Acc 201 final - Flashcards

Q: The balance sheet

reports the assets, liabilities, and stockholders\' equity at a specific date

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Borrowing money is an example of

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a financing activity

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If total liabilities increased by $75,000 and stockholders' equity increased by $25,000 during a period of time, then total assets must change by what amount and direction during the same period?

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$100,000 decrease

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Pinson Company began the year with retained earnings of $570,000. During the year the company recorded revenues of $600,000, expenses of $380,000, and paid dividends of $140,000. What was Pinson's retained earnings at the end of the year?

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$650,000

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Ashley's Accessory Shop started the year with total assets of $140,000 and total liabilities of $80,000. During the year the business recorded $220,000 in revenues, $110,000 in expenses, and dividends of $40,000. The ent income reported by Ashley Accessory Shop for the year was

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$110,000

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Issuing shares of stock in exchange for cash is an example of a

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financing activity

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If total liabilities decreased by $75,000 and stockholders' equity increased by $25,000 during a period of time, then total assets must change by what amount and direction during the same period?

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$50,000 decrease

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Dividends are reported on the

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retained earnings statement

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Jackson Company recorded the following cash transactions for the year: Paid $135,000 for salaries; paid $60,000 to purchase office equipment; paid $15,000 for utilities; paid $6,000 in dividends; collected $245,000 from customers. what was Jackson's net cash provided by operating activities?

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$95,000

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The best definition of assets is

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resources belonging to a company that have future benefit to the company

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Ashley's Accessory Shop started the year with total assets of $140,000 and total liabilities of $80,000. During the year the business recorded $220,000 in revenues, $110,000 in expenses, and dividends of $40,000. Stockholders' equity at the end of the year was

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$130,000

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Jack and Jill form a partnership. Jack runs the business in New York, while Jill vacations in Hawaii. During the time Jill is away from the business, Jack increases the debts of the business by $20,000. Which of the following statements is true regarding this debt?

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Both Jack and Jill are personally liable for the business debt

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An annual report includes all of the following except

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salary information for all the executives

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Which of the following is not a step for solving an ethical dilemma?

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Certifying the ethical accuracy of the financial information

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The balance sheet

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reports the assets, liabilities, and stockholders' equity at a specific date

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Notes to the financial statements

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help clarify information presented in the financial statements

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Which of the following is not an advantage of the corporate form of business organization?

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favorable tax treatment

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Which of the following is an asset

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investments

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external users want answers to all of the following questions except

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will the company be able to afford employee pay raises this year

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the proprietorship form of business organization

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generally receives favorable tax treatment relative to a corporation

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the liability create by a business when it purchases coffee beans and coffee cups on credit from suppliers is termed an

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account payable

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Balance Sheet: Cash: $130,000 Accounts receivable: $100,000 Inventory: $110,000 Prepaid insurance: $60,000 Stock investments: $170,000 Land: $180,000 Buildings: $210,000 Less accumulated depreciation: $40,000 Trademarks: $140,000 Total assets: $1,060,000 Accounts payable: $140,000 Salaries and wages payable: $20,000 Mortgage payable $160,000 Total liabilities: $320,000 Common stock: $240,000 Retained earnings: $500,000 Total stockholders' equity: $740,000 Total liabilities and stockholders' equity: $1,060,000

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...

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determine the total dollar amount of assets to be classified as current assets

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$400,000

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determine the total dollar amount of assets to be classified as property, plant and equipment

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$350,000

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determine the total dollar amount of assets to be classified as investments

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$170,000

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determine the total amount of working capital

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$240,000

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calculate the current ratio

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2.50:1

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determine the total dollar amount of liabilities classified as current liabilities

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$160,000

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N3 Corporation has assets of $3,000,000, common stock of $780,000, and retained earnings of $475,000. What are the creditors' claims on their assets?

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$1,745,000

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What is the order in which assets are generally listed on a classified balance sheet?

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current; long-term investments; property, plant, and equipment, intangibles

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on a classified balance sheet, companies usually list current assets

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in the order in which they are expected to be converted into cash

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which of the following would not be classified as a long-term liability?

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current maturities of long-term debt

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an intangible asset

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derives its value from the rights and privileges it provides the owner

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Land: $100,000 Land (held for future use): $150,000 Buildings: $800,000 Inventory: $200,000 Equipment: $450,000 Furniture: $100,000 Accumulated Depreciation: $300,000. what is the total amount of property, plant, and equipment that will appear on the balance sheet?

