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Study Resources (Accounting)

Accounting:  Concepts and Applications, 11e Chapter 6  1 11.Mitchell Company has the following information from its records and from the May bank statement: Cash balance per books $40,000 Ending cash balance per bank statement 50,000 Deposits made, not received by bank 12,000 Checks written, not processed by bank 20,000 Interest earned on bank account 100 Bank service charge 140 Direct deposit by customer (on.
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Accounting:  Concepts and Applications, 11e Chapter 6  1 MULTIPLE CHOICE 1.The major activities of a business include all BUT which of the following? a. Financing activities b. Operating activities c. Investing activities d. Earning activities 2.Which type of the major activities of a business are best described as those events that raise money by means other than operations? a. Financing activities b. Operating activities c. Investing activities d. Earning.
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Accounting:  Concepts and Applications, 11e Chapter 4  1 14.For each account listed below, check whether it appears on the income statement or the balance sheet and whether it would normally have a debit or a credit balance. (Note: This covers the entire accounting cycle.) The first line has been completed as.
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Accounting:  Concepts and Applications, 11e Chapter 5  1 11.Restoring public confidence in the financial reporting process requires that auditors remain independent. How does the Sarbanes-Oxley Act constrain auditors to ensure independence? 12.Restoring public confidence in the financial reporting process requires that management ensure financial statement users of the steps taken to provide.
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Accounting:  Concepts and Applications, 11e Chapter 4  1 9.Palmer Pen Co. has the following adjusted trial balance: Palmer Pen Co. Adjusted Trial Balance December 31, 2012 Debit Credit Cash $  50,000 Accounts Receivable 40,500 Supplies 4,000 Inventory 74,580 Buildings 100,000 Machinery and Equipment 30,000 Land 20,000 Accounts Payable $  37,400 Notes Payable 49,180 Capital Stock (100,000 shares outstanding as of 12/31/12) 150,000 Retained Earnings (1/1/2012) 76,000 Sales Revenue 480,750 Salaries Expense 125,000 Insurance Expense 6,000 Dividends 20,000 Cost of Goods Sold 290,900 Utilities Expense 12,000 Income Tax Expense     20,350                 $793,330 $793,330 Prepare an income statement and a.
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Accounting:  Concepts and Applications, 11e Chapter 5  1 81.Which of the following does Sarbanes-Oxley NOT require management to do? a.Develop and enforce an officer code of ethics b.Make loans to executive officers and directors c.Prepare a statement to accompany the audit report d.Support a much stronger board and audit committee in each public company 82.The internal.
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Accounting:  Concepts and Applications, 11e Chapter 4  1 61.On December 31, the trial balance of Fife Company included the following account with a credit balance: Unearned advertising revenue $16,200 If it is determined that the amount of advertising revenue applicable to future periods is $10,400, the correct adjusting entry would be: a. Debit Unearned Advertising Revenue.
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Accounting:  Concepts and Applications, 11e Chapter 5  1 9.Internal earnings targets represent an important tool in motivating managers to increase sales efforts, control costs, and use resources more efficiently. Such internal targets also can cause managers to resort to extreme measures in order to meet goals established by upper management. Earnings.
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Accounting:  Concepts and Applications, 11e Chapter 4  1 8.Lincoln Company's adjusted trial balance as of August 31, 2012, is shown below. Lincoln Company Adjusted Trial Balance August 31, 2012 Debits Credits Cash $30,500 Accounts Receivable 7,400 Supplies 800 Prepaid Rent 3,500 Inventory 5,000 Land 16,200 Accounts Payable $15,300 Capital Stock (10,000 shares outstanding as of 8/31/12) 45,400 Retained Earnings (9/1/11) 900 Dividends 800 Sales Revenue 37,800 Cost of Goods Sold 16,600 Advertising Expense 1,800 Salaries Expense   15,000             $98,500 $98,500 Prepare a balance sheet for the year ended.
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Accounting:  Concepts and Applications, 11e Chapter 6  1 13.A U.S. company entered into a sales transaction with a Japanese company on September 15 for 200,000 yen. The U.S. company prepares quarterly financial statements. The Japanese company will pay for the sale on November 20. The exchange rates were as follows: 1 Yen September.
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Accounting:  Concepts and Applications, 11e Chapter 6  1 61.Samson Corporation had sales of $1,000,000 during 2012, of which 80 percent were on credit. On December 31, 2012, Accounts Receivable totaled $80,000 and Allowance for Bad Debts had a debit balance of $1,200. Given this information, if uncollectible receivables are estimated to.
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Accounting:  Concepts and Applications, 11e Chapter 4  1 91.Given this information, the entry to close expenses would include a a. Debit to Utilities expense of $42,000 b. Credit to Utilities expense of $42,000 c. Credit to Sales revenue of $630,000 d. Debit to Salaries expense of $483,000 92.The December 31, 2012, adjusted account balances taken from the Adjusted Trial Balance.
