Accounting Final

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Accounting Final
2013-12-09 19:09:51

SAM1000 Fianl
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  1. The main goal of understanding the process of accounting it to help ensure that a business is:
  2. Which type of business organization is owned by its stockholders?
  3. GAAP is the acronym for Generally Accepted           Principle.
  4. Which of the following is considered an asset?
    Accounts Receivable
  5. Liabilities represent:
    monies owed to third parties
  6. Revenues, expenses and dividends are all a part of:
    Retained earnings
  7. A company has liabilities of 23,500 and stockholders’ equity of 56,500. How much does the company have in assets?
  8. Liabilities are defined as:
    amounts owed to third parties
  9. Payables are classified as:
  10. Which of the following finical statements illustrates the accounting equations?
    Balance Sheet
  11. A type of company asset in which a customer owes the company money would be a:
  12. Land, cash, office equipment and accounts receivable belong to what category of accounts?
  13. Accounts payable, taxes payable and note payable:
    decrease on the debit side, increase on the credit side and are liabilities.
  14. Cash, Common stock and advertising expense have normal balances of:
    debit, credit, and debit, respectively.
  15. Debit means:
    The left side of an account
  16. Credit means:
    The right side of an account
  17. ABC Corporation collects $600 from one of its
    customer for payment on their account. The journal entry would include a:
    debit to Cash and a credit to Accounts Receivable
  18. The information from the general journal is
    transferred to the:
    general ledger
  19. The common stock account is increased with a ........ and Wages expense account is increases with a .........
    • Credit
    • Debit
  20. A trial balance will determine if:
    debit equals credit
  21. The matching principle in accounting requires the matching of:
    Revenue earned with the expenses incurred to produce the revenue.
  22. The type of accounting required by GAAP is:
  23. It is necessary to post:
    all journal entries
  24. During a recent week, incurred wages were $700. However, $280 of the wages had not been paid. The adjusting entry for wages would be:
    Debit wages expense, $280; credit wages payable, $280
  25. Rick bought a 2-year insurance policy on August 1 for $150 per month. The adjusting entry on December 31 would be:
    debit insurance expense $750; credit prepaid insurance, $750
  26. A machine with a salvage value of $4000 and a cost of $36000 was purchased on January 1, 2010. What is the depreciation expense for 2010 if the company uses straight-line depreciation for 10 years?
  27. Which of the following accounts would NOT be adjusted?
  28. The difference between the cost of office equipment and accumulated depreciation – office equipment is called:
    book value
  29. The adjusted trial balance shows:
    numbers ready to be transferred to the financial statements
  30. All financial statements must have, in order, the:
    name of the company, title of financial statement, and a specific date or period.
  31., and are examples of Internet:
    Retail businesses
  32. Physical inventory counts must be done:
    regardless of method inventory
  33. The amount of an invoice is $1000, with terms 2/10, n30. The amount to be paid within the discount period is;
  34. Tayler Corporation purchased merchandise from Brandon Corporation for cash. The journal entry for Tayler Corporation under a perpetual inventory system will be:
    debit inventory; credit cash
  35. A record to keep the revenue earned from the sale of merchandise is entered as:
  36. Which of the following indicates that the shipment is free on board and the buyers pay all of the shipping and freight costs?
    FOB shipping point
  37. Cash is listed as the first current asset because it is the account:
    that is the most liquid
  38. A company has net sales of %56,700 and a cost of goods sold of $26,700. The company’s gross profit percentage is approximately;
  39. Which of the following current rations would be considered the
    strongest ratio?
    1.50 (*the highest is the strongest)
  40. Which type of company is best described as
    having ownership by stock and double taxation of earnings?
  41. A company has $123,000 in assets and $65,000
    in liabilities. How much does the company have in stockholders’ equity?
  42. A company purchases merchandise (inventory) for cash. What is the net result on the accounting equation?
    Total assets will not change
  43. Casey invest $5,000 into his business. He would:
    increase cash and increase stockholders' equity.
  44. Casey’s is famous for their submarine
    sandwiches. At the end of 2009, Casey’s total assets were $345,000 and total
    liabilities were $129,500. How much was Casey’s stockholders’ equity?
