

C. $200,000

On December 31, 2019, Des & Dawson Dance Supplies, Inc. reported the following Shareholders' Equity Balances Common Stock, $1 par value (1,000,000 shares authorized, 500,000 shares issued and outstanding) ..... $500,000 Additional Paid in Capital - Common Stock $1,500,000 Retained Earnings....................................................$3,000,000 Total Shareholders' Equity....................................$5,000,000 On December 31, 2020, Des & Dawson Dance Supplies, Inc. reported the following Shareholders' Equity Balances Common Stock, $1 par value (1,000,000 shares authorized, 600,000 shares issued and outstanding) ..... $600,000 Additional Paid in Capital - Common Stock$2,200,000 Retained Earnings....................................................$4,400,000 Total Shareholders' Equity....................................$7,200,000 Das & Dawson reported $1,600,000 in profit for the year ended 12/31/2020. What amount of dividends was declared during 2020? A. $0 B. $100,000 C. $200,000 D. $300,000

D. $800,000

On December 31, 2019, Des & Dawson Dance Supplies, Inc. reported the following Shareholders' Equity Balances Common Stock, $1 par value (1,000,000 shares authorized, 500,000 shares issued and outstanding) ..... $500,000 Additional Paid in Capital - Common Stock $1,500,000 Retained Earnings....................................................$3,000,000 Total Shareholders' Equity....................................$5,000,000 On December 31, 2020, Des & Dawson Dance Supplies, Inc. reported the following Shareholders' Equity Balances Common Stock, $1 par value (1,000,000 shares authorized, 600,000 shares issued and outstanding) ..... $600,000 Additional Paid in Capital - Common Stock$2,200,000 Retained Earnings....................................................$4,400,000 Total Shareholders' Equity....................................$7,200,000 How much money did Das & Dawson raise from issuing common stock during 2020? A. $100,000 B. $300,000 C. $700,000 D. $800,000

includes a debit to "Notes Payable" of $17,740

On January 1, Cuthbert Corporation borrowed $100,000 from the bank at 6% interest. Cuthbert agreed to make cash installment payments of $23,740 at the end of each year for 5 years. Cuthbert's adjusting journal entry at the end of the first year of the loan... includes a debit to "Notes Payable" of $6,000 includes a debit to "Notes Payable" of $17,740 includes a debit to "Notes Payable" of $23,740 includes a debit to "Notes Payable" of $29,740

$3,000,000

On December 31, 2019, Oberdorfer Corp. reported the following Stockholders' Equity Balances Common Stock, $1 par value (1,000,000 shares authorized, 500,000 shares issued and outstanding) ..... $500,000 Additional Paid in Capital-Common Stock$10,500,000 Retained Earnings..................................................$20,000,000 Total Shareholders' Equity..................................$31,000,000 On December 31, 2020, Oberdorfer Corp. reported the following Stockholders' Equity Balances Common Stock, $1 par value (1,000,000 shares authorized, 600,000 shares issued and outstanding) ..... $600,000 Additional Paid in Capital-Common Stock$13,400,000 Retained Earnings..................................................$25,000,000 Total Shareholders' Equity..................................$39,000,000 How much money did Oberdorfer raise from issuing common stock during 2020? $100,000 $600,000 $3,000,000 $14,000,000

No adjusting journal entry is necessary.

On December 31, 2020 Nemshick Cellular Corp. had inventory with a historical cost of $60,000 and a net realizable value of $64,000. The necessary December 31, 2020 adjusting entry will... Increase Net Income by $4,000 Increase Ending Inventory by $4,000 Increase Ending Inventory by $64,000 No adjusting journal entry is necessary.

$4,000 credit to Prepaid Rent

On December 31, 2020, Diamond Corp. paid $12,000 cash in advance for rent for the three-month period from January 1 - March 31, 2021. The adjusting entry that Diamond will record on January 31, 2021 will include a... $4,000 debit to Prepaid Rent $4,000 credit to Prepaid Rent $8,000 debit to Prepaid Rent $8,000 credit to Prepaid Rent

The answer depends on whether the announcement of the loss was a surprise to investors.

On December 31, 2020, Trenton Corp (a publicly-traded company) announced a significant inventory loss of $8,000,000 due to the decline of the value of one of its products. How will the announcement impact Trenton's market value (market capitalization)? Trenton's market value will be unaffected. Trenton's market value will decrease by $8,000,000. Trenton's market value will decrease by more than $8,000,000. The answer depends on whether the announcement of the loss was a surprise to investors.

B. Clausel will make a 12/31 adjusting journal entry that decreases total assets by $3,000.

On December 31, Clausel Jewelers had inventory with an historical cost of $18,000. At that time, Clausel estimated the net realizable value of the inventory to be $15,000. Which of the following is correct? A. Clausel will make a 12/31 adjusting journal entry that includes a $3,000 credit to inventory loss. B. Clausel will make a 12/31 adjusting journal entry that decreases total assets by $3,000. C. Clausel will report the inventory on its balance sheet at $18,000. D. Clausel will report an "allowance for doubtful inventory" of $3,000 on its balance sheet.

A. decrease Total Assets by $7,000

On December 31, Pullman Electronics had inventory with a historical cost of $80,000 and a net realizable value of $73,000. The necessary December 31 adjusting entry will... A. decrease Total Assets by $7,000 B. increase Total Assets by $73,000 C. increase Total Assets by $80,000 D. No adjusting entry is necessary for this inventory item.

C. $750 Credit to Interest Payable

On January 1, 2019, Sholtz Corp. borrowed $100,000 from Wargo Bank at 9% interest. Interest is paid once a year on December 31. Principal is due on January 1, 2024. The adjusting entry that Sholtz will make on January 31, 2021 to record January 2021 interest will include a... A. $500 Debit to Interest Expense B. $500 Credit to Interest Expense C. $750 Credit to Interest Payable D. None of the above

Large should report Goodwill of $2,000,000 on its Balance Sheet as of 12/31/2020.

