Financial Accounting Exam 2

The Cohn Company used the WEIGHTED AVERAGE METHOD for valuing it's inventory. Based on the following transactions what was the Company's gross profit for the month of May ? May 1 - Purchased 100 pens @ $ 1.20 each May 5 - Sold 30 pens @ $ 2.50 each May 10- Purchased 70 pens @ $ 1.40 each May 15 - Sold 40 pens @ $ 2.50 each May 30 - Sold 10 pens @ $ 2.80 each A. $ 102 B. $ 105 C. $ 99 D. $ 108 E. None of the above

A. $ 102

A company sells merchandise to a customer with terms of 2/10, net 30. The customer ALWAYS pays during the discount period . The customer buys 400 tables at $ 250 per table. They return 20 tables for full credit and in addition get an additional allowance on the remaining tables of $ 20 per table. What is the amount of the check the customer will send the Company when they pay the invoice ? A. $ 85,652 B. $ 87,400 C. $ 93,100 D. $ 86,475 E. None of the above

A. $ 85,652

At year end the Brite Company had A/R as follows:0-30 Days- $ 10,000 30-60 days $ 25,000 and over 60 days -$45,000. It reserves 1% 0n 0-30 day accounts, 2% on 30-60 day accounts and 3 % on accounts over 60 days. If the balance in the A/R reserve was $ 1,000 before the year end adjustment, how much should the year end adjustment be ? A. $ 950 B. $ 1950 C. $ 1000 D. $ 500

A. $ 950

Brickman Corporation uses the allowance method to account for uncollectible receivables. At the beginning of the year, Allowance for Bad Debts had a credit balance of $1,000. During the year Brickman wrote off uncollectible receivables of $2,100. Brickman recorded Bad Debts Expense of $2,700. What is Brickman's year-end balance in Allowance for Bad Debts? A. $1,600 B. $4,800 C. $3,700 D. $600

A. $1,600

Company A purchased 50 items for $ 750. In addition shipping costs were $ 50 (FOB Shipping point). The Company returned 10 items for full credit. They then sold ½ the inventory for $ 20 a piece. The gross profit percentage on the sale of the inventory was ? A. 18.75 % B. 25 % C. 17.5 % D. 21.615 % E. None of the above

A. 18.75 %

Based on the following accounts compute the quick ratio for the CBC Company: Furniture: $ 25,000 Long term liabilities: $ 50,000 Accum Depre-Furn: $ 12,000 Short term investments: $ 15,000 Cash: $ 15,000 Current liabilities: $ 25,000 Inventory: $ 75,000 Bad debt expense: $ 8,000 Accounts Rec: $ 35,000 Reserve for bad debts: $ 5,000 A. 2.4 B. 2.6 C. 2.92 D. 1.0 E. None of the above

A. 2.4

Gross profit percentage: Based on the following numbers compute the Company's correct gross profit percentage: Sales- $ 1,250,000 Rent expense $ 85,000 Sales returns 61,000 Cost of goods sold $ 361,000 Sales discounts 23,000 Accrued expenses $ 75,000 Inventory-beginning $ 8,000,000 Inventory-ending $ 7,500,000 A. 69.0 % B. 71.1 % C. 46.6 % D. 62.5 % E. 18.8 %

A. 69.0 %

The Mayer Company takes a physical inventory every December 31st and adjusts its records to the actual physical count. On December 31, 2017, they make a mistake when recording the inventory. The count indicates there is $24,000 of inventory but they record $42,000 in error. At December 31, 2018 they record the inventory correctly.As a result A. Income for 2017 is overstated and income for 2018 is understated B. Income for 2017 is understated and income for 2018 is overstated C. Income for 2017 is overstated but income for 2018 is correct D. Income for 2017 and 2018 is overstated

A. Income for 2017 is overstated and income for 2018 is understated

The company buys 300 pens from a manufacturer for $ 600. The goods are shipped FOB shipping point and the shipping costs are $ 50. The company takes a $ 100 credit allowance for the pens arriving late. What is the final cost to the company per pen? A. $ 2.00 B. $ 1.83 C. $ 1.67 D. $ 2.17

