Accounting 1 Final

On April 1, 2019, Barnes Services received a 9-month note for $12,000 at 12%. Calculate the amount of interest due at maturity. (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

$1,080

The assets of Star Company are $120,000 and the total liabilities are $10,000. The equity is ________.

$110,000

Ten years ago a corporation purchased a building for $160,000. At that time, the corporation felt that the building was worth $185,000. The current market value of the building is $430,000. The building has been assessed at $405,000 for property tax purposes. At which amount should the corporation record the building in its accounting records?

$160,000

Dynamic Production Services started the year with total assets of $120,000 and total liabilities of $55,000. The revenues and the expenses for the year amounted to $100,000 and $80,000, respectively. During the year, the company did not issue any common stock, but it distributed dividends of $50,000. Calculate Dynamic's net income for the year.

$20,000

Spring Company has assets and equity that amount to $220,000 and $20,000, respectively. Liabilities total ________.

$200,000

A company's Cash account shows an ending balance of $4,600. Reconciling items included a bookkeeper error of $130 (a $500 check recorded as $630), two outstanding checks totaling $830, a service charge of $25, a deposit in transit of $250, and interest revenue of $30. What is the adjusted book balance?

$4,735

A Plus Appliances sells dishwashers with a four-year warranty. In 2019, sales revenue for dishwashers is $94,000. The company estimates warranty expense at 4.5% of revenues. What is the total estimated warranty payable of A Plus Appliances as of December 31,2019? A Plus Appliances began operating in 2019. (Round your final answer to the nearest dollar.)

$4230

On November 1, 2018, Arch Services issued $313,000 of eight-year bonds with a stated rate of 12% at par. Interest payments occur each April 30 and October 31. On December 31, 2018, Arch made an adjusting entry to accrue interest at year-end. What is the amount of Interest Expense that will be recorded on December 31, 2018? (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)

$6260

Which of the following amounts would be reported as Merchandise Inventory on the balance sheet of a company if the cost of an item is $110 and the current replacement cost is $70?

$70

On January 1, 2018, Sanderson, Inc. acquired a machine for $1,110,000. The estimated useful life of the asset is five years. Residual value at the end of five years is estimated to be $91,000. What is the book value of the machine at the end of 2019 if the company uses the straight-line method of depreciation?

$702,400

On December 1, 2018, Garden Products borrowed $92,000 on a 5%, 10-year note with annual installment payments of $9200 plus interest due on December 1 of each subsequent year. Which of the following describes the first installment payment made on December 1, 2019? (Round your answer to the nearest whole number.)

$9200 principal plus $4600 interest

Jones Supply Services paid $350 cash, the amount owed from the previous month, to a materials supplier. Which of the following accounts decrease?

Accounts Payable

19) Which of the following is an asset account?

Accounts Receivable

Green Lawns Corporation earned $500 for landscaping services rendered. The customer promised to pay at a later time. Which of the following accounts increased as a result of this transaction?

Accounts Receivable

Which of the following is a current asset that is expected to be converted to cash, sold, or consumed during the next year (or the normal operating cycle, if longer)?

Accounts Receivable

Which of the following accounts will have an ending balance after the closing process is completed?

Accumulated Depreciation

Which of the following statements, regarding notes receivable, is incorrect?

All notes receivable are considered long-term assets.

17) Which of the following is included on the balance sheet?

Assets

Which of the following is the correct accounting equation?

Assets = Liabilities + Equity

Which of the following is true of assets?

Assets are something of value the business owns or controls.

Saturn, Inc. paid $13,000 on accounts payable. How does this transaction affect the accounting equation of Saturn?

Assets decrease by $13,000 and liabilities decrease by $13,000.

Which of the following financial statements reports that total assets are equal to total liabilities plus total stockholders' equity?

Balance sheet

Which of the following are classified as long-term assets on a classified balance sheet?

