question

When revenue exceeds cost, it is referred to as: Profit Risk Loss Value

answer

Profit

question

Which of the following would NOT be considered a stake holder in business? An employee A regulator A supplier All of the above

answer

All of the Above

question

Liabilities are defined as: Earnings retained in the business Stockholder's claims to assets Amounts owed to lenders Future Economic benefits of a company

answer

Amounts owed to lenders

question

Net in come is defined as: Revenue plus expenses Expenses less revenue Revenue less expenses Revenue less assets

answer

Revenue less expenses

question

A company has a policy to pay for meals when an employee has to travel on business. The employee must present a receipt for each meal in order to be reimbursed. The use of a receipt illustrates the: Disdain the company has for the employees truthfulness Financial accounting standards board Desire of the company to be a good employer Reliability Principle

answer

Reliability Principle

question

A tax preparation business is primarily a: Not - for - profit operation Service Operation Manufacturing Operation Merchandising Operation

answer

Service Operation

question

Which of the following business forms is similar to a corporation in regard to owner liability? All businesses are the same with regard to owner liability Sole proprietorship Partnership Limited Liability Company

answer

Limited Liability Company

question

Home Depot would primarily be considered a: Service business Not for Profit business Manufacturing business Merchandising business

answer

Merchandising business

question

Which type of business organization is owned by its stockholder? Sole proprietorship Corporation Partnership Limited Liability

answer

Corporation

question

Consider accounts receivable and accounts payable. Which of the following statements is TRUE? Accounts receivable is an asset and account payable is an asset Accounts receivable is an liability and account payable is an liability Accounts receivable is an asset and account payable is an liability Accounts receivable is an liability and account payable is an asset

answer

Accounts receivable is an asset and account payable is an liability

question

Alicia owns a sporting goods store. In her accounting records, she included her personal computer and all of her personal sporting gear. Alicia is violating what principle of account? Business entity Reliability Cost Going Concern

answer

Business entity

question

Jesse lists his building as current replacement value, rather than price he paid for the build. What principle is jesse violating? Cost Business entity Reliability Going Concern

answer

Cost

question

The guidelines that describe the rules of accounting are called: FASB GAAS SEC GAAP

answer

GAAP

question

When an owner combines their personal assets with the assets of their business, what concept or principle of accounting is being violated? Going concern Objectivity Cost Business entity

answer

Business entity

question

Taking an inventory of goods on hand would be representative of what accounting concept or principle? Cost Business entity Objectivity Going concern

answer

Objectivity

question

A company has $123k in assets and $65K in liabilities. How much does the company have in Stockholders Equity? $58000 $65000 $123000 $188000

answer

$58000

question

A net loss will: Increase Retained Earnings Force the company into bankruptcy Force the company to pay dividends Decrease Retained Earnings

answer

Decrease Retained Earnings

question

Amounts owed to a company by its customers are classified as: Cash Payables Dividends Receivable

answer

Receivable

question

How would the purchase of a computer on account affect the accounting equation? Assets decrease; Liabilities increase Assets increase; Liabilities Decrease Assets increase; Liabilities increase Assets increase; Stockholder Equity Increases

answer

Assets increase; Liabilities Increase

question

Payables are categorized as: Retained Earnings Liabilities Common Stock Assets

answer

Liabilities

question

R & R Heating buys a new machines for its shop on credit. The effect on the account equation is to: Increase liabilities and decrease stock holders equity Increase assets and increase stock holders equity Increase liabilities and increase assets Decrease liabilities and increase assets

answer

Increase liabilities and increase assets

question

The net income figure is needed to prepare: A Statement of Liabilities A Statement of Retained Earnings A Balance Sheet Some other Report

answer

A Statement of Retained Earnings

question

Which of the following financial statements illustrated the account equation? Balance sheet Statement of Retained Earnings Income Statement Statement of Cash Flow

