accouting – Flashcards

A company made net sales revenue of $540,000 and cost of goods sold totaled $324,000. Calculate its gross profit percentage.

Gross profit is calculated as the difference between net sales revenue and ________.

Which of the following is a disadvantage of accepting credit cards or debit cards for a business?

Which of the following statements describes a purchase order?

An entry to write off an account receivable under the allowance method will ________.

In a large company, the person who is responsible for comparing cash and the bank balance is the ________.

Merchandise Inventory and Cost of Goods Sold appear ________.

Which of the following states that the business should use the same accounting methods from period to period?

A company has a petty cash fund amount of $300. When replenished, it has petty cash receipts of $30 for gas expense, $32 for postage expense, $16 for supplies expense, and $10 for miscellaneous expenses. Assume the cash balance is not over or short. In the journal entry, Cash would be credited with ________.

A company purchased 100 units for $20 each on January 31. It purchased 100 units for $30 on February 28. It sold 150 units for $45 each from March 1 through December 31. If the company uses the last-in, first-out inventory costing method, what is the amount of Cost of Goods Sold on the income statement for the year ending December 31? (Assume that the company uses a perpetual inventory system.)

The beginning inventory of Soft Toys Inc. was $46,000. The purchases (excluding returns) and sales revenue for the year were $230,000 and $325,000, respectively. The purchase returns amounted to $30,000. The company's normal gross profit percent is 60%. What is the amount of the estimated ending inventory?

Under the direct write-off method, which of the following is included in the entry to write off an uncollectible account?

Calculate the interest on a 90-day, 9% note for $36,000. (Use a 360-day year to compute interest.)

In a multi-step income statement, which of the following items is excluded from the calculation of operating income?

Which of the following is representative of safeguarding assets

What is the maturity value of a 3-month, 10% note for $40,000?

A check was written by a business for $507, but was recorded in the cash payments journal as $705. How would this error be included on the bank reconciliation?

Which of the following is a requirement of the Sarbanes-Oxley Act?

What does "2/10" mean, with respect to "credit terms of 2/10, n/30"?

Which of the following inventory valuation methods should be used for unique items?

The entity that signs the promissory note and promises to pay the required amount is the ________.

The Sales Discounts account is a contra account to the ________

Which of the following is an application of the conservatism principle?

A company purchased 100 units for $20 each on January 31. It purchased 100 units for $30 on February 28. It sold a total of 150 units for $45 each from March 1 through December 31. What is the amount of ending inventory on December 31, if the company uses the first-in, first-out (FIFO) inventory costing method? (Assume that the company uses a perpetual inventory system.)

Which of the following is described as a system where customers send their checks directly to a post office box that belongs to a bank?

For a company with significant uncollectible receivables, the direct write-off method is unsuitable because ________.

Which of the following is the correct formula to calculate average merchandise inventory?

Which of the following line items will appear on the income statement of a merchandiser but not of a service company?

Which of the following statements describes a receiving report?

Which of the following statements is true?

On January 1, Ajax Corp. accepted a one-year note for $50,000 at 5% from one of its customers. When the note matured on December 31, the customer was unable to pay, and the company recorded the dishonor. The amount of the debit in the dishonor entry would be: ________.

Michelin Jewelers uses the perpetual inventory system. On April 2, Michelin sold merchandise with a cost of $5,500 for $9,000 to a customer on account with terms of 3/15, n/30. On April 4, the customer reported damaged goods and Michelin granted a $1,000 sales allowance. On April 10, Michelin received payment from the customer. Calculate the amount of net sales revenue.

A company using the perpetual inventory system purchased inventory worth $25,000 on account with terms of 2/10, n/30. Defective inventory of $2,000 was returned 2 days later and the accounts were appropriately adjusted. If the invoice is paid within 10 days, the amount of the purchase discount that would be available to the company is ________.

Which of the following is true of internal control?

The bank made an EFT payment of a telephone bill of $5,000. How would this information be included on the bank reconciliation?

Which of the following is shown on a multi-step income statement, but not on a single-step income statement?

A company has the cash ratio of 2.3. What does this imply?

