Accounting test 1

B

Abbott Company purchased $7,600 of merchandise inventory on account. Abbott uses the perpetual inventory method. How does this transaction affect the financial statements? Increase cost of goods sold and increase accounts payable. Increase inventory and increase accounts payable. Decrease accounts payable and decrease inventory. Decrease accounts payable and decrease purchases.

C

Assume the perpetual inventory method is used. Green Company purchased merchandise inventory that cost $16,900 under terms of 3/10, n/30 and FOB shipping point. The company paid freight cost of $690 to have the merchandise delivered. Payment was made to the supplier within 10 days. All of the merchandise was sold to customers for $25,300 cash and delivered under terms FOB shipping point with freight cost amounting to $490. What is Green Company's gross margin resulting from these transactions? Multiple Choice $8,907. $7,727. $8,217. $8,417.

B

Assume the perpetual inventory method is used. Green Company purchased merchandise inventory that cost $17,700 under terms of 3/10, n/30 and FOB shipping point. The company paid freight cost of $770 to have the merchandise delivered. Payment was made to the supplier within 10 days. All of the merchandise was sold to customers for $26,900 cash and delivered under terms FOB shipping point with freight cost amounting to $570 paid by Green company. As a result of the above transactions of Green Company, the net cash flow from operating activities was: Multiple Choice $9,731 inflow. $8,391 inflow. $26,900 inflow. $18,509 outflow.

B

Assume the perpetual inventory method is used. The company purchased $12,800 of merchandise on account under terms 2/10, n/30. The company returned $2,300 of merchandise to the supplier before payment was made. The liability was paid within the discount period. All of the merchandise purchased was sold for $19,600 cash. What effect will the return of merchandise to the supplier have on the accounting equation? Assets and stockholders' equity are decreased by $2,300. Assets and liabilities are decreased by $2,300. Assets and liabilities are decreased by $2,254. None. It is an asset exchange transaction.

2750

At the end of Year 2, retained earnings for the Baker Company was $3,150. Revenue earned by the company in Year 2 was $3,400, expenses paid during the period were $1,800, and dividends paid during the period were $1,200. Based on this information alone, what was the amount of retained earnings at the beginning of Year 2?

A

Bledsoe Company received $17,000 cash from the issue of stock on January 1, Year 1. During Year 1, Bledsoe earned $8,500 of revenue on account. The company collected $6,000 cash from accounts receivable and paid $5,400 cash for operating expenses. Based on this information alone, during Year 1, which of the following statements is true? Total assets increased by $20,100. Total assets increased by $26,100. Total assets did not change. Total assets increased by $600.

B

Consider the information: Company A Company B Company C Company D Sales$ 80,000 $ 180,000 $ 120,000 $ 100,000 Goods sold 48,000 135,600 72,000 60,000 Gross margin 32,000 45,000 48,000 40,000 Operating exp 9,60012, 60010, 800 10,000 Net income 22,40032, 400 37200 30000 Based on common-sized income statements, which of the companies spent, relative to sales, the least on operating expenses? Multiple Choice Company C Company D Company B Company A

C

Duke Company's unadjusted bank balance at March 31 is $3,740. The bank reconciliation revealed outstanding checks amounting to $560 and deposits in transit of $430. Based on this information, Duke's true cash balance is: Multiple Choice $3,740. $4,170. $3,610. $3,310.

D

Gomez Company collected $18,300 on September 1, Year 1 from a customer for services to be provided over a one-year period beginning on that date. How much revenue would Gomez Company report related to this contract on its income statement for the year ended December 31, Year 1? How much would it report as cash flows from operating activities for Year 1? Revenue of $18,300; Cash flow from operating activities of $18,300 Revenue of $0; Cash flow from operating activities of $18,300 Incorrect Revenue of $6,100; Cash flow from operating activities of $6,100 Revenue of $6,100; Cash flow from operating activities of $18,300

C

Gomez Company had beginning inventory of $1,800 and ending inventory of $1,400. The cost of goods sold was $4,200. Based on this information, what is the amount of inventory that was purchased by Gomez Company? $5,600 $7,400 $3,800 $4,200

A

Greg Company recognized revenue on account. Which of the following financial statements are affected by this accounting event? Income statement and the balance sheet Statement of cash flows Income statement Balance sheet

A

If total assets decrease, then which of the following statements is true? Liabilities, common stock, or retained earnings must decrease. Liabilities must increase and retained earnings must decrease. Common stock must decrease and retained earnings must increase. Liabilities, common stock, or retained earnings must increase.

D

In 2013, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) updated its framework for the assessment of internal control. That framework includes all of the following interrelated components except: Multiple Choice monitoring. risk assessment. the control environment. separation of duties.

