PRT 3203 Accounting Final

Accrued Payroll was $10,000 and $5,000 at the beginning and end of 20X5, respectively. The payroll expense for 20X5 totaled $480,000. Cash outflow for payroll during 20X5 totaled:

$485,000.

The Lagging Hotel Company originally bought other companies' stocks for $50,000; now it has sold its holdings for $45,000 and paid a broker a commission of $300 for the sale. As a result of this sale, accountants at the Lagging Hotel Company should debit the account Loss on Sale of Short-Term Investments for:

$5,300

Partners Willy and Nilly are very anxious to persuade Mr. Conrad to join their partnership. They currently have $60,000 each in capital accounts. They are willing to admit Conrad as a partner with a one-third interest for only $30,000. After Conrad is admitted, the capital balance for each of the three partners would be:

$50,000

A certain firm purchases glassware, china, and silver worth $14,000 at the beginning of its fiscal year. It plans to write off these assets over a period of 28 months. One month into its fiscal year, managers purchase more glassware for $1,000, but they do not place it in service that year. The monthly amount of depreciation for these assets is:

$500

Elias's Eatery paid $8 each for 10 racks of dinner rolls, which had a market value of $7 each. The lower of cost or market for this item is:

$70

The Quiet Respite Resort purchased a luxurious carriage that will be horse-drawn and will carry guests in tours of the resort grounds. The carriage cost $50,000 and has a salvage value of $5,000. Its estimated useful life is 5 years, assuming a usage of 1,000 miles each year. During the first year, the carriage carried guests 1,000 miles, just as expected. The first year's depreciation for the carriage under the units of production method of depreciation is:

$9,000

Current Assets $200,000 Long-Term Debt $500,000 Current Liabilities $100,000 Total Owners' Equity $400,000 Given the preceding information, total capitalization would be_______________.

$900,000

The common stock of a certain corporation has a par value of $5, and the market value of these shares has reached the conversion parity price of its convertible bonds. The corporation has 1,000 $1,000 convertible bonds outstanding. Their conversion ratio is 20 shares per $1,000 bond. If all the bonds were converted, Additional Paid-In Capital would be credited for __________ in a record of this conversion.

$900,000

Rooms Available for Sale 100,000 Paid Rooms Occupied 60,000 Complimentary Room Nights 500 Paid Guests 80,000 Rooms Occupied by 2 or More Guests 10,000 The complimentary occupancy rate for a property with the preceding data would be:

0.5 percent.

A restaurant's food sales were $150,000 for the month of April. Cost of food consumed totaled $25,000. The costs of employee meals and promotional meals were $350 and $250 respectively. The food cost percentage for April was:

16.3%.

Current Assets: $200,000 Investments: $50,000 Current Liabilities: $100,000 Long-Term Debt: $600,000 Owners' Equity: $400,000 Given the above information, the current ratio is:

2 to 1.

If a certain banquet hall estimates that $200 of the $4,000 in accounts receivable that are from one to thirty days past due is uncollectible, what percentage of accounts receivable in this category is considered uncollectible?

5 percent

Given the following information, identify which units would be used to value inventory if the firm that owned it used a FIFO inventory valuation method. Assume that the beginning inventory was zero. March 1: Purchased 10 units at $1.00 per unit March 2: Purchased 5 units at $1.03 per unit March 3: Purchased 5 units at 1.05 per unit March 6: Sold 14 units

5 units at $1.05 per unit and 1 unit at $1.03

The Good News Motel has a system of control accounts and subsidiary ledgers to help it run more efficiently. When the motel charges $1000 to its account at the Calloway Carpet Company for a new carpet, the transaction is recorded in the _______________________ control account and the subsidiary ledger account for _____________________.

Accounts Payable; Calloway Carpet Company

Which of the following is a major section of a balance sheet?

Assets

What happens to the fundamental accounting equation when the sole proprietor of a business sells a piece of the business's equipment at the amount it is recorded on the books?

Assets, liabilities, and owners' equity all remain the same.

The important last step in the process of preparing a bank reconciliation is to make the necessary journal entries. Which of the following accounts is always involved in these entries?

Cash

What is a DISADVANTAGE of the corporate form of business?

Corporate profits are taxed twice.

Which of the following best summarizes the function of the statement of owner's equity?

It serves as a link between the income statement and the balance sheet.

Hospitality firms should record security deposits they make to secure utility services under the ____________ section of the balance sheet.

Other Assets

The Upscale Hotel has some rare, expensive sculptures that it sometimes displays in the lobby. Sculptures that are not on display are kept in a storeroom. Which of the following precautions should hotel managers take to protect these sculptures?

Take an inventory of them daily.

Under which of the following headings of an income statement that was prepared according to the Uniform System of Accounts for the Lodging Industry, ninth revised edition, would marketing expenses appear?

Undistributed Operating Expenses

If on December 31, 20X5, the Mason Motel recorded accrued wages payable of $750 as an adjusted entry, what would the reversing entry be?

a $750 credit to Wages Expense and a $750 debit to Accrued Wages

Christiana has just started work as part of a restaurant chain's accounting staff. She wants to know the interest rate and interest payment dates for a certain class of the chain's bonds. The official document that lists these kinds of details is called the

bond indenture.

