smartbook learnsmart ch8, & ch9, ch10, ch11

True or false: A liability can be recorded, even if there is uncertainty of when to pay, how much to pay, or whom to pay.

T

Lakeview, Inc.'s statement of cash flows reports financing activities with payments that exceed receipts. This means that Lakeview had a net cash (inflow/outflow) from financing activities.

outflow

Bonds are securities that can be readily bought and sold. A bond issue consists of a number of bonds, usually in denominations of ______ or _____ and is sold to many different lenders.

$1,000; $5,000

Sheldon has a $15,000 liability for a machine that has an interest rate of 10%. The interest expense for one year is?

$1,500

A delivery van that cost $45,000 with accumulated depreciation of $15,000 is sold for $20,000. How much gain or loss will be recognized on this sale?

$10,000 loss

Juno Co. purchased a machine for $10,000 and estimates it will use the machine for four years with a $2,000 salvage value. Using the double declining-balance depreciation method, compute the machine's first year depreciation expense.

$10,000 x (.25 x 2) = $5,000.

Teshin Co. purchases a piece of land with several land improvements for $180,000. The land appraises at $120,000 and the land improvements appraise at $80,000. The land should be recorded at what cost?

$108,000

Net cash provided by operating activities was $12,000. Net cash provided by investing activities was $2,000. Net cash used in financing activities was $7,000. The cash balance at the beginning of the year was $4,000. The cash balance at the end of the year is:

$11,000

Bina Co. purchased a vehicle on January 1st for $15,000 and estimates it will use the vehicle for eight years with a $3,000 salvage value. Using the double declining-balance depreciation method, compute the vehicle's second year depreciation expense.

$2,812.50

PT Co. purchased land and an existing building for $200,000. In addition, PT paid real estate commissions of $15,000. PT removed the unwanted building and graded the land for a total cost of $35,000. PT should record the cost of the land at:

$250,000

Juno Co. purchased a machine for $10,000 and estimates it will use the machine for three years with a $2,000 salvage value. It expects to produce a total of 8,000 units as follows: 3,000 during year one; 2,500 during year two; and 2,500 during year three. Using the units-of-production depreciation method, compute the machine's first year depreciation expense.

$3,000

At the beginning of the year, Jobs Co. owned one piece of office equipment, a copier. The copier was purchased two years ago for $12,000. At the beginning of the year, the balance in accumulated depreciation was $4,000. Jobs uses straight-line depreciation of $2,000 per year with a zero salvage value. How much is accumulated depreciation at the end of the year?

$6,000

A company borrows $70,000 by signing a $70,000, 8%, 6-year note that requires equal payments of $15,142 at the end of each year. The first payment will record interest expense of $5,600 and will reduce principal by:

$9,542

Straight-line depreciation can be calculated by taking:

(cost minus salvage value)/useful life

A company sells a machine that cost $7,000 for $500 cash. The machine had $6,500 accumulated depreciation. The entry to record this transaction will include which of the following entries? (Check all that apply.)

1. Debit to Accumulated Depreciation - Machinery for $6,500. 2. Credit to Machinery for $7,000. 3. Debit to Cash for $500.

The cost of a plant asset includes the following:

1. Purchase price 2. Cost to prepare it for use

There are five important steps to preparing a statement of cash flows. Rank the steps in order from first to last.

1. in cash. 2. operating act. 3. investment act. 4. financing act. 5. ending cash

On November 1, Wright Co. borrowed $20,000 cash from Third Bank by signing a 90-day, 6% interest-bearing note. On December 31, Wright recorded an adjusting entry to interest expense of $200. On January 30, the due date of the note, Wright will record the payment with a debit to Interest Expense in the amount of $

100

On January 8, Lee Co. borrows $100,000 cash from National Bank by signing a 90-day, 6% interest note. On April 8, Lee Co. will pay National Bank a total of $101,500. Principal on the note totals $

100,000

On October 30, Cleo Co. purchased a machine for $26,000 and estimates it will use the machine for four-years with a $2,000 salvage value. Using the straight-line depreciation method, compute the machine's first year partial depreciation expense for October 30 through December 31.

1000

Arc Co. purchased a piece of equipment for $25,000. At the end of the year, the book value of the equipment is $12,000. The salvage value is 0. How much is accumulated depreciation, using the straight-line method, at the end of the period?

13000

On June 1, Harding Co. purchased a machine for $14,000 and estimates it will use the machine for five-years with a $2,000 salvage value. Using the straight-line depreciation method, compute the machine's first year (partial) depreciation expense for June 1st through December 31st.

1400

Net cash used in operating activities was $10,000. Net cash provided by investing activities was $2,000. Net cash provided by financing activities was $5,000. The cash balance at the end of the year was $12,000. The cash balance at the beginning of the year was $.

15000

On July 1, Scene Co. borrowed $15,000 cash from First Bank by signing a 30-day, 5% interest-bearing note. Scene will record this entry with a credit to Notes Payable in the amount of $

15000

Tops Co. purchases equipment for $12,000 and has been using straight-line depreciation, estimating a 5-year life and $500 salvage value. At the beginning of the third year, Tops decides to use the equipment for a total of 6-years with no salvage value. Compute the revised depreciation for the third year.

1850

Ion Co. purchased land for $190,000. Ion also paid $5,000 in real estate commissions, $1,000 in legal fees, and $500 in title insurance fees. Ion should record the cost of this land at:

196,500

Damien Co. has $10,000 of unearned revenues on its balance sheet. Damien expects that it will earn $8,000 of these revenues in the upcoming twelve months. How much will be recorded in Long-Term Liabilities?

2,000

Daley Co. owns a mineral deposit with an estimated 600,000 tons of available ore. It was purchased for $300,000 and has no salvage value. During the current period, Daley mined and sold 40,000 tons of ore. Depletion expense for the period will be how much?

20,000

Winn Co. signs a 60 day note payable for a $15,000 copy machine with an interest rate of 8%. Winn will record total interest expense of

200

On January 3, ATA Company purchases a copy machine for $11,500. The machine is expected to last five years and have a salvage value of $1,500. Compute depreciation expense for the first year, assuming the company uses the straight-line method.

2000

Wen Co. purchased a building for $200,000. Wen paid $20,000 in lawyer and title fees. Wen also paid an additional $15,000 to modify the building in order to accommodate his business needs. Wen should record the cost of the building at:

235,000

Bina Co. purchased a machine on January 1st for $15,000 and estimates it will use the machine for three years with a $3,000 salvage value. Bina estimates that they will produce 1,500 units during year one, 1,000 units during year two, and 1,250 units during year three. Using the units-of-production method, compute the machine's second year depreciation expense.

3200

Alin Co. purchases a building for $300,000 and pays an additional $30,000 for title fees and lawyer fees. Alin also pays $20,000 in renovations, including painting, carpet, lighting, etc. Alin should record the cost of the building at:

350,000

A company acquires a patent for $20,000 to manufacture and sell an item. The company intends to hold the patent for 5 years. Amortization for the first year will be recorded with a debit to Amortization Expense for $

4000

Seven Co. owns a coal mine with an estimated 1,000,000 tons of available coal. It was purchased for $300,000 and has $50,000 salvage value. During the current period, Seven mined and sold 200,000 tons of coal. Depletion expense for the period will be how much?

50,000

On December 1, Hansen Co. borrows $100,000 cash from National Bank by signing a 90-day, 6% interest-bearing note. On December 31, Hansen will record an adjusting entry by debiting interest expense in the amount of ______.

500

On January 2, Dice Co. purchases a mixing machine for $25,500. The machine is expected to last four years and have a salvage value of $5,500. Assuming the company uses the straight-line method, depreciation expense should be $ per year.

5000

Book value can be calculated by taking an asset's acquisition costs less its

Blank 1: accumulated Blank 2: depreciation

At the beginning of the period, a company reported $100,000 of common stock, $10 par; and $50,000 paid-in capital in excess of par. At the end of the period, this company reported $110,000 of common stock, $10 par; and $90,000 paid-in capital in excess of par. Cash received from the sale of common stock during the year is $.

50000

Cen Co. purchases land and a building for $130,000. The land is appraised at $100,000 and the building at $150,000. Allocating the cost based on market values, the land should be recorded at what amount?

