Accounting- Final Exam, Master Exam One - ACC201

Total stockholder's equity includes $50,000 of common stock with a stated value of $0.50, and 5,000 shares of treasury stock with a total cost of $25,000. How many total shares are outstanding? A. 95,000 B. 100,000 C. 105,000 D. 150,000

A. 95,000

When a company incurs costs in connection with the acquisition of the franchise or license

, it should recognize an intangible asset.

Modified Accelerated Cost Recovery System (MACRS)

what big companies use on their tax returns in order to minimize their income taxes

The cost of the copyright consists of the cost of

acquiring and defending it.

Which one of the following financial statements reports an entity's financial position at a specific date?

balance sheet

Which one of the following is not an external user of financial statements?

The Company's President

The cost of intangible assets with indefinite lives...

should not be amortized.

Beginning accounts receivable were $200,000 and ending accounts receivable were $300,000. Assuming cash collections totaled $1,100,000, what were credit sales? A. $1,200,000 B. $1,100,000 C. $1,300,000 D. $1,500,000

A. $1,200,000

Refer to Gainesville Truck Center. Assuming December 31st falls on a Thursday, the year-end adjusting entry would (Look at #22). A. Increase wages expense by $8,000 B. Decrease wages payable by $2,000 C. Decrease cash by $8,000 D. Increase wages payable by $2,000

A. Increase wages expense by $8,000

Which one of the following is an example of an accrued liability? A. Rent that has been incurred but that has not been recorded at the end of the period B. Equipment that will benefit several periods has been purchased C. An insurance policy that expires in a future period has been acquired D. Supplies are purchased and then used over several months

A. Rent that has been incurred but that has not been recorded at the end of the period

Match Incorporated recorded salary expense of $120,000 in 2013. However, additional salaries of $9,000 have been earned by employees but not paid or recorded. After the adjustments are recorded and posted at December 31, 2013, the balances in the Salaries Expense and Salaries Payable Account will be: A. Salaries Expense = $129,000; Salaries Payable = $9,000 B. Salaries Expense = $120,000; Salaries Payable = $0 C. Salaries Expense = $120,000; Salaries Payable = $9,000 D. Salaries Expense = $109,000; Salaries Payable = $0

A. Salaries Expense = $129,000; Salaries Payable = $9,000

If a company has assets of $5,000,000, liabilities of $3,000,000, and retained earnings of $1,200,000, how much is total stockholder's equity? A. $800,000 B. $2,000,000 C. $3,000,000 D. $1,800,000

B. $2,000,000

Refer to Beard Marine. What was the balance of Retained Earnings at January 1, 2013? (Look at exam for information). A. $21,000 B. $26,000 C. $106,000 D. $214,000

B. $26,000

A corporation issued $150,000 of 10-year bonds at the stated rate of 8%, with interest payable semiannually. How much cash will the bond investors receive at the end of the first interest period? A. $3,000 B. $6,000 C. $12,000 D. $24,000

B. $6,000

Carithers Cleaning Service received advance payments from customers during 2013 of $24,000. At December 31, 2013, $5,000 of the advance payments still had not been earned. After the adjustments are recorded and posted at December 31, 2013, the balances in the Unearned Service Revenue and Service Revenue accounts will be: A. Unearned Revenue = $0; Service Revenue = $24,000 B. Unearned Revenue = $5,000; Service Revenue = $19,000 C. Unearned Revenue = $5,000; Service Revenue = $24,000 D. Unearned Revenue = $24,000; Service Revenue = $5,000

B. Unearned Revenue = $5,000; Service Revenue = $19,000

Which of the following statements is true with regard to 7% cumulative, participating preferred stock? A. Stockholders who hold this type of stock are guaranteed a dividend each year. B. The issue price of this stock is reported in the preferred stock account on the balance sheet C. If the corporation pays per share dividend in excess of 7% of the preferred stock's par value and there are no dividends in arrears, the preferred shares will receive a share of the amounts available for distribution as dividends to other classes of stock D. If dividends are not declared, they accumulate and a liability must be reported on the balance sheet for any amount in arrears that is owed to the preferred stockholders

C. If the corporation pays a per share dividend in excess of 7% of the preferred stock's par value and there are no dividends in arrears, the preferred shares will receive a share of the amounts available for distribution as dividends to other classes of stock

Which of the following is an example of a deferred revenue? A. Sales are made to customers on credit B. Revenue has been earned and recorded C. Payments are received prior to providing the services to customers D. Cash sales are made to customers

C. Payments are received prior to providing the services to customers

Which of the following sets of factors is needed to calculate depreciation on plant and equipment? A. The asset's acquisition cost, replacement cost, and its estimated residual value B. The estimated residual value of the asset, its replacement cost, and its market value C. The asset's replacement cost, its estimated life, and its estimated residual value D. The estimated life of the asset, its acquisition cost, and its estimated residual value

D. The estimated life of the asset, its acquisition cost, and its estimated residual value

Each of the following items is considered a cash equivalent except: A. a 30-day certificate of deposit B. 60-day corporate commercial paper C. a 75-day U.S. Treasury bill D. a 180-day note issued by a local government

D. a 180-day note issued by a local government

The Income Statement shows:

a summary of the results of operations for a period of time

If a company has assets of $5,000,000, liabilities of $3,000,000, and retained earnings of $1,200,000, how much is total stockholders' equity?

$2,000,000

Double-Decline Method = ?

((1 / estimated life) x 2) x cost of purchase

to increase its return on assets, it can do so in two ways:

(1) by increasing the margin it generates from each dollar of goods that it sells (the profit margin), or (2) by increasing the volume of goods that it sells (the asset turnover)

Straight-Line Method = ?

(Cost of purchase - Estimated residual value) / Estimated life

A company should choose a depreciation method that A. Best allocates the original cost of the asset to the periods benefited by the use of the asset B. Saves the most taxes C. Minimizes net income D. Shows the highest amount of net income

A. Best allocates the original cost of the asset to the periods benefited by the use of the asset

Which of the following are Non-current Assets? A. machinery and equipment B. accounts receivable C. inventories D. unearned revenues

A. machinery and equipment

The resources used to earn revenues during a period are called: A. Net Income B. Expenses C. Revenues D. Dividends

B. Expenses

Operating assets with no physical properties are called A. Current assets B. Intangible assets C. Plant assets D. Property, plant, and equipment

B. Intangible assets

Carithers Cleaning Service received advance payments from customers during 2013 of $24,000. At December 31, 2013, $5,000 of the advance payments still had not been earned. After the adjustments are recorded and posted at December 31, 2013, the balances in the Unearned Service Revenue and Service Revenue accounts will be: Unearned Service Revenue Service Revenue A. $0 $24,000 B. $5,000 $19,000 C. $5,000 $24,000 D. $24,000 $5,000

B. Unearned Service Revenue Service Revenue $5,000 $19,000

Depreciation per financial statements is usually different from

depreciation per tax returns.

