Accounting Final Study Guide

Depreciation is the process by which: the cost of ___________ and _______________ is allocated to _______________ over the time periods which benefit from the use of an asset.

plant equipment expense

Which of the following would appear on the balance sheet as a current liability? premium ___________ in _________ ____________.

offers cereal boxes

________________ stock are those shares that are currently owned or held by stockholders.

outstanding

_________________ is a business owned by two or more individuals.

partnership

On May 1, the Chris Company borrowed $30,000 from the Third Street Bank on a 1 - year, 6% note. If the company keeps its records on a calendar year, an adjustment is needed on December 31 to increase: interest _______________, $____________.

payable 1,200

The person to whom the note is made payable is the _____________.

payee

The date of _______________ is the date the corporation pays the dividend to the stockholders who owned the stock on the record date.

payment

Which of the following statements regarding contingencies is true?: Contingencies that are ________________ and ______ estimable are disclosed in the ______________ to the financial statements.

probable not notes

The three forms of business entities are: sole ___________________, _________________, and ____________________.

proprietorships partnerships corporations

The date of _____________ determines to whom the dividend is paid. The owners of individual stock on this date will receive the dividend. No entry is recorded in the accounting records on this date.

record

Which of the following below is an example of a capital expenditure?: ____________ an engine in a company

replacing

______ ________________ is a business owned by a single individual.

sole proprietorship

have no physical presence and represent a right or privilege

tangible assets

_____________ stock are those shares that were once owned by stockholders, but the corporation purchased those shares in the stock market. Now the corporations owns those shares of stock.

treasury

Which of the following items would be considered a cash equivalent if it was held at the the balance sheet date? U.S. ____________ bill purchased when there were ___________ days until _______________.

treasury 90 maturity

Long-term notes are liabilities that usually have credit terms of ___________ years or more.

two

Borden Company incurred the following costs to acquire and prepare land for a new parking lot purchase price for land cost to clear the land cost of paving lighting for the parking lot and landscaping for the parking lot. How should the company determine which cost to be recorded as land improvement in which should be recorded as land? the costs with an _______________ life will increase Land, and the costs with a _________________ useful life will increase Land improvements.

unlimited limited

_______________ analysis, also known as common-size analysis, uses percentages to compare individual components of financial statements to a key statement figure.

vertical

On January 2, 2015, Roof Master Construction, Inc. issued $500,000, 10-year bonds for $574,540. The bonds pay interest on June 30 and December 31. The face rate is 8% and the market rate is 6%. At the maturity date, besides an interest payment, Roof Master would repay the bondholders?

$500,000 (bonds are repaid at face value)

If a company purchases $3,000 worth of inventory with terms of 1/15, n30 and pays within 15 days, then the amount to the paid seller would be: $_______________

2,970

Bonds in the amount of $100,000 with a life of 10 years were issued by the Roundy Company. If the stated rate is 6% and interest is paid semiannually, what would be the total amount of interest paid over the life of the bonds? $_________________

60000

Carrington Inc. recorded $97,000 in salary expense for January 2019. Its beginning balance in salaries payable was $3,000 and its ending balance was $4000. How much was paid in cash for salaries during January 2019? $________________

96000

________________ are a separate legal entity created by the authority of a state government. Each state has separate laws governing the establishment of corporations within the individual state.

Corporations

The current portion of long-term debt is a balance sheet item for Flavorful Products Company. How would it most likely be classified on the balance sheet?

Current liability

Which of the the following accounts is classified as a long term liability? _________________ payable, due in ___________ years.

notes three

Bonds are a popular source of financing because: __________ _____________ expense is ________________ for tax purposes, while _______________ paid on stock are not.

bond interest deductible dividends

When bonds are issued by a company, the accounting entry shows an: increase in _____________ and an increase in ________________.

assets liabilities

Which balance sheet accounts are most affected by operating activities? current ______________ and current __________________.

assets liabilities

________________ shares are the maximum number of shares of capital stock that can be sold to the public.

authorized

Which of the following is not a financing activity? a- Issuing bonds for cash b- Selling an investment in IBM stock for cash c- Purchasing a company's own stock for cash. d - Making a cash payment to repay a loan.

b

Which of the following statements is true with respect to long-term liabilities? Long-term liabilities include _____________, other __________-____________ liabilities, and ___________ income statements.

