FINAL BOSS ACC Multiple choices

At year end, CurlZ, Inc.'s inventory consists of 220 bottles of CleanZ at $3 per bottle and 120 boxes of DyeZ at $9 per box. Market values are $3.10 per bottle for CleanZ and $7 per box for DyeZ. CurlZ should report its inventory at:

$1,500.

A company uses $100,000 in cash to pay off $100,000 in notes payable. This would result in a:

$100,000 debit to Notes Payable and a $100,000 credit to Cash.

Transport Inc. has a fleet of 10 large trucks that cost a total of $1,410,000. The fleet is expected to be driven a total of 1,000,000 miles during its estimated 10-year life and be sold for $141,000 at the end of its useful life. If the fleet was driven 125,000 miles during the current year, what is the amount of depreciation that would be calculated using the straight-line and units-of-production methods, respectively?

$126,900 and $158,625

Crystal Lodging recorded $330,000 in revenues, $247,500 in expenses, and $45,000 of dividends for the year. The company began the year with total assets of $285,000 and stockholder's equity of $130,500. Suppose that liabilities increased by $90,000 and stockholders' equity increased by $37,500. What would be the change in Crystal Lodging's assets?

$127,500 increase

At the end of last year, the company's assets totaled $863,000 and its liabilities totaled $741,500. During the current year, the company's total assets increased by $58,300 and its total liabilities increased by $24,150. At the end of the current year, stockholders' equity was:

$155,650.

Sweetwater Co. updates its inventory perpetually. The company reported a beginning inventory of $3,000. During the year, the company recorded inventory purchases of $9,000 and cost of goods sold of $10,000. What was the amount of its ending inventory?

$2,000

Medlock Company sold inventory on credit for $3,000, terms 2/10, n/30. The cost of the merchandise to Medlock was $2,400. How much cash will Medlock receive if payment is received within the discount period?

$2,940

Parker, Inc. had a beginning balance in its Retained Earnings account of $386,550. During the year, the company declared and paid a $4,890 dividend and, at the end of the year, it reported Retained Earnings of $401,760. The company's net income for the year was:

$20,100.

Marion Manufacturing had the following cash flows for the current year. The company uses the direct method in preparing the statement of cash flows. If the cash balance at the beginning of the current year was $0, what is the amount of cash at the end of the year?

$212,500

Madison Manufacturing's ending inventory count was $65,000, cost of goods sold was $35,100, and purchases were $72,800, its beginning inventory must have been:

$27,300.

Puffin Co. began the year with assets of $109,000 and liabilities of $79,500. During the year assets increased by $13,800 and liabilities decreased by $9,900. What is the amount of Puffin's stockholders' equity at the beginning of the year?

$29,500

If beginning Accounts Payable is $10,000 and the purchases on account are $100,000 and payments made on account were $80,000 during the period, then the ending Accounts Payable balance is:

$30,000 credit

Saint John Industries uses the percentage of credit sales method to estimate Bad Debt Expense. The company reported net credit sales of $580,000 during the year. Saint John has experienced bad debt losses of 6% of credit sales in prior periods. At the beginning of the year, Saint John has a credit balance in its Allowance for Doubtful Accounts of $4,800. No write-offs or recoveries were recorded during the year. What amount of Bad Debt Expense should Saint John recognize for the year?

$34,800.

Lexington Company updates its inventory periodically. The company's beginning inventory was $1,000 and purchases were $5,000 during the year. The company's ending inventory count was $2,000. What was the amount of its cost of goods sold?

$4,000

If total liabilities decreased by $50,000 and stockholders' equity increased by $10,000 during a period of time, then total assets must change by what amount and direction during that same time period?

$40,000 decrease

Missouri Company uses a perpetual inventory system. On October 1, Missouri Company sold inventory on account in the amount of $6,500 to Montebello Company, terms 1/10, n/30. The items cost Missouri $4,200. On October 4, Montebello returns some of the inventory. This inventory had a selling price of $500 and a cost of $200. On October 8, Montebello Company paid Missouri Company the amount due on that date. What is the amount of cash received by Missouri Company on October 8 for the receipt of payment from Montebello?

