Accounting Expert Answers & Study Resources : Page 135

Learning Objective 7.1 Questions 1) Given the following data, what is cost of goods sold? Sales revenue $730,000 Beginning inventory 80,000 Ending inventory 95,000 Purchases of inventory160,000 A) $585,000 B) $145,000 C) $570,000 D) $175,000 E) $555,000 2) Given the following data, what is cost of goods sold? Sales revenue $10,000 Beginning inventory 3,000 Ending inventory 7,000 Purchases of inventory 5,000 A) $12,000 B) $ 9,000 C).

Learning Objective 7.4 Questions 1) Using the LIFO method, the earliest purchases of inventory are assumed to be contained A) on the balance sheet as part of ending inventory. B) on the income statement as part of cost of goods sold. C) equally split between the income statement and the balance sheet. D) Impossible to.

Learning Objective 6.4 Questions 1) Consider the following information: Cash sales $ 59,000 Credit sales 510,000 Beginning Cash 18,000 Ending Cash 11,500 Beginning Retained Earnings 32,300 Ending Retained Earnings 41,700 Beginning Accounts Receivable 40,000 Ending Accounts Receivable 50,000 Net Income 64,000 What is the accounts receivable turnover? A) 1.20 B) 2.92 C) 11.33 D) 12.64 E) 13.78 2) Consider the following information: Cash sales $ 59,000 Credit sales 510,000 Beginning.

46) On January 1, 2009, Elicir Technologies purchased lawn mowers for $60,000. The lawn mowers have an estimated life of 8 years or 40,000 hours and an estimated residual value of $4,000. Elicir Technologies must choose the depreciation method that appropriately allocates depreciation over the lawn mowers' useful life and.

21) The cost of merchandise acquired is the invoice price of the goods plus directly identifiable inbound transportation costs less any cash or quantity discounts and less any returns or allowances. 22) Silver Line Transportation purchased inventory on account for $20,000 on April 2, 20X3. They use a periodic inventory system..

2) Which of the following statements is FALSE? A) Historically, the periodic system has been associated with low volume, high value items. B) Historically, the perpetual system has been considered more expensive and cumbersome to maintain. C) The perpetual system is better able to aid management in pricing and ordering inventory. D) Computerized inventory.

11) Neslund Ornamentals offered a 2% trade discount to Parsons Retail Outlet for all purchases over $200,000. Parsons Retail Outlet purchased $300,000 from Neslund Ornamentals on account. Neslund uses the periodic inventory system. Which of the following is the journal entry made by Neslund Ornamentals to recognize the sale and.

Learning Objective 8.3 Questions 1) Compatibility Services acquired an $80,000 machine on January 1, 20X3. The machine is estimated to have a useful life of 8 years, and a residual value of $4,000. For units-of-production depreciation purposes, the machine is expected to produce 400,000 units. What is the depreciable value of.

11) Compatibility Services acquired an $80,000 machine on January 1, 20X3. The machine is estimated to have a useful life of 8 years, and a residual value of $4,000. For units-of-production depreciation purposes, the machine is expected to produce 400,000 units. What is the balance in the accumulated depreciation account.

21) Assume the periodic inventory system is used. Nicolla Company sold inventory for cash of $6,000. A week later, the inventory was returned and a cash refund was given to the customer. Nicolla's journal entry to record the return of the inventory would be which of the following? A) Cash 6,000 Accounts.

31) The accumulated depreciation account represents a growing amount of cash to be used to replace the asset. 32) In order to calculate depreciation, the current market value of the equipment, the salvage value, and the estimated useful life must be known. 33) Book value is determined by adding salvage value to.

Learning Objective 6.1 Questions 1) A long term contract to provide services for New York City was awarded to Mason Technology on December 30, 20X1. The 4-year contract is set for $160 million and payment is certain. Services are to be provided evenly over 20X2 through 20X5. Progress measures are dependable,.

10) For each of the following items, identify whether they are a tangible or intangible asset. In addition, if the asset is long-lived, identify whether it is depreciated, amortized, or depleted. If the asset is not a long-lived asset, identify it as a current asset. Tangible/ Depreciated/ Intangible /Current Amortized/Depleted 1) Natural gas.

Learning Objective 8.11 Questions 1) Which statement is FALSE? A) The economic life of an intangible asset does not always equal its legal life. B) The cost of developing an intangible asset internally is capitalized as an asset. C) Intangible assets are similar to fixed assets, in that their acquisition costs are capitalized as.

Learning Objective 6.2 Questions 1) Lazareth Machine Metals sold inventory to Talla Manufacturing for $5,000 cash. Which of the following is the journal entry made by Lazareth Machine Metals? Assume the periodic inventory system is used. A) Cost of Goods Sold 5,000 Sales 5,000 B) Cash 5,000 Inventory 5,000 C) Accounts Receivable 5,000 Sales 5,000 D) Cash 5,000 Sales.

11) Biscuit Bakery had the following activity in its inventory account during August 20X3. Cost per Date        Activity                 Units     Unit Cost     Total August 1  Beginning inventory100 $3.00$300 August 3  Purchase 403.10 124 August 7  Sale 50 August 12  Purchase 503.20160 August 16  Sale 70 August 23  Sale 40 August 30  Purchase 603.30198 What is the ending inventory balance at August.