On January 1, 2020, Large Corporation acquired Small Corporation for $5,000,000 total and attributed $2,000,000 of the purchase price due to Goodwill. On December 31, 2020, Large Corp. determined that the Goodwill had increased in value to $2,600,000 due to the increased popularity of the Small brand name. Large should report a revenue of $600,000 on its 2020 Income Statement. Large should report a gain of $600,000 on its 2020 Income Statement. Large should report Goodwill of $2,000,000 on its Balance Sheet as of 12/31/2020. None of the above

$3.15

On January 1, 2020, National Corp. reported the following Shareholders' Equity Balances Common Stock, $1 par value (1,000,000 shares authorized, 600,000 shares issued and outstanding) ..... $600,000 Additional Paid in Capital - Common Stock $1,500,000 Retained Earnings.....................................................$2,000,000 Total Shareholders' Equity.....................................$4,100,000 During 2020, the following transactions and events occurred. • 1/5/2020: National sold 100,000 shares of the $1 par common stock for $8 per share. • 12/4/2020: National received $200,000 in advance for work that National will complete during 2021. • 12/16/2020: National purchased 30,000 shares of its own stock on the open market for $7 per share. • National reported Net Income of $2,000,000 Which amount below is the best estimate of National's 2020 Earnings per Share? $2.99 $3.15 $3.45 $3.77

$38,000

On January 1, 2021 Bartley Corporation purchased equipment costing $200,000 with a salvage value of $20,000 and a 20-year useful life. Bartley has elected double declining balance depreciation. What is the balance of accumulated depreciation on 12/31/2022 (after the second year)? $34,000 $36,000 $38,000 40,000

$560

On January 1, 2021, Anderson Bagel Factory purchased a DoughXpress bagel slicer for $3,000. The bagel slicer is expected to have a five-year useful life and a salvage value of $200. Using the straight-line method, depreciation expense for the year 2022 (not 2021) equals _____. $560 $600 $1,120 None of the above

C. Both "A" and "B"

On January 1, 2021, Mahtani Corporation paid $200,000 for machinery to make protective cases for iPhones. Mahtani expects to make and sell 20,000 cases during 2021, but expects to make and sell significantly fewer cases during each subsequent year as new phones and new protective case technologies are introduced. Mahtani expects to use the machinery for 5 years and then sell the machinery for $40,000. A. In this specific example, the use of double-declining balance depreciation for the new machinery will likely result in better matching of revenues and expenses than the use of straight-line depreciation. B. At the end of the 5-year expected useful life, the Net Book Value of the machinery will be $40,000 regardless of whether straight-line or double-declining balance depreciation is used. C. Both "A" and "B" D. Neither "A" nor "B"

A. 1.13

Refer to the financial statements for DDD in your slide deck. What would 12/31/2020 debt to equity have been if DDD did not buy Treasury stock during 2020? A. 1.13 B. 1.14 C. 1.16 D. 1.29

A. Includes a debit to "Notes Payable" of $18,410

On January 1, Persaud Corporation borrowed $100,000 from the bank at 8% interest. Persaud agreed to make installment payments of $25,046 at the end of each year for 5 years. Persaud's adjusting journal entry for the second year of the loan... A. Includes a debit to "Notes Payable" of $18,410 B. Includes a debit to "Notes Payable" of $19,882 C. Includes a debit to "Notes Payable" of $21,473 D. Includes a debit to "Notes Payable" of $23,191

D. $1,000 Debit to Depreciation Expense

On January 1, ZZZ bought equipment for $150,000 cash. The equipment had a useful life of 10 years and a salvage value of $30,000. The adjusting journal entry that ZZZ will record on January 31 includes... A. $1,000 Credit to Building B. $1,250 Debit to Accumulated Depreciation C. $1,250 Credit to Depreciation Expense D. $1,000 Debit to Depreciation Expense

C. The $3,000 payment had no effect on the book value of Marley Corporation.

On January 14, Marley Corporation paid $3,000 rent in advance for an office for the month of February. How did the January 14 payment of $3,000 impact the book value of the Marley Corporation? A. The $3,000 payment increased the book value of Marley Corporation. B. The $3,000 payment decreased the book value of Marley Corporation. C. The $3,000 payment had no effect on the book value of Marley Corporation. D. Cannot tell from the information provided.

C. Both "A" and "B" are correct.

On January 15, 2021, Rodney Diamond Importers was sued for $4 million by customers who allege that Rodney exaggerated the quality of its diamonds. As of December 31, 2021 Rodney believes there is a 90% chance that Rodney will pay $2.2 million cash to settle the claims. The journal entry that Rodney will record during 2021... A. Increases Total Liabilities B. Decreases Total Equity C. Both "A" and "B" are correct. D. Neither "A" nor "B" is correct.

D. Supplies Expense $650 Supplies $650

On January 2, Smiley Dental Corporation purchased $1,000 in exam gloves, fluoride, dental cement and other supplies on account (recorded on January 2 as an increase to the asset "Supplies"). On January 31, Smiley determined that $350 of supplies were on hand. Which of the following is the correct January 31 adjusting journal entry? A. Supplies $350 Accounts Payable $350 B. Supplies Expense $650 Accounts Payable $650 C. Supplies $650 Accounts Payable $650 D. Supplies Expense $650 Supplies $650

D. Duncan will report a credit to Prepaid Rent during February

On January 26, Duncan Corporation paid $3,000 in advance to rent a building for the month of February. Due to these events, A. Duncan will report a credit to Rent Expense during January B. Duncan will report a credit to Rent Expense during February C. Duncan will report a credit to Prepaid Rent during January D. Duncan will report a credit to Prepaid Rent during February

C. Both "A" and "B" are correct.

On March 1, a customer paid Sevilla Fitness Corp. $180 cash for a six-month gym membership for the period from March 1 to August 31. For the month ended March 31 (after all journal entries and adjusting journal entries for the month are recorded), Sevilla will report A. $30 of service revenue on its Income Statement B. $180 of cash flow from operations on its Statement of Cash Flows C. Both "A" and "B" are correct. D. Neither "A" nor "B" is correct.

A. Increases Total Assets

On March 18, Holmes Corp. received $6,000 cash in advance for services that Holmes will perform during April. Holmes' March 18 journal entry... A. Increases Total Assets B. Increases Total Equity C. Increases Net Income D. None of the above

D. None of the above

On March 20, Florida Painting Corporation signed a contract to paint a building during April for $6,000. The contract required the customer to pay $6,000 after the job was completed. At the time that the contract was signed on March 20 A. Florida Painting recorded a revenue of $6,000. B. Florida painting recorded a gain of $6,000. C. Florida Painting recorded an increase in Shareholders' Equity of $6,000. D. None of the above

D. No expense is recorded on March 29.

On March 29, Glassmacher Corporation purchased industrial heating and cutting equipment for $50,000. Glassmacher also paid the equipment manufacturer $1,000 for shipping and $3,000 for assembly of the machinery. The March 29 event(s)... A. reduce Net Income by $1,000. B. reduce Net Income by $3,000. C. reduce Net Income by $4,000. D. No expense is recorded on March 29.