  45. Accounts payable, taxes payable, and notes payable:
    decrease on the debit side, increase on the credit side and are liabilities
  46. A T-account has $382 debit balance. This account is most likely:
  47. ARCO pays wages in the amount of $13,579. this transaction:
    credits cash
  48. The account “Cash” had the following changes:
    increase of $250, decrease of $75, increase of $113 and a decrease of $35. The
    final balance is a:
    debit balance of $253
  49. ABC Corporation collected $600 from one of its
    customers for payment on their account. The journal entry would include a:
    debit to cash and a credit to accounts receivable
  50. A period of time, such as a moth or quarter, could be considered a(n):
    accounting period
  51. At the beginning of the period, the supplies
    account has a balance of $500. At the end of the period, the balance in the account was $275. The adjusting entry would be:
    debit supplies expense, $225; credit supplies $225
  52. 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:
  53. A 20-moth insurance policy was purchased for
    $1,500 on May 1. How much insurance will be expensed on December 31?
  54. The account to which revenue and expenses
    are closed is called:
    retained earnings
  55. Meranda Corporation purchaes $3,500 on inventory on account from Ashley Corporation. The journal entry to record this purchase for
    Meranda under a perpetual inventory system is:
    debits inventory; credits accounts payable-Ashley
  56. ABC Corporation has received an invoice of $4,500 with terms of 3/15, n/50. If ABC pays the invoice on the seventeenth day, the
    Cash account will be:
    credited for $4,500
  57. An invoice of $237.50 is dated April 2, terms 2/10, n/30. If the invoice is paid on April 9, the amount to be paid is:
  58. ABC Company returned $750 of goods it had
    purchased from another company. The original invoice was for $4,200, 3/10,
    n/30. What is the discount if ABC pays the balance within the discount period?
  59. The account in which the revenue earned from the sale of merchandise is entered is:
  60. A method of valuing inventory based on the
    assumption that the oldest goods will be the first sold is called the:
    FIFO Method
  61. A manufacturer’s goods available for sell
    represent; A manufacturer’s goods available for sell represent:
    Finished Goods Inventory
  62. Cost of goods sold is shown on the:
    Income statement before gross profit
  63. The journal entry to record the purchase of $7,400 of inventory on account under perpetual inventory method is:
    debit inventory, $7,400; credit accounts payable, $7,400.
  64. Changing from LIFO to FIFO over two
    accounting periods could be viewed as a violation of what account concept or
  65. Ignoring a write-off of inventory that will effect
    the financial statement to users of the information is an example of:
  66. Which account would always be used for an
    inventory adjustment?
    Cost of goods sold
  67. If a misstatement of inventory occurs, the
    net income for ? periods will be misstated.
  68. Cost of goods available for sale, minus estimated
    cost of goods sold yields the estimated:
    ending inventory
  69. Good available for sale are $350,000; beginning
    inventory is $24,00; ending inventory is $32,000; and cost of goods sold is
    $275,000. The inventory turnover is:
  70. GAAP’s overriding principles of accounting are
    written by the:
  71. Establishing fake companies, then having the
    company pay for goods or services that will never be delivered, and then
    intercepting and cashing the checks would be an example of a(n):
    Employee embezzlement scheme.
  72. Committing fraud because the employee feels
    that it will be easy to do is indicative of what part of the Fraud Triangle?
    perceived fraud
  73. A disgruntled employee who convinces another to steal from the company is an example of:
  74. Which element of internal control deals with
    establishing procedures for thins such as handling of incoming checks?
    Control Activities
  75. Establishing a hierarchy to let all
    management and employees know what is going on in a company would be an example
    of what element of internal control?
    Information and communication
  76. Details that support business transactions make up what is called:
    an audit trail
  77. The agency that requires financial audits of
    publicly traded companies is the:
    Securities and Exchange Commission
  78. An audit opinion in which there are material
    misstatements in the financial statements is the:
    adverse opinion
  79. Under SOX, the Chief Executive Officer and Chief
    Financial Officer must sing off on:
    All annual and quarterly reports by the company
  80. Toy Company has 4% credit/debit card service
    fees deducted monthly by the back from Toy Company’s bank account. Toy company
    has $75,000 in sales for the month. At what amount will Toy Company record this
    month’s sales?