Learning Objective 7.6 Questions 1) If the ending inventory is overstated by $18,000 in 20X3, and assuming a constant 30% tax rate, then what will be the effect on net income in 20X4? A) Net income will be understated by $5,400 in 20X4. B) Net income will be overstated by $5,400 in 20X4. C).

Learning Objective 7.3 Questions 1) In a transaction where the merchandise invoice indicates F.O.B. shipping point, who pays the cost of shipping? A) The buyer B) The seller C) The common carrier D) The freight forwarder E) None of the above 2) On March 1, 20X3, Environmental Impacts acquired inventory on account. The cost of the inventory.

Learning Objective 8.9 Questions 1) Companies electing to revalue their fixed assets under IFRS are allowed to A) only increase the carrying value of the fixed asset. B) only decrease the carrying value of the fixed asset. C) only increase the historical cost of the fixed asset. D) only decrease the historical cost of the.

Learning Objective 7.5 Questions 1) The lower-of-cost-or-market practice is based on the A) consistency principle. B) entity concept. C) reliability principle. D) conservatism principle. E) historical cost concept. 2) The replacement costs have increased from $5.60 per unit to $6.20 per unit from the time 200 units of inventory were purchased. The year-end audit found 120 units.

21) A contra asset account is created under the allowance method because of the inability to write down a specific customer's account at the time bad debts expense is recognized. 22) The accounts used in the journal entry for the estimation of bad debts is the same whether a firm uses.

Learning Objective 7.7 Questions 1) Fortune Company had sales during July 20X3 of $29,000. During the month, the company had purchases of $17,000. At July 1, 20X3, the company had inventory of $4,500. Assuming the company has a gross profit percentage of 40%, what is the estimated ending inventory for Fortune.

31) There are no contra accounts on the income statement. 32) Net sales is always equal to total sales revenue less sales returns and allowances. 33) Net sales is equal to total sales revenue plus sales returns and allowances and sales discounts. 34) If a company normally sells merchandise for $5,000, but allows.

11) Queen Mattresses, Inc. had the following transactions occur during May 20X3. Assume there is no beginning inventory. May 2 Inventory was purchased on account for $5,000, terms 2/10, n/30. May 3 Inventory costing $1,000 was returned. May 9 Paid for the inventory. May 15Inventory costing $2,200 was sold on account for $3,800, terms.

41) Units-of-production depreciation is the most popular form of accelerated depreciation. 42) Double-declining-balance depreciation computes annual depreciation by multiplying the asset's book value at the beginning of the year by two times the straight-line rate. 43) Land is always depreciated using double-declining-balance depreciation. 44) Hartman Manufacturing acquired a vehicle on January 1, 20X2,.

21) The portion of a long-term liability that is due within a year is still included in the long-term liability section of the balance sheet. 22) A line of credit is a written promise to repay the loan principal plus interest at a specific future date. 23) A promissory note is an.

7) Useful Organizing began operations on January 1, 20X3, when the owners invested $80,000 cash in the company. Also on January 1, the company paid for a $30,000 machine. The machine has a useful life of 4 years and a $2,000 residual value. During its first year of operations, the.

11) A bad debts recovery has what effect on the balance sheet under the allowance method for bad debts? A) It has no effect on total assets or stockholders' equity. B) It decreases assets and decreases stockholders' equity. C) It increases assets and decreases stockholders' equity. D) It decreases assets and has no effect.

Learning Objective 9.1 Questions 1) A liability is created A) when merchandise is purchased with cash. B) when owners invest in a company. C) when merchandise is sold on account. D) when salary expense is recognized before employees are paid. E) when rent is paid in advance. 2) Liabilities that fall due more than 1 year beyond.

31) Morland Company has determined that 2% of $50,000 credit sales are uncollectible. The Allowance for Uncollectible Accounts currently has a debit balance of $250. The adjusting entry for bad debts should be prepared for $1,250. 32) In its first year of operations, 20X2, Flow Crafts, Inc., had credit sales of.

Learning Objective 6.6 Questions 1) Good accounting controls A) include all methods and procedures that facilitate management's planning and control of operations. B) help maximize efficiency and minimize waste, unintentional errors, and fraud. C) are not concerned with the accuracy of the financial records. D) are not concerned with safeguarding assets. E) All of the above.

Learning Objective 8.8 Questions 1) Appott Technologies recently sold some equipment for $6,800 cash. The equipment cost $23,000 and had accumulated depreciation through the date of sale totaling $17,250. The journal entry to record the sale of the equipment will include a A) credit to accumulated depreciation of $17,250. B) credit to equipment.

21) Machiel Manufacturing acquired a $60,000 machine on January 1, 2009. The machine is estimated to have a useful life of 4 years, and a residual value of $10,000. For units-of-production depreciation purposes, the machine is expected to produce 500,000 units. If Machiel Manufacturing uses straight-line depreciation, what is the.

