ACC Chapters 1-4

Which of the following events (transactions) is an internal event for a business entity?

Periodically, part of the cost of the computer equipment used by an accountant is assigned to depreciation expenses.

The correct term for the process of transferring amounts from a book of original entry to specific assets, liabilities, revenues, expenses, and stockholders' equity items is

Posting

Which of the following best describes a company's operating activities?

Operating activities focus on the sale of products and services.

Expenses originate from

using an asset or recognizing liabilities.

Bevco Company has provided the following information from its accounting records for the current year: Cash$ 55,000 Accounts receivable$ 45,000 Inventory65,000 Land75,000 Accounts payable50,000 Notes payable (due 2020)150,000 Retained earnings? Capital stock20,000 What are Bevco' current assets?

$ 165,000

Grove Corp. purchased equipment at a cost of $260,000 in January, 2012. As of January 1, 2016, depreciation of $88,000 had been recorded on this asset. Depreciation expense for 2016 is $22,000. After the adjustments are recorded and posted at December 31, 2016. What are the balances for the Depreciation Expense and Accumulated Depreciation? Depreciation Expense Accumulated Depreciation

$ 22,000 $110,000

Marvel Shoes reported the following items on its statement of cash flows for the current year: Net cash inflows from operating activities$70,000 Net cash outflows from investing activities(20,000) Net cash outflows from financing activities(40,000) Cash balance at the beginning of the year30,000 What was the cash balance for Marvel Shoes at the end of the current year?

$ 40,000

Bevco Company has provided the following information from its accounting records for the current year: Cash$ 55,000 Accounts receivable$ 45,000 Inventory65,000 Land75,000 Accounts payable50,000 Notes payable (due 2020)150,000 Retained earnings? Capital stock20,000 What are Bevco' current liabilities?

$ 50,000

Aloha Company reports the following information at December 31, 2016: ​ Revenue$150,000Cash30,000Accounts payable40,000Dividends10,000Expenses85,000 ​ What is Aloha Company's net income?

$ 65,000

Harbor City Corporation's end-of-year balance sheet consisted of the following amounts: ​ Cash$15,000 Accounts receivable$50,000Property, plant, and equipment70,000 Long-term debt40,000Capital stock100,000 Accounts payable20,000Retained earnings? Inventory35,000 What is Harbor City's retained earningsbalance at the end of the current year? ​

$10,000

Domenico Enterprises purchased land for $2,000,000 in 1999. In 2016, an independent appraiser assessed the value at $4,400,000. What amount should appear on the financial statements in 2016 with respect to the land?

$2,000,000

Sawaddee Enterprises began the year with total assets of $450,000 and total liabilities of $230,000. If Sawaddee's total assets increased by $80,000 and its total liabilities increased by $57,000 during the year, what is the amount of Sawaddee's owners' equity at the end of the year?

$243,000

On January 1, 2016, A-Best Company's balance in retained earnings was $80,000. At the end of the year, December 31, 2016, the balance in retained earnings was $94,000. During 2016, the company earned net income of $40,000. How much were dividends?

$26,000

Jobston, Inc. The balance sheet of Jobston Inc. includes the following items: Cash$ 22,400Accounts receivable11,700Inventory23,300Prepaid insurance1,040Land80,000Accounts payable47,500Salaries payable1,200Capital stock84,040Retained earnings5,700 What is Jobston's working capital?

$9,740

Which of the following statements is true concerning intangible assets?

.Intangible assets lack physical existence.

The following list contains several items that appear on an income statement. 1.Other revenue and expenses5.Net Income 2.Income before taxes6.Operating revenues 3.Income taxes7.Income from operations 4.Operating expenses Select the choice that lists the items in the order they would appear on a multi-step income statement.

6, 4, 7, 1, 2, 3, 5

Sunnyside Vacations has a $1,200 account receivable from the John Smith. On September 18, the John makes a partial payment of $1,100 to Sunnyside. The journal entry made on September 18 by Sunnyside to record this transaction includes:

A credit to the accounts receivable account of $1,100.

The purchase of office equipment at a cost of $3,600 with an immediate down payment of $1,000 and agreement to pay the balance within 60 days is recorded by:

A debit of $3,600 to Office Equipment, a credit of $1,000 to cash, and a credit of $2,600 to Accounts Payable.

Squidly Products sold and delivered modems to Detail Solutions for $6,600 to be paid by Detail Solutions in three equal installments over the next three months. The journal entry made by Squidly to record this transaction will include:

A debit to Accounts Receivable for $6,600.

