Acct 2050 test bank questions
A company purchased 500 units for $30 each on January 31. It purchased 550 units for $33 each on February 28. It sold a total of 650 units for $45 each from March 1 through December 31. What is the cost of ending inventory on December 31 if the company uses the first-in, first-out (FIFO) inventory costing method? (Assume that the company uses a perpetual inventory system.) A) $13,200 B) $10,200 C) $12,000 D) $1,8000
A) $13,200
Dynamic Production Services started the year with total assets of $120,000 and total liabilities of $55,000. The revenues and the expenses for the year amounted to $100,000 and $80,000, respectively. During the year, the company did not issue any common stock, but it distributed dividends of $50,000. Calculate Dynamic's net income for the year. A) $20,000 B) $100,000 C) $80,000 D) $120,000
A) $20,000
Wellness, a healthy living magazine, collected $504,000 in subscription revenue on May 31. Each subscriber will receive an issue of the magazine in each of the next 12 months, beginning with the June issue. The company uses the accrual method of accounting. What is the balance in the Unearned Revenue account as of December 31? A) $210,000 B) $294,000 C) $504,000 D) $378,000
A) $210,000
Refer to the following adjusted trial balance after the first year of operations. Cash$1,900 D Accounts Receivable 8,900 D Office Supplies 200 D Equipment 22,300 C Accumulated Depreciation— Equipment $2,000 C Accounts Payable 1,000 C Salaries Payable 850 C Unearned Revenue 400 C Common Stock 3,600 D Dividends 3,000 C Service Revenue 55,150 D Salaries Expense 23,000 D Supplies Expense 2,000 D Depreciation Expense— Equipment 1,700 Total$63,000 What will the balance of the Retained Earnings account be after the closing entries are posted? A) $25,450 B) $28,450 C) $32,050 D) $31,450
A) $25,450
An adjusted trial balance is given below. D Cash$13,000 D Accounts Receivable 2,000 D Prepaid Rent 700 D Merchandise Inventory 25,000 C Accounts Payable $4,100 C Salaries Payable 2,000 C Notes Payable 800 C Common Stock 8,000 C Retained Earnings 3,800 D Dividends 1,000 C Sales Revenue 86,900 D Cost of Goods Sold 23,000 D Salaries Expense 18,000 D Rent Expense 12,000 D Selling Expense 8,500 D Delivery Expense 1,800 D Supplies Expense 600 Total $105,600 What will be the final balance in the corporation's Retained Earnings account after recording the closing entries? A) $25,800 B) $26,800 C) $14,000 D) $2,8000
A) $25,800
Accounts Receivable has a balance of $32,000, and the Allowance for Bad Debts has a credit balance of $3,000. The allowance method is used. What is the net realizable value of Accounts Receivable before and after a $2,100 account receivable is written off? A) $29,000; $29,000 B) $26,900; $26,900 C) $29,000; $26,900 D) $26,900; $31,100
A) $29,000; $29,000
An invoice of $600 for merchandise purchased is showing 2/15, n/30 as terms of credit. If the invoice is paid on or before the fifteenth day after the invoice date, the amount to be paid is ________. A) $588 B) $600 C) $612 D) $615
A) $588
The following Office Supplies account information is available for Nabors, Inc. Beginning balance $1,100 Office Supplies expensed 7,000 Ending balance 2,000 From the above information, calculate the amount of office supplies purchased. A) $7,900 B) $7,000 C) $1,100 D) $2,000
A) $7,900
Hudson Landscaping Service bought equipment for $9,600 on January 1, 2019. It has an estimated useful life of five years and zero residual value. Hudson uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of every month. As of June 30, 2019, the book value of this equipment shown on its balance sheet will be ________. A) $8,640 B) $9,600 C) $10,560 D) $9,760
A) $8,640
What does "2/10" mean, with respect to "credit terms of 2/10, n/30"? A) A discount of 2 percent will be allowed if the invoice is paid within 10 days of the invoice date. B) Interest of 2 percent will be charged if the invoice is paid after 10 days from the date on the invoice. C) A discount of 10 percent will be allowed if the invoice is paid within two days of the invoice date. D) Interest of 10 percent will be charged if invoice is paid after two days.