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Accounting:  Concepts and Applications, 11e Chapter 4  1 12.Lincoln Company's trial balance as of August 31, 2012, is shown below: Lincoln Company Trial Balance August 31, 2012 Debits Credits Cash $30,500 Accounts Receivable 7,400 Supplies 800 Prepaid Rent 3,500 Inventory 5,000 Land 16,200 Accounts Payable $15,300 Capital Stock 45,400 Retained Earnings 900 Dividends 800 Sales Revenue 37,800 Cost of Goods Sold 16,600 Advertising Expense 1,800 Salaries Expense   15,000             $98,500 $98,500 Prepare the post-closing trial balance for the year ended August 31, 2012. 13.Palmer Pen Co. has the following.
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Accounting:  Concepts and Applications, 11e Chapter 6  1 3.On March 1, Chickadee Company sold merchandise to Oriole Company for $5,000 with terms of 3/10, net 30.  On March 10, Oriole Company paid 50% of the amount due (assume the company allows the discount on partial payments).  On March 25, Oriole Company.
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Accounting:  Concepts and Applications, 11e Chapter 4  1 6.Mycro Corporation, a computer service company, had the following transactions during 2012. a. George Hale, a salesman with Mycro, signed Datum Sales to a two-year service contract for $48,000. The contract was signed on June 1, 2012, with Datum paying the full amount on that.
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Accounting:  Concepts and Applications, 11e Chapter 6  1 11.The accounting term for the recording of a sale through a journal entry is a. Revenue Accrual b. Revenue Recognition c. Receipt of Revenue d. Sales Transaction 12.The two criteria that need to be met in order revenue to be recognized are a. Work has been started and cash collection is reasonably assured. b. Work.
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Accounting:  Concepts and Applications, 11e Chapter 5  1 7.List and describe the four major reasons for managing reported earnings. 8.Research has shown that numerous companies manage their earnings. A variety of earnings management techniques are available ranging from income smoothing to outright fraud. Define income smoothing and explain how it is implemented. .
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Accounting:  Concepts and Applications, 11e Chapter 5  1 13.List the five different processes used by auditors in order to gain confidence in the quality of the reporting process. For each process, state who primarily uses this process (internal auditors, external auditors, or both) and give a specific example of how this.
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Accounting:  Concepts and Applications, 11e Chapter 4  1 3.In the course of your examination of the books and records of Griffin Company for the year ending December 31, 2012, you find the following data Salaries earned by employees $  40,000 Salaries paid to employees 50,000 Total sales revenue 700,000 Cash collected from sales 750,000 Utility expense incurred 4,500 Utility bills paid 4,200 Cost of goods.
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Accounting:  Concepts and Applications, 11e Chapter 6  1 .91.Wilbur Company's monthly bank statement showed an ending balance of $36,928. The bank reconciliation included a deposit in transit, $3,274; outstanding checks, $4,340; an "NSF" check, $1,576; a bank service charge, $50; and proceeds of a customer's note collected by the bank, $4,600..
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Accounting:  Concepts and Applications, 11e Chapter 4  1 4.Griesbach, Inc., prepares monthly financial statements. The September 30, 2012, trial balance reveals the following Debit Credit Supplies on Hand $1,200 Unearned Rent Revenue $  1,800 Notes Payable 45,000 An inventory of supplies reveals that only $675 are on hand at the end of the month. Of the unearned rent revenue, $600 remains.
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Accounting:  Concepts and Applications, 11e Chapter 5  1 51.Which of the following is a poor internal accounting control feature? a.Division of work b.Combining accountability with custodianship c.Rotation of personnel d.Internal auditing 52.Keeping marketable securities and cash in a fireproof vault is an example of which type of accounting procedure? a.Physical control over records b.Adequate documents and records c.Proper.
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Accounting:  Concepts and Applications, 11e Chapter 6  1 9.The following are summary financial data of the three most recent years for Birch company. 2013 2012 2011 Net Sales 948,000 876,000 745,000 Net Accounts Receivable 35,000 45,500 50,800 Cost of Goods Sold 784,000 798,000 655,000 Net Accounts Payable 19,800 25,700 26,400 Using the data above compute the following ratios for 2013 and 2012: 1. Accounts receivable turnover 2. Average collection period 10.In July, Romish Company.
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Accounting:  Concepts and Applications, 11e Chapter 4  1 PROBLEM 1.In the course of your examination of the books and records of Andelin Company for the year ending December 31, 2012, you find the following data Cost of goods sold $550,000 Salaries earned by employees   95,000 Rent paid 50,000 Salaries paid to employees 110,000 Total sales revenue 945,000 Cash paid for advertising 4,000 Taxes paid 12,000 Cash.
