Final Exam Review
true
T/F: All stock for an organization should at least be initially issued for the par value to reduce owner liability.
false
T/F: An auditor reviews all documents to determine accuracy.
false
T/F: Cash is increased by a credit and decreased by a debit.
false
T/F: Depreciation expense and accumulated depreciation are the same in types of accounts in accounting.
true
T/F: Depreciation expense gets zeroed out after a financial reporting period for an organization.
true
T/F: Depreciation is a known "tax shelter" and is completely "legal"
false
T/F: Depreciation is the same as money in the bank.
true
T/F: Double entry means that it is not possible to change one side of the accounting equation without changing the other.
false
T/F: Equity is the amount of money I have in the bank (cash) after I account for my assets and liabilities.
false
T/F: Financial statements are the responsibility of the auditor or CPA
false
T/F: For the most part, all "expenses" are credits in the worksheet.
true
T/F: Fraud usually makes no difference or impact on an organization's Balance Sheet.
false
T/F: I want to use the future profits valuation to determine how much insurance coverage I should have on an entity
false
T/F: If providers give away care (free or charity), they can include the amount they would have charged as revenue.
true
T/F: Inventory is less liquid than receivables.
true
T/F: Inventory management is the movement of products in stock and should always use the FIFO method no matter the costing method used.
false
T/F: Most undetected fraud is "material" in accounting.
false
T/F: Net Assets (equity) is the cash an organization has to invest for its future.
true
T/F: Net Realizable Value is based on someone's subjective estimate of what the entity could be sold for.
true
T/F: No matter which depreciation schedule is used the journal entries for the initial purchase will remain the same.
true
T/F: Non-profits have to have CPA audited financial statements.
false
T/F: Organizations must always have enough cash on hand to pay off stockholder's equity.
true
T/F: Owners equity and net assets are the same thing in accounting terminology
true
T/F: The SEC is concerned with correct arithmetic and consistent accounting practices.
true
T/F: The Statement of Operations and the Income Statement are the same document?
true
T/F: The accounting equation must always remain in balance
true
T/F: There are three ways to pay for an asset.
false
T/F: current assets and liabilities at the top of the balance sheet gives the reader a quick assessment of solvency
true
T/F: delaying or accelerating payments will not impact expenses if using accrual based accounting.
true
T/F: higher risk ventures should bring higher returns
true
T/F: marketable securities are current assets
false
T/F: nominal accounts are zeroed out after the reporting year has ended
true
T/F: non-profits need to disclose how liquid their organization is
true
T/F: there is always a trade off between profit and risk
true
T/F: using the accrual method of accounting with require a statement of cash flows
true
T/F: whether for profit or not-for-profit, health organizations need profits
12 months
The "near term", "short-term" or "current" in accounting means [_______] or less. A. 12 years B. 12 months C. quarter D. fiscal year
accounts receivable and routine services revenue
The Journal entry for: Patients were billed $25,000 for services rendered during the month. would entail which two accounts? A. routine services revenue and accounts payable B. cash and accounts receivable C. accounts receivable and routine services revenue
statement of cash flows
The _____________________ shows where an organization generates its cash and uses it over the accounting period.
LIFO
The idea that one will not be able to replace inventory items for lower costs because of inflation is the basis of which inventory costing method?
capitalization
Using cash to purchase an asset like new equipment, is defined as:
$64,000.00
Using the Sum of Years Digits method find the depreciation in year 3 for the following: Purchase Price: $325,000 Useful Life of 5 years Salvage Value of $5,000
$256,000.00
Using the information from the SYD problem Purchase Price: $325,000Useful Life of 5 yearsSalvage Value of $5,000 What is the accumulated depreciation through year 3?
double declining balance
Using the same information: Given a purchase of new equipment in the amount of $250,000 with a 8 years useful life and $25,000 salvage value Which of the three methods gives you the MOST depreciation expense in the first year?
solvency and liquidity
Viability is measured by [ans1] and [ans2]. Pick 2 A. solvency B. liabilities C. net assets D. profitability E. liquidity
objective evidence
based on evidence that reasonable individuals would agree upon
conservatism
consideration should be given to risks the organization faces
current, short-term, near-term
refers to a period of less than one year:
full disclosure
reports should disclose any information needed to ensure that they are fair representations
tangible assets
resources owned by the organization that have physical form
income statement
shows revenues and expenses over the entire accounting period.
going concern
statements are prepared based on assumption of longevity, if that is not likely the case then it must be disclosed
consistency
use of the same accounting method from period to period
backward
what direction does financial accounting look?
forward
what direction does managerial accounting look?
assets = liabilities + equity
what is the fundamental accounting equation?
revenue
Money received or earned for goods or services provided are known as:
transaction
All elements of a financial event are known as:
ledger
A _____________________ combines account balances from the beginning of the reporting period as well as journal entries for that recording period.
bundled payment
A lump-sum amount that is less than would be paid in total on a fee-for- service basis is a:
$41,600
A piece of equipment was purchased for $65,000 on 1/1/20X1 and has a salvage value of 20% and expected useful life of 10 years. Using the DDB method of depreciation, what is the book value of the item end of year 2 (beginning of year 3)?
