accounting 2

Orange Inc. purchased a one-year insurance policy for $18,000 on December 1, 2019. On Dec 31, 2019, what should Orange report as the amount of insurance expense on the Income Statement?

$1,500

Orange Inc. purchased a one-year insurance policy for $18,000 on October 1, 2019. On Dec 31, 2019, what should Orange report as the balance for insurance on the Balance Sheet?

$13,500

On Friday September 30, Van Inc. calculated an unadjusted profit of $2,000 for the month of Sept. What will Van's net income be based on the following information: Van's employees earned $400 wages that have not yet been paid and services of $1,000 were completed in September but have not yet been billed.

$2,600

Henry Corp. had outstanding checks totaling $549 on its June bank reconciliation and outstanding checks totaling $1,764 on its July bank reconciliation. In July, Henry issued checks totaling $3,980. The July bank statement shows that how much in checks cleared the bank in July?

$2,765

Ogel Company started the year with beginning inventory of $1,800, purchased $4,000 of inventory during the year, had sales of $7,000, and ended the year with $1,600 in inventory on hand. What should the gross profit be on Ogel Company's end of the year income statement?

$2,800

Henry Corp. had outstanding checks totaling $1,098 on its September bank reconciliation. In October, Henry issued checks totaling $7,960. The October bank statement shows that $5,530 in checks cleared the bank in October. The amount of outstanding checks on Henry's October bank reconciliation should be:

$3,528

Ogel Company started the year with beginning inventory of $1,800, purchased $4,000 of inventory during the year, had sales of $7,000, and ended the year with $1,600 in inventory on hand. What should the cost of goods sold be on Ogel Company's end of the year income statement?

$4,200

Which of the following statements about the multistep income statement is FALSE?

Multistep income statements are required when the perpetual inventory method is used.

Which of the following statements about the perpetual inventory method of tracking inventory is FALSE:

Companies using a perpetual inventory system never need to complete inventory counts.

Which of the following statements about inventory is TRUE?

Cost of Goods Sold is reported on the income statement as the cost of inventory that a merchandiser sold during the current accounting period and Inventory is a current asset.

Which of the following statements about inventory is TRUE?

Cost of Goods Sold is reported on the income statement as the cost of inventory that a merchandiser sold during the current accounting period.

Which of the following statements about the multistep income statement is TRUE?

A key measure available on a multistep income statement is the amount of profit earned over the cost of goods sold.

CL Builders purchased goods on credit costing $17,000 with terms of 3/10 n/30. Payment is made to the seller 7 days after the purchase. How would the payment be recorded?

Debit Accounts Payable for $17,000, credit Cash for $16,490, and credit Inventory for $510.

A and E Co. issued a Note Receivable on October 1, 2019 that will pay $450 interest on December 31, 2019. Which of the following adjusting entries would be made on October 31?

Debit Interest Receivable and credit Interest Revenue for $150.

Maisie Pics sold goods (that cost $2,800) on credit for $3,500 with terms of 2/10 n/30. Payment is received from the buyer 7 days after the purchase. How would the payment be recorded?

Debit Sales Revenue for $70, debit Cash for $3,430, and credit Accounts Receivable for $3,500.

Concerning Bank Reconciliations: Journal entries need to be made for all reconciling items. They are external reports prepared to report the cash balance to investors and creditors. A difference between the cash balance per the books and the bank statement balance indicates an error or fraud. They are internal reports prepared to guarantee that the cash balance is not affected by fraud.

FALSE

Net Income Formula

Total Revenues - Total Expenses

Closing journal entries:

transfer Revenue, Expenses and Dividends to Retained Earnings.

Which of the following statements about adjusting journal entries (adjustments) is TRUE?

Without adjustments, the financial statements present an incomplete and misleading picture of the company.

Under the gross method, purchase and sales discounts are recorded:

when the cash is paid or received.

Adjusting journal entries:

adjust for accrual and deferral transactions.

Closing journal entries do not:

adjust for accrual and deferral transactions.

Which of the following statements concerning electronic funds transfers (EFT) is TRUE?

an EFT occurs when customers electronically transfer funds from their bank account to a company's bank account.

When existing assets are used up in the ordinary course of business:

an expense is recorded, and the corresponding asset is decreased.

When prepaid expense on the books is consumed, which of the following is credited?

asset

Under the net method, purchase and sales discounts are recorded:

at the time of initial purchase or sale.

Which of the following statements concerning electronic funds transfers (EFT) is FALSE?

because EFTs are deposited directly into a company's bank account, they require additional internal control procedures.

Assume that a company uses a perpetual inventory system and records the return of inventory previously purchased on account with a debit to Accounts Payable and a credit to Inventory. This entry is:

correct.

Which of the following statements about inventory is FALSE?

Once inventory is sold, it is reported as a "selling, general, and administrative expense" on the multi-step income statement.

The balance of which of the following accounts appear in the debit column of an adjusted trial balance?

Prepaid Insurance

Emery Enterprises declared and paid a dividend of $800 this year. The entry to close the Dividend account at the end of the year will include a debit to:

Retained Earnings and a credit to Dividends for $800.

Gross Profit Formula

Sales - Cost of Goods Sold

How do Sales Returns and Allowances and Sales Discounts impact Gross Sales in order to calculate Net Sales?

Sales Returns and Allowances and Sales Discounts are deducted from Gross Sales to calculate Net Sales.

