marketing test 2

Litt, Inc. had income before income tax of $164,300 last quarter and a 34% tax rate. What is the company's net income? 1.) $55,862 2.) $220,162 3.) $108,438 4.) $(55,862)

$108,438

Robin Hood's statement of cash flows contained the following: - Cash flows from operating activities in the amount of $30,400 - Cash flows from investing activities in the amount of $31,400 - Cash flows from (used by) financing activities in the amount of ($43,600) What was Robin Hood's change in cash for the period? 1.) $12,200 increase 2.) $18,200 decrease 3.) $18,200 increase 4.) $12,200 decrease

$18,200 increase

Parker, Inc. had a beginning balance in its Retained Earnings account of $386,450. During the year, the company declared and paid a $4,870 dividend and, at the end of the year, it reported Retained Earnings of $401,560. The company's net income for the year was: 1.) $15,110. 2.) $19,980. 3.) $10,240. 4.) $0.

$19,980.

Grizzly Company had Retained Earnings at December 31, 2018 of $208,000. During 2019, the company had revenues of $408,000 and expenses of $354,000, and the company declared and paid dividends of $11,800. Retained earnings on the balance sheet as of December 31, 2019 will be: 1.) $304,200 2.) $250,200 3.) $262,200 4.) $42,200

$250,200

Logo and Trademarks

costs of purchased logo and trademarks

Which of the following represents an account rather than a subtotal? 1.) net income 2.) total revenues 3.) total expenses 4.) service revenue

service revenue

Amounts invested and reinvested by a company's owners is called: 1.) stockholders' equity in a corporation 2.) assets, or the resources presently owned by a business that generate future economic benefits 3.) a trial balance, proving that all amounts are accounted for 4.) liabilities, or the amounts presently owed by a business

stockholders' equity in a corporation

Which of the following accounts would be classified as a current asset on a classified balance sheet? 1.) accumulated depreciation 2.) equipment 3.) dividends 4.) supplies

supplies

Income Statement

The unit of measure assumption states that results of business activities should be reported in an appropriate monetary unit.

Temporary Accounts

Track financial results for a limited period of time.

Permanent Accounts

Track financial results from year to year.

closing entries

cause the revenue and expense accounts to have zero balances.

T-Accounts represent a simplified version of the: 1.) ledger 2.) journal 3.) trial balance 4.) financial statements

ledger

Accrual Adjustments

needed when a company has earned revenue or incurred an expense in the current period but has not yet recorded it because the related cash will not be received or paid until a later period.

Which of the following is an asset? 1.) common stock 2.) retained earnings 3.) notes receivable 4.) notes payable

notes receivable

The Debit/Credit Framework

1.) Accounts increase on the same side as they appear in A=L+SE 2.) Left is debit (dr), right is credit (cr) 3.) The normal balance for an account is the side on which it increases

Four Financial Reports

1.) Income Statement 2.) Statement of Retained Earnings 3.) Balance Sheet 4.) Statement of Cash Flows

The asset account Office Supplies has a balance of $840 at the beginning of the year. The amount on hand at the end of the year is $580. The company has calculated the Supplies Expense for the year to be $4,300. Based on this information, what amount of office supplies was purchased during the year? 1.) $0 2.) $4,040 3.) $3,720 4.) $4,880

$4,040

The following transactions occurred during July: 1. Received $1,100 cash for services performed during July. 2. Received $6,050 cash from the issuance of common stock to owners. 3. Received $550 from a customer as payment for services performed during June. 4. Billed $3,950 to customers for services performed on account in July. 5. Borrowed $2,800 from the bank and signed a promissory note. 6. Received $1,450 from a customer for services to be performed during August. What is the amount of revenue that will be reported on the income statement for the month ended July 31? 1.) $5,050 2.) $6,500 3.) $7,050 4.) $8,400

$5,050

The first year of operations for a company was Year 1. The net income for Year 1 was $21,600 and dividends of $12,800 were paid. In Year 2, the company reported net income of $35,600 and paid dividends of $5,800. At the end of Year 1, the company had total assets of $166,000. At the end of Year 2, the company had total assets of $ $256,000.What was the amount of retained earnings at the end of Year 1? 1.) $19,400 2.) $8,800 3.) $18,000 4.) $21,600