answer

Balance Sheet

question

The correct oder for the preparation of financial statement is: 1. Statement of cash flows 2. Income statement 3. balance sheet 4. Statement of retained earnings 2,3,4,1 2,4,3,1 1,2,3,4 4,3,2,1

answer

2,4,3,1

question

Obligations that are owed to others due to past transactions are categorized as: Liabilities Assets Expenses Stockholders Equity

answer

Liabilites

question

Expenses paid in advance such as rent and insurance are classified as prepaid expenses. Into what category are they places? Assets Liabilities Expenses Revenues

answer

Assets

question

Dividends are paid with cash to shareholders. Dividends are in what category of the chart of accounts? Revenue Assets Liabilities Stockholders Equity

answer

Stockholders Equity

question

Which of the following is an expense account? Accounts Payable Cash Advertising Prepaid Insurance

answer

Advertising

question

Which following is TRUE regarding the accounts supplies payable and supplies expense? Supplies payable represents the cost of supplies bough on account but not yet paid for, while supplies expense represents the cost of supplies used to deliver goods or services to customers. These account titles both mean the same thing are used interchangeably Supplies payable represents the cost of supplies bought on account but not yet paid for, while supplies expense represents the cost of supplies which have en paid for. Supplies expense represents the cost of supplies bought on account but not yet paid for,while supplies payable represents the cost of supplies used to deliver goods or services to customers

answer

Supplies payable represents the cost of supplies bough on account but not yet paid for, while supplies expense represents the cost of supplies used to deliver goods or services to customers.

question

Accounts payable, taxes payable, and notes payable: Decrease on the debit side, increase on the credit side and are liabilities Increase on the debit side, decrease on the credit sides and are expenses Increase on the debit side, increase on the credit side and are assets Decrease on the debit side, increase on the credit side and are revenues

answer

Decrease on the debit side, increase on the credit side and are liabilities

question

Cash, Common Stock, and Advertising Expense have normal balances of: Credit, Debit, and Debit, respectively Debit, Credit, and Debit, respectively Debit, Debit and Credit, respectively Credit, Credit and Credit, respectively

answer

Debit credit debit respectively

question

The total amount of debits must equal the the amount of credits. This is rule of: The chart of accounts. Double - entry accounting Normal Balances T - accounts

answer

Double - entry accounting

question

A T- account has $759 credit balance. This account is most likely NOT: Sales Revenue Account Receivable Common Stock Accounts Payable

answer

Accounts Receivable

question

Credit means: Decrease The right side of an account Increase The left side of an account

answer

the right side of an account

question

An example of accounts with normal credit balance would be: Expenses Revenues Dividends Assets

answer

Revenues

question

When the bank takes money out of a company's account, why does the bank say that they have debited the account? The bank has increased the company's assets and assets increase with debts The bank has increased its liability to the company and liabilities increase with debts The bank has decreased its liability to the company and liabilities increase with debits The Bank has decreased the company's assets and assets decrease with debits

answer

The bank has decreased its liability to the company and liabilities increase with debits

question

The account "Notes Payable" began with a zero balance and then had the following changes: increase of $500, increase of $200, decrease of $550, and an increase of $250. The final balance is a: Credit balance: $400 Debit balance: $950 Debit balance: $400 Credit balance: $550

answer

Credit balance: $400

question

The third step in analyzing a transaction is to determine: The accounts that are involved The type of accounts that are involved If the account balance will increase or decrease Which accounts are to debited and credited

answer

If the account balance will increase or decrease

question

Office equipment was purchased for $2400 on account from Office Express, The journal entry would include a: Debit to office equipment and a credit to Accounts Payable Debit to office equipment and credit to Cash Credit Cash and a debit to Office equipment expense Debit to accounts payable and a credit to Cash

answer

Debit to office equipment and a credit to Accounts Payable

question

The information from the general journal is transferred to the: Statement of retained earnings General Ledger Income Statement Balance Sheet

answer

General Ledger

question

Where is the best place for a company's accountant to find the information necessary to review the activity in the cash account? General Ledger Bank Statement Trial Balance General Journal

