Accounting Exam 2
Unearned fees
Balance sheet
There is really no benefit in preparing financial statements in any particular order
False
the specific identification inventory method should be used when the inventory consists of identical, low-cost units that are purchased and sold frequently
False
Cost flow is in the order in which costs were incurred when using
First in first out or FIFO
Merchandise is sold for cash. The selling price of the merchandise is $6,000 and the sale is subject to a 7% state sales tax. The journal entry to record the sale would include credit to
Sales tax Payable for $420
Which of the accounts below would not appear in the balance sheet columns of the end-of-period spreadsheet
Service Revenue
Freight-in is considered a cost of purchasing inventory
True
Under the perpetual inventory system, when a sale is made, both the sale and cost of goods sold are recorded
True
Stockholders' equity is
added to liabilities and the two are equal to liabilities
Notes receivable due in 390 days appear on the
balance sheet in the non current assets section
which document authorizes the purchase of the inventory from an approved vendor
the purchase order
Alpha Company has current assets of $74,524, total assets of $203,310, total net income of $67,913, current liabilities of $60,100, and total liabilities of $150,600 What is Alpha Company's current ratio
1.24
Retained Earnings
Balance Sheet
Supplies
Balance sheet
accumulated depreciation
Balance sheet
The inventory costing method that reports the most current prices in ending inventory is
FIFO
If title on merchandise purchases passes to the buyer when the goods are delivered to the buyer, the terms are
FOB destination
Cash and other assets that may resonably be expected to be realized in cash, sold, or consumed through the normal operations of a business, usually longer than one year, are called current assets
False
Freight-in amount paid by the company to deliver merchandise sold to a customer
False
Most retailers record all credit card sales are credit sales
False
The usual presentation of the retained earnings statement is (1) Beginning balance, (2) Net income or loss, (3) Dividends , (4) Stockholders' contributions, (5) Ending balance
False
Depreciation Expense
Income statement
Fees earned
Income statement
Supplies expense
Income statement
The journal entry to record the receipt of inventory purchased for cash in a perpetual inventory system would be
Jan. 1 Inventory 1500 Cash 1500
Which of the following accounts should be closed to Income Summary at the end of the fiscal year
Service Revenue
Which of the statements below indicates that a company earned a net income for the period
The sum of the credits exceeds the sum of the debits in the Income statement columns on the end-of-period spreadsheet
Liabilities that will be due within one year or less and that are to be paid out of current assets are called current liabilities
True
One of the two internal control procedures over inventory is to properly report inventory on the financial statements
True
Under a periodic inventory system, the cost of inventory on hand at the end of the accounting period is determined by a physical count of the inventory
True
Accumulated Depreciation appears on the
balance sheet in the property, plant, and equipment section
A business's current assets divided by its current liabilities is equal to its
current ratio
On march 1, a company collects revenue in advance for the next twelve months and credits a liability account. The adjusting entry at year end on the end-of-period spreadsheet would
decrease a liability account
On sept 1, the company pays rent for twelve months in advance and debits an asset account. At year end, the adjusting entry on the end-of-period spreadsheet would
increase an expense account
When goods are shipped FOB destination and the seller pays the freight charges, the buyer
makes no journal entry for the freight
a fiscal year for a business
ordinarily begins on the first day of a month and ends on the last day of the following twelfth month
The primary difference between the periodic and perpetual inventory systems is that a
periodic system determines the inventory on hand only at the end of the accounting period
The inventory system employing accounting records that continuously disclose the amount of inventory is called
perpetual
When comparing a retail business to a service business, the financial statement that changes the least is the
retained earnings statement
Gross profit is equal to
sales less cost of goods sold
The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a
single-step statement
The accounting cycle requires three trial balances be done. In what order should they be prepeared
unadjusted, adjusted, post-closing
Once the adjusting entries are posted, the adjusted trial balance is prepared to
verify that the debits and credits are in balance
In credit terms of 3/15, n/45, the "3" represents the
percent of the cash discount
Who is responsible for the freight costs when the terms are FOB shipping point
the buyer
Common Stock
Balance Sheet