Loss on the sale of land of $10,000.

On their 12/31/2019 Balance Sheet, Robles Corporation reported a land balance of $200,000. Robles' 2020 Statement of Cash Flows reported cash invested in land of $50,000. Robles' 2020 Statement of Cash Flows reported cash received from the sale of land of $20,000. On their 12/31/2020 Balance Sheet, Robles reported a land balance of $220,000. The journal entry for Robles' sale of land during 2020 includes a... Answers: Loss on the sale of land of $10,000. Loss on the sale of land of $30,000. Gain on the sale of land of $10,000. Gain on the sale of land of $30,000. the change in Fontaine's

C. 14.53

Refer to the financial statements for DDD in your slide deck. What would 2020 EPS have been if DDD did not buy Treasury stock during 2020? A. 13.68 B. 14.23 C. 14.53 D. 15.77

A. $73,508

Review BBB's financial statements and the installment loan footnote in your slide deck. The journal entry for the year 2018 installment loan payment reduces Total Liabilities by A. $73,508 B. $75,000 C. $76,508 D. $78,492

The $10,000 dividend decreases "Total Shareholders' Equity" on Patel's 12/31/2020 Balance Sheet.

Patel Corporation declared and paid a $10,000 cash dividend during 2020. The $10,000 dividend reduces "Non-operating Income" on Patel's 2020 Income Statement. The $10,000 dividend reduces "Cash Flows from Investing Activities" on Patel's 2020 Statement of Cash Flows. The $10,000 dividend decreases "Total Shareholders' Equity" on Patel's 12/31/2020 Balance Sheet. None of the above

D. Pelesh will report a $10 million expense on its 2020 Income Statement

Pelesh Corp. spent $10 million cash on Research and Development during 2020. Pelesh believes that the knowledge gained from the research is worth $12 billion A. Pelesh will report a $10 million asset on its 2020 Balance Sheet B. Pelesh will report a $12 million asset on its 2020 Balance Sheet C. Pelesh will report $2,000,000 gain from research on its 2020 Income Statement D. Pelesh will report a $10 million expense on its 2020 Income Statement

B. Pay dividends to all preferred shareholders

Prior to paying any dividends to its common shareholders during a year, a corporation must A. Pay all amounts owed to creditors B. Pay dividends to all preferred shareholders C. Both "A" and "B" D. Neither "A" nor "B"

A. Happy

Rankel Corp. reported the following on its 2019 and 2020 Income Statements: 2020: Sales $1,500,000 COGS $750,000 2019: Sales $1,000,000 COGS $700,000 Rankel's shareholders likely will be __________ with the change in Rankel's COGS from 2019 to 2020. A. Happy B. Unhappy C. Indifferent D. Vermillion

D. $54,000 credit to additional paid in capital

Rathjen Corporation issued 1,000 shares of $1 par value common stock for $55,000. Rathjen's journal entry to record this transaction includes a A. $1,000 debit to common stock B. $5,500 credit to common stock C. $1,000 debit to cash D. $54,000 credit to additional paid in capital

B. $188,000

Refer to the financial statements for DDD in your slide deck. DDD gave up on trying to collect from some of its account customers during the most recent year. What was the amount that DDD gave up on? A. $186,000 B. $188,000 C. $190,000 D. $192,000

C. $69,744

Refer to the financial statements for DDD in your slide deck. What was the dollar amount of dividends that were declared during 2020? A. $48,000 B. $58,744 C. $69,744 D. Cannot be determined from the information given

Sweet 16 estimates that it will give up on $45,150 of its accounts receivable in the future

Refer to the financial statements for Sweet 16 Department Stores that were provided. Based on Sweet 16's Balance Sheet, which of the following is correct? The most that Sweet 16 can possibly collect is $857,850 of its Accounts Receivable. Due to discounts given to customers, Sweet 16 only earned $857,850 in revenues. Sweet 16 estimates that it will give up on $45,150 of its accounts receivable in the future. Kim will get $857,850 and Kanye will get the remaining $45,150.

$1,350,000

Refer to the financial statements for Sweet 16 Department Stores that were provided. How much did Sweet 16's employees earn during 2020? $1,190,000 $1,350,000 $1,510,000 $1,780,000

None of the above

Refer to the financial statements for Sweet 16 Department Stores that were provided. Miller Manufacturing is considering selling a large amount of inventory to Sweet 16 on account. Relative to Sweet 16's industry, Miller will be pleased by Sweet 16's Current Ratio Debt to Equity Ratio Accounts Payable Days None of the above

Sweet 16 obtains a large portion of its assets from borrowing.

Refer to the financial statements for Sweet 16 Department Stores that were provided. Note that Sweet 16's Return on Equity is three times higher than their Return on Assets. This is because Sweet 16's Inventory Days decreased. Sweet 16 maintains a high cash balance. Sweet 16 obtains a large portion of its assets from borrowing. Sweet 16's operating income decreased during 2020.

Sweet 16 lowered its prices

Refer to the financial statements for Sweet 16 Department Stores that were provided. Sweet 16 changed a key strategy during 2020. Based only on the information provided, which of the following is most likely? Sweet 16 lowered its prices. Sweet 16 gave customers a longer time to pay during 2020, which increased sales. Sweet 16 raised its prices. WandaVision

$77,802

Refer to the financial statements for Sweet 16 Department Stores that were provided. Sweet 16 gave up on trying to collect from some of its account customers during 2020. What was the amount that Sweet 16 gave up on? $77,802 $81,000 $84,198 $97,900

$167,000

Refer to the financial statements for Sweet 16 Department Stores that were provided. What was Sweet 16's Rent Expense for 2020? (You can solve this with a T-Account!) $151,000 $167,000 $191,000 $205,000

Gain of $189,000

Refer to the financial statements for Sweet 16 Department Stores that were provided. What was Sweet 16's gain or loss on the sale of land during 2020? Gain of $18,000 Gain of $75,000 Gain of $84,000 Gain of $189,000

