acg 3024 ch1-9
Which accounts would appear on the income statement?
Cost of goods sold Transportation-out Selling expense Loss on the sale of land Sales
Which resource providers lend financial resources to a business with the expectation of repayment with interest?
Creditors
Which of the following is not a generally recognized internal control procedure?
Customer service comment cards
Chow Company earned $2,700 of cash revenue, paid $1,600 for cash expenses, and paid a $500 cash dividend to its owners. Which of the following statements is true?
The net cash inflow from operating activities was $1,100.
The term "FOB Shipping Point" means:
The buyer pays the shipping cost.
^ The amount of net income shown on Carolina's Year 1 income statement would amount to:
$1,000.
Jason Company paid $4,200 for one year's rent in advance beginning on October 1, Year 1. Jason's Year 1 income statement would report rent expense, and its statement of cash flows would report cash outflow for rent, respectively, of
$1,050; $4,200 $4,200 × 3/12 = $1,050 rent expense; $4,200 payment on 10/1/15 is a cash outflow for rent
Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1) issued stock for $68,000 2) borrowed $39,000 from its bank 3) provided consulting services for $66,000 cash 4) paid back $29,000 of the bank loan 5) paid rent expense for $16,000 6) purchased equipment for $26,000 cash 7) paid $4,400 dividends to stockholders 8) paid employees' salaries of $35,000 What is Yowell's notes payable balance at the end of Year 1?
$10,000 Beginning notes payable balance $0 + $39,000 loan - $29,000 repayment = $10,000 ending balance
Anton Co. uses the perpetual inventory method. Anton purchased 920 units of inventory that cost $7 each. At a later date the company purchased an additional 990 units of inventory that cost $9 each. If Anton uses the FIFO cost flow method and sells 1,350 units of inventory, the amount of cost of goods sold will be:
$10,310. (920 × $7) + (430 × $9) = $10,310
Assume the perpetual inventory method is used. 1) The company purchased $13,300 of merchandise on account under terms 2/10, n/30. 2) The company returned $2,800 of merchandise to the supplier before payment was made. 3) The liability was paid within the discount period. 4) All of the merchandise purchased was sold for $20,600 cash. The net cash flow from operating activities as a result of the four transactions is:
$10,310. Cash outflow for inventory purchase: ($13,300 - $2,800) × 0.98 = $10,290Cash inflow from inventory sale: $20,600Net cash flow = $20,600 - $10,290 = $10,310
The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 1: Cash$4,000 Accounts receivable$3,400 Dividends$2,000 Common stock$3,900 Land$3,200 Revenue$3,200 Accounts payable$1,800 Expense$2,200 Total assets on Carolina's December 31, Year 1 balance sheet would amount to:
$10,600.
At March 31, Cummins Co. had a balance in its cash account of $10,900. At the end of March the company determined that it had outstanding checks of $1,210, deposits in transit of $740, a bank service charge of $45, and an NSF check from a customer for $230. The true cash balance at March 31 is:
$10,625 $10,900 unadjusted book balance - $45 service charge - $230 NSF check = $10,625 true cash balance
Assume the perpetual inventory method is used. 1) The company purchased $13,700 of merchandise on account under terms 3/10, n/30. 2) The company returned $3,200 of merchandise to the supplier before payment was made. 3) The liability was paid within the discount period. 4) All of the merchandise purchased was sold for $21,400 cash. The amount of gross margin from the four transactions is:
$11,215. Cost of goods sold = ($13,700 - $3,200) × 0.97 = $10,185Sales revenue $21,400 - Cost of goods sold $10,185 = $11,215
The balance sheet of the Algonquin Company reported assets of $50,000, liabilities of $22,000 and common stock of $15,000. Based on this information only, the amount or balance for retained earnings must be:
$13,000 Assets = Liabilities + Equity; Equity includes common stock and retained earnings. $50,000 = $22,000 + $15,000 + Retained earnings; Retained earnings = $13,000
