A100 Accounting Spring 2023

Calvin Corp., a merchandising company, reported the following results for November:Sales $4,096,400 Cost of goods sold (all variable) $2,194,500 Total variable selling expense $238,700 Total fixed selling expense $144,700 Total variable administrative expense $238,700 Total fixed administrative expense $282,900 The contribution margin for November is: $3,191,400 $1,424,500 $996,900 $1,901,900

$1,424,500

NYB, Inc. started into business in 2025, when it issued 1,800 shares of common stock for a total of $18,000. At the end of 2025, NYB had assets of $64,000 and liabilities of $15,000. During the year, NYB paid $3,600 in dividends. What was NYB's earnings per share for the year? $19.22 $17.22 $29.22 25.22

$19.22

On January 1, Year 1, Seitz Trucking paid $250,000 to purchase a truck. The truck was expected to have a four-year useful life and a $30,000 salvage value. If ST uses the straight-line method, the amount of net book value shown on the Year 1 balance sheet is $250,000 $220,000 $195,000 55,000

$195,000

Which of the following is an example of a period cost in a company that makes clothing? Fabric used to produce men's pants. Factory supervisor's salary. Advertising cost for a new line of clothing. Monthly depreciation on production equipment.

Advertising cost for a new line of clothing.

Which of the following correctly describes the various financial statements? The statement of stockholders' equity is a financial statement at a specific point in time. The balance sheet is a financial statement that covers a period of time. An income statement covers a period of time. The cash flow statement is a financial statement at a specific point in time.

An income statement covers a period of time.

Which of the following would not be reported in the operating activities section of a cash flow statement? Cash received from customers. Cash paid for employee wages. Cash paid for interest expense. Cash paid for dividends to stockholders.

Cash paid for dividends to stockholders.

Which of the following is primarily responsible for the information provided in the financial statements? Company Top Management External Auditors Board of Directors Internal Accounting Staff

Company Top Management

At the end of this year, Bartlett Inc. owes its employees $2,200. Bartlett will pay them on Jan. 2nd of the next year. Which of the following is true? Bartlett will show the $2,200 as an expense of this year, even though the payment has not yet been made. Bartlett will show the $2,200 as a liability at the end of this year, but not an expense for this year. The $2,200 will be an expense when the payment is made next year. Bartlett will make no entry for the $2,200 this year. Bartlett must pay the $2,200 before the end of this year.

Bartlett will show the $2,200 as an expense of this year, even though the payment has not yet been made.

Which of the following is true of the Statement of Cash Flows? It is only analyzing the cash account. It must be prepared using accrual accounnting. The entries on this statement are always the same as the entries on the Income Statement. The ending balance on this statement must equal total assets for the statement to be in balance.

It is only analyzing the cash account.

For accounting information to be useful, it must be which of the following? It must be comparable and reliable. It must be consistent and comparable. It must be relevant and consistent. It must be a faithful representation and relevant.

It must be a faithful representation and relevant.

Which of the following increases total assets? Paying a dividend Payring for three months rent at one time Collecting an account receivable Making a sale on account

Making a sale on account

Which of the following is true? Making a sale on account increases assets. Collecting an accounts receivable increases total assets. Revenue is not recorded until the cash is received. Accounts receivable is the amount of revenue that the cash has already been received.

Making a sale on account increases assets.

Seitz Trucking's retained earnings increased $50,000 during the current year. What was Seitz Trucking's current year net income or loss given that Seitz Trucking declared $30,000 of dividends during this year? Net income was $20,000. Net income was $80,000. Net loss was $80,000. Net loss was $20,000.

Net income was $80,000.

Cougar Corporation bought inventory on account on August 23rd. Cougar paid its supplier for the inventory on August 28th. Cougar sold the inventory on account on September 2nd and received payment from its customer on September 12th. On what date did Cougar record the inventory as an expense? August 28 August 23 September 12 September 2

September 2

Which of the following is true? Depreciation expense is the cash paid for depreciation during the period. The balance in the account "accumulated depreciation" always equals the depreciation expense for the period. Subtracting accumulated depreciation from the equipment account gives the net carrying value of equipment at this point in time. The balance in accumulated depreciation is the total cash that has been paid for depreciation over all the years the company has owned that asset.

Subtracting accumulated depreciation from the equipment account gives the net carrying value of equipment at this point in time.