Goodwill is not amortized because

it is considered to have an indefinite life. However, it must be written down if a company determines the value of goodwill has been permanently impaired.

Which one of the following is not one of the three business activities?

measuring financing operating investing

The principal of conservatism is concerned with: A. The avoidance of overstating assets or income in the preparation of the income statement B. The minimization of costs associated with providing financial information C. The company's ability to carry out its existing commitments D. The company's procedures for recording activities at their initial exchange price

A. The avoidance of overstating assets or income in the preparation of the income statement

Which of the following statements is true regarding a corporation's purchase of treasury stock? A. The cost of treasury stock is a reduction in stockholder's equity B. Dividends must still be paid on treasury stock because it is still issued C. Treasury stock is reported as an asset because it is considered an investment in the corporation's own stock D. Treasury stock is no longer considered issued once it is back in the hands of the issue

A. The cost of treasury stock is a reduction in stockholder's equity

Bonds are a popular source of financing because A. The relative cost of issuing debt is often lower than the cost of issuing equity B. Financial analysts tend to downgrade a company that has raised large amounts of cash by frequent issues of stock C. A company having cash flow problems can postpone payment of interest to bondholders D. The bondholders can always convert their bonds into stock if they choose

A. The relative cost of issuing debt is often lower than the cost of issuing equity

Refer to the information provided for Klump Co. If the company uses the LIFO inventory costing method, ending inventory at June 30th is: (Look at #23). A. $1,823.25 B. $1,811.75 C. $1,810.00 D. $1,806.25

B. $1,811.75

On January 1, 2013, Kaiser Permanente issued $2,000,000 of 8% bonds at par. These bonds are due in 10 years with interest payable semi-annually on June 30 and December 31. What is the amount of the interest expense in 2013 assuming the use of the effective interest amortization method? A. $16,000 B. $160,000 C. $1,600,000 D. $2,000,000

B. $160,000 2,000,000 x .08 x (6/12) =80,000 x 2 periods

Refer to Fabian Woodworks. Based on the information presented above, what methods of depreciation will maximize depreciation expense in 2012? (Look at #1). A. Straight-line B. Double-declining-balance C. Units-of-production D. All methods produce the same expense in 2012

B. Double-declining-balance

A manufacturing company purchased equipment on January 1, 2004 for $450,000. As of January 1, 2013, depreciation of $202,500 had been recorded on this asset. Depreciation expense for 2013 is $22,500. After the adjustments are recorded and posted at December 31, 2013, what are the balances for the Equipment and Accumulated Depreciation? A. Equipment = $450,000; Acc Depreciation = $0 B. Equipment = $450,000; Acc Depr = $225,000 C. Equipment = $225,000; Acc Depr = $22,500 D. Equipment = $225,000; Acc Depr = $225,000

B. Equipment = $450,000; Acc Depr = $225,000

Issued shares represent the A. Number of previously issued shares that have been repurchased by the corporation B. Number of shares that the corporation has sold C. Number of shares that are currently held by stockholders D. Maximum number of shares that can be sold by the corporation

B. Number of shares that the corporation has sold

Which of the following would not appear on a bank statement for a checking account? A. Service charge B. Outstanding checks C. Credit memos D. Interest earned

B. Outstanding checks

Balance sheet accounts are also known as which of the following? A. Nominal accounts B. Permanent accounts C. Temporary accounts D. Closing accounts

B. Permanent accounts

Under accrual accounting, when is revenue and expense recognized? A. When cash is received and expenses when cash is paid B. When cash is received and expenses when the costs are incurred C. When earned and expenses when incurred D. When earned and expenses when cash is paid

B. When cash is received and expenses when the costs are incurred

Refer to the information provided for Klump Co. If the company uses the FIFO inventory costing method, the amount of ending inventory reported on the balance sheet is: (Look at #22). A. $1,800.00 B. $1,810.00 C. $1,823.75 D. $1,825.00

C. $1,823.75

Refer to Fabian Woodworks. What amount will be reported as depreciation expense over the 5-year life of the equipment? (Look at #2). A. $12,000 B. $8,000 C. $10,000 D. $4,000

C. $10,000

What will be the increase in the Paid-in capital in excess of par account if a corporation issues 20,000 shares of $1.00 par common stock for $6 per share? A. $140,000 B. $120,000 C. $100,000 D. $20,000

C. $100,000 $20,000 x $6 = $120,000 $120,000 - ($20,000 x $1.00) = $100,000

The purchase of office equipment on credit has what effect on the accounting equation A. assets and stockholders' equity decrease B. Liabilities increase and stockholders' equity decreases C. Assets and liabilities increase D. Assets and liabilities decrease

C. Assets and liabilities increase

Which of the following best describes the effects of recognized revenue earned by a business entity? A. Assets increase only when cash sales are collected B. Stockholder's equity increases only when credit sales are made C. Assets and stockholder's equity increases when either cash or credit sales are made D. Assets increase and stockholder's equity decreases when either cash or credit sales are made

C. Assets and stockholder's equity increases when either cash or credit sales are made

Expenses should be matched against revenue A. Before the earnings process is complete B. Only after cash is collected from the customer C. In the same period as the revenue that they helped generate D. After payment has been made for any costs related to the revenue

C. In the same period as the revenue that they helped generate

Which of the following is the correct date format for the financial statement heading? A. Balance Sheet for the Year Ended June 30, 2013 B. Income Statement at December 31, 2013 C. Income Statement for the Year Ended December 31, 2013 D. Statement of Retained Earnings At December 31, 2013

C. Income Statement for the Year Ended December 31, 2013

Which of the following is the correct date format for the financial statement heading? A. Balance Sheet for the Year Ended June 30, 2013 B. Income Statement at December 31, 2013 C. Income Statement for the Year Ended December 31, 2013 D. Statement of Retained Earnings at December 31, 2013

C. Income Statement for the Year Ended December 31, 2013

Which of the following accounts are normally reported as current liabilities on a classified balance sheet? A. Accounts Payable and Prepaid Insurance B. Interest Payable and Interest Receivable C. Income Taxes Payable and Salaries Payable D. Capital Stock and Accounts Payable

C. Income Taxes Payable and Salaries Payable

Refer to Gainesville Truck Center. Which of the following statements is true regarding the FICA taxes that must be recorded? (Look at #24). A. Social Security tax expense will be debited in the amount of $1,240 B. Medicare tax expense will be debited in the amount of $290 C. Social Security tax expense will be debited in the amount of $620 D. Medicare taxes payable will be credited in the amount of $1,530

C. Social security tax expense will be debited in the amount of $620

The Cost of Goods Sold is equal to: A. Purchases less beginning inventory plus ending inventory B. The inventory account reported on the balance sheet C. The cost of goods available for sale less ending inventory D. The amount of inventory on hand at the end of the accounting period

C. The cost of goods available for sale less ending inventory

Test #1

Chapters 1-2 :)

Book Value = ?