$5,200
A piece of equipment was purchased for $65,000 on 1/1/20X1 and has a salvage value of 20% and expected useful life of 10 years. What is the straight line depreciation amount per year?
$111,111.00
A piece of equipment was purchased on 1/1/20X1. It has a useful life of 5 years and salvage value of 10%. Accumulated depreciation amounted to $100,000 on 12/31/20X5. What was the purchase price (historical cost) of the item?
contractual allowances and bad debts
Accounts receivable net is gross charges less what items?
$69,000.00
Again using the same information from the SYD problem Purchase Price: $325,000Useful Life of 5 yearsSalvage Value of $5,000 What would be the book value of the item after 3 years of SYD depreciation?
liquidity
Assets are presented on the Balance sheet in order of:
all choices are correct
Cash accounting would recognize a transaction when: A. All choices are correct B. Cash paid for supplies C. Wages are paid D. A loan is taken for new machinery E. Cash received for services
historical cost
GAAP requires assets such as Property, Plant and Equipment to be based on what type of cost valuation method?
historical cost
GAAP requires assets such as Property, Plant and Equipment to be based on what type of cost valuation method? A. fair value accounting B. net realizable value C. historical cost D. contractual allowance
property, plant, equipment
GAAP requires the use of historical valuation for which types of assets. There is more than one answer to this question. A. property B. bonds C. All choices are correct D. equipment E. stocks F. plant
$60,000
Given Revenue of $75,000 and Profit of $15,000 what were Expenses over the given period? A. $90,000 B. $60,000 C. Not enough information given D. $55,500
$267.00
Given a beginning inventory of 10 units @ $4/each the following purchases were made: 10 units 3/21 @ $5.00/each 11 units 11/14 @ $6.00/each 6 units 6/16 @ $5.00/each 25 units 2/15 @ $4.50/each 5 units 12/15 @ $8/each If 50 units were sold @ $25.00/each. Using LIFO what is the cost of goods sold?
$1,250
Given a beginning inventory of 10 units @ $4/each the following purchases were made: 10 units 3/21 @ $5.00/each 11 units 11/14 @ $6.00/each 6 units 6/16 @ $5.00/each 25 units 2/15 @ $4.50/each 5 units 12/15 @ $8/each If 50 units were sold @ $25.00/each. What is the revenue generated?
400 units
Given a beginning inventory of 150 units the organization bought 750 units and sold 500 units @ $20/each. What is the ending balance?
$62,500
Given a purchase of new equipment in the amount of $250,000 with a 8 years useful life and $25,000 salvage value what is the double declining balance depreciation amount for year 1?
$28,125/year
Given a purchase of new equipment in the amount of $250,000 with a 8 years useful life and $25,000 salvage value what is the straight line depreciation amount per year?
$50,000
Given a purchase of new equipment in the amount of $250,000 with a 8 years useful life and $25,000 salvage value what is the sum of digits amount of depreciation for year 1?
$52
Given an invoice with the terms: 2/12 net 30 for $2600. What would be the cost of missing the deadline? Otherwise known as the interest expense. A. $2600 B. no cost - just pay balance C. $26.00 D. $52.00
$50,000
Given that you purchased equipment for $90,000 and then it has depreciated over the years in the amount of $40,000. What is the book value of the equipment? A. equipment doesn't depreciate B. $50,000 C. $40,000
5 %
Given the terms: 5/15 net 30 what would be the discount from the vendor if paid immediately after receipt of invoice? A. 5 percent B. All choices are not correct C. 30 percent D. 15 percent
$412.00
Given: 12/15/2020 10 units @ $13 6/15/2020 10 units @ $9 1/15/2020 10 units @ $5 3/15/2020 20 units @ $7 9/15/2020 20 units @ $11 52 units were sold for $15.50/unit Using FIFO - what is the COGS for the year?