$0

Refer to the financial statements for Talley Corporation that were provided. After Talley recorded its closing entries at the end of 2020, what was the balance of Talley's Cost of Goods Sold account? $0 $621,000 $3,181,000 Cannot be determined based on the information given

$4,000,000

Refer to the financial statements for Talley Corporation that were provided. Assume that at year-end 2020, the firm decided to close shop and liquidate (sell) its assets. Assume the firm sold the assets for $4,000,000. How much of these proceeds would go to Talley's creditors? $1,976,126 $2,023,874 $2,975,262 $4,000,000

$36,006

Refer to the financial statements for Talley Corporation that were provided. During 2020, Talley gave up on trying to collect from some of its account customers. What amount did Talley give up on during 2020? $9,006 $17,994 $27,000 $36,006

632,107

Refer to the financial statements for Talley Corporation that were provided. How much more of a dividend could have been paid in 2020 without violating the current ratio covenant on Talley's Bond Liability? 628,287 630,817 632,107 634,557

$798,000

Refer to the financial statements for Talley Corporation that were provided. What was Talley's 2020 "Cash paid for salaries & wages"? $744,000 $762,000 $780,000 $798,000

1.47

Refer to the financial statements for Talley Corporation that were provided. What would Talley's 2020 Debt to Equity Ratio have been if Talley did not buy any Treasury stock during 2020? 1.19 1.47 1.67 3.77

C. Asset turnover

Return on Assets (ROA) can be viewed as a function of Return on Sales times A. Return on Equity B. Gross margin % C. Asset turnover D. Equity Multiplier

C. $333,454

Review AAA's financial statements in your slide deck. Suppose that AAA had a loan covenant stating that the current ratio must not fall below 2.0. How much cash could AAA spend on new equipment without violating that covenant? A. $166,727 B. $250,091 C. $333,454 D. Spending cash on equipment cannot cause AAA to violate the current ratio covenant.

Increases Rhino's Nonoperating Income by $30,000

Rhino Supermarkets sold some of its land to a real estate developer for $130,000 cash. Rhino had paid $100,000 for the land two years earlier. The sale of the land Increases Rhino's Revenues by $30,000 Increases Rhino's Revenues by $130,000 Increases Rhino's Nonoperating Income by $30,000 Increases Rhino's Nonoperating Income by $130,000

C. $3,500 higher if they report inventory using FIFO instead of LIFO

Rodriguez Furniture bought and sold office chairs as shown below: Model UX14 Office Chairs Available and Sold # of units cost per unit total cost Beginning 2,000 x $30 each = $60,000 3/19 Purchase 2,000 x $32 each = $64,000 10/22 Purchase 4,000 x $35 each = $140,000 Available for Sale: 8,000 $264,000 Units Sold 7,000 ? Ending Inventory 1,000 ? Assuming a tax rate of 30%, Rodriguez's Net Income will be A. $1,500 higher if they report inventory using FIFO instead of LIFO B. $2,000 higher if they report inventory using FIFO instead of LIFO C. $3,500 higher if they report inventory using FIFO instead of LIFO D. None of the above

B. $1,500 higher if they report inventory using LIFO instead of FIFO

Rodriguez Furniture bought and sold office chairs as shown below: Model UX14 Office Chairs Available and Sold # of units cost per unit total cost Beginning 2,000 x $30 each = $60,000 3/19 Purchase 2,000 x $32 each = $64,000 10/22 Purchase 4,000 x $35 each = $140,000 Available for Sale: 8,000 $264,000 Units Sold 7,000 ? Ending Inventory 1,000 ? Assuming a tax rate of 30%, Rodriguez's Operating Cash Flows will be A. $1,500 higher if they report inventory using FIFO instead of LIFO B. $1,500 higher if they report inventory using LIFO instead of FIFO C. $3,500 higher if they report inventory using FIFO instead of LIFO D. $3,500 higher if they report inventory using LIFO instead of FIFO

$130,000

Rosemont Company has Total Stockholders' Equity of $90,000, Retained Earnings of $20,000, and Total Liabilities of $40,000. What is the amount of Rosemont's Total Assets? $50,000 $70,000 $130,000 $150,000

C. Both "A" and "B"

Ryerson Corporation purchased a patent from a small technology firm for $1,000,000 on 1/1/2021. The patent has a legal life of 20 years. At the time of the purchase, Ryerson expected that the patent only would be useful in generating revenues for five years, after which the patent is expected to be worthless. The adjusting entry to record 2021 amortization of the patent... A. Reduces Net Income by $200,000 B. Reduces Stockholders' Equity by $200,000 C. Both "A" and "B" D. Neither "A" nor "B"

$500 unrealized gain

Security: Nordic Equipment Purchases: 170 shares @ $70 Sales: 145 shares @ $95 Total Dividends Received: 50 12/31/20 Market Value per share: 90 What is the amount of O'Leary's 2020 unrealized gain or loss from the investment in Nordic Equipment stock? $125 unrealized loss $675 unrealized loss $725 unrealized loss $500 unrealized gain

C. Both "A" and "B"

Semi-fresh Supermarket tries to sell older perishable goods before newer ones. For example, Semi-fresh places older gallons of milk in front of newer ones in its refrigerators. Which of the following inventory cost flow methods is Semi-fresh allowed to use in creating its financial statements in accordance with GAAP? A. LIFO B. Weighted Average C. Both "A" and "B" D. Neither "A" nor "B"

A. Sequeira will include the $4,000 in revenue on its 2020 Income Statement.

Sequeira sold $4,000 of inventory to a customer under the terms "FOB Shipping Point." Sequeira shipped the goods on 12/29/2020 and the inventory arrived at the customer's location on 1/5/2021. Which of the following is correct? A. Sequeira will include the $4,000 in revenue on its 2020 Income Statement. B. Sequeira will include the $4,000 of inventory on its 12/31/2020 Balance Sheet. C. Both "A" and "B" are correct. D. Neither "A" nor "B" is correct.

B. Increases MNO's Net Income

Seven years ago, MNO Corporation purchased land for $24,000. During the current year, MNO sold half of that land for 14,000 cash. The sale of the land... A. Decreases MNO's Total Assets B. Increases MNO's Net Income C. Both "A" and "B" D. Neither "A" nor "B"

C. Both "A" and "B" are correct.

Shady Corporation purchased equipment on January 1, 2020 and uses the straight-line method of depreciation. Shady wants to mislead investors into thinking that the company was more profitable during 2020 than it really was. Which of the following might Shady do to exaggerate 2020 reported profits? A. Shady might use a salvage value for the equipment that is too high. B. Shady might use a useful life for the equipment that is too long. C. Both "A" and "B" are correct. D. Neither "A" nor "B" is correct.

