Accounting Final Exam

1. Payments made on the debit side 2. Purchases on account on the credit side 3. Beginning balance on the top of the credit side 4. Ending balance on the bottom of the credit side

After posting all entries to the ledger, the Accounts Payable T-account will show which of the following?

Balance Sheet

Allowance for Doubtful Accounts

On the Balance Sheet

Allowance for Doubtful Accounts

Increase Revenue

An end-of-period adjusting entry that decreases Deferred Revenue most likely will ________.

Increase Revenue

An end-of-period adjusting entry that decreases Deferred Revenue most likely will _________.

1. Common stock will be overstated 2. Paid-in Capital in Excess of Par will be understated

Canton, Inc. issued 10,000 shares of $1 par value common stock at $10 per share. Mr. Smart, the bookkeeper, recorded this transaction with a $100,000 debit to Cash and a $100,000 credit to Common stock. As a result of this entry ___________.

Debit: Inventory Credit: Accounts Payable

Bob buys goods on account from Bill. Selling price of the goods is $100. Record the entry for Bob

$3500

Bob earns $100/hour and works 40 hours in June. Bob tax withholding is $100. FICA is 10%. NET PAY

Paid-in Capital in Excess of Par is credited for $900,000

Booked Solid Co. received $1,000,000 for the issuance of its stock on Jan 1. The credit to the Common Stock account was $100,000. Which of the following is true?

Paid-in Capital in Excess of Par is credited for $900,000

Booked Solid Co. recieved $1,000,000 for the issuance of its stock on Jan 1. The credit to the Common Stock account was $100,000. Which of the following is true?

Asset

Cash

Statement for Cash Flows

Cash Paid for Insurance

Dr: Cash Cr: Accounts Recievable

Collected money owed from customers for services previously recorded

Operating Activity

Collecting cash from customers is a(n) _____________.

the amount shareholders have invested in exchange for stock

Common Stock plus Paid-in Capital in Excess of Par (Contributed Capital) of $1,000,000 represents ___________

a minimal amount specifies in the corporate charter

Common stock's par value is ____________.

Income Statement

Doubtful Accounts Expense

On the income statement

Doubtful Accounts Expense

Assets and Shareholders' Equity are overstated, but Liabilities are not affected

During the year, Morris Lest, Inc. recorded $120,000 for the CEO's salary as a capital expenditure. Determine the effect of this entry on accounting equation.

Asset

Equipment

Assets: Debit Inventory Liabilities: Credit Accounts Payable Shareholders' Equity: No Effect

FIFO Purchase

Assets: Inventory Liabilities: Accounts Payable Shareholders' Equity: No Effect

FIFO Purchase

Asset: Debit Accounts Receivable and Credit Inventory Liabilities: No Effect Shareholders' Equity: Credit Sales and Debit Cost of Goods Sold

FIFO Sale

Assets: Debit Accounts Receivable and Credit Inventory Liabilities: No Effect Shareholders' Equity: Credit Sales and Debit Cost of Goods Sold

FIFO Sale

Assets: Debit Accounts Receivable and Credit Inventory Liabilities: No Effect Shareholders' Equity: Credit Sales and Debit Cost of Goods Sold

FIFO sale

Assets: Debit Accounts Receivable and Credit Inventory Liabilities: No Effect Shareholders' Equity: Credit Sales and Debit Cost of Goods Sold

FIFO sale of inventory

Debit Discounts Lost for $200 Credit Cash for $10,000 Debit Accounts Payable for $9,800

Florist Gump, Inc., purchased $10,000 of merchandise on account with discount terms of 2/10, n/30 on June 12. It used the net method when the purchase was recorded. Florist Gump paid the invoice on June 30. Record the payment of this invoice.

Sales-Cost of Goods Sold

Gross Profit=

1

How many of the following accounts are assets? -Supplies Expense -Retained Earnings -Notes Payable -Depreciation Expense -Common Stock -Equipment

2

How many of the following accounts have a normal debit balance and are found on the income statement? -Accounts Receivable -Accumulated Depreciation -Wages Expense -Wages Payable -Depreciation Expense -Sales Revenue

1. Deferred Revenue 2. Accounts Receivable 3. Cash

If a company credited Revenues, the debit may have been to ____________.

1. An asset such as Prepaid Insurance, Supplies, Inventory or Accumulated Depreciation 2. Cash 3. A payable account such as Supplies Payable, Utilities Payable, Interest Payable

If a company debited an expense, the credit may have been to ____________.

1. An asset such as Prepaid Insurance, Supplies, Inventory or Accumulated Depreciation 2. Cash 3. A payable account such as Supplies Payable, Utilities Payable, Interest Payable

If a company debited an expense, the credit may have been to _____________.