Cost - Accumulated Depreciation

Current Ratio = ?

Current Assets / Current Liabilities

Working capital is calculated by which of the following?

Current assets minus current liabilities

On January 1, 2013, a company reported assets of $1,000,000 and liabilities of $600,000. During 2013, assets decreased by $100,000 and Stockholders Equity decreased $200,000. What is the amount of liabilities at December 31, 2013 A. $200,000 B. $500,000 C. $600,000 D. $700,000

D. $700,000

The Discount on Bonds Payable account is shown on the balance sheet as A. An asset B. An expense C. A long-term liability D. A contra-liability account that reduces the bond to market value at the issue date

D. A contra-liability account that reduces the bond to market value at the issue date

Refer to HVAC Service. The journal entry to record payment for the office equipment and supplies will include a debit to (Look at exam for information). A. Salary Expense B. Salaries Payable C. Prepaid Expenses D. Accounts Payable

D. Accounts Payable

The balance in the retained earnings account represents A. Cash in the bank B. The amount of cash available for dividends C. Accumulated revenues from all prior years of operations D. Accumulated earnings that have not been distributed to stockholders

D. Accumulated earnings that have not been distributed to stockholders

Which of the following statements regarding the amortization is true? A. Amortization of the premium causes the premium on bonds payable account to increase B. Amortization of the premium causes the amount of interest expense to increase C. Cash interest payments on bonds equals interest expense on the income statement when there is amortization of a bond premium D. Amortization of a premium continues over the life of the bond until the balance in the account is reduced to zero

D. Amortization of a premium continues over the life of the bond until the balance in the account is reduced to zero

Payment is made for the phone bill which was recorded previously. What effect does this transaction have on the accounting equation? A. Assets and liabilities increase B. Assets and retained earnings increase C. Liabilities increase and contributed capital decreases D. Assets and liabilities decrease

D. Assets and liabilities decrease

In order for accounting information to be useful in making informed decisions, it must be A. Internal B. Relevant C. Reliable D. Both relevant and reliable

D. Both relevant and reliable

Which of the following accounts are normally reported as current liabilities on a classified balance sheet?

Income Taxes Payable and Salaries Payable

Which one of the following adjustments decreases net income for the period?

Recognition of depreciation on plant assets

Which of the following best describes the term "expenses"?

The cost of assets used in the operations of a business.

the practice of timing the recognition of gains and losses to achieve certain income results is known as

earnings management

Depreciation expense is reported where?

on the income statement.

In recording the purchase of a business, a company debits

the identifiable acquired assets and credits liabilities at their fair values, credits cash for the purchase price, and records the difference as the cost of goodwill.

the higher the return on assets,

the more profitable the company.

How do we close accounts?

1. Revenues ---> Income Summary 2. Expenses ---> Income Summary 3. Income Summary ---> Retained Earnings 4. Dividends ---> Retained Earnings

How do we find COGS?

Beginning Inventory + Purchases = COGS - Cost of Goods Available for Sale = Ending Inventory

What is the name for a person who lends funds to a business entity and expects repayment with interest?

creditor

When a change in an estimate is required, the company makes the change in

current and future years but not to prior periods.

Asset turnover indicates

how efficiently a company uses its assets to generate sales—that is, how many dollars of sales a company generates for each dollar invested in assets. formula: net sales/average total assets

Return on assets helps users determine

if a company is using its assets effectively.

Evaluating a company's amortization of intangibles helps users determine

if net income is overstated.

Calculate total sales for a company that reported a net loss of $1,500,000 and total expenses of $2,900,000.

$1,400,000

Which of the following best describes the term "current assets"?

Assets expected to be converted into cash within one year or one operating cycle, whichever is longer.

On January 1, 2013, a company's balance in retained earnings was $275,000. During 2013, the company had net income of $23,500 and paid $11,200 in dividends. Calculate the retained earnings balance at December 31, 2013? A. $263,800 B. $298,500 C. $262,700 D. $287,300

D. $287,300

GTO Division has $14,000 in current assets, $2,000 in accounts payable, and $2,000 in unearned sales revenue. What is the division's current ratio? A. 1.75 B. 2.25 C. 3.00 D. 3.50

D. 3.50

Cash collected and recorded by a company but not yet reflected in a bank statement are known as A. Debit memos B. Credit memos C. Outstanding checks D. Deposits in transit

D. Deposits in transit

All of the following accounts have normal credit balances except A. Accounts Payable B. Unearned Revenue C. Common Stock D. Inventory

D. Inventory

All of the following are acceptable for financial accounting purposes EXCEPT: A. Specific identification B. FIFO C. LIFO D. Retail cost

D. Retail cost

Which of the following is not a form of a business entity?

cooperative

Companies amortize the cost of a patent over...

its 20‐year life or its useful life, whichever is shorter.

Recognizing depreciation for an asset does NOT

result in the accumulation of cash for replacement of the asset.

Refer to Lanthier's Heating and Air. What is the maximum amount that can be reported on the balance sheet for common stock and preferred stock, respectively, if all of the stock is issued? (Look at #23).

:)

On January 1, 2019, a company's balance in retained earnings was $275,000. During 2019, the company earned net income of $23,500 and paid $11,200 in dividends. Calculate the retained earnings balance at December 31, 2019.

$287,300

Because trademarks and trade names have indefinite lives

, they are not amortized.

debit entries are used to

increase asset accounts.

Liquidity

Measures the ability of the firm to pay financial obligations as they become due, can be measured in terms of working capital, and can be assessed by the current ratio.

If a company has $10,500,000 of revenues, declares and pays $550,000 in dividends, and has net income of $1,600,000, how much were expenses for the year?