$5,940

The Sweet Smell of Success Fragrance Company borrowed $60,000 from the bank to be paid back in five years and used all of the money to purchase land for a new store. Sweet Smell's balance sheet would show this as:

$60,000 under Land and $60,000 under Notes Payable (long-term).

The following account balances were listed on the trial balance of Edgar Company at the end of the period: AccountBalance Accounts Payable$30,600 Cash 48,900 Common Stock 30,000 Equipment 13,500 Land 45,000 Notes Payable 60,000 The company's trial balance is not in balance and the company's accountant has determined that the error is in the cash account. What is the correct balance in the cash account?

$62,100

The following activities occurred in 2019: Performed advertising services on account, $62,650. Received cash payments on account, $12,000. Received deposits from customers for advertising services to be performed in 2020, $3,600. Made payments to suppliers on account, $5,270. Incurred $51,300 of operating expenses; $44,500 was paid in cash and $6,800 was on account and unpaid as of the end of the year. What is the amount of revenue that will be reported on the income statement for the year ended December 31, 2019?

$62,650.

Larkspur Co. had cost of goods sold of $2,600. If beginning inventory was $2,700 and ending inventory was $800, Larkspur's purchases must have been:

$700.

The following is a listing of some of the balance sheet accounts and all of the income statement accounts for Northview Company as they appear on the company's adjusted trial balance. Net income would be:

$72,550.

During April, Ballarat, Inc. earned $1,680, of which $1,200 was collected, and had expenses of $960, of which $840 was paid. Its net income equals:

$720 using accrual accounting versus $360 using cash basis.

Common Stock$13,700 Total Assets$193,000 Accounts Payable 65,700 Retained Earnings 29,700

$83,900.

A fire destroyed some of Cholla, Inc.'s records. Information from the documents found related to inventory is listed below. What was the amount of inventory that was purchased during the year?

$860,400

Sparks Furniture Company carries three lines of sofas. Information about the sofa inventory as of the end of its most recent fiscal year follows. If LCM/NRV is applied to each separate product line, what is the amount of the adjustment that must be made to the company's inventory?v

($34,200)

A company starts the period with 300 computers in inventory, purchases 90 more, returns 12 of them to suppliers, and has 249 in inventory at the end of the period. If there is no shrinkage, how many computers were sold?

129

For a note receivable that was created on November 1, 2018 and is due for repayment on October 31, 2019, what is the time fraction needed to compute interest revenue for the year ended December 31, 2018?

2/12

Which of the following would be classified as a noncurrent liability on the balance sheet at December 31, Year 1?

A notes payable due January 15, Year 3

Which of the following would be properly classified as a long-lived asset?

A warehouse used to store inventory.

Charlie Co. owes $800,000 to Tilly, Inc. from whom Charlie buys its inventory. Which account would Charlie use to report the amount owed?

Accounts Payable

Which of the following statements about cash basis accounting and accrual basis accounting is correct?

Accrual basis accounting provides a better measure of operating performance than cash basis accounting.

Which of the following is the best measure of a company's profitability?

Accrual-based net income

Which of the following trial balances is used as a source for preparing the income statement?

Adjusted trial balance

Why are these adjustments needed?

Adjustments are needed to ensure the financial statements are up-to-date and complete.

A company's cash flows from investing activities include cash transactions relating to the purchase and disposal of which types of assets?

All of a company's non-current assets.

Which of the following best describes when an accrual adjustment is required?

An expense has been incurred but not yet paid in cash.

Which one of the following statements about inventory is not correct?

An increase in inventory levels is always a sign of inefficiency in inventory management.

Which of the following is not correct?

Assets = Liabilities − Stockholders' Equity

Sue Shells, Inc. pays back $200,000 on a loan it had obtained earlier from a bank.