D

Item6 2/2points awarded ItemScored Item6 Item 6 2 of 2 points awarded Item Scored Which of the following is not a procedure to maintain internal controls over cash payments? Multiple Choice All checks should be prenumbered. Checks should be properly authorized with approval signatures. Voided checks should be defaced and retained. A receipt should be provided to each cash customer.

A

Kenyon Company experienced a transaction that had the following effect on the financial statements: Balance SheetIncome StatementStatement of Cash FlowsAssets=Liabilities+Stockholders' EquityRevenue−Expense=Net IncomeA.− − n/a n/a n/a n/a n/a Which transaction would have this effect? Multiple Choice Return to a supplier of merchandise purchased on account. Return by a customer of a sale that was made on account. A loss on land that was sold for cash. Paid for merchandise that had been purchased on account.

2450

Lexington Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1) Acquired $3,500 cash from issuing common stock. 2) Borrowed $2,450 from a bank. 3) Earned $3,350 of revenues. 4) Incurred $2,450 in expenses. 5) Paid dividends of $450. Lexington Company engaged in the following transactions during Year 2: 1) Acquired an additional $750 cash from the issue of common stock. 2) Repaid $1,475 of its debt to the bank. 3) Earned revenues, $4,750. 4) Incurred expenses of $2,850. 5) Paid dividends of $940. Total liabilities on Lexington's balance sheet at the end of Year 1 equal:

6760

Lexington Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1) Acquired $3,700 cash from issuing common stock. 2) Borrowed $2,550 from a bank. 3) Earned $3,450 of revenues. 4) Incurred $2,470 in expenses. 5) Paid dividends of $470. Lexington Company engaged in the following transactions during Year 2: 1) Acquired an additional $850 cash from the issue of common stock. 2) Repaid $1,545 of its debt to the bank. 3) Earned revenues, $4,850. 4) Incurred expenses of $2,890. 5) Paid dividends of $1,060. The amount of total assets on Lexington's balance sheet at the end of Year 1 was:

2205 outflow

Lexington Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1) Acquired $4,700 cash from issuing common stock. 2) Borrowed $3,050 from a bank. 3) Earned $3,950 of revenues. 4) Incurred $2,570 in expenses. 5) Paid dividends of $570. Lexington Company engaged in the following transactions during Year 2: 1) Acquired an additional $1,350 cash from the issue of common stock. 2) Repaid $1,895 of its debt to the bank. 3) Earned revenues, $5,350. 4) Incurred expenses of $3,090. 5) Paid dividends of $1,660. What is the net cash flow from financing activities on Lexington's statement of cash flows for Year 2?

9660

Nelson Company experienced the following transactions during Year 1, its first year in operation. Issued $7,800 of common stock to stockholders Provided $4,100 of services on account Paid $2,050 cash for operating expenses Collected $2,800 of cash from accounts receivable Paid a $190 cash dividend to stockholders What is the total amount of assets shown on the balance sheet prepared as of December 31, Year 1?

800

Nelson Company experienced the following transactions during Year 1, its first year in operation. Issued $8,000 of common stock to stockholders Provided $4,300 of services on account Paid $2,100 cash for operating expenses Collected $2,900 of cash from accounts receivable Paid a $200 cash dividend to stockholders What is the of net cash flow from operating activities shown on the Year 1 statement of cash flows?

C

On September 30, the bank statement of Fine Company showed a balance of $11,300. The following information was revealed by comparing the bank statement to the cash balance in Fine's accounting records: Deposits in transit amounted to $4,650 Outstanding checks amounted to $8,500 A $700 check was incorrectly drawn on Fine's account NSF checks returned by the bank were $1,100 Bank service charge was $39 Credit memo for $150 for the collection of one of the company's account receivable Based on the above information, the true cash balance was: Multiple Choice $7,161. $8,911. $8,150. $8,261.

D

Owen Company's unadjusted book balance at June 30 is $10,220. The company's bank statement reveals bank service charges of $65. Two credit memos are included in the bank statement: one for $1,050, which represents a collection that the bank made for Owen, and one for $90, which represents the amount of interest that Owen had earned on its interest-bearing account in June. Based on this information, Owen's true cash balance is: Multiple Choice $11,425. $10,220. $11,180. $11,295.

D

Rainey Company's true cash balance at October 31 is $6,680. The following information is available for the bank reconciliation: Outstanding checks, $1,010 Deposits in transit, $670 Bank service charges, $130 The bank had collected an account receivable for Rainey Company, $1,400 The bank statement included an NSF check written by one of Rainey's customers for $840 Based on this information Rainey's unadjusted book balance at October 31 is: Multiple Choice $6,380. $7,650. $7,020. $6,250.