Liabilities will be too low

If a company incorrectly records cash received for services to be provided in the future by increasing Cash and increasing Sales Revenue, how will this error affect the current period?

A Premium

If the market rate of interest is less than the bond's contract (stated) rate of interest, the bonds will sell at _____________.

When the merchandise reaches the buyer's warehouse

If the terms of purchase are FOB destination, title to the goods passes from the vendor to the buyer ___________.

1. The financing activities section of the statement of cash flows increases 2. Shareholders' Equity on the Balance Sheet increases

Ima Rich purchased 100 shares of Stockits, Inc's $1 par value common stock for $5 per share. Which statements are true reguarding the effect of this transaction on Stockits' financial statements?

Income Statement

Insurance Expense

$400

J earns $10/hour. He works 40 hours and has a tax withholding of $100. FICA of 5%. Calculate GROSS PAY

Dr: Bad Debt Expense $5 Cr: AFDA $5

Jatin Corp. has a Accounts Receivable of $200, Unadjusted AFDA of $5 (Credit). 5% of Accounts Receivable will be collectible

Unearned/Deferred Revenue

Jatin recieves cash in advance for services it has not yet preformed, he records a credit to ___________.

$5

Jatin signed a 24 month, $100, 10% note on July 1st. The interest to be accrued on Dec. 31st is

Asset

Land

Creditors' claims to economic resources

Liabilities

Goods available for sale - ending inventory

Net Income Formula

Liability

Notes Payable

Dr: Insurance Expense 100 Cr: Prepaid Insurance 100

On Dec. 1st, Jatin paid 200 for a 1 year insurance policy. What is the entry on Dec 31st?

Finalizes its list of shareholders who will receive dividends

The date of record is the date on which the corporation ___________.

Date of record

The date, which follows the date of declaration, and determines which shareholders' equity will receive the dividend is the __________.

The cost of supplies that remain unused at the end of the period

The dollar amount shown on the Balance Sheet for Supplies represents _______________.

The cost of supplies used during the period

The dollar amount shown on the Income Statement for Supplies Expense represents ______________.

Dividends Payable and a credit to Cash

The entry to record the payment of a cash dividend previously declared includes a debit to __________.

revenues minus expenses for the accounting period

The income statement reports the _________.

Revenues minus expenses for the accounting period

The income statement reports the _____________.

LIFO

The inventory method where the oldest costs of inventory items is likely to remain on the BS is

Affect the financing activities section of the statement of Cash Flows

The issuance of Common Stock in exchange for cash will ___________.

affect the financing activities section of the statement of cash flows

The issuance of common stock in exchange for cash will __________.

Supplies and credit Supplies Payable

The journal entry to record the purchase of supplies on account is debit __________.

Supplies and Credit Supplies Payable

The journal entry to record the purchase of supplies on account is debit ___________.

Accounts Recievable

The journal entry to record the sale to a customer on account includes a debit to ____________.

Financing activities section of the statement of cash flows

The line item Repurchase of Treasury Stock is reported in the ____________.

% of discount for an early payment

The number 2 in the credit terms 2/10, n/60 is the...

Decreases total assets and decreases shareholders' equity

The purchase of treasury stock __________.

Cash collected and cash paid during the period

The statement of cash flows reports the __________.

Cash collected and cash paid during the period

The statement of cash flows reports the ___________

Changes that occurred in shareholders' equity during the accounting period

The statement of shareholders' equity reports the ___________.

Changes that occurred in shareholders' equity during the accounting period

The statement of shareholders' equity reports the ____________.

Debit Treasury Stock $10,000 Credit Cash $10,000

There were 10,000 shares issued and outstanding before T-Ball, Inc. decided to buy back some of its own stock to have on hand for end-of-year bonuses. It buys 200 shares at $50 per share. The entry to record the purchase of these 200 shares includes a ___________.

Contra-Equity

Treasury stock would be classified as a ____________.

Income Statement

Wages Expense

Statement of Cash Flows

Wages Paid to Employees

Balance Sheet

Wages Payable

Employees did not yet receive payment for the last few days of work because the last day of the accounting period was not a payday

Wages Payable on a company's balance sheet most likely means that __________.

Analyze, Journalize, Post to Ledger, Trial Balance

What is the accounting process?

Record Revenue in the period the service has been provided

What is the revenue recognition principle?

1) On the declaration date, liabilities are increased 2) On the payment date, current assets are decreased

What statements are true about cash dividends?

Prepaid Rent; Cash

When a company pays cash in advance for rent that is to be used over the next 2 years, the company records a debit to __________ and a credit to __________.