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$1,150,000

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Ace Company is a retail store. Due to competition, it is having trouble selling its products. Thus, inventory has been building up. Ace's current ratio has not changed for the past three years, in spite of the inventory build up. Which of the following statements is true?

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the management of Ace should consider the effect of slow moving inventory on its liquidity

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free cash flow provides an indication of a company's ability to

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generate cash to invest in new capital expenditures and to pay dividends

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in 2014 Grider Corporation had cash receipts of $56,000 and cash disbursements of $32,000. Grider's ending cash balance at December 31, 2014 was $88,000. What was Grider's beginning cash balance?

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$64,000

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For 2014 Kuhlman Corporation reported net income of $28,000; net sales $400,000; and average share outstanding 16,000. There were no preferred dividends. What was the 2014 earnings per share?

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$1.75

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earnings per share is a

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profitability ratio

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Issued Common stock: $45; retired common stock $65; paid dividends $75; Net income $130; Beginning Common stock balance $625; beginning retained earnings balance $475. What is the retained earnings balance at the end of the year?

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$530

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Issuing new shares of common stock will

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increase common stock

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the ability of a business to pay obligations that are expected to become due within the next year or operating cycle is

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liquidity

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If total liabilities decreased by $4,000 then

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assets must have decreased by $4,000, or stockholders' equity must have increased by $4,000

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the purchase of an asset for cash

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leaves total assets unchanged

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Jamal company began the year with $84,000 in its common stock account and debit balance in retained earnings of $36,000. during the year the company earned net income of $18,000 and declared and paid $6,000 of dividends. in addition, the company sold additional common stock amounting to $22,000. based on this information, what should the transaction analysis show for the ending total of all stockholders' equity accounts?

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$82,000

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a debit to an asset account indicates an

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increase in the asset

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the normal balance of any account is

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the side which increases that account

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which one of the following represents the expanded basic account equation?

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assets + dividends + expenses = liabilities + common stock + revenues

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which accounts normally have credit balances?

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revenues, liabilities, and retained earnings

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an awareness of the normal balances of accounts would help you spot which of the following as an error in recording?

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a credit balance in an expense account

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in the first month of operations, the total of the debit entries to the cash account amounted to $1,000 and the total of the credit entries to the cash account amounted to $600. the cash account has a

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$400 debit balance

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Cash $11,000; prepaid insurance $500; accounts receivable $2,500; accounts payable $2,000; notes payable $3,000; common stock $5,000; dividends $500; revenues $17,000; expenses $12,500. what was the total credits on its trial balance?

answer

$27,000

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During February 2014, its first month of operations, the owner of Schwenn Enterprises invested cash of $40,000. Schwenn had cash sales of $8,000 and paid expenses of $14,000. Assuming no other transactions impacted the cash account, what is the balance in cash at February 28?

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$35,000 debit

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a complete journal entry does not show

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the new balance in the accounts affected by the transaction

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which of the following accounts probably would be listed before the others in a chart of accounts?

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accumulated depreciation- Buildings

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posting is performed by transferring information from the

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journal to the ledger

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on july 7 ,2014 Shieman Enterprises received cash $1,400 for services rendered. the entry to record this transaction will include

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a debit to cash of $1,400

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on January 14, Decker industries purchased supplies of $500 on account. the entry to record the purchase will include

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a debit to supplies and a credit to accounts payable

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the recording process occurs

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repeatedly during the accounting period

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at January 31, 2014, the balance in Goebel Inc.'s supplies account was $700 . During February Goebel purchased supplies of $600 and used supplies of $800. At the end of February, the balancei nthe supplies account should be

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$500 debit

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at September 1, 2014 Kern Enterprises reported a cash balance of $70,000. During the month Kern collected cash of $30,000 and made disbursement of $50,000. at September 30, 2014 the cash balance

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$50,000 debit

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a credit to a liability account

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indicates an increases in the amount owed to creditors

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the periodicity assumption states that

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the economic life of a business can be divided into artificial time periods

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expenses are recognized when

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they contribute to the production of revenue

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in a service-type business, revenue is recognized

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when the service is performed

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Ottos's tune-up shop follows the revenue recognition principle. Otto services a car on August 31. The customers picks up the vehicle on September 1 and mails the payment to Otto on September 5. Otto receives the check in the mail on September 6. When should Otto show that the revenue was recognized?

