Exam One - ACC201, Accounting Final

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Includes only permanent—balance sheet—accounts

post-closing trial balance

When is a liability for dividends created?

at the date of declaration

A company receiving payment of a $20,000 accounts receivable within 10 days with terms of 2/10, n/30, would record a sales discount of:

2% of $20,000

Use the following data to calculate the current ratio.

2.50 : 1

A very small company would have the most difficulty in implementing which of the following internal control activities?

Separation of duties.

When will bonds sell at a discount?

The stated rate of interest is less than the yield rate of interest at the time of issue.

Common stock usually has all of the following features except

1. conversion privilege.

Rent owed to the lessor under a short-term lease would appear on the balance sheet as

1. current liability.

If a company's bonds are callable,

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%.

In order to determine inventory for its balance sheet, a company must count the inventory at the end of its accounting period according to:

the periodic inventory system.

The Income Statement shows:

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

Which of the following is a transposition error?

writing $89 as $98

Plant assets are depreciated because

1. the accrual basis of accounting requires matching of costs to revenues. 2. 3. 4.

Which of the following is not classified properly as a current asset?

A receivable from the sale of an asset to be collected in two years

The book value of an asset is equal to the

asset's cost less accumulated depreciation.

Under the accrual basis of accounting:

events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.

Transportation-in is

part of the net cost of purchases

A list of accounts and their balances at a given time. A list of all active accounts and their balances at a particular date and used to prove the equality of debits and credits.

trial balance

Working capital is

used to evaluate a company's liquidity and short-term debt paying ability.

A company had beginning accounts receivable of $175,000. All sales were on account and totaled $550,000. Cash collected from customers totaled $650,000. Calculate the ending accounts receivable balance.

$ 75,000

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 stockholders' equity?

$2,000,000

Which of the following methods will result in the highest depreciation in the first year?

Declining-balance

Long-term debt generally includes

obligations that extend beyond one year.

Fantasy Cruise Lines On January 1, 2019 the company purchased a ship for $1,000,000. It has a 10-year useful life and a residual value of $100,000. The company uses the double-declining-balance method. Refer to Fantasy Cruise Lines. What will be the book value of the ship after 10 years?

$100,000

Refer to A-One Construction. If the aging approach is used to estimate bad debts, what amount should be recorded as bad debt expense?

$27,100

Which of the accounts is decreased by a debit entry?

unearned revenue prepaid insurance cash insurance expense

Fernbank Farms This company purchased a semi truck at the beginning of 2019 at a cost of $100,000. The truck had an estimated life of 5 years, an estimated residual value of $20,000, and will be depreciated using the straight-line method. On January 1, 2021, the company made major repairs of $30,000 to the truck that extended the life 3 years. Thus, starting with 2021, the truck has a remaining life of 5 years and a new salvage value of $8,000. Refer to Fernbank Farms. What amount should be recorded as depreciation expense each year starting in 2021?

$13,600 $16,000

Which of the following terms fit this definition: "The area of accounting principally concerned with reporting to external users."

Financial accounting

If a corporation repurchases 500 shares of its previously-issued common stock for $5,000 and then reissues it for $4,000, which of the following statements is true regarding the difference in the amounts of the repurchase and reissuance?

It is a decrease in stockholders' equity.

If a company uses the direct write-off method of accounting for bad debts,

It will record bad debt expense only when an account is determined to be uncollected.

Group 5 - Involves acquiring the resources necessary to run the business.

Involves acquiring the resources necessary to run the business. 2. 3. 4.

Which of the following is the correct entry to establish a petty cash fund in the amount of $300?

Petty Cash Fund 300 Cash 300

unearned revenue

a liability created when a business collects cash from customers in advance of providing services or delivering goods.

Income statement accounts are also known as which of the following?

temporary accounts

Plant assets are depreciated because

the accrual basis of accounting requires matching of costs to revenues

Many companies use MACRS (Modified Accelerated Cost Recovery System) depreciation for:

tax purposes because of a desire to report higher expenses in early years in order to pay lower taxes.

At the year-end inventory count, if goods in transit are shipped FOB shipping point, they should be included in the inventory count of:

the buyer

The balance in the retained earnings account represents

accumulated earnings that have not been distributed to stockholders

Depreciation is

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

Par value represents the

arbitrary amount that establishes a minimum price for the stock when it is first issued

If the amount assigned to ending inventory is incorrect,

both the balance sheet and income statement are affected.

Goodwill can be recorded as an asset when a(n)

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

A physical count of inventory is required even though the company uses the perpetual inventory system. This is an example of which of the following internal control activities?

checks on recorded amounts

Debit Entries

used to increase asset accounts

If a company determines cost of goods sold each time a sale occurs, it

uses a perpetual inventory system.

Land is not depreciated because it

will provide future benefits for a company for an unlimited period of time.

Bonds sell at a premium when the

market rate of interest is less than the stated interest rate at the time of issue

Bonds sell at a premium when the

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

Authorized stock represents the

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

Which of the following is not classified as a current liability account?

note payable, due in 2 years

Treasury shares represent the

number of previously issued shares that have been repurchased by the corporation

Which of the following is not a sound internal control procedure for cash disbursements?

paying with petty cash to expedite the payment process

Includes only permanent-balance sheet-accounts

post-closing trial balance

Transferring journal entries to ledger accounts.

posting

Dividends in arrears on cumulative preferred stock

should be disclosed in the notes to the financial statements

When bonds are sold for less than the par amount, this means that the

stated rate of interest is less than the yield rate of interest.

Assets

stockholder's equity + liabilities

When a corporation declares a cash dividend, which of the following is true?

stockholders' equity decreases

Fabian Woodworks This company purchased 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, 2019, and was used 27,000 hours in 2019 and 26,000 hours in 2020. Refer to Fabian Woodworks. If the company uses the units-of-production method, what is the depreciation rate per hour for the equipment?

$0.10

On January 15, Nifty Company sells merchandise on account to Martinez Associates for $5,000 with terms 3/10, n/30. On January 20, Martinez returns merchandise worth $1,000 to Nifty. On January 24, payment is received from Martinez for the balance due. What is the amount of cash received?