Prepaid Advertising; Cash

When a company pays fro advertising in advanced, it will record a debit to _________ and a credit to __________

Allowance for Doubtful Accounts

Which account shows the amount of accounts receivable that the business does not expect to collect?

Perpectual

Which inventory system records inventory on a continual basis?

Historical Cost Principle

Which is violated if Jim's Jambs, Inc. revealed its assets at their higher fair market values on its balance?

Cash paid to buy equiptment

Which item would be reported as a cash flow from investing activities?

All of these are closed except for Allowance for Doubtful Accounts and Accumulated Depreciation

Which of the following accounts are closed at the end of the accounting period? -Allowance for Doubtful Accounts -Accumulated Depreciation -Depreciation Expense -Doubtful Accounts Expense -Gain on Sale of Equiptment

Cash Supplies Equiptment

Which of the following have a normal debit balances?

Greed

Which of the following is not a part of the fraud triangle?

Paid-in Capital in Excess of Par is found on the Statement of Cash Flows

Which of the following statements is FALSE?

1. Cash paid to buy equipment 2. Cash paid to build a new corporate headquarters

Which of these would be reported as cash flows from investing activities?

1) Cash borrowed from the bank 2) Cash dividends paid to shareholders 3) Cash paid to reduce the principal borrowed from banks

Which of these would be reported in the financing activities section of the Statement of Cash Flows?

The buyer will receive a 2 percent discount if it pays within 10 days

Which statement below best explains credit terms of 2/10, n/30?

Income Statement

Which statement shows a company's revenues and expenses?

A Discount

A bond with a 6% stated interest rate was issued when the market rate of interest was 7%. The bond was issued at __________.

Dividend

A company's distribution of its accumulated earnings is a(n) ______________.

Debit Cash and Credit Accounts Recievable

A pizza company receives a check from a customer as partial payment of his account balance. This transaction does not involve the sale of new pizzas. How should the entry be recorded by the pizza company?

Liability

Accounts Payable

1) Decreases when the adjusting entry for estimated doubtful accounts is recorded 2) Remains the same after a write off is recorded

Accounts Receivable, Net __________.

Economic resources that will provide future benefit

Assets

Assets=Liabilities+Stockholders' Equity

Assets Formula

Accumulated Depreciation

Credit

Deferred Revenue

Credit

Notes Payable

Credit

Service Revenue

Credit

Common Stock will be overstated

Daffy Duct, Inc. issued 100,000 shares of $1 par value common stock at $5 per share. Miss steak, the bookkeeper, recorded the transaction with a $500,000 debit to Cash and a $500,000 credit to common stock. Which of the following is true?

Dividends

Debit

Interest Expense

Debit

Inventory

Debit

Doubtful Accounts Expense

The adjusting entry to record the estimated doubtful accounts includes a debit to ____________.

$1,000,000 plus the last year's interest of $100,000

On the maturity date, the bondholders of $1,000,000 of bonds that pay 10% annually that were issued at $990,000 will be paid ___________.

Shares Issues - Shares bought back

Outstanding shares formula

Operating

Paid $100 for advertising in the local paper

Shareholders' Equity; Balance Sheet

Paid-in Capital in Excess of Par of $1,000,000 is found in the __________ section of the _____________.

Balance Sheet

Prepaid Insurance

Investing

Purchased a barber's chair and sink for $35,000

Financing

Received $40,000 from its owner in exchange for Common Stock

Debit treasury stock Credit Cash

Record the purchase of the stock

Common Stock + Paid in Capital + Retained Earnings - treasury stock

Shareholders Equity Formula

Common Stock

Shareholders' Equity

Owners' claims to economic resources

Shareholders' Equity

Net Income will be overstated

Sonny Diaz, the bookkeeper, increased the equipment for ordinary repairs incurred during the month. Which of the following is TRUE?

Credit to Common Stock for $1,000 and a credit to Paid-in Capital in Excess of Par for $4,000

Stacos Bell inc. issues 100 shares of $10 par value common stock for $40 per share. This transaction will include a ___________.

Decrease to Deferred Revenue Increase to Revenues

The adjusting entry to record amounts earned that were collected in advance include a(n) ______________

Interest Expense and credit to Interest Payable

The adjusting entry to record interest owed on obligations at the end of the accounting period includes a debit to ___________.

Interest Expense and Credit to Interest Payable

The adjusting entry to record interest owed on obligations at the ends of the accounting period includes a debit to ____________.

Decrease in Shareholders' Equity Decease in assets

The adjusting entry to record the estimated doubtful accounts causes a(n) __________

Allowance for Doubtful Accounts

The adjusting entry to record the estimated doubtful accounts includes a credit to ______________.