Building, Equipment, Notes Receivable (due in 5 years)

Montgomery Equipment Rental Company received $1,000 cash from a customer; the amount was owed to the business from the previous month. What is the effect of this transaction on the accounting equation?

Cash increases and Accounts Receivable decreases.

Which of the following is included in the entry to record the issuance of 14,000 shares of $7 par value common stock at $21 per share for cash?

Cash is debited for $294,000.

23) Which of the following accounts increases with a credit?

Common Stock

Which of the following should be classified as a long-term asset?

Notes Receivable, due in 5 years

24) Which of the following accounts increases with a debit?

Prepaid Rent

________ is the equity earned by profitable operations that is not distributed to stockholders.

Retained earnings

A business performs services for a customer for $26,000 on account. Which of the following accounts is credited?

Service Revenue

Which of the following occurs when a cash dividend is declared?

Stockholders' equity decreases.

Which of the following statements is true if a bond's stated interest rate is higher than the market rate?

The bond will be issued at a premium.

Which of the following statements is true of a bond that is issued at a discount?

The bond will be issued for an amount less than the face value.

Which of the following is true of a corporation?

The earnings of a corporation may be subject to double taxation.

Regarding net pay, which of the following statements is incorrect?

The net pay amount is not important for accounting purposes.

A corporation has been sued for product failures allegedly resulting in injuries to the individuals bringing the lawsuit. The company's lawyers believe it is more than remote, but less than probable, that the lawsuit will result in an actual liability. Which of the following actions should be taken by the company's management?

The situation should be described in a note to the financial statements.

In reconciling a bank statement, the bank balance is $2,100, and the checkbook balance is $2,001. Which of the following is the most probable reason for the bank balance being larger than the book balance?

There are outstanding checks.

Cash received in advance of providing goods or performing services is recorded as ________.

Unearned Revenue

On the balance sheet of a retailer, the Merchandise Inventory account ________.

is included in the current assets section

The allowance method of accounting for uncollectible receivables ________.

is used to measure bad debts

Which of the following inventory costing methods uses the costs of the oldest purchases to calculate the value of the ending inventory?

last-in, first-out

A bond is issued at a discount when a bond's stated interest rate is ________.

less than the market interest rate

Which one of the following account groups normally has a credit balance?

liabilities and revenues

Which of the following is an advantage of the corporate form of business?

limited liability of stockholders

Which of the following is NOT an inventory costing method?

lower of cost or market

The date on which the principal amount is repaid to the bondholder is known as the ________.

maturity date

Adjusting entries are needed to correctly measure the ________.

net income (loss) on the income statement

The two basic sources of stockholders' equity are ________.

paid-in capital and retained earnings

The materiality concept states that a company must ________.

perform strictly proper accounting only for significant items

At the time the transaction occurred, which of the following would result in an increase in net income under the accrual basis of accounting, but would not result in an increase in net income under cash basis accounting?

performance of services on account

An account that is not closed at the end of the period is called a(n) ________.

permanent account

Merchandise inventory accounting systems can be broadly categorized into two types. They are ________.

perpetual and periodic

When a bond is issued at a price higher than the face value, the difference is known as a ________.

premium

The maturity value of a note is the ________.

principal amount plus interest due at maturity

Which of the following is a benefit provided by internal control?

promoting operational efficiency

Maxwell Plumbing Services earned $500 by completing a job for Smith Company. The $500 earned by Maxwell Plumbing Services is its ________.

revenue

Amounts earned from delivering goods or services to customers are called ________.

revenues

The amount of cash interest the borrower pays each year is based on the ________.

stated interest rate

To match expenses against revenues means to ________.

subtract expenses incurred during one period from revenues earned during that same period

When a company uses the allowance method to measure bad debts, ________.

the amount of bad debts expense is estimated at the end of the accounting period

Which of the following depreciation methods allocate a varying amount of depreciation to expense each year based on an asset's usage?

the units-of-production method

A liability created when a business receives cash from customers in advance of providing services or delivering goods is called a(n) ________.

unearned revenue

The expense for warranty costs is recorded in the period ________.

when the product is sold

Landon Jewelers uses the perpetual inventory system. On April 2, Landon sold merchandise with a cost of $2,500 for $7,000 to a customer on account with terms of 3/15, n/30. The journal entry to record the cost of goods sold would be:

Cost of Goods Sold 2,500 Merchandise Inventory 2,500

Which of the following statements regarding FIFO is incorrect?