Hancock Medical Supply Co., which had no beginning balance in its Accounts Receivable and Allowance for Doubtful Accounts, earned $81,000 of revenue on account during Year 1. During Year 1, Hancock collected $64,800 of cash from its receivables accounts. The company estimates that it will be unable to collect 1% of revenue on account. The amount of net realizable value of receivables on the December 31, Year 1 balance sheet would be:
$15,390. $0 beginning accounts receivable + $81,000 revenue on account - $64,800 collected = $16,200 ending accounts receivable; $0 beginning allowance balance + ($81,000 × 1%) uncollectible accounts expense = $810 ending allowance balance; net realizable value of receivables = $16,200 - $810 = $15,390
Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1) issued stock for $70,000 2) borrowed $40,000 from its bank 3) provided consulting services for $68,000 cash 4) paid back $30,000 of the bank loan 5) paid rent expense for $16,500 6) purchased equipment for $27,000 cash 7) paid $4,500 dividends to stockholders 8) paid employees' salaries of $36,000 What is Yowell's net income for Year 1?$
$15,500 $68,000 revenue - $16,500 rent expense - $36,000 salaries expense = $15,500 net income
Owen Company's unadjusted book balance at June 30 is $14,780. The company's bank statement reveals bank service charges of $125. Two credit memos are included in the bank statement: one for $1,520, which represents a collection that the bank made for Owen, and one for $210, which represents the amount of interest that Owen had earned on its interest-bearing account in June. Based on this information, Owen's true cash balance is:
$16,385. $14,780 unadjusted book balance - $125 service charge + $1,520 collection + $210 interest = $16,385 true cash balance
Sheldon Company began Year 1 with $1,300 in its supplies account. During the year, the company purchased $3,800 of supplies on account. The company paid $2,200 on accounts payable by year end. At the end of Year 1, Sheldon counted $2,100 of supplies on hand. Sheldon's financial statements for Year 1 would show:
$2,100 of supplies; $3,000 of supplies expense $2,100 of supplies on hand is the supplies asset on the balance sheet; $1,300 beginning balance + $3,800 of supplies purchased − $2,100 ending balance = $3,000 supplies expense
Chase Co. uses the perpetual inventory method. The inventory records for Chase reflected the following Jan 1Beginning inventory600units@$2.90 Jan 12Purchase700units@$2.70 Jan 18Sales800units@$4.40 Jan 21Purchase600units@$3.00 Jan 25Purchase400units@$2.80 Jan 31Sales750units@$4.40 Assuming Chase uses a LIFO cost flow method, the amount of cost of goods sold for the sales transaction on January 18 is:
$2,180. (700 × $2.70) + (100 × $2.90) = $2,180
Glasgow Enterprises started the period with 80 units in beginning inventory that cost $7.50 each. During the period, the company purchased inventory items as follows. Glasgow sold 220 units after purchase 3 for $17.00 each. Purchase No. of items Cost 1 200 $9.00 2 150 $9.30 3 50 $10.50 Glasgow's ending inventory under weighted average would be approximately:
$2,340. 80 units + 400 units purchased - 220 units sold = 260 units in ending inventory[(80 × $7.50) + (200 × $9.00) + (150 × $9.30) + (50 × $10.50)] ÷ 480 = $9.00 per unit × 260 = $2,340
The inventory records for Radford Co. reflected the following Beginning inventory @ May 1400units@$2.40 First purchase @ May 7500units@$2.60 second purchase @ May 17700units@$2.70 Third purchase @ May 23300units@$2.80 Sales @ May 311,500units@$4.30 Determine the weighted average cost per unit (rounded) for May.
$2.63 [(400 × $2.40) + (500 × $2.60) + (700 × $2.70) + (300 × $2.80)]/1,900 units = $2.63 per unit
Prior to closing, Syracuse Company's accounting records showed the following balances: Retained earnings$16,800 Service revenue 21,750 Interest revenue 1,800 Salaries expense 12,300 Operating expense 3,450 interest expense 900 Dividends 2,700 After closing, Syracuse's retained earnings balance would be
$21,000. $16,800 + $21,750 + $1,800 − $12,300 − $3,450 − $900 − $2,700 = $21,000
On January 1, Year 1, Friedman Company purchased a truck that cost $33,000. The truck had an expected useful life of 8 years and an $7,000 salvage value. The book value of the truck at the end of Year 1, assuming that Friedman uses the double-declining-balance method, is
$24,750. $33,000 × (2 × 12.5%) = $8,250 Depreciation expense for Year 1; $33,000 - $8,250 = $24,750 book value at the end of Year 1.