Misty Inc. had 20,000 units of ending inventory that were recorded at their cost of $5.00 per unit using the first-in, first-out (FIFO) method. The current replacement cost is $4.25 per unit. Which of the following amounts would be reported as Ending Merchandise Inventory on the balance sheet using the lower-of-cost-or-market rule?

The inventory account balance is $50,000. An actual count of inventory reveals that actual inventory is $43,000. Which of the following would be included in the adjusting entry? (Assume a perpetual inventory system)

A way to account for petty cash by maintaining a constant balance in the petty cash account and which at any time requires that cash plus petty cash tickets must total the amount allocated to the petty cash fund, is known as the ________.

The Allowance for Bad Debts has a credit balance of $9,000 before the adjusting entry for bad debt expense. After analyzing the accounts in the accounts receivable subsidiary ledger using the aging method, the company's management estimates that uncollectible accounts will be $15,000. What will be the amount of bad debts expense reported on the income statement?

Which of the following statements is true of the direct write-off method?

Which of the following is true of the proper balance sheet treatment of the Allowance for Bad Debts with a credit balance?

Which of the following statements describes an invoice from a supplier?

A deposit receipt is

When a company uses the perpetual inventory method, which of the following would be the entry to adjust inventory to lower-of-cost-or-market?

Which of the following is a collection of all the accounts, the changes in those accounts, and their balances?

When is a trial balance usually prepared?

Lush Lawns Corporation earned $1,000 for lawn mowing services rendered. The customer promised to pay at a later time. Which of the following accounts increased as a result of this transaction?

Which of the following financial statements lists the entity's assets, liabilities, and stockholders' equity as of a specific date?

According to the ________, the acquired assets should be recorded at the amount actually paid rather than at the estimated market value.

Revenues and expenses are transferred to the ________ account before their final transfer into the Retained Earnings account.

Which of the following categories of accounts are temporary accounts that are closed at the end of the year?

Which of the following groups of accounts normally have a debit balance?

Posting a transaction means ________.

Financial statements are prepared from the balances in a(n) ________

Patents, copyrights, and trademarks are examples of ________.

Accountants first record transactions in a ________.

________ are professional accountants who serve the general public, not one particular company.

A company has $130,000 in current assets; $500,000 in total assets; $90,000 in current liabilities, and $110,000 in total liabilities. Calculate the current ratio of the company.

On the first day of January, Maywood Inc. borrowed $2,000 on a one-year note payable bearing interest at 4% per year. The note specifies that principal and interest must be paid in full at the end of the one-year period. On June 30, the adjusted trial balance will show Interest Payable of ________.

The explanation of why the net income differs from the change in cash balance for the period is explained in the ________.

Ace Inc. had the following transactions in June: Sold goods for $4,000 on account; received cash on account, $5,000; paid $800 for repair expense; paid $2,000 to a supplier that it owed from the previous month. What is the combined effect on Cash of the June transactions?

Rosewood Inc. earned revenues of $15,000 and incurred expenses of $9,000. The company declared and paid cash dividends of $3,000. What is the balance in the Income Summary account prior to closing net income or loss to the Retained Earnings account?

The accounting principle that ensures all expenses are recorded when they are incurred during the period and offsets those expenses against the revenues of the period, is called the ________ principle.

The Accounts Receivable account is a(n) ________ account and carries a ________ normal balance.

Which of the following is a liability account?

An account that is not closed at the end of the period is called a(n) ________.

Which of the following accounts will be closed by crediting the Income Summary account?

The economic resources of a business such as furniture, building, and land are its ________.

Dividends is a(n) ________ account that has a normal ________ balance.

Closing journal entries are posted ________.

Assets that are expected to be converted to cash, sold, or used up during the next 12 months, or within the business's normal operating cycle if the cycle is longer than a year are called ________ assets.

Which of the following statements is true of a trial balance?

The time span during which cash is paid for goods and services, which are then sold to customers from whom the business collects cash, is called the ________.

Unearned Revenue is classified as a(n) ________ account.

The adjusted trial balance shows ________.

Which of the following factors is assessed using the debt ratio?

Which of the following users would rely on management accounting information for decision-making purposes?

Which of the following accounts would be used under the accrual method of accounting, but not under cash basis accounting?