B. $ 1.83

Rutgers buys computers for $ 1200 a piece. On March 15th, 2015 it buys 100 computers. The computers are shipped FOB shipping point and Rutgers is charged $ 600 for shipping. The terms of payment are 3/10, net 30 and Rutgers pays for the computers on March 20th, 2015 taking advantage of the discount. How much is the cost per computer? A. $ 1200 B. $ 1170 C. $ 1206 D. $ 1169.82

B. $ 1170

A Company purchases 500 items for $ 1,500 on January 10, 2019. The invoice terms are 2/10, net 30. The Company pays the invoice on January 15, 2019 taking advantage of the discount. On February 1, 2019 the Company sells 8 of the items. How much are cost of sales related to the sale ? A. $ 24.00 B. $ 23.52 C. $ 24.52 D. $ 25.00

B. $ 23.52

A company borrowed $ 50,000 on January 25, 2014 on a 90 day note with interest at 6 %. What should be the balance in accrued interest payable on February 28, 2014 ( 365 day year )? A. $ 3000 B. $ 279.45 C. $ 750 D. $ 291.67 E. None of the above

B. $ 279.45

On January 1st the ABC Company purchased 50 chairs for $20 a piece. They purchased another 50 chairs for $25 a piece on June 15th. In July they sold 75 chairs. During December the manufacturer reduced the price for chairs to $15 a piece. The Company uses the FIFO method for valuing inventory. What is the correct value for ABC's inventory at December 31st? A. $ 500 B. $ 375 C. $ 625 D. $ 562.50

B. $ 375

Based on the following information compute the gain or loss on the transaction: Asset cost: $ 20,000 Accum Deprec through Dec 31,2013: $ 10,000 10 year life- straight line depreciation Date of sale- June 30, 2014 Residual value: $ 1,000 Sale price: $ 15,000 A. $ 5,000 B. $ 5,950 C. $ 6,900 D. $ 6,000

B. $ 5,950

Based on the following data, compute Expo Inc.'s Inventory Turnover for 2013. Inventory - December 31, 2012: $ 525,000 Sales: 2,500,000 Sales returns: 100,000 Cost of goods sold: 1,750,000 Inventory - December 31, 2013: 575,000 A. 3.04 B. 3.18 C. 1.59 D. 4.73

B. 3.18

Compute the Company's gross profit percentage using the following accounts: Inventory, December 31, 2013: $ 175,000 Sales -Gross: 500,000 Cost of sales: 250,000 Sales returns: 18,000 Sales allowances: 12,000 Sales discounts estimated: 8,000 A. 50% B. 45.9% C. 42.4% D. 39.4% E. None of the above

B. 45.9%

The client supplies you with the following information about a new machine they purchased: Cost: $ 50,000 Estimated useful life- 10 years Salvage value: $ 3,000 This is enough information to enable you to compute depreciation A. True B. False

B. False

A Company just completed the acquisition of property for $ 1,200,000. The appraisal shows the values as follows: Land: $ 750,000 Land improvements: $ 350,000 Building: $ 400,000 What is the proper allocation of the purchase price on the books ? A. Land- $ 750,000, Land Imp- $ 350,000, Bldg- $ 400,000 B. Land- $ 600,000, Land Imp-$ 279,960, Bldg- $ 320,040 C. Land $ 600,000. Land Imp-$ 350,000, Bldg- $ 250,000 D. Land- $ 400,000, Land Imp- $ 400,000, Bldg- $ 400,000 E. None of the above

B. Land- $ 600,000, Land Imp-$ 279,960, Bldg- $ 320,040

Basket Purchase- The DT Company purchases a property for $ 2,500,000. Included in the sale is land, a building and equipment. The appraised value of the land is $ 800,000, the building $ 1,000,000 and the equipment $ 900,000. The correct values to be recorded for these assets on DT's books is (round)? A. Land- $800,000,Building- $1,000,000 and Equip- $ 900,000 B. Land- $ 740,750, Building- $ 926,000 and Equip- $ 833,250 C. Land -$ 900,000,Building- $ 900,000 and Equip- $ 900,000 D. Land $ 780,400, Building- $ 926,000 and Equip - $ 793,600

B. Land- $ 740,750, Building- $ 926,000 and Equip- $ 833,250

Which of the following is an example of a non-cash transaction ? A. Paying off a note to a bank B. Purchasing treasury stock for a note C. Receiving interest income D. Receiving 6 months of prepaid rental income