The April 30 bank statement for Trimble Corporation shows an ending balance of $36,308. The unadjusted cash account balance was $30,150. The accountant for Trimble gathered the following information: -There was a deposit in transit for $4,612. -The bank statement reports a service charge of $84. -A credit memo included in the bank statement shows interest earned of $335. -Outstanding checks totaled $11,889. -The bank statement included a $1,370 NSF check deposited in April. What is the true cash balance as of April 30?
$29,031 $36,308 unadjusted bank balance + $4,612 deposit in transit - $11,889 outstanding checks = $29,031 true cash balance.Alternatively, $30,150 unadjusted book balance - $84 service charge + $335 interest revenue - $1,370 NSF check = $29,031.
Warren Enterprises had the following events during Year 1: The business issued $31,000 of common stock to its stockholders. The business purchased land for $23,000 cash. Services were provided to customers for $27,000 cash. Services were provided to customers for $16,000 on account. The company borrowed $27,000 from the bank. Operating expenses of $23,000 were incurred and paid in cash. Salary expense of $1,900 was accrued. A dividend of $15,000 was paid to the stockholders of Warren Enterprises. Assuming the company began operations during Year 1, the amount of retained earnings as of December 31, Year 1 would be:
$3,100 $0 beginning balance + $43,000 revenue − $24,900 expenses − $15,000 dividends = $3,100 ending balance
Revenue on account amounted to $6,400. Cash collections of accounts receivable amounted to $4,100. Expenses for the period were $3,300. The company paid dividends of $1,050. Net income for the period was
$3,100. Revenue $6,400 − Expenses $3,300 = $3,100 Net Income
Nelson Company experienced the following transactions during Year 1, its first year in operation. Issued $9,800 of common stock to stockholders. Provided $6,100 of services on account. Paid $2,550 cash for operating expenses. Collected $3,800 of cash from accounts receivable. Paid a $290 cash dividend to stockholders. The amount of net income recognized on Nelson Company's Year 1 income statement is:
$3,550. $6,100 revenue − $2,550 expenses = $3,550 net income
The Miller Company earned $115,000 of revenue on account during Year 2. There was no beginning balance in the accounts receivable and allowance accounts. During Year 2, Miller collected $78,000 of cash from its receivables accounts. The company estimates that it will be unable to collect 3% of its sales on account. The net realizable value of Miller's receivables at the end of Year 2 was:
$33,550. $0 beginning balance + $115,000 revenue on account - $78,000 collections = $37,000 ending accounts receivable balance; $0 beginning balance + $3,450 uncollectible accounts expense - $0 write-offs = $3,450 ending allowance for doubtful accounts balance; $37,000 - $3,450 = $33,550 net realizable value
Vargas Company uses the perpetual inventory method. Vargas purchased 1,800 units of inventory that cost $19.00 each. At a later date the company purchased an additional 2,200 units of inventory that cost $20.00 each. Vargas sold 1,900 units of inventory for $23.00. If Vargas uses a FIFO cost flow method, the amount of cost of goods sold appearing on the income statement will be:
$36,200. (1,800 × $19.00) + (100 × $20.00) = $36,200 cost of goods sold
The inventory records for Radford Co. reflected the following Beginning inventory @ May 12,100units@$5.80 First purchase @ May 72,200units@$6.00 second purchase @ May 172,400units@$6.10 Third purchase @ May 232,000units@$6.20 sales @ May 316,600units@$7.70 Determine the amount of cost of goods sold assuming the LIFO cost flow method.