Mitchell Florists & Co. reported assets of $1,000 and equity of $350. What is its debt ratio?

Which of the following accounts will be included in a post-closing trial balance?

If a company is using the accrual basis accounting method, when should it record its earned revenue?

The income statement presents a summary of an entity's revenues and expenses for a period of time. Which of the following statements is true of an income statement?

Paramount Event Planning Services collects fees from its customers in advance. On January 1, 2015, the balance of its Unearned Revenue account had a balance of $6,000 (Cr.). During January and February, the company collected $3,000 and $1,000 as advance fees. During the two-month period, it rendered services of $6,500 related to the prepaid revenue. What is the balance in Unearned Revenue at the end of February?

The current ratio measures ________.

Which of the following organizations is responsible for the creation and governance of accounting standards in the United States?

Which of the following is the correct accounting equation

Assume MetAmbit Corporation had a net income of $2,500 for the year ending December, 2014. Its beginning and ending total assets were $35,500 and $20,500, respectively. Calculate MetAmbit's return on assets (ROA). (Round your percentage answer to two decimal places.)

A business makes a payment in cash for advertising expense. Which of the following accounts will be debited?

A list of the accounts and their balances at the end of the period after journalizing and posting the closing entries and includes only permanent accounts is called ________.

The process by which companies produce their financial statements for a specific period is called the ________.

Healthy Living, a diet magazine, collected $480,000 in subscription revenue on May 31st. Each subscriber will receive an issue of the magazine for each of the next 12 months, beginning with the June issue. The company uses the accrual method of accounting. What is the amount of Subscription Revenue that has been earned by the end of December?

The account title used for recording the payment of rent in advance for an office building is ________.

Which of the following account's balance is carried forward to the next accounting period?

Which of the following is considered a fiscal year?

A coal mine costs $1,000,000 and is estimated to hold 50,000 tons of coal. There is no residual value. 3,000 tons are extracted and sold during the first year of operations. Calculate depletion per unit.

On October 1, 2015, Nurix Inc. purchased a patent for $200,000 cash. Although the patent gives legal protection for 20 years, the patent is expected to be used for only 10 years. What will be the balance in the patent account on September 30, 2016?

The cost of an asset is $1,000,000 and its residual value is $100,000. Estimated useful life of the asset is four years. Calculate depreciation for the first year using the double-declining-balance method of depreciation

Which of the following describes a serial bond?

On January 1, 2015, Anodel Inc. acquired a machine for $1,000,000. The estimated useful life of the asset is 5 years. Residual value at the end of 5 years is estimated to be $50,000. Calculate the depreciation expense per year using the straight-line method.

Steel Rolling Corp. purchased a mine on January 1, 2015, for $500,000 and it is estimated to contain 30,000 tons of iron ore. There is no residual value. The corporation has extracted 2,500 tons of ore in 2015 and 3,800 tons of ore in 2016. What is depletion expense for 2016? (Do not round your intermediate calculations

Which of the following is paid by the employer only?

Trek Holidays Company signed a 9%, 10-year note for $150,000. The company paid $1,900 as the installment for the first month. After the first payment, what is the updated principal balance?

A photocopier costs $95,000 when new and has accumulated depreciation of $88,000. Suppose the corporation junks this machine and receives nothing. What is the result of the disposal transaction?

The balance in the Bonds Payable account is a credit of $65,500. The balance in the Discount on Bonds Payable account is a debit of $2,150. How much is the bond's carrying amount?

Which of the following is included in the cost of a plant asset?

Debra Technologies invested $50,000 to buy $50,000 face value, 8%, five-year in municipal bonds on January 2, 2010. The bonds will mature on January 2, 2015. The bonds pay interest semiannually on January 2 and July 2 every year till maturity. Based on the information provided, which of the following will be included in the journal entry for the transaction on January 2, 2014?

Which of the following is the correct accounting treatment for a patent?

Which of the following is an intangible asset?

Which of the following asset categories would include the cost of clearing land and removing unwanted buildings?

An asset was purchased for $24,000. The asset's estimated useful life was 5 years, and its residual value was $4,000. The straight-line method of depreciation was used. Calculate the gain or loss on sale if the asset is sold for $18,000 at the end of the first year.