Assets decrease by $200,000, liabilities decrease by $200,000, and stockholders' equity is unchanged.

What do independent auditors provide for companies who hire them?

Assurance that the financial statements follow Generally Accepted Accounting Principles

The adjusting entry to record the estimated bad debts in the period credit sales occur would normally include a debit to:

Bad Debt Expense and a credit to Allowance for Doubtful Accounts.

Utopia Corporation provides $6,000 worth of lawn care on account during the month. Experience suggests that about 3% of net credit sales will not be collected. To record the potential bad debts, Utopia Corporation would debit:

Bad Debt Expense and credit Allowance for Doubtful Accounts for $180.

Which of the following statements is prepared as of a point in time?

Balance Sheet

Which of the following is the equation for cost of goods sold?

Beginning inventory + Purchases − Ending inventory

Identify whether each required adjustment is a deferral or an accrual.

Both transactions are accruals

A company issues $20 million in new stock. The company later uses this money to acquire a building. What is the effect of these two transactions on the company's accounts?

Buildings increases and Common Stock increases.

Which of the following is an activity in the operations of a manufacturer, but not in the operations of a merchandising or service company?

Buying raw materials

Which of the following is included in the financing activities on a statement of cash flows?

Cash dividends paid.

Which of the following would appear in the cash flows from operating activities section of the statement of cash flows?

Cash paid to suppliers and employees

Which of the following would be classified as an operating activity on the statement of cash flows using the direct method?

Cash received from accounts receivable collections.

Which of the following would be classified as an investing activity on the statement of cash flows?

Cash received from sale of land.

Which of the following would be included in cash flows from investing activities?

Cash used to purchase equipment.

Which of the following equations is correct?

Change in cash = Change in liabilities + Change in stockholders' equity − Change in noncash assets

The balance of which of the following accounts appears in the credit column of an adjusted trial balance?

Common Stock

Which of the following will result in the recording of goodwill?

Company A purchases Company B and pays more than the fair value of Company B's assets and liabilities.

Most companies report their lower of cost or market write-down expense as a ______ expense even if the goods haven't been sold, because it's a necessary cost of carrying and (eventually) selling the goods.

Cost of Goods Sold

Goods available for sale equals:

Cost of Goods Sold plus ending inventory.

When a company sells goods, it removes their cost from the balance sheet and reports the cost on the income statement as:

Cost of Goods Sold.

If inventory is updated periodically, which of the equations is correct?

Cost of goods sold = Beginning inventory + Purchases − Ending inventory

Which one of the following is not likely to be a consequence of fraudulent financial reporting?

Creditors recover 100% of amounts owed to them.

On July 1, Darin Company sold inventory costing $5,000 to Dee Company for $6,000, terms 3/10, n/30. Both companies use the perpetual inventory system. Dee Company pays the invoice on July 8 and takes the appropriate discount. What journal entry will be recorded by Dee Company on July 8?

Debit Accounts Payable for $6,000, credit Cash for $5,820, and credit Inventory for $180

Recording a Lower of Cost or Market/Net Realizable Value (LCM/NRV) adjustment involves which of the following generic journal entries?

Debit Cost of Goods Sold and credit Inventory.

Shaylee, Inc. borrowed $62,000 from a bank, depositing those funds in its bank account and signing a formal agreement to repay the loan in two years. What is the correct journal entry for this transaction?

Debit cash and credit notes payable for $62,000

As of December 31, Frappe Company has a balance of $22,000 in accounts receivable. Of this amount, $2,200 is past due and the remainder is not yet due. Frappe has a credit balance of $215 in the Allowance for Doubtful Accounts. Frappe Company estimates its bad debt losses using the aging of receivables method, with estimated bad debt loss rates equal to 2% of accounts not yet due and 10% of past due accounts. How will the Bad Debt Expense account be included in the required adjusting journal entry at year-end?

Debit of $401

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

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

When a company postpones reporting revenue until it fulfills its promise represented by a gift card, it has recorded.