The term "leverage" means which of the following? The likelihood the company will have sufficient cash to pay its upcoming debts. The extent to which the company uses debt as opposed to equity. A comparison of the company's net income to its income-producing assets. A comparison of the company's current assets to its current liabilities.

The extent to which the company uses debt as opposed to equity.

Which of the following is true regarding equity and debt holders? Debt holders hope to receive dividends and interest from the company. Equity holders receive a stated amount of interest plus a return of their original investment. The maximum amount debt holders can receive is the amount originally loaned plus interest. Equity holders hope to receive dividends, interest, and an increase in the stock price.

The maximum amount debt holders can receive is the amount originally loaned plus interest.

Which of the following is true regarding equity and debt holders? Equity holders expect to receive both dividends and interest on their investment. Equity holders receive their original investment at maturity as well as any interest they are owed. The maximum amount debt holders could receive is the amount they loaned plus interest. Debt holders stand to benefit if the company does well and the stock price increases.

The maximum amount debt holders could receive is the amount they loaned plus interest.

Which of the following transactions will increase a current ratio, which is currently 2.5? Accruing (Recording, Increasing) an expense. Receiving cash from signing a 6-month note payable. Using cash to pay an account payable. Collecting an account receivable.

Using cash to pay an account payable

Which of the following accounts appears on the Income Statement? Utilities expense Accumulated depreciation Retained earnings Interest payable

Utilities expense

The salary of the factory supervisor is classified as a non-product cost. an administrative expense. an inventoriable cost. a process cost.

an inventoriable cost.

When a company pays a dividend, it is classified Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. as an investing cash outflow. as an operating cash inflow. as a financing cash outflow. The payment of dividends is not a cash transaction.

as a financing cash outflow.

Accounting books are "in balance" when net income equals ending retained earnings. the cash account equals net income. assets minus liabilities equals stockholders equity. assets plus liabilities equals stockholders equity.

assets minus liabilities equals stockholders equity.

A $3.00 increase in a product's variable expense per unit accompanied by a $3.00 increase in its selling price per unit will: have no effect on the contribution margin ratio. have no effect on the break-even volume. none of these answers are correct. decrease the contribution margin.

have no effect on the break-even volume.

Demand for a product is said to be elastic if a change in price has: no effect on the volume of units sold. little effect on the volume of units sold. substantial effect on the volume of units sold. little effect on the volume of units produced.

substantial effect on the volume of units sold.

Which of the following costs are always irrelevant in decision making? sunk costs opportunity costs avoidable costs fixed costs

sunk costs

The usual starting point for a master budget is: the sales forecast or sales budget. the direct materials purchase budget. the budgeted income statement. the production budget.

the sales forecast or sales budget.

Saratoga Co. issued 100 shares of stock for $10 per share when it went into business on January 1, 2016. No stock has been issued since that time. The balance in stockholders' equity at January 1, 2025 was $14,000. During 2025, $6,000 was paid in dividends. At December 31, 2025, Saratoga had total assets of $60,000 and total liabilities of $26,000. What was Saratoga's earnings per share for 2025? $200 $270 $140 $260

$260

At the beginning of 2022, a corporation had assets of $340,000 and liabilities of $60,000. During 2022, assets increased $15,000 and liabilities increased $3,000. What was stockholders' equity at December 31, 2022? $292,000. $298,000. $18,000. $280,000.

$292,000.

Prospect Incorporated had the following totals for the year: Sales $76,000 Salary expense $14,000 Gain on land sale $ 3,000 Cost of goods sold $28,000 Rent expense $10,000 What is Prospect's gross profit? $51,000 $48,000 $27,000 $24,000

$48,000

Pearl Co. had the following transactions in its land account: In 2013 - Bought Land A for $4,000 In 2014 - Bought Land B for $6,000 In 2020 - Sold half of Land B for $4,000 Pearl has made no other transactions in land. What is the balance in its land account? $7,000 $6,000 $8,000 $4,000

$7,000

At January 1, 2026, Bergdorf, inc. had $14,000 in current assets and $12,000 in current liabilities. At December 31, 2026, the company had $18,000 in current assets and $12,500 in current liabilities. Bergdorf earned $120,000 in net income during the year. What is Bergdorf's current ratio at December 31, 2026? 1.44 1.17 1.31 6.67

