ACC FINAL

Sales Revenue-COGS

Gross Profit

Record expenses in the same time period as incurred in earning revenue.

None of these are correct

BI+Purchases

Total Available (On hand) or Goods Available for Sale

Dakota Industries has $96,000 in total assets, $43,200 in total liabilities, and a $14,400 credit balance in retained earnings. What is the balance in the contributed capital accounts?

$38,400 Stockholders' equity ($52,800) = Assets ($96,000) − Liabilities ($43,200). Stockholders' equity ($52,800) = Contributed capital of common stock and additional paid-in capital ($38,400) + Retained earnings ($14,400).

Buildings

asset

QV-TV, Incorporated provided the following items in its notes to the financial statements for the year-end 2022: Cost of goods sold was $22 billion under FIFO costing and the inventory value under FIFO costing was $2.1 billion. The LIFO Reserve for year-end 2021 was $0.6 billion and at year-end 2022 it had increased to $0.8 billion. What is the LIFO inventory value at year-end 2022?

$1.3 billion. The LIFO Reserve at the end of the year is used to adjust inventory either to LIFO or to FIFO, depending on which method is used in the financial statements. QV-TV uses FIFO in its financial statements. Therefore, the LIFO Reserve would be subtracted from the FIFO inventory to find the lower amount of LIFO inventory. FIFO inventory − LIFO reserve = $2.1 billion − $0.8 billion = $1.3 billion LIFO inventory.

Huron has provided the following year-end balances: Cash, $25,000 Patents, $7,900 Accounts receivable, $9,300 Property, plant, and equipment, $98,700 Prepaid insurance, $3,600 Accumulated depreciation, $10,000 Inventory, $37,000 Retained earnings, 15,500 Trademarks, $12,600 Accounts payable, $8,000 Goodwill, $11,000 How much are Huron's net noncurrent assets?

$120,200 Huron's net noncurrent assets ($120,200) include patents ($7,900), property, plant, and equipment ($98,700), accumulated depreciation (−$10,000), trademarks ($12,600), and goodwill ($11,000).

iger Company's total stockholders' equity at the beginning of the year was $175,000. During the year Tiger reported the following: Net income of $79,000. Dividend declarations totaling $17,000. Issued stock to stockholders in exchange for $42,000 cash. Borrowed $20,000 from a stockholder.v What is Tiger's total stockholders' equity at the end of the year?

$279,000 Total stockholders' equity = $279,000 = $175,000 + $79,000 − $17,000 + $42,000. Borrowing money affects cash and liabilities regardless of who is the lender.

Assume Idaho Company recorded the following adjusting journal entry at year-end: Account Title Debit Credit Insurance expense 4,000 Prepaid insurance 4,000 If the beginning balance in prepaid insurance was $500, and $7,000 was paid for an insurance premium during the year, what is the ending balance in the prepaid insurance account after the above adjusting entry?

$3,500 Prepaid insurance = $3,500 = $500 + $7,000 − $4,000.

Blankenship Company has $160,000 in total assets, $72,000 in total liabilities, and a $24,000 credit balance in retained earnings. What is the balance in the contributed capital accounts?

$64,000 Stockholders' equity ($88,000) = Assets ($160,000) − Liabilities ($72,000). Stockholders' equity ($88,000) = Contributed capital of common stock and additional paid-in capital ($64,000) + Retained earnings ($24,000).

What was cost of goods sold using the FIFO cost flow assumption?

$667,000 Cost of goods sold = $667,000 = (240 × $540) + (340 × $590) + (440 × $640) + (80 × $690).

Husky Company has provided the following information for its most recent year of operation: Cash collected from customers totaled $90,600. Cash borrowed from banks totaled $34,300. Cash paid to employees for salaries totaled $33,400. Cash received from selling Husky common stock to stockholders totaled $54,000. Cash payments to banks for repayment of money borrowed totaled $8,800. Cash paid to suppliers totaled $13,800. Land costing $32,000 was sold for $32,000 cash. Cash paid for dividends to stockholders totaled $4,600. How much was Husky's cash flow from financing activities?

$74,900 74,900 = Cash borrowed from banks ($34,300) plus cash received from selling Husky common stock to stockholders ($54,000) minus cash payments to banks for repayment of money borrowed ($8,800) minus cash paid for dividends to stockholders ($4,600).

Sandlake Company has provided the following information: Net sales, $720,000 Net income, $36,000 Average total assets, $300,000 What is Sandlake's net profit margin?

5% The net profit margin ratio (5%) is net income ($36,000) divided by net sales ($720,000).

Which of the following accounts normally have a credit balance?

Accounts payable; Retained earnings; Sales revenue. Liabilities, retained earnings, and revenue accounts are all on the right side of the accounting equation and are all increased with a credit. Therefore, the normal balance for these accounts are credit balances.