Deferred Revenue.

A company purchased a computer system on January 2, 2018 for $1,600,000. The company used the straight-line depreciation method with an estimated useful life of 6 years and a residual value of $130,000. The company prepares financial statements at December 31. Which of the following is correct about the depreciation recorded?

Depreciation expense will be debited for $245,000.

Which of the following appears on an adjusted trial balance?

Dividends

Which of the following statements about the format of financial statements is correct?

Dividends are shown in parentheses on the statement of retained earnings.

Which of the following items appear on more than one financial statement?

Ending Cash and ending Retained Earnings

If inventory is updated perpetually, which of the equations is correct?

Ending inventory = Beginning inventory + Purchases − Cost of goods sold

Which of the following accounts does not have a normal credit balance?

Equipment

According to Generally Accepted Accounting Principles, which of the following is not a characteristic of useful financial information?

Ethical

Which of the following statements about the tradeoffs of extending credit is not correct?

Even if there are no bad debts from credit sales, the delayed receipt of cash will always increase additional costs beyond the increased revenue from the credit sales.

Which of the following statements about liabilities is not correct?

Examples of liabilities include Notes Payable, Common Stock, and Income Tax Payable.

A company owes $200,000 on a bank loan. It will be reported by the company as Accounts Payable.

F

Dividends are subtracted from revenues on the income statement.

F

Expenses are the costs of operating a business that are paid for in the period covered by the income statement.

F

In order to be considered useful, information must have two fundamental characteristics: reliability and understandability.

F

Puffin, Inc. issues $1,000,000 in new stock for cash. Puffin's stockholders' equity does not change because as new shares are sold, the value of its existing shares falls.

F

Revenue is reported on the income statement only if cash was received at the point of sale.

F

The adjustment for corporate income taxes is generally the first adjustment prepared.

F

The general ledger is an internal report that lists all the accounts and their balances and is used to check that total debits equals total credits.

F

Between FIFO and LIFO, which method is preferable in terms of maximizing income from operations, if costs are rising?

FIFO

Between FIFO and LIFO, which method is preferable in terms of minimizing income taxes, if costs are falling?

FIFO

Financial statements are a key source of information useful to external users. The quality of relevance in financial information contributes to its usefulness. Along with relevance which of the following attributes is a primary element of useful financial information?

Faithful representation

In the U.S., Generally Accepted Accounting Principles (GAAP) are established by the:

Financial Accounting Standards Board (FASB).

Which of the following statements about financial accounting is correct?

Financial accounting reports are primarily prepared to provide information for external decision makers.

Which of the following costs should be added to the buyer's Inventory account?

Freight-in costs with terms FOB shipping point

Which of the following intangible assets has an unlimited life?

Goodwill

There are advantages and disadvantages to extending credit to customers. Which of the following statements below expresses the general reason for extending credit?

Gross profits exceed bad debt costs.

Which one of the following statements regarding sales discounts is correct?

If a company offers a discount to encourage prompt payment and the discount is taken, the discount reduces the amount of net sales.

Expenses appear on the:

Income Statement.

Net income appears on which of the following financial statements?

Income statement and statement of retained earnings

Which of the following is an activity common to the operations of merchandising, manufacturing, and service companies?

Incurring operating expenses

The MegaHit Film Studio has a licensing right (or agreement) to distribute films produced by the Artsy Film Company. How would the MegaHit Company classify this licensing right?

Intangible asset

Which of the following statements is correct?

Intangible assets with unlimited or indefinite lives are not amortized.

Which line item would be found on a merchandiser's balance sheet and not on a service firm's?

Inventory

Which of the following items would not be considered a long-lived asset?

Inventory

Which of the following statements about inventory classifications is not correct?

Inventory is classified as a long-term asset on the balance sheet.

Which of the following statements regarding shrinkage is not correct?

It is easier to detect shrinkage in a periodic inventory system than in a perpetual inventory system.