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Accounting:  Concepts and Applications, 11e Chapter 6  1 7.At the end of the year, Skipper Company had the following information. Credit sales for the year $ 650,000 Accounts receivable, beginning of year 135,000 Allowance for bad debts, beginning of year 47,000 Allowance for bad debts, end of year 62,000 Cash collections during the year 665,000 Bad debt expense for the year 55,000 Calculate the.
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Accounting:  Concepts and Applications, 11e Chapter 4  1 81.The entry to close the revenue accounts normally includes a a. Debit to each revenue account b. Credit to each revenue account c. Debit to each expense account d. Credit to each expense account 82.Which of the following is NOT a true statement? a. Expenses are closed with a credit b. Revenues are closed with a.
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Accounting:  Concepts and Applications, 11e Chapter 5  1 MULTIPLE CHOICE 1.Which of the following is NOT a reason for problems occurring in the financial statements? a.Fraud b.Disagreement c.Errors d.Safeguards 2.Which of the following statements is true about errors in the financial statements of a company? a.Errors are a result of intentional mistakes made while recording or posting transactions. b.Errors.
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Accounting:  Concepts and Applications, 11e Chapter 6  1 71.Which of the following factors are used to compute the average collection period of accounts receivable? a. Inventory turnover and 365 days b. Net sales and average inventory c. Accounts receivable turnover and 365 days d. Average accounts receivable and cost of goods sold Dana Company's December 31, 2012, financial statements showed.
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Accounting:  Concepts and Applications, 11e Chapter 5  1 71.Which of the following typically involves the use of non-GAAP accounting? a.Delaying a transaction to be recorded in a more advantageous quarter b.Changing an interest rate and disclosing it in the financial statements c.Recording expenses as assets d.Changing an interest rate but not disclosing it in the.
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Accounting:  Concepts and Applications, 11e Chapter 6  1 41.When the allowance method of recognizing bad debt expense is used, the entries at the time of collection of a small account previously written off would a. Increase net income b. Increase Allowance for Bad Debts c. Decrease net income d. Decrease Allowance for Bad Debts 42.Allowance for Bad Debts is an.
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Accounting:  Concepts and Applications, 11e Chapter 6  1 21.The difference between gross sales and net sales is a. Cost of goods sold b. Selling and administrative expenses c. Sales discounts and sales returns and allowances d. Gross margin 22.Which of the following is NOT a cash control procedure? a. Separate the handling and recording of cash b. Deposit all cash receipts daily c. Make all cash.
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Accounting:  Concepts and Applications, 11e Chapter 5  1 41.If an external auditor suspects wrongdoing in financial statements, the concerns should be addressed to: a.The audit committee b.The management of the company c.The Securities and Exchange Commission d.The board of directors 42.The control environment can be defined as a.The lines of authority and responsibility within a company. b.The.
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Accounting:  Concepts and Applications, 11e Chapter 4  1 15.For each account listed below, mark the column that BEST describes the correct classification of the account and mark the column for the financial statement on which the account would appear.  Assume that all accounts have normal balances. (NOTE: This problem covers the.
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Accounting:  Concepts and Applications, 11e Chapter 6  1 81.Eckstein Company sells television sets with a two year service warranty. Each television sells for $400. In September, Eckstein sold 50 television sets and estimates that during the warranty period Eckstein will provide an average of $40 of service costs per television set..
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Accounting:  Concepts and Applications, 11e Chapter 5  1 21.Which of the following statements is true about disagreements in the financial statements of a company? a.Disagreements are a result of intentional mistakes made while recording or posting transactions. b.Disagreements are not intentional and when detected are immediately corrected. c.Disagreements result when different people arrive at.
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Accounting:  Concepts and Applications, 11e Chapter 6  1 5.The following information was abstracted from the records of Sydney Corporation: Accounts receivable, December 31, 2012 $ 1,160,000        Allowance for bad debt before adjustment, December 31, 2012 36,000 (dr.) Sales (2012) 4,360,000        Sales discounts (2012) 36,000        Sales returns and allowances (2012) 54,000        Prepare the adjusting entry for Bad Debt expense under each of the.
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Accounting:  Concepts and Applications, 11e Chapter 6  1 PROBLEM 1.For each of the business activities listed below, state whether it is an operating, an investing or a financing activity. 1. Purchasing equipment 2. Selling stock 3. Purchasing inventory for resale 4. Paying utility bills 5. Borrowing money from a bank 6. Purchasing land 7. Selling goods for a profit 8. Buying stock from another company 9. Paying salaries to employees 10. Performing.
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Accounting:  Concepts and Applications, 11e Chapter 5  1 61.As William is preparing the end of year financial statements, he has been asked to reconsider the timing of revenues and expenses in order to report less volatile earnings. This is an example of a.Window dressing b.Meeting internal targets c.Income smoothing d.Meeting external expectations 62.As William is preparing.