B. Purchasing treasury stock for a note

Price per Unit :The Book Store recently received a shipment of 1000 books costing $ 13,000. In addition they were charged shipping of $ 250. They returned 100 books for full credit and negotiated an additional allowance of $ 1.25 per book because of damages. How much is their cost per book ? A. $ 13.00 B. $ 11.75 C. $ 12.03 D. $ 12.00 E. $ 10.82

C. $ 12.03

The Company buys 300 pens from the manufacturer for $ 600. The pens are shipped FOB shipping point with the buyer paying the $ 100 shipping cost. The next day they return 20 pens. The Company then takes a $ 50 purchase allowance on the remaining pens. The terms of the invoice were 2/10, net 30. The pens were sold on May 15th and paid for on May 20th taking advantage of the discount. How much was the inventory cost per pen ? A. $ 2.135 B. $ 2.000 C. $ 2.142 D. $ 1.998 E. None of the above

C. $ 2.142

Compute Goodwill on this transaction: Sales price of net assets - $ 22,000,000 Book value of assets sold $ 20,000,000 Liabilities sold ( equal to market value ) $ 6,000,000 Market value of assets sold $ 24,000,000 A. $ 2,000,000 B. $ 8,000,000 C. $ 4,000,000 D. $ 6,000,000

C. $ 4,000,000

The Cohn Company inventory transactions were as follows: May 1- Purchased 12 pens @ $ 1.50 each May 2- Sold 6 pens @ $ 3.00 each May 9- Sold 2 pens @ $ 3.25 each May 15- Purchased 20 pens @ $ 1.75 each What is the Company's inventory balance ( in $ ) at May 15th using the FIFO method of inventory? A. $ 36 B. $ 42 C. $ 41 D. $ 38

C. $ 41

Based on the following information how much is depreciation for 2014 ? Car purchased- September 30, 2013 Purchase price: $ 30,000 + 7 % sales tax Life- 4 years Salvage value: $ 5,000 Method- Straight line A. $ 8,025 B. $ 6,250 C. $ 6,775 D. $ 7,500

C. $ 6,775

FIFO- Inventory : The Company uses the FIFO method to value it's inventory. On January 1st they had 500 items with a total value of $ 1000. On January 5th they purchased 500 more for $ 1200 and on January 12th 500 more for $ 1500. They had sales of 300 items on January 7th and 400 on January 15th. How much was cost of sales for the January 7th sale ? A. $ 660 B. $ 720 C. $ 600 D. $ 1400 E. $ 1680

C. $ 600

Based on the following facts compute the balance in Net Accounts Receivable at December 31, 2014. Accounts Receivable at December 31, 2014 - $ 653,000 Allowance for Uncollectibles, Dec 31, 2013- $ 32,500 Account receivable write offs for 2014- $ 82,500 Recoveries for 2014 $ 12,500 Bad debt expense for 2014- $ 65,000 A. $ 588,000 B. $ 485,500 C. $ 625,500 D. $ 653,000 E. $ 637,500

C. $ 625,500

JC Manufacturing purchased inventory for $5,300 and also paid a $260 freight bill. JC Manufacturing returned 45% of the goods to the seller and later took a 2% purchase discount. Assume JC Manufacturing uses a perpetual inventory system. What is JC Manufacturing's final cost of the inventory that it kept? (Round your answer to the nearest whole number). A. $2,997 B. $2,337 C. $3,117 D. $2,857

C. $3,117

Using the appropriate accounts below compute the Company's Accounts Receivable Turnover Ratio for 2014: Accounts Receivable-Dec 31, 2013: $ 200,000 Reserve for Bad Debts- Dec 31, 2013: $ 20,000 Accounts Receivable- Dec 31, 2014: $ 250,000 Reserve for Bad Debts- Dec 31, 2014: $ 35,000 Credit sales - 2014: $ 2,000,000 Sales returns-2014: $ 15,000 Sales discounts- 2014: $ 18,000 Bad debt expense- 2014: $ 50,000 A. 9.15 B. 8.89 C. 9.96 D. 9.30 E. None of the above

