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Generally excepted accounting principals (GAAP) are formulated by the...
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Which type of business organization is owned by its stockholders?
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Financial ACCT Final
| Question | Answer |
|---|---|
| Generally excepted accounting principals (GAAP) are formulated by the... | (FASB)Financial Accounting Standards board |
| Which type of business organization is owned by its stockholders? | Corporation |
| Which accounting concept or principle specifically states that we should record transactions at amounts that can be verified? | Reliability principle |
| Fossil is famous for fashion wristwatches and leather goods. At the end of a recent year, Fossil's total assets added up to $336 million, and stockholders' equity was $259 million. How much were Fossils's liabilities? | $77 million |
| Assume that fossil sold watches to a department store on account for $43,000. How would this transaction affect Fossil's accounting equation? | Increase both assets and stockholder's equity by $43,000 |
| Which part of the accounting equation does a sale on account affect? | Accounts receivable and Retained earnings |
| Assume that Fossil paid expenses totaling $40,000. How does this transaction affect Fossil's accounting equation? | decreases both assets stockholders' equity |
| Consider the overall effects on Fossil of selling watches on account for $59,000 and paying expenses totaling $28,000. What is Fossil's net income or net loss? | Net Income of $31,000 |
| The balance sheet reports... | Financial position on a specific date |
| The income statement reports... | Results of operations for a specific period |
| What is the sequence that summarizes the accounting process? | Journalize transactions, post to the accounts, prepare a trail balance |
| The left side of an account is used to record... | Debits |
| Suppose Frazier Corp. has cash of $46,000, receivables of $65,00, and furniture totaling $203,000. The business has a $109,000 note payable and owes $75,000 on account. How much is Frazier's stockholders' equity? | $130,000 (314,000:assets-184:liabilities) |
| Your business purchased supplies of $1,000 on account. The journal entry record this transactions is... | Supplies Accounts payable |
| Which journal entry records your payment for supplies of $1,000 previously purchased on account? | Accounts payable Cash |
| You paid $500 for supplies and purchased additional supplies on account for $800. Later you paid $400 of the accounts payable. What is the balance in your Supplies account? | $1,300 ($500+$800) |
| Quick Copes, Inc., recorded a cash collection on account by debiting Cash and crediting Accounts payable. What will the trail balance show for this error? | too much for liabilities |
| Brent, began the year with total assets of $120,000, liabilities of $78,000, and stockholders' equity of $42,000. During the year the business earned revenue of $109,000 and paid expenses of $32,000 and paid cash dividends of $67,000. How much is equity? | $52,000 |
| What are the distinctive feature of accrual accounting and cash-basis accounting? | Accrual accounting is superior because it provides more information |
| The revenue principle says... | Record revenue only after you have earned it |
| Adjusting the accounts is the process of... | Updating the accounts at the end of the period |
| Which types of adjusting entries are natural opposites? | Prepaids and accruals |
| A client prepays $480 for a package of six physical training sessions. The gym collects the $480 in advance and will provide the training later. After two training sessions, what should the gym report on its income statement? | Service Revenue of $160 ($480/6=80....80*2=$160) |
| Assume you prepay the gym for a package of six training sessions. Which type of account should you have in your records? | prepaid expense |
| Unearned Revenue is always a.. | Liability |
| The adjusted trail balance shows... | Amounts ready for financial statements |
| Accounting data flow from the... | Balance sheet>Income statement Income statement>Statement of Retained earnings |
| Which part of the accounting cycle provides information to help a business decide where to expand its operations? | Financial Statements |
| Which columns of the accounting work sheet show unadjusted amounts? | Trial Balance |
| Which columns of the work sheet show net income | Income statement |
| Which situation indicates a net loss on the income statement? | Total debits exceed total credits |
| Supplies has a $7,000 unadjusted balance on your trail balance. At year-end you count supplies of $3,000. What adjustment will appear on your worksheet? | $4,000 Supplies expense Supplies |
| Which of the accounts is NOT closed? | Accumulated depreciation |
| What do closing entries accomplish? | 1. Transfer revenues,expenses, dividends to Retained earnings 2. Bring the Retained earnings account to its correct ending balance 3. Zero out the revenues, expenses, and dividends |
| Is this a closing entry? Salary payable XXX Income summary XXX | NO! |
| Is this a closing entry? Retained earnings XXX Dividends XXX | YES!-closing dividends into Retained earnings |
| Assets and liabilities are listed on the balance sheet in order of their... | Liquidity |
| Hunter has cash of $600, receivables of $800, and supplies of $400. He owes $100 on accounts payable and salary payable of $200. Hunter's current ratio is.... | 6.00 (add up assets: 600+800+400=1800......then add up liabilities: 100+200=300) 1800/300=6.00 |
| Gross profit percentage= | Gross profit/ Net sales |
| Gross profit= | Net Sales-Cost of goods sold |
| Which account does a merchandizer, but not a service company, use? | Sales revenue, Inventory, and Cost of goods sold |
| The two main inventory accounting systems are the.... | Perpetual and Periodic |
| The journal entry for the purchase of inventory on account is... | Inventory XXX Accounts Payable XXX |
| The Market purchases inventory for $5,000 and also paid a $330 freight bill. The Market returned 35% of the goods to the seller and later took a @% purchase discount. What is the Market's cost of the inventory that it kept? | $3,642 (5200*.35=1820....5200-1820=3380.... 3380*.02=68....3380-68+330=$3,642) |
