ACC 201 final exam

The net amount expected to be received in cash from receivables is termed the a. cash realizable value. b. cash-good value. c. gross cash value. d. cash-equivalent value.

a. cash realizable value.

The principles of internal control include all of the following except a. establishment of responsibility. b. segregation of duties. c. revenue recognition. d. independent internal verification.

c. revenue recognition.

Internal controls are concerned with a. only manual systems of accounting. b. the extent of government regulations. c. safeguarding assets. d. preparing income tax returns.

c. safeguarding assets.

Use the following information to answer the next group of questions (A-G): The following items are taken from the financial statements of Mistletoe Company for the year ending 12/31/2016: Cash 15,000 Accounts receivable 11,000 Prepaid insurance (12-month policy) 6,000 Supplies 4,000 Equipment 210,000 Accumulated depreciation - equipment 28,000 Accounts payable $ 18,000 Note payable, due 6/31/2017 70,000 Common stock 90,000 Retained earnings, 1/1/2016 12,000 Dividends 14,000 Service revenue 133,000 Advertising expense 21,000 Depreciation expense 12,000 Insurance expense 3,000 Rent expense 17,000 Salaries expense 32,000 Supplies expense 6,000 F) What are total long-term liabilities at 12/31/2016? a. $0 b. $70,000. c. $88,000 d. $90,000

a. $0

Use the following information to answer the next questions (A-D): Candy Cane Company uses a periodic inventory system. Details for the inventory account for the month of January 2016 are as follows: Units Per unit price Total Balance, 1/1/2016 200 $5.00 $1,000 Purchase, 1/15/2016 100 5.30 530 Purchase, 1/28/2016 100 5.50 550 An end of the month (1/30/2016) inventory showed that 120 units were on hand. D) If the company uses FIFO and sells the units for $10 each, what is the gross profit for the month? a. $1,376 b. $1,424 c. $2,800 d. $3,000

a. $1,376

Lifetime sells softball equipment. On November 14, they shipped $3,000 worth of softball uniforms to Palos Middle School, terms 2/10, n/30. On November 21, they received an order from Tinley High School for $1,800 worth of custom printed bats to be produced in December. On November 30, Palos Middle School returned $300 of defective merchandise. Lifetime has received no payments from either school as of month end. What amount will be recognized as net accounts receivable on the balance sheet as of November 30? a. $2,700 b. $3,000 c. $4,500 d. $4,800

a. $2,700

Which of the following would be deducted from the balance per bank on a bank reconciliation? a. Outstanding checks. b. Deposits in transit. c. Service charge. d. Electronic funds transfer to supplier.

a. Outstanding checks.

Under the allowance method, writing off an uncollectible account a. affects only balance sheet accounts. b. affects both balance sheet and income statement accounts. c. affects only income statement accounts. d. is not acceptable practice.

a. affects only balance sheet accounts.

The term "receivables" refers to a. amounts due from individuals or companies. b. merchandise to be collected from individuals or companies. c. cash to be paid to creditors. d. cash to be paid to debtors.

a. amounts due from individuals or companies.

Allowance for Doubtful Accounts is reported in the a. balance sheet as a contra asset. b. balance sheet as a contra liability account. c. income statement under other expenses and losses. d. income statement under other revenues and gains.

a. balance sheet as a contra asset.

The percentage of sales basis of estimating expected uncollectibles a. emphasizes the matching of expenses with revenues. b. emphasizes balance sheet relationships. c. emphasizes cash realizable value. d. is not generally accepted as a basis for estimating bad debts.

a. emphasizes the matching of expenses with revenues.

The bank statement that a depositor receives from the bank includes a. notification of amounts deducted by the bank to cover such things as the cost of a supply of new checks ordered by the depositor. b. a designation of which checks are still outstanding at the end of the month. c. a designation of which deposits are in transit at the end of the month. d. notification of errors made by the depositor in recording checks written during the month in the depositor's accounts.

a. notification of amounts deducted by the bank to cover such things as the cost of a supply of new checks ordered by the depositor.

An adjusting entry is not required for a. outstanding checks. b. collection of a note by the bank. c. NSF checks. d. bank service charges.

a. outstanding checks.

