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Study Resources (Accounting)

Learning Objective 5-3 1) An amount that a merchandiser earns by selling its inventory is known as Sales Revenue or Sales. 2) When a customer returns goods to the seller, the seller records it as purchase returns. 3) When a merchandiser records sales returns, the Accounts Receivable account is credited. The seller uses.
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Learning Objective 4-4 1) GAAP requires publicly traded companies to prepare a post-closing trial balance and publish it in their annual report. 2) The post-closing trial balance shows the updated capital balance. 3) The post-closing trial balance shows the net income for the period just ended. 4) Only permanent accounts appear on the post-closing.
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21) 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. The journal entry to record the cost of goods sold would be: A) Cost of Goods Sold 5,500                Accounts Receivable 5,500 B) Sales.
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15) Freight out is an addition to the Merchandise Inventory account if the seller uses the perpetual inventory system. 16) On January 21st, 2014, Bessant merchandisers, received merchandise from Mullies Inc. On that date, it found a few of these goods to be damaged. On January 22, it returned the damaged.
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21) Refer to the following trial balance. Debit Credit Cash $15,000 Accounts Receivable 42,000 Merchandise Inventory 60,000 Supplies 15,000 Land 300,000 Accounts Payable $3,000 Notes Payable 25,000 Smith, Capital 326,000 Smith, Withdrawals 3,000 Sales Revenues 480,000 Sales Returns and Allowances 6,000 Sales Discounts 9,000 Cost of Goods Sold 240,000 Salary Expense 15,000 Utility Expense 69,000 Rent Expense 54,000 Interest Expense 6,000 Totals $834,000 $834,000 Prepare a multi-step income statement: 22) An adjusted trial balance of Woods Company for the year 2015 is given below. Prepare a single-step income statement for the.
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49) The following is the adjusted trial balance as of December 31, 2015 of Current Times Watch Company: AccountsDebitCredit Cash$18,000 Accounts Receivable30,000 Prepaid Insurance9,000 Office Supplies3,200 Building165,000 Accumulated Depreciation—Building$12,000 Equipment88,000 Accumulated Depreciation—Equipment8,500 Land45,000 Accounts Payable12,000 Salaries Payable2,000 Unearned service revenue25,000 Mortgage Payable100,000 Martin, Capital21,290 Martin, Withdrawals25,840 Service Revenue325,000 Salaries Expense63,000 Depreciation Expense—Building and Equipment6,250 Office Supplies Expense15,000 Insurance Expense14,500 Utilities Expense23,000_______ Total$505,790$505,790 Provide the closing entry for the Income Summary account. 50) The following is.
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11) An entity that buys goods and sells them to customers at a markup is a: A) merchandiser. B) service provider. C) manufacturer. D) producer. 12) Gross profit is calculated as the difference between net sales revenue and: A) purchases. B) cost of goods sold. C) cost of merchandise inventory. D) selling and administrative expenses. 13) The Gajet Store Inc..
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31) Which of the following account's balance is carried forward to the next accounting period? A) Accumulated Depreciation B) Depreciation Expense C) Owner's Name, Withdrawals D) Sales Revenue 32) Which is a permanent account? A) Wages Expense B) Salary Payable C) Service Revenue D) Utilities Expense 33) Which of the following accounts will be closed by debiting the Income Summary.
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  Learning Objective 5-1 1) A wholesaler is a merchandiser who buys merchandise from a manufacturer and sells the same to a retailer. 2) Hitech Inc., a small, local grocer, without optical scanning cash registers and computer systems, wants to introduce an inventory system to track its inventory. The perpetual inventory system is.
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Learning Objective 5-7 1) Under the periodic inventory system, purchases, purchase discounts, and purchase returns and allowances are recorded in the Merchandise Inventory account as and when they occur. 2) If a merchandiser uses the periodic inventory system, it is necessary to conduct physical count of inventory to determine the quantity of.
