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Study Resources (Accounting)

3.5   Learning Objective 3-5 1) The books need to be closed in order to prepare the accounts for the next period's transactions. 2) Temporary accounts are closed at the end of the accounting period. 3) During the closing process, each revenue account is credited for the amount of its balance. 4) The income statement.
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Account Debit Credit Cash         600 Accounts Receivable       1,800 Inventory       3,000 Store Supplies       1,900 Prepaid Rent       1,500 Land     23,000 Building     50,000 Accumulated Depreciation–Building   7,500 Store Equipment      27,000 Accumulated Depreciation–Store Equipment 15,625 Accounts Payable 6,000 Notes Payable   2,500 Salaries Payable Unearned Revenue 8,000 Common Stock 31,655 Retained Earnings 2,520 Revenue 35,000 Rent Expense Store Supplies Expense Salaries Expense Depreciation Expense–Building Depreciation Expense–Store Equipment Totals   $108,800   $108,800 The following data is available from Mindy Meadows, Controller for Eckle Ltd.: A)  Store.
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A.The balance in Office Supplies before adjustment is $4,200. A physical count reveals $2,750 of supplies on hand at December 31. B.A computer was purchased on January 1 for $12,000. The computer has a useful life of 3 years and is depreciated using the straight-line method. C.A one-year insurance policy costing $5,400.
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31) The rule that all major groups of transactions should be supported by hard copy documents or electronic records is part of the control procedure of: A) limited access. B) segregation of duties. C) adequate records. D) proper approvals. 32) A company has a policy that all checks over $5,000 need to have the signature.
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3.1   Learning Objective 3-1 1) Accounting can be based on either the cash basis or the accrual basis. 2) Equity is increased when company makes a sale, not when the company collects the cash. 3) The transaction to record a cash sale will be the same under the accrual and cash-basis of accounting. 4).
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31) ________ will be increased when a company receives cash before performing the services. A) Prepaid Rent B) Accumulated Depreciation C) Unearned Sales Revenue D) Accrued Sales 32) The book value of a plant asset is the: A) accumulated depreciation less the cost of the asset. B) cost of the asset. C) balance in the accumulated depreciation account. D).
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28) The adjusted trial balance of Debit Company is shown below. Prepare the necessary closing entries. There were no dividends paid during the year. Debit Company Adjusted Trial Balance December 31, 2012 Cash$6,500 Accounts receivable8,000 Supplies1,000 Prepaid Rent (3 months)2,500 Equipment, net46,000 Accounts payable$4,000 Salary payable2,000 Unearned revenue (2 month advance)2,000 Note payable — long term14,000 Common stock10,000 Retained earnings14,700 Service revenue75,000 Salary expense40,000 Rent expense10,000 Supplies expense1,500 Depreciation.
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15) The adjusted trial balance of Debit Company is shown below: Debit Company Adjusted Trial Balance December 31, 2012 Cash$6,500 Accounts receivable8,000 Supplies1,000 Prepaid Rent (3 months)2,500 Equipment, net42,000 Accounts payable$4,000 Salary payable2,000 Unearned revenue (2 month advance)2,000 Note payable — long term14,000 Common stock10,000 Retained earnings14,700 Dividends4,000 Service revenue75,000 Salary expense40,000 Rent expense10,000 Supplies expense1,500 Depreciation expense5,000 Utilities expense 1,200      Total$121,700$121,700 Prepare Debit Company's income statement, statement of retained earnings and.
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81) The Book Company had the following adjustments at December 31, the end of the accounting period: A.The Book Company uses straight-line depreciation for its equipment. The amount of depreciation to be recorded for the equipment is $10,500. B.Accrued interest of $2,000 on a note receivable will be received in January. C.On November.
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21) Every adjusting entry must affect both the income statement and the balance sheet. 22) Adjusting entries are: A) not needed under the accrual basis of accounting. B) prepared at the option of the accountant. C) prepared at the beginning of the accounting period to update all accounts. D) prepared at the end of the.
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51) Which of the following is NOT a correct statement about adjusting entries? A) Every adjusting entry affects cash. B) Every adjusting entry affects the balance sheet. C) Every adjusting entry affects net income. D) Every adjusting entry must balance. 52) The adjustment for an accrued expense: A) increases expenses and decreases assets. B) increases expenses and.
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Chapter 4   Internal Control & Cash   4.1   Learning Objective 4-1 1) One of the main elements of the fraud triangle is rationalization. 2) Perpetrators of fraud usually commit fraud for their own short-term economic gain. 3) Fraud is a major problem. 4) One of the most common types of fraud that impacts the financial statements.