B. A credit to Sales Revenue of $200,000

Shemp sold 4,000 units of inventory on account for $50 each. Shemp originally paid $30 for each unit. The journal entries to record the sale of the 4,000 units includes A. A debit to Cost of Goods Sold of $200,000 B. A credit to Sales Revenue of $200,000 C. A credit to Inventory of $200,000 D. All of the above

$4,000

Shroff Restaurants purchased a delivery van on January 1, 2018 for $28,000. The van has a 5-year useful life and a salvage value of $8,000. Shroff uses the straight-line method of depreciation. Depreciation expense for the year 2020 equals _____. $4,000 $5,600 $12,000 $16,800

Is a Financing Cash Flow and does not impact Net Income

Snyder Corporation issued common stock and received $300,000 cash. This transaction Is an Investing Cash Flow and increases Net Income Is a Financing Cash Flow and increases Net Income Is a Financing Cash Flow and does not impact Net Income Old Town Road

$1,048,000

Stonebreaker International recently purchased new manufacturing equipment. The equipment cost $1,000,000. Stonebreaker also paid $40,000 to have the equipment delivered and $8,000 to insure the equipment while it was being transported to Stonebreaker's plant. What dollar amount should Stonebreaker capitalize on its books (record as an increase to total assets)? $1,000,000 $1,008,000 $1,040,000 $1,048,000

C. Alpha's 2021 Net Income will be understated by $22,000.

Suppose that on December 31, 2020, Alpha agreed to ship inventory (historical cost = $15,000) to a customer for $22,000 on account. Alpha did not actually ship the inventory, however, until January 4, 2021. Alpha recorded the following journal entries on December 31, 2020 and January 4, 2021: 12/31/2020: Accounts Receivable 22,000 Sales Revenue 22,000 1/4/2021: Cost of Goods Sold 15,000 Inventory 15,000 A. Alpha's 2021 Net Income will be understated by $7,000. B. Alpha's 2021 Net Income will be overstated by $7,000. C. Alpha's 2021 Net Income will be understated by $22,000. D. Alpha's 2021 Net Income will be overstated by $22,000.

Pioneer's 2021 Sales Revenue will be understated by 20,000

Suppose that on December 31, 2020, Pioneer Corporation agreed to ship inventory (historical cost = $12,000) to a customer for $20,000 on account. Pioneer did not actually ship the inventory, however, until January 3, 2021. Pioneer recorded the following journal entries on December 31, 2020 and January 3, 2021: 12/31/2020 Accounts Receivable 20,000 Sales Revenue 20,000 1/3/2021 Cost of Goods Sold 12,000 Inventory 12,000 Answers: Pioneer's 2021 Sales Revenue will be overstated by 20,000. Pioneer's 2021 Cost of Goods Sold will be overstated by 12,000. Pioneer's 2021 Sales Revenue will be understated by 20,000. Pioneer's 2021 Cost of Goods Sold will be understated by 12,000.

B. $17,000

Temptation Corporation reported 2020 Revenues of $1,000,000 and Net Income of $100,000. Temptation also reported the following: 12/31/2020 12/31/2019 Dividends Payable $8,000 $5,000 Retained Earnings $500,000 $420,000 What was Temptation's 2020 "Cash Paid for Dividends"? A. $12,000 B. $17,000 C. $20,000 D. $23,000

C. Cash paid for depreciation

The 2020 Income Statement for Hall Corp. reported the following: Sales Revenue $100,000 Cost of Goods Sold (50,000) Salaries Expense (30,000) Depreciation expense (5,000) Operating Income 15,000 Interest Expense (2,000) Net Income $13,000 Which item will not appear in the Operating Activities section of Hall's 2020 Statement of Cash Flows? A. Cash received from customers B. Cash paid for salaries C. Cash paid for depreciation D. Cash paid for interest

$153,000

The 2020 Statement of Cash Flows for Schmitt Corporation reported "Cash Paid for Salaries" of $150,000. The Liabilities section of Schmitt's 2019 and 2020 Balance Sheets reported the following 12/31/2020 12/31/2019 Accounts Payable $24,000 $20,000 Salaries Payable $17,000 $14,000 Total Liabilities $41,000 $34,000 What amount of Salaries Expense did Schmitt report on its 2020 Income Statement? Answers: $133,000 $147,000 $153,000 $167,000

D. $32,000

The Balance Sheet for Boseman Corp. included the following: 12/31/20 12/31/19 Inventory $5,000 $8,000 Taxes Payable $3,000 $4,000 The 2020 Income Statement for Boseman Corp. reported the following: Sales Revenue $100,000 Cost of Goods Sold (50,000) Salaries Expense (20,000) Depreciation expense (3,000) Operating Income 27,000 Loss on the Sale of Equipment (2,000) Net Income $25,000 What was Boseman's 2020 Cash Flow from Operations? A. $29,000 B. $30,000 C. $31,000 D. $32,000

C. Both "A" and "B"

The Inventory T-Account is credited by A. Cost of Goods Sold B. Inventory Impairment Losses C. Both "A" and "B" D. Neither "A" nor "B"

D. Earned

The accrual basis of accounting records revenues when they are A. Collected B. Readily available for use C. Contracted D. Earned

B. Decreases Shareholders' Equity

The declaration of a dividend A. Decreases Total Assets B. Decreases Shareholders' Equity C. Both "A" and "B" are correct D. Neither "A" nor "B" is correct

deferral

cash is received prior to the recording of the revenue or paid prior to the recording of the expense

the change in Fontaine's Current Ratio

The following information is from Fontaine Corporation. 2020: Current Ratio 1.80 Debt to Equity Ratio 2.40 Dividend Payout Ratio 0.25 2019: Current Ratio 3.10 Debt to Equity Ratio 2.85 Dividend Payout Ratio 0.34 A potential lender likely would be displeased by Answers: the change in Fontaine's Current Ratio the change in Fontaine's Debt to Equity ratio the change in Fontaine's Dividend Payout ratio All of the above