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Learning Objective 5-4 1) The loss of inventory that occurs because of theft, damage, and errors is referred to as inventory shrinkage. 2) When a company uses the perpetual inventory system, there is no need to conduct a physical count of inventory. 3) The entry to close Sales Discounts will include a debit.
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Learning Objective 4-6 1) The current ratio is calculated using the values from the income statement. 2) The current ratio shows the profitability of a firm. 3) The smaller the current ratio, the higher is the ability of a firm to repay its current debts. 4) A current ratio that has increased from the.
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11) An adjusted trial balance is given below. Debit Credit Cash $12,600 Accounts Receivable 2,400 Prepaid Rent 800 Merchandise Inventory 28,000 Accounts Payable $4,200 Salaries Payable 1,000 Notes Payable 800 Smith, Capital 13,800 Smith, Withdrawals 1,000 Sales Revenue 96,000 Sales Returns and Allowances 1,600 Sales Discounts 400 Cost of Goods Sold 25,000 Salaries Expense 21,000 Rent Expense 14,000 Selling Expense 8,500 Supplies Expense          500 Total $115,800 $115,800 What will be the final balance in the Smith, Capital account after recording the closing entries? A) $37,800 B) $12,700 C) $24,000 D) $36,800 12) Sales revenue.
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11) The current ratio measures a company's: A) overall ability to pay liabilities. B) ability to pay current liabilities with current assets. C) the proportion of assets that are financed by debt. D) rate of cash flow. 12) The following contains information from the records of the Wellborn Engineers and Architects. Current Assets $74,000 Current Liabilities 44,000 Long-term Assets 95,000 Long-term Liabilities 60,000 Total.
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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 collected.
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21) Under which of the following categories would Accounts Payable appear? A) Long-term assets B) Current assets C) Long-term liabilities D) Current liabilities 22) Which of the following is a plant asset? A) Equipment B) Patents C) Trademark D) Accounts Receivable 23) The Notes Payable that are due within two years are classified as: A) current liabilities. B) current assets. C) long-term liabilities. D).
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Learning Objective 5-5 1) Cost of goods sold appears on a multi-step income statement but not on a single-step income statement. 2) The net income calculated using both the single and multi-step formats of income statement is always the same. 3) Operating income is gross profit minus operating expenses. 4) A single-step income statement.
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45) Reid Art Supply Company uses a perpetual inventory system. The company had the following transactions during August, 2015: Aug. 5:Purchased $2,900 of merchandise on account. Freight and credit terms were FOB shipping point, 3/15, n/60. Aug. 9:Paid transportation costs of $440 for the Aug. 5 purchase. Aug. 10:Returned $600 of defective merchandise.
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Learning Objective 5-6 1) The gross profit percentage measures the profitability of each sales dollar above the cost of goods sold. 2) A small increase in the gross profit percentage may indicate an important rise in income. 3) Which of the following is the correct formula for calculating gross profit percentage? A) Net profit.
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21) The Owner's Name, Withdrawals account is a permanent account. 22) The Owner's Name, Capital account is a permanent account. 23) The beginning balance in the Capital account of a company was $10,000. The revenues and expenses were $200,000 and $120,000, respectively. The owner withdrew $4,000 during the year. The ending balance.
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  Learning Objective 4-1 1) In the balance sheet, assets are classified as either current or long-term depending on their liquidity. 2) Prepaid Rent is always classified as a long-term asset. 3) The operating cycle is the time span required for a business to repay its long-term liabilities. 4) A balance sheet prepared in the.
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Learning Objective 3-6 1) A worksheet is an external document that forms a part of the financial statements. 2) The worksheet is NOT a journal, a ledger, or a financial statement. 3) GAAP requires a public company to prepare a worksheet for financial reporting purposes. 4) An internal document that helps summarize data for.
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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. Ursula's monthly depreciation expense calculated using the straight-line method is: (Assume salvage.