1100

Revenue on account amounted to $4,800. Cash collections of accounts receivable amounted to $4,500. Cash paid for expenses was $3,400. The amount of employee salaries accrued at the end of the year was $1,200. What is the net cash flow from operating activities for the year?

2500

Revenue on account amounted to $5,200. Cash collections of accounts receivable amounted to $3,200. Expenses for the period were $2,700. The company paid dividends of $750. What was the amount of net income for the period?

C

Robertson Company paid $1,850 cash for rent expense. As a result of this business event: Total stockholders' equity decreased. The net cash flow from operating activities decreased. Both total stockholders' equity and net cash flow for operating activities decreased. Liabilities decreased.

D

The bank statement for Tetra Company contained the following items: a bank service charge of $85; a credit memo for interest earned, $90; and a $200 NSF check from a customer. The company had outstanding checks of $475 and a deposit in transit of $1,050. Assuming that the unadjusted bank balance was $2,100, what is the unadjusted book balance? Multiple Choice $2,675. $3,150. $1,905. $2,870.

8200

The year-end financial statements of Calloway Company contained the following elements and corresponding amounts: Assets = $32,000; Liabilities = ?; Common Stock = $6,200; Revenue = $13,400; Dividends = $1,350; Beginning Retained Earnings = $4,350; Ending Retained Earnings = $8,200. Based on this information, the amount of expenses on Calloway's income statement was

D

Use the following account numbers and corresponding account titles to answer the following question. Account NumberAccount Title (1)Cash (2)Merchandise inventory (3)Cost of goods sold (4)Transportation-out (5)Dividends (6)Common stock (7)Selling expense (8)Loss on the sale of land (9)Sales revenue Which accounts would affect gross margin? Multiple Choice Account numbers 2 and 9. Account numbers 3, 4, 7, and 9. Account numbers 3, 7, 8 and 9. Account numbers 3 and 9.

D

Use the following account numbers and corresponding account titles to answer the following question. Account NumberAccount Title (1)Cash (2)Merchandise inventory (3)Cost of goods sold (4)Transportation-out (5)Dividends (6)Common stock (7)Selling expense (8)Loss on the sale of land (9)Sales revenue Which accounts would affect the amount of net income shown on the income statement? Multiple Choice Account numbers 2, 3, 7, 8, and 9. Account numbers 3, 5, 7, and 8. Account numbers 3, 4, 5, 7, and 9. Account numbers 3, 4, 7, 8, and 9.

B

What documentation issued by a bank increases a company's checking account balance at the bank? Multiple Choice Balance sheet Credit memo Certified check Debit memo

A

When using a perpetual inventory system, which of the following events is an asset use transaction? Multiple Choice Paid cash for transportation-out costs. Paid cash to purchase inventory. Purchased inventory on account. Paid cash for transportation-in costs.

B

Which of the following accounts is not closed at the end of an accounting cycle? Dividends Retained Earnings Expenses Revenues

C

Which of the following accounts would not appear on a balance sheet? Unearned Revenue. Salaries Payable. Service Revenue. Neither Service Revenue nor Unearned Revenue would appear on a balance sheet.

A

Which of the following illustrates how selling land for cash affects the financial statements? Balance Sheet: Income Statement Statement of Cash Flows Assets=Liabilities+Stockholders' Equity Revenue−Expense=Net Income A. n/a n/a n/an/a n/a n/a+ IA B. −n/a −n/a n/a n/a− IA C. ++n/an/a n/a n/a+ FA D .−n/a −n/a + −+ IA

Operations, Creditors, Investors

Which of the following is (are) source(s) of assets to a business?

D

Which of the following items appears in the investing activities section of the statement of cash flows? Cash inflow from interest revenue. Cash inflow from the issuance of common stock. Cash outflow for the payment of dividends. Cash outflow for the purchase of land.

C

Which of the following statements about materiality is not true? Multiple Choice Materiality is different for each company. A material error would change the opinion of the average prudent investor. Any error greater than $5,000 is considered material in a financial statement audit. Material misstatements should not exist in order for a company to receive an unqualified audit opinion.

C

Which of the following statements concerning internal controls is true? Multiple Choice Strong internal controls cannot be circumvented. Internal controls are limited to the policies and procedures used to protect the company from fraud. A system of internal controls is designed to prevent or detect errors and fraud. The control procedure, separation of duties, prohibits the employment of a husband and wife or other closely related parties within the same company.

ABC

Which of the following transactions does not involve a deferral? Recording operating expense incurred but not yet paid Recording interest earned that will be received in the next period Recording salary expense incurred but not yet paid Recording the pre-payment of two years' worth of insurance

D

Which of the following transactions does not involve an accrual? Recording operating expense incurred but not yet paid Recording interest earned that will be received in the next period Recording salary expense incurred but not yet paid Recording the pre-payment of two years' worth of insurance