A. Decreases Accounts Receivable

The journal entry to record the write off of an Accounts Receivable A. Decreases Accounts Receivable B. Decreases Stockholders' Equity C. Decreases Total Assets D. All of the above

Grogu has collected $200,000 cash for services that Grogu has not yet completed

The liabilities section of Grogu Corporation's Balance Sheet reports $200,000 of "deferred revenue warranties." Answers: Grogu has collected $200,000 cash for services that Grogu has not yet completed. Grogu has earned $200,000 by delivering warranty services. Grogu owes its inventory suppliers $200,000. Justin Bieber featuring Chance The Rapper

matching revenues and expenses

The matching principle refers to matching assets and liabilities matching revenues and expenses recording assets at historical cost matching dividends in the correct year

B. Decreases the company's current ratio

The purchase of Treasury stock at the very end of a year... A. Increases Shareholders' Equity B. Decreases the company's current ratio C. Decreases the company's Earnings Per Share D. All of the above

None of the above

The purchase of inventory for cash Increases Total Assets Decreases Total Assets Increases the Book Value of the firm None of the above

A. Increases Total Assets

The purchase of inventory on account A. Increases Total Assets B. Increases Stockholders' Equity C. Both "A" and "B" D. Neither "A" nor "B"

B. Results in higher Total Assets at the end of 4 years.

Tianli Corporation bought an asset with a 5-year expected useful life. Relative to double-declining balance depreciation, using straight line depreciation for the asset A. Results in higher Net Income during each of the 5 years. B. Results in higher Total Assets at the end of 4 years. C. Both "A" and "B" D. Neither "A" nor "B"

The purchase of the machine is a cost.

Tribel Furniture Manufacturing purchased an industrial cutting machine for $7,000 cash. The purchase of the machine is an expense. The purchase of the machine reduces total assets. The purchase of the machine is a cost. All of the above are correct.

B. The buyer includes the $1,000 as part of the buyer's inventory.

Tropeano Corp. shipped inventory to a customer "FOB Shipping Point." The responsible party had to pay the trucking company $1,000 for shipping the goods. Which of the following is correct? A. Tropeano Corp. reports the $1,000 as part of "Cost of Goods Sold." B. The buyer includes the $1,000 as part of the buyer's inventory. C. The buyer records the $1,000 as an expense. D. None of the above

C. Vasek's Dividend Payout ratio must exceed 25%

Vasek Corporation issued $30,000,000 in bonds to the public. Which of the following is least likely to be included in Vasek's debt covenants? A. Vasek's Debt to Equity ratio cannot exceed 3.0. B. Vasek's Current Ratio must exceed 2.0. C. Vasek's Dividend Payout ratio must exceed 25% D. Vasek must provide audited GAAP financial statements annually.

$250,000 debit to Impairment Loss

Ventnor Trucking reported the following on its Balance Sheet: Trucks $800,000 Accumulated Depreciation $150,000 Net Trucks $650,000 Shortly thereafter, it was discovered that significant design flaws in the trucks had significantly impaired the trucks' value and that the trucks were now only worth $400,000. Ventnor must record a $250,000 debit to Impairment Loss $250,000 credit to Trucks $400,000 credit to Acumulated Depreciation $400,000 credit to Trucks

C. $1,450,000

Vernieri Shoe Corporation bought and sold Air Johannson sneakers as shown below: Air Johannson Sneakers Available and Sold # of Units Cost per Unit Total Cost Beginning Balance: 6,000 x $70 each = $420,000 February 8 Purchase: 9,000 x $80 each = $720,000 August 17 Purchase: 5,000 x $90 each = $450,000 # of Units Cost per Unit Total Cost Available for Sale: 20,000 $1,590,000 Units Sold: 18,000 ? Ending Inventory: 2,000 ? What is Vernieri's Cost of Goods Sold under the LIFO inventory cost flow assumption? A. $1,370,000 B. $1,410,000 C. $1,450,000 D. None of the above

B. $180,000

Vernieri Shoe Corporation bought and sold Air Johannson sneakers as shown below: Air Johannson Sneakers Available and Sold # of Units Cost per Unit Total Cost Beginning Balance: 6,000 x $70 each = $420,000 February 8 Purchase: 9,000 x $80 each = $720,000 August 17 Purchase: 5,000 x $90 each = $450,000 # of Units Cost per Unit Total Cost Available for Sale: 20,000 $1,590,000 Units Sold: 18,000 ? Ending Inventory: 2,000 ? What is Vernieri's Ending Inventory under the FIFO inventory cost flow assumption? A. $140,000 B. $180,000 C. $220,000 D. $420,000

A. $26,000

Wesselius Company started the year with $30,000 in its Contributed Capital account and a credit balance in Retained Earnings of $12,000. During the year, the company earned net income of $24,000 and declared and paid $10,000 of dividends. In addition, the company sold additional stock for $14,000. As a result, Wesselius' Retained Earnings at the end of the year would be: A. $26,000 B. $40,000 C. $56,000 D. $70,000

includes a credit to Accumulated Depreciation of $300 million

Western Airlines Corp. reported the following on its Balance Sheet. Airplanes: $800 million Less Accumulated Depreciation: ($300 million) Net Airplanes: $500 million Shortly thereafter, it was discovered that there were substantial manufacturing defects in the airplanes. Western determined that the airplanes were now worth only $200 Million. The journal entry that Western will record... includes a credit to Accumulated Depreciation of $300 million. includes a debit to Airplanes of $200 million. includes a credit to Airplanes of $600 million. includes a credit to Accumulated Depreciation of $200 million.

C. $3.8 Billion

When Bristol-Myers Squibb purchased DuPont Pharmaceuticals for $7.8 billion in cash, it acquired assets with a fair market value of $5.1 billion and assumed the liabilities of DuPont Pharmaceuticals valued at $1.1 Billion. How much goodwill was recognized on the acquisition? A. $1.6 Billion B. $2.7 Billion C. $3.8 Billion D. $4 Billion

B. The sale of equipment at a loss impacts Net Income, but does not impact Operating Cash Flows.

When calculating Net Cash Flow from Operating Activities using the indirect method, we would adjust for a loss on the sale of equipment because... A. The loss decreases Net Income, but the cash that comes in from the sale is an Operating Cash Flow. B. The sale of equipment at a loss impacts Net Income, but does not impact Operating Cash Flows. C. A loss from the sale of equipment is an operating loss on the Income Statement, but a non-operating loss on the Statement of Cash Flows. D. We want to hide the fact that we sold equipment from our investors.