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August 31

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a furniture factory's employees work overtime to finish an order that is old on January 31. The office sends a statement to the customer in early February and payment is received by mid-February. The overtime wages should be expensed in

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January

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under the cash basis of accounting, an amount received from a customer in advance of providing the services would be reported as a

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revenue

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which of the following would be unethical

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recording backdated revenue

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adjusting entries are made to ensure that

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expenses are recognized in the period in which they are incurred; revenues are recorded in the period in which the performance obligation is satisfied; balance sheet and income statement accounts have correct balances at the end of an accounting period

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adjusting entries can be classified as

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accruals and deferrals

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a law firm received $2,000 cash for legal services to be rendered in the future. the full amount was credited to the liability account unearned service revenue. if the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would casue

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revenues to be understated

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accumulated depreciation is a

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contra asset account

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leyland realty company received a check for $15,000 on july 1, which represents a 6-month advance payment of rent on a building its rents to a client. unearned rent revenue was credited for the full $15,000. financial statements will be prepared on july 31. leyalnd realty should make the following adjusting entry on july 31

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debit unearned rent revenue, $2,500; credit rent revenue $2,500

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payments of expenses that will benefit more than one accounting period are identified as

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prepaid expenses

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on January 1, 2013 Leardon Inc. purchased equipment for $60,000. The company is depreciating the equipment at the rate of $800 per month. At January 31, 2014, the balance in accumulated depreciation is

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$10,400 credit

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the difference between the balance of a plant asset account and the related accumulated depreciation account is termed

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book value

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Skypress Company collected $8,400 in May of 2013 for 4 months of service which would take place from October of 2013 through January 2014. The revenue reported from this transaction during 2013 would be

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$6,300

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Mary Richardo has performed $500 of CPA services for a client but has not billed the client as of the end of the accounting period. what adjusting entry must Mary make?

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debit accounts receivable and credit service revenue

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Snelling Tables paid employee wages on and through Friday January 26, and the next payroll will be paid in February. There are three more working days in January (29-31). Employees work 5 days a week and the company pays $900 a day in wages. What will be the adjusting entry to accrue wages expense at the end of January?

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Payable salaries and wages expense $2,700 salaries and wages payable $2,700

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can financial statements be prepared directly form the adjusted trial balance

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yes, adjusting entries have been recorded in the general journal and posted to the ledger accounts

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which types of accounts will appear in the post-closing trial balance

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permanent accounts

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in the credit terms of 1/10, n/30 the "1" represents the

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percent of the cash discount

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conway company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30. What is the net cost of the goods if conway company pays within the discount period?

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$8,820

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merchandising companies that sell to retailers are known as

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wholesalers

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which of the following activities is not a component of the operating cycle?

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payment of employees' salaries

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gross profit equals the difference between

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sales revenue and cost of goods sold

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net income will result if gross profit exceeds

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operating expenses

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two categories of expenses in merchandising companies are

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cost of goods sold and operating expenses

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generally the revenue account for a merchandising enterprise is called

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sales revenue or sales

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in a perpetual inventory system, cost of goods sold is recorded

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each time a sale occurs

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a purchase invoice is a document that

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provides evidence of credit purchases

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Tony's Market recorded the following events involving a recent purchase of inventory: received goods for $40,000, terms 2/10, n/30. returned $800 of the shipment for credit. paid $200 freight on the shipment. paid the invoice within the discount period. as are result of these events, the company's inventory

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increased by $38,616

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the collection of a $600 account beyond the 2% discount period will result in a

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debit to cash for $600

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operating expenses $36,000; sales revenue $150,000; cost of goods sold $105,000. gross profit would be

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$45,000

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operating expenses $36,000; sales revenue $150,000; cost of goods sold $105,000. the gross profit rate would be

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.30

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operating expenses $36,000; sales revenue $150,000; cost of goods old $105,000. the profit margin would be

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.06

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What is an advantage of using them multiple-step income statement

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it highlights the components of net income

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which of the following is not considered in computing net cost of purchases?

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freight paid on goods shipped to cusotmers

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income from operations appears on

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a multiple-step income statement

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detailed records of goods held for resale are not maintained under a

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periodic inventory system

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a merchandiser will earn an operating income of exactly $0 when

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gross profit equals operating expenses

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Manufactured inventory that has begun the production process but is not yet completed is

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work in progress

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The factor which determines whether ornotgoods should be included in a physical count of inventory is

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legal title

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If goods in transit are shipped FOB destination

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the seller has legal title to the goods until they are delivered.