A) A discount of 2 percent will be allowed if the invoice is paid within 10 days of the invoice date.
________ represent the right to receive cash in the future from customers for goods sold or for services performed. A) Accounts Receivable B) Accounts Payable C) Equity D) Expenses
A) Accounts Receivable
Which of the following accounts will be included in a post-closing trial balance? A) Accumulated Depreciation—Building B) Rent Expense C) Interest Expense D) Service Revenue
A) Accumulated Depreciation—Building
Newton Corporation settles a liability by making a payment in cash. How does paying this liability affect the accounting equation of the business? A) Assets and liabilities decrease. B) Liabilities decrease and equity increases. C) Assets and liabilities increase. D) Assets increase and equity decreases.
A) Assets and liabilities decrease.
Which of the following statements regarding the allowance method of accounting for uncollectible receivables is incorrect? A) Bad debt expense is not estimated. B) The Allowance for Bad Debts is used to hold the pool of "unknown" uncollectible accounts. C) The business does not wait to see which customers will not pay when estimating the allowance for bad debts. D) The allowance method is based on the matching principle.
A) Bad debt expense is not estimated.
A business collects cash from a customer for services that were performed one month earlier. Which of the following accounts is debited? A) Cash B) Accounts Receivable C) Service Revenue D) Accounts Payable
A) Cash
A business makes a cash payment to a supplier on account for office supplies that were purchased earlier. Which of the following accounts is credited? A) Cash B) Accounts Payable C) Office Supplies D) Office Supplies Expense
A) Cash
The accountant for Barnes Auto Repair, Inc. failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year. Which of the following is an effect of this omission? A) The net income will be overstated. B) The total assets will be understated. C) The net income will be understated. D) The total assets will be overstated
A) The net income will be overstated.
Which of the following can be an effect of a transaction that increased an asset of a corporation for the accounting equation to balance? A) There is an equal decrease in another asset. B) There is an equal decrease in equity. C) There is an equal decrease in a liability account. D) Both liabilities and equity decrease.
A) There is an equal decrease in another asset.
Metropolitan Casting Services started the year with total assets of $130,000 and total liabilities of $45,000. The revenues and the expenses for the year amounted to $130,000 and $50,000, respectively. During the year, the company did not issue any common stock, but it distributed dividends of $60,000. Calculate the amount of increase or decrease in stockholders' equity for the year. A) a $20,000 increase B) a $105,000 increase C) a $85,000 decrease D) a $60,000 increase
A) a $20,000 increase
Country Homes Corporation just recorded a transaction in its books. If this transaction increased the total liabilities by $10,000, then ________. A) assets must increase, or equity must decrease by $10,000 B) either assets or equity must decrease by $10,000 C) both assets and equity must each decrease by $5,000 D) assets must decrease by $10,000
A) assets must increase, or equity must decrease by $10,000
The entries that transfer the revenue, expense, and dividends balances to the Retained Earnings account to prepare the company's books for the next period are called ________ entries. A) closing B) opening C) adjusting D) end of period
A) closing
If an adjusting entry includes a debit to Rent Expense, it indicates that the payment of rent had been previously recorded as a(n) ________. A) deferred expense B) depreciation expense C) accrued expense D) accrued revenue
A) deferred expense
When inventory costs are declining, which of the following inventory costing method will result in the lowest ending merchandise inventory? A) first-in, first-out B) last-in, first-out C) weighted-average D) specific identification
A) first-in, first-out
The allowance method of accounting for uncollectible receivables ________. A) is used to measure bad debts B) violates the matching principle C) records bad debt expense in the period the accounts receivable is written off D) requires the use of a contra liability account.
