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2.4   Questions 1) A trial balance is a list of the accounts and their balances taken from the general journal. 2) The trial balance is an official financial statement. 3) A trial balance contains the name of the company, the words "trial balance" and the date of the statement. 4) The required accounting period.
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11) An overstatement of earnings can inflate a company's stock price and may also be used to: A) deflate the amount of taxes the corporation pays. B) avoid paying raises to employees. C) ensure larger bonuses to upper management at year-end. D) avoid paying dividends to stockholders. 12) The primary form of fraud committed against.
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4.2   Questions 1) Most businesses today use the periodic inventory method. 2) Because of innovative and computerized methods of tracking inventory, most businesses today use the perpetual inventory method. 3) In the perpetual inventory system, inventory is constantly updated through the inventory tracking system. 4) Under the perpetual inventory system, the need for a.
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1) Wholesalers purchase large quantities of product from manufacturers and then sell the product to retailers. 2) Retailers may buy goods from the manufacturer and then sell the goods to consumers. 3) A retailer sells goods to a wholesaler. 4) Goods that a retailer sells to consumers are classified as inventory. 5) Which of.
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11) On the trial balance, which account balances should be listed in the debit column? A) Assets, revenues, and dividends B) Liabilities, revenues, and Common Stock C) Assets, Dividends, and expenses D) Liabilities, revenues, and Dividends 12) On the trial balance, which account balances should be listed in the credit column? A) Liabilities, Retained Earnings, and.
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3.3   Questions 1) The adjusted trial balance is prepared before the adjusting entries are completed and posted. 2) After preparing the adjusted trial balance, those figures are used to complete the balance sheet only. 3) The balance of Retained Earnings on the adjusted trial balance does not represent the final retained earnings balance.
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21) When merchandise is purchased on account under the perpetual inventory system, the journal entry is: A) debit Purchases and credit Accounts Payable. B) debit Accounts Payable and credit Inventory. C) debit Inventory and credit Accounts Payable. D) debit Accounts Payable and credit Purchases. 22) The inventory system that uses the merchandise inventory account as.
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3.2   Questions 1) Adjusting entries are used to update accounts at the end of an accounting period. 2) An example of a contra-account would be Accumulated Depreciation. 3) Adjusting entries are made only for accrued revenues and accrued expenses. 4) Unearned Ticket Revenue must be adjusted to show how much of the deferred revenue.
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5.8   Questions 1) Inventory is the most important asset in a service business. 2) Inventory turnover equals average ending inventory divided by cost of goods sold. 3) Inventory turnover measures the amount of times a company turns over its beginning inventory during a period. 4) Other than the cost of purchasing the inventory, another.
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11) The first step in analyzing a transaction is to determine: A) if the account balance will increase or decrease. B) the accounts that are involved. C) the type of accounts that are involved. D) which accounts are to be debited and credited. 12) The second step in analyzing a transaction is to determine: A) if.
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4.7   Questions 1) Gross profit percentage is computed by dividing net sales by cost of goods sold. 2) The net income percentage is computed by dividing net income by gross profit. 3) If a company has $115,000 net sales, $65,000 in gross profit, and $12,000 in net income, the net income percentage would.
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5.2   Questions 1) Beginning inventory plus net purchases equals cost of goods sold. 2) A piece of artwork would probably be inventoried using the specific-identification method. 3) The objective of inventory tracking is to allocate the cost of goods available for sale between the cost of units sold and the cost of unsold.
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11) The adjusted trial balance will directly show the: A) total in the Cash account. B) final total in the Retained Earnings account. C) total of the adjustments. D) accounts that were adjusted. 12) The adjusted trial balance shows: A) accounts that may still be out of balance. B) revenues and expense amounts only. C) numbers ready to.
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6.3   Questions 1) In a broad sense, fraud is the use of deception or trickery for personal gain. 2) Fraud is always committed against an organization. 3) Fraud is one of the less perpetrated business crimes today. 4) An organization's employees are usually responsible for fraud that is committed by a business organization. 5) For.
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5.5   Questions 1) An example of full disclosure would be a footnote to the financial statements indicating what method was used to value inventory. 2) Knowledgeable decisions that are made by outsiders who read financial reports are a result of the concept of conservatism. 3) Shrinkage refers to the loss of inventory due.