A. Independent Auditor's Report

Where in King Corporation's Form 10K would a reader find the following statement: "In our opinion, the financial statements present fairly, in all material respects, the financial position of King Company..." A. Independent Auditor's Report B. Footnotes to the Financial Statements C. Management Discussion and Analysis section D. None of the above

B. Income Statement

Which Financial Statement do companies report "For the Year Ended"? A. Balance Sheet B. Income Statement C. Both "A" and "B" D. Neither "A" nor "B"

C. STU Corporation made a cash interest payment

Which of the following involves an operating cash flow? A. STU Corporation purchased inventory on account B. STU Corporation purchased equipment for cash C. STU Corporation made a cash interest payment D. None of the above

B. Cash

Which of the following is a "permanent account"? A. Dividends B. Cash C. Cost of Goods Sold D. All of the above are "permanent accounts"

C. A cash register that a furniture store uses to record sales

Which of the following is a long-lived asset? A. Cash B. A chair that a furniture store is trying to sell to its customers C. A cash register that a furniture store uses to record sales D. None of the above

A copyright that a publishing company purchased from an author

Which of the following is a long-lived asset? An automobile that a automobile dealership intends to sell to its customers Cash A copyright that a publishing company purchased from an author Retained Earnings

A. Preferred shareholders get paid before common shareholders upon liquidation.

Which of the following is an advantage of owning preferred stock instead of common stock? A. Preferred shareholders get paid before common shareholders upon liquidation. B. Preferred shareholder votes have more weight than common shareholder votes. C. Preferred shareholders have unlimited upside on their investments. D. All of the above

Preferred shareholders get paid before common shareholders upon liquidation.

Which of the following is an advantage of owning preferred stock instead of common stock? Preferred shareholders get paid before common shareholders upon liquidation. Preferred shareholder votes have more weight than common shareholder votes. Preferred shareholders have unlimited upside on their investments. All of the above

C. Employees who have done work for ABC, but have not yet been paid by ABC

Which of the following is an example of ABC Corporation's creditors? A. The shareholders who have purchased stock in ABC B. Customers who have purchased products from ABC, but have not yet paid for them C. Employees who have done work for ABC, but have not yet been paid by ABC D. All of the above

None of the above

Which of the following is correct regarding Goodwill? A company that develops a strong reputation with customers will report Goodwill on its balance sheet. For financial accounting purposes, Goodwill is amortized over a period not to exceed 15 years. If Goodwill increases during the year, then the company will report a gain on its income statement. None of the above

A. The Cash Flows from Financing Activities section is identical under both the Direct Method and the Indirect Method

Which of the following is correct regarding the Statement of Cash Flows? A. The Cash Flows from Financing Activities section is identical under both the Direct Method and the Indirect Method B. The use of the Indirect Method is less common than the use of the Direct Method C. A Direct Method Statement of Cash Flows is easier to prepare than an Indirect Method Statement of Cash Flows. D. None of the above

None of the above

Which of the following is correct? A company with a AAA bond rating likely has a very high debt to equity ratio Debt covenants typically require companies to maintain a high dividend payout ratio Shareholders' Equity increases when a company issues bonds for cash. None of the above

D. A high market to book ratio might reflect the market's belief that a company has strong future potential

Which of the following is correct? A. A company's book value cannot be greater than its market value. B. A company's market value typically is less than its shareholders' equity. C. If a corporation's market value is greater than its book value, then the company likely is overvalued by the stock market. D. A high market to book ratio might reflect the market's belief that a company has strong future potential.

D. None of the above

Which of the following is correct? A. A company's cash balance must equal its retained earnings B. A company's cash balance must equal or exceed its retained earnings C. A company's cash balance must be less or equal to its retained earnings D. None of the above

A. Bad debt expense is estimated in the year during which the related sales occur.

Which of the following is correct? A. Bad debt expense is estimated in the year during which the related sales occur. B. Bad debt expense is recorded at the time a company gives up trying to collect from a customer. C. The journal entry to record bad debt expense does not impact Total Assets. D. The journal entry to record bad debt expense does not impact Net Income.

D. None of the above

Which of the following is correct? A. Compared to FIFO, LIFO provides a balance sheet amount that more closely approximates the true value of the inventory. B. Most U.S. firms use LIFO when completing tax returns, but FIFO when preparing financial statements. C. Under US GAAP, Grocery chains are required to use the FIFO inventory cost flow method. D. None of the above

A. Creditors would prefer that a corporation always refrain from buying Treasury Stock.

Which of the following is correct? A. Creditors would prefer that a corporation always refrain from buying Treasury Stock. B. Owners would prefer that a corporation always refrain from buying Treasury Stock. C. Both "A" and "B" D. Neither "A" nor "B"

C. For financial accounting purposes, the estimated useful life of an automobile is the period of time over which the automobile is expected to remain in service for the specific owner to generate revenues.

Which of the following is correct? A. For financial accounting purposes, the estimated useful life of a new automobile is 5 years. B. For financial accounting purposes, the estimated useful life of an automobile is 7 years. C. For financial accounting purposes, the estimated useful life of an automobile is the period of time over which the automobile is expected to remain in service for the specific owner to generate revenues. D. North Dakota

D. Firms are not required to use the same depreciation method for both tax purposes and financial statement purposes.

Which of the following is correct? A. If a firm uses straight-line depreciation for tax purposes, then it must also use straight-line depreciation for financial statement purposes. B. If a firm uses double-declining balance depreciation for tax purposes, then it must also use double-declining balance depreciation for financial statement purposes. C. Both "A" and "B" are correct D. Firms are not required to use the same depreciation method for both tax purposes and financial statement purposes.

D. Neither "A" nor "B"

Which of the following is correct? A. Managerial Accounting information is more aggregated than Financial Accounting information. B. Publicly-traded companies are required to use GAAP when creating Managerial Accounting information. C. Both "A" and "B" D. Neither "A" nor "B"

C. Interest expense impacts nonoperating income on the Income Statement.

Which of the following is correct? A. Paying cash for interest impacts the Financing Activities section of the Statement of Cash Flows. B. Paying cash for interest does not impact the Statement of Cash Flows C. Interest expense impacts nonoperating income on the Income Statement. D. Interest expense does not impact the Income Statement.