A) is used to measure bad debts
Maxwell Plumbing Services earned $500 by completing a job for Smith Company. The $500 earned by Maxwell Plumbing Services is its ________. A) revenue B) equity C) gain D) debt
A) revenue
Anderson Corporation has purchased a group of assets for $20,300. The assets and their relative market values are listed below. Land $6800 Equipment 2300 Building 3600 Which of the following amounts would be debited to the Land account? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.) A) $4233 B) $10,962 C) $3654 D) $5684
B) $10,962
An asset was purchased for $37,000 on January 1, 2019. The asset's estimated useful life was five years, and its residual value was $9000. The straight-line method of depreciation was used. Calculate the gain or loss if the asset is sold for $19,000 on December 31, 2019, the last day of the accounting period. A) $6200 gain B) $12,400 loss C) $12,400 gain D) no gain or no loss
B) $12,400 loss
A merchandiser uses a perpetual inventory system. The beginning Retained Earnings balance of the merchandiser was $110,000. During the year, Sales Revenue amounted to $90,000, Cost of Goods Sold was $40,000, and all other expenses totaled $12,000. The company declared and paid $27,000 as dividends. The ending balance of Retained Earnings would be ________. A) $148,000 B) $121,000 C) $175,000 D) $110,000
B) $121,000
The balances of select accounts of Donovan, Inc. as of December 31, 2018 are given below. D Building$120,000 D Cash 9,000 D Office Supplies 1,000 D Furniture 4,000 D Prepaid Insurance 600 C Accumulated Depreciation—Furniture $2,000 D Land 33,000 C Accumulated Depreciation—Building 4,000 D Accounts Receivable 2,000 What amount of total long-term assets would be shown on the balance sheet at December 31, 2018? A) $120,000 B) $151,000 C) $153,000 D) $157,000
B) $151,000
On January 1, 2018, Jordan, Inc. acquired a machine for $1,100,000. The estimated useful life of the asset is five years. Residual value at the end of five years is estimated to be $61,000. Calculate the depreciation expense per year using the straight-line method. A) $220,000 B) $207,800 C) $268,800 D) $275,000
B) $207,800
Bachman, Inc. plans to develop a shopping center. In the first quarter, the following amounts were spent: Acquisition of land $23,000 Surveys and legal fees 1500 Land clearing 400 Fencing 7000 Install lighting and signage 1860 What amount should be recorded as the cost of the land in the corporation's books? A) $31,900 B) $24,900 C) $26,760 D) $30,400
B) $24,900
A company purchased 130 units for $20 each on January 31. It purchased 190 units for $25 each on February 28. It sold 190 units for $60 each from March 1 through December 31. If the company uses the weighted-average inventory costing method, calculate the amount of Cost of Goods Sold on the income statement for the year ending December 31. (Assume the company uses the perpetual inventory system. Round any intermediate calculations two decimal places, and your final answer to the nearest dollar.) A) $7,350 B) $4,364 C) $2,600 D) $4,750
B) $4,364
The net income of Hollywood Talent Services is $26,000. The beginning and ending stockholders' equity balances were $35,000 and $56,000, respectively. The company issued no common stock. Calculate the amount of dividends. A) $15,000 B) $5,000 C) $9,000 D) $8,000
B) $5,000
The following are the current month's balances for selected accounts of Sandlin Marketing Company. Accounts Payable $9,000 Revenue 8,000 Cash 7,650 Expenses 1,100 Furniture 11,000 Accounts Receivable 12,000 Common Stock 10,250 Notes Payable 4,500 What is the net income for Sandlin Marketing for the current month? A) $8,000 B) $6,900 C) $9,100 D) $15,650
B) $6,900
A business makes a cash payment of $12,000 to a supplier for supplies purchased two weeks earlier. Which of the following accounts is debited? A) Cash B) Accounts Payable C) Supplies D) Accounts Receivable
B) Accounts Payable
Jones Supply Services paid $350 cash, the amount owed from the previous month, to a materials supplier. Which of the following accounts decrease? A) Accounts Receivable B) Accounts Payable C) Retained Earnings D) Office Supplies
B) Accounts Payable
Mulberry Corporation collected $16,000 from one of its customers, the amount owed from the previous month. How does this affect the accounting equation for Mulberry? A) Assets increase by $16,000; liabilities decrease by $16,000. B) Assets increase by $16,000; assets decrease by $16,000. C) Assets increase by $16,000; liabilities increase by $16,000. D) Assets increase by $16,000; equity increases by $16,000.
