practice

The following information is available for Waggoner Corporation for the month of June:Beginning inventory16 units $40 = $640Purchased, June 310 units $44 = $440Purchased, June 514 units $48 = $672Purchased, June 1516 units $32 = $512Ending inventory26 units

a.$1,080

On January 1, 2019, Bushong Company purchased equipment at a cost of $12,600. The equipment had an estimated useful life of 6 years or 30,000 hours. The equipment will have a $1,200 salvage value at the end of its life. The depreciation expense for the year ending December 31, 2019, using the straight-line method would be

a.$1,900

Refer to Exhibit 1. Using the information above,periodic LIFO cost of goods sold is

a.$430

Exhibit 2 Selected financial statement numbers for Frederick Company are given below:Sales$277,480 Cost of goods sold 179,155 Average accounts receivable 20,730 Average inventory 4,145 Average property, plant, and equipment 75,70590. Refer to Exhibit 2. Using the information above, calculate Frederick's accounts receivable turnover (round to two decimal places).

a.13.39 times

If the average collection period is 73 days, what is the accounts receivable turnover?

a.5 times

Which of the following accounts is considered to be the most liquid?

a.Cash

Under accrual-basis accounting, revenues are always recognized when

a.Earned

During March, Randolph Corporation completed the following transactions:Purchased inventory for $36,000 on credit.Issued additional commonstock for $20,000.Purchased equipment for $15,900 cash.As a result of these transactions, Randolph's total assetswould

a.Increase by $56,000

In a period of rising prices, the inventory method that results in the lowest income tax payment is

a.LIFO.

An enterprise's obligations to pay cash or other economic resources to others are called

a.Liabilities

Which of the following would be reported as an operating activity on a statement of cash flows?

a.Payment of taxes

Which one of the following accounts is not closed at the end of an accounting period?

a.Retained Earnings account

Which of the following taxes must be paid by boththe employee and the employer?

a.Social security tax (FICA)

Which of the following events cannot be quantified into dollars and cents and recorded as an accounting transaction?

a.The appointment of a new CPA firm to perform an audit.

When a note payable is given to settle an existing account payable,

a.There is no net change in assets, liabilities, or stockholders' equity

If ending inventory is understated, net income and assets will be

a.Understated Understated

A Discount on Bonds Payable account

a.is a contra account to Bonds Payable.

Stockholders' equity is decreased by all of the following except

a.sales of stock.

When total expenses exceed total revenues, the result is:

b. a net loss.

During the year, Rigby Corporation earned revenues of $114,000 and incurred $98,000 for various operating expenses. There are 1,280 shares of stock outstanding. Earnings per share is

b.$12.50

If total liabilities decreased by $50,000 and stockholders' equity increased by $30,000 during a period of time, then total assets must change by what amount and direction during that same period?

b.$20,000 decrease

The net income reported on the income statement for the current year was $220,000. Depreciation recorded on plant assets was $35,000. Accounts receivable and inventories increased by $2,000 and $8,000, respectively. Prepaid expenses and accounts payable decreased by $2,000 and $12,000 respectively. How much cash was provided by operating activities?

b.$235,000

Refer to Exhibit 1. Using the information above, average (periodic) cost of goods sold is

b.$390

Bigg and Talle Corporation uses the percent-of-sales method to estimate bad debts. Net credit sales for the current year amount to $2,000,000, and management estimates 2% will be uncollectible. Allowance for Doubtful Accounts prior to adjustment has a credit balance of $16,000. The amount of bad debt expense will be:

b.$40,000.

Amy Company sold $8,000 of merchandise to Tory Turnbull with terms 2/10, n/30. If Tory paid for three-fourths of the merchandise within the discount period and one-fourth after the discount period, he paid a total of

b.$7,880

The following information was taken from the records of Hart Corporation for the month ended December 31, 2019: Advertising expense$20,625 Income tax 13,095 Accounts payable 13,450 Dividends paid 14,125 Retained earnings (12/1/19)57,860 Consulting fees revenue 97,875 Rent expense 11,728 Supplies expense 16,917 Given the above information, retained earnings as of December 31, 2019is

b.$79,245

The current assets of Orangette Company are $292,500. The current liabilities are $130,000. The current ratio expressed as a proportion is

b.2.25:1.

On October 1, Mathis Company entered into a six-month contract with Lewis Company to providecustodial services on a daily basis. The terms of the contract state that the cost will be $3,000 per month and Mathis will bill Lewis at the end of every two months. If Mathis is a calendar year company, what is the appropriate adjusting entry at December 31?

b.Accounts Receivable 3,000Service Revenue 3,000

During July 2019, Gutierrez Corporation sold $9,000 of merchandise on account. The revenue portion of this transaction would be posted as

b.Accounts Receivable Sales Revenue| |9,000 | | 9,000

Which of the following is true about accrual-basis accounting?

b.Accrual-basis accounting provides a better measure of performance.