answer

General LEdge

question

A trial balance will determine if: The right accounts were debited or credited An entry was recorded twice An entry was posted twice Debits equal Credits

answer

Debits equal Credits

question

A cash payment was made to pay for delivery expenses, but was mistakenly changed to Advertising Expense. What effect will this have on the trial balance? Cash will be overstated Advertising Expense will be understated Delivery Expense will be overstated The trial balance will still balance

answer

The trial balance will still balance

question

Motor Work Inc's trial balance contains the following balances: Cash $367 Accounts Payable $267 Revenue $632 Accounts receivable $429 Expenses $103 What is the amount of total debits for this trial balance? $745; $899; $796; $1798

answer

$899 Cash + AR + Expense (add all debit)

question

Only the _____ accounts from the trial balance will be used to prepare the income statement. Stockholders equity and asset Liabilities and retained earnings Asset and liabilities Revenue and Expense

answer

Revenue and Expense

question

The trial balance: Lists only the accounts, with their balances which are used to prepare the income statement. Lists only the accounts, with their balances, which are used to prepare the balance sheet. Lists all accounts, with their balances, on a given date. Lists account names but no balances.

answer

lists all the accounts, with their balances on a given date.

question

If revenues are recognized and recorded when earned, the company is using the: Cash basis of accounting Accrual basis of accounting Adjustment basis of accounting The expense basis of accounting

answer

Accrual basis of accounting

question

The matching principle in accounting requires the matching of: Revenue earned with the assets used less the liabilities incurred Revenue earned with the liabilities used to produce the revenue Revenue earned with the expenses incurred to produce the revenue Revenue earned with the assets used to product the revenue

answer

Revenue earned with the expenses incurred, to produce the revenue

question

Part of accrual accounting depends upon recording _______ entries at the end of the fiscal year. Expense Adjusting Revenue Debit

answer

Adjusting

question

Recording Interest Receivable would be an example of a(n): Accrued Revenue Deferred Expense Accrued Expense Deferred Revenue

answer

Accrued Revenue

question

Recording Wages Payable would be an example of a(n): Deferred revenue Accrued revenue Accrued expense Deferred expense

answer

accrued expense

question

A majority of businesses normally end their fiscal year on: June 30 December 31 September 30 Some other date

answer

December 31

question

Recording the collection of three months of advance rent from a client in an unearned account would be an example of a(n): Deferred expense Deferred revenue Accrued expense Accrued revenue

answer

Deferred revenue

question

The recording of depreciation is related to a(n): Deferred expense Deferred revenue Accrued expense Accrued revenue

answer

Deferred expense

question

A period of time, such as a month or quarter, could be considered a(n): Income period Revenue period Accounting period Fiscal Year

answer

Accounting period

question

Acme Car Wash Inc, washed 100 cars this past month. They charged $7 per car for a wash. The company's only expenses during this month were $83 utilities/water, $300 wages and $31 for soap. The wages were paid during the month, but the utility bill and soap bills were not What is Acme's income or loss for this month? $285; $400: $317; None of the above

answer

$285, Still subtract because utilities and soap is used and is account payable

question

At the beginning of the period, the Supplies account has a balance of $500. At the end of the period, the balance in the account was $275. The adjusting entry would be: Debit supplies, $225; credit Supplies expense, $225 Debit supplies expense, $225; credit supplies, $225 Debit supplies, $275, credit supplies expense, $275 Debit supplies expense, $275, credit supplies $275

answer

Debit supplies expense $225, Credit supplies $225

question

During a recent week, incurred wages were $700. However, $280 of the wages had not been paid. The adjusting entry for wages would be: Debit wages payable, $280, credit wages expense $280 Debit wages expense $280; credit wages payable $280 Debit wages expense $420, credit wages payable $420 Debit wages payable $420, credit wages expense $420

answer

Debit wages expense $280, credit wages payable $280

question

Which of the following accounts would NOT be debited or credited in an adjusting entry? Supplies expense Office equipment Wages payable Wages expense