FIFO is a specific identification costing method because companies sell their oldest inventory first.

Under which of the following terms will the buyer be required to pay transportation costs?

FOB shipping point

Which of the following is a characteristic of a current liability?

It creates a present obligation for future payment of cash or services.

Which of the following is true of a contingent liability?

It is a potential liability that depends on a future event.

Which of the following is the record holding all the accounts, the changes in those accounts, and their balances?

Ledger

The journal entry for accrued interest on a note payable includes ________.

a debit to Interest Expense and credit to Interest Payable

Which of the following entries would be made to record the purchase of inventory on account, if a company uses the perpetual inventory system?

a debit to Merchandise Inventory and a credit to Accounts Payable

Which of the following is included in the entry to record accrual of warranty expense?

a debit to Warranty Expense

A company with significant amounts of accounts receivable experiences uncollectible accounts from time to time. If the company uses the direct write-off method, the effect of writing off an uncollectible receivable will be ________.

a reduction in net income

Which of the following is included in the cost of a plant asset?

amounts paid to make the asset ready for its intended use

A business purchases equipment in exchange for a note payable. This transaction results in ________.

an increase in liabilities

26) Which one of the following account groups normally has a debit balance?

assets and expenses

An adjusting entry is completed ________.

at the end of the accounting period

Which of the following states that the business should use the same accounting methods from period to period?

consistency principle

The main expense of a merchandiser is usually ________.

cost of goods sold

According to the ________, acquired assets should be recorded at the amount actually paid rather than at the estimated market value.

cost principle

Thirty years ago, Citywide Grocery Corporation purchased a building for its grocery store for $30,000. Based on inflation estimates, the amount of the building has been adjusted in the accounting records. The building is now reported at $75,000 in Citywide's financial statements. Which of the following concepts or principles of accounting is being violated?

cost principle

Salaries Payable, Accounts Payable, and Unearned Revenue are examples of ________.

current liabilities

Which of the following entries is necessary to close the appropriate depreciation account at the end of the year?

debit Income Summary and credit Depreciation Expense

Which of the following entries will be necessary to close the Insurance Expense account at the end of the year?

debit Income Summary and credit Insurance Expense

Treasury stock ________.

decreases the number of shares outstanding

60) Which of the following items are reconciling items on the bank side of the reconciliation?

deposit in transit and outstanding checks

Which one of the following items requires an adjustment on the bank side of the bank reconciliation?

deposits in transit

The revenue recognition principle guides accountants in ________.

determining when to record revenues

Stuart Allen Corporation manufactures computer hardware. The president of the corporation bought a new car as a gift for his daughter and paid for it using cash from the business. Since the corporation paid for the car, it was recorded in its books as an asset. Which of the following concepts or principles of accounting did the corporation violate?

economic entity assumption

Which of the following is required to be deducted from employees' paychecks?

federal income tax

Under which of the following inventory costing methods is the ending inventory based on the costs of the most recent purchases?

first-in, first-out

Which of the following inventory costing methods yields the lowest cost of goods sold during a period of rising inventory costs?

first-in, first-out

The requirement to report the details behind the financial statements that would impact users' decisions in the notes to the financial statements refers to the ________.

full disclosure principle

Motor Sales sold its old office furniture for $9000. The original cost was $17,000, and at the time of sale, accumulated depreciation was $14,000. What is the effect of this transaction?

gain of $6000

As per the ________, the entity will remain in operation for the foreseeable future.

going concern assumption

The entry to write off an account receivable under the allowance method will ________.

have no effect on net income