B) Assets increase by $16,000; assets decrease by $16,000.
Regarding the double-entry system, which of the following statements is incorrect? A) A transaction would be incomplete if only one side were recorded. B) Because of technology, the use of the double-entry system of accounting is optional. C) The double-entry system is a system of accounting in which every transaction affects at least two accounts. D) If office supplies are purchased on account, the account Office Supplies increases and the account Accounts Payable increases.
B) Because of technology, the use of the double-entry system of accounting is optional.
Montgomery Equipment Rental Company received $1,000 cash from a customer; the amount was owed to the business from the previous month. What is the effect of this transaction on the accounting equation? A) Accounts Receivable increases and Service Revenue increases. B) Cash increases and Accounts Receivable decreases. C) Cash increases and Service Revenue increases. D) Cash increases and Accounts Payable decreases.
B) Cash increases and Accounts Receivable decreases.
Regarding the Cost of Goods Sold account, which of the following statements is incorrect? A) In a perpetual inventory system, the Cost of Goods Sold account keeps a current balance throughout the period. B) Cost of Goods sold is a contra revenue account. C) Cost of Goods Sold is based on the company's cost, not the retail price. D) Cost of Goods Sold represents the cost of inventory that has been sold to customers.
B) Cost of Goods sold is a contra revenue account.
Revenues and expenses may be transferred to the ________ account before their final transfer into the Retained Earnings account. A) Net Income B) Income Summary C) Dividends D) Assets
B) Income Summary
Mitchell Company receives a bill from one of its suppliers for advertising services received and will pay the supplier next month. How does the receipt of the bill from the supplier affect the accounting equation of Mitchell? A) Assets and equity decrease. B) Liabilities increase and equity decreases. C) Assets and liabilities increase. D) Liabilities and equity increase.
B) Liabilities increase and equity decreases.
Jason Repair Corporation incurred $1,500 as advertising expense and promised to pay the advertising agency within 30 days. Which of the following will decrease as a result of this transaction? A) Assets B) Stockholders' equity C) Liabilities D) Revenues
B) Stockholders' equity
Property, plant, and equipment are ________. A) presented in order of the category name, with Land being presented last B) also called fixed or plant assets C) either tangible or intangible assets D) easily converted to cash
B) also called fixed or plant assets
For Office Supplies, the category of account and its normal balance is ________. A) liabilities and a debit balance B) assets and a debit balance C) liabilities and a credit balance D) assets and a credit balance
B) assets and a debit balance
If goods are sold on terms FOB shipping point, the ________. A) seller normally pays the transportation costs B) buyer normally pays the transportation costs C) buyer and the seller split the transportation costs D) shipping company bears the transportation cost
B) buyer normally pays the transportation costs
The Allowance for Bad Debts account ________. A) is a liability account B) holds the pool of "unknown" uncollectible accounts C) increases with a debit D) is added to accounts receivable
B) holds the pool of "unknown" uncollectible accounts
When using the allowance method, the write-off of a receivable ________. A) involves a contra-revenue account B) reduces the amount of the Allowance for Bad Debts account C) decreases net income D) affects the net realizable value of accounts receivable
B) reduces the amount of the Allowance for Bad Debts account
The expected value of a depreciable asset at the end of its useful life is called ________. A) book value B) residual value C) depreciation expense D) accrued expense
B) residual value
A liability created when a business receives cash from customers in advance of providing services or delivering goods is called a(n) ________. A) notes receivable B) unearned revenue C) accrued liability D) service revenue
B) unearned revenue
During the accounting period, office supplies were purchased on account for $3,200. A physical count, on the last day of the accounting period, shows $1,100 of office supplies on hand. Supplies Expense for the accounting period is $3,300. What was the beginning balance of Office Supplies? A) $4,400 B) $2,100 C) $1,200 D) There is not enough information to answer this question.