$3,880

Kaleidoscope Paint On January 1, 2019, this company issued $500,000, 10-year, 9% bonds for $480,745. The bonds pay interest on June 30 and December 31. The market rate is 10%. The company plans to use the effective interest method of amortizing bond discounts and premiums. Refer to Kaleidoscope Paint. What is the carrying value of the bonds on the maturity date?

$500,000

A company whose fiscal year ends December 31, has a weekly payroll of $100,000. Employees work 5 days per week, Monday through Friday and payday is every Friday. How much wages expense will be recorded on the Friday, January 3 payday?

$60,000

United Services and Supplies reports net income of $60,000 and cost of goods sold of $360,000. If US&S's gross profit rate was 40%, net sales were

$600,000.

Keller Company issued $1,000,000, 8%, 7 year bonds with interest payable semiannually when the yield rate was 8%. The bonds issued at

1. $887,037. 2. $1,112,963.-i/c $1,000,000. c.This question cannot be answered without the time value of money tables.

If a business has current assets of $62,000, total assets of $350,000, current liabilities of $31,000, and total liabilities of $125,000, then its current ratio will be

1. 3.0 2. 3. 4.

Liquidity

1. All of the above.

Group 4 - Future economic benefits.

1. Assets

Different companies using the same accounting principles.

1. Comparability

Group 5 - A separate legal entity under state laws.

1. Corporation 2. 3. 4.

A cost allocation process

1. Depreciation 2. 3. 4.

Group 5 - Distributions of cash from a corporation to its stock holders.

1. Dividends 2. 3. 4.

Refer to the information provided for Tedder Co. Which of the following entries correctly records the purchase assuming the units were acquired on credit under terms of 2/10, n/30? --

1. Purchases 264.60Purchase discounts 5.40Accounts payable 270.00 2. 3. 4.

A company receives $348, of which $28 is for sales tax. The journal entry to record the sale would include a

1. debit to Sales Taxes Expense for $28. 2. debit to Sales Taxes Payable for $28. debit to Sales Revenue for $348. debit to Cash for $348.

Expenses should be matched against revenue

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

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

1. interest expense by $600. 2. 3. 4.

The principle of conservatism is concerned with

1. the avoidance of overstating assets or income in the preparation of financial statements..

A current liability includes obligations which must be repaid

1. within one year or within the operating cycle, whichever is shorter. 2. 3. 4.

GT Company has $200 in cash, $500 in accounts receivable, and $700 in inventory. The company also has $200 in accounts payable and $200 in unearned sales revenue. What is the company's quick ratio?

1.75

Expenses incurred but not yet paid

Accrued expenses

Cost less accumulated depreciation

Book value

Which of the following would describe a callable bond?

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

What is the impact on the accounting equation of recording a payment to a supplier on account?

Both assets and liabilities decrease.

Which of the assets listed below is considered the most liquid?

Cash

A list of all asset, liability, stockholders' equity, revenue, expense, and dividend accounts which are used by the company is called a(n)

Chart of Accounts.

Cash, Accounts Receivable and Prepaid Insurance will be classified on a balance sheet as

Current assets

Working capital is calculated by which of the following?

Current assets minus current liabilities

Current assets divided by current liabilities.

Current ratio

Retained Earnings is reduced by which of the following?

Dividends

Which of the accounts is increased by a debit entry?

Equipment notes payable common stock service revenue

In a period of declining prices, which of the following inventory methods generally results in the lowest balance sheet figure for inventory?

FIFO method

Which of the following statements regarding contingent liabilities is true?

If they are probable and estimable, then they must be recorded even before the outcome of the future event.

Which is not a major category for long-term assets?

Inventory

An item important enough to influence the decision of an investor or creditor.

Materiality

If common stock is issued for an amount greater than par value, the excess should be credited to

Paid-in Capital in Excess of Par Value.

Suppose a corporation issues 5,000 shares of $1 par common stock for $30 per share. In addition to the increase in cash, what effect does this transaction have on the accounting equation?

Paid-in capital in excess of par increases $145,000.

Revenue is recognized when the performance obligation is satisfied.

Revenue recognition principle

Measures of the ability of the company to survive over a long period of time.

Solvency ratios

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

HVAC Service. Record the purchase of office equipment and supplies will include:

a credit to accounts payable

An addition to employee compensation whereby the corporation provides a right to purchase stock at a set price is called

a stock option

Having one employee prepare company checks and sign those checks relates to which internal control activity?

a violation of proper segregation of duties

This company purchased a semi truck at the beginning of 2019 at a cost of $100,000. The truck had an estimated life of 5 years, an estimated residual value of $20,000, and will be depreciated using the straight-line method. On January 1, 2021, the company made major repairs of $30,000 to the truck that extended the life 3 years. Thus, starting with 2021, the truck has a remaining life of 5 years and a new salvage value of $8,000. Refer to Fernbank Farms. When calculating depreciation for 2021, the company's accountant should

add the $30,000 to the book value at December 31, 2020, and then allocate the revised depreciation basis over the remaining adjusted useful life of 5 years.

All of the following are examples of internal control procedures except

customer satisfaction surveys.

Fabian Woodworks This company purchased 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, 2019, and was used 27,000 hours in 2019 and 26,000 hours in 2020. Refer to Fabian Woodworks. Based on the information presented above, what method of depreciation will maximize depreciation expense in 2020?

double-declining-balance

Efforts are related to accomplishments

expense recognition principle

Receivables might be sold to

generate cash quickly.

Which of the following is an intangible asset?

goodwill

The statement of cash flows

summarizes the operating, financing, and investing activities of an entity.

Which of the following preferred stock features authorizes the corporation to redeem shares at a fixed price on or after a specified date?

the call provision

Cost of goods sold is equal to

the cost of merchandise purchased plus transportation costs plus beginning inventory minus purchase returns and allowances and purchased discounts minus ending inventory.

Depreciation is a process by which

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

Which of the following sets of factors is needed to calculate depreciation on plant and equipment?

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

All of the following would be considered internal control weaknesses except:

the practice of shipping goods to customers right before year-end even though the customers had not ordered them.

Group 9 - Left side of an account.

1. Debit

Refer to Labor Finders, Inc. The company's 2020 earnings per share is reported as

$1.30

Return on principal plus interest for two or more periods.

Compound interest

Hesson properties. How much is still owed to the company by its customers at the end of the month?

$1,000

Keller Company issued $1,000,000, 8%, 7 year bonds with interest payable semiannually when the yield rate was 8%. The bonds issued at

$1,000,000.

