Acct 202 exam 1

The Harris Company purchased equipment for $15,000 on December 1. It is estimated that annual depreciation on the computer will be $3,000. If financial statements are to be prepared on December 31, the company should make the following adjusting entry: a. debit Depreciation Expense, $12,000; credit Accumulated Depreciation, $12,000. b. debit Depreciation Expense, $250; credit Accumulated Depreciation, $250 c. debit Depreciation Expense, $3,000; credit Accumulated Depreciation, $3,000 d. debit Equipment, $15,000; credit Accumulated Depreciation, $15,000.

b. debit Depreciation Expense, $250; credit Accumulated Depreciation, $250

which of the following accounts has a normal credit balance? a. sales returns and allowances b. cost of goods sold c. sales revenue d. sales discounts

c. sales revenue

A debit is not the normal balance for which account listed below a. cash b. accounts receivable c. service revenue d. dividends

c. service revenue

Barnes Company showed the following balances at the end of its first year: Cash $14,000 Prepaid insurance 700 Accounts receivable 3,500 Accounts payable 2,800 Notes payable 4,200 Common stock 5,400 Dividends 700 Revenues 29,000 Expenses 17,500 What amount did Barnes Company show as total credits? a. 41,400 b. 42,100 c. 42,800 d. 40,700

a. 41,400

If a company fails to adjust a Prepaid Rent account for rent that has expired, what effect will this have on that month's financial statements? a. Assets will be overstated and net income and stockholders' equity will be overstated b. Failure to make an adjustment does not affect the financial statements. c. Assets will be overstated and net income and stockholders' equity will be understated. d. Expenses will be overstated and net income and stockholders' equity will be under- stated.

a. Assets will be overstated and net income and stockholders' equity will be overstated

Which of the following accounts is increased with a debit? a. dividends b. interest payable c. common stock d. service revenue

a. dividends

collection of a $600 accounts receivable a. increases an asset $600; decreases and asset $600 b. increases an asset $600; decreases a liability $600 c. decreases a liability $600; increases stockholders' equity $600 d. decreases an asset $600; decreases a liability $600

a. increases an asset $600; decreases and asset $600

Using accrual accounting, expenses are recorded and reported only: a. when they are incurred whether or not cash is paid. b. if they are paid after they are incurred. c. when they are incurred and paid at the same time. d. if they are paid before they are incurred.

a. when they are incurred whether or not cash is paid

Conway Company purchased merchandise inventory with an invoice price of $12,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Conway Company pays within the discount period? a. 12,000 b. 10,800 c. 11,700 d. 11.040

b. 10,800

Financial information is presented below: Operating expenses $ 45,000 Sales returns and allowances 3,000 Sales discounts 7,000 Sales revenue 160,000 Cost of goods sold 96,000 Gross profit would be a. 67,000 b. 54,000 c. 61,000 d. 64,000

b. 54,000

Sampson Company's accounting records show the following for the year ending on December 31, 2017. Purchase Discounts $ 11,200 Freight-In 15,600 Purchases 700,020 Beginning Inventory 47,000 Ending Inventory 57,600 Purchase Returns and Allowances 12,800 Using the periodic system, the cost of goods purchased is a. 171,220 b. 691,620 c. 660,420 d. 576,420

b. 691,620

In a perpetual inventory system, cost of goods sold is recorded a. on a daily basis b. each time a sale occurs c. on an annual basis d. on a monthly basis

b. each time a sale occurs

During January 2017, its first month of operation, Osborn Enterprises earned net income of $6,800 and paid dividends to the owners of $2,000. At January 31, the balance in Retained Earnings will be a. 6,800 credit b. 0 c. 4,800 credit d. 2,000 debit

c. 4,800 credit

Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account? a. freight-out b. freight expense c. inventory d. freight-in

c. inventory

which of the following items has no effects on retained earnings? a. expense b. dividends c. Land purchase d. Revenue

c. land purchase

Rains Company is a furniture retailer. On January 14, 2017, Rains purchased merchandise inventory at a cost of $60,000. Credit terms were 2/10, n/30. The inventory was sold on account for $100,000 on January 21, 2017. Credit terms were 1/10, n/30. The accounts payable was settled on January 23, 2017 and the accounts receivables were settled on January 30, 2017. Which statement is correct? a. gross profit percentage is 60% b. there is not enough information available to answer this question c. on january 30, 2017, customers should remit cash in the amount of $99,000 d. cash flows were affected on January 14 and January 21

c. on january 30, 2017, customers should remit cash in the amount of $99,000

Piper Company sells merchandise on account for $1,800 to Morton Company with credit terms of 2/10, n/30. Morton Company returns $600 of merchandise that was damaged, along with a check to settle the account within the discount period. What entry does Piper Company make upon receipt of the check?

cash 1,176 Sales returns and allowances 600 Sales Discount 24 AR 1,800

A credit sale of $3,800 is made on April 25, terms 2/10, net/30, on which a return of $200 is granted on April 28. What amount is received as payment in full on May 4? a. 3,800 b. 3,6000 c. 3,724 d. 3,528

d. 3,528

The balance in the prepaid rent account before adjustment at the end of the year is $12,000 and represents three months rent paid on December 1. The adjusting entry required on December 31 is a. debit Rent Expense, $12,000; credit Prepaid Rent, $12,000 b. debit Prepaid Rent, $4,000; credit Rent Expense $4,000. c. debit Prepaid Rent, $8,000; credit Rent Expense, $8,000. d. debit Rent Expense, $4,000; credit Prepaid Rent, $4,000.

d. debit Rent Expense, $4,000; credit Prepaid Rent, $4,000.

The Vintage Laundry Company purchased $8,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $1,500 on hand. The adjusting entry that should be made by the company on June 30 is: a. debit Supplies, $1,500; credit Supplies Expense, $1,500. b. debit Supplies, $7,000; credit Supplies Expense, $7,000. c. debit Supplies Expense, $1,500; credit Supplies, $1,500 d. debit Supplies Expense, $7,000; credit Supplies, $7,000.

d. debit Supplies Expense, $7,000; credit Supplies, $7,000.

The adjusting entry to an unearned revenue account will a. increase liabilities and increase revenues. b. increase assets and increase revenues c. decrease revenues and decrease assets d. decrease liabilities and increase revenues

d. decrease liabilities and increase revenues

Stan's Market recorded the following events involving a recent purchase of inventory: Received goods for $120,000, terms 2/10, n/30. Returned $2,400 of the shipment for credit. Paid $600 freight on the shipment. Paid the invoice within the discount period. As a result of these events, the company's inventory a. increased by $115,836 b. increased by $115,848 c. increased by $118,200 d. increased by $115,248

d. increased by $115,248

on March 1, 2010, Freeze Company hires a new employee who will start to to work on March 6. The employee will be paid on the last day of each month. Should a journal entry be made on March 6? Why or Why not?

no, hiring an employee is an important event; however it is not an economic event that should be recorded

Are advanced receipts from customers treated as revenue at the time of receipt? Why or why not?

no, revenue cannot be recognized until the work is performed