52,000

Trighton's Trailer Co. sells trailers and provides a one-year warranty on all new trailer sales. Based on history, Trighton anticipates that 2% of trailers will be returned and will have a warranty cost of $100 per trailer. During the month, Victor sold 300 trailers for a total of $255,000. At the end of the month, Trighton will record $ in warranty expense.

600

A company borrows $60,000 by signing a $60,000, 8%, 6-year note that requires equal payments of $12,979 at the end of each year. The first payment will record interest expense of $4,800 and will reduce principal by $.

8179

Victor's Vacuum Sales Co. sells high quality vacuums and provides a one-year warranty on all new sales. Based on history, Victor anticipates that 3% of vacuums will be returned at a cost of $30 per vacuum. During the month, Victor sold 100 vacuums for a total of $35,000. At the end of the month, Victor will record _______ in Warranty Expense.

90

Since bond market values are expressed as a percentage of their bond value, a $1,000 bond that is sold at 93 will trade at $.

930

Which of the following situations will result in recognizing a gain on sale of a plant asset?

A fully depreciated asset is sold for $1,000

Spot Co. purchases office supplies from Sally Supplies, Inc.. Spot does not pay cash for the purchase, and now owes the amount to Sally. This transaction would typically be recorded in which account in Spot's books?

Accounts Payable

________ are amounts owed to suppliers for products or services purchased on credit.

Accounts payable

Which of the following items would be considered a current liability? (Check all that apply.)

Accounts payable, terms n/30 Wages payable Notes payable, due in 3 months

Ella Co. owns a mineral deposit and recognizes $15,000 of depletion expense during the period. This entry will be recorded with a credit to:

Accumulated Depletion - Mineral Deposit

Accumulated depletion is a contra asset account, and is therefore reported on the

Blank 1: balance Blank 2: sheet

Which depreciation method will compute the most depreciation expense over the life of the asset?

All methods will produce equal depreciation expense over the life of the asset.

_________ stock is the number of shares that a corporation's charter allows it to sell.

Authorized

stock is the number of shares that a corporation's charter allows it to sell. The number of these shares usually exceeds the number of shares issued (and outstanding), often by a large amount.

Authorized

Accumulated amortization is reported on which of the following financial statements?

Balance sheet

Accumulated depreciation is recorded on which of the following financial statements?

Balance sheet

The statement of cash flows explains the difference between beginning and ending balances of cash and cash equivalents. A cash equivalent must satisfy which of the following criteria? (Check all that apply.)

Be readily convertible to a known amount of cash Be close to maturity

are expenditures that make a plant asset more efficient or productive, but do not always increase an asset's useful life.

Betterments

Jorge Lopez worked 40 hours this week and earned $1,000 in total compensation. Federal and state taxes and other withholdings totaled $350. Jorge's gross pay totals $

Blank 1: 1000 or 1,000

A company borrows $50,000 by signing a $50,000, 8% note that requires six equal payments of (round to the nearest dollar) at the end of each year. (The present value of an annuity of six annual payments, discounted at 8% equals 4.6229.)

Blank 1: 10816

Ring Co. owns a delivery van that was purchased two years ago for $25,000. Ring has depreciated the van for two years at a straight-line amount of $4,000 per year. The book value of this van at the end of the second year would be $

Blank 1: 17000

A company borrows $100,000 by signing a $100,000, 5% note that requires four equal payments of $ round to the nearest dollar) at the end of each year. (The present value of an annuity of four annual payments, discounted at 5% equals 3.5460.)

Blank 1: 28,201

Geo Co. purchased a building for $400,000. In addition, Geo paid $35,000 for taxes and lawyer fees. Geo also paid $60,000 to modify the building, changing the layout specifically for Geo's needs. Geo should record the building at $

Blank 1: 495000

Jorge Lopez worked 40 hours this week and earned $1,000. Federal and state taxes, and other withholdings totaled $350. Jorge's net pay totals $

Blank 1: 650 or $650

A company issues $75,000 of 6%, 10-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer records the payment of principal at maturity with a credit to in the amount of $.

Blank 1: Cash Blank 2: 75000

Anchor Co. has accrued payroll expense of $1,300 which includes employee withholdings of $400. On payday, Anchor will record the distribution of paychecks with a credit to in the amount of $

Blank 1: Cash Blank 2: 900

The process of allocating the cost of a natural resource to a period when it is consumed requires a debit entry to the account.

Blank 1: Depletion Blank 2: Expense

Employee benefits that are paid by the employer are recorded in the Employee Benefit account.

Blank 1: Expense

is the difference between the amount borrowed and the amount repaid.

Blank 1: Interest

T. Chung Co. sold a computer for $500 cash. The computer cost $3,000 and had accumulated depreciation of $2,200 at the time of the sale. Chung will record the sale with an entry to the (Gain/Loss) on Disposal of Equipment account in the amount of $

Blank 1: Loss Blank 2: $300 or 300

Philip's Inc. reports stockholders' equity on its financial statements. The two items reported in the stockholders' equity section of Philip's balance sheet are Capital and Retained Earnings.

Blank 1: Paid-in or Contributed

Harvey Co. has current period employee salary expenses of $800. Employee withholdings total $300. The entry to accrue current period payroll will include a credit to Salaries in the amount of $

Blank 1: Payable Blank 2: 500

assets are assets used in a company's operations that have a useful life of more than one accounting period.

Blank 1: Plant or Fixed

is an account that consists of a company's cumulative net income less any losses and dividends declared since its inception.

Blank 1: Retained Blank 2: Earnings

State unemployment taxes imposed on employers in order to provide unemployment benefits to qualified workers are known as (use acronym)

Blank 1: SUTA

Dean, Inc.'s charter indicates a par value of $1 per share. Dean issues 100 shares at a market value of $8 per share. The journal entry to record this transaction will include a debit to the account in the amount of $.

Blank 1: cash Blank 2: 800

A bond is evidence of the company's debt.

Blank 1: certificate

Investors who buy a corporation's stock sometimes receive a stock as proof of share ownership.

Blank 1: certificate

When a company guarantees the payment of debt owed by a supplier, customer or another company, the guarantor usually discloses the guarantee as a _ liability.

Blank 1: contingent

Niren, Inc.'s charter authorizes 1,000,000 shares of stock at a par value of $1 per share. Niren sells 100 shares of stock at its initial offering for $1 per share. The journal entry to record this transaction will include a (debit/credit) to Common Stock, $1 par for $.

Blank 1: credit Blank 2: 100 or $100

A company issues $400,000 of 8%, 10-year bonds dated January 1. The bonds pay interest semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer records the sale with a (debit/credit) to Bonds Payable in the amount of $.

Blank 1: credit Blank 2: 400000

Josie Inc.'s charter authorizes 1,000 shares of stock with no par value. Josie Inc. sells 100 shares of stock at its initial offering for $5 per share. The journal entry to record this transaction will include a (debit/credit) to Common Stock, for $.

Blank 1: credit Blank 2: 500

Riley Inc.'s charter authorizes 1,000 shares of stock at a stated value of $10 per share. Riley issues 50 shares of stock at its initial offering for $20 per share. The journal entry to record this transaction will include a (debit/credit) to Common Stock, $.

Blank 1: credit Blank 2: 500

A company repaid a long-term debt during the year. They will report this as a(n) (increase/decrease) in the activities section on the statement of cash flows.

Blank 1: decrease Blank 2: financing

The process of allocating the cost of a natural resource to a period when it is consumed requires a debit entry to the account.

Blank 1: depletion Blank 2: expense

The net cash amount provided by operating activities is identical under both the and methods.

Blank 1: direct Blank 2: indirect

Cash flows provided (used) by operating activities are reported in one of two ways: the method or the method. These two methods apply only to the operating activities section.

Blank 1: direct Blank 2: indirect

While stockholders elect the board of directors of a corporation, the board of hires the president, vice president and other officers, who manage the corporation.

Blank 1: directors

A plant asset is (depreciated/discarded/obsolete) when it is no longer useful to the company, and it has no market value.

Blank 1: discarded

A known obligation of an uncertain amount that can be reasonably estimated is called a(n) liability.

Blank 1: estimated

Land are assets that are additions to land and have limited useful lives, such as walkways and fences.