A credit sale of $1,400 is made on July 15, terms 2/10, net/30, on which a return of $100 is granted on July 18. What amount is received as payment in full on July 24?

$1,274

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

Refer to the information provided for Aaron Corporation. Calculate the Cost of Goods Sold.

$105,500

Given the data below for a firm in its first year of operation, determine net income under the accrual basis of accounting.

$11,750

If total assets are $100,000, liabilities are $60,000, and Common Stock is $25,000, the Retained Earnings of the firm is:

$15,000

The interest on a $15,000, 6%, 60-day note receivable is

$150

Fantasy Cruise Lines On January 1, 2019 the company purchased a ship for $1,000,000. It has a 10-year useful life and a residual value of $100,000. The company uses the double-declining-balance method. Refer to Fantasy Cruise Lines. Compute the amount of depreciation expense for the year ended December 31, 2019.

$200,000

A company's unadjusted bank balance is $3,000. Outstanding checks amount to $500 and deposits in transit total $300. Based on this information alone, what is the company's adjusted cash balance for the purpose of preparing a bank reconciliation?

$2800

Lasik Vision, Inc. began business on June 1, 2019. The corporate charter authorized issuance of 1,000 shares of no-par common stock and 4,000 shares of $6 par, 6% cumulative preferred stock. As of the beginning of 2020, 200 shares of common stock had been issued and none of the preferred stock had been issued. If the company issues 400 shares of common stock on March 1, 2020 for $10 per share, the journal entry would include a

$4,000 credit to common stock.

This company received a promissory note from a customer on July 1, 2019. The face amount of the note is $45,000; the terms are 12 months and 10% annual interest.

$4,500

Given the data below for a firm in its first year of operation, determine net income under the cash basis of accounting.

$7,700

A Better Mousetrap The company sold merchandise to a customer on December 1, 2019, for $100,000. The customer paid with a promissory note that has a term of 6 months and an annual interest rate of 9%. The company's accounting period ends on December 31. Refer to A Better Mousetrap. What amount should the company recognize as interest revenue on December 31, 2019?

$750

Refer to the information provided for Klump Co. If the company uses the (moving) Average Cost inventory costing method, ending inventory at June 30th is:

1,819.86

Eli Company Eli Company sells novelty items and offers terms of 1/10, n/30 to credit customers. One customer, Faulkner, Inc., purchased 100 Sweet-16 party decor packs with a list price of $20 each on March 5, 2019. Refer to the information provided for Eli Company. If the customer pays the invoice on March 31, 2013, how much sales discount will Eli Company recognize?

1. $200 2. 3. 4.

Refer to the information provided for Tedder Co. If the company uses the weighted average method of inventory costing, how much is cost of goods sold for January?

1. $240 2. 3. 4.

1. 482,282.

Refer to the information provided for Pham Enterprises. What is the company's gross profit ratio for the year ended December 31?

1. 50.25% 2. 3. 4.

Georgia's Salon The salon sells $50,000 of gift cards in May 2019. These gift cards may be used anytime before their expiration on May 31, 2020. Refer to Georgia's Salon. During May 2019, $10,000 of the gift cards were redeemed for salon services. Which of the following is the correct journal entry to record the redemption of the gift cards?--

1. Prepaid Sales Revenue 10,000 Sales Revenue 10,000 2. 3. 4.

Group 3 - Expenses paid before they are incurred

1. Prepaid expenses

Value today of a series of future amounts to be received or paid.

1. Present value of an annuity

Group 5 - Ownership is limited to one person.

1. Sole proprietorship 2. 3. 4.

The supplies account has a balance of $1,000 on January 1. During January, the company purchased $25,000 of supplies on account and the liability was appropriately recorded. A count of supplies at the end of January indicates a balance of $3,000. Which one of the following is a correct amount to be reported on the company's financial statements for the month ending January 31?

1. Supplies Expense - $26,000 2. 3. 4.

The current portion of long-term debt would appear on the balance sheet as

1. current liability.

Authorized stock represents the

1. maximum number of shares that can be issued for each class of stock.

Gross profit equals the difference between

1. net income and operating expenses. 2. sales revenue and cost of goods sold. sales revenue and operating expenses. sales revenue and cost of goods sold plus operating expenses.

The going concern assumption is concerned with

1. offsetting management's natural optimism by providing a prudent approach to uncertainty in financial statement items. 2. 3. 4.

Each of the following documents is used in the control of cash disbursements except

1. outstanding checks. 2. 3. 4.

Refer to HVAC Service. The journal entry to record payment for the office equipment and supplies will include a debit to--

1. prepaid expenses. 2. 3. 4.

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 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?

1.77

Fabian Woodworks This company purchased 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, 2019, and was used 27,000 hours in 2019 and 26,000 hours in 2020. Refer to Fabian Woodworks. If the company uses the double-declining-balance depreciation method, what amount is the depreciation expense for 2020?

2,880

The total amount of interest that will be paid on a 5-year, $90,000 note payable at 11% simple annual interest is?

49,500

Which of the following statements regarding accounts payable is false?

Accounts payable arise when a business promises to purchase goods or services in the future.

The salon sells $50,000 of gift cards in May 2019. These gift cards may be used anytime before their expiration on May 31, 2020. Refer to Georgia's Salon. Which of the following is the correct journal entry to record the sale of the gift cards?

Cash 50,000 Unearned Sales Revenue 50,000

Hesson Properties. What journal entry is required to record the collections on account from customers?

Cash 500 Accounts Receivable 500

Events recorded only in periods the company receives or pays cash

Cash basis

Which set of items below are current assets?

Cash, Accounts Receivable, Inventory, and Office Supplies

Distributions of cash from a corporation to its stock holders.

Dividends

Cash from operating activities less capital expenditures and cash dividends.

Free cash flow

The value at a future date of a given amount invested.

Future value of a single amount

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

Income Taxes Payable and Salaries Payable

Accent Flooring The company received a promissory note from a customer on March 1, 2019. The principal amount of the note is $20,000; the terms are 3 months and 9% annual interest. Refer to the information for Accent Flooring. At the maturity date, the customer pays the amount due for the note and interest. What entry is required on the books of Accent Flooring on the maturity date assuming that none of the interest had already been recognized?