1.44

Crockin Corporation is considering a machine that will save $9,000 a year in cash operating costs each year for the next six years. At the end of six years it would have no salvage value. If this machine costs $33,165 now, the machine's internal rate of return is closest to (Ignore income taxes.): Use the table to determine the discount factor(s).IRR table.pdfActions 17% 18% 19% 16%

16%

A company with $500,000 in operating assets is considering the purchase of a machine that costs $60,000 and which is expected to reduce operating costs by $15,000 each year. These reductions in cost occur evenly throughout the year. The payback period for this machine in years is closest to: 8.3 years 33.3 years 0.25 years 4 years

4 years

Roosevelt Inc. breaks even when it sells 1,600 units. The company's variable cost per unit is $10 and the selling price is $25 per unit. The total fixed cost are $24,000 & the contribution margin is $24,000. How many units does Roosevelt need to sell to earn $40,000 in net income? 3,600 1,760 4,267 3,200

4,267

At January 1, 2025, Gerolsteiner, Inc. had $140,000 of inventory, and at December 31, 2025, the Company had $125,000 in inventory. During the year Gerolsteiner bought $880,000 in inventory. The Company had total sales of $2,200,000 during 2025. What was Gerolsteiner's approximate inventory turnover ratio? 9.96 6.64 3.38 6.75

6.64

Recognizing an expense may be accompanied by which of the following? A decrease in liabilities An increase in assets A decrease in assets A decrease in revenue

A decrease in assets

Which of the following is true of stockholders equity? This is a category on the Income Statement. All corporations must have both the common stock account and the retained earnings account. The only way it can be increased is by the company issuing more common stock. Assets plus liabilities will always equal stockholders equity.

All corporations must have both the common stock account and the retained earnings account.

Which of the following is true of depreciation? Because depreciation is recorded on fixed assets, cash paid for depreciation is an investing cash outflow. As accumulated depreciation increases, the net carrying value of fixed assets decreases. Depreciation is recorded on land, buildings and equipment. Recording depreciation reduces the balance in current assets.

As accumulated depreciation increases, the net carrying value of fixed assets decreases.

Which of the following is true? Supplies is a liability account showing the amount of supplies used during the period. When supplies are purchased, net income is reduced. Supplies are an asset when purchased and become a liability as they are used. As the company uses supplies, it decreases assets and increases expenses.

As the company uses supplies, it decreases assets and increases expenses.

Which of the following is true of unearned revenue? Both assets and revenue are increased when it is earned. Assets are increased and liabilities are decreased when it is received. Both assets and liabilities are increased when it is received. Both assets and revenue are increased when it is received. Assets are increased and liabilities are decreased when it is earned.

Both assets and liabilities are increased when it is received.

The bookkeeper at your company mistakenly recorded six months of prepaid insurance as an expense in the first month. What impact does that have on the first month's financial statements? Assets are overstated, and expenses are understated. Both assets and net income are understated. Liabilities are understated, and expenses are overstated. Both assets and expenses are understated.

Both assets and net income are understated.

Which of the following increases total assets? Selling land for your original purchase price Buying equipment for cash Buying inventory on account Collecting an account receivable

Buying inventory on account

Which of the following is considered to be an expense on the income statement? Notes payable. Cost of goods sold. Wages payable. Prepaid Expenses.

Cost of goods sold.

Fairfax Company bought a piece of equipment on December 1, 2025 for $12,000. Fairfax expects the equipment to last four years and then be worthless. What is the depreciation expense and net carrying value Fairfax would show on its annual financial statements at December 31, 2026 for this asset? Depreciation expense $3,250; net carrying value $8,750 Depreciation expense $3,250; net carrying value $12,000 Depreciation expense $3,000; net carrying value $8,750 Depreciation expense $3,000; net carrying value $3,250

Depreciation expense $3,000; net carrying value $8,750

A manufacturing Company leases vehicles to deliver finished products to end customers. Which of the following terms correctly describes the monthly lease payments made on the delivery vehicle? Direct Cost - No; Fixed Cost - No Direct Cost - No; Fixed Cost - Yes Direct Cost - Yes; Fixed Cost - Yes Direct Cost - Yes; Fixed Cost - No

Direct Cost - No; Fixed Cost - Yes

Which of the following is the most accurate and complete statement? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. Dividends are payments made to creditors of the business. Dividends are always required by law to be paid by public corporations. Dividends are payments made to both the business's creditors and stockholders. Dividends are payments made to the company stockholders.