Blank 1: improvements or improvement

At the beginning of the year, Rex Co. showed a debit balance in the cash account of $20,500. Total debits to this account during the year were $45,000, and total credits during the year were $35,000. The net (increase/decrease) in cash for the year equals $.

Blank 1: increase or increases Blank 2: 10000

If an intangible asset has an life, it is recorded as an intangible asset, but is not amortized.

Blank 1: indefinite

The legal contract between the bondholders and the issuer is called the bond .

Blank 1: indenture

A company borrows $60,000 from a bank to purchase equipment. It signs an 8% note requiring six annual payments of principal plus interest. This is an example of a(n) note.

Blank 1: installment

The par value of a bond, also called the face value, is paid at a stated future date, known as the bond's date.

Blank 1: maturity

Star Bank provided cash to a customer, J. Brown, to pay for a building. Star required that Brown also sign a(n) (mortgage/installment/bond) note payable, which allows the bank to be paid by the cash proceeds of the sale of the building if Brown fails to pay on the note.

Blank 1: mortgage

The indirect method of computing and reporting net cash flows from operating activities involves adjusting to obtain the net cash provided or used by operating activities.

Blank 1: net Blank 2: income

The costs to start a corporation are called expenses.

Blank 1: organization

Most bonds require (interest/par) value to be repaid at maturity and (interest/par) to be paid semiannually.

Blank 1: par Blank 2: interest

Stock that typically includes preference for receiving dividends and for distribution of corporate assets during a liquidation is called _ stock.

Blank 1: preferred

Corporations can be separated into two types. A held corporation does not offer its stock for public sale and usually has few stockholders. A held corporation offers its stock for public sale and can have thousands of stockholders.

Blank 1: privately, closely, or private Blank 2: publicly or public

A charter application usually must be signed by the prospective stockholders called incorporaters or . Then, it is filed with the appropriate state official.

Blank 1: promoters

A is a document that gives a designated agent the right to vote the stock.

Blank 1: proxy

Capital is a general term that refers to any shares issued to obtain capital (owner financing).

Blank 1: stock

Two of the biggest disadvantages of the corporate form of business are government regulation and corporate

Blank 1: taxation, taxes, tax, or double taxation

Two of the biggest disadvantages of the corporate form of business are government regulation and corporate .

Blank 1: taxation, taxes, tax, or double taxation

The life (also called service life) is the length of time the asset is productively used in a company's operations.

Blank 1: useful

Stockholders have the right to at stockholders' meetings.

Blank 1: vote

A is a seller's obligation to replace or fix a product (or service) that fails to perform as expected within a specified period.

Blank 1: warranty

Which of the following statements are disadvantages of bond financing? (Check all that apply.)

Bonds can decrease return on equity. Bonds require payment of interest and par value.

Which of the following statements is an advantage of bond financing?

Bonds do not affect owner control.

Which of the following statements is not an advantage of bond financing?

Bonds require interest payments and payment of par value.

Which of the following is a disadvantage of bond financing?

Bonds require payment of periodic interest and the par value.

On December 31, Lazo Co. offers a bonus to its employees of $100,000 to be paid in January of the following year. The December 31 journal entry will require a credit to the ______ account in the amount of _____.

Bonus Payable; $100,000

_____________ is a general term that refers to any shares issued to obtain capital (owner financing).

Capital stock

Determine which of the following expenses are considered revenue expenditures related to a company vehicle. (Check all that apply.)

Car wash Oil change Dent repair

Which of the following transactions would not be classified as an operating activity on the statement of cash flows?

Cash dividends paid to shareholders

Which of the following transactions would not be reported under investing activities in the statement of cash flows?

Cash paid for interest on long-term notes

Which of the following transactions would be reported under investing activities in the statement of cash flows? (Check all that apply.)

Cash paid to purchase plant assets Cash paid to purchase investments in securities

Which of the following items would be reported under financing activities on the statement of cash flows? (Select all that apply).

Cash paid to repay debt Cash dividends paid to shareholders Cash received from issuing notes payable

A company's cash receipts and cash payments are recorded in the cash account in its general ledger. Which of the following can be determined by analyzing the cash account? (Check all that apply.)

Cash payments for equipment Cash receipts from customers Cash payments on notes

Which of the following items would not be adjusted to net income when computing cash flows from operating activities, using the indirect method?

Cash received from sale of building

Which of the following would not be reported under financing activities on the statement of cash flows?

Cash received from sale of plant assets

Par

Choice Contract rate is equal to market rate

Premium

Choice Contract rate is greater than the market rate

Discount

Choice Contract rate is less than the market rate

The board of directors of Chester, Inc. authorizes a $0.10 cash dividend to its 10,000 shares of common stock issued and outstanding. On the date of payment, a journal entry will debit which of the following accounts and for what amount?

Common Dividend Payable for $1,000.

John Kim agrees to contribute equipment with a fair market value of $5,000 in exchange for 100 shares of Rio Inc.'s common stock with a par value of $1 per share. Rio will record this transaction as a credit to which of the following accounts? (Check all that apply.)

Common Stock Paid-in Capital in Excess of Par Value

Cash flows from financing activities identifies cash receipts and cash payments related to which of the following types of accounts? (Check all that apply.)

Common Stock Bonds Payable

Payton, Inc.'s charter authorized 100,000 shares of stock with a par value of $1 per share. Payton issues 100 shares at a market value of $5 per share. The journal entry to record this transaction will include a credit to _____ in the amount of _______.

Common Stock, $1 par; $100

The information needed to prepare a statement of cash flows could come from which of the following sources? (Check all that apply.)

Comparative balance sheets Cash account Income statement

Which of the following is not one of the five important steps to preparing a statement of cash flows?

Compute the net income

Identify the advantages of the corporate form of business. (Check all that apply.)

Continuous life Ease of capital accumulation Limited liability of stockholders

Which of the following items are classified as noncash investing and financing activities? (Check all that apply.)

Conversion of preferred stock to common stock Retirement of debt by issuing stock Lease of assets in a long-term lease transaction

Which of the following assets are amortized? (Check all that apply.)

Copyright Patent

Identify the disadvantages of the corporate form of business. (Check all that apply.)

Corporate taxation Government regulation

J. Flores owns a business and is trying to decide whether to incorporate. While researching corporations, she has determined the following facts. Which of these facts is not correct?

Corporations dissolve when owners transfer rights.

Which of the following factors determine depreciation? (Check all that apply.)

Cost of asset Useful life Salvage value

Trio Co. reported that maintenance and normal repair costs are expensed as incurred. If Trio's current year machinery and equipment repair costs are $8,200, which accounts would be impacted to complete the journal entry? (Check all that apply.)

Credit Cash. Debit Repairs expense.

A patent was purchased for $15,000 and expected to be used for the 10-year life with no salvage value. The entry to expense the patent during the second year of life will include which of the following entries? (Check all that apply.)

Credit to Accumulated Amortization $1,500. Debit to Amortization Expense $1,500.

Zion Co. paid cash for an upgrade to an existing machine that would reduce the amount of waste produced by the machine and, therefore, increase efficiency. The journal entry to record this upgrade would include which of the following entries? (Check all that apply.)

Credit to Cash Debit to Machinery

A company issues $100,000 of 6%, 10-year bonds dated January 1, that pay interest semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer records the first semi-annual interest payment with which of the following entries? (Check all that apply.)

Credit to Cash for $3,000. Debit to Interest Expense for $3,000.

Gomez Inc.'s charter authorizes 1,000 shares of stock at a par value of $1 per share. Gomez sells 200 shares of stock at its initial offering for $1 per share. The journal entry to record this transaction will include which of the following entries? (Check all that apply.)

Credit to Common Stock, $1 par for $200. Debit to Cash for $200.

Niwa Co. replaced a $3,000 account payable balance to Fiona Co. with a 60-day, $3,000 note bearing 5% annual interest. Niwa's entry to record this transaction would include which of the following entries? (Check all that apply.)

Credit to Notes Payable Debit to Accounts Payable

John Grey owns Grey's Snow Plowing. In October, he collects $12,000 cash for 6 commercial accounts for which he will provide snowplowing for the next three months. John recorded the cash collection as an unearned revenue. To record the adjusting entry in November, when $4,000 has been earned, Grey will enter which of the following entries? (Check all that apply.)