Increase Cash by $20,450, increase Interest Revenue by $450, and decrease Notes Receivable by $20,000

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

LIFO

In a period of rising prices, which of the following inventory methods generally results in the lowest net income figure?

LIFO method

Which depreciation method is most frequently used in businesses today?

Straight-line.

Abbreviated version of an account, useful for analyzing the effects of business events

T-Account

When a corporation issues a stock dividend, which of the following is true?

Total stockholders' equity remains the same.

Each of the following items is considered a cash equivalent except:

a 180-day note issued by a local government

If the market interest rate for a bond is higher than the stated interest rate, the bond will sell at

a discount.

An accounting record of increases and decreases in specific assets, liabilities, and stockholders' equity items.

account

In the reconciliation of a bank statement, deposits in transit should be

added to the unadjusted bank statement balance.

Madson Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 90,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?

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

balance sheet

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

creditor

Which of the following correctly identifies normal balances of accounts?

The payment of Accounts Payable results in a(n)

decrease in both liabilities and assets.

With the effective interest method of amortization, the amortization of a bond premium results in a(n)

decrease in interest expense.

While preparing a bank reconciliation, which of the following items would be added to the bank statement balance?

deposits in transit

Refer to Fabian Woodworks. Based on the information presented above, what method of depreciation will maximize depreciation expense in 2020?

double-declining-balance

The system of accounting in which there are at least two accounts affected in every transaction so that the accounting equation stays in balance is called

double-entry.

The revenue recognition principle dictates that revenue should be recognized in the accounting period in which it is:

earned

The common characteristic possessed by all assets is

future economic benefit

The value today of a future amount to be received or paid.

Present value of a single amount

Value today of a series of future amounts to be received or paid.

Present value of an annuity

Noncurrent assets that do not have physical substance.

Intangible assets

Which of the following entries is necessary for recording the replenishment of the fund?

Postage Expense 48 Office Supplies Expense 146 Delivery Expense 35 Cash 229

Which of the following entries is necessary for recording the replenishment of the fund?

Postage Expense 48 Office Supplies Expense 146 Delivery Expense 35 Cash 229

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

Working Capital

current assets minus current liabilities

Rent owed to the lessor under a short-term lease would appear on the balance sheet as

current liability.

The current portion of long-term debt would appear on the balance sheet as

current liability.

A high accounts receivable turnover ratio indicates

customers are making payments very quickly.

B&B Painting: How much was paid out in dividends in 2019? Revenues $2,500,000 Expenses $2,000,000 RE $100,000 RE $450,000

$150,000

$160,000

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?

$2,000,000 assets - liabilities = stockholder's equity

$3,750

Refer to A Better Mousetrap. What amount should the company recognize as interest revenue on the maturity date of the note?

$3,750

What is the company's net income for the year based on the accrual basis of accounting?

$554

How much will be recorded as land improvements?

$6,000

Group 5 - A report prepared by management that presents financial information.

1. Annual report 2. 3. 4.

Which one of the following represents the expanded basic accounting equation?

1. Assets + Dividends + Expenses = Liabilities + Common Stock + Revenues

Dietz, Inc. sells merchandise on credit. If a customer pays its balance due within the discount period, what is the effect of the payment on Dietz's accounting equation?

1. Assets decrease and liabilities increase. 2. 3. 4.

Net Income appears on which financial statement(s)?--

1. Both the Balance Sheet and the Income Statement 2. 3. 4.

Return on principal plus interest for two or more periods.

1. Compound interest

Group 8 - Current assets divided by current liabilities.

1. Current ratio

Group 5 - Officers and others who manage the business.

1. Internal users 2. 3. 4.

Group 9 - Shows the debit and credit effects of specific transactions.

1. Journal

Debit entries are used to

1. increase asset accounts. 2. 3. 4.

Cost of goods sold is equal to

1. the cost of merchandise purchased plus transportation costs plus beginning inventory minus purchase returns and allowances and purchase discounts. 2. 3. 4.

Parlato Corp. has an inventory turnover rate of 8 times. Calculate the company's average days to sell inventory.

45.625

Which of the following companies would most likely have the highest inventory turnover?

A bakery.

Balance Sheet

A financial statement that reports assets, liabilities, and owner's equity (current financial position) on a specific date.

Group 5 - Future economic benefits.

ASSETS

Hesson properties. What journal entry is required to record the services provided to customers?

Accounts Receivable $1500 Service Revenue $1500

Action Signs recorded credit sales of $10,000 on the gross method. Terms are 2/20, n/30. Select the correct statement about the entry to record this sale.

Accounts receivable increases $10,000

Revenues earned but not yet received in cash or recorded

Accrued revenues

Fabian Woodworks This company purchased 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, 2019, and was used 27,000 hours in 2019 and 26,000 hours in 2020. Refer to Fabian Woodworks. Based on the information presented above, what method of depreciation will maximize depreciation expense in 2019?

All methods produce the same expense in 2019.

An internal Control system is important to a business because it

All of the above

Which of the following is not a current liability?

Bonds Payable

Which of the following principles dictates that expenses are recognized in the same accounting period as their related revenue?

Expense recognition (Matching)

What is the distinguishing characteristic between accounts receivable and notes receivable?

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

Which of the following would be deducted from the balance per bank on a bank reconciliation?

Outstanding checks.

Information that has a bearing on a decision.

Relevance

Ending retained earnings for a period is equal to beginning

Retained earnings + Net income - Dividends

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

Retained earnings is reported on the Balance Sheet.

How is the balance sheet linked to other financial statements?

Retained earnings is reported on the balance sheet.

Which one of the following relationships shows the proper structure of a corporation?

Stockholders select the board of directors, who select officers.

Failure to record dividends paid would result in which of the following?

Stockholders' equity being overstated.

If a corporation issues cumulative, participating preferred stock, which of the following is true regarding the rights of the preferred stockholders?

They will share in the dividends that exceed a specified amount.

Revenues earned but not yet received

accrued revenues

Fernbank Farms This company purchased a semi truck at the beginning of 2019 at a cost of $100,000. The truck had an estimated life of 5 years, an estimated residual value of $20,000, and will be depreciated using the straight-line method. On January 1, 2021, the company made major repairs of $30,000 to the truck that extended the life 3 years. Thus, starting with 2021, the truck has a remaining life of 5 years and a new salvage value of $8,000. Refer to Fernbank Farms. When calculating depreciation for 2021, the company's accountant should

add the $30,000 to the book value at December 31, 2020, and then allocate the revised depreciation basis over the remaining adjusted useful life of 5 years.

