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Study Resources (Accounting)

11) Different users of financial statements focus on the different parts of the financial statements for the information they need. 12) Any person or business to whom a business owes money is called the business's creditor. 13) Managerial accounting provides information to ________. A) internal decision makers B) outside investors and lenders C) auditors D) taxing.
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41) Gamma Company is considering an investment opportunity with the following expected net cashinflows: Year 1, $250,000; Year 2, $350,000; Year 3, $395,000. The company uses a discount rate of 12% and the initial investment is $750,000. The following table is available: Present Value of $1: 10% 12% 14% 15% 1 0.909 0.893 0.877 0.870 2 0.826 0.797 0.769 0.756 3 0.751 0.712 0.675 0.658 4 0.683 0.636 0.592 0.572 5 0.621 0.567 0.519 0.497 The IRR of the project will be: A).
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31) The taxable income of a sole proprietorship is ________. A) combined with the personal income of the proprietor B) not combined with the proprietor's personal income C) not taxable. D) handled similarly to that of a corporation 32) Genity Inc., located in Texas, records business transactions in dollars and disregards changes in the value.
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31) The entry to record depreciation includes a credit to the ________. A) the Depreciation Payable account B) the Cash account C) the Accumulated Depreciation account D) the Depreciation Expense account 32) If an adjusting entry includes a debit to Rent Expense, that would indicate that the payment of rent had been previously recorded as.
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Learning Objective 3-2 1) The revenue recognition principle is the basis for recording revenues?both when to record revenue and the amount of revenue to record. 2) In accounting terms, the calendar year is always called the fiscal year. 3) Which of the following is considered a fiscal year? A) six months B) three months C) twelve.
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21) Kostner Financial Services Inc. performed accounting services for a client in December. A bill was mailed to the client on December 30. The company received the client's check by mail on January 5. Which of the following accounts should appear on the income statement for the year ended December.
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Learning Objective 1-2 1) As per the economic entity assumption, an organization and its owner should be seen as the same entity. 2) The guidelines for accounting information are called Generally Accepted Accounting Principles (GAAP). 3) IFRS is the main U.S. accounting rule book and is currently created and governed by the FASB. 4).
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Learning Objective 2-1 1) A chart of accounts is a detailed record of the changes in a particular asset, liability, or stockholders' equity. 2) A chart of accounts is a list of all of a company's accounts with their account numbers. 3) Liabilities are economic resources that are expected to benefit the business.
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Learning Objective 1-1 1) Accounting is the information system that measures business activities, processes the information into reports, and communicates the results to decision makers. 2) Accounting is referred to as the language of business because it is the method of communicating business information to stakeholders. 3) Managerial accounting focuses on information for.
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Learning Objective 2-3 1) Source documents provide the evidence and data for accounting transactions. 2) Debits in the journal are always posted as debits in the ledger. 3) The process of transferring data from the ledger to the journal is called posting. 4) A journal entry under the double-entry system includes both debit and.
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21) Gamma Company is considering an investment of $500,000 in a land development project. It will yield cash flows of $200,000 for 5 years. The company uses a discount rate of 9%. What is the net present value of the investment? Present value of annuity of $1: 8% 9% 10% 1 0.926 0.917 0.909 2 1.783 1.759 1.736 3 2.577 2.531 2.487 4 3.312 3.24 3.17 5 3.993 3.89 3.791 A) $230,000 B) $278,000 C) $330,000 D) $200,000 22).
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21) Accord Corporation purchased land for $100,000 by a cash payment of $20,000 and promised to pay the remaining amount at a later period. What is the net effect of this transaction on the business's accounting equation? A) assets increase by $100,000 and liabilities decrease by $20,000 B) assets increase by $100,000.
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Learning Objective 1-6 1) The income statement shows whether or not a business can generate enough cash to pay its liabilities. 2) The balance sheet shows whether or not a business is earning profits. 3) The statement of retained earnings informs users about how much of the earnings were kept and reinvested in.