Credit to Plowing Revenue Earned Debit to Unearned Plowing Revenue

Fortiz Co. receives $85 for the sale of merchandise with a sales price of $80 and sales tax of $5. The entry to record the $5 sales tax would require which of the following?

Credit to Sales Tax Payable

Mary's Magazine Sales sells popular magazine subscriptions. During January, Mary collected $1,200 from various customers to provide magazines over the next 12 months. At the end of February, Mary would make an adjusting entry to record one month of magazines subscriptions earned. This transaction would include which of the following entries? (Check all that apply.)

Credit to Subscriptions Earned Debit to Unearned Subscriptions

John Grey owns Grey's Snow Plowing. In October, Grey's collects $12,000 cash for 6 commercial accounts for which he will provide snowplowing for the entire season. To record this transaction, Grey will enter which of the following entries? (Check all that apply.)

Credit to Unearned Plowing Revenue Debit to Cash

Authorizing a cash dividend payment to investors requires three crucial dates. Identify which of the following is not a correct term to describe these dates.

Date of authorization

When a corporation declares and pays a cash dividend, there are three notable important dates. Which date does not require a formal journal entry to the financial statements?

Date of record

A patent was purchased for $20,000 and expected to be used for the 20-year life with no salvage value. The entry to expense the patent during the second year of life will include which of the following entries? (Check all that apply.)

Debit to Amortization Expense $1,000. Credit to Accumulated Amortization $1,000.

Patel Paving collected $1,000 cash in advance from a customer to provide paving services next month. The entry to record this cash receipt would include the following entries? (Check all that apply.)

Debit to Cash Credit to Unearned Paving Fees

A company issues $500,000 of 6%, 10-year bonds dated January 1, 2017 that mature on December 31, 2026. The bonds pay interest semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer records the sale with which of the following entries?

Debit to Cash $500,000; and credit to Bond Payable $500,000.

Vanya Inc.'s charter authorizes 1,000 shares of stock at a stated value of $1 per share. Vanya sells 50 shares of stock at its initial offering for $10 per share. The journal entry to record this transaction will include which of the following entries? (Check all that apply.)

Debit to Cash for $500. Credit to Common Stock for $50. Credit to Paid-In Capital, in Excess of Stated Value for $450.

The board of directors of Anchor, Inc. authorizes a $0.50 cash dividend to its 100,000 shares of common stock issued and outstanding. On the date of payment, a journal entry will include which of the following accounts? (Check all that apply.)

Debit to Common Dividend Payable Credit to Cash

Rojo's Roses Co. received an invoice for replacement of the engine on its main delivery van. The replacement will extend the life of the van an additional three years. The entry to record receipt of the invoice would include which of the following entries? (Check all that apply.)

Debit to Equipment. Credit to Accounts Payable.

Zilo Co. has accrued employee salary expense of $1,000 which includes employee withholdings that total $300. On payday, Zilo will record the payment with which of the following entries? (Check all that apply.)

Debit to Salaries Payable for $700. Credit to Cash for $700.

Lyon Co. collected $1,200 in sales tax from customers during the month of March. In April, Lyon sent the $1,200 sales tax to the state government. The entry to record payment to the state would include which of the following? (Check all that apply.)

Debit to Sales Tax Payable Credit to Cash

Vance Co. allows employees to take a two week vacation each year. To account for the two weeks off each year, Dante will record an adjusting entry to which of the following accounts? (Check all that apply.)

Debit to Vacation Benefits Expense. Credit to Vacation Benefits Payable.

Perez Co. sells automotive supplies and warranties them for a three-month period. Perez sold $10,000 of supplies during the month and anticipates that warranty repairs for these sales will total $250. The adjusting entry that Perez will make to record the warranty expense will include which of the following? (Check all that apply.)

Debit to Warranty Expense Credit to Estimated Warranty Liability

_______ is the process of allocating the cost of a natural resource to the period when it is consumed.

Depletion

is the process of allocating the cost of a plant asset to expense while it is in use.

Depreciation

Which of the following items related to depreciating equipment would be found on a company's income statement?

Depreciation Expense - Equipment

Information about cash flows can influence decision makers in important ways. Which of the following questions could be answered by the statement of cash flows? (Check all that apply.)

Does the company have the resources to pursue opportunities? How does a company spend its cash? Can the company pay its debts?

Theo Co. has two full-time employees who are provided health insurance at Theo's expense. At the end of the period, the cost of the insurance totals $1,400. The entry that Theo will make to accrue these costs include a debit to the ___________ account.

Employee Benefits Expense

Camelot Co. expects that bonuses for the year will be $100,000. The 12/31 entry will require a debit to the ______ account in the amount of _____.

Employee Bonus Expense; $100,000

Diamond Co. paid cash to overhaul a forklift, which extended the life of the forklift for an additional four years. The entry to record this purchase would include a debit to the _______ account.

Equipment

Quick Catering Co. paid for a refrigeration system to be added to their delivery van to keep the food cooled during deliveries. To record this expense, Quick would debit the ________ account.

Equipment

ATZ Co. sells equipment that cost $9,000 with current accumulated depreciation of $8,000 for $2,000 cash. To record this transaction, ATZ will credit which accounts? (Check all that apply.)

Equipment Gain on Disposal of Equipment

Sangmoon Co. sells equipment for $1,000 cash. The equipment cost Sangmoon $6,500 and has accumulated depreciation of $2,000 at the time of sale. Sangmoon will record the sale with a credit to which account and for how much?

Equipment for $6,500.

Handy Holly Co. provides a variety of household repairs and warranties her work for a six-month period. Holly provided $13,000 of service fees during the month and anticipates that warranty repairs for these sales will total $400. The entry that Holly will make to record the estimated warranty expense will include a credit which account?

Estimated Warranty Liability

Perez Co. sells lawn mowers and warranties them for one year. Perez made an adjusting entry at the end of last year to record the warranty expense. In February of the current year, a customer needed a $50 repair to a lawn mover. The entry to record the repair includes a debit to ___.

Estimated Warranty Liability

Simar Sales Co. sells and installs kitchen appliances. Simar guarantees parts and labor for one year after installation. Simar would record potential claims in a(n) _______ account.

Estimated Warranty Liability

___________ are expenditures that extend the asset's useful life beyond its original estimate.

Extraordinary repairs

Keys Co. is located in Florida. An evacuation has been ordered due to Hurricane Edward, which is headed in the direction of Keys. Keys should record a contingent liability prior to the evacuation.

F

Leo Calvin is required to have ______ taxes withheld from his pay in order to cover the cost of future retirement, disability, survivorship and medical benefits.

FICA

The Federal Insurance Contributions Act provides retirement, disability, survivorship, and medical benefits to qualified workers. Laws require employers to withhold _____ taxes from employees' pay to cover costs of the system.

FICA

Federal government taxes implemented on employers in order to provide unemployment benefits to qualified workers are known as (use acronym)

FUTA

The federal government requires that employers are taxed on employee wages to provide unemployment benefits to qualified workers. These taxes are known as:

FUTA

_________ activities include those transactions and events that affect long-term liabilities and equity, such as obtaining cash from issuing debt and distributing cash to owners.

Financing

activities include those transactions and events that affect long-term liabilities and equity, such as obtaining cash from issuing debt and distributing cash to owners.

Financing

Which of the following situations is not a contingent liability?

Future natural disaster

_____ is measured as the excess of the cost of an acquired entity over the value of the individual assets and liabilities.

Goodwill

_______ is(are) the total compensation an employee earns including wages, salaries, commissions, bonuses, and any compensation earned before deductions such as taxes.

Gross pay

Accountants can use a three-step process to determine cash provided (or used) by investing activities. Which of the following steps is not part of this process?

Identify adjustments to net income.

Amortization expense is recorded on which financial statement?

Income statement

Depreciation Expense is reported on which of the following financial statements?

Income statement

Depreciation expense is reported as a decrease in which of the following financial statements?

Income statement

Which of the following items would be added to net income when reporting cash flows from operating activities, using the indirect method? (Check all that apply.)