Adjusting entries are made to ensure that:

all of these answer choices are correct.

Academy Grill Supply On October 1, 2019, the company received a $50,000 promissory note from a customer. The annual interest rate is 6%. Principal and interest will be collected in cash at the maturity date of September 30, 2020. Refer to Academy Grill Supply. The effect on the company's financial statements on December 31, 2019 is as follows

assets and Stockholders' equity increase.

Which of the following items would not be a reconciling item on a bank reconciliation?

canceled checks

Checks presented for payment and paid by the bank are known as

canceled checks.

Current Assets

cash and other assets expected to be exchanged for cash or consumed within a year cash, accounts receivable, inventory, office supplies

The category that is generally considered to be the best measure of a company's ability to continue as a going concern is

cash flows from operating activities.

A list of all the accounts used by a company.

chart of accounts

For companies that use a perpetual inventory system, all of the following are purposes for taking a physical inventory except to:

determine ownership of the goods.

Two methods of accounting for uncollectible accounts are the

direct write-off method and the allowance method.

What are current liabilities on a classified balance sheet?

income taxes payable and salaries payable

debit entries are used to

increase asset accounts.

Each of the following documents is used in the control of cash receipts except

outstanding checks

A current liability includes obligations which must be repaid

within one year or within the operating cycle, whichever is longer.

A current liability is a debt that can reasonably be expected to be paid

within one year, or the operating cycle, whichever is longer.

Which of the following terms does not describe the interest rate printed on the bond certificate?

yield rate

Fabian Woodworks This company purchased 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, 2019, and was used 27,000 hours in 2019 and 26,000 hours in 2020. Refer to Fabian Woodworks. If the company uses the straight-line method of depreciation, what is the book value at December 31, 2021?

$ 6,000

What are the total sales for a company that reported a net loss of $1,500,000 and total expenses of $2,500,000?

$1,400,000 total expenses - net loss = total sales

An oil company purchased 10,000 acres of land on January 1, 2019, for $5,000,000, on which it developed an underground oil site. The company spent $11,000,000 to prepare the site for operation but believes that 500,000 barrels of oil can be extracted from the site over 5 years after drilling begins. The land has a residual value of $250,000. Assuming 50,000 barrels of oil were extracted from the land in 2021, how much depletion would be recorded?

$1,575,000

Refer to the information provided for Klump Co. If the company uses the (moving) Average Cost inventory costing method, ending inventory at June 30th is:

$1,819.86

Fabian Woodworks This company purchased 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, 2019, and was used 27,000 hours in 2019 and 26,000 hours in 2020. Refer to Fabian Woodworks. What amount will be reported as depreciation expense over the 5-year life of the equipment?

$10,000

On April 1, 2019, Guyton Sails accepted a $12,000 advance payment for maintaining a customer's fleet of sail boats. The contract is for a twelve month period. In May 2019, the company performed $1,200 worth of repairs. What is the remaining liability that would appear on the company's balance sheet at the end of May?

$10,000

A corporation has 5,000 shares of $5 par, 6% cumulative preferred stock outstanding and 25,000 shares of $2 par common stock outstanding. No dividends have been paid for the past 2 years. If the company wishes to distribute $2 per share to the common stockholders this year, what is the total amount of dividends that must be paid?

$54,500

An insurance company received advance payments from clients during 2019 of $12,000. At December 31, 2019, $10,000 of the advance payments still had not been earned. After the adjustments are recorded and posted at December 31, 2019, what will the balances be in the Unearned Insurance Revenue and Insurance Revenue accounts? Unearned Insurance Revenue Insurance Revenue

$10,000 $2,000

For Year 2 Daisy Corporation reported net income of $60; net sales $800; and average shares outstanding 6. There were no preferred stock dividends. What were the Year 2 earnings per share for Daisy?

$10.00

On January 1, 2019, a company issued 10,000 shares of 10%, $10 par value cumulative preferred stock. No dividends were declared in 2019 or 2020. In 2021, the company declared a dividend of $200,000. How much of the 2021 dividend should be paid to common stockholders?

$170,000

Art Shoes This company received a promissory note from a customer on July 1, 2019. The face amount of the note is $45,000; the terms are 12 months and 10% annual interest. Refer to Art Shoes. How much interest revenue will the company recognize for the year ended December 31, 2019?

$2,250

Refer to Art Shoes. How much interest revenue will the company recognize for the year ended December 31, 2019?

$2,250

$22,500.

At January 1, 2017, Troyer Industries reported Retained Earnings of $350,000. During 2017, Troyer had a net loss of $75,000 and paid dividends to the stockholders of $50,000. At December 31, 2017, the balance in Retained Earnings is

$225,000 credit.

Kaleidoscope Paint On January 1, 2019, this company issued $500,000, 10-year, 9% bonds for $480,745. The bonds pay interest on June 30 and December 31. The market rate is 10%. The company plans to use the effective interest method of amortizing bond discounts and premiums. Refer to Kaleidoscope Paint. The interest expense on the bonds at June 30, 2019, is

$24,037

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

$3,200-i/c

Carnegie Jewelers accepted a 9-month, 9% note for $100,000 from a customer on July 1, 2019. The note is due on March 31, 2020. Assuming the company's accounting period ends on December 31, 2019, how much interest revenue should be recognized during 2019 and 2020?

$4,500 $4,500-i/c

A plant asset with a cost of $600,000 and accumulated depreciation of $570,000 is sold for $70,000. What is the amount of the gain or loss on disposal of the plant asset?

$40,000 gain.

$482,282

The interest charged on a $400 note payable, at the rate of 6%, on a 90-day note would be

Fabian Woodworks This company purchased 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, 2019, and was used 27,000 hours in 2019 and 26,000 hours in 2020. Refer to Fabian Woodworks. If the company uses the straight-line method of depreciation, what is the book value at December 31, 2021?

$6,000

On the issuance date, the Bonds Payable account has a balance of $55,000,000 and Premium on Bonds Payable has a balance of $5,000,000. These bonds issued at

$60,000,000.