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21) Rosewood Company had current assets of $582, current liabilities of $433, total assets of $732, and no long-term liabilities. If Rosewood executes a six-month note for $500, what is the new current ratio? A) 0.76 B) 1.16 C) 1.34 D) 2.50 22) ABC Company has total assets of $360,000 and total liabilities of $200,000..
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41) For each of the following situations, indicate which internal control procedure ABC company has violated: _____1.Since they are costly, background checks are not done for the employees. _____2.Purchases of items on credit do not need the approval of the purchasing department. _____3.All hard copies of documents are shredded after one month and.
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11) Which is NOT an objective of an internal control system? A) Safeguarding of assets B) Compliance with company policies C) Compliance with legal requirements D) Risk minimization 12) The objective of internal control that minimizes waste, which lowers costs and increases profits is: A) operational efficiency. B) asset safeguards. C) cost minimization. D) reliable accounting records. 13) The Sarbanes-Oxley.
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3.3   Learning Objective 3-3 1) In an unadjusted trial balance, the accounts are not yet ready for the preparation of the company's financial statements. 2) Accounts Receivable and Common Stock are accounts that need to be adjusted at the end of the period. 3) Certain accounts do not need to be adjusted at.
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4.2   Learning Objective 4-2 1) The primary way that fraud and errors are prevented is by external auditors. 2) External auditors are responsible for maintaining a company's system of internal controls. 3) All employees should have a background check before being hired, and should be properly trained and supervised. 4) Small companies cannot have.
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3.2   Learning Objective 3-2 1) The revenue principle determines when to record revenue and the amount of revenue to record. 2) The revenue principle states that revenue should be recorded in the same period as the cash is received. 3) In the retail industry, income is recognized under IFRS when the cash is.
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11) The debt ratio measures a firm's ability to: A) pay current debt. B) pay long-term debt. C) purchase additional assets. D) pay both current and long-term debt. 12) Which of the following is correct regarding transactions and their effect on ratios? A) Lending agreements often require a company's current ratio to stay above 2.5. B) Lending.
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41) The ending bank statement balance for November is $9,845. The bank statement shows a service charge of $95, electronic funds receipts of $500, and a NSF check for $350. Deposits in transit total $2,050 and outstanding checks are $1,835. What is the adjusted bank balance? A) $8,900 B) $10,060 C) $10,115 D) $13,730 42).
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3.6   Learning Objective 3-6 1) To analyze a company's financial position, decision makers use data and ratios computed from various items in the financial statements. 2) A current ratio below 1.0 is a sign of financial strength for a company. 3) A low debt ratio is safer than a high debt ratio. 4) The.
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44) Prepare a bank reconciliation using Fancy Clothing Store's information for August 31. •Two deposits made on August 31 were not on the bank statement, totaling $7,413. •The note. •August 31 balance in Cash was $11,677. •The bookkeeper forgot to record check # 1578 for $843 which was cashed by the bank on August.
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30) Heidi's Hut, Inc. has the following adjusted trial balance as of March 31, 2012. Prepare a classified balance sheet as of that date. Account Debit Credit Cash 600 Accounts Receivable 1,800 Inventory 3,000 Store Supplies 1,900 Prepaid Rent 1,500 Land 23,000 Building 50,000 Accumulated Depreciation—Building 7,500 Store Equipment 27,000 Accumulated Depreciation—Store Equipment 15,625 Accounts Payable 6,000 Notes Payable 2,500 Salaries Payable Unearned Revenue 8,000 Common Stock 31,650 Retained Earnings 2,520 Revenue 41,000 Rent Expense 1,000 Store Supplies Expense 2,000 Salaries Expense 1,000 Depreciation Expense—Building 1,500 Depreciation Expense—Store Equipment 500 Totals $114,800 $114,800 .
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31) Which of the following is a correct numbering system for a chart of accounts? A) Accounts payable is numbered 153. B) Utilities expense is numbered 487. C) Accounts receivable is numbered 104. D) Sales revenue is numbered 809. 32) Which account has a normal debit balance? A) Salaries payable B) Common Stock C) Advertising Expense D) Service revenue 33).
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11) After the closing entries are prepared: A) all asset accounts will have a zero balance. B) the Retained Earnings account will have the correct ending balance. C) the temporary accounts will have debit balances. D) all liability accounts will have a zero balance. 12) Accounts that relate to a limited period are called: A) asset.
