Accounting Final Review

How much is the cost of goods sold for march?

$560

How much is the ending inventor at March 31st?

4 @ $4

Which one of the following is the correct fundamental accounting equation?

Assets = Liabilities + Equity

Which of the following is the appropriate entry to record the declaration of cash dividends?

Dividends Dividends Payable

On October 1st, Hillsmith Company borrowed $60,000 from Eight National Bank on a 1-year, 7% note. If the company's fiscal year ends on December 31st, Hillsmith should make a year end adjusting entry to increase:

Interest Payable $1,050

There are some liabilities, such as income taxes payable and the estimated warranty liability, for which the amount must be estimated so they can be recorded in the same period as the related revenues. Failure to record these amounts in the same period as the related revenues is a violation of the

Matching Principle

All amounts paid to acquire a property, plant, and equipment asset and to get it ready for its intended usage are referred to as:

Operating Expenses

The best definition for assets is the:

Resources belonging to a company having future benefit to the company

Accounts which are closed at the end of an accounting period include:

Revenues expenses and dividends

Which internal control activity is followed when inventory storage areas are secured with limited access?

Safeguard of assets and records

The adjusting entry to record salaries owed to employees but not paid until the next accounting period involves a credit to:

Salaries Payable

Which internal control activity is violated when the cashier at a cash register in a retail store also records the daily receipts in a journal?

Segregation of Duties

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

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

The account called "accounts receivable" is used:

When money is due the company from another business or individual generally from selling to a customer on credit

A accrual refers to an event:

Where the expense or revenue is recorded before the cash settlement

Net realizable account receivable is calculated as:

accounts receivable - allowance for doubtful accounts

Market conditions may force a company to issue its bonds at less than the face value of the bonds. The discount on bonds payable account is used in this situation. This account:

contra-liability interest expense > Interest Paid market rate (Yield) > Stated Rate

The sales discount is a(n)?

contra-revenue

The book value of a depreciable asset equals:

cost minus accumulated depreciation

The issuance of no-par common stock requires a:

credit to common stock

Jensen Distribution Company's sales for the day totaled $10,552. Jenkins collected an additional 7.50% in sales tax. The entry to record the day's sales includes a:

credit to sales tax payable

Under the allowance method, the entry to record the bad debts estimates includes a:

debit to bad debts Expense and credit to Allowance for doubtful accounts

Which of the following accounts has a normal debit balance?

dividends

Which of the following assets is not subject to depreciation?

land

Which of the following account is decreased with a debit?

notes payable

The adjustment for the expiration of prepaid insurance originally recorded as an asset, consists of a debit to

prepaid insurance

Under the perpetual inventory system, in addition to making the entry to record a sale, a company would:

record a decrease in inventory and an increase in cost of goods sold for the cost of the merchandise sold.

The matching principle:

states that we should match expense with related revenue in the accounting period to which they relate

The account that shows the amount of accounts receivable that the business does not expect to collect is:

Allowance for Doubtful Accounts

Which of the following items are witheld from an employee's paycheck?

federal, state, and possibly city or county income tax, as well as social security and medicare. optional: retirement accounts (401-k), parking, health insurance.

Which inventory cost flow method assigns the cost of the most recent items purchased to cost of goods sold?

lifo

Using a perpetual inventory system, which of the following entries would report the cost of merchandise sold on credit?

Cost of goods sold merchansising inventory record a decrease in inventory and an increase in COGS for the cost of merchandise sold

Accrued interest on a short-term note payable is recorded by:

Debiting interest expense and crediting interest payable

A $10,000 bond quoted at 103 1/2 is selling for:

$10,350 (10,000 x 1.35)

A balance sheet prepared on December 31, 2011 would report total paid-in capital (also called contributed capital) of:

$115,000

The interest of a $50,000 note at 12% for 2 months is:

$1,000 (PxRxT)

A balance sheet on December 31, 2011 would report a total stockholder's equity of:

$155,000

A company purchases a truck at a cost of $12,000. The truck has an estimated residual value of $2,000 and an estimated life of 5 years, or 100,000 hours of operation. The truck was purchased on January 1, 2012, and was used 27,000 hours in 2012 and 26,000 hours in 2013. If the company uses the straight-line method of depreciation, what is the amount of depreciation expense for 2012?

$2,000 (cost - residual value)/ expected useful life

The stockholder's equity accounts of Jamison Corporation include $7,500 shares of common stock with a stated value of $.50, and 5,000 shares of treasury stock with a total cost of $25,000. The total number of shares outstanding for Jamison Corporation is:

$32,500

A company has a discount policy, which states that, if a customer pays within ten days of the invoice, the customer can take a 2% discount; otherwise, the full amount is due in 30 days from the date of invoice. Which of the following abbreviations are used in business to reflect this discount policy?

2/10, n/30

Blury Corp, issued 10-year, 9%, $100,000 bonds paying interest on an annual basis, at a $6,200 premium. Which one of the following statements is true?

Blurry's annual interest expense on the bonds will be less than the amount of interest payments to bondholders each year

Lincoin Corp. issued $10,000,000 in bonds. The bonds were sold at a price of $97. The journal entry to record the issuance is:

Cash $9,700,000 Discount on Bonds Payable $300,000 Bonds Payable 10,000,000

Lock corp. sold $2,000,000, 6%, 10-yer bonds on January 1, 2010. The bonds were dated January 1, 2010, and pay interest on January 1. Lock uses the straight-line method to amortize bond premium or discount. The journal entry to record the issuance of the bonds, assuming that the bond sold at 103, would include:

Cash (2,000,000 x 103%) 2,060,000 Bonds Payable 2,000,000 Premium on Bonds Payable 60,000

Receiving a check from a customer on account would include a:

Debit to Cash and credit to Accounts Receivable

The normal balance of an expense account is a __________________, while the normal balance of a revenue account is a _________________.

Debit; Credit

Accumulated depreciation is classified as a(n):

contra-asset account

Which of the following does not require a journal entry for a bank reconciliation?

deposits in transit

Cash collected and recorded by a company, but not yet reflected in a bank statement are known as:

deposits in transits

All of the following will affect retained earnings except:

Investments by owners

Petry Corporation issues 20,000 shares of $.50 par common stock for $6 per share. The account for Additional Paid-In Capital in excess of par will increase by:

$110,000 (20000 x 5.5)

If ABC Corp. has 120,000 shares of common stock authorized, has 75,000 shares of common stock issues and holds 6,000 shares of common stock as treasury stock, the total number of outstanding shares of ABC Corp. amounts to:

69,000

The closing entry for utilities expense would include:

A debt to Income Summary and a credit to Utilities Expense

Which of the following accounts is not involved in closing entries:

Accumulated depreciation - equipment permanent accounts

The carrying value of bonds issued at premium is calculated by:

Adding the remaining balance of Premium on Bonds Payable to Bonds Payable

The process of allocating a property, plant, and equipment asset's cost to expense over the period the asset is used is called

Amortization

The ending balance of retained earnings appears on the:

Balance Sheet and Statement of Retained Earnings.

The issuance of common stock above par value requires a:

Credit to Additional paid-in-capital (APIC)

The entry to record the issuance of $8,000 shares of $5 par value common stock at $9 per share includes a:

Credit to common stock for 40,000

A check returned by a bank because the issuer's cash account balance could not cover the check is called a(n):

NSF check

Treasury stock causes:

Outstanding shares to be less than issued shares

Which of the following is an example of an accrual?

Salary owed but not yet paid

A gain is recorded on the sale of property, plant and equipment asset when:

The asset is sold for a price greater than the asset's book value