Accounting Final

Prior to adjusting entries, Salaries Expense had a balance of $22,300. The following year-end adjusting entry was made by the company: Salaries Expense4,400 Salaries Payable 4,400 What balance would be shown for Salaries Expense in the adjusted trial balance?

$22,300 + $4,400 = $26,700.

double declining balance method

A method of depreciation that provides periodic depreciation expense based on the declining book value of a fixed asset over its estimated life.

What is an income statement?

A report of net income or loss over an accounting period,(Revenue-Expenses)

What goes under current liabilities?

Accounts Payable, Salaries Payable, Interest Payable

When preparing a bank reconciliation, a deposit outstanding would be:

Added to the banks cash balance

What are assets?

All of the things your company owns. In balance sheet including property, cash, inventory, accounts receivable, and any equipment that will allow you to produce a future benefit.

How do you calculate Liabilites

Assests - Stockholders equity

Capturing Transactions

Asset accounts: Examples: Cash, Supplies, and EquipmentLiability accounts: Examples: Accounts Payable, Salaries Payable, Utilities Payable, and Taxes PayableStockholders' equity accounts: Examples: Common Stock and Retained Earnings

Accounting Equation:?

Assets = Liabilities + Stockholders' Equity

A company purchases supplies on account for $2,000. Indicate the amount of increases and decreases in the accounting equation.

Assets and Liability increase

A company received a utility bill of $610 but did not pay it. Indicate the amount of increases and decreases in the accounting equation.

Assets and Stockholders Equity Increase

A company provides services to customers on account for $2,900. Indicate the amount of increases and decreases in the accounting equation.

Assets and Stockholders equity increase

The following financial information is from Shovels Construction Company: Accounts payable$13,600 Buildings 83,000 Cash 11,300 Accounts receivable 10,400 Sales tax payable 4,400 Retained earnings 45,600 Supplies 40,700 Notes payable (due in 18 months) 26,000 Interest payable 1,100 Common stock 54,700 What is the amount of current assets, assuming the accounts above reflect normal activity?

Cash ($11,300), Accounts Receivable ($10,400), and Supplies ($40,700) are normally current assets.

Dividends represent:

Cash Payments to stockholders

A bank reconciliation reconciles the bank statement with the company's:

Cash account is in the balance sheet

What are Dividends?

Dividends are distributions to stockholders, usually in the form of cash payments. Dividends are not expenses.

Expenses normally carry a___________ balance and are shown in the _______

Debit and Stockholders equity

An increase to an asset account is shown with a ______________. An increase to a liability account is shown with a ______________.

Debit, Credit

Revenues normally carry a _______ balance and are shown in the ______________.

Debit, Stockholders equity

The following data were obtained from the bank statement and from the process of reconciling the bank balance with the company's cash balance: Bank service charges$20 Deposit outstanding$150 Interest earned on the bank account$10 Checks outstanding$400 Which items should be deducted from and added to the bank balance in completing the reconciliation?

Deduct checks outstanding; add deposit outstanding.

he following financial information is from Bronco Company. All debt is due within one year unless stated otherwise. Retained Earnings$65,000 Supplies 37,000 Equipment 73,500 Accounts Receivable 9,000 Deferred Revenue 4,300 Accounts Payable 13,800 Common Stock 24,000 Notes Payable (due in 18 months) 30,000 Interest Payable 5,100 Cash 22,700 What is the amount of current liabilities?

Deferred Revenue ($4,300), Accounts payable ($13,800), and Interest payable $(5,100) are normally current liabilities.

bank reconciliation

Deposits Outstanding, Checks Outstanding

Kansas Enterprises purchased equipment for $82,000 on January 1, 2021. The equipment is expected to have a ten-year service life, with a residual value of $7,200 at the end of ten years.Using the straight-line method, depreciation expense for 2021 would be:

Depreciation expense = (($82,000 − $7,200) / 10 years) = $7,480.

A company purchased a machine for $203,000 on October 1, 2021. The estimated service life is 10 years with a $19,600 residual value. The company records partial-year depreciation based on the number of months in service. Depreciation expense for the year ended December 31, 2021, using straight-line depreciation, is: (Do not round your intermediate calculations. Round your answer to the nearest dollar amount)

Depreciation expense = [($203,000 − $19,600) / 10 years] × 3 / 12 = $4,585.

The financial statement(s) that record activity over an interval of time include the:

Income statement and statement of cash flows.