$40,240 (2,000 × $6.20) + (2,400 × $6.10) + (2,200 × $6.00) = $40,240
Tin company had the following results during 2017. Sales$626,700 Gross Margin$190,200 Ending Inventory$89,300 Based on the information provided, what was the company's cost of goods sold?
$436,500 Sales − COGS = Gross Margin.$626,700 − X = $190,200.COGS = $436,500.
Rosewood Company made a loan of $9,800 to one of the company's employees on April 1, Year 1. The one-year note carried a 6% rate of interest. The amount of interest revenue that Rosewood would report during the years ending December 31, Year 1 and Year 2, respectively, would be:
$441 and $147 $9,800 × 6% × 9/12 months = $441 interest revenue in April - December, Year 1; $9,800 × 6% × 3/12 months = $147 interest revenue in January - March, Year 2
On April 1, Year 1, Fossil Energy Company purchased an oil producing well at a cash cost of $9,690,000. It is estimated that the oil well contains 780,000 barrels of oil, of which only 680,000 can be profitably extracted. By December 31, Year 1, 34,000 barrels of oil were produced and sold. The amount of depletion expense for Year 1 on this well would be:
$484,500. $9,690,000 ÷ 680,000 barrels = $14.25 ÷ per barrel; $14.25 × 34,000 barrels = $484,500 depletion expense; the cost of the oil well is distributed over only those barrels that can be profitably extracted.
Parker Company purchased an asset costing $34,000 on January 1, Year 1. The asset had an expected five year life and a $7,000 salvage value. Based on this information, the amount of depreciation expense and accumulated depreciation appearing on the Year 2 financial statements would be (assume straight-line depreciation):
$5,400 and $10,800, respectively. ($34,000 − $7,000)/5 = $5,400 depreciation expense each year. Accumulated depreciation: $5,400 depreciation expense in Year 1 + $5,400 depreciation expense in Year 2 = $10,800 accumulated depreciation in Year 2.
Allegheny Company ended Year 1 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $54,000 and $2,400, respectively. During Year 2, Allegheny wrote off $4,200 of Uncollectible Accounts. After aging its receivables, Allegheny estimates that the ending Allowance for Doubtful Accounts balance should be $4,000. What will Allegheny report as Uncollectible Accounts Expense on its Year 2 income statement?
$5,800 $2,400 beginning allowance balance - $4,200 write-offs + uncollectible accounts expense = $4,000 ending allowance balance; uncollectible accounts expense = $4,000 - $2,400 + $4,200 = $5,800
Gomez Company collected $19,800 on September 1, Year 1 from a customer for services to be provided over a one-year period beginning on that date. How much revenue would Gomez Company report related to this contract on its income statement for the year ended December 31, Year 1? How much would it report as cash flows from operating activities for Year 1?
$6,600; $19,800 Gomez will recognize revenue earned for the 4 months between September 1 and December 31 ($19,800 × 4/12 = $6,600). However, the company will recognize the entire $19,800 received as a cash inflow for operating activities in Year 1.
Nelson Company experienced the following transactions during Year 1, its first year in operation. Issued $12,000 of common stock to stockholders. Provided $4,600 of services on account. Paid $3,200 cash for operating expenses. Collected $3,800 of cash from accounts receivable. Paid a $200 cash dividend to stockholders. The amount of net cash flow from operating activities shown on Nelson Company's Year 1 statement of cash flows is
$600. $3,800 cash collected from revenue − $3,200 cash paid for expenses = $600 cash flow from operating activities
Packard Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1) Acquired $1,550 cash from the issue of common stock. 2) Borrowed $1,020 from a bank. 3) Earned $1,200 of revenues cash. 4) Paid expenses of $370. 5) Paid a $170 dividend. During Year 2, Packard engaged in the following transactions. (Assume all transactions are cash transactions.) 1) Issued an additional $925 of common stock. 2) Repaid $640 of its debt to the bank. 3) Earned revenues of $1,350 cash. 4) Incurred expenses of $600. 5) Paid dividends of $220. Packard Company's net cash flow from financing activities for Year 2 is:
$65 inflow. $925 inflow from stock - $640 outflow for loan repayment - $220 outflow for dividends = $65 inflow.