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Accounting:  Concepts and Applications, 11e Chapter 4  1 51.Montana Inc.'s fiscal year ended on December 31, 2012. The balance in the prepaid insurance account as of December 31, 2012, was $34,800 (before adjustment) and consisted of the following policies: Policy Number Date of Purchase Date of Expiration Balance in Account 279248 10/1/11 9/30/12 $14,400 694421 3/1/12 2/28/14     9,600 800616 7/1/11 6/30/13   10,800 $34,800 The adjusting entry required on December 31, 2012, would be a. Insurance.
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Accounting:  Concepts and Applications, 11e Chapter 5  1 11.Which one of the following errors causes net income to be understated? a.Failure to record wages employees have earned but not yet been paid b.Failure to record depreciation expense c.Failure to record collection of accounts receivable d.Failure to record revenue earned but not billed 12.A company purchased a.
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Accounting:  Concepts and Applications, 11e Chapter 5  1 5.List the five major concerns that companies must keep in mind when designing their internal control system. 6.Control activities are the policies and procedures that management has adopted to provide reasonable assurance that the financial reports are accurate and that the company’s objective are.
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Accounting:  Concepts and Applications, 11e Chapter 5  1 3.The income statement and the balance sheet for Trust Company for the year ended December 31, 2012 are shown below: Trust Company Income Statement For the Year Ended December 31, 2012 Sales revenue $900,000 Less: Cost of goods sold   500,000 Gross profit $400,000     Operating expenses:         Advertising $35,000         Rent 42,000         Salaries   150,000     227,000 Net income $ 173,000 Trust Company Balance Sheet December 31, 2012 Assets       Current assets:         Cash $  165,000         Accounts.
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Accounting:  Concepts and Applications, 11e Chapter 5  1 31.Which of the following is NOT one of the major safeguards in the financial reporting process? a.Earnings management b.Internal controls c.Internal auditors d.External auditors 32.Which of the following is NOT one of the major concerns most companies have when they are designing internal controls? a.The assets and records are.
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Accounting:  Concepts and Applications, 11e Chapter 5  1 4.In the spaces provided, write the letter of the definition for each of the following terms. A. Policies and procedures used by management to meet their needs B. Internal control activities that are designed to prevent the occurrence of errors and fraud C. Internal control activities that are designed.
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Accounting:  Concepts and Applications, 11e Chapter 4  1 71.The purpose of financial statement analysis is to a. Use the past performance to predict future performance. b. Evaluate the current performance in order to identify problem areas. c. Both use the past performance to predict future performance and evaluate the current performance in order to identify problem.
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Accounting:  Concepts and Applications, 11e Chapter 6  1 51.The December 31 trial balance of Humming Company included the following accounts: Accounts Receivable $  25,000        Allowance for Bad Debts 2,000 (cr.) Sales Revenue 325,000        Sales Returns and Allowances 12,000        If it is estimated that 1 percent of the net sales is uncollectible, the entry to record the estimate of bad debts would.
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Accounting:  Concepts and Applications, 11e Chapter 4  1 7.Mancheski and Sons Inc. reported net income of $45,600 in 2012. Carl, the company bookkeeper, neglected to make the necessary adjusting entries. The necessary adjustments are given below: a. Supplies at the beginning of the year were $4,000. Supply purchases during the year totaled $2,500.
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Accounting:  Concepts and Applications, 11e Chapter 5  1 PROBLEM 1.Discuss the three types of problems that can occur in financial statements. 2.During the end of year audit, the auditors found the following errors in Blossom Company’s financial statements: a. No adjusting entry was made for salaries of $15,000 that were earned in December but will.
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Accounting:  Concepts and Applications, 11e Chapter 6  1 31.Raven Company had the following account balances  Sales Revenue, $100,000; Sales Returns and Allowances, $2,400; Sales Discounts,2,400; and Bad Debts, $400. Given these balances, the amount of net sales is a. $100,000 b. $98,000 c. $95,600 d. $95,200 32.Customers who do NOT pay for the merchandise that they bought on credit are.
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Accounting:  Concepts and Applications, 11e Chapter 4  1 10.Roosevelt Company's adjusted trial balance as of August 31, 2012, is shown below. Roosevelt Company Adjusted Trial Balance August 31, 2012 Debits Credits Cash $61,000 Accounts Receivable 14,800 Supplies 1,600 Prepaid Rent 7,000 Inventory 10,000 Land 32,400 Accounts Payable 30,600 Capital Stock (10,000 shares outstanding as of 8/31/12) 90,800 Retained Earnings (9/1/11) 1,800 Dividends 1,600 Sales Revenue 75,600 Cost of Goods Sold 33,200 Advertising Expense 3,600 Salaries Expense   30,000             $197,000 $197,000 Prepare the income statement and a statement of.
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