Which of the following is the correct order for preparing the financial statements listed?

Income statement, statement of stockholders' equity, and balance sheet.

On February 1, 2021, Miter Corp. lends cash and accepts a $1,600 note receivable that offers 12% interest and is due in six months. How much interest revenue will Miter Corp. report during 2021?

Interest revenue = $1,600 × 12% × 6 / 12 = $96.

Accountants are responsible for measuring various operating, investing and financing activities. Which of the following correctly matches the activity with its type?

Investing - purchasing land.

Equipment was sold for $50,000. The equipment was originally purchased for $85,000. At the time of the sale, the equipment had accumulated depreciation of $30,000. Calculate the gain or loss to be recorded on the sale of equipment.

Loss of 50,000

What is the primary purpose of financial accounting?

Measure business activities and communicate those measures to external users to make decisions.

Expenses?

Most expenses are recorded in the same period as the revenues they help to generate. Other expenses indirectly related to producing revenues are recorded in the period they occur.

FIFO method

Multiply number of units times unit cost

A company has the following balances on December 31, 2021, after year-end adjustments: Accounts Receivable = $71,000; Service Revenue = $470,000; Allowance for Uncollectible Accounts = $5,000; Cash = $27,000.

Net accounts receivable = $71,000 − $5,000 = $66,000.

A customer purchased a drill press on November 14 on account from Sears. The drill press was delivered two weeks later. The customer paid for the drill press on December 5. When should Sears record the revenue for this transaction according to the revenue recognition principle?

Novemeber

Which of the following is true concerning temporary and permanent accounts?

Permanent accounts represent activity over the entire life of the company.

Financial accounting does not deal with which of the following?

Providing information to internal users.

What is accrual basis accounting?

Recognition of revenue in the accounting period when the sale is made rather than when cash is received.

Which of the following describes the purpose(s) of closing entries?

Reduce the balances of the temporary accounts to zero to prepare them for measuring activity in the next period.

Retained Earnings formula

Retained Earnings == beginning retained earnings + net income or net loss - cash dividends= 23 -begging retained earnings

When a company reports a loss on the sale of a depreciable asset, which of the following is always true?

The company sold the asset for less than book value.

When a company reports a gain on the sale of a depreciable asset, which of the following is always true?

The company sold the asset for more than its book value.

Cost of goods sold

beginning inventory + purchasing new inventory- ending inventory

How to calculate stockholders equity?

common stock + retained earnings Total Stockholders' Equity = Common Stock ($609,000 + $23,000) + Retained Earnings ($708,000 + $104,000 − $14,400) = $1,429,600.

What goes under stockholders equity?

common stock and retained earnings

What is Book Value?

cost - accumulated depreciation

Gross profit is calculated as net sales minus:

cost of goods sold

What are Retained Earnings?

epresent the sum of all net income since business inception minus all cash dividends paid since inception.

Which of the following is a permanent account?

retained earnings

What are liabilities?

s are obligations that it must pay, including things like lease payments, merchant account fees, accounts payable, and any other debt service.

Investing Activies?

transactions involving the purchase and sale of resources that are expected to benefit the company for several years

Operating Activities?

transactions that relate to the primary operations of the company

Which of the following would not appear on an income statement?

Cash

Airline Accessories obtains a $100,000, three-year loan, at 6% interest, with monthly payments of $3,042. What amount would be recorded as interest expense in the second month?

487

Airline Accessories obtains a $100,000, three year loan, at 6% interest, with monthly payments of $3,042. What amount would be recorded for interest expense for the first full month?

500

The following account balances appear in the 2021 adjusted trial balance of Blue Devils Corporation: Cash, $3,800; Accounts Receivable, $7,800; Supplies, $17,800; Equipment, $108,000; Accumulated Depreciation, $39,000; Accounts Payable, $24,800; Salaries Payable, $14,800; Common Stock, $48,000; and Retained Earnings,.

AssetsLiabilitiesCurrent assets:Current liabilities:Cash$3,800Accounts Payable$24,800Accounts Receivable7,800Salaries Payable14,800Supplies17,800Total current assets29,400Total current liabilities39,600Long-term assets:Stockholders' EquityEquipment108,000Common Stock48,000Accumulated Depreciation(39,000)Retained Earnings10,800Total stockholders' equity58,800Total assets$98,400Total liabilities and stockholders' equity$98,400

The balance of cash reported in the balance sheet would include which of the following?