Prior to closing, Syracuse Company's accounting records showed the following balances: Retained earnings$8,300 Service revenue 9,050 Interest revenue 1,500 Salaries expense 5,900 Operating expense 2,050 Interest expense 1,200 Dividends 1,800 After closing, Syracuse's retained earnings balance would be
$7,900. $8,300 + $9,050 + $1,500 − $5,900 − $2,050 − $1,200 − $1,800 = $7,900
On September 30, the bank statement of Fine Company showed a balance of $11,650. The following information was revealed by comparing the bank statement to the cash balance in Fine's accounting records: (1) deposits in transit amounted to $4,815 (2) outstanding checks amounted to $8,790 (3) a $720 check was incorrectly drawn on Fine's account (4) NSF checks returned by the bank were $1,140 (5) bank service charge was $41 (6) credit memo for $160 for the collection of one of the company's account receivable Based on the above information, the true cash balance was:
$8,395. $11,650 unadjusted bank balance + $4,815 deposits in transit - $8,790 outstanding checks + $720 error correction = $8,395
The following account balances were drawn from the financial statements of Grayson Company: Cash$5,100 Accounts payable$1,600 Accounts receivable$2,200 Common stock ? Land$8,700 Retained earnings, Jan.1$3,400 Revenue$10,200 Expenses$7,600 Based on the above information, what is the balance of Common Stock for Grayson Company?
$8,400 Assets ($5,100 + $2,200 + $8,700) = Liabilities ($1,600) + Equity; Equity = $14,400;$14,400 = Common Stock + Retained Earnings ($3,400 + $10,200 − $7,600);$14,400 = Common Stock + $6,000; Common Stock = $8,400
Anchor Company purchased a manufacturing machine with a list price of $82,000 and received a 2% cash discount on the purchase. The machine was delivered under terms FOB shipping point, and freight costs amounted to $1,600. Anchor paid $2,100 to have the machine installed and tested. Insurance costs to protect the asset from fire and theft amounted to $2,600 for the first year of operations. Based on this information, the amount of cost recorded in the asset account would be:
$84,060. $82,000 list price - ($82,000 × 2% discount) + $1,600 freight + $2,100 installation and testing = $84,060. The insurance cost is not included in the cost of the machine, but is instead expensed during the first year.
The inventory records for Radford Co. reflected the following Beginning inventory @ May 11,700units@$5.00 First purchase @ May 71,800units@$5.20 second purchase @ May 172,000units@$5.30 Third purchase @ May 231,600units@$5.40 Sales @ May 315,400units@$6.90 Determine the amount of gross margin assuming the FIFO cost flow method.
$9,330 (1,700 × $5.00) + (1,800 × $5.20) + (1,900 × $5.30) = $27,930 cost of goods sold; $37,260 sales − $27,930 cost of goods sold = $9,330
On January 1, Year 1, Friedman Company purchased a truck that cost $47,000. The truck had an expected useful life of 100,000 miles over 8 years and an $8,000 salvage value. During Year 2, Friedman drove the truck 24,000 miles. The amount of depreciation expense recognized in Year 2 assuming that Friedman uses the units-of-production method is
$9,360. ($47,000 - $8,000) ÷ 100,000 miles = $0.390 per mile depreciation expense. 24,000 miles × $0.390 per mile = $9,360 depreciation expense in Year 2.
As of December 31, Year 1, Mason Company had $500 cash. During Year 2, Mason earned $1,200 of cash revenue and paid $800 of cash expenses. The amount of cash shown on the balance sheet at the end of Year 2 would be:
$900.