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11) Renaud, Inc. has the following list of inventory: Item Unit Cost Selling Price DKW $13,257 $20,322 EOR $ 6,790 $7,192 CKS $18,302 $19,773 XCC $ 9,394 $11,274 CIS $27,434 $33,409 Under specific-identification, what is Renaud's ending inventory if EOR and CIS are not sold during the current period? A) $34,224 B) $40,601 C) $40,953 D) $51,369 12) Inland Industrial has the following list of inventory: Item Unit Cost Selling Price DKW $13,257 $20,322 EOR $ 6,790 $7,192 CKS $18,302 $19,773 XCC $ 9,394 $11,274 CIS $27,434 $33,409 Under.
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21) ________ entries transfer net income or net loss and dividends to the Retained Earnings account. A) Adjusting B) Closing C) General D) Timely 22) Closing entries are prepared for which of the following reasons? A) To get the accounts ready for the next accounting period B) To get the worksheet ready for the next accounting period C).
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21) The adjusted trial balance proves that: A) all adjusting entries have been recorded correctly. B) debit totals equal credit totals. C) no adjusting entry has been entered twice. D) the balance of the adjusted trial balance is correct. 22) The unadjusted trial balance for Supplies shows a $434 balance. If $132 of supplies were.
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1) Under accrual accounting, the most important GAAP concepts to remember are the recognition principle for expenses and the matching principle for revenues. 2) Accounts receivable and accounts payable are examples of accruals. 3) Recording office supplies as an asset after paying for them would be considered a deferral. 4) Because inventories are.
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6) The most popular inventory costing method is: A) FIFO. B) LIFO. C) average cost. D) specific identification. 7) ________ produces the lowest cost of goods sold and the highest gross profit when prices are increasing. A) FIFO B) LIFO C) Average cost D) Specific identification 8) ________ produces the highest cost of goods sold and the lowest.
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6) FOB means: A) first on board. B) from our buyer. C) fee on board. D) free on board. 7) Freight charges that are paid by a buyer are: A) added to Cost of Goods Sold. B) added to Inventory. C) subtracted from Inventory. D) subtracted from Cost of Goods Sold. 8) Transferring title refers to a: A) change of ownership. B).
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5.4   Questions 1) Under the conservatism principle, liabilities and expenses would be overstated, rather than understated. 2) The LCM rule compares original cost to current replacement cost to determine the amount at which inventory should be valued. 3) A material amount of value is one large enough to cause someone to change a.
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31) The ________ keeps a running balance of an individual account. A) general journal B) balance sheet C) general ledger D) posting reference 32) The ________ indicates where the information originated and to where the information was transferred. A) general journal B) balance sheet C) general ledger D) posting reference 33) One of the customers of Rodriguez Roofing, Inc. paid.
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11) A piece of equipment cost $1,000 and has a salvage value of $200. If it has an 8-year life, the annual depreciation expense under straight-line depreciation would be: A) $125. B) $100. C) $200. D) $800. 12) Adjusting entries for Supplies and Prepaid Rent would be adjustments for: A) deferred expense. B) deferred revenue. C) accrued expense. D).
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4.4   Questions 1) Sales Discounts and Sales Returns and Allowances are contra-accounts of the Sales account. 2) Debit card and credit card sales are counted as cash transactions. 3) A journal entry that has more than one debit or more than one credit is known as a complex journal entry. 4) The account Sales.
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3.4   Questions 1) To prove the equality of the debit and credit balances in the general ledger accounts after the closing entries have been journalized and posted, prepare the adjustments. 2) Revenues, expenses and Dividends are called permanent accounts. 3) Assets, liabilities and Retained Earnings are permanent accounts that are NOT closed at.
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11) Inventory errors cancel out at the end of ________ accounting periods. A) 1 B) 2 C) 3 D) 4 12) Which of the following is an INCORRECT statement if ending inventory is overstated? A) Cost of goods sold is overstated. B) Gross profit is overstated. C) Net income is overstated. D) Income tax is overstated. 13) Which of the.
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21) Which of the following would NOT be considered a control activity? A) Keeping accounting records B) Having written job descriptions C) Not having employees take vacations D) Changing passwords regularly 22) Which of the following would NOT be considered part of the control environment? A) Having integrity and ethical values B) Assessing chances of fraud C) Having.
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1) The process CPAs use to confirm that financial reports conform to GAAP is called a review. 2) U.S. GAAP has been organized into what is called the Accounting Standards Code. 3) Currently, most European countries are using International Financial Reporting Standards. 4) The U.S. is now using International Financial Reporting Standards.
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11) The accounts that are NOT closed are: A) assets, liabilities, and revenues. B) assets, liabilities, and stockholder's equity. C) assets, liabilities, and expenses. D) revenues, expenses and dividends. 12) Dividends paid and net losses are: A) additions to Retained Earnings. B) subtractions from Retained Earnings. C) additions to net income. D) subtractions from net income. 13) Revenues are: A) additions.
