ACCT 2101 Exam 2 – Flashcards

Unlock all answers in this set

Unlock answers
question
the economic life of a business can be divided into artificial time periods
answer
The periodicity assumption states that:
question
expense recognition
answer
One of the accounting concepts upon which adjustments for prepayments and accruals are based is:
question
a fiscal year
answer
An accounting time period that is one year in length is called:
question
they contribute to the production of revenue
answer
Expenses are recognized when:
question
when it is earned
answer
The revenue recognition principle dictates that revenue should be recognized in the accounting records:
question
november 30
answer
A flower shop makes a large sale for $1,000 on November 30. The customer is sent a statement on December 5 and a check is received on December 10. The flower shop follows GAAP and applies the revenue recognition principle. When is the $1,000 considered to be earned?
question
cash must be received before revenue is recognized
answer
Under the cash basis of accounting:
question
events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.
answer
Under the accrual basis of accounting:
question
expenses are recognized, revenues are recorded, accounts have correct balances (all of the above)
answer
Adjusting entries are made to ensure that:
question
affects a balance sheet account and an income statement account
answer
An adjusting entry:
question
incurred but not yet paid or recorded
answer
Accrued expenses are:
question
earned but not yet received or recorded.
answer
Accrued revenues are:
question
debit Office Supplies Expense, $2,900; credit Office Supplies, $2,900
answer
Greese Company purchased office supplies costing $4,000 and debited Office Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $1,100 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be:
question
$5,400
answer
Walton Company collected $7,200 in May of 2010 for 4 months of service which would take place from October of 2010 through January of 2011. The revenue reported from this transaction during 2010 would be:
question
all temporary accounts
answer
The closing entry process consists of closing:
question
net sales revenues and cost of goods sold
answer
Gross profit equals the difference between:
question
accounting records continuously disclose the amount of inventory
answer
Under a perpetual inventory system:
question
the inventory account
answer
Under a perpetual inventory system, acquisition of merchandise for resale is debited to
question
debit Accounts Payable and credit Inventory
answer
A company using a perpetual inventory system that returns goods previously purchased on credit would
question
$7,840
answer
Conway Company purchased merchandise inventory with an invoice price of $8,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Conway Company pays within the discount period?
question
debit Accounts Receivable, credit Sales Revenue
answer
The journal entry to record a credit sale is
question
debit Cost of Goods sold and credit Inventory
answer
Under the perpetual inventory system, in addition to making the entry to record a sale, a company would
question
credit to Sales Revenue for $900
answer
The entry to record a sale of $900 with terms of 2/10, n/30 will include a
question
debit to Sales Discounts for $16
answer
The collection of an $800 account within the 2 percent discount period will result in a
question
the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date
answer
The credit terms offered to a customer by a business firm were 2/10, n/30, which means
question
$1,225
answer
Aber Company sells merchandise on account for $1,500 to Borth Company with credit terms of 2/10, n/30. Borth Company returns $250 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?
question
sales discounts, sales returns and allowances (both a)
answer
Which sales accounts normally have a debit balance?
question
sales discounts are included in the calculation of gross profit
answer
With respect to the income statement
question
the seller has legal title to the goods until they are delivered
answer
If goods in transit are shipped FOB destination
question
Goods held on consignment from another company
answer
Which of the following should not be included in the physical inventory of a company?
question
merchandise inventory
answer
Manufacturers usually classify inventory into all the following general categories except:
question
the first to be allocated to cost of goods sold
answer
The LIFO inventory method assumes that the cost of the latest units purchased are
question
comparability
answer
The consistent application of an inventory costing method enhances
question
conservatism
answer
The lower of cost or market basis of valuing inventories is an example of
Get an explanation on any task
Get unstuck with the help of our AI assistant in seconds
New