The record used to accumulate monetary information for each individual asset, liability, stockholders' equity, revenue, and expense item is a(an)

Account

Monaco & Associates Use the following five transactions for Monaco & Associates, Inc. to answer the question(s). October 1 Bills are sent to clients for services provided in September in the amount of $800.9 Dravo Co. delivers office furniture ($1,060) and office supplies ($160) to Monaco leaving an invoice for $1,220.15 Payment is made to Dravo Co. for the furniture and office supplies delivered on October 9.23 A bill for $430 for electricity for the month of September is received and will be paid on its due date in November.31 Salaries of $850 are paid to employees. The journal entry to record the October 15 transaction will include a debit of $1,220 to

Accounts Payable

The journal entry to record the October 23 transaction will include a credit of $430 to

Accounts Payable

The journal entry to record the October 9 transaction will include a credit of $1,220 to

Accounts Payable

Use the following five transactions for Monaco & Associates, Inc. to answer the question(s). October 1 Bills are sent to clients for services provided in September in the amount of $800.9 Dravo Co. delivers office furniture ($1,060) and office supplies ($160) to Monaco leaving an invoice for $1,220.15 Payment is made to Dravo Co. for the furniture and office supplies delivered on October 9.23 A bill for $430 for electricity for the month of September is received and will be paid on its due date in November.31 Salaries of $850 are paid to employees. The journal entry to record the October 1 transaction will include a debit of $800 to

Accounts Receivable

Which of the following include only current assets?

Accounts receivable, cash, inventory, office supplies

Which one of the following business decisions will most likely require financial information?

All of these choices.

All of the following are examples of manufacturers except:

Amazon.com

Which one of the following is a correct expression of the accounting equation?

Assets = Liabilities + Owners' Equity

Which of the following statements is true concerning assets?

Assets become expenses when their economic benefits expire.

Services are provided for customers who are sent bills for the amount they owe. For this transaction, identify the effect on the accounting equation.

Assets increase and stockholders' equity increases.

XYZ Corp. made cash sales to customers. What effect does this transaction have on the accounting equation?

Assets increase and stockholders' equity increases.

Harvest Catering is a local catering service. Conceptually, when should Harvest recognize revenue from its catering service?

At the date the meals are served

Which financial statement would you refer to in order to determine whether a company owed funds to creditors?

Balance sheet

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

Balance sheet

You are a potential stockholder and are concerned that a particular company you are ready to invest in might have too much debt. Which financial statement would provide you information needed in order to evaluate your concern?

Balance sheet

In order for accounting information to be useful in making informed decisions, it must be

Both relevant and reliable

Monaco & Associates Use the following five transactions for Monaco & Associates, Inc. to answer the question(s). October 1 Bills are sent to clients for services provided in September in the amount of $800.9 Dravo Co. delivers office furniture ($1,060) and office supplies ($160) to Monaco leaving an invoice for $1,220.15 Payment is made to Dravo Co. for the furniture and office supplies delivered on October 9.23 A bill for $430 for electricity for the month of September is received and will be paid on its due date in November.31 Salaries of $850 are paid to employees. The journal entry to record the October 31 transaction will include a credit to

Cash

A list of all asset, liability, stockholders' equity, revenue, and expense accounts, along with their assigned account numbers, which are used by a company is a(an)

Chart of Accounts

The Securities and Exchange Commission (SEC) is concerned with

Companies that issue securities to the general public.

If an investor can use accounting information for two different companies to evaluate the types and amounts of expenses, the information is said to have the quality of

Comparability

An accountant is uncertain about the best estimate of an amount for a business transaction. If two amounts are about equally likely, the amount least likely to overstate assets and income is selected. Which of the following qualities is characterized by this action?

Conservatism

What is the correct method for calculating working capital?

Current Assets minus Current Liabilities

How are assets which are expected to be realized in cash, sold, or consumed within the normal operating cycle of a business or within one year (if the operating cycle is shorter than one year) reported on a classified balance sheet?

Current assets

What type of account is increased with a debit but is a decrease to retained earnings?

Expense

The Casan Company purchased a delivery van for $100,000 in cash. What is the effect on current assets?

Decrease in current assets

Which of the following terms best describes a distribution of the net income of a business to its owners?

Dividends

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

Double-entry system

Which pair of accounts has the same set of rules for debit and credit entries?

Equipment and Salaries Expense

Which one of the following is an assumption made in the preparation of financial statements?

Financial statements are prepared for a specific entity that is distinct from the entity owners.

A bank loaned $62 million to Apex Corporation to finance the construction of a new distribution warehouse. In which section of Apex's statement of cash flows would you be able to determine whether the company repaid any portion of the debt during the year?

Financing Activities

Which of the following is the attribute used to measure many assets that are recognized on a balance sheet, because it is more objective and verifiable?

Historical cost

Use the information from Hopper Inc. to answer the following question(s). 20172016 Operating revenues $1,900,000$1,600,000 Operating expenses 1,400,0001,100,000 Income taxes 200,000200,000 Which statement best represents Hopper's performance?

Hopper's profit margin ratio decreased.

As used in accounting, the "Notes to the Financial Statement" should be:

Included as an integral part of the financial statements

Which of the following would appear on a multiple-step income statement but not on a single-step income statement?

Income before income taxes

What are the two subtotals that distinguish the multi-step income statement from the single-step income statement?

Income from operations and income before taxes

The natural progression in items from one statement to another and preparation of financial statements is best represented by the following order:

Income statement > statement of retained earnings > balance sheet and statement of cash flows

Forman, Inc. earned $600,000 profit during 2016. On which financial statement(s) will you find the dollar amount of the profit earned by the company?