answer

Office Equipment

question

Which of the following accounts would NOT be adjusted? Accumulated Depreciation Cash Wages Depreciation Expense

answer

Cash

question

The difference between the cost of office equipment and accumulated depreciation - office equipment is called: Salvage value Market value Book value Original value

answer

Book Value

question

A 20 month insurance policy was purchased for $1500 on May 1. How much would insurance will be expensed on December 31? $75 $600 $300 $1500

answer

$600; $1500/20 = 75 x 8 months

question

A machine costing $45000 has a life of 12 years. The salvage value is $10000. it was purchased on February 1. The depreciation expense for the calendar year is: $2673.61 $3437.50 $312.50 $243.06

answer

$2673.61; (Machine cost - salvage value) / Time

question

Which of the following does NOT go onto the balance sheet from the adjusted trial balance? Accounts payable Cash Land Dividends

answer

Dividends

question

The income statement that is prepared from the adjusted trial balance begins with the: First asset account listed on the adjusted trial balance First revenue account listed on the adjusted trial balance First expense account listed on the adjusted trial balance First liability account listed on the adjusted trial balance

answer

first revenue account listed on the adjusted trial balance

question

The statement of retained earnings that is prepared from the adjusted trial balance begins with the: Net income listed on the adjusted trial balance Retained Earnings balance on the adjusted trial balance First dividend account listed on the adjusted trial balance First stock account listed on the adjusted trial balance

answer

Retained Earnings balance on the adjusted trial balance

question

The unadjusted trial balance shows a $780 balance of Depreciation Expense. Depreciation of $235 was recorded for the period. The adjusted trial balance figure for Depreciation Expense is now at: $1015 credit $1015 debit $545 debit $545 credit

answer

$1015 debit add both

question

The unadjusted trial balance reflects a normal balance for Wages Expense of $750. Accrued wages for the period are $1045. The adjusted balance for Wages Expense is now a: $295 debit $295 credit $1795 debit $1795 credit

answer

$1795 debit add both

question

The adjusted balance for Prepaid insurance is a $724 debit. Insurance expense for the period was $1136. What was the balance for Prepaid Insurance on the unadjusted trial balance? $1136 debit $412 credit $1860 debit $412 debit

answer

$1860, add both debit

question

Interest Expense had an adjusted balance of $1187. The adjusting entry for accrued interest was for $382. The unadjusted balance for interest expense was a: $1560 debit $796 debit $1560 credit $382

answer

$796 debit; interest expense - accrued interest

question

Respectively, dividends, revenues, and expenses are: Temporary, permanent and temporary accounts Temporary, temporary and permanent accounts All temporary accounts All permanent accounts

answer

All temporary accounts

question

The total revenues of $6500, total expenses of $3500 and dividends of $500 were recorded in the closing entries. The net income for the month was: $6000 $3000 $2500 $3500

answer

$3000; Net income = Revenues - Expense

question

Closing the revenue, expense and dividend accounts: Yields the final balance in stockholder's equity for the period Yields the change in Retained Earnings for the period Yields the change in the permanent accounts for the period Yields the amount of net income or net loss for the period

answer

Yields the change in Retained earnings for the period

question

_____ entries transfer net income or net loss and dividends to the Retained Earnings account Adjusting Timely General Closing

answer

General

question

Which of the following do NOT appear on the post - closing trial balance? Dividends Inventory Dividends Payable Land

answer

Dividends

question

A company had a normal $50000 cash balance on their adjusted trial balance. If revenues, expenses and dividends respectively were $90000; $18000 and $2000 what amount of cash will be found on the post - closing trial balance? $160000; $120000; $50000; $122000

answer

$50000

question

Inventory for a merchandising business is classified as a(n): Asset Liability Part of stockholder's equity Revenue

answer

Asset

question

A general public is referred to as: Service customers Final consumers Retail customers Manufacturing customers

answer

Final Consumers

question

Amazon.com, JCPenney.com and Walmart.com are examples of internet: Manufacturing businesses Service Businesses Retail Businesses Wholesalers

answer

Retail Businesses

question

Is there a difference between the physical count and the perpetual record, the account in which the difference is recorded is: Sales. Inventory Expense. Revenue. Cost of goods sold.