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Learning Objective 1-3 1) Liabilities represent creditors' claims on the business's assets. 2) The left side of the accounting equation measures the amount that the business owes to creditors and to the stockholders. 3) The total of the amount of assets that a business possesses may or may not be equal to the.
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41) A business paid cash dividends to shareholders. Which of the following accounts will be debited? A) Cash B) Dividends C) Accounts Payable D) Common Stock 42) A business paid cash dividends to shareholders. Which of the following accounts will be credited? A) Common Stock B) Dividends C) Cash D) Accounts Payable 43) An accounting entry that is characterized by.
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Learning Objective 3-1 1) Under accrual accounting, transactions are recorded only when cash is received or paid. 2) Recipes. Inc. purchased $2,000 of supplies on account. Under the accrual basis of accounting, no entry is made until the amount is paid. 3) In cash basis accounting, revenue is recognized when cash is received.
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Learning Objective 1-4 1) John contributed $6,000 in the business by opening a bank account in the name of the business, United Internists. The corporation issued common stock to John. This transaction results in an increase in the assets of the business. 2) For an accounting equation to balance, a transaction must.
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31) The following details are provided by Dopler Company: Project A Project B Project C Project D Initial investment $420,000 $200,000 $550,000 $500,000 PV of cash inflows $570,000 $380,000 $800,000 $390,000 Payback period (years) 3.6 3.2 4.0 2.0 NPV of project $150,000 $180,000 $250,000 ($110,000) Calculate the profitability index for Project A. A) 0.98 B) 1.08 C) 1.36 D) 1.66 32) The following details are provided by Dopler Company: Project A Project B Project C Project D Initial investment $420,000 $200,000 $550,000 $500,000 PV of cash inflows $570,000 $380,000 $800,000 $390,000 Payback period (years) 3.6 3.2 4.0 2.0 NPV of.
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Learning Objective 3-4 1) An adjusted trial balance does not list the revenues and expenses of a business. 2) The adjusted trial balance shows ________. A) account balances after adjustments B) revenue and expense accounts only C) account balances before adjustments D) balance sheet accounts only 3) Deborah Consultants had the following accounts and account balances after.
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51) Sharon Foods Inc. reported the following transactions for September, 2015. A)The business received $25,000 cash and issued common stock. It was credited to Common Stock. B)The business purchased office equipment for $11,500 for which $2,500 cash was paid and the balance was put on a note payable. C)Paid insurance expense of $1,800.
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61) Saturn Inc. signed a one-year $48,000 note payable at 8% interest on May 1, 2014. If Saturn Inc. only adjusts its accounts once a year at year-end, how much interest expense was accrued on December 31, 2014? A) $1,280 B) $3,840 C) $2,560 D) $3,200 62) Accumulated Depreciation is a(n) ________ account and carries.
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21) The following are the current month's balances for Toys Galore Inc. Accounts Payable $ 8,000 Revenue 10,000 Cash 5,000 Expenses 1,750 Furniture 12,000 Accounts Receivable 14,000 Common Stock 8,250 Notes Payable 6,500 Calculate the total amount of credits for the trial balance. A) $24,500 B) $22,750 C) $24,750 D) $32,750 22) The following are the current month's balances for Toys Galore Inc. Accounts Payable $ 8,000 Revenue 10,000 Cash 5,000 Expenses 1,750 Furniture 12,000 Accounts Receivable 14,000 Common Stock 8,250 Notes Payable 6,500 What is the total amount.
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11) Marsh Supply Services received $1,000 cash from a customer which was owed to the business from the previous month. Which of the following accounts would decrease as a result of this transaction? A) Cash B) Equity C) Accounts Payable D) Accounts Receivable 12) Ace Inc. had the following transactions in June: Sold goods for $4,000.