Syfy Company on July 15 sells merchandise on account to Eureka Co. for $5,000, terms 2/10, n/30. On July 20 Eureka Co. returns merchandise worth $2,000 to Syfy Company. On July 24 payment is received from Eureka Co. for the balance due. What is the amount of cash received? a. $2,900 b. $2,940 c. $3,000 d. $5,000

b. $2,940

Kill Corporation's unadjusted trial balance includes the following balances (assume normal balances): Accounts Receivable $850,000 Allowance for Doubtful Accounts 15,000 Bad debts are estimated to be 6% of outstanding receivables. What amount of bad debt expense will the company record? a. $15,000 b. $36,000 c. $50,100 d. $51,000

b. $36,000

Use the following information to answer the next group of questions (A-G): The following items are taken from the financial statements of Mistletoe Company for the year ending 12/31/2016: Cash 15,000 Accounts receivable 11,000 Prepaid insurance (12-month policy) 6,000 Supplies 4,000 Equipment 210,000 Accumulated depreciation - equipment 28,000 Accounts payable $ 18,000 Note payable, due 6/31/2017 70,000 Common stock 90,000 Retained earnings, 1/1/2016 12,000 Dividends 14,000 Service revenue 133,000 Advertising expense 21,000 Depreciation expense 12,000 Insurance expense 3,000 Rent expense 17,000 Salaries expense 32,000 Supplies expense 6,000 B) What is the balance that would be reported for Retained earnings at 12/31/2016? a. $12,000 b. $40,000 c. $42,000 d. $56,000

b. $40,000

Use the following information to answer the next group of questions (A-G): The following items are taken from the financial statements of Mistletoe Company for the year ending 12/31/2016: Cash 15,000 Accounts receivable 11,000 Prepaid insurance (12-month policy) 6,000 Supplies 4,000 Equipment 210,000 Accumulated depreciation - equipment 28,000 Accounts payable $ 18,000 Note payable, due 6/31/2017 70,000 Common stock 90,000 Retained earnings, 1/1/2016 12,000 Dividends 14,000 Service revenue 133,000 Advertising expense 21,000 Depreciation expense 12,000 Insurance expense 3,000 Rent expense 17,000 Salaries expense 32,000 Supplies expense 6,000 A) What is the company's net income for the year ending 12/31/2016? a. $133,000 b. $42,000 c. $28,000 d. $12,000

b. $42,000

Tinsel Factory, Inc.'s December 31, 2016 trial balance includes the following balances: Common Stock, $14,000; Unearned Revenue, $12,000; Retained Earnings, $32,000, and Depreciation Expense $10,000. Total Stockholders' Equity at December 31, 2016 is: a. $58,000 b. $46,000 c. $68,000 d. $34,000

b. $46,000

Use the following information to answer the next questions (A-D): Candy Cane Company uses a periodic inventory system. Details for the inventory account for the month of January 2016 are as follows: Units Per unit price Total Balance, 1/1/2016 200 $5.00 $1,000 Purchase, 1/15/2016 100 5.30 530 Purchase, 1/28/2016 100 5.50 550 An end of the month (1/30/2016) inventory showed that 120 units were on hand. C) If the company uses LIFO, what is the value of the ending inventory? a. $520 b. $600 c. $656 d. $1,480

b. $600

When an account becomes uncollectible and must be written off, a. Allowance for Doubtful Accounts should be credited. b. Accounts Receivable should be credited. c. Bad Debt Expense should be credited. d. Sales Revenue should be debited

b. Accounts Receivable should be credited.

Haven Company uses the percentage of sales method for recording bad debt expense. For the year, cash sales are $600,000 and credit sales are $2,700,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Haven Company make to record the bad debt expense? a. Bad Debt Expense 33,000 Allowance for Doubtful Accounts 33,000 b. Bad Debt Expense 27,000 Allowance for Doubtful Accounts 27,000 c. Bad Debt Expense 27,000 Accounts Receivable 27,000 d. Bad Debt Expense 33,000 Accounts Receivable 33,000

b. Bad Debt Expense 27,000 Allowance for Doubtful Accounts 27,000

From an internal control standpoint, the asset most susceptible to improper diversion and use is a. prepaid insurance. b. cash. c. buildings. d. land.

b. cash.

If a company fails to record estimated bad debts expense, a. cash realizable value is understated. b. expenses are understated. c. revenues are understated. d. receivables are understated.

b. expenses are understated.

The existing balance in Allowance for Doubtful Accounts is considered in computing bad debt expense in the a. direct write-off method. b. percentage of receivables basis. c. percentage of sales basis. d. percentage of receivables and percentage of sales basis.

b. percentage of receivables basis.