$8,900,000

The following transactions occurred during November: Nov. 1 - Sent bills to clients for services provided in August in the amount of $12,000. Nov. 9 - Purchased office equipment of $4,000 and office supplies of $150 from Office Depot receiving an invoice for $4,150. None of the office supplies were used during November. Nov. 15 - Paid for the office furniture and supplies purchased from Office Depot. Nov. 23 - Received a $350 bill from WKRP Radio for advertising. The bill will be paid next month. Nov. 30 - Paid salaries of $2,500 to employees. Refer to HVAC Service. The journal entry to record the bills sent to clients will include a debit of $12,000 to:

:accounts receivable

On January 1, 2012, a company issued 10,000 shares of 10%, $10 par value cumulative preferred stock. No dividends were declared in 2012 or 2013. In 2014, the company declared a dividend of $200,000. How much of the 2014 dividend should be paid to common stockholders? A. $170,000 B. $190,000 C. $197,000 D. $200,000

A. $170,000 $10 x .1 = $1 $1 x 10,000 = $10,000 $10,000 x 3 = $30,000 preferred $200,000 - $30,000 preferred = $170,000 common

Which of the following accounts is decreased by a debit entry? A. Cash B. Prepaid insurance C. Accounts payable D. Insurance expense

C. Accounts payable

Accrued expenses originate from A. paying off liabilities B. paying for items such as insurance in advance C. collecting cash from customers D. incurring expenses without yet having paid cash for them

D. incurring expenses without yet having paid cash for them

Which one of the following is not one of the three business activities? A. financing B. operating C. investing D. measuring

D. measuring

Transportation-in is: A. an operating expense B. part of purchase returns and allowances C. added to the transportation-out as part of the calculation of cost of goods sold D. part of the net cost of purchases

D. part of the net cost of purchases

FIFO

EI = most recent COGS = earliest

Which of the following transactions affects total liabilities? a. Payment is made on a bank loan. b. Common stock is issued. c. Services are provided for a customer for credit. d. Equipment is purchased for cash.

Payment is made on a bank loan.

A company plans to distribute $134,000 in dividends. It has outstanding 200,000 shares of 7%, $10 par preferred stock (non-cumulative and non-participating) and 60,000 shares of $2 par common stock. How much will be distributed per share on preferred and common stock? Preferred Common A. $0.52 $0.52 B. $0.6 $0.00 C. $0.00 $2.23 D. $0.60 $2.00

Preferred Common B. $0.67 $0.00

The following transactions occurred during November: Nov. 1 - Sent bills to clients for services provided in August in the amount of $12,000. Nov. 9 - Purchased office equipment of $4,000 and office supplies of $150 from Office Depot receiving an invoice for $4,150. None of the office supplies were used during November. Nov. 15 - Paid for the office furniture and supplies purchased from Office Depot. Nov. 23 - Received a $350 bill from WKRP Radio for advertising. The bill will be paid next month. Nov. 30 - Paid salaries of $2,500 to employees. Refer to HVAC Service. The journal entry to record the bill received from WKRP Radio will include a debit to:

advertising expense

Total depreciation expense is the same for

all 3 methods

permanent decline in the fair value of an asset is referred to as

an impairment.

credit entries are used to a. increase asset accounts. b. increase liability accounts. c. increase dividends. d. increase expense accounts.

increase liability accounts

"Revenues" are best described as:

increases in assets resulting from the sale of products or services

All of the following accounts have normal credit balances except

inventory

An overall measure of profitability is

the return on assets. formula: net income/average total assets.

Therefore, companies record goodwill only when

there is an exchange transaction that involves the purchase of an entire business. When an entire business is purchased, goodwill is the excess of cost over the fair value of the net assets (assets less liabilities) acquired.

How is the Balance Sheet linked to the other financial statements?

Retained earnings is reported on the Balance Sheet.

Discount = ?

Stated < Yield

Premium = ?

Stated > Yield

Which statement summarizes the results of the company's operations?

Statement of Cash Flows

An abbreviated version of an account, which is useful for analyzing the effects of business events

T-account

Suppose a company reports the following information at December 31, 2019: Sales - $15,000,000 Cash - $ 3,000,000 Unearned Revenue - $ 400,000 Dividends - $ 1,000,000 Cost of Sales - $ 8,500,000 What is the company's Gross Profit?

$6,500,000

Intangibles may arise from the following sources: Government grants, such as patents, copyrights, licenses, trademarks, and trade names. Acquisition of another business in which the purchase price includes a payment for goodwill. Private monopolistic arrangements arising from contractual agreements, such as franchises and leases.

- Government grants, such as patents, copyrights, licenses, trademarks, and trade names. - Acquisition of another business in which the purchase price includes a payment for goodwill. - Private monopolistic arrangements arising from contractual agreements, such as franchises and leases.

What is the most common denomination of bonds?

1,000

The following transactions occurred during November: Nov. 1 - Sent bills to clients for services provided in August in the amount of $12,000. Nov. 9 - Purchased office equipment of $4,000 and office supplies of $150 from Office Depot receiving an invoice for $4,150. None of the office supplies were used during November. Nov. 15 - Paid for the office furniture and supplies purchased from Office Depot. Nov. 23 - Received a $350 bill from WKRP Radio for advertising. The bill will be paid next month. Nov. 30 - Paid salaries of $2,500 to employees. Refer to HVAC Service. The journal entry to record payment for the office equipment and supplies will include a debit to:

: accounts payable

A company issued $10,000,000 of bonds. Assuming the most common denomination of bonds, the number of bonds sold was A. 10,000 B. 100,000 C. 1,000,000 D. 10,000,000

A. 10,000 10,000,000 / 1,000

Par value represents the A. Arbitrary amount that establishes a minimum price for the stock when it is first issued B. Current market price of the stock C. Amount for which any treasury shares have been acquired for the corporation D. Amount for which treasury shares may be reissued

A. Arbitrary amount that establishes a minimum price for the stock when it is first issued

Which of the following would describe a callable bond? A. Borrower has the right to pay off the bonds prior to due date B. Borrower has the right to issue more bonds prior to due date of existing bonds C. Borrower has the right to call off the interest payments on the bonds D. Investor has the right to call off the interest payments on the bonds

A. Borrower has the right to pay off the bonds prior to due date

When the amount for a debit entry in a journal is transferred to a specific account in the general ledger, it must be posted as a: A. Debit to the account in the general ledger B. Credit to the account in the general ledger C. Total amount, without regard to debit or credit since the general ledger accounts do not have spaces for debit and credit entries D. Decrease to the account in the general ledger

A. Debit to the account in the general ledger

The payment of Accounts Payable results in a(n) A. Decrease in both liabilities and assets B. Decrease in liabilities and increase in assets C. Decrease in liabilities and increase in stockholder's equity D. Increase in liabilities and decrease in stockholder's equity

A. Decrease in both liabilities and assets

Treasury shares represent the A. Number of previously issued shares that have been repurchased by the corporation B. Number of shares that the corporation has sold C. Number of shares that are currently held by stockholders D. Maximum number of shares that can be sold by the corporation

A. Number of previously issued shares that have been repurchased by the corporation

Which of the following best describes a company's operating activities? A. Operating activities are cash flows directly related to operating income B. Operating activities are necessary to provide the money to start a business C. Operating activities are needed to provide the valuable assets required to run a business D. Operating activities represent the right to receive a benefit in the future