$524.00
Given: 12/15/2020 10 units @ $13 6/15/2020 10 units @ $9 1/15/2020 10 units @ $5 3/15/2020 20 units @ $7 9/15/2020 20 units @ $11 52 units were sold for $15.50/unit Using LIFO what is the COGS for the year?
$106.00
Given: 12/15/2020 10 units @ $13 6/15/2020 10 units @ $9 1/15/2020 10 units @ $5 3/15/2020 20 units @ $7 9/15/2020 20 units @ $11 52 units were sold for $15.50/unit What is the inventory valuation based on FISH for the year?
$218.00
Given: 12/15/2020 10 units @ $13 6/15/2020 10 units @ $9 1/15/2020 10 units @ $5 3/15/2020 20 units @ $7 9/15/2020 20 units @ $11 52 units were sold for $15.50/unit What is the inventory valuation using LISH?
$112.00
Given: 12/15/2020 10 units @ $13 6/15/2020 10 units @ $9 1/15/2020 10 units @ $5 3/15/2020 20 units @ $7 9/15/2020 20 units @ $11 52 units were sold for $15.50/unit What is the profit difference between LIFO and FIFO methods for this problem?
$806.00
Given: 12/15/2020 10 units @ $13 6/15/2020 10 units @ $9 1/15/2020 10 units @ $5 3/15/2020 20 units @ $7 9/15/2020 20 units @ $11 52 units were sold for $15.50/unit What was the revenue generated over the year?
LIFO
Given: 12/15/2020 10 units @ $13 6/15/2020 10 units @ $9 1/15/2020 10 units @ $5 3/15/2020 20 units @ $7 9/15/2020 20 units @ $11 52 units were sold for $15.50/unit Which method - LIFO or FIFO gives the better tax advantage to the organization?
cash, accounts receivable
Given: $24,000 was collected from previously billed patients. What would be the two accounts effected in this transactions?
no choices are correct
Given: Placed an order for a new truck in the amount of $85,000. Entity has applied for a loan in this amount. What are the accounts effected? A. Notes Payable B. no choices are correct C. Interest expense D. Equipment
$307,000
Given: Purchase of new technology for $65,000 Building remodel for new technology of $230,000 and Sales Tax of 6,500 and Commission of $5,500 what is the historical cost of this item?
automatically
Internal control means the system is designed to catch and correct errors:
sometimes
Internal control means the system is designed to catch and correct errors: A. sometimes B. before they occur C. automatically D. all the time
$16,000 and $5,760
Jerry bought a new tractor for $40,000 for his landscaping business. He thinks it will last him 5 years at which time he will sell if for scrap for $750.00. Using the Double Declining Balance method of depreciation what is his depreciation expense for years 1 and 3 respectively?
$275,000
Jones Services bought a new building on 9/15/20X1 for $950,000 with a Salvage Value of $50,000 and Useful Life of 30 years. The land was valued at $275,000. Using the Straight Line method of depreciation what is the book value of the land in 20X5?
all choice are correct
Net Patient Services Revenue is what the organization is legally entitled to collect. Original charges are reduced by: A. discounts B. charity care C. contractual allowances D. All choices are correct
$330.00
Purchased: 1/15 2units @ $75.00/each 6/15 2 units @ $150.00/each 8/15 1 unit @ $80.00/each 10/15 1 unit @ $100/each Using specific identification if three units were sold what is the remaining inventory valuation?
fair value accounting
Stock and bonds that an entity invests in are valued on the balance sheet using which valuation method? A. net realizable value B. historical cost C. fair value accounting
false
T/F: A "certified statement" means the documents reviewed are error free and correct.
false
T/F: A good strategy is to maximize an organizations liquidity and solvency.
false
T/F: A mortgage is considered a notes payable and is an expense account.
false
T/F: A system of checks and balances make it easy to defraud and embezzle from an organization.
true
T/F: Accrual accounting is much less open to manipulation of profits.
true
T/F: Accumulated depreciation is a contra-asset account.
contractual allowance
The difference between a providers posted charge for service and the amount agreed to by the provider and third party payer is a:
Net Patient Service Revenue
The first item listed on healthcare financial statements and reflects the adjustments of charity care and contractual adjustments is known as:
$1,110.00
The following purchases were made: 1/15 10 @ $5.00/ea 6/15 15 @ $8.00/ea 12/15 45 @ $14.00/ea 3/15 20 @ $6.00/ea 11/15 30 @ $12.00/ea 9/15 25 @ $10.00/ea Sold 115 units at $25.00/each What is the Cost of Goods Sold using the FIFO method?