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11) When a company is evaluating an investment proposal with high risk, a low discount rate should be used, and vice versa. 12) Compound interest used in discounted cash flow calculations assumes that companies will reinvest future cash flows whenever they are received. 13) If an investment project's IRR is higher than.
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21) GAAP are the rules that govern accounting in the United States. The acronym GAAP in this statement refers to ________. A) Globally Accepted and Accurate Policies B) Global Accommodation Accounting Principles C) Generally Accredited Accounting Policies D) Generally Accepted Accounting Principles 22) The formation of a partnership firm requires a minimum of ________. A) four.
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Learning Objective 3-3 1) Accrued revenue is the income that has been received but not earned. 2) Prepaid insurance is an asset account and hence it appears on the balance sheet. 3) Prepaid rent is an expense account and hence it appears on the income statement. 4) A contra account's normal balance (debit or.
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41) Which of the following is a contra account? A) Depreciation Expense B) Accumulated Depreciation C) Unearned Revenue D) Earned Revenue 42) Accrued revenue is revenue that ________. A) has been collected and earned B) the business has collected in cash, but not yet earned C) the business has earned, but not yet collected in cash D) will be.
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71) Ursula Tax Planning Service has the following plant assets: Communications equipment: Cost, $6,720 with useful life of 8 years; Furniture: Cost, $18,000 with useful life of 12 years; and Computer: Cost, $12,000 with useful life of 4 years. (Assume salvage value of all the assets to be zero.) Ursula's.
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51) The Accumulated Depreciation account is ________. A) a record of the sum of all the depreciation expense recorded B) the price quoted to the buyer of a used asset C) an expense account D) the expense account used to expense the cost of an asset 52) On January 1, 2015, the Accounts Receivable of.
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11) Which of the following is a liability account? A) Accounts Receivable B) Cash C) Building D) Notes Payable 12) Which of the following is an asset account? A) Wages Payable B) Notes Payable C) Unearned Revenue D) Accounts Receivable 13) A customer's promise to pay in the future for services or goods sold is called a(n) ________. A) Accounts Receivable B).
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11) Which of the following accounts does cash basis accounting ignore? A) Payables B) Revenue C) Cash D) Expenses 12) A company receives payment on August 5 for services rendered, two weeks earlier, to one of its customers on account. Which of the following entries would be recorded if the company uses accrual basis accounting? A).
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Learning Objective 26-4 1) Net present value is defined as the difference between the present value of the project's net cash inflows and the cost of investment. 2) Management's minimum desired rate of return on a capital investment is known as the return on investment. 3) The residual value is discounted as a.
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Learning Objective 1-5 1) The balance sheet of a business summarizes an entity's revenues and expenses. 2) By looking at a statement of retained earnings, the effect of dividends on the ending balance in retained earnings can be determined. 3) Financial statements are business documents that are used to communicate information needed to.
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31) For Revenues, the category of account and its normal balance is ________. A) stockholders' equity and a credit balance B) assets and a debit balance C) assets and a credit balance D) stockholders' equity and a debit balance 32) For Stockholders' Equity, the category of accounting equation and its normal balance is ________. A) equity.
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11) In the case of unearned revenue, the adjusting entry at the end of the period includes a credit to Service Revenue. Assume the unearned revenue is initially recorded as a liability. 12) The contra asset accounts, like Accumulated Depreciation, always have normal debit balances. 13) On January 1, 2014, Prepaid Insurance.
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21) Which of the following groups of accounts normally have a debit balance? A) assets and expenses B) revenues and expenses C) liabilities and stockholders' equity D) assets and liabilities 22) Which of the following groups of accounts will decrease with a debit? A) assets and expenses B) revenues and expenses C) liabilities and stockholders' equity D) assets and.
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11) Which of the following is a financial statement that presents a business's accounting equation? A) chart of accounts B) trial balance C) income statement D) balance sheet 12) Which of the following is used by both internal and external users to the company? A) chart of accounts B) trial balance C) balance sheet D) costing reports 13) Which of.
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