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6) Which of the following statements is true of the worksheet? A) The worksheet is a ledger. B) The worksheet is a document used to summarize data to prepare the financial statements. C) The worksheet is a financial statement issued to the public to communicate the financial results of the company. D) The worksheet.
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11) On a multi-step income statement, the operating expenses are subtracted from ________ to arrive at operating income. A) net sales B) cost of goods sold C) net profit D) gross profit 12) In which of the financial statements do Merchandise Inventory and Cost of goods sold appear? A) on the balance sheet and statement of.
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51) The following is the adjusted trial balance as of December 31, 2014 of Tuttle Photography: AccountDebitCredit Cash$1,700 Accounts Receivable8,500 Supplies100 Equipment7,500 Accumulated Depreciation—Equipment$2,000 Accounts Payable1,200 Salaries Payable800 Unearned Revenue600 Tuttle, Capital3,400 Tuttle, Withdrawals2,300 Service Revenue40,000 Salaries Expense24,000 Supplies Expense2,300 Depreciation Expense—Equipment1,600      Total$48,000$48,000 Provide the closing entry for Service Revenue. 52) The following is the adjusted trial balance as of December 31, 2014 of Tuttle Photography: AccountDebitCredit Cash$1,700 Accounts Receivable8,500 Supplies100 Equipment7,500 Accumulated Depreciation—Equipment$2,000 Accounts.
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12) The adjusted trial balance of Michael's Shutterbug Photography at December 31, 2015 is as follows: AccountsDebitCredit Cash$15,000 Accounts Receivable30,000 Prepaid Insurance7,500 Supplies3,200 Building160,000 Accumulated Depreciation—Building$12,000 Equipment75,000 Accumulated Depreciation—Equipment8,500 Land40,000 Accounts Payable12,000 Salaries Payable2,000 Unearned Service Revenue25,000 Mortgage Payable100,000 Michael, Capital21,290 Michael, Withdrawals23,000 Service Revenue289,000 Salaries Expense61,000 Depreciation Expense—Building and Equipment6,150 Supplies Expense14,040 Insurance Expense14,000 Utilities Expense20,900       Total$469,790$469,790 Using the information above, prepare a post-closing trial balance for Shutterbug Photography (dated December 31,.
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Learning Objective 4-3 1) The adjusting process zeroes out all revenues and all expenses. 2) The closing process helps in measuring each period's net income separately from all other periods. 3) Permanent accounts are not closed at the end of the accounting period. 4) As a part of the closing process, revenues and expenses.
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Learning Objective 4-5 1) The steps of the accounting cycle are followed throughout the accounting period. 2) The operating cycle is the process by which companies produce their financial statements for a specific period. 3) In an accounting cycle, an analysis of transactions is performed at the end of each accounting period. 4) The.
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Learning Objective 3-7 1) Patricia Event Planning Service records prepaid expenses and unearned revenues using the alternative treatments. Patricia makes adjusting entries as needed to bring her books to the full accrual basis once a year at the end of the year. On October 1, she paid $3,600 for insurance for.
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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 helps to identify: A) account balances after adjustments. B) revenue accounts only. C) account balances before adjustments. D) amounts that are out of balance. 3) Deborah Consultants had the following accounts and account balances.
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20) An adjusted trial balance of a merchandiser is given below. DebitCredit Cash$12,600 Accounts Receivable2,400 Prepaid Rent800 Merchandise Inventory30,000 Accounts Payable$4,200 Salaries Payable1,000 Notes Payable800 Smith, Capital13,800 Smith, Withdrawals1,000 Sales Revenue96,000 Sales Returns and Allowances1,600 Sales Discounts400 Cost of Goods Sold23,000 Salaries Expense21,000 Rent Expense14,000 Administrative Expense8,500 Supplies Expense500       Total$115,800$115,800 Provide journal entries to close the Income Summary account and the Smith, Withdrawals account. .