$1,360.00
The following purchases were made: 1/15 10 @ $5.00/ea 6/15 15 @ $8.00/ea 12/15 45 @ $14.00/ea 3/15 20 @ $6.00/ea 11/15 30 @ $12.00/ea 9/15 25 @ $10.00/ea Sold 115 units at $25.00/each What is the Cost of Goods Sold using the LIFO method?
30
The following purchases were made: 1/15 10 @ $5.00/ea 6/15 15 @ $8.00/ea1 2/15 45 @ $14.00/ea 3/15 20 @ $6.00/ea 11/15 30 @ $12.00/ea 9/15 25 @ $10.00/ea Sold 115 units at $25.00/each How many units are left on the shelves?
$1,213.25
The following purchases were made: 1/15 10 @ $5.00/ea 6/15 15 @ $8.00/ea1 2/15 45 @ $14.00/ea 3/15 20 @ $6.00/ea 11/15 30 @ $12.00/ea 9/15 25 @ $10.00/ea Sold 115 units at $25.00/each What is the Cost of Goods Sold using the Weighted Average Method?
$170.00
The following purchases were made: 1/15 10 @ $5.00/ea 6/15 15 @ $8.00/ea1 2/15 45 @ $14.00/ea 3/15 20 @ $6.00/ea 11/15 30 @ $12.00/ea 9/15 25 @ $10.00/ea Sold 115 units at $25.00/each What is the FISH value?
$420.00
The following purchases were made: 1/15 10 @ $5.00/ea 6/15 15 @ $8.00/ea1 2/15 45 @ $14.00/ea 3/15 20 @ $6.00/ea 11/15 30 @ $12.00/ea 9/15 25 @ $10.00/ea Sold 115 units at $25.00/each What is the LISH value?
$2,875.00
The following purchases were made: 1/15 10 @ $5.00/ea 6/15 15 @ $8.00/ea1 2/15 45 @ $14.00/ea 3/15 20 @ $6.00/ea 11/15 30 @ $12.00/ea 9/15 25 @ $10.00/ea Sold 115 units at $25.00/each What is the Revenue from this transaction?
$10.55
The following purchases were made: 1/15 10 @ $5.00/ea 6/15 15 @ $8.00/ea1 2/15 45 @ $14.00/ea 3/15 20 @ $6.00/ea 11/15 30 @ $12.00/ea 9/15 25 @ $10.00/ea Sold 115 units at $25.00/each What is the average price per unit?
$1,765.00
The following purchases were made: 1/15 10 @ $5.00/ea 6/15 15 @ $8.00/ea1 2/15 45 @ $14.00/ea 3/15 20 @ $6.00/ea 11/15 30 @ $12.00/ea 9/15 25 @ $10.00/ea Sold 115 units at $25.00/each What is the profit using the FIFO costing method?
$1,515.00
The following purchases were made: 1/15 10 @ $5.00/ea 6/15 15 @ $8.00/ea1 2/15 45 @ $14.00/ea 3/15 20 @ $6.00/ea 11/15 30 @ $12.00/ea 9/15 25 @ $10.00/ea Sold 115 units at $25.00/each What is the profit using the LIFO costing method?
book value
The historical cost of an item less the accumulated depreciation of the item is known as:
all choices are correct
The users of financial statements are: A. suppliers B. bankers C. All choices are correct D. stockholders E. investors
2
There are how many methods to calculate the Statement of Cash Flows?
intangible assets
This type of asset results in substantial valuation difficulties because it has no physical form.
financing, operating, and investing
What are the 3 types of cash flows shown on the Statement of Cash Flows?
wage increases, monopolies, government regulation
What are three causes of Demand Inflation? A. Wage Increases B. Printing Money C. Low Unemployment D. Monopolies E. Government Regulation F. Price Increases
stockholder's equity
What is the term for a claim that an outside investor has on an organization.
level 1
When using "mark-to-market" valuation which GAAP method is preferred? A. Level 3 B. Level 2 C. Level 1
balance sheet
Which financial statement is a "snapshot" of the organizations financial health?
limited liability
________________________ protects owners of a corporation from being personally liable for the debts of the corporation.
fund accounting
a system of accounting where each entity has its own set of financial records and statements
matching
expenses should be recorded in the same period as the revenues they were responsible for generating
materiality
if an individual would make a different decision based on the incorrect information resulting in an error
decreases
inflation______ the value of money (the dollar)
liabilities
obligations of the organization to outside creditors
cost
the value of what was given up to acquire the item
intangible assetss
this type of asset results in substantial valuation difficulties because it has no physical form