Dividends are payments made to the company stockholders.

Which of the following ratios is required by the SEC to be shown on the face of the income statement? Earnings per share Return on equity Debt to equity Current ratio

Earnings per share

Which of the following is true? Revenue becomes revenue when the cash is received. Expenses become an expense when they are incurred, whether or not they have been paid. Ending retained earnings always equals ending net income. Retained earnings is an account on the Income Statement.

Expenses become an expense when they are incurred, whether or not they have been paid.

Which of the following is true? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. GAAP are the rules companies based in the US are required to use. UASB are the rules that companies based in most other countries are required to use. GAAP is a principles-based system. GAAP gives less guidance that IFRS.

GAAP are the rules companies based in the US are required to use.

Financial accounting standards are known collectively as GAAP. What does that acronym stand for? Generally Accepted Accounting Principles Generally Authorized Auditing Principles Governmentally Approved Accounting Practices Generally Applied Accounting Procedures

Generally Accepted Accounting Principles

How can marketing assist in the budgeting process? none of the answer choices are correct. Only worrying about sales, not expenses. Not participate because budgeting isn't their job. Inform management of realistic sales forecasts.

Inform management of realistic sales forecasts.

Hoosier Company experienced an accounting event that affected its financial statements as indicated below. - Increase in Assets & - Increase in Equity & - Increase in Financing Cash Flows Which of the following accounting events could have caused these effects on the elements of Hoosier's financial statements? Borrowed money from a bank Issued common stock Paid a cash dividend Earned cash revenue

Issued common stock

Which of the following is true of the income statement? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. It covers a period of time. The ending balances always roll over to become the beginning balances of the next period. It is broken down into three categories: assets, liabilities, and stockholders equity None of the above are true.

It covers a period of time.

Which of the following is true of retained earnings? It is a summary of all the cash the company has received for all the years it has been in business minus any dividends paid. It is a Balance Sheet account. The ending balance in retained earnings should always agree with the ending balance in cash. When the Balance Sheet is in balance, assets will equal liabilities plus retained earnings.

It is a Balance Sheet account.

Which of the following is true of retained earnings? It is the balance the company owes to customers at the end of the period. It is the amount of cash the company has at the end of the period. It is the amount received when common stock was first issued. It is all the net incomes the company has earned since it first started in business minus any dividends paid.

It is all the net incomes the company has earned since it first started in business minus any dividends paid.

Which of the following is true of retained earnings? It is an account on the Income Statement. It is an account on the Balance Sheet. It is the amount of cash received by the company over all the years it has been in business minus all of the expenses it made. The ending balance on the Statement of Retained Earnings will always equal net income at the bottom of the Income Statement.

It is an account on the Balance Sheet.

Which of the following is true regarding the SEC? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. It was established in 1934. It comes under the control of the FASB. Its rules and regulations apply to all companies, both public and private. It was enacted as a result of Sarbanes-Oxley. It is responsible for preparing the financial statements of all publicly-held companies.

It was established in 1934.

Which of the following is an asset account? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. Accounts payable Retained earnings Notes payable Land

Land

The debt-to-equity ratio measures which of the following? Profitability. Market strength. Liquidity. Leverage.

Leverage.

Which of the following statements is true? Managerial accounting for companies in the US is governed by GAAP. Managerial accounting statements are prepared to go to parties outside the company. Managerial accounting is more future oriented than financial accounting. The results of both managerial and financial accounting are reported only in currency.

Managerial accounting is more future oriented than financial accounting.

Which relationship below could help explain marketing efficiency? Advertising expenses/Prepaid advertising expense none of the answer choices are correct. Travel expenses/Total revenue Marketing expenses/Total revenue

Marketing expenses/Total revenue

Which of the following is true of a manufacturing company? Period costs are expensed as cost of goods sold when the inventory is sold. The salary of the factory foreman is a period cost. Selling expenses are considered a product cost of the company. Period costs are expensed as they are incurred.

Period costs are expensed as they are incurred.

Chandler's Inc. paid $1,200 for four months insurance on January 1. Which of the following would correctly state Chandler's accounts at January 31? Prepaid insurance is $1,200, and insurance expense is $300. Prepaid insurance is $900, and insurance expense is $300. Prepaid insurance is $300, and insurance expense is $300. Prepaid insurance is $0, and insurance expense is $1,200.