Glasgow Enterprises started the period with 85 units in beginning inventory that cost $2.60 each. During the period, the company purchased inventory items as follows. Glasgow sold 315 units after purchase 3 for $10.80 each. Purchase No. of Item Cost 1 290 $3.10 2 195 $3.20 3 50 $3.60 Glasgow's cost of goods sold under FIFO would be:
$934. (85 × $2.60) + (230 × $3.10) = $934
Harding Corporation acquired real estate that contained land, building and equipment. The property cost Harding $1,900,000. Harding paid $525,000 and issued a note payable for the remainder of the cost. An appraisal of the property reported the following values: Land, $555,000; Building, $1,650,000 and Equipment, $1,095,000. What value will be recorded for the building?
950,000 In a basket purchase, the cost of each asset in the "basket" is determined as a percentage of the basket's total appraised value. $1,650,000 ÷ ($555,000 + $1,650,000 + $1,095,000) = 50%; $1,900,000 × 50% = $950,000
Which of the following is considered a period cost?
Advertising expense for the current month.
Which of the following would not require the company to make an adjustment to its books?
An error in which the bank charged the company $83 for a check that had been written by another account holder.
Assume the perpetual inventory method is used. 1) The company purchased $13,900 of merchandise on account under terms 2/10, n/30. 2) The company returned $3,400 of merchandise to the supplier before payment was made. 3) The liability was paid within the discount period. 4) All of the merchandise purchased was sold for $21,800 cash. What effect will the return of merchandise to the supplier have on the accounting equation?
Assets and liabilities are reduced by $3,400. The purchase return will decrease assets (merchandise inventory) and decrease liabilities (accounts payable) by $3,400, the full invoiced amount of the merchandise returned.
Which of the following financial statements provides information about a company as of a specific point in time?
Balance sheet
Which of the following businesses is most likely to use a specific identification cost flow method?
Car dealership
The transaction, "provided services for cash," affects which two accounts?
Cash and Revenue
Butte Company recognized $24,000 of revenue on the cash sale of merchandise that cost $11,000. How will the sale be reported on the statement of cash flows?
Cash inflow from operating activities
Which of the following items appears in the investing activities section of the statement of cash flows?
Cash outflow for the purchase of land.
Which of the following items is an example of revenue?
Cash received from customers at the time services were provided
Duluth Co. collected a $6,000 cash advance from a customer on November 1, Year 1 for work to be performed over a six-month period beginning on that date. If the year-end adjustment is properly recorded, what will be the effect of the adjusting entry on Duluth's Year 1 financial statements?
Decrease liabilities and increase revenues
When the cost of purchasing inventory is declining, which inventory cost flow method will produce the highest amount of cost of goods sold?
FIFO
Which of the following groups has the primary responsibility for establishing generally accepted accounting principles for business entities in the United States?
Financial Accounting Standards Board.
Which type of accounting information is intended to satisfy the needs of external users of accounting information?
Financial accounting
In which section of a statement of cash flows would the payment of cash dividends be reported?
Financing activities.
Financial accounting standards are known collectively as GAAP. What does that acronym stand for?
Generally Accepted Accounting Principles
Abbott Company purchased $7,600 of merchandise inventory on account. Abbott uses the perpetual inventory method. How does this transaction affect the financial statements?
Increase inventory and increase accounts payable.
Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1) issued stock for $68,000 2) borrowed $39,000 from its bank 3) provided consulting services for $66,000 cash 4) paid back $29,000 of the bank loan 5) paid rent expense for $16,000 6) purchased equipment for $26,000 cash 7) paid $4,400 dividends to stockholders 8) paid employees' salaries of $35,000 What is Yowell's net cash flow from operating activities?
Inflow of $15,000 $66,000 inflow from consulting services - $16,000 outflow for rent expense - $35,000 outflow for salaries expense = $15,000 inflow
Which of the following statements accurately describes a fidelity bond?
Insurance that the company buys to protect itself from loss due to employee dishonesty
Policies and procedures designed to reduce the opportunities for fraud are often called:
Internal controls.
Which inventory costing method will produce an amount for cost of goods sold that is closest to current market value?
LIFO.
Which of the following would be considered as primarily a merchandising business?
Martin's Supermarket
An audit is useful to financial statement users because it:
Provides reasonable assurance that the financial statements do not have material misstatements.