$8,800

During its first year of operations, Puffin, Inc. reported Sales Revenue of $387,700 but collected only $305,500 from customers. At the end of the year, Accounts Receivable equals: 1.) $305,500 2.) $693,200 3.) $387,700 4.)$82,200

$82,200

Relationships Among the Financial Statements

1.) Net income from the income statement is a component in determining ending Retained Earnings on the Statement of Retained Earnings. 2.) Ending Retained Earnings from the Statement of Retained Earnings is then reported on the Balance Sheet. 3.) Cash on the Balance Sheet is equal to the ending Cash reported on the Statement of Cash Flows.

Transaction

A business activity that affects the basic accounting equation. Assets must equal liabilities plus stockholders' equity for every one of these.

Corporation

A separate legal entity. Owners of these (stockholders) are not personally liable for debts.

Accounting Methods

A systematic accounting process is used to capture and report the financial effects of a company's transactions.

Retained Earnings

Accumulated earnings (not yet distributed as dividends)

Contra-Account

An account that is an offset to, or reduction of, another account.

Deferral Adjustments

An expense or revenue has been deferred if we have postponed reporting it on the income statement until a later period.

Basic Accounting Equation

Assets = Liabilities + Stockholders' Equity

Which of the following statements about revenue and expense accounts is correct? 1.) Revenue accounts are a subset of assets, and expense accounts are subcategories of liabilities. 2.) Both revenue accounts and expense accounts are subcategories of assets. 3.) Both revenue accounts and expense accounts are subcategories of Retained Earnings. 4.) Revenue accounts are a subcategory of Cash and expense accounts are a subcategory of Accounts Payable.

Both revenue accounts and expense accounts are subcategories of Retained Earnings.

Sole Proprietorship

Business organization owned by one person. The owner is personally liable for all debts of the business.

Partnership

Business organization owned by two or more people. Each partner is personally liable for all debts of the business.

Which of the following would not be reported as a liability on the balance sheet? 1.) Salaries and Wages Payable 2.) Common Stock 3.) Accounts payable 4.) Notes Payable

Common Stock

Equipment

Cost of computers, printers, desks, etc.

Supplies

Cost of paper, pens, business forms, etc.

Software

Cost of purchased technology

Time Period Assumption

Dividing the company's long life into shorter chunks of time such as months, quarters, and years.

Cash

Dollar amount of coins, paper money, finds in bank

Assets

Economic resources presently controlled by the company that have measurable value and are expected to benefit the company by producing cash inflows or reducing cash outflows in the future

Duality of Effects

Every transaction has at least two effects on the basic accounting equation.

Financial Statements

Financial reports that summarize the financial condition and operations of a business

Which of the following identifies, in the correct order, steps in the five-step model for reporting revenue? 1.) Determine the transaction price; identify the seller's performance obligation(s); identify the contract. 2.) Allocate the transaction price to the performance obligation(s); determine the transaction price; recognize revenue when (or as) each performance obligation is satisfied. 3.) Identify the contract; determine the transaction price; identify the seller's performance obligation(s). 4.) Identify the seller's performance obligation(s); determine the transaction price; recognize revenue when (or as) each performance obligation is satisfied.

Identify the seller's performance obligation(s); determine the transaction price; recognize revenue when (or as) each performance obligation is satisfied.

When should supplies be recorded as an expense? 1.) In the period the supplies are purchased, regardless of when cash is paid. 2.) In the period cash is paid for the supplies, regardless of when the supplies were received. 3.) In the period the supplies are used, regardless of when they were purchased. 4.) In the period the supplies are sold, regardless of when they were received.

In the period the supplies are used, regardless of when they were purchased.

Operating Activities

Includes buying goods and services from suppliers and employees and selling goods and services to customers and then collecting cash from them.

Expenses appear on the: 1.) Statement of Retained Earnings 2.) Balance Sheet 3.) Income Statement

Income Statement

Creditors

Is the company generating enough cash to make payments on its loans? Does the company have enough assets to cover its liabilities?

Liabilities

Measurable amounts that the company owes to creditors

Notes Payable (long-term)

Owed to lenders, as per terms of promissory note

Accounts Payable

Owed to supplies for goods or services bought on credit

Stockholders' Equity

Owners' claim to the business resources.