answer

Cost of goods sold

question

A useful tool that updates inventory is the: Price tag on the merchandise Bar code scanner UPC number Cash register

answer

Bar code scanner

question

Physical inventory counts must be done: When using the perpetual method of inventory When using barcode scan technology When using the periodic method of inventory Regardless of method inventory

answer

Regardless of method inventory

question

The cost of goods sold account appears on the: Balance sheet Post - closing trial balance Statement of retained earnings Income Statement

answer

Income Statement

question

The inventory account appears on the: Statement of retained earnings Balance Sheet List of Liabilities Income statement

answer

Balance sheet

question

A company uses the perpetual inventory method. At year end the general ledge indicated that this company had a balance of $50000 in the inventory account. Actual inventory on hand per a physical count was $51500. What action does the company now need to take? The company needs to debit inventory and credit COGS for $1500 The company needs to debit COGS and credit inventory $1500 The company should debit the Purchases account and credit COGS

answer

The company needs to debit inventory and credit COGS for $1500

question

The name of the supplier is listed in the: Accounts payable subsidiary ledger Inventory ledger Account payable total Liabilities Ledger

answer

Accounts payable subsidiary ledge

question

If damaged goods are received by the merchandiser and are kept with a reduction in price, the account to be credited by the merchandiser for the reduction in price under a perpetual inventory system is: Returns. Cash. Accounts Payable. Inventory.

answer

Inventory.

question

A company pays an invoice early and takes 4% off the original invoice price. The account to be credited for this amount under a perpetual inventory system is: Accounts payable Discount Cash Inventory

answer

Inventory

question

Fancher, Inc received an invoice from Eaton Company for $5550 with terms of 3/10, n/45 on Match 8. If Fancher pays the bill on March 15, they will credit inventory under a perpetual inventory system for: $166.50 $0.00 $5550.0 $555.0

answer

$166.50; 3% of $1550

question

If an invoice reads n/15, it means that: The company pays 85% of the invoice The company has 15 days to pay the bill in full The company takes 15% off the total of the invoice The company has 15 days to take the discount

answer

The company has 15 days to pay the bill in full

question

Which of the following credit terms allowed a discount of 3% if payment is made within 15 days of the invoice; otherwise the total amount of the invoice must be paid within 30 days from the dat of the invoice? 3/EOM, n/30 3/15, EOM 3/15, n/30 15/3, n/30

answer

3/15, n/30

question

Discounts allowed for customers who pay their invoices early: Increase the cost of the purchased inventory Are called manufacturers discounts Are called allowances reduce the cost of the purchased inventory

answer

reduce the cost of the purchased inventory

question

A customer purchased items on account from Renaud, Inc. After a few days the customer returned the goods Renaud Inc. will issue a: Refund check. Credit Memorandum. Return Receipt. Debit Memorandum

answer

Credit Memorandum

question

A list of credit customers is called a(n): General Journal Accounts receivable subsidiary ledger Accounts payable subsidiary ledger General Ledger

answer

Accounts receivable subsidiary ledger

question

Under the perpetual inventory method, Sales returns cause: An increase Revenue No effect on cost of goods sold An increase in COGS A decrease in COGS

answer

A decrease in COGS

question

James, a customer, purchased $500 of merchandise from Haeskins Inc. Under the perpetual inventory system, Haeskins Inc will record a: Debit to accounts receivable or to cash for $500 Debit to sales for $500 Credit to account receivable or to cash for $500 Credit to COGS for $500

answer

Debit to accounts receivable or to cash for $500

question

Under the perpetual inventory system, when goods are returned to the retailer from a customer: Sales Returns and allowances is debited; COGS is credited Inventory is debited; Sales is credited COGS is debited; Sales returns and allowances is credited Sales is debited; COGS is credited