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6.2   Questions 1) An organization's employees are responsible for the design and implementation of the internal control system. 2) One objective of an internal control system is to safeguard the assets of a company. 3) Ensuring compliance with laws and regulations is an example of what following GAAP can do for a company. 4).
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11) Part of accrual accounting depends upon recording ________ entries at the end of the fiscal year. A) expense B) revenue C) adjusting D) debit 12) At the end of the period, which is prepared first? A) Income statement B) Balance sheet C) Adjusting entries D) Unadjusted trial balance 13) Recording Interest Receivable would be an example of a(n): A) deferred.
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4.3   Questions 1) Both purchase returns and allowances decrease the merchandiser's inventory cost. 2) The purchase of inventory affects both an asset and the stockholder's equity account. 3) An invoice with the credit terms 3/10, n/30 means that the customer has 3 days to take a 10% discount off of the invoice total. 4).
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11) A properly designed internal control system can guarantee that fraud will not occur. 12) Internal control is a comprehensive system that helps an organization do all of the following EXCEPT: A) safeguard assets. B) safeguard liabilities. C) operate efficiently and effectively. D) ensure compliance with applicable laws and regulations. 13) Internal control systems: A) are the.
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5.7   Questions 1) If a company experiences a loss of inventory for fire, there is no way to estimate the inventory. 2) The first step in using the gross profit method to estimate ending inventory is to: A) calculate the cost of goods available for sale. B) estimate the ending inventory. C) estimate the beginning.
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11) Current assets are listed on the balance sheet in: A) alphabetical order. B) order of liquidity. C) ascending order of value. D) descending order of value. 12) Wages Payable, Income Taxes Payable and Accounts Payable are: A) long-term liabilities. B) long-term assets. C) short-term liabilities. D) short-term assets. 13) A 10-year note payable would be listed on the balance.
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21) Olympic Enterprises had the following inventory data: Date Quantity Unit cost June 1 Beginning inventory 5 $52 June 4 Purchase 10 $55 June 7 Sale 12 June 11 Purchase 9 $58 June 14 Sale 8 Assuming average cost, what is the ending inventory after the June 14 sale? A) $228 B) $232 C) $214 D) $208 22) Cost of goods sold equals: A) ending inventory plus net purchases minus beginning inventory. B) beginning inventory minus net purchases plus.
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5.6   Questions 1) The ending inventory of one year becomes the beginning inventory of the next year. 2) Counting inventory that is in transit on December 31 that was shipped from the supplier FOB shipping point would not cause any error in the final inventory valuation. 3) An ending inventory error in one.
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4.6   Questions 1) Most merchandising businesses prepare a single-step income statement. 2) Cost of Goods Sold is part of general and administrative expenses. 3) Net Sales minus Cost of Goods Sold equals Gross Profit. 4) Net income is generally referred to as the company's "bottom line." 5) The statement of retained earnings for a merchandiser.
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31) Salary expense is $975 per day, Monday through Friday, and the business pays employees each Friday. If December 31 falls on a Wednesday, the amount of the adjusting entry to record accrued salaries would be: A) $2,925. B) $975. C) $1,950. D) $4,875. 32) The journal entry to record $2,750 of depreciation expense for.
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21) Which of the following accounts would never be adjusted in a journal entry? A) Prepaid Rent B) Supplies C) Inventory D) Cash 22) The difference between the cost of office equipment and accumulated depreciation–office equipment is called: A) market value. B) salvage value. C) book value. D) original value. 23) The total dollars in an accumulated depreciation account are: A).
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1) Merchandise inventory represents the goods that a merchandiser has available to sell to its customers. 2) Inventory is probably the retailer's smallest (by value) current asset. 3) Manufacturers have three different kinds of inventory. 4) GAAP allows two different kinds of inventory costing methods. 5) Under the specific-identification method, the flow of costs.
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21) The type of accounting required by GAAP is: A) modified cash. B) hybrid cash. C) cash. D) accrual. 22) The majority of businesses normally end their fiscal year on: A) June 30. B) September 30. C) December 31. D) some other date. 23) It is necessary to post: A) asset and liability entries. B) revenue and expense entries. C) adjusting entries. D).
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11) James, a customer, purchased $500 of merchandise from Haskins, Inc. Under the perpetual inventory system, Haskins, Inc. will record a: A) debit to Accounts Receivable or to Cash for $500. B) credit to Accounts Receivable or to Cash for $500. C) credit to Cost of Goods Sold for $500. D) debit to Sales.
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