Timing of Reporting Expenses vs Cash Payments

Record expenses in the same period as the revenues with which they are associated

Accrual Basis Accounting

Records revenues when they are earned and expenses in the same period as the revenues to which they relate, regardless of the timing of cash receipts or payments.

The purpose of a statement of retained earnings is to: 1.) Estimate the current value of a company's assets. 2.) Report the way that net income and dividends affected the financial position of the company during the period. 3.) Show where the cash is flowing into and out of a company. 4.) Report the specific revenues and expenses arising during the period.

Report the way that net income and dividends affected the financial position of the company during the period.

Statement of Retained Earnings

Reports the way that net income and the distribution of dividends affected the financial position of the company during the period.

Timing of Reporting Revenue vs Cash Receipts

Revenue Recognition Principle: Revenues are recognized when they are earned.

Amounts earned by selling goods or services to customers are called: 1.) Common Stocks 2.) Revenues 3.) Expenses 4.) Dividends

Revenues

Income Statement Equation

Revenues-Expenses=Net Income

The WeBuild Construction Company sold $23 million of buildings in its first year of operations. The company received payments of $13.50 million for these buildings. The company's income statement would report: 1.) expenses of $9.50 million 2.) sales revenue of $13.50 million 3.) sales revenue of $23 million 4.) accounts receivable of $13.50 million

Sales Revenue of $23 million

Revenues

Sales of goods or services to customers. They are measured at the amount the business charges the customer.

Balance Sheet

Statement of financial position; reports the amount of assets, liabilities, and stockholders' equity of an accounting entity at a point in time.

Common Stock

Stock issued for contributions made to the company

Statement of Cash Flows

Summarizes how a business's operating, investing, and financing activities caused its cash balance to change over a particular period of time.

Expenses

The costs of doing business necessary to earn revenues, including wages to employees, advertising, insurance, utilities, and supplies used in the office.

Separate Entity Assumption

The financial reports of a business are assumed to include the results of only that business's activities.

The separate entity assumption assumes: 1.) Revenues and expenses are reported in separate sections of a company's income statement. 2.) The financial reports of a business include only the results of that business's activities. 3.) Assets equal liabilities plus stockholder's equity. 4.) Assets are reported in a separate financial statement from liabilities.

The financial reports of a business include only the results of that business's activities.

Depreciation

The process of allocating the cost of buildings, vehicles, and equipment to the accounting periods in which they are used.

Investors

What is the immediate return (through dividends) on my contributions? What is the long-term return (through stock price increases resulting from the company's profits)?

Which of the following statements about normal account balances is correct? 1.) assets have debit balances and liabilities have credit balances 2.) assets and liabilities have credit balances 3.) assets have credit balances and liabilities have debit balances 4.) assets and liabilities have debit balances

assets have debit balances and liabilities have credit balances

On December 1, 2018, Shamrock Company received $4,800 from Destiny, Inc. for rent of an office owned by Shamrock Company. The payment covers the period from December 1, 2018 through February 28, 2019. Shamrock Company recorded this as Deferred Rent Revenue when it was received on December 1. The adjusting entry on December 31 would include a: 1.) credit to Rent Revenue of $1,600. 2.) credit to Deferred Rent Revenue of $1,600. 3.) debit to Rent Revenue of $2,400. 4.) debit to Deferred Rent Revenue of $2,400.

credit to Rent Revenue of $1,600.

A company purchased equipment for use in the business at a cost of $17,500, one-fifth was paid in cash, and the company signed a note for the balance. The journal entry to record this transaction will include a: 1.) debit to notes payable of $14,000 2.) credit to notes payable of $14,000 3.) debit to equipment of $3,500 4.) debit to cash of $17,500

credit to notes payable of $14,000

Under the accrual basis of accounting, the ________ recognition ("matching") principle requires that expenses be recognized in the same period as the related revenues. 1.) expense 2.) revenue 3.) cost 4.) separate

expense

A cost of doing business is referred to as a(n) ______ and is considered necessary to earn ______. 1.) revenue; assets 2.) expense; revenue 3.) liability; expenses 4.) dividend; revenue

expense; revenue