C. 9.96

A company purchases inventory on June 10th for $ 500 and pays for it on June 15th in accordance with the terms of the invoice., which were 2/10, net 30. What is the correct entry on June 15th to record the payment ? A. A debit to accounts payable for $ 490 and a credit to cash for $ 490 B. A debit to accounts payable for $ 500 and a credit to cash for $ 500 C. A debit to accounts payable for $ 500, a credit to cash for $ 490 and a credit to inventory for $ 10 D. A debit to accounts payable for $ 490, a debit to inventory for $ 10 and a credit to cash for $ 500

C. A debit to accounts payable for $ 500, a credit to cash for $ 490 and a credit to inventory for $ 10

Which method of accounting for bad debts is in accordance with GAAP ? A. Direct write off method B. Recovery method C. Allowance method D. Indirect write off method

C. Allowance method

The inventory account of the ABC Company shows a balance of $ 40,000 before the year end inventory count. The count shows there's only $ 39,000 of actual inventory. The adjustment needed to the ledger is: A. Debit sales $ 1,000 Credit inventory $ 1,000 B. Debit inventory $ 1,000 Credit cost of sales $ 1,000 C. Credit inventory $ 1,000 Debit cost of sales $ 1,000 D. Debit cost of sales $ 1,000 Credit sales $ 1,000

C. Credit inventory $ 1,000 Debit cost of sales $ 1,000

If a Company finds that the amount of customer accounts it has to write off as uncollectible is increasing annually that indicates their control over collections is worsening A. True B. False C. Not Necessarily

C. Not Necessarily

The Canon Company borrowed $ 2,500,000 on April 18, 2013. The note is payable in 6 months and interest is due and payable monthly. The interest rate of the note is 5.25 %. How much is Canon's interest expense for the month of July ? A. $ 12,500 B. $ 37,916.66 C. $ 87,500 D. $ 10,937.50 E. None of the above

D. $ 10,937.50

The Cohn Company's inventory transactions were as follows: May 1- Purchased 20 pens @ $ 2.00 each May 31- Purchased 25 pens @ $ 2.25 each June 15 - Purchased 30 pens @ $ 2.45 each June 27 - Sold 27 pens @ $ 3.00 each June 30- Sold 17 pens @ $ 3.00 each How much was the Company's cost of goods sold ( C/O/S ) for the period May 1- June 30 ? The Company uses LIFO inventory ! A. $ 88 B. $ 94 C. $ 99 D. $ 105 E. None of the above

D. $ 105

The Company buys 300 pens from a manufacturer for $ 600 on June 10th under terms of 3/10 net 30. The pens are shipped FOB destination with the shipping costs of $ 100 being paid by the seller. The Company returns 30 of the pens on June 12th and pays for the balance on June 22nd. What is the final cost per pen to the Company? A. $ 2.22 B. $ 2.33 C. $ 2.59 D. $ 2.00 E. None of the above

D. $ 2.00

Inventory pricing- A company sells chairs. They use the FIFO method to value their inventory. On January 1st, 2015 they have 50 chairs in inventory costing $ 40 each. They purchase 100 chairs during 2015 costing $ 50 each. On December 31st, 2015 they have remaining in inventory 40 chairs. The replacement cost of chairs at December 31st is now $ 38 each. The correct inventory value per chair at December 31st, 2015 is ? A. $ 45 B. $ 40 C. $ 50 D. $ 38 E. $ 42.50

D. $ 38

A Company borrows $ 2,800,000 on July 20,2018. The interest rate on the loan is 9%. The loan is for 90 days. How much interest should be accrued on July 31,2018 ? A. $252,000 B. $ 62,137 C. $ 63,000 D. $ 7,594

D. $ 7,594

A company borrowed $ 25,000 on November 1, 2013. The term of the note was 6 months and the interest rate was 8.5 %. How much is interest expense on the note for 2014 ? A. $ 2125 B. $ 1062.50 C. $ 344 D. $ 708 E. None of the above

D. $ 708

Brickman's ending balance of Accounts Receivable is $19,500. Use the data in the preceding question (4) to compute the net realizable value of Accounts Receivable at year-end. A. $16,800 B. $19,500 C. $17,400 D. $17,900

D. $17,900

Using the following facts, compute the Company's correct Gross Profit Percentage AND Inventory Turnover rate for 2018; Inventory- January 1, 2018 $ 500,000 Sales- 2018 $ 2,500,000 Cost of Sales -2018 $ 1,750,000 Inventory-December 31, 2018 $ 900,000 A. G/P- 30% I/T- 3.6 times B. G/P- 43% I/T- 3.6 times C. G/P- 43% I/T- 2.5 times D. G/P- 30% I/T- 2.5 times