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Independent internal verification of the physical inventory process occurs when

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a second employee counts the inventory and compares the result to the count made by the first employee.

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An employee assigned to counting computer monitors in boxes should

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determine that the box contains a monitor.

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After the physical inventory is completed,

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quantities are listed on inventory summary sheets.

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When is a physical inventory usually taken?

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At the end of the company's fiscal year

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Which of the following should not be included in the physical inventory of a company?

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Goods held on consignment from another company.

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Tidwell Company's goods in transit at December 31 include sales made (1) FOB destination (2) FOB shipping point and purchases made (3) FOB destination (4) FOB shipping point. Which items should be included in Tidwell's inventory at December 31?

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1 and 4

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The term "FOB" denotes

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free on board.

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Goods held on consignment are

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never owned by the consignee.

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Many companies use just-in-time inventory methods. Which of the following is not an advantage of this method?

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Companies may not have quantities to meet customer demand.

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When a perpetual inventory system is used, which of the following is a purpose of taking a physical inventory?

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To check the accuracy of the perpetual inventory records

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Which statement is false?

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Companies that use a perpetual inventory system must take a physical inventory to determine inventory on hand on the balance sheet date and to determine cost of goods sold for the accounting period.

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Reeves Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count?

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Goods that Reeves is holding in inventory on March 31 for which the related Accounts Payable is 15 days past due

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At December 31, 2014 Mohling Company's inventory records indicated a balance of $602,000. Upon further investigation it was determined that this amount included the following: ? $112,000 in inventory purchases made by Mohling shipped from the seller 12/27/14 terms FOB destination, but not due to be received until January 2nd ? $74,000 in goods sold by Mohling with terms FOB destination on December 27th. The goods are not expected to reach their destination until January 6th ? $6,000 of goods received on consignment from Dollywood Company What is Mohling's correct ending inventory balance at December 31, 2014?

answer

$484,000

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At December 31, 2014 Howell Company's inventory records indicated a balance of $858,000. Upon further investigation it was determined that this amount included the following: ? $168,000 in inventory purchases made by Howell shipped from the seller 12/27/14 terms FOB destination, but not due to be received until January 2nd ? $111,000 in goods sold by Howell with terms FOB destination on December 27th. The goods are not expected to reach their destination until January 6th ? $9,000 of goods received on consignment from Westwood Company What is Howell's correct ending inventory balance at December 31, 2014?

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$681,000

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Alpha First Company just began business and made the following four inventory purchases in June: June 1 150 units $780 June 10 200 units 1,170 June 15 200 units 1,260 June 28 150 units 990 $4,200 A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand. Using the LIFO inventory method, the value of the ending inventory on June 30 is

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$1,131

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Baker Bakery Company just began business and made the following four inventory purchases in June: June 1 150 units $780 June 10 200 units 1,170 June 15 200 units 1,260 June 28 150 units 990 $4,200 A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for June is

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$1,368

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Charlene Cosmetics Company just began business and made the following four inventory purchases in June: June 1 150 units $780 June 10 200 units 1,170 June 15 200 units 1,260 June 28 150 units 990 $4,200 A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand. Using the average cost method, the amount allocated to the ending inventory on June 30 is

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$1,260

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Which of the following is not a basic principle of cash management

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maintain idle cash

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restricted cash should be reported

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separately on the balance sheet

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a bank reconciliation should be prepared

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to explain any difference between the depositor's balance per books with the balance per bank

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cash balance per books $21,000; deposits in transit $900; notes receivable and interest collected by bank $5,100; bank charge for check printing $120; outstanding checks $12,000; NSF check $1,020 the adjusted cash balance per books is

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$24,960

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internal controls are concerned with

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safeguarding assets

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Mrs. Smith has worked for Bosco Inc. for 20 years without taking a vacation, an internal control feature that would address this situation would be

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human resource controls

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which one of the following is not an objective of a system of internal controls

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fairness of the financial statements

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a consequence of separation of duties is that

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theft is still possible when several employees are involved

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budgeted credit sales January $255,000 February $375,000 March $525,000 April $450,000 the company's past experience indicates the 70% of the AR are collected in the month of sale, 20% in the month following the sale, and 8% in the second month following the sale. the anticipated cash inflow for the month of march is

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$462,900

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which one of the following items would never appear on a cash budget

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depreciation expense

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if employees are bonded

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they have been insured against misappropriation of assets

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in the month of November Garvin Company wrote checks in the amount of #37,000. In December check in the amount of $50,632 were written. In November, $33,872 of these checks were presented to the bank for payment and $43,532 in December. What is the amount of outstanding checks at the end of December

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$10,228

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the cash receipts section of a cash budget includes all of the following except

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expected borrowings

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Sam's Grocery Store has the following policy, 'only one cashier can have access to a cash drawer' which internal control principle supports this policy?

