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Study Resources (Accounting)

Learning Objective 1.1 Questions 1) The primary purpose of financial accounting is to A) supply information for external users' decision making. B) provide data for internal users' decision making. C) produce data for income taxes. D) create an audit report. E) organize the data for management. 2) Footnotes are A) included in the audit report. B) an integral part.
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21) Revenue is recorded when accounts receivable are collected under the cash basis of accounting. 22) Under the cash method, revenue is recorded when cash is collected. 23) The accrual basis of accounting provides a better measure of economic performance than the cash basis. 24) Analyze the following transactions in the accounting equation.
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11) Formation, Inc. had the following balances as of December 31, 2012. Prepare closing entries based on these balances. Equipment $26,000 Retained Earnings 7,000 Accumulated Depreciation $ 4,500 Paid-in Capital 21,400 Cost of Goods Sold 59,000 Supplies 4,300 Wages Payable 1,200 Sales 112,000 Cash 34,000 Accounts Payable 7,200 Wage Expense 36,000 Rent Expense 8,000 Merchandise Inventory 12,700 Dividends (Amount Declared) 3,000 12) Morrill Law Offices.
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11) Financial accounting serves external decision makers, such as suppliers, banks, government agencies, and stockholders. 12) Management accounting serves internal decision makers, such as top executives and department heads. 13) Managerial accounting serves external users while financial accounting serves internal users. 14) The annual report is a document prepared by the board of.
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10) Which of the following concepts applies to situations 1-6 below. Entity Periodicity ReliabilityStable monetary unit Going Concern Cost-effectiveness constraint Materiality 1. Rhodes, Inc. acquired equipment with a fair market value of $22,000 and only paid $1,000 for the equipment at an auction. Following company policy which expenses assets with a cost of $1,000 or.
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Learning Objective 2.7 Questions 1) The cost-effectiveness constraint requires that standard setting bodies choose rules that A) have decision-making benefits that exceed the costs of providing the information. B) have revenue generating ability. C) have revenue generating ability that exceeds the cost of providing the information. D) have costs known to the SEC. E) are not.
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57) Selected accounts from Taylor Company as of March 31, 2012, follow: Cash $ 5,300 Inventory 10,250 Prepaid rent 100 Plant 40,500 Accumulated depreciation, plant 10,000 Accounts payable 6,300 Paid in capital 20,000 Retained earnings ? In addition, the following transactions occurred in the month of March. 1. Depreciation for the month amounted to $700 2. Purchased inventory on account for $3,000 3. Returned a portion of the inventory deemed.
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Learning Objective 2.5 Questions 1) The Goaling Company declared a $3,500 cash dividend on March 1, 2012 payable on April 2, 2012. The effect of the March 1st transaction on the Goaling Company would be to A) decrease the balance in the cash account and decrease the balance in the retained earnings.
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11) An operating loss occurs when A) revenues exceed expenses. B) expenses exceed revenues. C) assets exceed liabilities. D) liabilities exceed assets. E) liabilities exceed owners equity. 12) Expenses are A) increases in net assets as a result of consuming resources in the process of providing services to a customer. B) decreases in net assets as a result.
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17.5   Questions 1) In an efficient capital market, the market prices of securities ________. A) fully reflect all the information available to the public B) fully reflect all the information available to insiders C) reflect some of the information available to the public D) reflect most of the information available to the public 2) In an.
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Learning Objective 3.5 Questions 1) The entry to close revenue accounts involves A) a debit to Income Summary and credits to all the revenue accounts. B) debits to all the revenue accounts and a credit to Income Summary. C) debits to all the expense accounts and credits to all the revenue accounts. D) a debit.
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16) Following is a list of selected financial data for a series of companies: |Per-share Data |Ratios and Percentages Company  | Price  Earnings Dividends | P-E  Dividend-yield Dividend-payout Jacobs| $50$1.75A| BC30% Simons| $35D$2.25| EF40% Russell| G$5.25$1.75| 12.0IJ 1.Compute the missing figures and identify the company with a. the highest dividend-yield. b. the highest dividend-payout percentage. c. the lowest market price relative to earnings. 2..