Record revenues when earned and expenses when incurred.

Accrual basis accounting

Accounts receivable

Asset

Cash and cash equivalents

Asset

Record revenues when received and expenses when paid.

Cash basis accounting

Which of the following can aid investors in identifying shifts in management's strategies?

Common-sized income statements To identify shifts in management's strategies, analysts should perform an analysis to identify trends in each component of revenues and expenses. This involves dividing each line on the income statement by net sales. Statements presented with these percentages are called common-sized income statements.

Which of the following statements is correct? -Cost of goods available for sale is allocated between costs of goods sold and inventory at year-end. -A purchase of inventory on credit increases both cost of goods available for sale and cost of goods sold. -Purchases of inventory during a period less that period's cost of goods sold equals ending inventory regardless of the beginning inventory amount. -Cost of goods available for sale equals ending inventory plus purchases.

Cost of goods available for sale is allocated between costs of goods sold and inventory at year-end. Cost of goods available for sale minus ending inventory equals cost of goods sold.

Which of the following journal entries correctly records a transaction where services were provided to a customer on account?

Debit | Credit AR- Debit Service Revenue- Credit When services are provided to a customer on account, a debit to accounts receivable is required. The services have been provided so it is appropriate to credit revenue.

On December 31, 2022, Barksdale Corporation paid $105,000 for next year's insurance policy. This transaction should be recorded as follows by Barksdale:

Debit | Credit Prepaid Insurance - $105000 Debit Cash -$105000 Credit The insurance is for future periods, so it is considered prepaid insurance, an asset account, increased with a debit. This is paid for with cash resulting in a cash outflow, recorded with a credit to the cash account.

Which of the following would not be reported on a statement of stockholders' equity?

Dividend payments

BI+PURCHASES-COGS

EI

The retained earnings equation.

Ending Retained Earnings = Beginning Retained Earnings + Net Income − Dividends Declared

Selling, marketing, and administrative expenses

Expense

True or False: The statement of stockholders' equity explains the change in the retained earnings balance caused by stockholder investments and dividend declarations.

False

True or False: Borrowing money is an investing activity.

False it is a financing activity

True or False: A company's retained earnings balance increased $50,000 last year; therefore, net income last year must have been $50,000.

False, it depends on other factors as well.

True or False: The amount of cash paid by a business for dividends would be reported as an operating activity cash flow on the statement of cash flows.

False, it is a financing activity

Result primarily from the disposal of assets for more than their cost minus the amount of cost depreciated in the past.

Gains

Which of the following statements is false?

Gross profit percentage should only be viewed for each reporting company and is not useful in comparing different companies in the same industry. Gross profit percentage is helpful to managers, analysts, and creditors for assessing a company by itself as well as for comparing companies in the same industry.

Accounts payable

Liability

Bank Loans

Liability

Dividends payable

Liability

Which of the following account balances would be closed at year-end by crediting the account?

Loss on sale of building Loss accounts have a normal debit balance and are closed with credit entries at year-end.

Which of the following is correct when, in the same year, beginning inventory is overstated by $1,300 and ending inventory is understated by $700?

Net income is understated by $2,000. The overstatement of the beginning inventory causes net income to be understated by $1,300 and the understatement of the ending inventory causes net income to be understated by $700. The total understatement is $2,000.

Report the long life of a company in shorter periods.

None of these are correct

Result primarily from the disposal of assets for less than their cost minus the amount of cost depreciated in the past.

None of these are correct

A calendar year reporting company preparing its annual financial statements should use the phrase "At December 31, 2022" in the heading of which financial statements?

On the balance sheet only.

The time it takes to purchase goods or services from suppliers, sell goods or services to customers, and collect cash from customers.

Operating cycle

Boone's Cleaning Service performed cleaning services during December 2022, but had not collected any cash from its customers as of December 31, 2022. What impact did performing these services have on the accounting equation?

Performing the service increased assets and increased stockholders' equity. Performing the services generated revenue, increasing net income and stockholders' equity. Even though cash was not collected, assets increased (through an account receivable) because the services have been performed.

Which is the correct sequence of the following steps in the accounting cycle?

Post adjusting journal entries, prepare financial statements, close the income statement accounts. The accounting cycle includes analyzing transactions, recording journal entries, posting entries to the general ledger, preparing a trial balance, recording and posting adjusting journal entries, preparing financial statements, and closing the books.

An asset account used to record cash paid before expenses have been incurred.

Prepaid expenses

Which of the following lists of accounts represents the correct order for those accounts as reported on the balance sheet?

Prepaid expenses, Intangible assets, Unearned revenue, Notes payable. The balance sheet lists assets in order of liquidity and liabilities before stockholders' equity accounts.