Prepaid insurance is $900, and insurance expense is $300.

Which of the following transactions will result in an increase in operating income as of the date of the transaction? Providing a service to a customer on account. The receipt of cash dividends from an investment. Collection of cash from a customer for services to be provided at a later date. The sale of investments at a gain

Providing a service to a customer on account.

Which of the following is true under accrual accounting? Expenses become an expense when they are paid. Revenue always equals the amount of cash received. Cash received minus expenses paid is net income. Revenue may be recorded on the income statement even before the cash is received.

Revenue may be recorded on the income statement even before the cash is received.

Which of the following is true? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. The Income Statement and the Balance Sheet are the same financial statement. Companies are required to use the cash basis of accounting on the Income Statement. Accrual accounting requires that revenue be reported only when the cash is received. The Income Statement covers a period of time, while the Balance Sheet is a point in time.

The Income Statement covers a period of time, while the Balance Sheet is a point in time.

Which of the following is true? Variable costs per unit will vary depending on the level of production. Fixed costs per unit always stay the same. Total fixed costs plus total variable costs will always equal total sales. The contribution margin will always equal fixed costs plus net income.

The contribution margin will always equal fixed costs plus net income.

Which of the following best describes the purpose of an audit? To prove the accuracy of an entity's financial statements. To audit every transaction that an entity entered into. To lend credibility to an entity's financial statements. To establish that a corporation's stock is a sound investment.

To lend credibility to an entity's financial statements.

Which of the following describes the primary objective of financial accounting? To provide useful financial information about a business to help internal parties make informed decisions. To provide useful financial information only to stockholders. To provide information about a business' future business strategies. To provide useful financial information about a business to help external parties make informed decisions.

To provide useful financial information about a business to help external parties make informed decisions.

Which of the following is correct concerning reactions to INCREASES in activity? Total Variable Cost: Increase; Variable Cost Per Unit: Decrease Total Variable Cost: Constant; Variable Cost Per Unit: Decrease Total Variable Cost: Decrease; Variable Cost Per Unit: Constant Total Variable Cost: Increase; Variable Cost Per Unit: Constant

Total Variable Cost: Increase; Variable Cost Per Unit: Constant

A company purchased inventory for cash, which will be consumed during future months. Which of the following correctly describes the impact of the purchase on the financial statements? Total assets will remain unchanged. Operating expenses will increase. Operating income will decrease. Total assets will decrease.

Total assets will remain unchanged.

Which of the following is true? Total assets are increased when an accounts receivable is collected. Total assets are increased when a payment is made for prepaid rent. Interest payable will always equal interest expense. Total liabilities are increased when an adjustment is recorded to accrue interest expense.

Total liabilities are increased when an adjustment is recorded to accrue interest expense.

Which of the following statements is false? Time-series analysis examines a company's performance over time. When computing the component percentages for a common size analysis of the income statement, net income is the base figure. It is often useful to compare a company's performance with that of a competitor. The North American Industry Classification System assigns industry codes based on business operations.

When computing the component percentages for a common size analysis of the income statement, net income is the base figure.

On what date would a door handle for a freezer be expensed by a manufacturing company? When the door handle is paid for by the company When the freezer is sold by the company When payment is received for the sale of the freezer When the door handle is attached to the freezer in the production assembly line.

When the freezer is sold by the company

Which is true? Accounting assists management by determining profitability. Marketing reports back on the success of campaign. all choices are correct. Marketing creates strategies to increase sales.

all choices are correct

Which factors influence pricing decisions? Competitors all of the answer choices are correct. Cost Customers

all of the answer choices are correct

When a company borrows money from a bank, stockholders equity is increased by the amount borrowed. revenue is increased by the amount borrowed. the company's books are out of balance. both assets and liabilities are increased.

both assets and liabilities are increased.

Direct costs: are incurred due to a specific decision. are the variable costs of producing a product. can be easily traced to a particular cost object. are incurred to benefit a particular accounting period.

can be easily traced to a particular cost object.

Accrual accounting is the same as the cash basis of accounting. requires an expense be recorded as an expense when it is incurred, whether or not it has been paid. is not allowed under either GAAP nor IFRS. requires recording an expense as an expense when it is paid, whether or not is has been incurred.

requires an expense be recorded as an expense when it is incurred, whether or not it has been paid.