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

A company uses $10,500,000 of revenues, declares and pays $500 in dividends and has net income of $1,600,000. How much were expenses?

$8,900,000 revenues - net income = expenses

$80,000

Total stockholders' 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?

$95,000

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

1. $1,400,000

Georgia's Salon The salon sells $50,000 of gift cards in May 2019. These gift cards may be used anytime before their expiration on May 31, 2020. Refer to Georgia's Salon. Which of the following is the correct journal entry to record the sale of the gift cards?

. Cash 50,000 Unearned Sales Revenue 50,000

A landscaping company operates five days per week with a daily payroll of $16,000. Employees are paid every Saturday for the workweek just completed (Monday through Friday). The last day of the month is Wednesday, March 31. What is the amount of Wages Expense recorded on the next payday, Saturday, April 3?

1. $ -0- 2. 3. 4.

A company borrowed $100,000 on a one-year, 10% note on September 1, with interest and principal to be paid at maturity. How much interest payable will be reported on the balance sheet at November 30?

1. $ 2,500

1. $100,000

1. $12,000 2. 3. 4.

1. $275,000 2. 3. 4.

Refer to A-One Construction. If the aging approach is used to estimate bad debts, what amount should be recorded as bad debt expense?

1. $29,200 2. 3. 4.

During January, Gaston Wholesalers experienced some difficulties with cash flow so it approached one of its vendors about a payment extension. The vendor agreed to the extension on the condition that the company sign a 30-day note that includes 9% interest. What journal entry is needed to record the retirement of the note on the maturity date?

1. Debit notes payable, credit interest expense, and credit cash. 2. 3. 4.

A company rented office space to a tenant on January 1 and received a total of $90,000 for the first nine months of rent. The amount was recorded as Rent Collected in Advance when received. Adjustments are recorded only at the end of every quarter. What effect does the adjustment at March 31 have on the company's net income for the quarter ending March 31?

1. Decrease by $30,000 2. Increase by $90,000 Increase by $30,000 Decrease by $60,000

Group 5 - Consumed assets or services.

1. Expenses 2. 3. 4.

The value at a future date of a given amount invested.

1. Future value of a single amount

Group 2 - The sum of all the payments or receipts plus the accumulated compound interest on them.

1. Future value of an annuity

The sum of all the payments or receipts plus the accumulated compound interest on them.

1. Future value of an annuity

Suppose a corporation issues 5,000 shares of $1 par common stock for $30 per share. In addition to the increase in cash, what effect does this transaction have on the accounting equation?

1. Gain on stock issuance increases $145,000. 2. 3. 4.

Group 4 - Creditor claims against the assets of the business.

1. Liabilities

Group 5 - Creditor claims against the assets of the business.

1. Liabilities 2. 3. 4.

Group 5 - A section of the annual report that presents management's views.

1. Management discussion and analysis 2. 3. 4.

Group 9 - The side which increases an account.

1. Normal account balance

Group 9 - journal entries to ledger accounts.

1. Posting

What does the phrase, "revenue is recognized when earned" mean?

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

A growing corporation had $180,000 of its $30 par common stock issued before its recent 3-for-1 stock split. The market price of the stock was $120 per share before the split. Which of the following is true as a result of the split?--

1. The market price of the stock tripled. 2. 3. 4.

Refer to HVAC Service. The journal entry to record the purchase of office equipment and supplies will include a credit to

1. accounts payable.

What happens to the accounting equation when the adjustment for depreciation expense for the accounting period is recorded?

1. assets decrease and stockholders' equity decreases

The current portion of long-term debt should

1. be classified as a long-term liability. 2. be reclassified as a current liability. 3. be paid immediately. 4. not be separated from the long-term portion of debt.-i/c

Goodwill can be recorded as an asset when a(n)

1. business can determine that it has created customer goodwill and name recognition. 2. 3. 4.

Credit entries are used to

1. increase liability accounts.

If the amount assigned to ending inventory is incorrect,

1. the balance sheet is affected, but cost of goods sold is not. 2. 3. 4.

If a company's bonds are callable,

1. the bondholder has the right to sell an option on the bond. 2. 3. 4.

1.77

If a business has current assets of $62,000, total assets of $350,000, current liabilities of $31,000, and total liabilities of $125,000, then its current ratio will be

2.0

Some of the steps in the accounting cycle are listed below. Select the choice that places these steps in the correct order. 1.Close the accounts. 2.Post transactions to accounts in the ledger. 3.Journalize daily transactions. 4.Record and post adjustments. 5.Prepare financial statements.

3, 2, 4, 5, 1

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?

3.50

Refer to the information provided for Pham Enterprises. What is the company's average-days-to-sell inventory measure?

59.76 days

Two friends decide to launch a new business by investing $25,000 each in Hot Spot Tanning. They are given shares of stock as evidence of their ownership interest. What effect does this transaction have on the accounting equation?

Assets and liabilities increase. i/c

A list of all active accounts and their balances at a particular date, which is used to prove the equality of debits and credits, is a

Chart of Accounts.

Economic events can be identified with a particular unit of accountability.

Economic entity assumption

Same accounting principles and methods used from year to year within a company.

Consistency

A business organized as a separate legal entity from its owners is a:

Corporation

A corporation purchased a three-year insurance policy on December 1, Year A for $7,200. Assuming that the. corporation debited the prepaid insurance account in recording the original transaction, the adjusting entry on December 31, Year A, the company's yearend, will include a:

Credit to prepaid insurance for $200

What is the order in which assets are generally listed on a classified balance sheet?

Current; long-term investments; property, plant and equipment, intangibles

Debit notes payable, debit interest expense, and credit cash.

(Net income - preferred stock dividends) divided by average common shares outstanding.

Earnings per share

Hesson Properties. What journal entry is required to record the purchase of the carts?

Equipment 1,500 Accounts Payable 1,500

Consumed assets or services.

Expenses

If a company fails to adjust for accrued expenses, what effect will this have on that month's financial statements?

Expenses will be understated and net income and stockholders' equity will be overstated.

Which of the following statements is true with regard to 7% cumulative, participating preferred stock?

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 not one of the main factors that contribute to fraudulent activity?

Incompatible duties.

Officers and others who manage the business.

Internal users

Which of the following is not one of the three forms of business organization?

Investors

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?