36) Gabby Company operates under a perpetual inventory system. It began operations on March 1, 20X9, and had the following transactions affecting inventory during March, 20X9. March 1 Purchase 500 units @ $5.00 $2,500 March 5 Sale 200 units March 10 Purchase 300 units @ $5.20 $1,560 March 15 Sale 320 units March 20 Purchase.

Learning Objective 8.2 Questions 1) Kolonial Township acquired a building and the 3 acres of land on which it is located. The total purchase price was $2,500,000. For valuation purposes, the company contacted three local commercial real estate agents, who gave the following valuation estimates: Land Building M. Mulhan $ 900,000 $2,100,000 H. Ivan.

11) The current portion of long-term debt represents A) the amount of principal on long-term debt that comes due in the coming year. B) the amount of long-term debt that appears in the noncurrent liability section of the balance sheet. C) the amount of interest that comes due in the coming year. D) a.

31) An attribute associated with inventory valuation methods is that the lower the cost of goods sold the higher the ending inventory. 32) U.S. tax law contains a conformity requirement that allows companies to use LIFO for tax purposes only if the companies use LIFO for financial reporting purposes. 33) The LIFO.

Learning Objective 6.7 Questions 1) The following represent common reconciling items within a bank reconciliation: 1. Bank service charges 2. Deposits in transit 3. Outstanding checks Which of the above items will be an adjustment to the balance per books? A) 1 only B) 2 only C) 3 only D) 1 and 2 E) 2 and 3 2) In a bank.

3) When prices and costs are rising, most companies that use LIFO A) have a higher inventory value than they would under FIFO. B) report their LIFO reserve on the balance sheet or in the footnotes. C) have higher total assets than they would under FIFO. D) have higher stockholders' equity than they would.

Learning Objective 8.7 Questions 1) A major expenditure made to equipment that extends its useful life beyond the original estimate is journalized by A) debiting repairs expense. B) debiting depreciation expense. C) debiting equipment. D) crediting depreciation expense. E) crediting accumulated depreciation. 2) Which of the following activities can be classified as a betterment? A) waxing a car B).

25) Fill in the appropriate blank figures in the income statement below. Gross sales $7,500 Sales returns and allowances A Less: Cash discounts on sales 250 B _______________________ $7,100 Cost of goods sold Inventory, January 1, 2X10 200 Purchases (gross) $3,210 C _______________________ 275 Less: Cash discounts on purchases 280 Net Purchases D Add: Freight In 50 Total cost of merchandise acquired.

Learning Objective 8.12 Questions 1) Jets Company buys Pack Company for $11 million. Pack Company has assets with a fair value of $9 million and liabilities with a fair value of $2 million. Pack's stockholders' equity is recorded at $6 million. What goodwill should Jets Company record? A) $10 million B) $8 million C).

11) The cost of equipment shall include all costs of acquisition and preparation for use. 12) Delta Company acquired land and a building on March 1, 20X3, paying a total of $1,400,000. Separately, the land had an estimated fair market value of $750,000 and the building had an estimated fair market.

11) A policy that requires organizations to use procedures manuals to specify the flow of documents and provide information and instructions to facilitate adequate record-keeping is an example of A) adequate documentation. B) general authorization. C) specific authorization. D) proper procedures. E) an independent check. 12) Which of the following tasks is not commonly performed by.

Learning Objective 8.1 Questions 1) Repairs made to equipment as part of yearly maintenance would be recorded in the journal by A) debiting equipment. B) debiting repairs expense. C) debiting depreciation expense. D) debiting accumulated depreciation. E) crediting accumulated depreciation. 2) Treating a capital expenditure as repairs and maintenance expense A) understates expenses and overstates owners' equity. B) understates.

21) If unit costs and prices did not fluctuate, specific identification, LIFO, FIFO, and weighted-average would show the same ending inventory and cost of goods sold balances. 22) The specific identification method is frequently used for items with common characteristics, such as tons of coal. 23) Under the FIFO method, ending inventory.

Learning Objective 6.5 Questions 1) Heintz Corporation wishes to borrow $83,000 at 11% interest from the local bank. However, the bank requires a compensating balance of 10%. The effective interest rate that Heintz Corporation will pay on the loan is which of the following? A) 10.1% B) 12.2% C) 13.2% D) 16.4% E) 14.1% 2) Which of.

Learning Objective 8.4 Questions 1) Dugger Excavating bought a machine for $24,000 on January 1, 20X3, with a useful life of 5 years and a salvage value of $4,000. At the beginning of 20X4, Dugger finds the residual value will be zero. Assuming Dugger employs straight-line depreciation, what will be the depreciation.

3) Useful lives for depreciable assets for tax purposes are frequently shorter than the useful lives used for financial reporting purposes. Because of this, taxable net income would be A) lower and lower income taxes payable in the early years of an asset's life than the straight-line method. B) lower and higher.

Learning Objective 6.3 Questions 1) Martin Optical has found that 2% of credit sales turn into bad debts and it costs the company $2,000 in administration expenses per year to manage the bad debts. Martin Optical obtains $30,000 of credit sales each year that it would not otherwise obtain if it.