answer

Sales Returns and allowances is debited; COGS is credited Inventory is debited; Sales is credited

question

Sales returns and allowances appear on the: Income Statement and balance sheet Income Statement Statement of Retained earnings Balance Sheet

answer

Income Statement

question

The COGS includes which of the following? Management salaries Depreciation Expense Administrative Fees The actual cost of the item

answer

The actual cost of the item

question

Mackay Manufacturing had sales for the week of $3569, of which $2900 was on credit and $659 in cash sales. The cost of the merchandise sold was $1888. the journal entries would include a: Debit to COGS for $1888; credit to sales of $1888 Debit to COGS for $3569 and a credit to COGS for $3569 Debit to COGS for $1888; credit to inventory for $1888 Debit to Cash for $3569; credit to sales for $3569

answer

Debit to COGS for $1888 credit to inventory for $1888

question

Net Sales is computed by taking: Gross sales - sales returns and allowances + sales discounts Gross sales + Sales returns and allowances + sales discounts Gross Sales - Cash received for sales Gross Sales - sales returns and allowances - sales discounts

answer

Gross Sales - sales returns and allowances - sales discounts

question

FOB means: First on board Free on board Fee on board From our buyer

answer

Free on board

question

Freight charges that are paid by a buyer are: Subtracted from COGS Added to inventory Subtracted from inventory Added to COGS

answer

Added to inventory

question

Which of the following indicated that the shipment is free on board and the buyer pays all the shipping and freight costs? Cash on delivery FOB destination FOB shipping point 2/10, n/30

answer

FOB shipping point

question

Under a perpetual inventory system, the account to which transportation charges on incoming merchandise is generally entered is: Delivery Expense Inventory FOB destination FOB shipping

answer

Inventory

question

Acme company purchases $5000 inventory with shipping terms, FOB, Kalamazoo. Came is based in Detroit and the supplier is based in Kalamazoo. The shipping costs are $460. What is the cost of Acme's inventory? $5460 $5000 Either $5000 or $5460

answer

$5460

question

A company has net sales of $126,000, cost of goods sold of $72,000, operating expense of $38000 and other expenses of $3000. The company's gross profit is: $13,000 $54,000 $51,000 $16,000

answer

$54,000 Net sales - COGS = Gross profit

question

Current assets are listed on the balance sheet in: Descending order of value Alphabetical Order Order of Liquidity Ascending Order of value

answer

Order of Liquidity

question

Wages Payable, Income Taxes Payable and Accounts payable are: Short term assets Long term liabilities Long term assets Short term liabilities

answer

short term liabilities

question

A 10 year not payable would be listed on the balance sheet as: Partly a current liability with the balance listed as a long term liability A long term asset A long term liability only A current liability only

answer

partly a current liability with the balance listed as a long term liability

question

Cash is listed as the first current asset because it is the account: With the most value That is first alphabetically That is most liquid That is most used

answer

That is most liquid

question

Which of the following is true of gross profit: This number is the same as net income The company will subtract taxes from this number to arrive at new profit or net loss The company has this much money to pay for all the other expense, except taxes The company has this much money to pay for all other expenses, including taxes.

answer

The company has this much money to pay for all other expenses, including taxes

question

A high gross profit percentage means: The COGS was relatively high The COGS was relatively low Selling expenses are very low General and administrative expenses are very high

answer

The COGS was relatively low

question

A company has net sales of $56,700 operating expenses of $10000 and a COGS of $26700. The company gross profit percentage is aprox: 189% 47.1% 52.9% 89.0%

answer

52.9%; (Net sales - COGS) / Net Sales

question

A company has net sales of $56700 operating expenses of $10000 and a COGS of $26700. The company net income percentage aprox: 52.9% 89.0% 35.3% 47.1%

answer

35.3%; (Net sales - COGS - Expense) / Net sales

Accounting 2301 EXAM 1 chapter 1-4 – Flashcards

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