Increase in unearned fees Increase in accounts payable

A company reported total assets at the end of the previous year of $95,000; including cash of $35,000, accounts receivable of $20,000, and inventory of $40,000. It reported total assets at the end of the current year of $110,000; including cash of $44,000; accounts receivable of $29,000, and inventory of $37,000. Compute the net increase or decrease in cash for the current year.

Increase of $9,000

_______ are nonphysical assets used in operations that give companies long-term rights, or competitive advantages.

Intangible assets

A company borrows $70,000 by signing a $70,000, 8%, 6-year note that requires equal payments of $15,142 at the end of each year. The first payment will record interest expense of $5,600 and will reduce principal by $9,542. The journal entry to record this transaction will include a debit to which of the following accounts and for how much? (Check all that apply.)

Interest Expense $5,600 Notes Payable; $9,542

To compute cash flows from financing activities, accountants normally analyze changes in all of the following accounts except:

Interest Payable

On November 1, Lance Co. borrows $90,000 cash from First Bank by signing a 90-day, 5% interest-bearing note. On December 31, Lance will record an adjusting entry by crediting _______ in the amount of ______.

Interest Payable; $750

_______ activities include those transactions and events such as lending and collecting money for notes receivable and cash receipts from sale of short-term investments.

Investing

Identify which of the following items is a noncash investing and financing activity that must be reported in a note to the statement of cash flows. (Check all that apply.)

Lease of an asset in a long-term lease transaction Retirement of debt by issuing stock

In a leasehold improvement, the lessee debits the costs to

Leasehold Improvements

Organization expenses, or the costs to organize a corporation, include which of the following? (Check all that apply.)

Legal fees Charter fees

On December 31, Briar Co. disposed of a piece of equipment that cost $6,000 with accumulated depreciation of $4,500. The entry to record this disposal would include a debit to which account and for how much?

Loss on Disposal of Equipment for $1,500

Sanson Co. sells equipment for $1,000 cash. The equipment cost Sanson $6,500 and has accumulated depreciation of $2,000 at the time of sale. Sanson will record the sale with a debit to which account and for how much?

Loss on Sale of Equipment for $3,500.

Which of the following items would be adjusted to net income when computing cash flows from operating activities, using the indirect method? (Check all that apply.)

Loss on sale of investment Gain on sale of building Depreciation expense

Forward Co. discarded a machine that cost $5,000 and was fully depreciated. The entry to record this transaction would include a credit to the _________ account.

Machinery

Identify which of the following is not generally a right of common stockholders.

Manage operations

Which of the following items are considered employee benefits? (Check all that apply.)

Medical insurance Pension plans

FICA tax includes both Social Security tax and _____.

Medicare tax

Which of the following asset(s) are not considered intangible assets? (Check all that apply.)

Mineral deposit Copy machine

To calculate depletion expense, first determine the depletion per unit. Depletion per unit can be calculated by taking (cost ______)/total units of capacity.

Minus salvage value

Gross pay minus all deductions—including federal and state taxes, FICA and any voluntary deductions equals pay.

NET

______ are assets that are physically consumed when used, such as mineral deposits and oil and gas fields.

Natural resources

Both the direct and indirect methods of operating activities report which of the following items?

Net cash inflows (outflows)

Which of the following would be included in the operating section when preparing the statement of cash flows using the indirect method?

Net income

Which of the following items is not a payroll deduction?

Net pay

Determine which of the following expenses related to a building would be classified as a capital expenditure. (Check all that apply.)

New air conditioning system Room addition

Book value is equal to the selling price

No gain or loss recognized

Bushra Co. replaced a $1,000 account payable balance to Elin Co. with a 120-day, $1,000 note bearing 8% annual interest. Bushra's entry to record this transaction would include a credit to which account?

Notes Payable

On December 1, Campbell Co. borrowed $10,000 cash from Second Bank by signing a 90-day, 6% interest-bearing note. On December 31, Campbell accrued interest expense of $50. Campbell does not use reversing entries. On March 1, the due date of the note, Campbell will record the payment with debit entries to which of the following accounts? (Check all that apply.)

Notes Payable for $10,000 Interest Expense for $100 Interest Payable for $50

On June 1, Button Co. borrowed $1,000 cash from National Bank by signing a 120-day, 6% interest-bearing note. Button will record this transaction with a credit to _____ in the amount of ______.

Notes Payable; $1,000

On January 1, Avers Co. borrowed $10,000 cash from Main St. Bank by signing a 60-day, 8% interest-bearing note. On March 1, Avers pays the amount due in full. The March 1 entry would be recorded by Avers with a debit to (Accounts Payable/Notes Payable/Cash)_____ in the amount of _______.

Notes Payable; $10,000

A company borrows $60,000 by signing a $60,000, 8%, 6-year note that requires equal payments of $12,979 at the end of each year. The first payment will record interest expense of $4,800 and will reduce principal by $8,179. The journal entry to record this payment will include a debit to which of the following accounts and in what amount? (Check all that apply.)

Notes Payable; $8,179 Interest Expense; $4,800

The presentation of the _____ section is shown differently depending on if the statement of cash flows is reported using the direct or indirect method.

Operating

activities include those transactions and events that affect net income.

Operating

are expenditures that keep an asset in good operating condition. They are necessary if an asset is to perform to expectations over its useful life.

Ordinary repairs

Jose Garcia agrees to contribute land with a fair market value of $10,000 in exchange for 200 shares of Damian Inc.'s common stock with a par value of $10 per share. The journal entry to record this transaction in the books of Damian, Inc., will include a credit to _________ in the amount of _______.

Paid-in Capital, in Excess of Par; $8,000

The market value per share is the price at which stock is bought and sold. Which of the following factors does not influence market value?

Par value

Perez Co. sells lawn mowers and warranties them for one year. Perez made an adjusting entry at the end of last year to record the warranty expense. In February of the current year, a customer needed a $50 repair to a lawn mover. The entry to record the repair includes a credit to ___.

Parts Inventory

A company's cash receipts and cash payments are recorded in the cash account in its general ledger. Identify which of the following could not be determined by analyzing the cash account?

Payment for land by issuing a note

The journal entry to record employer tax accruals includes a debit to:

Payroll Tax Expense

_________ has/have special rights that give it priority over other types of stock in one or more areas.

Preferred stock

The cost at which a company records purchases of machinery and equipment should include which of the following?

Purchase price Installation Taxes Shipping fees

Ordinary repairs, such as normal repairs and maintenance to a vehicle, would be recorded with a debit to which of the following accounts?

Repairs expense

Which of the following expenses would not be considered an ordinary repair?

Replacing an engine

On March 15, the board of directors of Richmond, Inc. declare a cash dividend of $1 per share. On March 15, there are 1,000 shares of stock issued and outstanding. The journal entry required on the date of declaration will include a debit to the _________ account.

Retained Earnings

The account that consists of a company's cumulative net income less any losses and dividends declared since its inception is called _________.

Retained Earnings

Stockholders' equity, reported on the balance sheet, consists of which of the following accounts? (Check all that apply.)

Retained Earnings Paid-in Capital

State unemployment taxes imposed on employers in order to provide unemployment benefits to qualified workers are known as:

SUTA

Zion Co. sells $100 of merchandise and collects $10 sales tax. The sales tax is recorded to which account?

Sales tax payable

value, also called residual value or scrap value, is an estimate of the asset's value at the end of its useful life.

Salvage

Plant assets should be recorded at cost, including all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use. This would include which of the following costs? (Check all that apply.)

Shipping charges Testing Assembling

Which of the following items would be correct adjustments to net income to arrive at cash flows from operating activities, using the indirect method? (Correct all that apply.)

Subtract increase in inventory Add increase in accounts payable

Which of the following items would not be a correct adjustment to net income to arrive at cash flows from operating activities, using the indirect method?

Subtract increase in taxes payable

Which of the following is a true statement concerning the employer FICA taxes:

The employer must pay FICA tax in an amount equal to that paid by the employee.

Which of the following situations would require a journal entry to record the contingent liability in the financial statements?

The liability is probable and estimated to be $10,000.

Which of the following situations would not be required to be recorded in the financial statements or reported as a note to the financial statements?

The liability is remote and estimated to be $30,000.

Which of the following statements about the statement of cash flows are correct? (Check all that apply.)