  81. US Treasury notes must mature within ??
    days of the balance sheet date in order to be considered cash equivalents.
  82. A company has $235,000 in credit
    sales. The company uses the allowance method of determining
     uncollectible accounts expense. The allowance for doubtful accounts
    now has a $7,250 credit balance. If   the company uses the allowance
    method based on 7% of credit sales, what will be the amount of
    the  journal entry credited to allowance for uncollectible accounts?
  83. The aging method is called the:
    balance sheet approach
  84. Using a 360-day year, the maturity value of a
    90-day not for $3,500 at 8% annual interest is:
  85. A 135-day note issued on May 17 will mature on:
    September 29
  86. Mike Company has cash of $56,000; net
    account receivables of $67,000; short-term investments of $12,000 and inventory
    of $40,000. It also has $45,000 in current liabilities and $75,000 in long-term
    liabilities. The quick ratio for Mike Company is:
  87. On April 23, Lauren paid $4,750 to Ryan Company to
    fulfill her promissory note agreement. Of the $4,750, $750 is interest. The
    journal Ryan Company will record is:
    • debit cash, $4,750; credit note receivable/Lauren,
    • $4,000; credit interest income, $750.
  88. A company with an accounts receivable turnover of
    11.78 would be collecting its receivables about:
    once a month
  89. A company has a petty cash fund of $350. At the end
    of the month, $7.89 remind in the fund along with $340.56 in various receipts.
    The journal entry to replenish the fund would show a debit(s) to:
    • various expenses for $340.56 and cash short of
    • $1.55.
  90. Coal, oil and timber are:
  91. Assets that cannot be seen, touch or held are
    Intangible assets
  92. Which of the following would be considered
    part of land improvements?
    Paving of the parking lot
  93. If an asset produces more revenue in its early
    years, the depreciation method best suited for this asset would be the;
    Double-declining balance method
  94. A company purchased a van at a cost of
    $42,000 and expects its salvage value to be $6,000 after 120,000 miles of
    service. Using the units-of-production method, what is the first year’s
    depreciation if the van is driven 24,000 miles?
  95. Which accounting principle dictates whether
    the cost of a repair should be expensed?
  96. If an asset is being sold or exchanged, the gain or loss is always computed by comparing the;
    market value and book value
  97. Research and development costs (R&D) are
    expensed and become part of the income statement
  98. Cost divided by the total amount of the natural resource to be removed yields;
    depletion rate per unit for the period
  99. Securities that are actively managed in order to
    maximize profit as a result of short-term changes in price are:
    trading securities
  100. Buildings, vehicles and desks are:
  101. The inventory account appears on the:
    Balance sheet
  102. Patents, goodwill, and trademarks are:
  103. NSF check amounts are:
    Subtracted from the book balance
  104. Honesty, fairness, and integrity are all al part of:
    Ethical behavior
  105. Which of the following accounts is considered an asset?
    Accounts reveivable
  106. The type of accounting required by GAAP is:
  107. Outstanding checks are:
    added to the book balance
  108. Which of the following types of
    organizations would probably sell goods?
    Merchandising operation
  109. If shrinkage is found for $500, an adjusting entry would be made by;
    • debiting cost of goods sold for $500; credit
    • inventory for $500.
  110. Alpha Company received an invoice from Beta Company
    for $5,550 with terms of 3/10, n/45 on March 8. If Alpha pays the bill on March
    15, they will credit inventory under a perpetual inventory system for:
  111. Under the FIFO method, the flow of goods through
    the accounting records will:
    closely match the physical flow of goods through the business
  112. Coal, oil and timber are:
  113. Under the specific-identification method, the flow of goods through the accounting records will:
    exactly match the physical flow of goods through the business
  114. All payables are listed as:
  115. Which of the following types of
    organizations would produce goods?