The existing balance in Allowance for Doubtful Accounts is considered in computing bad debts expense in the: a. direct write-off method. b. percentage of receivables basis. c. percentage of sales basis. d. percentage of receivables and percentage of sales basis.

b. percentage of receivables basis.

Christmas Company reported the following balances at June 30, 2016: Sales $12,000 Sales Returns and Allowances 500 Sales Discounts 100 Cost of goods sold 5,000 Net sales for the month is: a. $11,500 b. $6,400 c. $11,400 d. $11,900

c. $11,400

A plant asset cost $96,000 and has a 8-year useful life. The annual depreciation expense recorded (assuming an equal amount each year) would be: a. $9,600 b. $13,000. c. $12,000. d. $10,500.

c. $12,000.

Use the following information to answer the next group of questions (A-G): The following items are taken from the financial statements of Mistletoe Company for the year ending 12/31/2016: Cash 15,000 Accounts receivable 11,000 Prepaid insurance (12-month policy) 6,000 Supplies 4,000 Equipment 210,000 Accumulated depreciation - equipment 28,000 Accounts payable $ 18,000 Note payable, due 6/31/2017 70,000 Common stock 90,000 Retained earnings, 1/1/2016 12,000 Dividends 14,000 Service revenue 133,000 Advertising expense 21,000 Depreciation expense 12,000 Insurance expense 3,000 Rent expense 17,000 Salaries expense 32,000 Supplies expense 6,000 D) What is the book value of the equipment at 12/31/2016? a. $238,000. b. $210,000 c. $182,000 d. $170,000

c. $182,000

Use the following information to answer the next group of questions (A-G): The following items are taken from the financial statements of Mistletoe Company for the year ending 12/31/2016: Cash 15,000 Accounts receivable 11,000 Prepaid insurance (12-month policy) 6,000 Supplies 4,000 Equipment 210,000 Accumulated depreciation - equipment 28,000 Accounts payable $ 18,000 Note payable, due 6/31/2017 70,000 Common stock 90,000 Retained earnings, 1/1/2016 12,000 Dividends 14,000 Service revenue 133,000 Advertising expense 21,000 Depreciation expense 12,000 Insurance expense 3,000 Rent expense 17,000 Salaries expense 32,000 Supplies expense 6,000 C) What are total current assets at 12/31/2016? a. $26,000 b. $32,000 c. $36,000 d. $218,000

c. $36,000

Poinsetta Agency started the year with total assets of $20,000 and total liabilities of $5,000. During the year the business recorded $16,000 in catering revenues and $8,000 in expenses. Stockholders made additional investments of $3,000 and the company paid dividends of $5,000 during the year. Stockholders' equity changed by what amount from the beginning of the year to the end of the year? a. $15,000 b. $14,000 c. $6,000 d. $3,000

c. $6,000

Use the following information to answer the next questions (A-D): Candy Cane Company uses a periodic inventory system. Details for the inventory account for the month of January 2016 are as follows: Units Per unit price Total Balance, 1/1/2016 200 $5.00 $1,000 Purchase, 1/15/2016 100 5.30 530 Purchase, 1/28/2016 100 5.50 550 An end of the month (1/30/2016) inventory showed that 120 units were on hand. B) If the company uses FIFO, what is the value of the ending inventory? a. $520 b. $600 c. $656 d. $1,424

c. $656

Poinsetta Agency started the year with total assets of $20,000 and total liabilities of $5,000. During the year the business recorded $16,000 in catering revenues and $8,000 in expenses. Stockholders made additional investments of $3,000 and the company paid dividends of $5,000 during the year. The net income reported by Poinsetta Agency for the year was a. $16,000 b. $11,000 c. $8,000 d. $3,000

c. $8,000

Use the following information to answer the next group of questions (A-G): The following items are taken from the financial statements of Mistletoe Company for the year ending 12/31/2016: Cash 15,000 Accounts receivable 11,000 Prepaid insurance (12-month policy) 6,000 Supplies 4,000 Equipment 210,000 Accumulated depreciation - equipment 28,000 Accounts payable $ 18,000 Note payable, due 6/31/2017 70,000 Common stock 90,000 Retained earnings, 1/1/2016 12,000 Dividends 14,000 Service revenue 133,000 Advertising expense 21,000 Depreciation expense 12,000 Insurance expense 3,000 Rent expense 17,000 Salaries expense 32,000 Supplies expense 6,000 E) What are total current liabililites at 12/31/2016? a. $18,000 b. $70,000 c. $88,000 d. $0.

c. $88,000

The normal balance of any account is the a. Left side. b. Right side. c. Side which increases that account. d. Side which decreases that account.

c. Side which increases that account.