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

Georgia's Salon The salon sells $50,000 of gift cards in May 2019. These gift cards may be used anytime before their expiration on May 31, 2020. Refer to Georgia's Salon. On May 31, 2020, all but $1,500 of the gift cards had been redeemed for salon services. What is the impact on the accounting equation of recording the expired gift cards?

Liabilities decrease and stockholders' equity increases.

What is the impact on the accounting equation of recording the accrual of interest expense?

Liabilities increase and stockholders' equity decreases.

What is the impact on the accounting equation of recording the accrual of wages expense?

Liabilities increase and stockholders' equity decreases.

Measures of the short-term ability of the enterprise to pay its maturing obligations.

Liquidity ratios.

The side which increases an account

Normal account balance

Which of the following transactions affects total liabilities?

Payment is made on bank loan

Which of the following would appear on the balance sheet as a current liability?

Payments that are likely to occur for pension benefits to employees.

The economic life of a business can be divided into artificial time periods

Periodicity assumption

Which of the following would be unethical?

Recording backdated revenue.

Net Income may be defined as follows

The excess of revenues over expenses for the time period

Which of the following is not a significant date with respect to dividends?

The incorporation date.

Which of the following is the most appropriate and modern definition of accounting?

The information system that identifies, records, and communicates the economic events of an organization to interested users.

Which of the following statements about bond accounting under the effective interest method is correct?

The interest expense is calculated as the carrying value × the yield rate.

The par value of the stock decreased to $10 per share.

What is the primary reason for a stock split?

To decrease the market value of the stock.

Georgia's Salon The salon sells $50,000 of gift cards in May 2019. These gift cards may be used anytime before their expiration on May 31, 2020. Refer to Georgia's Salon. On May 31, 2020, all but $1,500 of the gift cards had been redeemed for salon services. Which of the following is the correct journal entry to record for the expired gift cards?

Unearned Sales Revenue 1,500 Sales Revenue 1,500

Georgia's Salon The salon sells $50,000 of gift cards in May 2019. These gift cards may be used anytime before their expiration on May 31, 2020. Refer to Georgia's Salon. On May 31, 2020, all but $1,500 of the gift cards had been redeemed for salon services. Which of the following is the correct journal entry to record for the expired gift cards?

Unearned Sales Revenue 1,500 Sales Revenue 1,500

Unearned Sales Revenue 10,000 Sales Revenue 10,000

Hesson Properties. What journal entry is required to record the utility bill?

Utilities Expense 300 Accounts Payable 300

The excess of current assets over current liabilities.

Working capital

Each of the following items is considered a cash equivalent except

a 180-day note issued by a local government.

The Discount on Bonds Payable account is shown on the balance sheet as

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

Art Shoes This company received a promissory note from a customer on July 1, 2019. The face amount of the note is $45,000; the terms are 12 months and 10% annual interest. Refer to Art Shoes. At the maturity date, the customer pays for the note and interest. The company made the proper adjustment at the end of December for interest. The effect of recognizing the transaction on the maturity date is

a decrease to Notes Receivable.

The Income Statement shows

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

A customer returned damaged goods for credit. Under a perpetual system, which of the seller's accounts decreases?

accounts receivable

On the balance sheet, the cumulative amount of plant and equipment already expensed is reported in an account called

accumulated depreciation

The amount of a current liability reported on the balance sheet for interest payable includes

all interest currently owed related to amounts borrowed in past transactions.

A Premium on Bonds Payable account would appear on the balance sheet as

an increase to a long-term liability.

If the cash budget showed a projected cash shortage, the company would most likely

arrange to borrow the necessary cash for that period.

assets and Stockholders' equity increase.

Powers Corporation received a cash advance of $500 from a customer. As a result of this event,

assets increased by $500.

Plant assets are ordinarily presented in the balance sheet

at cost less accumulated depreciation.

While preparing a bank reconciliation, which of the following items would be subtracted from the balance per the company records?

bank service charges

Failure to record depreciation expense for the period results in which of the following?

both a & c Net income being overstated. Stockholders' equity being overstated.

Journal

chronological record in which transactions are recorded in the order they occur; shows the debit and credit effects of specific transactions

Treasury Stock is a(n)

contra stockholders' equity account.

A Discount on Bonds Payable account would appear on the balance sheet as:

contra-liability.

Common stock usually has all of the following features except

conversion privilege.

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

cooperative

When bonds are issued by a company, the accounting entry shows an:

increase in assets and an increase in liabilities.

Left side of an account.

debit side

Many stockholders choose to invest in preferred stock because

dividends are distributed to preferred stockholders before common stockholders.

Creditor

expects repayment with interest

A company would be expected to generate small amounts of cash from operations during the

growth phase.

The purchase of an asset on credit

increases assets and 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

interest payable by $1,050.

interest payable by $1,200.

Accumulated Depreciation

is a adjunct account.-i/c

All of the following would be considered internal control weaknesses except

it takes two days to get a check written because of the approvals required.

The entire group of accounts maintained by a company.

ledger

Debts and obligations of a business are referred to as

liabilities.

A landlord records the collection of a tenant's security deposit as a(n)

liability

A twenty-year lease obligation would appear on the balance sheet as

long-term liability.

On January 1, a company sold a machine for $5,000 that it had used for several years. The machine cost $11,000, and had accumulated depreciation of $4,500 at the time of sale. What gain or loss will be reported on the income statement for the sale of the machine for the year ended December 31?

loss of $1,500

After a corporation declares a cash dividend, what takes place on the date of record?

no entry is necessary

Outstanding shares represent the

number of shares that are currently held by stockholders.

While preparing a bank reconciliation, which of the following items would be subtracted from the balance per the bank statement?

outstanding checks

Expenses paid before they are incurred

prepaid expenses

The primary purpose of the statement of cash flows is to

provide information about the cash receipts and cash payments during a period.

Hunter Company reported a net loss of $12,000 for the year ended December 31, 2017. During the year, accounts receivable decreased $28,000, inventory increased $20,000, accounts payable increased by $30,000, and depreciation expense of $24,000 was recorded. During 2017, operating activities

provided net cash of $50,000.

The journal entries required for purchase and sales transactions using the perpetual system are more complex than under the periodic system but offer the advantage of

providing management with more complete information from which to control inventories.

Expenses

resources that are used to earn revenues during a period; the cost of assets used in the operations of a business

A merchandiser that sells directly to consumers is a

retailer.