C) $1,200
Precision Camera Services started the year with total assets of $90,000 and total liabilities of $65,000. The revenues and the expenses for the year amounted to $100,000 and $70,000, respectively. During the year, the company did not issue any common stock, but it distributed dividends of $40,000. What is the amount of stockholders' equity at the end of the year? A) $70,000 B) $100,000 C) $15,000 D) $40,000
C) $15,000
A company reports net accounts receivable of $152,000 on its December 31, 2019 balance sheet. The Allowance for Bad Debts has a credit balance of $19,000. What is the balance of Accounts Receivable? A) $157,000 B) $152,000 C) $171,000 D) $133,000
C) $171,000
A company purchased 90 units for $20 each on January 31. It purchased 180 units for $25 each on February 28. It sold 180 units for $60 each from March 1 through December 31. If the company uses the first-in, first-out inventory costing method, what is the amount of Cost of Goods Sold on the income statement for the year ending December 31? (Assume that the company uses a perpetual inventory system.) A) $1,800 B) $4,500 C) $4,050 D) $6,300
C) $4,050
Accounts Receivable has a balance of $8,000, and the Allowance for Bad Debts has a credit balance of $450. The allowance method is used. What is the net realizable value of Accounts Receivable after a $160 account receivable is written off? A) $7,390 B) $7,710 C) $7,550 D) $8,000
C) $7,550
_______ represents a short-term liability created by purchasing "on account." A) Accounts Receivable B) Notes Payable C) Accounts Payable D) Expenses
C) Accounts Payable
The entry to record depreciation includes a credit to the ________ account. A) Depreciation Payable B) Cash C) Accumulated Depreciation D) Depreciation Expense
C) Accumulated Depreciation
Which of the following accounts will have an ending balance after the closing process is completed? A) Dividends B) Rent Expense C) Accumulated Depreciation D) Service Revenue
C) Accumulated Depreciation
Which of the following accounts will be included in a post-closing trial balance? A) Dividends B) Salaries Expense C) Common Stock D) Supplies Expense
C) Common Stock
Which of the following is a measure of how quickly an item can be converted to cash? A) Debt ratio B) Return on assets ratio C) Liquidity D) Accounting cycle
C) Liquidity
Which of the following should be classified as a long-term asset? A) Interest Receivable B) Accounts Receivable C) Notes Receivable, due in 5 years D) Cash Equivalents
C) Notes Receivable, due in 5 years
________ is the equity earned by profitable operations that is not distributed to stockholders. A) Assets B) Dividend C) Retained earnings D) Common stock
C) Retained earnings
The matching principle states that ________. A) financial statements can be prepared for specific periods B) a business's activities can be sliced into small time segments C) all expenses should be recorded when they are incurred during the period D) companies should record revenue when it has been earned
C) all expenses should be recorded when they are incurred during the period
Martinville, Inc. earned revenues of $18,000 and incurred expenses of $4,000. The company declared and paid cash dividends of $3,500. What is the balance in the Income Summary account prior to closing net income or loss to the Retained Earnings account? A) debit balance of $14,000 B) debit balance of $10,500 C) credit balance of $14,000 D) credit balance of $18,000
C) credit balance of $14,000
Salaries Payable, Accounts Payable, and Unearned Revenue are examples of ________. A) short-term investments B) fixed assets C) current liabilities D) long-term liabilities
C) current liabilities
On September 1, 2018, Real Estate Professionals, Inc. paid $7,000 in advance for an eight-month rental space covering the period of September 1, 2018 through April 30, 2019. The deferred expense was initially recorded as an asset. The company makes adjusting entries once a year at year-end. The adjusting entry on December 31, 2018 would include a ________. A) debit of $7,000 to Cash B) credit of $7,000 to Prepaid Rent C) debit of $3,500 to Rent Expense D) credit of $3,500 to Rent Expense
C) debit of $3,500 to Rent Expense
The matching principle ________. A) guides accounting for revenues and expenses B) results in the matching of expenses incurred during the period to the cash paid for expenses C) ensures that all expenses are recorded when they are incurred during the period D) results from a natural link between all expenses and revenues
C) ensures that all expenses are recorded when they are incurred during the period
The owners' claims to the assets of the business are called ________. A) return on assets B) expenses C) equity D) debt
C) equity
Which of the following inventory costing methods yields the lowest net income during a period of rising inventory costs? A) specific identification B) weighted-average C) last-in, first-out D) first-in, first-out
C) last-in, first-out