Gross Profit-Expenses

Pretax Income

Madrid Company has provided the following data (ignore income taxes): 2022 revenues were $99,500. 2022 net income was $36,400. Dividends declared and paid during 2022 totaled $8,200. Total assets at December 31, 2022 were $242,000. Total stockholders' equity at December 31, 2022 was $168,000. Retained earnings at December 31, 2022 were $59,000. Which of the following is correct?

Retained earnings increased $28,200 during 2022. Retained earnings increased by net income ($36,400) - dividends ($8,200). Retained earnings increased by $28,200. Total assets ($242,000) = Total liabilities + stockholders' equity. Total liabilities = Total assets ($242,000) - Stockholders' equity ($168,000) = $74,000. Stockholders' equity ($168,000) = Common stock + Retained earnings ($59,000). Solve for Common stock = $109,000. Net income ($36,400) = Revenues ($99,500) - Expenses. Solve for Expenses = $63,100.

Lorenta Company has provided the following data (ignore income taxes): 2022 revenues were $117,300. 2022 expenses were $47,800. Dividends declared and paid during 2022 totaled $9,500. Total assets at December 31, 2022 were $177,000. Total liabilities at December 31, 2022 were $89,000. Common stock at December 31, 2022 was $28,000. Which of the following is not correct?

Retained earnings on December 31, 2022 were $41,700. Total assets ($177,000) = Total liabilities + stockholders' equity. Stockholders' equity = Total assets ($177,000) − Total liabilities ($89,000) = $88,000. Stockholders' equity ($88,000) = Common stock ($28,000) + Retained earnings ($60,000). Retained earnings ($60,000) = Net income − Dividends declared ($9,500). Net income = $69,500 = Revenue ($117,300) − Expenses ($47,800).

Revenues are recognized when the company transfers promised goods or services to customers in the amount it expects to receive.

Revenue recognition principle

The income statement equation.

Revenues − Expenses = Net Income.

COGS+Gross Profit

Sales Revenue

Retained earnings

Shareholders' equity

common stock

Stockholder's Equity, Credit

Retained Earnings

Stockholders' Equity, Credit

True or False: An audit is an examination of the financial statements to ensure that they represent what they claim and to make sure that they are in compliance with generally accepted accounting principles.

TRUE

True or False: In the United States, generally accepted accounting principles are published in the FASB Accounting Standards Codification.

TRUE

Which of the following does not correctly describe an adjusting journal entry that debits rent expense and credits prepaid rent?

The entry decreases net income and decreases liabilities. This adjusting journal entry increases expenses and decreases assets; there is no impact on liabilities.

Which of the following would not typically be disclosed in the notes to the financial statements?

The net income earned for the reporting period The net income earned for the reporting period is included directly in the financial statements.

Which of the following best describes financing activities?

They primarily deal with securing money by bank loans or selling stock to investors. Financing cash flow activities include borrowing and repaying debt, issuing and repurchasing stock, and paying dividends.

Which of the following is an objective of the external audit of a company's financial statements?

To provide credibility that the financial statements are fairly presented The external audit lends credibility to the financial statements and reduces the risk that the financial condition of the reporting entity is misrepresented.

Which of the following describes the impact on the balance sheet when a company uses cash to purchase the stock of another company?

Total assets remain the same. Cash decreases by the same amount that the investment in the other company increases.

True or False: Due to the relationships among financial statements, the statement of stockholders' equity links the income statement to the balance sheet.

True

A liability account used to record cash received before revenues have been earned.

Unearned revenue

Which of the following statements is correct when inventory unit costs are decreasing?

Use of the LIFO method will result in lower cash flows due to a decreased cost of goods sold. LIFO has the lowest cost of goods sold, the highest gross profit and taxable income. LIFO will therefore result in a higher tax burden and lower cash flows.

Inventories

asset

Investments (in other companies)

asset

Land

asset

Trademarks

asset

machinery and equipment

asset

Accounts Receivable

current asset, debit

Inventories

current asset, debit

Short-term investments

current asset, debit

prepaid expenses

current asset, debit

Accounts Payable

current liability, credit

Current Lease Obligations

current liability, credit

accrued expenses payable

current liability, credit

Product cost of goods sold

expense

Rental and royalty costs

expense

provision for income taxes (income tax expense)

expense

The costs of operating the business that are incurred to generate revenues during the period.

expenses

Income Taxes Payable

liability

Operating Lease Right-of-Use Assets

noncurrent asset, debit

Plant, Property, and Equipment

noncurrent asset, debit

Long-term investments

noncurrent assets, debit

long-term debt

noncurrent liability, credit

net product sales

revenue

additional paid-in capital

stockholders equity, credit

Treasury Stock

stockholders equity, debit