The purpose is to report cash receipts and cash payments during a period. It details the sources and uses of cash.

Martinez Co. sells a machine that cost $10,000 with accumulated depreciation of $8,000 for $2,000 cash. The entry to record this transaction will recognize a gain or loss of how much?

There is no gain or loss.

Which of the following is not a reason that a corporation would issue preferred stock?

To obtain a tax advantage over corporations with no preferred stock

True or false: The book value of an asset when using straight-line depreciation is always greater than the book value from using double-declining-balance, except at the beginning and end of the asset's useful life, when it is the same.

True

True or false: The cost of a plant asset consists of all necessary and reasonable expenditures to acquire it and prepare it for its intended use.

True

Amounts received in advance from customers for future products or services are typically recorded in a liability account called _______.

Unearned Revenues

A company sells 12-month popular magazine subscriptions. During the month of May, the company sells $12,000 in magazines, which will start in June. The adjusting entry to record the $1,000 of subscriptions earned in June will include a debit to which account?

Unearned Subscription Revenue

A company sells 12-month subscriptions to popular magazines. During the month of May, the company sells $10,000 in magazines, which will start in June. The journal entry to record the sales not yet earned will include a credit to which account?

Unearned Subscription Revenue

Which of the following liabilities could be a multi-period known liability? (Check all that apply.)

Unearned Subscription Revenues Notes Payable

Employers must pay employee taxes in addition to those paid by the employees. Which of the following is paid only by the employer?

Unemployment

The method of depreciation that charges a varying amount to depreciation expense for each period depending on its usage is called the _________ method.

Units-of-Production

Which of the following is not a characteristic of a corporation?

Unlimited liability of stockholders

Abby Co. allows each employee two weeks of paid time off during each calendar year. Since employees are working for 50 weeks, rather than 52 weeks, Abby must accrue the paid time off during the 50 weeks that the employees work. The year-end adjusting entry is recorded as a credit to the ________ account.

Vacation Benefits Payable

Dante Co. allows employees to take two weeks vacation during each year. To account for the two weeks off each year, Dante will accrue the Vacation Benefits with a credit to the ________ account.

Vacation Benefits Payable

Which of the following questions could not be answered from the statement of cash flows?

What are the earnings-per-share of common stock?

Information on the statement of cash flows helps users answer all of the following questions except:

Why did the company invest in long-term assets?

Dividends paid during a period totaled $5,000. This will be reported on the statement of cash flows as:

a decrease in the financing activities section

Sheldon Company's balance in prepaid insurance at the beginning and end of the year was $2,500 and $1,000, respectively. This will be reported on the statement of cash flows using the indirect method as:

a decrease of $1,500 which will be added to net income

Emerald Jewelery Store had a credit balance in interest payable of $200 at the beginning of the period, and a credit balance of $50 at the end of the period. Based on this information, the adjustment to net income for the period will be reported as:

a decrease of $150 which will be subtracted from net income

Inventory at the beginning of the period had a debit balance of $9,000, and a debit balance of $7,000 at the end of the period. Using the indirect method, this will be reported in the operating section of the statement of cash flows as:

a decrease of $2,000 which will be added to net income

Retained earnings at the beginning and end of the year totaled $25,000 and $75,000, respectively. Net income reported during the period was $70,000. Using this information, dividends paid will be reported as _____ on the statement of cash flows.

a decrease of $20,000 in the financing activities section.

Accounts receivable had a debit balance of $10,000 at the beginning of the period, and a debit balance of $6,000 at the end of the period. Based on this information, the adjustment to net income for the period will be reported as:

a decrease of $4,000 which will be added to net income

LiveLife Company had a credit balance of $10,000 in accounts payable at the beginning of the period, and a credit balance of $6,000 at the end of the period. Based on this information, the adjustment to net income for the period will be reported as:

a decrease of $4,000 which will be subtracted from net income

When stock is sold for less than par value, it is issued at

a discount

When an asset is sold for an amount that is above the asset's current book value, the company should record?

a gain on sale of equipment.

The statement of cash flows reports noncash investing and financing transactions in

a note or separate schedule

A loss from the sale of an investment would be (added/subtracted) to (from) net income when computing cash flows from operations, using the indirect method.

added

An increase in wages payable would be (added/subtracted) to (from) net income when preparing cash flows from operating activities, using the indirect method.

added

An increase in wages payable would be (added/subtracted) to (from) net income, when computing cash flows from operations using the indirect method.

added

Depreciation expense is (added/subtracted) to (from) net income, when computing cash flows from operations, using the indirect method.

added

Copyrights, trademarks, and other intangible assets are expensed over their useful lives through the process of:

amortization

If an intangible asset has a limited life, its cost is systematically allocated to expense over its useful life through the process of:

amortization

The Coffee Cup Company had a credit balance of $500 in interest payable at the beginning of the period, and a credit balance of $600 at the end of the period. Based on this information, the adjustment to net income for the period will be reported as:

an increase of $100 which will be added to net income

Red Co.'s beginning Common Stock balance was $110,000 and their ending Common Stock balance was $125,000. This will be reported as _____ in the statement of cash flows.

an increase of $15,000 in the financing activities section

Sunshine Company had a credit balance of $4,000 in accounts payable at the beginning of the period, and a credit balance of $6,000 at the end of the period. Based on this information, the adjustment to net income for the period will be reported as:

an increase of $2,000 which will be added to net income

Accounts receivable had a debit balance of $4,000 at the beginning of the period, and a debit balance of $6,000 at the end of the period. Based on this information, the adjustment to net income for the period will be reported as:

an increase of $2,000 which will be subtracted from net income

Reid Company's balance in prepaid insurance at the beginning and end of the year was $1,000 and $1,200, respectively. This will be reported on the statement of cash flows using the indirect method as:

an increase of $200 which will be subtracted from net income

Inventory at the beginning of the period had a debit balance of $7,000, and a debit balance of $10,000 at the end of the period. Using the indirect method, this will be reported in the operating section of the statement of cash flows as:

an increase of $3,000 which will be subtracted from net income

A voluntary transfer of amounts from Retained Earnings to inform users of special activities that require funds are called:

appropriated retained earnings

No-par value stock is stock not assigned a value per share by the corporate charter. Its advantage is that it can be issued ___________ without the possibility of a minimum legal capital.

at any price

Most bonds require par value to be repaid _______ and interest to be paid _________.

at the maturity date; semiannually

Accumulated depreciation is reported on which of the following financial statements?

balance sheet

Employee ________ are perks that are provided in addition to salaries and wages, such as all or part of medical, dental, life and disability insurance.

benefits

Niren Co. made modifications to a manufacturing machine that increased its productivity by 40%. Niren would classify this expense as a(n):

betterment.

The stockholders of a corporation elect the

board of directors

A ___________ is when an employer provides employees with a percentage of the net income earned during the year.

bonus plan

Angela Bennett is an employee of Marks Co. This past year, Angela received 1% of Marks net income, in addition to her annual salary. This added benefit is called a:

bonus plan

The asset's acquisition costs less its accumulated depreciation is called:

book value

The factors necessary to compute depreciation include all of the following, except:

book value

When a company revises an estimate used to record depreciation expense, the company should revise depreciation by using the formula (_______ - revised salvage value)/revised remaining useful life.

book value

(Capital/Revenue) expenditures are additional costs of plant assets that provide benefits extending beyond the current period, such as a plant expansion, or major machine overhaul.

capital

Tire Co. collected $2,000 in sales tax during the month of October. The entry that shows the remittance of this sales tax to the state government in November would include a credit to the account.

cash

A _________ is the distribution of cash to its owners. This is determined by the board of directors.

cash dividend

A company issues $50,000 of 8%, 10-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer records the first semi-annual interest payment with a credit to in the amount of $.

cash, 2000

A bond _________ may be issued as evidence of the company's debt.

certificate

Investing activities are affected by

changes in long-term assets.

