Accounting 211 Final

The Cash T-account has a beginning balance of $21,000. During the year, $100,000 was debited and $110,000 was credited to the account. What is the ending balance of Cash? $11,000 debit balance $11,000 credit balance $31,000 credit balance $31,000 debit balance

$11,000 debit balance

Cash payments for salaries are reported in what section of the Statement of Cash Flows? A. Operating. B. Investing. C. Financing. D. None of the above.

A. Operating.

The dual effects concept can best be described as follows: A. When one records a transaction in the accounting system, at least two effects on the basic accounting equation will result. B. When an exchange takes place between two parties, both parties must record the transaction. C. When a transaction is recorded, both the balance sheet and the income statement must be impacted. D. When a transaction is recorded, one account will always increase and one account will always decrease.

A. When one records a transaction in the accounting system, at least two effects on the basic accounting equation will result.

Which of the following is not one of the four criteria that normally must be met for revenue to be recognized according to the revenue realization principle for accrual basis accounting? A.Cash has been collected. B. Services have been performed. C. The price is determinable. D. Evidence of an arrangement exists.

A.Cash has been collected.

Accounting Equation

Assets= Liabilities + Stockholders' Equity

You have observed that the net profit margin ratio for a retail chain has increased steadily over the last three years. The most likely explanation is which of the following? A.Salaries for upper management as a percentage of total expenses have decreased over the last three years. B. A successful advertising campaign increased sales companywide, but with no increases in operating expenses. C. New stores were added throughout the last three years, and sales increased as a result of the additional new locations. D. The company began construction of a new, larger main office location three years ago that was put into use at the end of the second year.

B. A successful advertising campaign increased sales companywide, but with no increases in operating expenses.

When expenses exceed revenues in a given period, A. Retained earnings are not impacted. B. Retained earnings are decreased. C. Retained earnings are increased. D. One cannot determine the impact on retained earnings without additional information.

B. Retained earnings are decreased.

At the end of a recent year, The Gap, Inc., reported total assets of $7,422 million, current assets of $4,309 million, total liabilities of $4,667, current liabilities of $2,128 million, and stockholders' equity of $2,755 million. What is its current ratio and what does this suggest about the company? A. The ratio of 1.59 suggests that The Gap has liquidity problems. B. The ratio of 2.02 suggests that The Gap has sufficient liquidity. C. The ratio of 1.59 suggests that The Gap has greater current assets than current liabilities. D. The ratio of 2.02 suggests that The Gap is not able to pay its short-term obligations with current assets.

B. The ratio of 2.02 suggests that The Gap has sufficient liquidity.

***The expense matching principle controls. A. Where on the income statement expenses should be presented. B. When costs are recognized as expenses on the income statement. C. The ordering of current assets and current liabilities on the balance sheet. D. How costs are allocated between Cost of Sales (sometimes called Cost of Goods Sold) and general and administrative expenses.

B. When costs are recognized as expenses on the income statement.

The Securities and Exchange Commission (SEC)

Broad powers to determine measurement rules for financial statements

On January 1, 2014, Anson Company started the year with a $300,000 credit balance in Retained Earnings, a $50,000 balance in Common Stock, and a $300,000 balance in Additional Paid-in Capital. During 2014, the company earned net income of $45,000, declared a dividend of $15,000, and issued 900 additional shares of stock (par value of $1 per share) for $10,000. What is total stockholders' equity on December 31, 2014? A. $692,500. B. $695,000. C. $690,000. D. None of the above.

C. $690,000.

During 2014, CliffCo Inc. incurred operating expenses of $250,000, of which $150,000 was paid in cash; the balance will be paid in January 2015. Transaction analysis of operating expenses for 2014 should reflect only the following: A. Decrease stockholders' equity, $150,000; decrease assets, $150,000. B. Decrease assets, $250,000; decrease stockholders' equity, $250,000. C. Decrease stockholders' equity, $250,000; decrease assets, $150,000; increase liabilities, $100,000. D. Decrease assets, $250,000; increase liabilities, $100,000; decrease stockholders' equity, $150,000. None of the above is correct.