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16) The Interest Expense in the worksheet's unadjusted trial balance column is $3,000. Interest Expense in the income statement column is $7,000. Which of the following entries would have caused this difference? A) A $7,000 credit to Interest Expense in the worksheet's adjustments column B) A $7,000 credit to Interest Payable in.
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11) The Office Supplies account is a temporary account. 12) The Office Supplies Expense account is a temporary account. 13) The Accounts Payable account is a temporary account. 14) The Salaries Payable account is a permanent account. 15) The Owner's Name, Capital account is a temporary account. 16) The Accumulated Depreciation account is a permanent.
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11) Which of the following accounts are included in an income statement? A) Land, Salaries Payable B) Owner's Name, Capital, Owner's Contribution C) Furniture, Cash D) Service Revenue, Utilities Expense 12) Property, plant and equipment are categorized as: A) current assets. B) fixed assets. C) long-term investments. D) short-term investments. 13) Patents, copyrights, and trademarks are examples of: A) short-term investments. B).
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Learning Objective 4-7 1) Generally Accepted Accounting Principles (GAAP) require every organization to prepare reversing entries. 2) Reversing entries ease the burden of accounting for transactions in a later period. 3) Reversing entries are dated on the first day of the new accounting period. 4) A reversing entry is: A) a journal entry used to.
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47) The following is the adjusted trial balance as of December 31, 2015 of Martin Watch Company: AccountsDebitCredit Cash$18,000 Accounts Receivable30,000 Prepaid Insurance9,000 Office Supplies3,200 Building165,000 Accumulated Depreciation—Building$12,000 Equipment88,000 Accumulated Depreciation—Equipment8,500 Land45,000 Accounts Payable12,000 Salaries Payable2,000 Unearned service revenue25,000 Mortgage Payable100,000 Martin, Capital21,290 Martin, Withdrawals25,840 Service Revenue325,000 Salaries Expense63,000 Depreciation Expense—Building and Equipment6,250 Supplies Expense15,000 Insurance Expense14,500 Utilities Expense23,000_______ Total$505,790$505,790 Provide the closing entry for Service Revenue. 48) The following is the adjusted trial balance.
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  Learning Objective 6-1 1) The consistency principle states that a business should use the same accounting methods from period to period. 2) The lower-of-cost-or-market rule demonstrates accounting conservatism in action. 3) A company reports in its financial statements that it uses the FIFO method of inventory costing. This is an example of the.
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17) The trial balance of a merchandiser is as follows. A physical count of inventory at the end of the accounting year reveals $28,000 of inventory on hand. (Assume a perpetual inventory system) DebitCredit Cash$12,600 Accounts Receivable2,400 Prepaid Rent800 Merchandise Inventory30,000 Accounts Payable$4,200 Salaries Payable1,000 Notes Payable800 Smith, Capital13,800 Smith, Withdrawals1,000 Sales Revenue96,000 Sales Returns and Allowances1,600 Sales Discounts400 Cost of Goods Sold23,000 Salaries Expense21,000 Rent.
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42) A company purchased inventory for $2,200 on account, and recorded the following journal entry: Merchandise Inventory 2,200                Accounts payable 2,200 The vendor's invoice showed terms of 3/10, n/30. Give the journal entry for the payment of the invoice seventeen days after the invoice date. 43) A company purchased inventory for $100,000 on account, and.
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31) The balances of select accounts of Sandra Company as at December 31, 2015 are given below: Notes Payable—short term $1,200 Salaries Payable 4,000 Notes Payable—long term 25,000 Accounts Payable 3,200 Unearned Revenue 2,000 Interest Payable 2,500 The unearned revenue is the amount of cash received for services to be rendered in January, 2016. What are the total current liabilities shown on the.
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11) The accountant of Hobson Electrical Repair Company failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year. Which of the following statements is true? A) The total revenue will be overstated. B) The total revenue will be understated. C) The total expenses.
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