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11) ________ will not be found on the statement of retained earnings. A) Net income. B) Dividends. C) Stockholders' equity. D) Net loss. 12) Revenues and expenses affect stockholders' equity; therefore, net income is then transferred to: A) the income statement. B) retained earnings. C) the balance sheet. D) none of the above. 13) ABC Company has a balance of.
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24) Sam's Fancy Foods has the following Trial Balance as of March 31, 2012. Determine the debt ratio. Account Debit Credit Cash 10,500 Accounts Receivable 3,800 Inventory 3,000 Store Supplies 1,900 Prepaid Rent 1,500 Land 28,000 Building 50,000 Accumulated Depreciation–Building 10,000 Store Equipment 27,000 Accumulated Depreciation--Store Equipment 15,625 Accounts Payable 9,000 Notes Payable due in one year 4,500 Salaries Payable            1,000 Unearned Revenue 12,000 Common Stock 31,655 Retained Earnings 4,920 Revenue 63,000 Rent Expense 7,000 Salaries Expense 14,000 Depreciation Expense–Building 3,500 Depreciation Expense--Store Equipment 1,500 TOTALS $151,700   $151,700 25) The adjusted trial balance of Debit.
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21) The following accounts are listed in order of liquidity: A) Cash, Inventory, Accounts Receivable, Furniture B) Cash, Accounts Receivable, Inventory, Furniture C) Furniture, Cash, Accounts Receivable, Inventory D) Furniture, Cash, Inventory, Accounts Receivable 22) When classifying assets and liabilities: A) assets are classified as liquid and non-liquid. B) for most businesses the operating cycle is two.
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87) For the year ended, December 31, 2012, the Acme Chemical Company omitted the following adjusting journal entries in error. For each entry, indicate if net income will be overstated or understated by placing an "X" in the appropriate box. JOURNAL ENTRY OMITTED NET INCOME NET INCOME OVERSTATED UNDERSTATED 1. Revenue previously recorded as.
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91) The accounting records of Aqua Inc. include the following selected unadjusted balances at June 30: Supplies, $2,000 Prepaid insurance, $2,500 Salary Payable, $0 Unearned Revenue, $1800 Service Revenue, $35,000 Salary Expense, $8,000 Supplies Expense, $0 Insurance expense, $0. The company obtains the following data for the June 30 adjusting entries: A) Supplies on hand, $600 B) Prepaid insurance that.
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11) ________ is the most common fraud, but ________ is the most expensive fraud. A) Fraudulent financial reporting, misappropriation of assets B) Misappropriation of assets, fraudulent financial reporting C) Misappropriation of assets, cooking the books D) Cooking the books, misappropriation of assets 12) ________ is the element in the fraud triangle results from either critical.
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21) A fidelity bond is a(n): A) employment contract for a specified period of time. B) insurance policy that reimburses a company for employee theft. C) contract prohibiting former employees from working for a competitor. D) promise by a company to safeguard customers' personal information. 22) When a company is determining its risk assessment: A) the.
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71) On November 1, Phillips Tool and Die Company paid six months' insurance in advance totaling $9,000. An adjusted trial balance prepared on December 31 would include a balance in the Prepaid Insurance account of: A) $0. B) $3,000. C) $6,000. D) $9,000. 72) The balance in the Accumulated Depreciation — Machine account at the.
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26) The ABC Company has the following adjusted trial balance as of December 31, 2012: Account Debit Credit Cash            800 Accounts Receivable         1,000 Inventory         2,000 Store Supplies         1,900 Prepaid Rent           500 Land         6,000 Building        40,000 Accumulated Depreciation–Building         8,500 Accounts Payable         7,500 Notes Payable          2,300 Unearned Revenue         4,100 Common Stock          6,600 Retained Earnings          3,100 Service Revenue        33,000 Rent Expense         2,300 Store Supplies Expense         1,200 Salaries Expense         6,400 Depreciation Expense–Building          1,400 Telephone Expense          1,600 Totals     .
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44) Below is the trial balance for Puff Toys. Puff Toys Trial Balance December, 31, 2012 Account   Debit   Credit Cash       5,000 Accounts Receivable       2,000 Equipment      4,000 Accounts Payable      3,000 Taxes Payable      2,000 Common Stock     3,000 Sales Revenue     7,000 Rent Expense       2,000 Salary Expense       3,000      Totals    14,000   17,000 When trying to determine why the trial balance does not balance, it was discovered that: 1.Several of the.
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3.4   Learning Objective 3-4 1) The balance sheet is the last financial statement to be prepared. 2) Net income for the period appears on the income statement and the balance sheet for the period. 3) The beginning balance of retained earnings appears on the Balance Sheet and the statement of retained earnings. 4) The.
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