midterm exam- part 1

Contingent liabilities are typically assessed on the basis of:

both their probability and their ability to be estimated

Which of the following are noncurrent assets? A. accounts recievable B. inventories C. unearned revenues D. machinery and equipment

machinery and equiptment

Authorized stock represents the:

maximum number of shares that can be issued for a class of stock.

Which internal control activity is followed when inventory storage areas are secured with limited access?

safeguarding of assets and records

When performing a vertical analysis of the income statement, each item is stated as a percent of:

sales

Which internal control activity is violated when the cashier at a cash register in a retail store also deposits the cash in the bank?

segregation (separation) of duties

Which of the following accounts should NOT be included on an income statement?

unearned revenue

How is the Balance Sheet linked to the other financial statements?

Ending retained earnings is reported on the Balance Sheet, which is taken from the Statement of Retained Earnings. A component of the Statement of Retained Earnings is Net Income (Loss), which is found on the Income Statement.

Which inventory method results in the highest inventory balance during a period of rising purchase prices?

FIFO

Which inventory cost flow method assigns the cost of the most recent items purchased to COGS?

LIFO

Suppose a corporation issues 5,000 shares of $1 par preferred stock for $30 per share. In addition to the increase in cash, what effect does this transaction have on the accounting equation?

Paid-in capital in excess of par (APIC) increases $145,000.

Calmar Corporation sold services to a customer for $30,000 on credit on July 15. The customer paid Calmar Corporation the amount due on July 31. Under the accrual basis of accounting, which of the following is correct?

The July 31st transaction has no net effect on total assets under the accrual basis.

Assuming each bond in Question 34 above is sold at 95% of par, the bonds would be sold at:

a Discount

On October 1st, a company borrowed $60,000 from Eighth National Bank on a 6-month, 7% note. If the company's fiscal year ends on December 31st, how much interest expense should be recorded by the company on December 31st?

$1,050

Beginning accounts receivable were $200,000 and ending accounts receivable were $300,000. Assuming cash collections totaled $1,100,000, what were credit sales? Also assume there were no credit defaults.

$1,200,000

Calculate total sales for a company that reported a net loss of $1,500,000 and total expenses of $2,900,000.

$1,400,000

An oil company purchased 10,000 acres of land on January 1, 2015, for $5,000,000, on which it developed an underground oil site. The company spent $11,000,000 to prepare the site for operation, and believes that 500,000 barrels of oil can be extracted from the site over 5 years after drilling begins. The land has a residual value of $250,000. Assuming 50,000 barrels of oil were extracted from the land in 2017, how much depletion would be recorded?

$1,575,000

Refer to Bay Camera above in Question 7. What amount will be reported as Retained Earnings on the Balance Sheet at December 31, 2018, assuming this is the first year of operations?

$27.500

Mystery, Inc. is contemplating selling bonds. The issue is to be composed of 800 bonds, each with a face amount of $750. How much is Mystery, Inc. able to borrow (in total) if each bond is sold at 95% of par?

$570,000

Bilbo Company has a beginning balance in its inventory account of $2,250 and the ending balance is $1,500. Cost of goods sold is $9,750. According to the cost of goods sold model, what was the amount of inventory purchased during the year?

$9,000

A company has total assets of $1,000,000 and total equity of $400,000. What is the debt to equity ratio (i.e., ratio of liabilities to equity)?

1.5

The purchase of office equipment on credit has what effect on the accounting equation?

Assets and liabilities increase.

What is current assets?

Assets expected to be converted into cash within one year.

On January 1, 2018, a company's balance in retained earnings was $10,000,000. At December 31, 2018, the balance in retained earnings was $9,400,000. If the company earned net income of $440,000 during the year, how much were dividends?

1,040,000

Calculate the number of days' sales in inventory for a company with COGS of $500,000 and average inventory of $62,500.

45.63

ABC Inc. reported net credit sales of $1,250,000 and cost of goods sold of $900,000 for 2018. Its beginning balance of Accounts Receivable was $175,000. Accounts receivable decreased by $25,000 during 2018. Rounded to two decimal places, what is the company's accounts receivable turnover rate for 2018?

7.69

On January 1, 2018, a company reported assets of $1,000,000 and liabilities of $600,000. During 2018, assets decreased by $100,000 and Stockholders' Equity decreased $200,000. What is the amount of liabilities on December 31, 2018? A. 600 k B. 500 k C. 200 k D. 700 k

? NOT A

Which of the following intangible assets is NOT amortized, but instead evaluated for impairment? A. franchise B. copyright C. patent D. trademark

? NOT A

Oscar Corp. rented office space to a tenant on January 1 and received a total of $90,000 for the first nine months of rent. The amount was recorded as Unearned Revenue by Oscar Corp. when received. Adjustments are recorded only at the end of every quarter. What effect does the adjustment at March 31 have on Oscar Corp.'s net income for the quarter ending March 31? A. increase by $30,000 B. increase by $90,000 C. decrease by $60,000 D. decrease by $30,000

? NOT D

On the balance sheet, the cumulative amount of plant and equipment expensed is reported in an account called:

accumulated depreciation

Par value represents the:

arbitrary amount that establishes a minimum price for the stock when it is first issued.

Which of the following accounts are NOT closed during the year-end closing process?

assets

Which of the following accounts is not included in calculating Earnings Per Share (EPS)?

cash

Assuming inventory is purchased by customers, the amount (expense) recognized on the balance sheet as inventory will ultimately be recognized on the income statement as:

cost of goods sold

When bonds are issued by a company, the accounting entry shows an:

increase in assets and an increase in liabilities.