A company purchased inventory on account. If the perpetual inventory method is used, which of the following choices accurately reflects how the purchase affects the company's financial statements?
Purchasing merchandise inventory on account increases assets (merchandise inventory) and increases liabilities (accounts payable). It does not affect the income statement or the statement of cash flows.
Middleton Company uses the perpetual inventory method. The company purchased an item of inventory for $75 and sold the item to a customer for $120. What effect will the sale have on the company's inventory account?
The account will decrease by $75.
Which of the following correctly states the proper order of the accounting cycle?
Record transactions, adjust accounts, prepare statements, close temporary accounts.
Which of the following would not be considered as primarily a merchandising business?
Regal Cinemas
Which of the following is not a component of the fraud triangle?
Reliance The fraud triangle includes opportunity, rationalization, and pressure.
Which internal control procedure addresses the idea that the likelihood of employee fraud or theft is reduced if collusion is required to accomplish it?
Separation of duties
Which of the following accounts would not appear on a balance sheet?
Service Revenue.
Which of the following is not an advantage of accepting credit cards from retail customers?
There are fees charged for the privilege of accepting credit cards.
Mayberry Company paid $30,000 cash to purchase land. As a result of this business event:
Total assets and total equity were not affected, and net cash flow from investing activities decreased.
How does the purchase of inventory on account under the perpetual inventory method affect the financial statements?
Total assets and total liabilities both increase
The Wilson Company purchased $25,000 of merchandise from the Poole Wholesale Company. Wilson also paid $1,800 for freight costs to have the goods shipped to its location. Which of the following statements regarding the necessary entries for the transactions is true? Wilson uses the perpetual inventory system.
Total increases to the inventory account would be $26,800.
A discount given to encourage prompt payment is called:
a cash discount. a sales discount by the seller. a purchase discount by the buyer.
In the reconciliation of the June bank statement, a deposit made on June 30 did not appear on the June bank statement. In preparing the bank reconciliation, this deposit in transit should be:
added to the unadjusted bank balance.
The cost of goods sold account is classified as:
an expense.
Liabilities are shown on the:
balance sheet.
The party that issues a promissory note is known as the:
borrower and maker.
Which accounts would appear on the balance sheet?
cash merchandise inventory common stock
In preparing the April bank reconciliation for Oscar Company, it was discovered that on April 10 a check was written to pay delivery expense of $45 but the check was erroneously recorded as $54 in the company's books. The correction the error of this error would increase:
cash and decrease delivery expense by $9.
The year-end adjusting entry to recognize uncollectible accounts expense will:
decrease assets and decrease equity.
In a bank reconciliation, a customer's NSF check included with the bank statement is:
deducted from the company's cash balance to get the true cash balance.
Which of the item(s) would be added to the unadjusted bank balance to determine the true cash balance?
deposit in transit
The matching concept refers to the "matching" of:
expenses and revenues.
In a company's bank reconciliation, an outstanding check is a check that:
has been issued by the company but has not been presented to the bank for payment.
Expenses are shown on the
income statement.
The bank statement for Tetra Company contained the following items: a bank service charge of $10; a credit memo for interest earned, $15; and a $50 NSF check from a customer. The company had outstanding checks of $100 and a deposit in transit of $300. The entry to record the customer's NSF check will:
increase the Accounts Receivable balance and decrease the Cash account balance.
On December 31, Year 1, Gaskins Co. owed $4,500 in salaries to employees who had worked during December but would be paid in January. If the year-end adjustment is properly recorded on December 31, Year 1, what will be the effect of this accrual on the following items for Gaskins?
net income - decrease cash flow from OA - no effect
The amount of accounts receivable that is actually expected to be collected is known as the:
net realizable value.
Yi Company provided services to a customer for $5,500 cash. As a result of this event:
total assets increased and net income increased.
The credit terms, 2/15, n/30, indicate that a:
two percent discount can be deducted if the invoice is paid before the fifteenth day following the date of the sale.
The most favorable audit opinion that a company can receive is a(n):
unqualified opinion.
The balance in a revenue account at the beginning of an accounting period will always be
zero.