Which of the following depreciation methods allocates a varying amount of depreciation each year based on an asset's usage?

The gain or loss on the sale of a plant asset is determined by comparing ________.

Which of the following items should be amortized

Synergy Appliances sells dishwashers with a 4-year warranty. In 2013, sales revenue for dishwashers is $85,000. The company estimates warranty expense at 4.5% of revenues. What is the total estimated warranty payable of Synergy Appliances in 2013?

Which of the following categories of assets should be depreciated?

Businesses are allowed to record goodwill ________.

Blandings Glassware Company issues $1,000,000 of 8%, 10-year bonds at 98 on February 28, 2014. The bonds pay interest on February 28 and August 31. Assume that Blandings uses the straight-line method for amortization. The journal entry to record the first interest payment on August 31, 2014 would be a ________.

A machine that was purchased for $100,000 has an accumulated depreciation of $70,000 as of the current date. The corporation exchanges the machine for a new machine. The new machine has a market value of $120,000 and the corporation pays cash of $100,000. Assume the exchange has commercial substance. What is the result of this exchange?

Moretown Inc. had the following transactions in 2015, its first year of operations. ? Issued 30,000 shares of common stock. Stock has par value of $1.00 per share and was issued at $18.00 per share. ? Earned net income of $70,000. ? Paid no dividends. At the end of 2015, what is the total amount of stockholders' equity?

Assume the following information for Petra Sales Inc.: ? Common stock, $1.00 par, 200,000 issued, 180,000 outstanding ? Paid-In Capital in Excess of ParCommon: $1,600,000 ? Retained earnings: $2,440,000 ? Treasury stock: 20,000 shares purchased at $12 per share If Petra Sales purchases an additional 5,000 shares of treasury stock at $14 per share, what number of shares will be shown as issued and outstanding?

Which of the following would be included in the entry to record the issuance of 5,000 shares of $10 par value common stock at $13 per share cash

The ________ section of the statement of cash flows includes increase and decrease in long-term assets.

Which of the following is a cash outflow for a financing activity on the statement of cash flows?

The purchase of equipment financed by a long-term notes payable is an example of ________.

A corporation originally issued $5 par value common stock for $6 per share. Which of the following would be included in the entry to record the purchase of 300 shares of treasury stock for $10 per share?

Bradley Corporation issued 10,000 shares of common stock on January 1, 2015. The stock has a par value of $0.01 per share and was sold for cash at par. Which of the following is the correct journal entry to record this transaction?

Harrison Recyclers Company uses the indirect method to prepare its statement of cash flows. Refer to the following information for the year 2014: 1) Retained Earnings, beginning balance, $138,000 2) Retained Earnings, ending balance, $125,000 3) Company reported net loss of $13,000 for the year. What was the amount of dividends declared during the year?

Which of the following explains the term "lack of mutual agency" of a corporation?

A summary of significant accounting policies and explanations of specific items on the financial statements will be given in ________.

Dividends in arrears are ________.

Which of the following is the typical order of the sections on a statement of cash flows?

Which of the following is true of dividends?

A business's cash receipts and cash payments for a specific period are reported on a(n) ________.

Perez Biofuels Company is preparing its statement of cash flows using the indirect method. Refer to the following information. 1) Repayments on Long-Term Notes Payable $58,000 2) New borrowing on Long-Term Notes Payable $19,000 Which of the following statements is accurate regarding the statement of cash flows?

Outstanding stock refers to the ________.

Which of the following describes the operating activities section of the statement of cash flows?

On the ________, cash dividends become a liability of a corporation.

Which of the following statements is true of a corporation?

Avatar Auto Parts Company uses the indirect method to prepare its statement of cash flows. Refer to the following information for the year 2015: Net cash provided by operating activities: $102,000 Net cash used in investing activities: $(113,500) Net cash provided by financing activities: $15,000 If the cash balance at the beginning of the year was $13,000, what would be the ending cash balance?

While preparing a statement of cash flows using the indirect method, the Depreciation Expense ________.

The issue of Common Stock for cash will be shown as a ________.