C. Decrease stockholders' equity, $250,000; decrease assets, $150,000; increase liabilities, $100,000

Which of the following is not a specific account in a company's chart of accounts? A .Gains B. Revenue C. Net Income D. Unearned Revenue

C. Net Income

Which of the following is the entry to be recorded by a law firm when it receives a $2,000 retainer from a new client at the initial client meeting? Debit to Cash, $2,000; credit to Legal Fees Revenue, $2,000. A. Debit to Accounts Receivable, $2,000; credit to Legal Fees Revenue, $2,000. B. Debit to Unearned Revenue, $2,000; credit to Legal Fees Revenue, $2,000. C. Debit to Cash, $2,000; credit to Unearned Revenue, $2,000. D. Debit to Unearned Revenue, $2,000; credit to Cash, $2,000.

D. Debit to Unearned Revenue, $2,000; credit to Cash, $2,000.

If a publicly traded company is trying to maximize its perceived value to decision makers external to the corporation, the company is most likely to understate which of the following on its balance sheet? A. Assets B. Common Stock C. Retained Earnings D. Liabilities

D. Liabilities

Managerial Accounting

Day to day reports, more detailed, internal users/decision makers (managers, investors, creditors)

What information appears in the statement of stockholders' equity?

Dividends Beginning Balance of retained earnings Ending Balance of retained earnings Net INcome

balance sheet

Financial position of a buisness at a particular point in time

Financial Accounting

Periodic financial statements, concise, external users/decision makers (investors, creditors, suppliers, customers, etc.)

Financial Accounting Standards Board (FASB)

Recognized as a body to formulate GAAP

Statement of Cash Flows

Reports the inflows and outflows of cash during the accounting period in categories of operating, investing, and financing

Income Statement

Reports the revenues minus the expenses of an accounting period

Statement of Retained Earnings

Reports the way that net income and distribution of dividends affected the financial position of the company during the accounting period

Balance Sheet

The Balance sheet of a corpporation reports assets, liabilites, and stockholders' equity

What is current ratio?

The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities.

Sole Properiertorship Partnership Corporation

What are the 3 primary forms of business orginaztions

Which of the following is not a financing activity on the statement of cash flows? a. When the company lends money. B. When the company borrows money. C. When the company pays dividends. D. When the company issues stock to shareholders.

a. When the company lends money.

****Total liabilities on a balance sheet at the end of the year are $150,000, retained earnings at the end of the year is $80,000, net income for the year is $60,000, common stock is $40,000, and additional paid-in capital is $20,000. What amount of total assets would be reported on the balance sheet at the end of the year? a.$290,000 b.$270,000 c.$205,000 d. $15,000

a.$290,000

Which of the following describes how assets are listed on the balance sheet? a. In alphabetical order b. In order of magnitude, lowest value to highest value c. From most liquid to least liquid d. From least liquid to most liquid

c. From most liquid to least liquid

Which of the following is not an asset? A.Investments B.Land C.Prepaid Expense D. Additional Paid-in Capital

d. Additional Paid-in Capital

The T-account is a tool commonly used for analyzing which of the following? a.Increases and decreases to a single account in the accounting system. b.Debits and credits to a single account in the accounting system. c. Changes in specific account balances over a time period. d. All of the above describe how T-accounts are used by accountants.

d. All of the above describe how T-accounts are used by accountants.

Which of the following statements are true regarding the balance sheet? 1. One cannot determine the true fair market value of a company by reviewing its balance sheet. 2. Certain internally generated assets, such as a trademark, are not reported on a company's balance sheet. 3. A balance sheet shows only the ending balances, in a summarized format, of all balance sheet accounts in the accounting system as of a particular date. a. None are true. b. Statements 1 and 2 only are true. c. Statements 2 and 3 only are true. d. All statements are true

d. All statements are true

profit

is a measure of performance and is also called net income

asset

is a resource such as cash,land, or building that is owned by a company

Current asset

is an asset that will be used or turned into cash within one year; inventory is always considered a current asset regardless of how long it takes to produce and sell the inventory.

Additional paid-in capital

is the owner-provided financing to the business that represents the excess of the amount received when the common stock was issued over the par value of the common stock

What is the primary objective of financial reporting for external users?

is to provide financial information about the reporting entity that is useful to existing and potential investors, lenders, and other creditors in making decisions about providing resources to the entity

Net Income Formula

net income equals total revenue minus total expenses

What is Net profit Margin

the percentage of revenue left after all expenses have been deducted from sales