When all authorized shares of stock have the same rights and characteristics, the stock is called _______ stock.

common

Accumulated depreciation is a asset account (one that is linked with the plant asset account, but has an opposite normal balance) and is reported on the balance sheet.

contra

Accumulated depletion is considered to be a ________ and is recorded on the _________.

contra-asset; balance sheet

The ________ rate is the interest rate specified, sometimes referred to as the coupon rate, stated rate, or nominal rate.

contract

The exclusive right to publish or sell a musical, literary, or artistic work during the life of the creator plus 70 years is called a .

copyright

A ___________ is an entity created by law that is separate from its owners. Owners are called stockholders or shareholders. These entities can be privately or publicly held.

corporation

The factors necessary to compute depreciation include (cost/selling price/market value), salvage value and useful life.

cost

On June 1, the board of directors of Dylan, Inc. declare a cash dividend of $1 per share. On June 1, there are 1,000 shares of stock issued and outstanding. The journal entry required on the date of declaration will include a (debit/credit) to the Common Dividend Payable account.

credit

Bing Inc.'s charter authorizes 500 shares of stock with no par value. Bing Inc. sells 100 shares of stock at its initial offering for $5 per share. The journal entry to record this transaction will include a (debit/credit) _______ to Common Stock for ______.

credit; $500

Teva Co. has current period employee salary expense of $2,000. Employee withholdings total $850. To accrue the current period payroll, Salaries Payable will be (debited/credited) __________ in the amount of ___________.

credited; $1,150

A _________liability is a liability due within one year or the company's operating cycle, whichever is longer.

current

Woods Co. has a note payable due in monthly installments over the next five years. This note will be reported under which of the following categories of the balance sheet? (Check all that apply.)

current liabilities long-term liabilities

Amounts withheld from employee's earnings for employee income tax is considered a _____ by the employer until the government is paid.

current liability

Plant assets are recorded at cost, which includes all expenditures necessary to get the asset in place and ready for use. All of the following would be included as part of the cost of a plant asset except:

damage done when unpacking the plant asset

On December 1, Hansen Co. borrowed $100,000 cash from National Bank by signing a 90-day, 6% interest-bearing note. On December 31, Hansen recorded an adjusting entry to record interest expense of $500. On March 1, the due date of the note, Hansen will record interest expense as a (debit/credit) ________ in the amount of ______.

debit; $1,000

On June 1, Sawyer Co. borrowed $5,000 by extending their past-due account payable with a 45-day, 12% interest-bearing note. On July 16, the due date, Sawyer pays the amount due in full. Sawyer would record this payment with a (debit/credit) _______ to Interest Expense in the amount of _______.

debit; $75

On June 1, Sawyer Co. borrowed $5,000 cash from Crystal Bank by signing a 45-day, 12% interest-bearing note. On July 16, Sawyer pays the amount due in full. Sawyer would record this payment with a (debit/credit) _______ to Interest Expense in the amount of _______.

debit; $75

A company issues $90,000 of 9%, 10-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer records the payment of principal at maturity with a (debit/credit) ________ to bond payable in the amount of _______.

debit; $90,000

Privo Co. purchases a machine that cost $15,000. Privo estimates a 5-year life with no salvage value. The first three years of depreciation expense are $6,000; $3,600; and $2,160, respectively. Based on this information, Privo is using the ________ depreciation method.

declining-balance

The depreciation method that determines the depreciation for the period by multiplying a depreciation rate (often twice the straight-line rate) by the asset's beginning-period book value is known as the __________ method.

declining-balance

The Breezy Fan reported a decrease to net income in their income taxes payable account on the statement of cash flows using the indirect method. This means that Breezy Fan's income taxes payable account (increased/decreased) for the period.

decreased

An oil company recognizes the cost of discovering and operating oil wells by recording ______ expense for each unit of oil used.

depletion

______ is the process of allocating the cost of a plant asset to expense while it is in use.

depreciation

The three-step analysis to determine cash provided or used by financing activities includes:

determine the cash effects using T-accounts and reconstructed entries reporting the cash flow effects identifying changes in financing-related accounts

A company owns an asset that is fully depreciated. The asset is no longer being used in operations and has no market value. The company has decided to ________ the asset by recording an entry to remove it from the balance sheet.

discard

A on stock occurs when a corporation issues its stock for less than par (or stated) value; however, most states prohibit stock to be sold for less than the par (or stated) value.

discount

The board of directors authorizes a cash or distribution of cash to its investors.

dividend

Unemployment taxes are examples of (employee/employer) taxes.

employer

In addition to analyzing the cash account, a second approach to preparing the statement of cash flows is to explain changes in cash by analyzing changes in

equity accounts liability accounts noncash asset accounts

A(n) ______ liability is a known obligation that is of an uncertain amount but that can be reasonably estimated.

estimated

Sioux Co. replaced the roof on its existing building, therefore increasing the building's life by 10 years. The cost of the roof is considered a(n):

extraordinary repair

True or false: The cost of plant assets should include all of the normal and reasonable expenditures necessary to get the asset in place and ready for its intended use, including repairs to damages incurred after installation

false

The format of a statement of cash flows includes reporting cash flows from three activities including:

financing investing operating

Book value is less than the selling price

gain on sale of asset

The amount by which a company's value exceeds the value of its individual assets and liabilities is called

goodwill

When recording a liability, a company may not know: (Check all that apply.)

how much to pay. whom to pay. when to pay.

The three-step process to determine cash provided or used by financing activities includes all of the following steps except:

identify an increase or decrease in cash.

Intangible assets that continue indefinitely into the future and are not amortized. The values of these assets are tested annually for ________.

impairment

An improvements to a leased asset is called a leasehold

improvement

When analyzing the noncash accounts to assist in preparing the statement of cash flows, the changes in liabilities, equity and noncash asset accounts are analyzed along with the

income statement accounts

The TeaCup Company reported an increase to net income in their income taxes payable account on the statement of cash flows using the indirect method. This means that TeaCup's income taxes payable account (increased/decreased) for the period.

increased

If an intangible asset has a(n)___ is not amortized.

indefinite life

The legal contract between the bondholders and the issuer is called the bond ______.

indenture

Carol Co. prepares a statement of cash flows starting with net income and then adjusting for items that do not affect cash. Carol Co. is using the (direct/indirect) method of reporting the statement of cash flows.

indirect

The _______ method of reporting the statement of cash flows reports net income and then adjusts it for items that do not affect cash.

indirect

A net cash (inflow/outflow) occurs when the receipts in a category exceed the payments.

inflow

A(n) _____ note is an obligation requiring a series of payments to the lenders.

installment

On January 8, Lee Co. borrows $100,000 cash from National Bank by signing a 90-day, 6% interest note. On April 8, Lee Co. will pay National Bank a total of $101,500. The difference between the amount paid back to National Bank of $101,500 and the amount borrowed of $100,000 (or $1,500) represents expense.

interest

Collecting money for notes receivable would be reported on the statement of cash flows as a(n) activity.

investing

A measurable obligation arising from agreements, contracts, or laws is called a liability.

known

Assets that increase the benefits of land, have a limited useful life, such as parking lots and lighting systems, are called:

land improvements

Property rented under a contract is called a

lease

Advantages of leasing versus buying an asset include all of the following:

lease terms often allow exchanges to trade up on leased assets little or no up-front payment

A is a probable future payment of assets or services that a company is presently obligated to make as a result of past transactions or events.

liability

Bina Consulting Co. collected $500 from a customer in advance to provide consulting fees for the next two months. The $500 would be recorded with a debit to Cash and a credit to the Unearned Revenues, which is a(n) (asset/liability/equity) account.

liability

Bryne Co. sells merchandise and collects a 5% state sales tax. The tax is recorded on Bryne's general ledger as a(n) ______ account.

liability

When a company has a current obligation to make a future payment to their supplier due to a shipment of supplies that were received last week, the company would record this transaction with an increase to an asset account and a(n) ________ account.

liability

Obligations due after one year or one operating cycle, whichever is longer, are considered to be:

long-term liabilities.