    Manufacturing operation
  116. Details that support business transactions make up what is called:
    an audit trail
  117. Obligations that are owed to others due to past
    transactions are categorized as:
  118. The Cost of Goods Sold account appears on the:
    income statement
  119. The matching principle in accounting requires the matching of:
    revenue earned with the expenses incurred to produce the revenue
  120. A bank statement shows the:
    ending bank balance as of a specific date
  121. If revenues are recognized and recorded when
    earned, the company is using the:
    accrual basis of accounting
  122. Under the LIFO method, the flow of goods through the accounting records will:
    be nearly the opposite of the physical flow of goods through the business
  123. Research and development costs (R&D) are
    expensed and become part of the income statement
  124. A type of company asset in which a customer owes the company money would be a:
  125. Embezzlement usually involves the misappropriation of business:
    assets by an employee
  126. A good internal control system does which of
    the following?
    reduces the risk of undetected errors
  127. Dividends are paid with cash to
    shareholders. Dividends are in what category of the chart of accounts?
    Stockholders' equity
  128. Which type of business organization is owned
    by its stockholders?
  129. Current liabilities are expected to be settled
    1 year
  130. Utilize the .......... principle to
    estimate warranty liabilities
  131. Which of the following would be considered a contingent liability?
    Pending legal action
  132. Leases that are treated as financed purchases are called:
    capital leases
  133. If a $6,000, 10 percent, 10-year bond was
    issued at 104 on October 1, 2011, how much interest will accrue on December 31
    if interest payments are made annually?
  134. If the bond’s stated rate of interest is greater
    than the market rate of interest the bond will be issued at:
    a premium
  135. A $150,000 bond issue sold at 93.8 will cost:
  136. A $400,000 issue of bonds that sold for $363,000
    matures on August 1, 2015. The journal entry to record the payment of the bond
    on the maturity date is:
    • debit bonds payable, $400,000; credit cash,
    • $400,000
  137. Mackey Company has a 5-year mortgage for $100,000. In the first year of the mortgage, Mackey will report this liability as a:
    • current liability of $20,000 and a long-term
    • liability of $80,000.
  138. Bill Company had total assets of $560,000; total
    liabilities of $250,000; and total stockholders’ equity of $310,000. Bill
    Company’s debt ratio is:
  139. Stock that is held by stockholders is called:
    Outstanding Stock
  140. Preferred stockholders generally have the same
    basic rights as common stockholders except for:
  141. Which right do preferred stockholders
    receive before common stockholders?
    Dividend rights
  142. If there is only one class of stock outstanding,
    such stock would be classified as:
    common stock
  143. A company issues 15,000 shares of its $25 par
    common stock for $29. The amount to be debited to cash is:
  144. A company has 25,000 shares of $12 par, 8%
    preferred stock. The 8% refers to the stock’s:
    dividend rate
  145. What are the annual dividends on $20 par
    preferred 5% stock, if 2,000 shares are authorized and 700 shares have been
  146. The liability “dividend payable” is recognized on
    the date of:
  147. The declaration of a stock dividend:
    does not create a liability
  148. Before a 3-for-1 stock split, the shares
    outstanding were 5,000 shares at the $12 par. After the split, what was the par
    value and number of shares?
    $15,000 shares and $4/share
  149. The purpose of the statement of cash flows is to show:
    How cash was received and used during the period
  150. Which of the following activities is
    computed differently using the two methods of formatting a statement of cash
    Operating activities
  151. Operating activities are transactions and events
    associated with selling a product or providing a service related to the:
    revenues and expenses reported on the income statement
  152. The cost of purchasing long-term assets, such as
    buildings and land, are:
    subtracted from investing activities
  153. Which would be subtracted from net income in
    the operating section of an indirect cash flow statement?
    An increase in inventory
  154. When preparing the statement of cash flows by the
    indirect method, if current liabilities increase, the difference is:
    added to net income
  155. Isaiah Corporation’s Account Receivable increased
    by $35,000 and their Accounts Payable decreased by $18,000. What is the net
    effect on cash from operations under the indirect method?
  156. Activities that increase and decrease as a result
    of selling a company’s stock are:
    financing activities
  157. Some investing and financing activities involve no cash flows, so they:
    • should be reported in a separate section of the
    • cash flow statement.