A. Operating activities are cash flows directly related to operating income

Carnegie Jewelers accepted a 9-month, 9% note for $100,000 from a customer on July 1, 2013. The note is due on March 31, 2014. Assuming the company's accounting period ends on December 31, 2013, how much interest revenue should be recognized during 2013 and 2014? A. 2013 = $2,250; 2014 = $4,500 B. 2013 = $4,500; 2014 = $2,250 C. 2013 = $9,000; 2014 = $0 D. 2013 = $4,500; 2014 = $4,500

B. 2013 = $4,500; 2014 = $2,250

When is a liability for dividends created? A. At the end of each fiscal year B. At the date of declaration C. At the date of record D. At the date of payment

B. At the date of declaration

Kiss Greetings planned to raise $500,000 by issuing bonds. The bond certificates were printed bearing a stated interest rate of 6%, which was equal to the yield rate of interest. However, before the bonds could be issued, economic conditions forced the yield rate up to 7%. If the life of the bonds is 10 years and interest is paid annually on December 31, how much will the company receive from the sale of the bonds? A. Exactly $500,000 because the company would still pay interest at the stated rate B. Less than $500,00 because the 7% yield rate of interest was higher than the stated rate C. More than $500,000 because the 6% stated rate of interest was less than the yield rate D. The 6% bonds will not be sold at all. The company will be required to have the certificates reprinted bearing the new yield rate of 7%

B. Less than $500,000 because the 7% yield rate of interest was higher than the stated rate

Bonds sell at a premium when the A. Issuing company has a better reputation than other companies in the same business B. Market rate of interest is less than the stated interest rate at the time of issue C. Yield rate of interest is more than the stated rate at the time of issue D. Issuing company agrees to repay the maturity before the due date

B. Market rate of interest is less than the stated interest rate at the time of issue

Hunsinger Enterprises purchases many small pieces of office furniture, such as trash cans, that cost less than $100 each. The company accounts for these items as expenses when acquired rather than reporting them as property, plant and equipment. Justification is based on the accounting constraint of: A. Conservatism B. Materiality C. Neutrality D. Materiality

B. Materiality

During December, Camp David Inc. purchased $5000 of supplies for business use. At the end of December, 20% of the supplies were still on hand, and only 70% of the supplies had been paid for. What amounts will appear on the balance sheet on December 31? A. Supplies on Hand = $5,000; Accounts Payable = $3,500 B. Supplies on Hand = $1,000; Accounts Payable = $1,500 C. Supplies on Hand = $4,000; Accounts Payable = $1,500 D. Supplies on Hand = $1,000; Accounts Payable = $5,000

B. Supplies on Hand = $1,000; Accounts Payable = $1,500

The two-column record used to accumulate monetary increases and decreases for individual assets, liabilities, stockholders' equity, revenue, expense and dividends items is a(n): A. Chart of accounts B. T-account C. Trial Balance D. Posting

B. T-account

If a company's bonds are callable, A. The bondholder has the right to sell an option on the bond B. The issuing company is likely to retire the bonds before maturity if the bonds are paying 8% interest while the market rate of interest is 4% C. The bonds are never allowed to remain outstanding until the maturity date D. The investor never knows what the redemption price will be until the bonds are actually called

B. The issuing company is likely to retire the bonds before maturity if the bonds are paying 8% interest while the market rate is 4%

"Revenues" are best described as A. decreases in assets resulting from the sale of goods or services B. increases in assets resulting from the sale of products or services C. assets used or consumed in the sale of products or services D. an increase in the financing activities

B. increases in assets resulting from the sale of products or services

A company that sells merchandise to customers should normally recognize revenue and expenses? A. revenue only after the cash is collected B. revenue and the related expenses in the period the revenue is earned, whether payment is received or not C. both revenue and expenses in the period following the sale D. expenses in the period the merchandise is sold and revenue in the following period

B. revenue and the related expenses in the period the revenue is earned, whether payment is received or not

A graphics design company issued bonds in the amount of $1,000,000 with a stated interest rate of 8%. If the interest is paid semiannually and the bonds are due in 10 years, what would be the total amount of interest paid over the life of the bonds? A. $1,000,000 B. $400,000 C. $800,000 D. $80,000

C. $800,000 1,000,000 x .08 x (6/12) =40,000 x 10

Which of the following statements is true concerning assets? A. Assets are measured using a time-period approach B. Assets are initially recorded at market value and then adjusted for inflation C. Assets are initially recorded using the historical cost principle D. Assets are initially recorded at market value because historical cost tends to be too arbitrary

C. Assets are initially recorded using the historical cost principle

Interest Payment = ?

Face x Stated x Time

Which of the following best describes the term "Current Assets"? A. The amount of total profits earned by a business since it began operations plus all other resources B. The amount of claim that the owners have in the business in the current year. C. Assets expected to be converted into cash within one year or the operating cycle, whichever is longer D. The cumulative profits earned by a business less any dividends paid in the current year

C. Assets expected to be converted into cash within one year or the operating cycle, whichever is longer

A list of all asset, liability, stockholders' equity, revenue, expense, and dividend accounts which are used by a company is called a(n): A. General Ledger B. General Journal C. Chart of Accounts D. Trial Balance

C. Chart of Accounts

Which of the following is not a form of a business entity? A. Sole proprietorship B. Partnership C. Cooperative D. Corporation

C. Cooperative

When bonds are issued by a company, the accounting entry shows an A. Increase in liabilities and a decrease in stockholder's equity B. Increase in liabilities and an increase in stockholder's equity C. Increase in assets and an increase in liabilities D. Increase in assets and an increase in stockholder's equity

C. Increase in assets and an increase in liabilities

On October 1st, a company borrowed $60,000 from Eighth National Bank on a 1-year, 7% note. If the company's fiscal year ends on December 31st, a year-end adjusting entry is required to increase A. Interest expense by $4,200 B. Notes payable by $1,050 C. Interest payable by $1,050 D. Prepaid interest by $3,150

C. Interest payable by $1,050 60,000 x .07 x (3/12)

Outstanding shares represent the A. Number of previously issued shares that have been repurchased by the corporation B. Number of shares that the corporation has sold C. Number of shares that are currently held by stockholders D. Maximum number of shares that can be sold by the corporation

C. Number of shares that are currently held by stockholders

If a corporation declares a 2-for-1 stock split, which of the following is true? A. A new class of stock must be authorized with twice the number of issued shares B. The number of outstanding shares is half the number that were previously outstanding before the split C. The number of outstanding shares is twice the number that were previously outstanding before the split D. The number of outstanding shares is doubled, while the number of issued shares is reduced to half the amount before the split

C. The number of outstanding shares is twice the number that were previously outstanding before the split

Interest Expense = ?

Carrying x Yield x Time

Which set of items below are current assets?