The Salaries Payable account is a(n) ________. A) liability account with a normal debit balance B) asset account with a normal debit balance C) liability account with a normal credit balance D) asset account with a normal credit balance
C) liability account with a normal credit balance
Under which of the following categories would bonds held as an investment for more than a year appear? A) current assets B) long-term liabilities C) long-term assets D) current liabilities
C) long-term assets
The accounting principle that ensures all expenses are recorded during the period when they are incurred and offsets those expenses against the revenues of the period is called the ________ principle. A) comparison B) accrual C) matching D) revenue recognition
C) matching
Adjusting entries are needed to correctly measure the ________. A) ending balance in the Cash account B) net income (loss) on the balance sheet C) net income (loss) on the income statement D) beginning balance in the Cash account
C) net income (loss) on the income statement
An account that is not closed at the end of the period is called a(n) ________. A) expense account B) temporary account C) permanent account D) revenue account
C) permanent account
Which of the following represents the correct flow of accounting data? A) transactions occur; transactions are analyzed; transactions are journalized and posted; source documents are prepared B) transactions occur; source documents are prepared; transactions are journalized and posted; C) transactions occur; source documents are prepared; transactions are analyzed; transactions are journalized and posted D) source documents are prepared; transactions occur; transactions are analyzed; transactions are journalized and posted
C) transactions occur; source documents are prepared; transactions are analyzed; transactions are journalized and posted
Maxwell Tax Planning Service bought communications equipment for $10,200 on January 1, 2019. The equipment has an estimated useful life of five years and zero residual value. Maxwell uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of each month. As of June 30, 2019, the balance in the Accumulated Depreciation account for this equipment is ________. A) $170 B) $2,040 C) $850 D) $1,020
D) $1,020
After the December 31, 2019 adjusting journal entries have been posted, Sinclair Enterprises has the following account balances (all accounts have normal balances) are: Accounts Receivable $159,000 Allowance for Bad Debts $4,600 Bad Debts Expense $8,200 What is the net realizable value as of December 21, 2019? A) $163,600 B) $150,800 C) $146,200 D) $154,400
D) $154,400
Baldwin, Inc. had the following balances and transactions during 2019:Beginning Merchandise Inventory as of January 1, 2019125 units at $81March 10Sold 50 unitsJune 10Purchased 225 units at $86October 30Sold 175 unitsWhat would be reported as Cost of Goods Sold on the income statement for the year ending December 31, 2019 if the perpetual inventory system and the first-in, first-out inventory costing method are used? A) $10,125 B) $14,675 C) $29,475 D) $18,725
D) $18,725
Which of the following is a current asset that is expected to be converted to cash, sold, or consumed during the next year (or the normal operating cycle, if longer)? A) Land B) Equipment C) Building D) Accounts Receivable
D) Accounts Receivable
Rosewood Corporation purchased land for $100,000 by making a cash payment of $38,000 and promising to pay the remaining amount in a later accounting period. What is the net effect of this transaction on Rosewood's accounting equation? A) Assets increase by $100,000 and liabilities decrease by $38,000. B) Assets increase by $100,000 and liabilities decrease by $62,000. C) Assets and equity increase by $62,000. D) Assets and liabilities increase by $62,000.
D) Assets and liabilities increase by $62,000.
Which of the following sequences states the order in which accounts are listed on a trial balance? A) Equity → Assets → Liabilities B) Liabilities → Assets → Equity C) Assets → Equity → Liabilities D) Assets → Liabilities → Equity
D) Assets → Liabilities → Equity
Which of the following is the most liquid asset?A) Building B) Prepaid Expenses C) Accounts Receivable D) Cash
D) Cash
The entry to record depreciation includes a debit to the ________ account. A) Equipment B) Cash C) Accumulated Depreciation D) Depreciation Expense
D) Depreciation Expense
The Income Summary account has a credit balance of $27,000 after the revenue and expense accounts have been closed. Which of the following is credited to close the Income Summary account? A) Dividends B) Sales Revenue C) Cost of Goods Sold D) Retained Earnings
D) Retained Earnings
Which of the following statements is true of revenues? A) Revenues decrease equity, so a revenue account's normal balance is a credit balance. B) Revenues decrease equity, so a revenue account's normal balance is a debit balance. C) Revenues increase equity, so a revenue account's normal balance is a debit balance. D) Revenues increase equity, so a revenue account's normal balance is a credit balance.