D. G/P- 30% I/T- 2.5 times

Gain on sale : The Mark Company decides to sell one of it's trucks. The sale occurs on June 30, 2016. The truck originally cost $ 25,000 and there was $12,000 of accumulated depreciation on it as of December 31st, 2015. The company uses straight line depreciation and had assigned the truck a 5 year life with no salvage value. The truck is sold for $ 12,000 . Compute the gain or loss. A. Loss of $ 1,000 B. Gain of $ 1,000 C. Loss of $ 1,500 D. Gain of $ 1,500 E. Gain of $ 4,200

D. Gain of $ 1,500

Lifo Inventory: The company uses LIFO to value it's inventory. On January 1st they had 500 items valued at $ 7.50 each. During January they purchased 50 more for $ 8.00 each and in February 100 more for $ 9.00 each. In March they wound up selling 200 items. How much was cost of sales for March ? A. $ 1,500 B. $ 1,600 C. $ 1,800 D. $ 1.750 E. $ 1,675

E. $ 1,675

Using the following partial list of accounts compute the company's gross profit: Net Sales: $80,000 Rent Expense: $20,000 Sales discounts forfeited: $6,000 Insurance expense: $4,000 Depreciation expense: $9,000 Sales expenses: $12,000 Cost of sales: $22,000 Sales salaries: $5,000 Freight out: $2,000 A. $ 41,000 B. $ 35,000 C. $ 46,000 D. $ 37,000 E. $ 58,000

E. $ 58,000

If I was running a Company which comparison of " actual gross profit " is most relevant ? A. Compared to " prior year gross profit "B. Compared to " industry norm gross profit " C. Compared to " budgeted gross profit " D. Compared to " my closest competitor's gross profit " E. All of the above

E. All of the above

On February 1st the Company purchased 10 chairs for $ 50 a piece. On February 5th they purchased another 10 chairs for $ 55 a piece. And on February 10th they purchased 20 chairs for $ 47 a piece. On February 20th they sold 8 chairs. On an accounting basis which group did they sell the chairs from ? A. All from the February 1st group B. All from the February 5th group C. All from the February 10th group D. Some from each of the groups E. Can't determine from information given

E. Can't determine from information given

Which of the following is not needed to prepare a cash flow statement? a. current year income statement b. prior year income statement c. end of year balance sheet d. analysis of changes in long term assets and equity accounts for the current year

b. prior year income statement

Operating activities are most closely related to a. long-term assets b. current assets and current liabilities c. long-term liabilities and stockholders' equity d. dividends and treasury stock

b. current assets and current liabilities

The ABC companies retained earnings at December 31, 2013 was reported at $50,000. During 2014 the Company discovers that it over depreciated assets in 2013 by $15,000. In addition it forgot to accrue $20,000 in salaries applicable to 2013. The restated retained earnings should be: a. $45,000 b. $85,000 c. $15,000 d. $55,000

a. $45,000

Assume Juniper Natural Dyes made Net Sales Revenue of $90,000 and Cost of Goods Sold totaled $58,000. What was Juniper Natural Dyes' gross profit percentage for this period? a. 36% b. 3.4 times c. 64% d. 17%

a. 36%

Which inventory costing method assigns to ending merchandise inventory the newest - the most recent - costs incurred during the period? a. FIFO b. weighted average c. specific identification d. LIFO

a. FIFO

The Turner Company earns $1.50 per share and has a current market price of $18 per share. Assuming that the "average company" in their industry sells for. a P/E ratio of 14, buying stock in Turner seems like a good idea. a. True b. False

a. True

Which item does not appear on a statement of cash flows prepared by the indirect method? a. collections from customers b. depreciation expense c. net income d. gain on sale of land

a. collections from customers

Which of the following accounts would be closed at the end of the year using the perpetual inventory system? a. cost of goods sold b. merchandise inventory c. accounts receivable d. accounts payable

a. cost of goods sold

A company buys 2000 shares of stock as an investment for $24,000. If they sell 1500 shares for $20,000 they will record a? a. gain of $2,000 b. loss of $2,000 c. break even d. gain of $4,000 e. loss of $4,000