Cost of Goods Sold Formula

Starting Inventory + Purchases - Ending Inventory

The Office Supplies account had a balance of $1,000 at the end of November. $4,000 of supplies was purchased during December. Based on a year-end count, $2,750 of supplies are on hand at Dec. 31. Based on this information, which of the following statements is TRUE?

Supplies expense was debited for $2,250 in December.

The Office Supplies account had a balance of $400 at the end of November. Based on a year-end count, $250 of supplies are on hand at Dec. 31. The company made an adjusting entry to record December Supplies Expense of $1,750. Based on this information, which of the following statements is TRUE?

Supplies has a $250 debit balance on the Dec. 31 adjusted trial balance.

The Office Supplies account had a balance of $1,000 at the end of November. $4,000 of supplies was purchased during December. Based on a year-end count, $2,750 of supplies are on hand at Dec. 31. Based on this information, which of the following statements is FALSE?

Supplies was debited for $2,750 in December.

The Office Supplies account had a balance of $400 at the end of November. Based on a year-end count, $250 of supplies are on hand at Dec. 31. The company made an adjusting entry to record December Supplies Expense of $1,750. Based on this information, which of the following statements is FALSE?

Supplies was debited for $250 in December.

LBP, Inc. pays its workforce on Fridays for a five-day workweek ending on that day. The payroll for an entire week is $30,000. If the accounting year-end falls on a Wednesday, the adjusting journal entry to record this will include a:

debit to Salaries and Wages Expense and a credit to Salaries and Wages Payable for $18,000.

At the end of the year, a deferral adjusting entry could include a:

debit to a liability and a credit to a revenue.

At the end of the year, an accrual adjusting entry could include a:

debit to an asset and a credit to a revenue.

At the end of the year, a deferral adjusting entry could include a:

debit to an expense and a credit to an asset.

At the end of the year, an accrual adjusting entry could include a:

debit to expense and a credit to a liability

The adjusting entry to record an expense incurred that previously had been paid in advance will:

decrease assets and increase expenses

The adjusting entry to record a revenue earned that previously had been received in advance will:

decrease liabilities and increase revenues

Which of the following is not an example of internal control?

duplication of responsibilities

When prepaid expense on the books is consumed, which of the following is debited?

expense

The journal entry to record the replenishment of the petty cash fund may involve debiting ______ and crediting________.

expense accounts; Cash

Failing to record an adjustment to an expense account at the end of the accounting period violates accrual accounting, specifically the ______ principle.

expense recognition ("matching")

The objectives of a company's system of internal control include all of the following except:

identifying ways to circumvent applicable laws and regulations.

Assume that a company uses a perpetual inventory system and records the return of inventory previously sold on account with a debit to Cost of Goods Sold and a credit to Inventory. This entry is:

incorrect and will cause assets to be understated.

Which of the following is an activity common to the operations of merchandising, manufacturing, and service companies?

incurring operating expenses

When deferred revenue on the books is earned, which of the following is debited?

liability

Which of the following is an example of internal control?

performing regular bank reconciliations, using a "Duo" password process to access company computer system, segregation of responsibilities and using prenumbered checks and purchase order forms.

Which of the following is not an activity common to the operations of merchandising, manufacturing, and service companies?

producing and selling a product

The objectives of a company's system of internal control include which of the following:

producing reliable and timely accounting information for use by people internal and external to the organization.

When deferred revenue on the books is earned, which of the following is credited?

revenue

Failing to record an adjustment to a revenue account at the end of the accounting period violates accrual accounting, specifically the ______ principle.

revenue recognition

As of December 30, XYZ's bank statement shows an ending balance of $5,930 and their books have an ending cash balance of $5,500. XYZ's bank reconciliation contains: outstanding checks of $618, $160 for an EFT in payment of a customer's account, a customer's returned NSF check for $16, deposits in transit of $344, a bank service charge of $8, and a check written by XYZ that was improperly processed by the bank for $2,510 but properly recorded in XYZ's books as $2,530. Given this information what should be the cash balance on the December 30 balance sheet?

$ 5,636

As of December 30, XYZ's bank statement shows an ending balance of $5,930 and their books have an ending cash balance of $5,500. XYZ's bank reconciliation contains: outstanding checks of $618, $160 for an EFT in payment of a customer's account, a customer's returned NSF check for $16, deposits in transit of $344, a bank service charge of $8, and a check written by XYZ that was properly processed by the bank for $2,510 but recorded in XYZ's books as $2,530. Given this information what should be the cash balance on the December 30 balance sheet?

$ 5,656

Which of the following statements about adjusting journal entries (adjustments) is FALSE?

Adjusting entries ensure that the financial results reflect management's objectives for operating performance.

Which of the following statements about adjusting journal entries (adjustments) is FALSE?

Adjustments help the financial statements present the best picture of whether all the company's cash flows were recorded for the period.

Which of the following statements about adjusting journal entries (adjustments) is TRUE?

Adjustments help the financial statements present the best picture of whether the company's activities were profitable for the period.

Which of the following statements about adjusting journal entries (adjustments) is TRUE?

Adjustments help the financial statements present the economic resources that the company owns and owes at the end of the period.

Which of the following statements about the perpetual inventory method of tracking inventory is TRUE:

It is easier to detect shrinkage in a perpetual inventory system than in a periodic inventory system.

The balance of which of the following accounts appear in the credit column of an adjusted trial balance?

Wages Payable