Cash, Accounts Receivable, Inventory, and Office Supplies

Exam #5

Chapters 9-10 :)

Refer to Gainesville Truck Center. Which of the following expense accounts will be recorded as a result of this payroll transaction? (Look at #23). A. 1, 2, and 3 B. 1, 4, and 5 C. 2, 3, 4, and 5 D. All of the accounts are needed to record a company's payroll

D. All of the accounts are needed to record a company's payroll

Which set of items below are current assets? A. Accounts Receivable, Net Income, Inventory and Dividends B. Cash, Accounts Receivable, Capital Stock and Sales C. Net Income, Cash, Office Supplies and Inventory D. Cash, Accounts Receivable, Inventory and Office Supplies

D. Cash, Accounts Receivable, Inventory and Office Supplies

On May 1, a company borrowed $30,000 from the First National Bank on a 1-year, 6% note. Assuming the company keeps its records on a calendar year basis, an entry is needed on December 31st to increase A. Interest expense by $600 B. Interest expense by $1,800 C. Interest payable by $900 D. Interest payable by $1,200

D. Interest payable by $1,200 30,000 x .06 x (8/12)

Authorized stock represents the A. Number of previously issued shares that have been repurchased by the corporation B. Number of shares that the corporation has sold C. Number of shares that are currently held by stockholer's D. Maximum number of shares that can be issued for each class of stock

D. Maximum number of shares that can be issued for each class of stock

After a corporation declares a cash dividend, what takes place on the date of record? A. Cash decreases B. Liabilities decrease C. Stockholder's equity decreases D. No entry is necessary

D. No entry is necessary

LIFO

EI = earliest COGS = most recent

The process of allocating to expense the cost of intangibles is referred to as

amortization.

In which form of organization are the owners' legal responsibility for the debt of the business limited to the amount they invested in the business?

corporation

Goodwill

exceptional management, desirable location, good customer relations, skilled employees, high‐quality products, fair pricing policies, and harmonious relations with labor unions.

Accumulated depreciation is reported where?

on the balance sheet as a deduction from plant assets.

Higher asset turnover equals

operating more efficiently

Return on assets indicates

the amount of net income generated by each dollar of assets.

While preparing a bank reconciliation, which of the following items would be subtracted from the balance per the bank statement? A. Outstanding checks B. Deposits in transit C. Bank service charges D. Interest earned on the bank account

A. Outstanding checks

Which one of the following statements is true? A. Sound internal control practice dictates that disbursements should be made by check B. Good cash management practice dictates that large cash balances should be maintained C. The person handling cash should also prepare the bank reconciliation D. Petty cash can be substituted for a checking account to expedite the payment of all disbursements

A. Sound internal control practice dictates that disbursements should be made by check

At the year-end inventory count, if goods in transit are shipped FOB destination, they should be included in the inventory count of: A. The seller B. The buyer C. The shipping company D. Neither the buyer nor the seller

A. The seller

Which of the following concepts is important to accrual accounting? A. Time period B. Market basis C. Cash basis D. Entity concept

A. Time period

Average Life = ?

Accumulated Depreciation / Depreciation Expense

Which of the following organizations is primarily responsible for GAAP in the United States? A. Securities Exchange Commission (SEC) B. Financial Accounting Standards Board (FASB) C. International Accounting Standards Board (IASB) D. Internal Revenue Service (IRS)

B. Financial Accounting Standards Board (FASB)

Which of the following is not a generally recognized internal control activity? A. Establishment of clear lines of authority to carry out specific tasks B. Preparation of bank reconciliation on a monthly basis C. Reducing the cost of hiring seasonal employees D. Limiting access to computerized accounting records

C. Reducing the cost of hiring employees

The Securities Exchange Commission (SEC) is concerned with A. Developing a new conceptual framework in order to reduce differences in financial reports for global companies B. Setting accounting rules for all companies that are incorporated in the United States C. Setting accounting rules for publicly-traded companies in the United States D. Working to reduce differences in accounting reports issued by governmental units

C. Setting accounting rules for publicly-traded companies in the United States

Test #2

Chapters 3-4 :)

What is the impact on the accounting equation of recording the accrual of interest expense? A. Both assets and liabilities decrease B. Both assets and stockholder's equity decrease C. Liabilities decrease and stockholder's equity increases D. Liabilities increase and stockholder's equity decreases

D. Liabilities increase and stockholder's equity decreases

Refer to A2Z Events. What are the effects on the accounting equation when the company writes off a bad debt under the allowance method? (Look at #11). A. Assets decrease and stockholder's equity increase B. Assets and stockholder's equity decrease C. Assets increase and stockholder's equity decreases D. No effect on overall assets or stockholder's equity

D. No effect on overall assets or stockholder's equity

All of the following accounts have normal debit balances except A. Accounts Receivable B. Dividends C. Supplies Expense D. Service Revenue

D. Service Revenue

Assets become expenses when? A. Purchased for cash or on credit B. Asset is delivered C. They are paid for in cash D. Their economic benefits expire

D. Their economic benefits expire

Which of the following are Noncurrent Assets? A. Machinery and equipment B. Accounts receivable C. Inventories D. Unearned revenue

A. Machinery and equipment

Refer to AT&U Company. If the company uses the aging of accounts receivable approach to estimate its bad debts, what amount will be reported as bad debt expense for 2012? A. $25,000 B. $45,000 C. $20,000 D. $49,000

A. $25,000

A company had sales of $40,000, sales discounts of $800, sales returns of $1,600, and commissions owed to sales people of $600. Compute net sales. A. $37,600 B. $37,000 C. $38,400 D. $39,000

A. $37,600 (Net Sales = Sales - Sales Returns/Allowances - Sales Discounts)

Refer to Hesson Properties. What journal entry is required to record the purchase of the carts? (Look at exam for information). A. (journal entry) B. (journal entry) C. (journal entry) D. (journal entry)

A. (journal entry)

Refer to Fireworks City. Using the data for 2012, determine the average life of the company's property, plant, and equipment rounded to one decimal place. (Look at #10). A. 1.6 years B. 2.5 years C. 4.0 years D. 10.0 years

A. 1.6 years

Depreciation is A. An effort to achieve proper matching of the cost of operating assets with related revenues B. An accumulation of funds to replace the related plant asset C. The difference between the original cost and salvage value of an asset D. The cash allocated each period to maintain a plant asset

A. An effort to achieve proper matching of the cost of operating assets with related revenues

Which one of the following is an accurate description of the Allowance for Doubtful Accounts? A. Contra Account B. Liability Account C. Revenue Account D. Expense Account

A. Contra Account

Which of the following is an example of a credit memo? A. Notice of a bank service charge B. Notice of interest earned on a checking account C. Outstanding checks D. A company's transposition error in the recording of a customer's check