What effect does the adjusting entry for interest earned but yet not received have on the accounting equation?

It results in an increase in assets and stockholders' equity.

Which of the following statements about a company's fiscal year is correct?

It usually corresponds to a company's slow period.

Between FIFO and LIFO, which method is preferable in terms of maximizing income from operations, if costs are falling?

LIFO

Between FIFO and LIFO, which method is preferable in terms of minimizing income taxes, if costs are rising?

LIFO

Angus Company agreed to sell goods for Longhorn Company on consignment, but wasn't willing to take ownership of the goods in case they were difficult to sell. Which of the following statements is true?

Longhorn owns the inventory and should report it on its balance sheet.

Who has primary responsibility for making sure that a company's financial statements follow GAAP?

Management

Which of these appears on both the income statement and the statement of retained earnings?

Net income

Establishing a note receivable by loaning cash to another company will have which of the following net effects on the accounting equation?

No effect on assets; No effect on liabilities; No effect on stockholders' equity

A company lends its supplier $160,000 for 3 years at a 10% annual interest rate. Interest payments are to be made twice a year. The entry to record this lending transaction includes a debit to:

Notes Receivable and a credit to Cash for $160,000.

What is the annual reporting period for this company?

November 1 through October 31.

Which of the following is typically considered a disadvantage of sole proprietorships?

Owner is personally liable for all debts of the business.

A company's quarterly income statements show that in the last three quarters both Sales Revenue and net income have been falling. Given this information, which of the following conclusions drawn by users are valid?

Owners may conclude that the company will be less likely to distribute dividends.

Which of the following would not affect a company's net income?

Paying a dividend to stockholders

Ashley Co. uses the direct method in calculating its cash flow from operations. Which of the following items will not have an effect on cash flow from operating activities?

Payment of dividends to stockholders.

Which of the following items below will be subtracted in the financing cash flow portion of the statement of cash flows?

Payment of dividends.

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

Periodic

Which of the following steps is performed first at the end of each accounting period?

Prepare adjusting entries.

Which of the following practices would not be considered ethical?

Recording 31 days of sales in April.

Sleepy Head Coffee Shop buys coffee, mugs, and pastries from Morning Show Co. for sale to consumers. What type of company is Sleepy Head Coffee Shop?

Retail merchandiser

In a perpetual system, when inventory is sold on account:

Sales Revenue, Cost of Goods Sold, and Accounts Receivable are increased while Inventory is decreased.

Which of the following statements is correct about accounting for expected sales returns?

Since no cash has yet been paid, a liability, Refund Liability, is credited for the sales price of expected returns.

Investors are often interested in the amount of net income distributed as dividends. Where would investors look for this information in the company's annual report?

Statement of Retained Earnings

Which of the following financial statements shows how net income (loss) and dividends impacted a stockholders' equity account?

Statement of Retained Earnings

Which of the following expressions of the accounting equation is correct?

Stockholders' Equity = Assets - Liabilities

Accounts Payable, Notes Payable, and Salaries and Wages Payable are examples of liabilities.

T

Accounts increase on the same side as they appear in the accounting equation: A = L + SE.

T

GAAP does not allow cash basis accounting to be used in external financial reports.

T

Goodrich, Inc. signed an agreement to rent a warehouse from Ellie Co. This is an example of a transaction that should not be recorded.

T

Investors are mainly interested in the profitability of a company.

T

Stockholders are owners of a corporation.

T

The daily activities involved in running a business, such as buying supplies and paying salaries and wages, are classified as operating activities on the statement of cash flows.

T

When a company pays its rent in advance, an asset is reported on the balance sheet.

T

The MegaHit Film Studio owns a production lot and related equipment. How would MegaHit Company categorize these assets?

Tangible assets

Which of the following is a merchandising company?

The Gap

Which of the following statements about organizational forms of a business is not correct?

The owners of a corporation are legally responsible for the corporation's debts and taxes.

Which of the following is a characteristic of a partnership?