Balance of savings account. Credit card sales. Currency. All of the other answers would be reported in the balance of cash.

Cost of goods sold equals:

Beginning inventory + net purchases - ending inventory.

What is Beggining Inventory?

Beginning inventory is how much inventory you have on hand at the beginning of the period.

Retained earnings at the end of the year is calculated using:

Beginning retained earnings, net income, and dividends.

What goes under current assets?

Cash, Accounts Recievable, Prepaid Rent, Supplies

How to calculate net income (stockholders equity)

Change in stockholders equity-Issuance of common stock-dividends + net income

Expenses

Cost Incurred to generate revenue

Liabilities normally carry a _______ balance and are shown in the ______________.

Credit and Balance Sheet

Revenues normally carry a _______ balance and are shown in the ______________.

Credit and Income statement

Bad Debt Expense Calculation

Ending balance times company estimate(percentage) plus bad debt

What is Ending Inventory?

Ending inventory is the product you have remaining at the end of the period.

adjusting entries

Entries that update balance for the recognition of revenue and expenses

Long term Assest

Equipement, Accumulated depreciation

An accrued expense occurs when:

Expense is recgonized before payment of cash

The costs associated with producing revenues are referred to as:

Expenses

The balance sheet of Cattleman's Steakhouse shows assets of $87,000 and liabilities of $13,700. The fair value of the assets is $90,100 and the fair value of its liabilities is $13,700. Longhorn paid Cattleman's $83,220 to acquire all of its assets and liabilities. Longhorn should record goodwill on this purchase of:

Explanation Purchase price $83,220 Less: Fair value of net assets: Assets$90,100 Less: Liabilities assumed 13,700 (76,400) Goodwill $6,820

Taco Hut purchased equipment on May 1, 2021, for $12,000. Residual value at the end of an estimated eight-year service life is expected to be $4,000. Calculate depreciation expense using the straight-line method for 2021 and 2022, assuming a December 31 year-end.

Explanation Year 2021($12,000 − $4,000)=$1,000 × 8/12=$6678 2022($12,000 − $4,000)=$1,0008

Transactions of a company involving external sources of funding are referred to as:

Financing Activities

The revenue recognition principle states that:

Revenue should be recognized in the period goods and services are provided.

Net Income equation?

Revenues - Expenses

Which of the following sales would typically be reported as a cash sale?

Sale with credit card.

What are revenues?

Sales or other postive cash inflows

[The following information applies to the questions displayed below.]Speedy Delivery Company purchases a delivery van for $40,800. Speedy estimates that at the end of its four-year service life, the van will be worth $5,600. During the four-year period, the company expects to drive the van 176,000 miles. Actual miles driven each year were 45,000 miles in year 1 and 50,000 miles in year 2. Required: Calculate annual depreciation for the first two years of the van using each of the following methods.

Straight Line Method. 40,800-5,600/4 years

striaght line depreciation

Straight line depreciation (Original cost - salvage value) / number of years in useful life

What is the primary purpose of a bank reconciliation?

To ensure the bank balance per reconciliation is equal to the company balance per reconciliation.

If total change in cash = $44,000, net operating cash flows = $22,000, and net investing cash flows = ($13,000); then net financing cash flows =

Total change in cash ($44,000) = net operating cash flows ($22,000) + net investing cash flows (−$13,000) + net financing cash flows ($35,000).

How to calculate Net Investing Cash Flows

Total change in cash-net operating cash flows-net financing cash flows

Financing Activies?

Transactions the comp has with its creditors and investors

The primary purpose of closing entries is to:

Update the balance of Retained Earnings and prepare revenue, expense, and dividend accounts for next period's transactions.

What is a balance sheet?

a statement of the financial condition of a business on a specific date. Assets, libality, equity

The following account balances appear in the 2021 adjusted trial balance of Beavers Corporation: Service Revenue, $260,000; Salaries Expense, $107,000; Supplies Expense, $18,500; Rent Expense, $24,500; Depreciation Expense, $41,000; and Delivery Expense, $16,500.

ervice Revenue$260,000Expenses:Salaries Expense$107,000Supplies Expense18,500Rent Expense24,500Depreciation Expense41,000Delivery Expense16,500Total expenses207,500Net Income$

Effects on accounting equation

f total assets increase, then liabilities or stockholders' equity increases by the same amount.•If total assets decrease, then liabilities or stockholders' equity decreases by the same amount.