D) Revenues increase equity, so a revenue account's normal balance is a credit balance.
Lamar Corporation originally purchased land for $20,000. It later sold the land for $20,000 in cash. Which of the following is true of the effect of the sale of land on the accounting equation? A) Assets increase and liabilities decrease by $20,000. B) Assets and equity increase by $40,000. C) Assets increase by $20,000; equity increases by $20,000. D) The amount of total assets remains the same.
D) The amount of total assets remains the same.
Which of the following is true when the estimate of an asset's useful life is changed? A) The new estimate is ignored until the last year of the asset's life. B) The depreciation expense in the prior years are restated. C) Prior years' financial statements must be restated. D) The asset's remaining depreciable book value will be spread over the asset's remaining life.
D) The asset's remaining depreciable book value will be spread over the asset's remaining life.
The Merchandise Inventory account balance is $52,000. A physical count of inventory reveals that the actual inventory balance is $41,000. Which of the following would be included in the adjusting entry? (Assume a perpetual inventory system.) A) a $41,000 credit to Merchandise Inventory B) a $52,000 debit to Cost of Goods Sold C) a $11,000 credit to Cost of Goods Sold D) a $11,000 credit to Merchandise Inventory
D) a $11,000 credit to Merchandise Inventory
An expense that has been incurred but not yet paid is called a(n) ________. A) accrued revenue B) deferred expense C) deferred revenue D) accrued expense
D) accrued expense
A business that accepts payments by credit and debit cards ________. A) is usually unable to attract more customers B) must check each customer's credit rating C) generally receives proceeds from credit and debit card transactions 30-45 days after the sale D) almost always pays a fee to the processor to cover the processing costs
D) almost always pays a fee to the processor to cover the processing costs
Notes receivable ________. A) represent an oral promise to pay a fixed amount of principal plus interest on the maturity date B) are included in a miscellaneous category called other receivables C) are due within 12 months or within the normal operating cycle if the cycle is longer than a year are considered long-term assets D) are supported by a promissory note
D) are supported by a promissory note
Which of the following entries will be necessary to close the Insurance Expense account at the end of the year? A) debit Insurance Expense and credit Income Summary B) debit Insurance Expense and credit Common Stock C) debit Retained Earnings and credit Insurance Expense D) debit Income Summary and credit Insurance Expense
D) debit Income Summary and credit Insurance Expense
The allocation of a plant asset's cost to expense over its useful life is called ________. A) residual value B) book value C) accrued revenue D) depreciation
D) depreciation
Under which of the following inventory costing methods is the ending inventory based on the costs of the most recent purchases? A) specific identification B) weighted-average C) last-in, first-out D) first-in, first-out
D) first-in, first-out
Which of the following inventory costing methods yields the highest net income during a period of rising inventory costs? A) specific identification B) weighted-average C) last-in, first-out D) first-in, first-out
D) first-in, first-out
Which of the following inventory costing methods yields the lowest cost of goods sold during a period of rising inventory costs? A) specific identification B) weighted-average C) last-in, first-out D) first-in, first-out
D) first-in, first-out
Patents, copyrights, and trademarks are examples of ________. A) short-term investments B) fixed assets C) long-term investments D) intangible assets
D) intangible assets
To match expenses against revenues means to ________. A) add expenses incurred during one period to revenues earned during that same period B) subtract expenses incurred during one period from revenues earned during the previous period C) add expenses incurred during one period to revenues earned during the previous period D) subtract expenses incurred during one period from revenues earned during that same period
D) subtract expenses incurred during one period from revenues earned during that same period
Which of the following accounting terms assumes that a business's activities can be divided into small segments and that financial statements can be prepared for specific periods, such as a month, quarter, or year? A) adjusting entry concept B) economic entity concept C) matching principle D) time period concept
D) time period concept