Teresa, a hotel accountant, notes that the Allowance for Doubtful Accounts account has a credit balance of $25. If she determines from an aging schedule that the hotel will incur $1,200 in bad debts, she should:

credit the Allowance for Doubtful Accounts account for $1,175.

Leo's Trattoria recently sold major pieces of equipment to pay debts. Decreases in assets are recorded with in a double-entry accounting system.

credits

The portions of long-term debt that a firm owes its lender within the current year are reported on the balance sheet as:

current maturities of long-term debt.

The double-entry accounting system is so called because:

every transaction affects and is recorded in at least two accounts.

Which of the following must be recognized periodically under accrual basis accounting even in the absence of a transaction?

expenses

The Visigoth Hotel receives a C.O.D. package for a guest (a package for which the recipient pays shipping costs), and the postal worker requires the hotel to pay $5.00 in cash to cover delivery charges. The hotel's accountants should record the $5.00 disbursement in the:

front office cash receipts and disbursements journal.

Which generally accepted accounting principle requires that a footnote section be a part of the financial statement presentation?

full disclosure principle

An increase in assets, a reduction in liabilities, or a combination of both that is not related to daily operations is defined as a(n):

gain

A certain guest made arrangements to pay his lodging bill with the hotel's front desk agents, but he left before doing so. The hotel has all the information it needs to bill the former guest, and its accountants are about to make an entry in the transfer journal. The former guest's account should be transferred from the __________________ to the ____________________.

guest ledger; city ledger

Herbert the hotel accountant enters a credit to the Income Summary account and a debit to Owners' Equity. If this entry is a closing entry, the hotel:

had expenses in excess of revenues for this accounting period.

Noncash investing and financing activities are shown:

in a separate schedule of the statement of cash flows.

A company whose stock was selling at a market price below its book price would be attractive to potential stockholders because:

its stock would appear to be undervalued.

Rebecca remembered to reduce banquet deposits when preparing the trial balance for a large convention center. If she had not remembered to do so:

liabilities would have been overstated.

Jerry submits a formal, written promise to pay a certain sum to a bank for his hotel. He plans to repay the bank within the current fiscal year, and states this intention in the note. Notes Payable are classified as:

liabilities.

A partnership of two people from which one partner chooses to withdraw best illustrates which of the following DISADVANTAGES of partnerships?

limited life

According to the generally accepted accounting principle of conservatism and the Financial Accounting Standards Board, which of the following results in recording an exchange of assets?

losses only

Solomon purchased a piece of land for $50,000 to accommodate his hotel expansion plans. He used $10,000 in cash and $40,000 that he borrowed from First Bank. To record this transaction, Solomon's bookkeeper should:

make a compound journal entry that includes the Cash and Notes Payable accounts

Time is limited on the last day of an accounting cycle, so accountants often perform which of the following during the first few days of the following accounting cycle?

make adjusting entries and close accounts

Managers of the Vacation Villa want to know how much they will receive when a certain note receivable comes due. The amount to be paid when a note is due is called the note's:

maturity value

A hospitality firm that uses the percentage of sales method of estimating bad debt applies a certain percentage to to estimate the amount of bad debt.

net credit sales

The balance sheet from the beginning of a certain firm's fiscal year and the one from the end of its fiscal year show an increase in accumulated depreciation of $200,000. This amount represents a:

noncash activity that should not be shown on the statement of cash flows itself.

Gains and losses on sales of assets are reported:

on the income statement

Capital, revenue, and expense accounts are all part of which of the following account categories?

owners' equity

Which of the following steps in the accounting cycle is performed immediately before preparing the financial statements?

preparing an adjusted trial balance

Computers can greatly improve the speed and accuracy of accounting procedures. Real-time processing is an operating feature that:

processes input very quickly, updates files, and makes output immediately available on a current basis.

Which of the following profitability ratios is calculated by dividing Net Income by Total Revenue and measures management's ability to generate sales and control expenses?

profit margin

The main purpose of a voucher system in a hospitality business is to:

provide better control over cash disbursements.

What is the major role of the accounting function in a hospitality operation?

providing information

Which of the following items is shown on the balance sheet of a hospitality company?

purchased goodwill

The main purpose for using reversing entries in accounts is to:

reverse the effects of adjusting entries.

Which of the following types of ratios gives the best indication of the extent to which a firm has been financed by debt?

solvency ratios

Hospitality accounting staff members prepare a trial balance in order to:

test the equality of debits and credits.

For a large hospitality firm, a gasoline purchase of $25 would be recorded as an expense instead of an asset because:

the amount is immaterial and it would be impractical to account for the gas on a usage basis.

Net working capital is best defined as:

the difference between Current Assets and Current Liabilities.

Which of the following is also known as the "profit and loss statement" and the "statement of operations"?

the income statement

An auditor is reviewing general journal entries for a certain hotel company. An entry that involves a debit to Cash and a credit to Bonds Payable represents:

the issuance of a bond.