When products are sold, their costs are removed from inventory and reported on the income statement as an expense called

b.Cost of goods sold

On October 1, Doe Hunting Supplies, a calendar-year company, sold inventory that cost $60,000 for $100,000. The customer signed a six-month, 10% note in payment. On December 31, Woods should

b.Debit Interest Receivable for $2,500

Lake of Fire Company purchased supplies costing $7,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of supplies revealed $1,900 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be

b.Debit Supplies Expense, $5,100; Credit Supplies, $5,100.

The matching principle requires that

b.Expenses incurred be matched with revenues earned

If the shipping terms indicate that the seller owns the goods until delivered to the buyer, this arrangement is known as

b.FOB destination

Which of the following is true of the balance sheet?

b.It identifies a company's assets and liabilities as of a specific date.

Vital information that CANNOT be captured solely by dollar amounts is reported in afirm's

b.Notes to financial statements

The existing balance in Allowance for doubtful accountsis ignored when which estimation method is used?

b.Percentage of sales method

Which of the following accounts is decreased with a debit?

b.Retained Earnings

Dixon Company purchases 1,000 shares of its common stock for $20,000. The $20,000 amount should be debited to

b.Treasury Stock.

Gross profit is calculated by subtracting

b.cost of goods sold from net sales.

All of the following are intangible assets except

b.land improvements.

The statement of cash flows is a(n)

b.required basic financial statement.

Shipping terms of FOB destination mean that the

b.shipping charges are debited to Freight-Out

Allowance for Doubtful Accounts is reported in the

balance sheet as a contra asset.

Mott Company uses the units-of-activity method in computing depreciation. A new plant asset is purchased for $48,000 that will produce an estimated 100,000 units over its useful life. Estimated salvage value at the end of its useful life is $4,000. What is the depreciation expenseper unit?

c.$0.44

The following information is available for Lighten Company: Sales$130,000 Freight-in$10,000 Ending Merchandise Inventory 12,000 Purchase Returns and Allowances 5,000 Purchases 100,000 Beginning Merchandise Inventory 15,000 Lighten's cost of goods sold is

c.$108,000.

On November 30, Thatcher Company issued a $15,000, 6%, 4-month note to the National Bank. The entry on Thatcher's books to record the payment of the note at maturity will include a credit to Cash for

c.$15,300

On April 1, Bonita Corporation's retained earnings account had abalance of $785,000. During April, Bonita had revenues of $135,000 and expenses of $93,000. On April 30, retained earnings had a balance of $811,500. What amount of dividends were paid during April?

c.$15,500

Bates Company has a $300,000 balance in Accounts Receivable and a $1,000 debit balance in Allowance for Doubtful Accounts. Credit sales for the period totaled $1,800,000. What is the amount of the bad debt adjusting entry if Bates uses a percentage of receivables basis at 5%?

c.$16,000

On January 1, 2019,Bushong Company purchased equipment at a cost of $25,200. The equipment had an estimated useful life of 6 years or 30,000 hours. The equipment will have a $2,400 salvage value at the end of its life. The equipment was used 6,500 hours in 2019. The depreciation expense for the year ending December 31, 2019, using the units-of-activity method would be

c.$4,940

When 30,000 shares of $10 par-value common stock are issued at $30 per share, Paid-In Capital in Excess of Par, Common Stock is credited for

c.$600,000

Exhibit 2 Selected financial statement numbers for Frederick Company are given below:Sales$277,480 Cost of goods sold 179,155 Average accounts receivable 20,730 Average inventory 4,145 Average property, plant, and equipment 75,70590. Refer to Exhibit 2. Using the information above, calculate Frederick's inventory turnover (round to two decimal places).

c.43.22 times

An adjusting entry to record the expired portion of a prepaid expense that was originally debited to a prepaid expense account always includes

c.A debit to an expense

The financial statement that reports resources owned, the obligations to transfer resources to other organizations, and the claims by the entity's owners is known as the

c.Balance sheet

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

c.Cash received from the sale of a land

What ratio is used to measure a firm's liquidity?

c.Current ratio

Which of the following accounts would be closed at year-end?

c.Dividends

The primary accounting standard-setting body in the United States is the

c.Financial Accounting Standards Board

On January 1, 2019, total assets for Liftoff Technologies were $125,000; on December 31, 2019, total assets were $145,000. On January 1, 2019, total liabilities were $110,000; on December 31, 2019, total liabilities were $115,000. What is the amount of the change and the direction of the change in Liftoff Technologies' stockholders' equity for 2019?

c.Increase of $15,000.

The purchase of supplies on account

c.Increases assets and increases liabilities

Items that are either manufactured or purchased for resale in the normal course of business are called

c.Inventory

Treasury stock is stock that is

c.Issued but not outstanding

Which of the following would be true if inventory costs were increasing?

c.LIFO would result in lower net income and lower ending inventory amounts than would FIFO

The primary internal group that uses accounting information is

c.Management

Liabilities of a company are owed to

c.creditors.