B. Notice of interest earned on a checking account

Which of the following is a reconciling item on the bank side of a bank reconciliation? A. canceled checks B. Outstanding checks C. NSF checks D. both b and c

B. Outstanding checks

Capitalizing an expenditure rather than recording it as a revenue expenditure A. Impacts the total book value of plant assets reported on the balance sheet and the amount of net income reported during the period B. Impacts the total book value of plant assets on the balance sheet, but has no effect on the amount of net income reported during the accounting period C. Impacts the amount of net income reported during an accounting period, but has no effect on the total book value of plant assets on the balance sheet D. Has no impact on the book value of plant assets on the balance sheet or the amount of income reported no the income statement

A. Impacts the total book value of plant assets reported on the balance sheet and the amount of net income reported during a period

According to the Sarbanes-Oxley Act of 2002, who is primarily responsible for establishing and maintaining a system of internal control over the company's financial reporting? A. Management of the company B. The company's auditors C. The company's internal auditors D. The audit committee of the company's board of directors

A. Management of the company

Which of the following is an example of a debit memo? A. notice of a bank service charge B. Notice of interest earned on a checking account C. Outstanding checks D. A company's transposition error in the recording of a deposit

A. Notice of a bank service charge

Research and development costs are A. Treated as an expense when incurred B. Capitalized but not amortized C. Capitalized and amortized over the periods that will probably benefit from the research and development D. Included with the cost of the patent resulting from the research and development

A. Treated as an expense when incurred

Refer to A&B Foods. If the company uses 4% of net credit sales to estimate its bad debts, what will be the balance in the Allowance for Doubtful Accounts account after the adjustment of bad debts? (Look at #12). A. $50,000 B. $103,000 C. $78,000 D. $75,000

B. $103,000

Refer to Fabian Woodworks. If the company uses the straight-line method of depreciation, what is the book value at December 31, 2014? (Look at #3). A. $8,000 B. $6,000 C. $10,000 D. $4,000

B. $6,000

Bihary Company has a beginning balance in its inventory account of $2,250 and the ending balance is $1,500. Cost of Goods Sold is $9,750. According to the Cost of Goods Sold model, what was the amount of inventory purchased during the year? (Look at work on test). A. $750 B. $9,000 C. $10,500 D. $11,250

B. $9,000

Carnegie Jewelers accepted a 9-month, 9% note for $100,000 from a customer on July 1, 2013. The note is due on March 31, 2014. Assuming the company's accounting period ends on December 31, 2013, how much interest revenue should be recognized during 2013 and 2014? 2013 2014 A. $2,250 $4,500 B. $4,500 $2,250 C. $9,000 $0 D. $4,500 $4,500

B. 2013 2014 $4,500 $2,250

Which one of the following financial statements show the end of the year cash balance for a business entity? A. Income Statement and Statement of Retained Earnings B. Balance Sheet and Statement of Cash Flows C. Statement of Retained Earnings and Statement of Cash Flows D. Balance Sheet and Statement of Retained Earnings

B. Balance Sheet and Statement of Cash Flows

A manufacturing company purchased equipment on January 1, 2004 for $450,000. As of January 1, 2013, depreciation of $202,500 had been recorded on this asset. Depreciation expense for 2013 is $22,500. After the adjustments are recorded and posted in December 31, 2013, what are the balances for the Equipment and Accumulated Depreciation? Equipment Accumulated Depreciation A. $450,000 $0 B. $450,000 $225,000 C. $225,000 $22,500 D. $225,000 $225,000

B. Equipment Accumulated Depreciation $450,000 $225,000

Generally accepted accounting principles (GAAP) require that research and development costs to develop a new product be A. Capitalized in the patents account B. Expensed in the period incurred C. Capitalized in the research and development costs account D. Amortized over the expected economic life of the new product

B. Expensed in the period incurred

Based on this (#20) information, it is likely that the company: A. Purchased inventory for cash B. Paid for inventory purchased on credit, and took advantage of a 1% purchase discount C. Sold inventory for cash D. Collected cash for inventory sold on credit, and recognized a 1% sales discount

B. Paid for inventory purchased on credit, and took advantage of a 1% purchase discount

Which one of the following items is a classification on the Classified Balance Sheet? A. Operating Accounts B. Stockholder's Equity C. Revenues and Expenses D. Net Income and Dividends

B. Stockholder's Equity

A particular company had $2,400 of supplies on hand at January 1. During the year, supplies with a cost of $4,000 were purchased. At December 31, the actual supplies on hand amounted to $2,000. After the adjustments are recorded and posted at December 31, what are the ending balances in the Supplies and Supplies Expense accounts? Supplies Supplies Expense A. $4,400 $2,000 B. $2,000 $4,400 C. $2,400 $4,000 D. $4,000 $2,400

B. Supplies Supplies Expense $2,000 $4,400

During December, Camp David, Inc. purchased $5,000 of supplies for use in its business. At the end of December, 20% of the supplies were still on hand, but only 70% had been paid. What amounts will appear on the company's balance sheet on December 31? Supplies on Hand Accounts Payable A. $5,000 $3,500 B. $1,000 $1,500 C. $4,000 $1,500 D. $1,000 $5,000

B. Supplies on Hand Accounts Payable $1,000 $1,500

Which one of the following statements is true if a company's collection period for accounts receivable is unacceptably long? A. The collection cost would be reduced B. The company may offer sales discounts to shorten the collection period C. Cash flows for operations may be higher than expected for the company's sales D. The company should expand operations with its excess cash

B. The company may offer sales discounts to shorten the collection period

A company that sells merchandise to customers should normally recognize A. revenue only after the cash is collected B. revenue and the related expenses in the period the revenue is earned, whether payment is received or not C. both revenue and expenses in the period following the sale D. expenses in the period the merchandise was sold and revenue in the following period

B. revenue and the related expenses in the period the revenue was earned, whether payment is received or not

Refer to the information provided for Aaron Corporation. Calculate gross margin. (Look at #12). A. $120,500 B. $137,500 C. $144,500 D. $212,500

C. $144,500

Refer to AT&U Company. If the company estimates its bad debts at 1% of net credit sales, what amount will be reported as bad debt expense for 2012? (Look at exam question #8). A. $44,500 B. $25,000 C. $24,500 D. $4,500

C. $24,500 2,500,000-50,000 = 2,450,000 2,450,000 x .01 = 24,500

What is the cost of the land? (Look at #6). A. $550,000 B. $597,000 C. $572,000 D. $562,000

C. $572,000

Refer to Bargain Spot Fabrics. What amount should the company report on its Balance Sheet for Total Assets? (Look at exam for information). A. $550,000 B. $775,000 C. $850,000 D. $950,000