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Learning Objective 2.3 Questions 1) Mac's Computer Skills Training, purchased equipment for $30,000 on January 1, 20X8, and believes the equipment has a useful life of 36 months. What will be the effect of the equipment's depreciation on the balance sheet equation? A) Decreases Equipment account and decreases Stockholders' Equity B) Decreases Equipment.
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55) Prepare the journal entries for each of the six transactions depicted in the following T-accounts, along with a brief explanation as to the nature of the transaction. CashPrepaid RentSales ---------------    ---------------     ------------- (1) 11,000| 350 (2)(2) 350||1,600 (4) (5) 400|450 (6)| Accounts Receivable              Accounts Payable              Cost of Goods Sold -----------------    -------------     ---------------- (4) 1,600|400.
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Learning Objective 2.4 Questions 1) Net income is defined as A) revenues minus expenses. B) expenses minus revenues. C) assets minus revenues. D) assets plus revenues. E) owners' equity assets minus expenses. 2) Under accrual basis accounting, the recognition of salaries earned and the immediate payment of salaries to employees would A) increase assets. B) increase owners' equity. C) increase.
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11) Liabilities are economic obligations of the organization to outsiders, or claims against its assets by outsiders. 12) Accountants use the terms notes payable or notes receivable to describe the existence of promissory notes. 13) Examples of assets include cash, inventory, and capital stock. 14) Inventory is goods held by a company for.
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Learning Objective 2.2 Questions 1) According to U.S. GAAP, revenue is recognized when it is A) realized or realizable only. B) earned only. C) received in a timely fashion. D) earned and realized or realizable. E) received in cash. 2) Which of the following is an example of revenue that may be realized but not yet earned? A).
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13) Given the following account balances for Felay's Second Hand Shop on December 31, 2012, prepare a trial balance. Accounts Payable $15,000 Sales 93,000 Merchandise Inventory 32,000 Accum. Depreciation, Equipment 3,000 Supplies 2,000 Paid-in Capital 32,000 Cost of Goods Sold 38,000 Retained Earnings 20,000 Wages Payable 8,000 Cash 26,000 Wage Expense 29,000 Rent Expense 17,000 Equipment 27,000 14) Given the following account balances for.
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Learning Objective 3.4 Questions 1) Which of the following accounts would not be found on the credit side of a trial balance? A) Equipment B) Accounts Payable C) Retained Earnings D) Sales Revenue E) Paid-in Capital 2) Given the following balances, what would the total credits in the trial balance equal? 1. Equipment $52,000 2. Accounts Payable 1,000 3. Sales.
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14) The Dyer Corporation began business operations on April 1, 20X9. The following transactionsoccurred during April 20X9: 1. The owner invested $32,000 in the company. 2. Inventory costing $13,000 was purchased. $900 in cash was paid; the remainder was put on account. 3. Equipment costing $23,000 was purchased, of which one-half was paid.
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21) An owner's investment into a business will increase assets and decrease liabilities. 22) An account is a summary record of the changes in a particular asset, liability, or owners' equity. 23) A transaction affects the financial position of an entity and can be reliably recorded in terms of money. 24) A transaction.
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Learning Objective 1.7 Questions 1) The principal task of the FASB is to A) be a link between the business community and the Securities and Exchange Commission (SEC). B) establish GAAP in the United States. C) audit each public company's financial statements and records. D) act as a counsel and advocate for business in its.
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11) Publishing for Personnel, Inc., received and paid its utility bill of $800. As the accountant, you would tell the bookkeeper to A) debit Utility Expense and credit Cash for $800. B) debit Cash and credit Utility Payable for $800. C) debit Cash and credit Utility Expense for $800. D) debit Cash and credit.