Which of the following errors will cause a trial balance to be out of balance? The entry to record a payment on account was

c.posted as a debit to Cash and a debit to Accounts Payable

On January 1, 2019, Brown Company purchased a mine for $100,000. On this same date, it was estimatedthat the mine contained 1,000 tons of ore. During 2019, 300 tons of ore were extracted from the mine. The amount of depletion expense for 2019would be

d.$30,000

Warren Clothing Store sells jeans. During January, its inventory records of one brand of designer jeans were as follows:Beginning inventory10 pairs $22 = $220January 6 purchase4 pairs $25 = $100January 10 sale5 pairsJanuary 15 purchase7 pairs $30 = $210January 20 sale10 pairsJanuary 25 purchase4 pairs $30 = $12078.Refer to Exhibit 1. Using the information above, periodic FIFO cost of goods sold is

d.$350

If a company has $528,000 of sales revenue, pays $26,400 in dividends, and has net income of $158,400, how much were the expenses for the year?

d.$369,600

The directors of Chandler Corp. are trying to decide whether they should issue par or no par stock. They are considering two alternatives for their new stock, which they are assuming will be issued at $8 per share. The alternatives are: (A) $5 par value and (B) no par, no stated value. If 100,000 shares are issued, what amount will be credited to the common stock account in each of these cases?

d.$500,000$800,000

Barker Company's records show the following for the month of January:Balance, Retained Earnings at January 1 $600,000Balance, Retained Earnings at January 31 900,000Revenues 1,005,000Dividends Declared 45,000Expenses forJanuary were

d.$660,000.

If rent revenue of $5,000 is earned in 2019 but will NOT be received until 2020, what is the appropriate adjusting entry at December 31, 2019?

d.Accounts Receivable 5,000 Rent Revenue 5,000

Which of the following would be classified as a current asset?

d.Accounts receivable

Which of the following depreciation methods can NOT depreciate an asset below its salvage value?

d.All of these cannot depreciate below salvage value

The perpetual method of accounting for inventory

d.Allows management to better estimate inventory losses from pilferage than does a periodic inventory method

Which of the following groups of accounts have a normal debit balance?

d.Assets and Expenses

JR Corporation has a debit balance of $3,750 in Allowance for doubtful accounts. If it estimates that 2 percent of the net salesof $1,500,000 will be uncollectible, it should debit

d.Bad Debt Expense for $30,000

When equipment is purchased with a cash down payment and a signed note for the balance, the net effect will be

d.Both an increase in assets and an increase in liabilities

Which of the following types of accounts show how resources came into a firm?

d.Both liabilities and stockholders' equity

Which of the following are usually NOT directly affected by adjusting entries?

d.Capital stock accounts

On January 1, 2019, Carter Corporation issued $5,000,000, 10-year, 8% bonds at 102. Interest is payable annually on January 1. The journal entry to record this transaction on January 1, 2019is

d.Cash 5,100,000 Bonds Payable 5,000,000 Premium on Bonds Payable 100,000

Which of the following would not be included in the operating activities section of a statement of cash flows?

d.Cash outflows to reacquire treasury stock

Which of the following would be reported as a cash flow from financing activities?

d.Cash receipts from the issuance of long-term debt

The closing entry involving a net loss will include a

d.Debit to retained earnings

Which of the following statements is most correct with respect to separation of duties?

d.Employees who authorize transactions should not have custody of related assets.

Revenues

d.Increase stockholders' equity

A daily cash count of register receipts made by a cashier department supervisor demonstrates an application of which of the following internal control principles?

d.Independent internal verification

Which of the following accounts is a permanent account?

d.Retained earnings

Dixon Corp. purchased 20,000 shares of its own $2 par common stock at a cost of $13 per share on April 30, 2019. The stock was originally issued at $11 per share. The entry to record the purchase of the stock should include a debit to

d.Treasury Stock for $260,000.

The failure to adjust an unearned revenue that has been partially earned and was originally recorded as a credit to Unearned Revenue will usually result in an

d.Understatement of revenues and an overstatement of liabilities

When the allowance method is used for bad debts, the entry to write off an individual account known to be uncollectible involves a

d.debit to the allowance account.

The common characteristic possessed by all assets is

d.future economic benefit.

Riodan Company sold old equipment for $420,000. The equipment had a cost of $840,000 and accumulated depreciation of $504,000. The entry to record the sale of the equipment would include a

d.gain on disposal of $84,000.

If the market rate of interest is lower than the stated rate, bonds will sell at an amount

d.higher than face value.

The profit margin is calculated by dividing

d.net income by net sales.

If merchandise is sold for $3,000 subject to credit termsof 2/10, n/30, the entry to record collection in full within the discount period would include a

d.none of These answer choices are correct.

In the statement of cash flows, the activities that affect cash flows are listed in the following order:

d.operating, investing, financing

ABC Auto Sales sells new Lexus vehicles. ABC will most likely use the ________ method to cost its ending inventory.

d.specific identification (specific-unit-cost)

A basic assumption of accounting that requires activities of an entity be kept separate from the activities of its owner is referred to as the

economic entity assumption.