a. gain of $2,000

Which of the following is most closely linked to accounting conservatism? a. lower-of-cost-or market rule b. materiality concept c. disclosure principle d. consistency principle

a. lower-of-cost-or market rule

The two main inventory accounting systems are the a. perpetual and periodic b. purchase and sale c. returns and allowances d. cash and accrual

a. perpetual and periodic

Calculate interest expense for 2015 on a 1 year note dated August 1, 2015 in the amount of $40,000 with interest at 9%. a. $3,600 b. $1,500 c. $2,100 d. $4,000 e. none of the above

b. $1,500

Suppose Nile.com used the weighted-average inventory costing method and the perpetual inventory system. Use the Nile.com data in previous questions to compute the weighted-average unit cost of the company's inventory on hand at April 8. Round weighted-average unit cost to the nearest cent. a. $21 b. $19.75 c. $19.50 d. cannot be determined from the data given

b. $19.75

A company buys a slot machine for $20,000 on January 1, 2015. It has a $2,000 residual value and a 6 year life. It sells the machine on June 30, 2017 for $15,000. How much is the gain or loss? a. $4,500 b. $2,500 c. $5,000 d. $10,000 e. none of the above

b. $2,500

Assume Nile.com began April with 14 units of inventory that cost a total of $266. During April, Nile purchased and sold goods as follows: April 8 Purchase 42 Units @ $20 April 14 Sale 35 Units @ $40 April 22 Purchase 28 Units @ $22 April 27 Sale 42 Units @ $40 Under the FIFO inventory method, costing method and the perpetual inventory system, how much is Nile's cost of goods sold for the sale on April 14? a. $1,106 b. $686 c. $1,400 d. $700

b. $686

Suppose Maestro's had cost of goods sold during the year of $230,000. Beginning merchandise inventory was $35,000 and ending merchandise inventory was $45,000. Determine Maestro's inventory turnover for the year. Round to the nearest hundredth. a. 6.57 times per year b. 5.75 times per year c. 5.11 times per year d. 17.39 times per year

b. 5.75 times per year

The ABC company has both common and non-cumulative preferred stock. There are 500 shares of preferred $50 par value 6% outstanding and 500 shares of common outstanding. The company didn't pay a dividend in 2013 or 2014 but is going to pay a $5,000 dividend in 2015. How does the $5,000 get split between the common and preferred shareholders? a. common ($2,500) & preferred ($2,500) b. common ($3,500) & preferred ($1,500) c. common ($500) & preferred ($4,500) d. common ($3,000) & preferred ($2,000) e. none of the above

b. common ($3,500) & preferred ($1,500)

At December 31 2018, Stevenson Company overstated ending inventory by $36,000. How does this error affect cost of goods sold and net income for 2018? a. overstates COGS & understates net income b. understates COGS & overstates net income c. leaves both COGS & net income correct because the errors cancel each other d. overstates both COGS & net income

b. understates COGS & overstates net income

A Celty Airline jet costs 28,000,000 and is expected to fly 200,000,000 miles during its 10-year life. Residual value is expected to be zero because the plane was used when acquired. If the plane travels 1,000,000 miles the first year, how much depreciation should Celty Airline record under the units-of-production method? a.) $2,800,000 b.) $140,000 c.) $560,000 d.) Cannot be determined from the data given

b.) $140,000

Which intangible asset is recorded only as part of the acquisition of another company? a.) Patent b.) Goodwill c.) Copyright d.) Franchise

b.) Goodwill

A company decides to go out of business. It's only asset is cash of $100,000. It has secured bank loans of $50,000 and accounts payable of 30,000. The equity sections has preferred stock of $40,000, common stock of $20,000 and an accumulated deficit of $40,000. How much will the preferred shareholders receive in the liquidation? a. 0 b. $40,000 c. $20,000 d. $100,000 e. none of the above

c. $20,000

A company has common and cumulative preferred stock. The cumulative preferred is $50 par 6% and there are 1000 shares outstanding. The company has not declared or paid any dividends in 2013 or 2014. If it decides to go out of business on December 31, 2015, how much does it owe its preferred stockholders in unpaid dividends? a. $9,000 b. $3,000 c. 0 d. $1,000 e. none of the above

c. 0

Which principle or concept states that business should use the same accounting methods & procedures from period to period? a. disclosure b. conservatism c. consistency d. materiality

c. consistency

Which method almost always produces the most depreciation in the first year? a.) Units-of-production. b.) Straight-line c.) Double-declining-balance. d.) All produce the same depreciation in the first year.

c.) Double-declining-balance.