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16) Following is the balance sheet for Value Creation, Inc. as of January 31, 20X9: Value Creation, Inc. Balance Sheet January 31, 20X9 Assets: Liabilities: Cash $ 7,100 Accounts Payable $ 6,200 Accounts Receivable 4,000 Notes Payable 8,300 Merchandise Inventory 13,500 Total Liabilities 14,500 Prepaid Rent 3,300 Stockholders' Equity: Store Equipment 15,600 Paid-in Capital $17,600 Retained Earnings 11,400 Total Stockholders' equity.
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41) Posting is the transferring of amounts from the journal to the appropriate accounts in the ledger. 42) The purchase of office supplies on account would include a debit to accounts payable and a credit to office supplies. 43) The purchase of office equipment on account would increase assets and decrease stockholders'.
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21) The Bailey Company reports the following information: Sales for the year ended December 31, 2012$106,950 Gross profit for the year ended December 31, 2012$45,150 Net income for the year ended December 31, 2012$7,300 Total Current Assets, December 31, 2012$18,700 Total Current Liabilities, December 31, 2012$7,600 Total Assets, December 31, 2012$48,400 Total Liabilities, December 31, 2012$20,850 Total common.
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11) Payton Corporation, acquired some office equipment, including a desk costing $900. The owner of the business next door said that he had been searching for a desk just like that one, so Payton Corporation, sold the desk to its business neighbor at cost, receiving $400 in cash, with the.
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Learning Objective 3.2 Questions 1) The recording process has a sequence of five steps. What is the specific order of the steps? A) Journal, trial balance, financial statements, ledger, transaction documentation B) Transaction documentation, journal, ledger, trial balance, financial statements C) Transaction documentation, ledger, journal, trial balance, financial statements D) Ledger, journal, transaction documentation, trial.
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11) Indicate whether each of the following accounts normally possesses a debit (DR) or a credit (CR) balance. 1. Wage expense 9. Merchandise Inventory 2. Prepaid rent  10. Salary expense 3. Cost of goods sold 11. Equipment 4. Cash 12. Accounts receivable 5. Sales 13. Accumulated depreciation 6. Paid-in-capital 14. Notes payable 7. Depreciation expense  15. Utilities.
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Learning Objective 1.3 Questions 1) An entity A) is a separate economic unit. B) allows a section of an organization to be a separate economic unit. C) helps accountants relate events to a defined area of accounting. D) All of the above E) None of the above 2) If liabilities increase by $10,000 during a given period.
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Learning Objective 1.2 Questions 1) A liability that results from a purchase of goods or services on open account is referred to as a(n) A) accounts receivable. B) notes payable. C) accounts payable. D) notes receivable. E) capital stock. 2) Which of the following statements is true? A) Owners' equities are economic sacrifices after deducting liabilities. B) Assets are.
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39) The balance sheet for Sesame Company at December 31, 2009 is given below: Current Assets: Cash$118 Accounts Receivable36 Inventory54 Total Current Assets$208 Long-term Assets: Fixed Assets$322 Less: Accumulated Depreciation(136) Net Fixed Assets$186 Total Assets$394 Current Liabilities: Accounts Payable$44 Taxes Payable14 Total Current Liabilities$58 Long-term Bonds Payable60 Total Liabilities$118 Stockholders' Equity: Paid-in Capital$120 Retained Earnings156 Total Stockholders' Equity$276 Total Liabilities and Stockholders' Equity$394 Required: Prepare a common-size balance sheet. 40) The following information is.
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Learning Objective 1.6 Questions 1) Kristine Parsons owns 2,000 shares of $1.00 par value capital stock of Garments 4 You. Kristine sold 100 of these shares to Beverly Plito for $200. The effect of this transaction on the accounts of Garments 4 You would be to A) increase the capital stock account.
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11) Floral Deliveries, Inc. paid $6,000 for January, February, March and April's rent in advance on January 1, 20X9. The company recorded this transaction by increasing the balance in the Prepaid Rent account. The balance in the Rent Expense account for the period, January 1, 20X9 through March 31, 20X9,.