Which of the following would be shown in the Financing Activities section of the statement of cash flows?

the value of a firm's purchase of its own capital stock

Which of the following is NOT a part of the formal accounting records, but is best characterized as a tool that accountants may use?

the worksheet

Upon the liquidation of a partnership, the amount of the liquidating cash dividend paid to the partners is based on:

their final equity balances.

Which of the following methods of depreciation is based on the actual usage of the asset?

units of production method

The journal entry to reimburse a Petty Cash account involves debiting:

various expense accounts.

Under which of the following circumstances would partners be most likely to wish they had organized as a limited partnership?

when the business is failing

Given the following information, calculate the firm's earnings per share: Total Revenue $6,000,000 Retained Earnings $ 900,000 Net Income $1,200,000 Average Common Shares Outstanding 1,000,000

$1.20

A certain bond issue sold for $400,000 instead of its face value of $500,000. The 10-year bonds bear interest at 12 percent. The total amount credited to Discount on Bonds Payable for the year would be:

$10,000

The Profitable Corporation has 100,000 outstanding shares of stock. Each share has a par value of $3 and a market value of $10. On the date of declaration of a 10 percent stock dividend, corporate accountants would make a journal entry in which they would debit Retained Earnings for:

$100,000

The Newfangled Hotel recently purchased a state-of-the-art computer system that has a useful life of five years, a salvage value of $1,500, and a purchase price of $11,500. The depreciation expense per month for this system, using the straight-line method of depreciation, would be

$166.67

The executive board of a certain hotel company wants to purchase enough interest in Tom's Restaurant Supply Company to control the supply company. The total amount of stock Tom's Restaurant Supply Company has issued is worth $450,000. The hotel company must purchase at least__________ in stock to count the supply company as its subsidiary.

$226,000

Delta Corporation's $5,000,000 of bonds bear annual interest of 12 percent. The interest payment after the first six months would be in the amount of:

$300,000

The Jangles Corporation invested $300,000 in 30 percent of TravCo's common stock. The Jangles Corporation accounts for investment with the equity method. During 20X4, TravCo reported profits of $100,000 and paid cash dividends of $50,000. At the end of 20X4, the Jangles Corporation's investment account for TravCo would have a balance of:

$315,000.

Which of the following accounting items is unique in that it appears on both the balance sheet and the income statement?

Inventory

The account that is used in the net method of recording purchases that is not used in the gross method of recording purchases is:

Discounts Lost

What is an advantage of a partnership?

Greater financial strength is provided since there is more than one owner.

A company that purchased 2,000 shares of its own stock at a market price of $30 per share, under the cost method, would record the purchase as a $60,000 debit to _____________ and a $60,000 credit to ________________.

Treasury Stock; Cash

The Hearty Hotel purchased a shuttle bus for $38,000 and estimates that the vehicle's salvage value will be $3,000. Each month, the hotel's accountant enters an adjusting entry of $800 to record the bus's depreciation. If the Hearty Hotel uses the straight-line method of depreciating assets, what is the bus's useful life?

about four years

The primary function of a petty cash fund is to:

account for small, miscellaneous purchases for which it is not feasible to prepare vouchers.

Which of the following is generally considered a current liability?

accounts payable

Which of the following describes a system of reporting revenues and expenses in the period in which they are considered to have been earned or incurred, regardless of the actual time of collection or payment?

accrual basis accounting

Which of the following is a capital expenditure?

all of the above

Treasury stock purchased for $50 per share is later sold for $60 per share. The purchasing company should recognize the difference in price as:

an increase in additional paid-in capital from treasury stock.

The departmental revenues shown on an income statement:

are generally shown net of any allowances.

Which of the following financial statements would bankers review most carefully before issuing loans to hospitality companies?

balance sheet

A range purchased for $5,000 two years ago has been appraised at $6,000. The range is not written up to $6,000 because of which generally accepted accounting principle?

cost principle

Taking a physical inventory involves a number of steps. Footing the inventory means:

calculating the costs of all items of inventory.

Annie totals the credits and debits for a certain account and finds that the account carries a credit balance. Which of the following types of accounts typically carry a credit balance?

capital accounts

A hospitality business would record all cash inflows from customers paying their accounts in which of the following journals?

cash receipts journal

The main function of an account is to:

classify and summarize business transactions.

For which of the following types of financial statements is every element for the year 20X5 computed as a percentage of a base amount that was taken from a 20X5 statement?

common-size statements

A certain resort starts the year with an estimation of bad debts of $8,000. Its accountants use the allowance method of accounting for bad debts expense, and they determine that Mr. Guest's debt of $800 is uncollectible. Accountants should now:

debit Allowance for Doubtful Accounts for $800 and credit Accounts Receivable for Mr. Guest for the same amount.

Mr. Jefferson used a credit card to purchase a perfumed soap from a hotel gift shop, but now he wants to return it. The gift shop staff should record the return as a:

debit to Gift Shop Returns.

For which of the following pension plans is the amount of the benefit based simply on the amount the pension fund has accumulated at some future point?

defined benefit pension

The basic purpose of managerial accounting is to provide information to various management levels in order to:

enhance controls.