Which of the following is one of the elements of stockholders' equity?

retained earnings

All of the following statements regarding retained earnings are true except

retained earnings represents a claim on cash.

Has a credit normal balance

revenue account

A bond issuing at 101.25 means that the bond

sold for $1,012.50

Evidence that a transaction has taken place.

source document

Many companies use MACRS (Modified Accelerated Cost Recovery System) depreciation for

tax purposes because of a desire to report higher expenses in early years in order to pay lower taxes.

At the year-end inventory count, if goods in transit are shipped FOB shipping point, they should be included in the inventory count of:

the buyer.

Depreciation is a process by which

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

At the year-end inventory count, if goods in transit are shipped FOB destination, they should be included in the inventory count of

the seller

If goods in transit are shipped FOB destination

the seller has legal title to the goods until they are delivered.

At the year-end inventory count, if goods in transit are shipped FOB destination, they should be included in the inventory count of

the seller.

Convertible bonds are attractive to bondholders because

they can be converted into stock at the bondholder's option.

Each of the following documents is used in the control of cash disbursements except

bank credit memos

credit entries are used to

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

$ -0-

Refer to the information provided for Klump Co. If the company uses the LIFO inventory costing method, ending inventory at June 30th is:

$1,811.75

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:

$1,823.75

Eli Company Eli Company sells novelty items and offers terms of 1/10, n/30 to credit customers. One customer, Faulkner, Inc., purchased 100 Sweet-16 party decor packs with a list price of $20 each on March 5, 2019. Refer to the information provided for Eli Company. If the customer pays the amount of the invoice for its purchase on March 14, 2019, how much cash will Eli Company receive?

$1,980

Refer to the information provided for Aaron Corporation. Calculate gross margin.

$144,500

On January 2, Alfredo Corporation sold merchandise with a gross price of $100,000 to a customer with terms of 2/10, n/30. How much Sales Discounts would be recorded if payment was received from the customer on January 8? Assume the company uses the Gross Method of recording receivables.

$2,000

Refer to A-One Construction. If the aging approach is used to estimate bad debts, what should the balance in the Allowance for Doubtful Accounts be after the bad debts adjustment?

$29,200

Accent Flooring The company received a promissory note from a customer on March 1, 2019. The principal amount of the note is $20,000; the terms are 3 months and 9% annual interest. Refer to the information for Accent Flooring. What is the total amount of interest the company will receive when the note is collected?

$450

Refer to the information provided for Pham Enterprises. What is the company's gross profit ratio for the year ended December 31?

33.44%

Refer to the information provided for Pham Enterprises. What is the company's average-days-to-sell inventory measure?

59.76 22.29

Refer to the information provided for Pham Enterprises. What is the company's inventory turnover ratio for the year ended December 31?

6.108

For which type of merchandise would a company most likely use the specific identification method of inventory costing?

custom-made boats

Irwin Company counted its ending inventory as $178,000 at year-end, January 31, 2019. Upon review of the records, it was noted that the following items were in transit during the count: - Goods totaling $2,000 shipped by the supplier FOB destination on January 31 were received February 5th and were not counted by Irwin Company. - Goods totaling $5,000 shipped by the supplier FOB shipping point on January 30 were received February 2nd and were not counted by Irwin Company. - Goods totaling $6,000 shipped by Irwin Company to a customer FOB shipping point on January 31 were received by the customer on February 3rd and were counted by Irwin Company. What is Irwin Company's correct inventory balance on January 31, 2019?

$177,000

Assuming outstanding checks of $338, what is the company's adjusted cash balance at June 30th?

$2,014

Refer to the information provided for Tedder Co. If the company uses FIFO inventory costing, how much is cost of goods sold for January?

$230

Refer to the information provided for Tedder Co. If the company uses the weighted average method of inventory costing, how much is cost of goods sold for January?

$232

Refer to the information provided for Tedder Co. If the company uses the LIFO inventory method, how much is inventory on the balance sheet at the end of January?

$50

Which of the following would be correct if a company factored $2,500,000 of receivables with a 2 percent fee?

$50,000 debit to factoring fee expense

Refer to A-One Construction. What is the balance of Accounts Receivable at December 31?

$515,000

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

Refer to the information provided for Aaron Corporation. Calculate net income.

$65,500

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

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

Dietz, Inc. sells merchandise on credit. If a customer pays its balance due within the discount period, what is the effect of the payment on Dietz's accounting equation?

Assets and stockholders' equity decrease.

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.

If a company uses the allowance method to account for doubtful accounts, when will the company's Stockholders' equity decrease?

At the end of the accounting period when an adjusting entry for bad debts is recorded

Which of the following statements best describes the act of collusion?

Collusion is an intentional act of two or more employees to accomplish theft of company assets.

Which one of the following is an accurate description of the Allowance for Doubtful Accounts?

Contra Account

During a period of increasing purchase prices, which inventory costing method will yield the lowest cost of goods sold?

FIFO

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

FIFO

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

NSF check

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.

Refer to the information provided for Tedder Co. Which of the following entries correctly records the purchase assuming the units were acquired on credit under terms of 2/10, n/30?

Purchases 270.00 Accounts payable 270.00

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

Recognition of depreciation on plant assets

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

The Company's President

If a company erroneously records a $50 check received from a customer as $500 in its records, which of the following must occur when reconciling its bank statement?

The company must decrease the balance per its records by $450.

If a company erroneously records a $500 deposit as $50 in its records, which of the following must occur when reconciling its bank statement?

The company must increase the balance per its records by $450.

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

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

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

Academy Grill Supply On October 1, 2019, the company received a $50,000 promissory note from a customer. The annual interest rate is 6%. Principal and interest will be collected in cash at the maturity date of September 30, 2020. Refer to Academy Grill Supply. If the company's year ends December 31, 2019, an adjusting entry is needed to:

increase interest receivable by $750.

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

measuring financing operating investing

Which of the following is a reconciling item on the bank side of a bank reconciliation?

outstanding checks

The journal entries required for purchase and sales transactions using the perpetual system are more complex than under the periodic system but offer the advantage of:

providing management with more complete information from which to control inventories.

The operating cycle is the elapsed time between the

purchase of goods or services and the ultimate collection of cash from customers related to the sale of those goods

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