bonds long term deferred

A non-classified balance sheet simply lumps all assets into one asset section, and all liabilities into one liabilities section. A ________________ balance sheet separates each of these into current and noncurrent.

classified

If a company issues $5 par value common stock: $5 per share is presented in the _________ ___________ account on the balance sheet.

common stock

A _____________ _________________ is a potential obligation arising from a past event. The amount or existence of the obligation depends on some future event, such as a lawsuit or, perhaps, a customer bringing in defective merchandise for warranty work.

contigent liability

_____________ ________________, are those assets that are expected to be converted to cash or consumed within one year or an operating cycle, whichever is longer (which is typically one year).

current assets

A ______________ _________________ is an obligation that will be satisfied within one year or the current operating cycle, whichever is longer. They are recorded at face value.

current liability

Which of the following is not classified as a long-term liability? ________________ portion of _____________-_____________ debt.

current long term

Which of the following should be classified as an investing activity on the statement of cash flows? a - Interest on notes payable b - Payment to supplier for inventory c - Payment of dividends d - The sale of a warehouse

d

A liability for dividends is created: at the _________ of _________________.

date declaration

The date of _____________ is the date the board of directors declares the dividend. On this date a legal liability is created and must be recorded.

decleration

The effect of recording depreciation for the year is a: _______________ in assets and a ______________ in net income.

decrease decrease

Tropical Co. declared a cash dividend of $30,000. This transaction includes a: ______________ to ____________ ______________ of $30,000.

decrease retained earning

_____________ _________________ are notes in which the interest in withheld from the proceeds when the note is issued.

discount notes

Stock holders prefer to invest in preferred stock because: the ________________ are paid on preferred stock _____________ they are paid on common stock.

dividends before

this depreciation method is an accelerated depreciation method, because more depreciation is recorded in the early years of the asset's life than in the later years: ____________ ______________ depreciation method.

double declining

The Retained Earning account balance for a corporation in $10,000,000. This amount represents: ______________ that have not been ______________ to the __________________.

earnings distributed shareholders

Which of the following sets of factors is needed to calculate depreciation on plant and equipment?: the __________________ _________ of an asset, its ________________ cost, and its estimated ______________ value.

estimated life acquisition residual

______________ _______________ is a term associated with using debt financing to increase return on equity. This occurs when the borrower earns more on the borrowed funds than it pays in interest.

financial leverage

Using different depreciation methods for book purposes versus tax purposes for the same asset is: the direct result of differing goals of ________________ and __________ accounting/

financial tax

The __________ activities section included cash _________ that result from: Borrowing Issuing stock

financing inflows

Land is not depreciated because it: will provide _______________ ______________ for a company for an _______________ period of time.

future benefits unlimited

_______________ analysis, (also known as trend analysis) involves analyzing financial information over several accounting periods.

horizontal

The primary purpose of the statement of cash flows is to provide information about: the cash _____________ and ______________ of the company.

inflows outflows

Operating assets with no physical value are called:

intangible assets

have a physical presence, meaning they can be seen and touched

intangible assets

The ______________ activities section included cash _________ that result from: Selling plant, property, and equipment Selling investment securities Collecting loans

investing inflows

The _____________ activities section included cash ___________ that result from: Purchasing property, plant, and equipment Purchasing investment securities Lending to others

investing outflows

A company would repurchase its own stock for all of the following reasons except: it wishes to make an _______________ on its _________ __________.

investment own stock

Which of the following statements are correct? The actual _____________ _______________ of a bond represents the ______________ ___________ of al future cash flows related to the bond.

issue price present value

_________ _____________ are those shares of authorized shares that have been sold to the public.

issued stock

__________-_____________ liabilities are obligations that will not be satisfied within one year or the current operating cycle

long term

Which balance sheet accounts are most affected by investing activities?

long-term assets

On January 2, 2013On January 2, 2013, Hannah Company sold a machine for $1,000 that it had used for several years. The machine cost $12,000, and had accumulated depreciation of $9,000 at the time of sale. What gain or loss will be reported on the income statement for the sale of the machine? __________ of $__________________.

loss 2000

The person responsible for making payment on the due date is the maker of the note. The maker may also be called the borrower.

maker