Income statement and statement of retained earnings

Carnival Bakery borrowed $500,000 from Front Street Bank. Carnival then hired a contractor to build a new Jonesie distribution outlet. In which section of Carnival's statement of cash flows would you find information that indicated that Carnival acquired the new Jonesie distribution outlet?

Investing Activities

All of the following accounts have normal credit balances except

Investments

Which of the following best describes a trial balance?

It is a tool used to prove the equality of debits and credits in the general ledger.

Holten Farm sells new tractors and pays each salesperson a commission of $1,000 for each tractor sold. During the month of August, a salesperson, Fred, sold 3 new tractors. Jacob pays Jason on the 10th day of the month following the sale. Fred operates on the cash basis; the tractor dealer operates on the accrual basis. Which of the following statements is true?

Jacob will recognize commission expense in the amount of $3,000 in August.

"Claims to economic resources" are known as

Liabilities and stockholders' equity

How is the balance sheet linked to the other financial statements?

Net income increases retained earnings on the statement of retained earnings, which ultimately increases retained earnings on the balance sheet.

Rise Corp. received payment from its customers for previous sales on credit. What was the impact on its working capital?

No effect on working capital

Which the following organizations is primarily responsible for establishing GAAP today?

None of these choices

The reliability of the information in a company's financial statements is the responsibility of which of the following?

None of these choices.

Which concept is the reason the dollar is used in the preparation of financial statements?

None of these choices.

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

Notes payable due in 5 years and bonds payable

Which of the following are generally supplementary information required by GAAP concerning the accounting treatments used by a company?

Notes to the Consolidated Financial Statements

Which one of the following is not one of the three activities included in the definition of accounting?

Operating

Which of the following represents the correct sequence of the three business activities on the Statements of Cash Flows?

Operating - Investing - Financing

An accountant describes the effects of an economic event on an entity by recording the transaction and reporting the amount on the financial statements. What is this called?

Recognition

Measurement of the economic effects on an entity involves each of the following except

Recording the economic effects in the financial statements

An investor found the following in an annual report: "The financial statements, in our opinion, present fairly the financial position, operating results, and cash flows, in conformity with accounting principles generally accepted in the United States." In which section of the annual report did the investor find this?

Report of the Independent Accountants

Which of the following statements best describes the term "revenues"?

Revenues represent assets received from the sale of products or services.

All of the following accounts have normal debit balances except

Sales

The three forms of business entities are:

Sole proprietorships, partnerships, and corporations

Which financial statement would you analyze to determine if a company distributed any of its profits to its shareholders?

Statement of Retained Earnings

Which financial statement reports the sources and uses of an entity's cash resources?

Statement of cash flows

Which of the following invests funds into a business and is considered an owner?

Stockholders

Liquidity relates to a company's ability to do which of the following?

The ability to pay its financial obligations as they become due

Which of the following would be classified as external users of financial statements?

The creditors and stockholders of the company

Which of the following best describes the term "retained earnings"?

The cumulative profits earned by the business less any dividends distributed.

Excursion Corp. increased its dollar amount of working capital over the past several years. To further evaluate the company's short-run liquidity, which one of the following measures should be used?

The current ratio

Lewis Corporation reported the following information for the year ended December 31, 2016: Net income$ 10,000 Dividends6,000 Retained earnings at December 31, 201625,000 ​ What was the economic effect of the payment of Lewis' dividends?

The dividends reduce total retained earnings for the year.

Which of the following statements is true?

The income statement reports the revenues and expenses of a company.

A question asked by stockholders is, "How much profit did the company make?" What should the stockholder examine to get the most information that will help evaluate the answer to this question?

The income statement, since it shows the revenues and expenses for the period

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

The outflow of assets resulting from the sale of goods and services.

Double-entry accounting is best characterized as:

The total dollar amount of debit entries posted to the ledger is equal to the dollar amount of the credit entries.

What is the primary objective of financial reporting?

To provide useful information for decision making.

Why is the use of the U.S. dollar as a unit of measure for financial statement data in the U.S. widely accepted?

U.S. dollar is the medium of monetary exchange in the U.S.

When are revenues and expenses recognized in the same accounting period that cash receipts and payments occur?

Under the cash basis of accounting

Information that is material means that an error or alternative method of handling a transaction

Would possibly affect the judgment of someone relying on the financial statements

All of the following are external events (transactions) except for

a department store recognizing losses from shoplifting.

If the company has an _________ from a client, then the client has an ________ to the company.

account receivable; account payable

An entry made to the right side of an account is called a

credit

A trial balance is a(an)

document used to prove the equality of debits and credits in the general ledger.

A file or book which contains a record for all accounts used by a company, including the account balance, is called a

general ledger

Credit entries are used to

increase liability accounts

If the sum of the debits and credits in a trial balance is not equal, then

most likely an error was made in posting journal entries to the general ledger or in preparing the trial balance.