C. $850,000

What is the company's adjusted cash balance at October 31? (Look at exam question #21). A. (answer) B. (answer) C. (answer) D. (answer)

C. (answer)

Refer to Hesson Properties. What journal entry is required to record the cash collected in advance?? (Look at exam for information). A. (journal entry) B. (journal entry) C. (journal entry) D. (journal entry)

C. (journal entry)

A company has total assets of $350,000 consisting of current assets of $115,000, property, plant, and equipment of $200,000, and other assets of $35,000. The company has total liabilities of $100,000 consisting of current liabilities of $65,000 and other liabilities of $35,000. What is the current ratio? A. 3.50 B. 1.15 C. 1.77 D. 5.38

C. 1.77

Which of the following statements is false? A. The inventory account is updated after every sale and after every merchandise purchase under the perpetual inventory system B. The inventory account is updated only at the end of the accounting period under the periodic inventory system C. A cost of goods sold account is updated after each sale of merchandise under the periodic inventory system D. A purchases account is used only under the periodic inventory system

C. A cost of goods sold account is updated after each sale of merchandise under the periodic inventory system

Which of the following statements is true concerning assets? A. Assets are measured using a time-period approach B. Assets are initially recorded at market value and then adjusted for inflation C. Assets are initially recorded using the historical cost principle D. Asses are initially recorded at market value, since historical cost tends to be too arbitrary

C. Assets are initially recorded using the historical cost principle

Which inventory cost flow method assigns the cost of the most recent items purchased to ending inventory? A. Specific identification B. Weighted average cost C. FIFO D. LIFO

C. FIFO

Depreciation is a process by which A. Replacement funds are accumulated for plant and equipment B. The decline in market value of plant and equipment is determined and recorded C. The cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset D. The difference between current market value and historical cost of plant and equipment

C. The cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset

Which allowance method approach is considered to be an income statement approach to estimating bad debts? A. The percentage of accounts receivable approach B. The percentage of accounts written off approach C. The percentage of net credit sales approach D. The direct write off method

C. The percentage of net credit sales approach

The accounting life of intangible assets is determined by A. Their legal lives B. Their useful lives C. Their legal lives or useful lives, whichever is shorter D. The tax life mandated by the IRS

C. Their legal lives or useful lives, whichever is shorter

Expenses should be matched against revenue A. before the earnings process is complete B. only after cash is collected from the customer C. in the same period as the revenue that they helped generate D. after payment has been made for any costs related to the revenue

C. in the same period as the revenue that they helped generate

Effective cash management and control for a company's operating cycle includes all of the following except: A. the use of a petty cash fund B. the preparation of monthly bank reconciliations C. the practice of using surplus cash for the purchase of bonds or other long-term investments D. the practice of keeping inventory levels low

C. the practice of using surplus cash for the purchase of bonds or other long-term investments

Test #3

Chapters 5-6 :)

Test #4

Chapters 7-8 :)

Refer to the information provided for Aaron Corporation. Calculate the Cost of Goods Sold. (Look at #14). A. $137,500 B. $129,500 C. $120,500 D. $105,500

D. $105,500

A company's accounts receivable balance after posting net collections from customers for 2012 is $150,000. Management feels that uncollected accounts should be based on the following aging of accounts receivable and uncollected percentages. There are $100,000 that are 1-30 past due at 2% and $50,000 that are 31 to 60 days past due at 10%. The net realizable value of the accounts receivable is A. $147,500 B. $148,000 C. $150,000 D. $143,000

D. $143,000 100,000 x .02 = 2,000 50,000 x .1 = 5,000 2,000 + 5,000 = 7,000 150,000 - 7,000 = $143,000

On January 1, 2012, a company reported assets of $1,000,000 and liabilities of $600,000. During 2012, assets decreased by $100,000 and Stockholder's Equity decreased by $200,000. What is the amount of Liabilities at December 31, 2012? A. $200,000 B. $500,000 C. $600,000 D. $700,000

D. $700,000

Goodwill can be recorded as an asset when a(n) A. Business has above normal profitability compared to other businesses in its industry B. Business can determine that it has created customer goodwill and name recognition C. Offer is received to purchase the business at a price in excess of the value of the assets D. Business is purchased and payment is made in excess of the value of the net assets

D. Business is purchased and payment is made in excess of the value of the net assets

Refer to HVAC Service. The journal entry to record payment of the salaries will include a credit to (Look at exam for information). A. Salary Expense B. Salary Payable C. Prepaid Salaries D. Cash

D. Cash

Which of the following statements is false regarding the choice between alternative inventory costing methods? A. Each alternative method provides for the same amount of cost of goods available for sale to be allocated between ending inventory and cost of goods sold B. In terms of current costs, FIFO presents a more realistic balance sheet; whereas LIFO presents a more realistic net income statement C. Companies sometimes choose FIFO because it is easier and less expensive to implement; whereas LIFO is often chosen for tax benefits D. Companies sometimes choose FIFO because it presents a more realistic income statement in terms of current market values

D. Companies sometimes choose FIFO because it presents a more realistic income statement in terms of current market values

What is the distinguishing characteristic between accounts receivable and notes receivable? A. Accounts receivable are usually current assets while notes receivable are usually long-term assets B. Accounts receivable require payment of interest while notes receivable does not have payment of interest C. Notes receivable result from credit sale transactions for merchandising companies, while accounts receivable result from credit sale transactions for service companies D. Notes receivable generally specify an interest rate and a maturity date at which any interest and principle must be repaid

D. Notes receivable generally specify an interest rate and a maturity date at which any interest and principle must be repaid

What does the phrase "Revenue is recognized when earned" mean? A. Revenue is recorded in the accounting records when the goods are received form a supplier, and reported on the income statement when sold to the customer B. Revenue is recorded in the accounting records and reported on the income statement when the cash is received from the customer C. Revenue is recorded in the accounting records when the goods are sold to a customer, and reported on the income statement when the cash payment is received from the customer D. Revenue is recorded in the accounting records and reported on the income statement when goods are sold and delivered to a customer

D. Revenue is recorded in the accounting records and reported on the income statement when goods are sold and delivered to a customer

The Allowance for Doubtful Accounts represents: A. Bad debt losses incurred in the current period B. The amount of uncollected accounts written off to date C. The difference between total sales made on credit and the amount collected from those credit sales D. The difference between the recorded value of accounts receivable and the net realizable value of accounts receivable

D. The difference between the recorded value of accounts receivable and the net realizable value of accounts receivable

What is the primary objective of financial reporting? A. To help investors make credit decisions B. To help management assess cash flows C. To protect users from fraudulent financial information D. To provide useful information for decision-making

D. To provide useful information for decision-making

How do we find Gross Margin?

Revenues - COGS