Replenishing the petty cash fund requires a. a debit to Cash. b. a credit to Petty Cash. c. a debit to various expense accounts. d. no accounting entry.

c. a debit to various expense accounts.

Bad Debt Expense is reported on the income statement as a. part of cost of goods sold. b. reducing gross profit. c. an operating expense. d. a contra-revenue account.

c. an operating expense.

Bad Debts Expense is reported on the income statement as a. part of cost of goods sold. b. reducing gross profit. c. an operating expense. d. a contra-revenue account.

c. an operating expense.

Sales taxes collected by a retailer are recorded by a. crediting Sales Taxes Revenue. b. debiting Sales Taxes Expense. c. crediting Sales Taxes Payable. d. debiting Sales Taxes Payable.

c. crediting Sales Taxes Payable.

The standard form of a journal entry has the a. debit account entered first and indented. b. credit account entered first and indented. c. debit account entered first at the extreme left margin. d. credit account entered first at the extreme left margin.

c. debit account entered first at the extreme left margin.

An aging of a company's accounts receivable indicates that $5,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $900 credit balance, the adjustment to record bad debts for the period will require a a. debit to Bad Debt Expense for $5,000. b. debit to Allowance for Doubtful Accounts for $4,100. c. debit to Bad Debt Expense for $4,100. d. credit to Allowance for Doubtful Accounts for $5,000.

c. debit to Bad Debt Expense for $4,100.

The respective normal account balances of Purchases, Purchase Discounts, and Freight-in are a. credit, credit, debit b. debit, credit, credit c. debit, credit, debit d. debit, debit, debit

c. debit, credit, debit

Sales revenues are usually considered earned when a. cash is received from credit sales. b. an order is received. c. goods have been transferred from the seller to the buyer. d. adjusting entries are made.

c. goods have been transferred from the seller to the buyer.

When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when a. a sale is made. b. an account becomes bad and is written off. c. management estimates the amount of uncollectibles. d. a customer's account becomes past-due.

c. management estimates the amount of uncollectibles.

Which of the following errors will cause a trial balance to be out of balance? The entry to record a payment on account was a. not posted at all. b. posted as a debit to Cash and a credit to Accounts Payable. c. posted as a debit to Cash and a debit to Accounts Payable. d. posted as a debit to Accounts Receivable and a credit to Cash.

c. posted as a debit to Cash and a debit to Accounts Payable.

Three accounting issues associated with accounts receivable are a. depreciating, returns, and valuing. b. depreciating, valuing, and collecting. c. recognizing, valuing, and disposing. d. accrual, bad debts, and disposing.

c. recognizing, valuing, and disposing.

Merchandise inventory is a. reported under the classification of Property, Plant, and Equipment on the balance sheet. b. often reported as a miscellaneous expense on the income statement. c. reported as a current asset on the balance sheet. d. generally valued at the price for which the goods can be sold.

c. reported as a current asset on the balance sheet.

The revenue recognition principle a. states that revenue should be recognized in the period when received. b. states that expense recognition is tied to revenue recognition. c. requires that revenue be recognized in the accounting period when it is earned. d. requires that events which make a difference to financial statement users be disclosed.

c. requires that revenue be recognized in the accounting period when it is earned.

The dominant form of business organization in the United States in terms of dollar sales volume, earnings, and employees is a. the sole proprietorship b. the partnership c. the corporation d. not known

c. the corporation

Central Michigan University sold season tickets for the 2016 football season for $200,000. A total of 5 games will be played during September, October and November. In September, two games were played. The adjusting journal entry at September 30 a. will include a debit to Unearned Ticket Revenue and a credit to Ticket Revenue for $40,000. b. will include a debit to Cash and a credit to Ticket Revenue for $200,000. c. will include a debit to Unearned Ticket Revenue and a credit to Ticket Revenue for $80,000. d. will include a debit to Ticket Revenue and a credit to Unearned Ticket Revenue for $80,000.

c. will include a debit to Unearned Ticket Revenue and a credit to Ticket Revenue for $80,000.