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establishment of responsibilities

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a petty cash fund should be replenished

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at the end of every accounting period

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which of the following is not one of the main factors that contribute to fraudulent activity?

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incompatible duties

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a very small company would have the most difficulty in implementing which of the following internal control activities?

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separation of duties

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which of the following bank reconciliation items would not result in an adjusting entry?

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deposits in transit

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beginning cash balance $46,000; cash receipts $62,000; cash disbursements $78,000. if the company has a policy of maintaining end of the month cash balance of $40,000, the amount the company would have to borrow is

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$10,000

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the custodian of a company asset should

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not have access to the accounting records for that asset

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the maturity value of a $40,000 9% 40-day note receivable dated july 3 is

answer

$40,400

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the sale of receivables by a business

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can be a quick way to generate cash for operating needs

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Gipson Furniture factors $500,000 of receivables to Kwik factors. Kwik factors assesses a 3% service charge on the amount of receivables sold. Gipson Furniture factors its receivables regularly with Kwik Factors. What journal entry does Gipson make when factoring these receivables?

answer

cash $485,000 service charge expense $15,000 accounts receivable $500,000

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the interest on a $5,000, 10%, 1- year note receivable is

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$500

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Net sales of #300,000 and accounts receivables of $50,000 and $30,000 at the beginning of the year and end of year, respectively. what is the accounts receivable turnover?

answer

7.5 times

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the allowance for doubtful accounts is necessary becasue

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when recording uncollectible accounts expense, it is not possible to know which specific accounts will not pay

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On January 15 company A sells merchandise on account to company B for $3,000 with terms 3/10, n/30. On January 20 Company B returns merchandise worth $600 to A. On january 24 payment is received from B for the balance due. What is the amount of cash received?

answer

$2,328

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Company A sells its goods on terms of 2/10, n/30. It has an accounts receivable turnover of 8. What is its average collection period (days)?

answer

46

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If a company fails to record estimated bad debts expense

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expenses are understated

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which one of the following is not an accounting problem associated with accounts receivable?

answer

depreciating accounts receivable

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which of the following is least likely to help a company minimize losses as credit standards are relaxed?

answer

increase the estimated of uncollectible accounts at the end of each period

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ABC company accepted a nation credit card for a $7,000 purchase. The cost of the goods sold is $5,600. The credit card charges a 3% fee. What is the impact of this transaction on net operating income?

answer

increase by $1,190

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a 90-day note dated June 30, 2014 would mature on

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September 28, 2014

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under the allowance method, bad debt expense is recorded

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for an amount that the company estimates it will not collect

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allowance for doubtful accounts on the balance sheet

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is deducted from accounts receivable

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the two key parties to a promissory note are the

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maker and the payee

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interest is usually associated with

answer

notes receivables

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Company A receives a $5,000, 3-month, 6% promissory note from Company B in settlement of an open accounts receivable. What entry will Company A make upon receiving the notes?

answer

Notes receivable $5,000 Accounts Receivable- company B $5,000

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When an account is written off using the allowance method, accounts receivable

answer

decreases and the allowance account increases

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Company A lends B $40,000 on August 1, 2014, accepting a 9-month 12% interest note. If A prepares it financial statements as of December 31, 2014 what adjusting entry must it make?

answer

interest receivable $2,000 interest revenue $2,000

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a company receives $176 of which $16 is for sales tax. the journal entry to record the sale would include a

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credit to sales taxes payable for $16

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the present value of a bond is also known as its

answer

market price

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Salaries $30,000; FICA taxes withheld $2,295; Income taxes withheld $6,600; medical insurance deductions $1,200; federal unemployment taxes $240; state unemployment taxes $1,500. the journal entry to record the monthly payroll on April 30 would include

answer

debit to salaries and wages expense for $30,000

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