A copy machine costs $45,000 when new and has accumulated depreciation of $44,000. Suppose Print and Photo Center junks this machine and receives nothing. What is the result of the disposal transaction? a.) No gain or loss b.) Gain of $1,000 c.) Loss of $1,000 d.) No gain or loss

c.) Loss of $1,000

Austin Sound sold inventory for $300,000, terms 2/10, n/30. Cost of goods sold was $152,000. How much sales revenue will Austin Sound report from the sale? a. $152,000 b. $294,000 c. $148,960 d. $300,000

d. $300,000

Leather Shop earned net income of $57,000 after deducting depreciation of $5,000 and all other expenses. Current assets decreased by $4,000, and current liabilities increased by $8,000. How much was Leather Shop's cash provided by operating activities (indirect method)? a. $40,000 b. $66,000 c. $48,000 d. $74,000

d. $74,000

Maxwell Furniture Center had accounts receivable of $20,000 at the beginning of the year and $54,000 at year-end. Revenue for the year totaled $116,000. How much cash did the business collect from customers? a. $150,000 b. $62,000 c. $116,000 d. $82,000

d. $82,000

How should you record a capital expenditure? a. Debit a liability. b. Debit capital. c. Debit an expense. d. Debit an asset.

d. Debit an asset.

Which inventory costing method results in the lowest net income during a period of rising inventory costs? a. weighted average b. specific identification c. FIFO d. LIFO

d. LIFO

Which of the following accounts would not be included in the calculation of the current ratio? a. equipment b. accounts payable c. capital stock d. a & c e. a & b

d. a & c

The purpose of the statement of cash flows are to: a. evaluate management decisions b. determine ability pay debts & dividends c. predict future cash flows d. all of the above

d. all of the above

Which account does a merchandiser use that a service company does not use? a. cost of goods sold b. merchandise inventory c. sales revenue d. all of the above

d. all of the above

Which of the following is a limitation of the direct write-off method of accounting for uncollectibles? a. overstates assets on balance sheet b. does not match expenses against revenue very well c. does not set up an allowance for uncollectibles d. all of the above

d. all of the above

Which cost is not recorded as part of the cost of a building? a. real estate commission paid to buy the building b. construction materials and labor c. concrete for the building's foundation d. annual building maintenance

d. annual building maintenance

Where in the financial statements do I expect to find treasury stock? a. as a credit in the equity section b. as an investment in assets c. on the income statement d. as a debit in the equity section e. in the liability section

d. as a debit in the equity section

The entry to record a write-off of an uncollectible account when the using the direct write-off method involves a a. debit to allowance for bad debts b. credit to cash c. debit to accounts receivable d. debit to bad debts expense

d. debit to bad debts expense

What is the order of the subtotals that appear on a multi-step income statement? a. gross profit, operating income, net income, total other income & expenses b. operating income, gross profit, net income, total other income & expenses c. total other income & expenses, operating income, gross profit, net income d. gross profit, operating income, total other income & expenses, net income

d. gross profit, operating income, total other income & expenses, net income

With good internal controls, the person who handles cash can also a. account for cash payments b. account for cash receipts from customers c. issue credits to customers for sales returns d. none of the above

d. none of the above

The main categories of cash flow activities on the statement of cash flows are a. direct and indirect b. current and long-term c. non cash investing and financing d. operating, investing, and financing

d. operating, investing, and financing

Suppose Print and Photo Center in the preceding question sold the machine for $1,000. What is the result of this disposal transaction?a.)Loss of $44,000 b.) Gain of $1,000 c.) Loss of $1,000 d.) No gain or loss

d.) No gain or loss

The Hill Co has both common and preferred stock. There are 500 shares of $100 par 5% cumulative shares outstanding. Hill did not pay any dividends in 2012, 2013, or 2014. If they pay $10,000 in dividends in 2015 how much goes to the common stockholders? a a. $2,500 b. $10,000 c. $7,500 d. $5,000 e. 0

e. 0