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Learning Objective 3.6 Questions 1) Which of the following errors would a trial balance help the accounting staff to find? A) A sale for $8,300 occurred, and instead of debiting Cash for $8,300, Accounts Receivable was debited for $8,300. B) A sale for $8,300 occurred, and instead of debiting Cash for $8,300, Accounts.
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Learning Objective 2.1 Questions 1) The operating cycle begins with A) the acquisition of goods. B) the receipt of cash from customers. C) the payment for goods. D) the initial investment by owners. E) the sales to customers. 2) Net income is A) the difference between revenues and dividends B) the difference between revenues and retained earnings. C) the difference.
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21) Under the accrual basis of accounting, prepaid assets become expenses when they expire. 22) Use the following balance sheet equation format to show the effect of the following transactions. Write the account names that will be used for each transaction. Account name Total assets Total liabilities Paid-in capital Retained Earnings 1. The owners invest $42,000 in the company. 2..
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Learning Objective 3.1 Questions 1) Which of the following transactions would not affect owners' equity? A) Recording cost of goods sold B) Recording a cash sale C) Recording a sale on account D) Recording utilities expense E) Purchasing inventory for cash 2) Which of the following statements is true regarding attributes of the general ledger and the.
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12) Determine the missing values. Revenues $250 Expenses 200 Dividends Declared 20 Additional investments by owners A Net income B Retained Earnings, Beginning C Retained Earnings, Ending 110 Paid-in Capital, Beginning 60 Paid-in Capital, Ending 60 Total Assets, Beginning D Total Assets, Ending 250 Total Liabilities, Beginning 95 Total Liabilities, Ending E 13) The Lone Maple Corporation had net income during 2012 of $46,000..
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Learning Objective 1.9 Questions 1) Public accountants follow the code of ethics for professional conduct established by the A) Sarbanes-Oxley Act. B) Securities and Exchange Commission. C) Financial Accounting Standards Board. D) Congress of the United States. E) American Institute of Certified Public Accountants. 2) The AICPA Code of Professional Ethics is especially concerned with integrity and.
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Learning Objective 1.5 Questions 1) Which of the following statements is false? A) If a sole proprietorship fails, the creditors can obtain repayment from the personal assets of the single owner. B) If a partnership fails, the creditors can obtain repayment from the personal assets of the partners. C) If a corporation fails, the.
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Learning Objective 2.6 Questions 1) Which financial ratio is required to be reported on the face of the income statement of publicly-held corporations? A) Earnings per share B) Price-earnings ratio C) Dividend-yield ratio D) Dividend payout ratio E) Inventory turnover ratio 2) Which financial ratio measures how much the investing public is willing to pay for a.
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Learning Objective 1.8 Questions 1) An auditor's opinion is not A) a report describing the auditor's examination of transactions and financial statements. B) included in the financial statements in the annual report issued by the corporation. C) another name for independent opinion. D) certified by the Securities Exchange Commission. E) a third party review. 2) The auditor's.
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Learning Objective 2.8 Questions 1) Reliability is defined as A) the quality of information that allows it to help users form their expectations about the future. B) the capability of information to make a difference to the decision maker. C) the quality of information that allows decision makers to depend on it to represent.
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Learning Objective 1.4 Questions 1) Twinkle Toes Dance Company December 31, 20X9 Cash $10,000 Accounts payable $5,600 Accounts receivable 4,000 Notes payable 17,000 Inventory 8,000 Common stock 5,000 Equipment 14,800 Retained earnings 9,200 Total Assets $36,800 Total liabilities and shareholders equity $36,800 What is the name of the financial statement above? A) Income Statement B) Balance Sheet C) Statement of Cash Flows D) Statement of Changes in Shareholders Equity E) Statement of Retained Earnings 2) Following is an alphabetical.
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11) Neutrality is defined as A) information which is free from bias and not slanted to influence the behavior of decision makers. B) the capability of information to make a difference to the decision maker. C) the quality of information that allows users to depend on it to represent the conditions or events.
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