The profits, taxes, and legal liability are the responsibility of two or more owners.

Which of the following statements concerning financial reporting is not correct?

There are no differences between the accounting rules developed by FASB and those developed by IASB.

Belmont Industries announces that its gross profit rose 5% but its income before income taxes fell. Which of the following statements is correct?

This must mean that selling, general, and administrative expenses increased by more than 5%.

Which of these are natural resources that are depleted over time?

Timber

Which of the following statements is correct about the unadjusted trial balance?

Total debits should equal total credits.

Which of the following is not true regarding the double-entry system?

Transactions must be recorded twice to ensure accuracy.

Assume that a perpetual inventory system is in use. Which of the following statements regarding the journal entries prepared is correct?

When a customer returns inventory, the seller debits Sales Revenue (or Sales Returns & Allowances) under a perpetual inventory system.

______ sell their inventory to ______ for resale to consumers.

Wholesalers; retailers

Which of the following descriptions about a note payable is correct?

Written promise to repay a loan

If a company wants exclusive rights to artistic material, it should obtain:

a copyright.

Goodwill may be attributable to all of the following except:

a significant amount of charitable contributions.

After the adjustments have been completed, the adjusted balance in Deferred Revenue represents the:

amount of the sales or services still owed to the customer.

Sales returns and allowances:

are not included on most externally reported income statements.

The ________ takes stock of what exists at a point in time whereas the _________ depicts a flow of what happened over a period of time.

balance sheet; income statement

An asset's cost minus accumulated depreciation is its ________ value.

book

The main goal of an accounting system is to:

capture information about a business so that it can be reported to decision makers.

A company loaned $1,000,000 with interest at 7% to another company. The interest revenue from this loan would be reported on the statement of cash flows as a:

cash inflow from operating activities.

At the end of the first year of an asset's life, the declining-balance depreciation:

causes an asset to be carried at a lower book value than that computed using the straight-line method.

Each account is assigned a number; this listing of all accounts is called a:

chart of accounts.

Mauricio invested $30,000 in Pizza Aroma in exchange for its stock. Pizza Aroma now has:

common stock.

The owner is not responsible for the entity's taxes and debts if the entity is organized as a(n):

corporation

A legal document called a stock certificate is used to indicate ownership in a:

corporation.

Cost of goods sold reports the:

cost times the quantity of goods sold.

Schoop, Inc. has 100 units in inventory, purchased at $8 per unit. These units have a current market value of $7. The entry to write-down the inventory will include a:

credit to Inventory for $100.

If the Ball Corp. writes down its inventory, its:

current assets will decrease.

Which of the following are similarities between a six-month note receivable and an account receivable? They both are:

current assets.

The potential disadvantages of extending credit include all of the following except:

customers buying too much.

When S. Dee Company bought B. Darin Company, the purchase price included a patent valued at $15,000. The patent has 10 years remaining of its legal life, but its estimated useful life to S. Dee Company was only 8 years. The journal entry to record the annual patent amortization would include a:

debit to Amortization expense, $1,875.

Sparkling Pools received a bill for $1,200 for running newspaper ads during the last two weeks of July; the bill will be paid on August 1. Advertising Expense should be:

debited for $1,200 in July.

Clarendon Corp. sold $1,000 of merchandise to a customer on terms of 1/10, n/30. Its customer paid within the discount period. As a result of its customer making the payment within the discount period, Clarendon's total assets will:

decrease by $10.

If revenues are less than expenses, the company's Retained Earnings:

decrease.

Extending credit to customers will introduce all of the following additional costs except:

decreased gross profit from reduced sales.

The journal entry to record taking a discount when paying for goods previously purchased on account:

decreases assets and liabilities.

Sales discounts should appear in the financial statements as a(n):

deduction from sales.

Net income that has been paid out to the company's stockholders for their own personal use is referred to as:

dividends.

Managerial accounting reports prepared for internal use are used by the company's:

employees.