C. Both "A" and "B" are correct

Which of the following is correct? A. The purchase of treasury stock at the very end of a fiscal year will increase reported EPS for that year. B. Stockholders' Equity if often thought of as a "safety net" for creditors. C. Both "A" and "B" are correct D. Neither "A" nor "B" is correct

FIFO more closely reflects the actual flow of inventory for a typical business than does LIFO.

Which of the following is correct? Because International Financial Reporting Standards (IFRS) are "principles based," companies that follow IFRS can use their judgment in determining whether or not to use the LIFO inventory cost flow assumption. FIFO more closely reflects the actual flow of inventory for a typical business than does LIFO. Most firms in the U.S. firms use LIFO for tax purposes in order to pay less taxes, but then use FIFO when preparing financial statements in order to report higher Net Income. All of the above are correct.

Most companies use straight-line depreciation for financial statement purposes.

Which of the following is correct? Choosing straight-line rather than double-declining balance depreciation for an asset allows a company to report higher net income during each year of the asset's useful life. Most companies use straight-line depreciation for financial statement purposes. Most companies use the same depreciation method for both financial statement purposes and tax purposes. All of the above are correct

C. Both "A" and "B"

Which of the following often is an advantage of issuing bonds rather than borrowing from a bank? A. Bonds usually have longer terms to maturity than notes issued to banks. B. All else equal, bond interest rates typically are lower than bank interest rates. C. Both "A" and "B" D. Neither "A" nor "B"

B. Gordon bought equipment for $50,000 cash.

Which of the following results in a "deferred expense" for Gordon Corporation? A. Gordon provided services to customers on account. B. Gordon bought equipment for $50,000 cash. C. Gordon received cash from customers for work that Gordon will perform in the future. D. All of the above

C. Gilpin received accounting services and will pay the accounting firm next month.

Which of the following results in an "accrued expense" for Gilpin Corporation? A. Gilpin performed work for a customer that the customer had paid for in advance during the previous month. B. Gilpin purchased an office building with cash. C. Gilpin received accounting services and will pay the accounting firm next month. D. None of the above

Magrini used electricity and will pay the utility company for the electricity next month.

Which of the following results in an "accrued expense" for Magrini Corporation? Magrini used electricity and will pay the utility company for the electricity next month. Magrini purchased a new delivery truck. Magrini provided services to customers on account. Magrini received cash from customers for work that Magrini will perform in the future.

Prepaid Expenses

Which of the following would appear on the Balance Sheet of American Airlines? Prepaid Expenses Passenger Revenue Fuel Expense None of the above

B. Von Kapff Corp. purchased 12% of the stock of Almond Corp. Von Kapff's only intent in buying the stock was to earn a good return on their investment.

Which of the following would be considered a passive investment in equity securities by Von Kapff Corp.? A. Von Kapff Corp. purchased 12% of the stock of Almond Corp. Von Kapff's intends to play an active role in the management of Almond. B. Von Kapff Corp. purchased 12% of the stock of Almond Corp. Von Kapff's only intent in buying the stock was to earn a good return on their investment. C. Von Kapff Corp. purchased 51% of the stock of Almond Corp. Von Kapff's intends to play an active role in the management of Almond. D. Von Kapff Corp. purchased 51% of the stock of Almond Corp. Von Kapff's only intent in buying the stock was to earn a good return on their investment.

The cost of a warehouse owned by Liedtka that is used to store the guitar inventory.

Which of the following would be recorded as an asset on the Balance Sheet of Liedtka Guitar Corporation? The amount spent by Liedtka to train employees and thus increase their value to the business. The cost of a warehouse owned by Liedtka that is used to store the guitar inventory. The value of the knowledge obtained by Liedtka through research into new guitar designs. All of the above

C. To increase revenues

Why do businesses often sell items or provide services on account (rather than for cash)? A. To increase liquidity B. To reduce liquidity C. To increase revenues D. To increase days in accounts payable

To increase revenues

Why do businesses sell on account? Answers: To increase revenues Companies are required to give customers time to pay their bills. To improve the speed at which the businesses receive cash. Companies sell on account because they do not want to receive cash too quickly.

C. $24,000

below is a subset of information from Jambo Corporation's financial statements. Cash $12,000 Accounts Receivable $5,000 Dividends $1,000 Equipment $20,000 Rent expense $4,000 Inventory $7,000 Based only on the above, the total amount of Current Assets reported on Jambo's Balance Sheet is A. $17,000 B. $18,000 C. $24,000 D. $37,000 E. None of the above

B. Using GAAP, the land must be valued at $2,000,000 on the balance sheet; using IFRS the land could be valued at $2,500,000 on the balance sheet.

XYZ Company bought land at a cost of $2,000,000 five years ago. A recent appraisal of the land valued the land at $2,500,000. Which of the following is correct? A. Using GAAP, the land must be valued at $2,000,000 on the balance sheet; using IFRS the land must be valued at $2,000,000 on the balance sheet. B. Using GAAP, the land must be valued at $2,000,000 on the balance sheet; using IFRS the land could be valued at $2,500,000 on the balance sheet. C. Using GAAP, the land could be valued at $2,500,000 on the balance sheet; using IFRS the land could be valued at $2,500,000 on the balance sheet. D. Using GAAP, the land could be valued at $2,500,000 on the balance sheet; using IFRS the land must be valued at $2,000,000 on the balance sheet.

C. $36,000 inflow from investing activities

Yongim Corp. purchased land for $40,000 4 years ago and sold that land today for $36,000. How does the sale of the land impact the Statement of Cash Flows? A. $4,000 inflow from investing activities B. $4,000 outflow from investing activities C. $36,000 inflow from investing activities D. None of the above

A. Zansky Corporation should include the $3,000 in its reported inventory balance.

Zansky Corporation shipped golf shoes to Victory Golf Corporation on consignment. The Book Value of the shoes is $3,000 and the expected sales price is $4,200. Victory has not yet sold the inventory. A. Zansky Corporation should include the $3,000 in its reported inventory balance. B. Zansky Corporation should report $3,000 Cost of Goods Sold. C. Zansky Corporation should report $4,200 Cost of Goods Sold (Conservatism). D. None of the above C. Both "A" and "B"

accrual

revenue or expense happened, but cash has not changed hands yet