Use the following information to answer the next group of questions (A-G): The following items are taken from the financial statements of Mistletoe Company for the year ending 12/31/2016: Cash 15,000 Accounts receivable 11,000 Prepaid insurance (12-month policy) 6,000 Supplies 4,000 Equipment 210,000 Accumulated depreciation - equipment 28,000 Accounts payable $ 18,000 Note payable, due 6/31/2017 70,000 Common stock 90,000 Retained earnings, 1/1/2016 12,000 Dividends 14,000 Service revenue 133,000 Advertising expense 21,000 Depreciation expense 12,000 Insurance expense 3,000 Rent expense 17,000 Salaries expense 32,000 Supplies expense 6,000 G) What is total stockholders' equity at 12/31/2016? a. $90,000. b. $102,000. c. $126,000. d. $130,000.

d. $130,000.

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $32,000. If the balance of the Allowance for Doubtful Accounts is $8,000 debit before adjustment, what is the amount of bad debt expense for that period? a. $8,000 b. $24,000 c. $32,000 d. $40,000

d. $40,000

Barker Company's records show the following for the month of January: Balance, Retained Earnings at January 1 $600,000 Balance, Retained Earnings at January 31 900,000 Revenues 1,005,000 Dividends Declared 45,000 Expenses for January were a. $960,000. b. $1,005,000. c. $705,000. d. $660,000.

d. $660,000.

Use the following information to answer the next questions (A-D): Candy Cane Company uses a periodic inventory system. Details for the inventory account for the month of January 2016 are as follows: Units Per unit price Total Balance, 1/1/2016 200 $5.00 $1,000 Purchase, 1/15/2016 100 5.30 530 Purchase, 1/28/2016 100 5.50 550 An end of the month (1/30/2016) inventory showed that 120 units were on hand. A) How many units did the company sell during January 2016? a. 80 b. 120 c. 200 d. 280

d. 280

What causes the balance on the bank statement to differ from the cash balance in the general ledger? a. Time lags. b. Errors by the bank. c. Errors by the company. d. All of these answer choices are correct.

d. All of these answer choices are correct.

Sam's Grocery Store has the following policy. 'Only one cashier can have access to a cash drawer.' Which internal control principle supports this policy? a. Documentation procedures. b. Segregation of duties. c. Physical controls. d. Establishment of responsibilities.

d. Establishment of responsibilities.

Ron Jones has been a trusted employee for over 10 years. He is responsible for ordering merchandise inventory, receiving the inventory items, and authorizing the payment for these items. Which internal control principle, if any, is being violated? a. None, Ron has proven to be trustworthy and has enough experience to do a good job. b. Documentation procedures. c. Establishment of responsibilities. d. Segregation of duties.

d. Segregation of duties.

The balance in the Accumulated Depreciation account represents the a. cash fund to be used to replace plant assets. b. amount to be deducted from the cost of the plant asset to arrive at its fair market value. c. amount charged to expense in the current period. d. amount charged to expense since the acquisition of the plant asset.

d. amount charged to expense since the acquisition of the plant asset.

The book value of an asset is equal to the a. asset's market value less its historical cost. b. blue book value relied on by secondary markets. c. replacement cost of the asset. d. asset's cost less accumulated depreciation.

d. asset's cost less accumulated depreciation.

Two methods of accounting for uncollectible accounts are the a. allowance method and the accrual method. b. allowance method and the net realizable method. c. direct write-off method and the accrual method. d. direct write-off method and the allowance method.

d. direct write-off method and the allowance method.

Allowance for Doubtful Accounts on the balance sheet a. is offset against total current assets. b. increases the cash realizable value of accounts receivable. c. appears under the heading "Other Assets." d. is offset against accounts receivable.

d. is offset against accounts receivable.

Two bases for estimating uncollectible accounts are: a. percentage of assets and percentage of sales. b. percentage of receivables and percentage of total revenue. c. percentage of current assets and percentage of sales. d. percentage of receivables and percentage of sales.

d. percentage of receivables and percentage of sales.

The method of accounting for uncollectible accounts that results in a better matching of expenses with revenues is the a. aging accounts receivable method. b. direct write-off method. c. percentage of receivables method. d. percentage of sales method.

d. percentage of sales method.

The best managed companies will have a. no uncollectible accounts. b. a very strict credit policy. c. a very lenient credit policy. d. some accounts that will prove to be uncollectible.

d. some accounts that will prove to be uncollectible.