Companies are concerned about the cost of extending credit for all the following reasons except the:

expense of the extra goods that must be produced or purchased for resale.

A cost of doing business is referred to as a(n) ______ and is considered necessary to earn ______.

expense; revenue

Faithful representation is a characteristic of external financial reporting that means:

financial information depicts the economic substance of business activities.

The separate entity assumption requires that:

financial reports of a business are assumed to include the results of only that business's activities.

The WC Company borrowed $26,500 from a bank during the year. This borrowing would be reported on the statement of cash flows as a(n):

financing activity in the amount of $26,500.

Recording the estimate of bad debt expense:

follows the expense recognition ("matching") principle.

Notes Receivable differ from Accounts Receivable in that Notes Receivable:

generally charge interest from the day they are signed to the day they are collected.

With a classified balance sheet, current assets are usually listed:

in the order of liquidity.

Expenses are reported on the:

income statement in the time period in which they are incurred.

The financial statement that reports revenues and expenses is the:

income statement.

All of the following will likely be incurred by a company that extends credit except:

increased advertising expenses.

Cash flows from investing activities include cash:

inflows from the sale of long-term investments.

Amortization is an adjusting entry that records the amount of:

intangible assets' usefulness used during the accounting period.

Operating activities include:

interest paid on a bank loan.

The Accounts Receivable account:

is increased by a debit.

A productive asset:

is used to produce goods or services that will be sold to customers.

Fixed assets are ________ and are found on the ________:

long-lived tangible assets; balance sheet

Intel makes microchips from raw materials acquired from suppliers. Intel is a:

manufacturer.

The receipt of cash is one of the operating activities of:

merchandising, manufacturing, and service companies.

Every financial statement should have "who, what, and when" in its heading. These include the:

name of the company, the type of financial statement, and the time period or date from which the data were taken.

The characteristic shared by all liabilities is that they:

obligate the company to do something in the future.

A sole proprietorship is:

owned and operated by one individual.

Creditors look at the balance sheet to see whether the company:

owns enough assets to pay what it owes to creditors.

The right to exclude others from making or using an invention is a:

patent

A ______ inventory system will always give updated balances for ______.

perpetual; Cost of Goods Sold

At the end of a depreciable asset's useful life, its book value equals its:

residual value.

A net loss for a period arises when:

revenues are less than expenses.

A net loss results when:

revenues are less than expenses.

Profit is equal to:

revenues minus expenses.

Sales Revenue reports the:

selling price times the quantity of goods sold.

A ledger is used to:

show increases and decreases in individual accounts, as well as the ending balance.

The normal balance of any account is the:

side which increases that account.

Operating activities, investing activities, and financing activities are presented on the:

statement of cash flows.

Dividends are reported on the:

statement of retained earnings.

Equity financing is financing obtained from:

stockholders.

Countryside Corporation is owed $11,890 from a customer for landscaping. The account is overdue and the customer is having difficulty paying. Countryside might ask the customer to sign a note for the unpaid amount to:

strengthen Countryside Corporation's legal right to be repaid with interest.

The "least and latest rule" is:

that a taxpayer should pay the least tax legally permitted at the latest date allowed.

When the allowance method is used, the entry to record the write-off of specific uncollectible accounts would decrease:

the Allowance for Doubtful Accounts account.

The income statement reports:

the amount of revenues earned and expenses incurred during the period.

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

the inventory balance of the buyer.

A ski resort with a calendar year-end is likely to have:

the largest cash inflow from operating activities in the fourth and first quarters (October - March).

An outdoor water park that has a calendar year-end and is located in an area of the country that has warmer weather during April through September and colder weather during the rest of the year is likely to have:

the largest cash inflow from operating activities in the second and third quarters (April through September).

The financial reports of a business include only the results of that business's activities. This is:

the separate entity assumption.

Dividing the long life of a company into shorter periods such as months, quarters, or years for reporting purposes is called the:

time period assumption.

The potential advantages of extending credit to customers include all of the following except higher:

wage expenses.