  158. A machine with a cost of $175,000 and accumulated
    depreciation of $94,000 is sold for $87,000 cash. The amount to be reported
    under cash flows from investing is:
  159. After the figure for net income appears on the income statement ...... ..... ...... data is computed.
    earnings per share
  160. Gains and losses on plant, property and equipment are a part of:
    Continuing operations section
  161. Which analysis deals with the percentage of changes in certain items over a period of years?
    trend analysis
  162. A common-size comparative statement show:
    percents only
  163. Current assets divided by current liabilities yields the:
    current ratio
  164. Inventory turnover would be highest for which of the following?
    Grocery store
  165. A company with an accounts receivable turnover of four means that the company collects its receivables approximately every ?? days?
  166. If management wishes to determine the delinquency of charge customers, they could use the:
    accounts receivable turnover
  167. If management wishes to know the ability to pay off upcoming debts, they could use the:
    current ratio
  168. What is the accounting equation?
    Assets (Things of Value) = Liabilities (Amounts owed to third parties) + Stockholders' Equity (Assets owned by stockholders)
  169. Break down the Stockholders' Equity portion of the accounting equation.
    • Stockholders Equity
    • Retained Earning + Common Stock
    • Revenues - Expenses - Dividends
  170. How do you calculate net income for the income statement?
    Revenues - expenses = net income
  171. How do you calculated Assets?
    Liabilities + Equity = Assets
  172. Income statement (net income) -> Statement of Retained Earnings (ending balance) -> Balance Sheet
  173. Increase with a debit
    • Assets
    • Dividends
    • Expenses
  174. Increase with a credit
    • Liabilities
    • Common Stock
    • Revenue
    • Retained Earnings
  175. Which of the following are temporary and which are permanent?
    Revenues, Expenses, Dividends (closed into retained earnings)
    Assets, Liabilities, Common Stock, Retained Earnings (Not closed, balance carries forward)
    RED-temporary (revenues, expenses, dividends)
  176. What is the difference between FOB Shipping Point and FOB Destinations?
    • Shipping- Ownership transfers when goods are shipped from sellers business, buyer pays, added to cost of inventory
    • Destination- Ownership transfers when goods reach buyers facility, seller pays, recorded as delivery expense.
  177. How do you calculate gross profit percentage?
    Gross profit/ Net sales revenue = Gross profit percent
  178. How do you calculate current ratio (evaluation of ability to pay current obligations)?
    Current assets / current liabilities = current ratio
  179. How do you calculate gross profit?
    Net sales revenue - cost of goods sold = gross profit
  180. How do you calculate inventory turnover?
    Cost of Goods Sold / Average Inventory (Beginning Inventory + Ending Inventory)/2
  181. What are the three parts of the fraud triangle?
    Perceived Opportunity, Perceived Pressure, Rationalization.
  182. How do you compute interest?
    Principle x Interest Rate x Time = interest rates
  183. How do you calculated quick ratio?
    (Cash + current receivables + Short-term investment) / Total current liabilities
  184. How do you calculate accounts receivable turnover?
    Net credit sales/ Average net account receivable
  185. What is the straight-line method to calculated depreciation?
    (cost-residual value)/ Estimated life in years = depreciation per year
  186. How do you calculated units-of-production depreciation?
    (Cost- Residual Value)/ Estimated useful life in unites = depreciation per unit

    Depreciation expense = depreciation per unit x activity during the period
  187. How do you calculated the double-decling-balance depreciation method?
    (cost-accumulated depreciation) x (2/life) = depreciation per year
  188. How do you calculated partial year depreciation?
    Depreciation expense for the entire year x (# of months the asset was used/12)
  189. How do you calculated depletion?
    Depletion per unit (cost-residual value) x (1/Estimate total units of natural resource)

    Depletion expense = depletion per unit x number of units removed
  190. How do you calculated debt ratio?
    Total liabilities/ total assets
  191. How do you calculate return on equity?
    Net income/ average stockholders' equity
  192. How do you calculated return on common equity?
    (net income - preferred dividends)/ Average common stockholders' equity
  193. How do you calculated free cash flow?
    Net cash provided by operating activities - Cash payments earmarked for investments in plant assets
  194. How do you calculate a trend percentage?
    Any year/ base year = trend %
  195. How do you calculate vertical analysis percentage?
    Each income statement/total revenue = vertical analysis percentage
  196. How do you calculate working capital?
    Current assets - current liabilities = working capital
  197. How do you calculate the rate of return on sales?
    net income/net sales