Ace Company borrowed $10,000 from Fair Rates Bank by signing a two-year note payable. Ace's operating cycle is 14 months. This note would be considered a ______ on the balance sheet.

long-term liability

Book value is greater than the selling price

loss on sale of asset

The purchase of a group of plant assets for one price is called a ______ purchase.

lump-sum

The ______ value per share is the price at which a stock is bought and sold.

market

The bond's _______ rate of interest is the rate that borrowers are willing to pay and lenders are willing to accept for a particular bond and its risk level.

market

The rate that borrowers are willing to pay and lenders are willing to accept for a particular bond at its risk level is called the bond's rate.

market

Jordan Inc.'s charter states that there are 50,000 shares of stock authorized with a par value of $5 per share. This typically means that investors must pay a (minimum/maximum) of $5 per share to invest in the corporation.

minimum

A(n) _______ is a legal agreement that helps to protect a lender if a borrower does not make required payments on notes or bonds. This agreement gives the lender the right to be paid from the cash proceeds of the sale of the borrower's assets, as identified in the agreement.

mortgage

Unearned subscription revenues that extends over multiple periods is an example of a _______ known liability.

multi-period

Brice Co. purchases land in order to drill oil. This oil field would be classified as a(n) _______ on the balance sheet.

natural resource

A(n) _______ occurs when the receipts in a category exceed the payments.

net cash inflow

_________ value stock is stock not assigned a value per share by the corporate charter. Its advantage is that it can be issued at any price without the possibility of a minimum legal capital.

no par

A _____ _____ is similar to a bond payable but is normally transacted with a single lender such as a bank.

note payable

Lyle Co. borrowed $20,000 from First Bank by signing a written promise to pay a definite sum of money on a specific future date. Lyle will record this in the general ledger as a(n) payable

notes

On January 1, Avers Co. borrowed $10,000 by extending their past-due account payable with a a 60-day, 8% interest-bearing note. On March 1, the due date, Avers pays the amount due in full. This entry would be recorded by Avers with a debit to (Accounts Payable/Notes Payable/Cash)_____ in the amount of _______.

notes payable 10,000

Employee income tax depends on: (Check all that apply).

number of employee withholding allowances employee's income

A potential legal claim is recorded

only if payment for damages is probable and the amount can be reasonably estimated.

A(n) _____________ activity includes those transactions and events that affect net income, including the purchase of goods and services, cash sales to customers, and payment of operating expenses.

operating

The purchase of goods and services, the sale of goods and services to customers, and costs to operate the business are all reported on the statement of cash flows under activities.

operating

A net cash ______ occurs when the payments in a category exceed the receipts.

outflow

The _____ value of stock is an amount assigned per share by the corporation in its charter. In many states, this amount establishes the minimum legal capital, which refers to the least amount that the buyers of stock must contribute or be subject to paying at future dates.

par

The ________ value of a bond, also called the face amount or face value, is paid at a stated future date, known as the bond's maturity date.

par

The bond contract rate determines the annual interest paid by multiplying the bond ______ value by the contract rate.

par

Employer taxes, such as SUTA, are recorded with a debit to Employer Tax Expense and a credit to SUTA (expense/payable) until payments are submitted to the state.

payable

KRS Co. sells merchandise for $120 and collects sales tax of $12. KRS would record the $12 sales tax with a credit to the Sales Tax account.

payable

When the board of directors authorizes a cash dividend to investors, there are three important dates involved—the date of declaration, date of record, and date of .

payment

Amounts withheld from an employee's gross pay are called:

payroll deductions

(Plant/Current) assets purchased as a group in a single transaction for a lump-sum price are allocated the purchase price based on their relative market values.

plant

A _____ on stock occurs when a corporation issues its stock for more than par (or stated) value.

premium

Martin, Inc.'s charter authorizes 50,000 shares of stock with a par value of $1 per share. 1,000 shares of stock are issued at a market value of $5 per share. This means that the shares of stock are issued at a (premium/discount) .

premium

When the current market rate is less than the bond contract rate on the date of issuance, the bond will be sold at a(n)

premium

The of a note is the amount that the signer of a note agrees to pay back when it matures, not including interest.

principal

Corrections of material errors in past financial statements are called period adjustments.

prior

Corrections of material errors in prior period financial statements, such as arithmetic errors, unacceptable accounting, and missed facts are reported in the statement of stockholders' equity as:

prior period adjustments

A(n) keeps stockholder records and prepares official lists of stockholders for stockholder meetings and dividend payments.

registrar

The three-step analysis to determine cash provided or used by investing activities includes:

reporting the cash flow effects determining the cash effects using T-accounts and reconstructed entries identifying changes in investing-related accounts

Statutory and contractual restrictions are called retained earnings.

restricted

A statement of stockholders' equity lists balances of:

retained earnings cash dividends common stock shares net income

(Revenue/Capital) expenditures are additional costs of plant assets that do not materially increase the asset's life or capabilities.

revenue

Straight-line depreciation is calculated by taking cost minus (salvage/market) value divided by useful life.

salvage

______ value, also called residual value or scrap value, is an estimate of the asset's value at the end of its useful life.

salvage

value, also called residual value or scrap value, is an estimate of the asset's value at the end of its useful life.

salvage

A written promise to pay a specified amount on a stated future date within one year or the company's operating cycle, whichever is longer, is considered a __________.

short-term note payable

Cadie Construction Co. signed a note promising to pay a cement supplier $1,000 60-days from now. As a result of this transaction, Cadie would record a(n) ________ on her balance sheet.

short-term note payable

Vernon, Inc.'s charter did not assign a par-value to its authorized stock. However, Vernon's directors assigned a(n) ________ value per share. This value becomes the minimum legal capital per share in this case.

stated

_____ value stock is no-par stock to which the directors assigned a certain value per share. This value becomes the minimum legal capital per share in this case.

stated

The information needed to prepare a statement of cash flows could come from all of the following sources, except the:

statement of retained earnings.

The _____ lists the beginning and ending balances of key equity accounts and describes the changes that occur during the period.

statement of stockholders' equity

A corporation can sell directly or indirectly (through a brokerage).

stock

Darby, Inc. has 25,000 shares of stock issued and outstanding. All the shares of stock have the same rights and characteristics; therefore, the stock is called stock.

stock

A corporation sometimes issues a _____ as proof of share ownership.

stock certificate

Rank the following groups in order of authority--with the highest authority at the top.

stockholder board of directors president employees

A gain from the sale of a building would be (added/subtracted) to (from) net income when computing cash flows from operations, using the indirect method.

subtracted

A corporation can pay a brokerage house to issue its stock. Some brokerage houses underwrite an indirect issuance of stock; they buy the stock from the corporation and resale it to investors.

t

True or false: A corporation has agreed to pay a $0.10 cash dividend on shares of common stock. On the date of record, no formal journal entry is required.

t

True or false: Preferred stock can be issued to raise money without giving up control.

t

True or false: Stockholders do not have the power to bind the corporation to contracts. This is referred to as lack of mutual agency.

t

A corporation is created by obtaining a charter from:

the state government

A symbol, name, phrase or jingle identified with a company, product or service is called a

trademark

Wyatt Co. purchased a popular symbol that doubled its sales in the first year. The cost of this symbol is an asset called a:

trademark

The statement of cash flows does not report the following transactions

transactions between cash and cash equivalents

A(n) agent assists with purchases and sales of shares by receiving and issuing certificates as necessary.

transfer

Keys, Inc. purchased 100 shares of its own common stock for $10 per share. The stock is now classified as ______ stock, a contra equity account, reported on the statement of stockholder's equity.

treasury

When a corporation purchases shares of its own stock, it is called ________ stock.

treasury

To calculate depletion expense in a period, a company should multiply the depletion per unit by:

units extracted and sold in the period

Grand Co. owns one copier that was purchased for $10,000 three years ago. The depreciation expense taken on the copier each year has been $2,700; $1,800; and $2,200, based on the number of copies that have been made on the copier. Based on this information, the company uses the ________ depreciation method.

units-of-production

The method of depreciation that charges a varying amount to depreciation expense for each period depending on its usage is called the _________ method.

units-of-production

Current liabilities _____ operations, including short-term notes payable and dividends payable are categorized as financing activities.

unrelated to

The ______ life of a plant asset is the length of time it is productively used in a company's operations

useful

Paid absences offered to employees are called _ benefits.

vacation

Employers often withhold amounts from employees' earnings which arise from employee requests, contracts, unions, or other agreements. These withholdings are called employee __________ and include items such as medical premiums.

voluntary deductions

A known liability is a measurable obligation arising from agreements, contracts, or laws. Known liabilities would include all of the following items, except:

warranties.