| Suposse Natural Dyes had sales of $330,000 and sales returns of $41,000. Cost of goods sold was $163,000. How much gross profit did Natural Dyes report? | $126,000 (330,000-41,000-163,000=$126,000) |
| Suppose Greg's inventory account showed a balance of $10,000 before the year-end adjustments. The physical count of goods on hand totaled $9,700. To adjust the accounts, Greg would make this entry.... | Cost of goods sold 300 Inventory 300 |
| Which of the following accounts would Greg close at the end of the year? | Cost of goods sold |
| The final closing entry for a corporation is... | Retained earnings XXX Dividends XXX |
| Which subtotals appear on a multi-step income statement, but not a single-step income statement? | Gross profit and Income from operations |
| Assume Austin sound made net Sales of $88,000, and Cost of goods sold totaled $40,000. Average inventory was $19,000. What was Austin Sound's gross profit percentage for this period? | 55% (88,000-40,000=48,000......48,000/88,000=0.545) |
| Johnson made sales of $9,000 and ended August with inventories totaling $1,000. Cost of goods sold was $7,000. Total operating expenses were $2,000. How much net income did Johnson earn for the month? | $500 (9600-7000-2100=$500) |
| Which inventory costing method assigns to ending inventory the newest-the most recent-costs inccured during the period? | FIFO-First-in, First-Out |
| Which inventory costing method results in the lowest net income during a period of rising inventory costs? | LIFO- Last-in, First-Out |
| Which of the following is most closely linked to accounting conservatism? | Lower-of-cost-or-market rule |
| At dec. 31,2011, Adam Company overstated ending inventory by $40,000. How does this error affect cost of goods sold and net income for 2011? | understates cost of goods sold and overstates net income |
| Which of the following is not part of the definition of internal control?-safeguard assets -encourage employees to follow company policy -separation of duites -promote operational efficiency | Separation of duties |
| Internal auditors focus on ________: External auditors are more concerned with _________. | operations: financial statements |
| Darice receives cash from customers. Her other assigned job is to post the collections to customer accounts receivable. Her company has weak ________________ | Separation of duties |
| Rearranges messages by a special process | Encryption |
| The document that explains all differences between the company's cash records ad the bank's figures is called the... | Bank reconciliation |
| Which items appear on the BANK side of a bank reconciliation? | Outstanding checks Deposits in transit |
| After performing a bank reconciliation, we need to journalize.... | All items on the BOOK side of the reconciliation |
| Separation of duties is important for internal control of... | Cash payments and Cash Receipts |
| "Bad Debts" are the same as... | Doubtful accounts and Uncollected accounts |
| Which method of estimating uncollectible receivables focuses on Uncollectible-account expense for the income statement? | Percent-of-sale approach |
| How do you find Year-end balance in Allowance for uncollectible accounts? | Beginning balance+Uncollectible account expense-Receivables written off= Ending balance |
| What is wrong with the direct write-off method of accounting for uncollectibles? | 1. doesnt match expenses against revenue very well 2. doesnt set up an allowance for uncollectibles 3. overstates assets on the balance sheet |
| Which cost is not recorded as part of the cost of a building? | Annual building maintenance |
| How should you record a capital expenditure? | Debit an asset |
| Which method almost always produces the most depreciation in the first year? | Double-declining-balance |
| Which depreciation method would you generally prefer to use for income tax purposes? Why? | Double-declining-balance: it gives the most total depreciation over the asset's life |
| Which method is used to compute depletion? | Units-of-production method |
| Which intangible asset is recorded only as part of the acquisition of another company? | Goodwill |
| Known liabilities of uncertain amounts are..... | reported on the balance sheet |
| On Jan. 1,2011, you borrowed $12,000 on a five-year, 9% note payable. At Dec, 31, 2012, you should record... | Interest Payable of $1080 |
| Your company sells $160,000 of goods and you collect sales tax of 4%. What current liability does the sale create? | Sales tax payable of $6,400 |
| Bond Price= | Par Value x Issue price |
| A $400,000 bond priced at 103.5 can be bought or sold for... | $414,000 |
| Which intrest rate on a bond determines the amount of the semiannual interest payment? | Stated rate |
| Lafferty Corp.'s bonds payable carry a stated interest rate of 7%, and the market rate of intrest is 8%. The price of Lafferty bonds will be at.... | Discount |
| Which characteristic of a corporation is most attractive? | Limited liability |
| Which characteristic of a corporation is a disadvantage? | double taxation |
| The two basic sources of corporate capital are... | Paid-in capital and Retained Earnings |
| Which class of stockholders take the greater investment risk? | Common |
| Suppose Sweets Bakery issues common stock to purchase a building. Sweets Bakery should record the building at... | its market value |
| A corporation's income tax payable is computed as... | Taxable income x Income tax rate |
| A stock dividend... | has no effect on total equity |
| In a small stock dividend... | Retained earnings is debited for the market value of the shared issued |
| Stock splits.... | decrease par value per share and increase the number of shares of stock issued |
| A company's own stock that is has issued and repurchased is called.... | Treasury stock |
| Assume that the bank required a company to maintain at least $100,000 in retained earnings. The $100,000 would be shown as.... | a restriction to Retained Earnings |
| Examples of Extraordinary loss... | Earthquake, natural disasters |
| What is the most widely followed statistic in business? | Earnings per share |
| Earnings per share is NOT computed for.... | Comprehensive Income |
Created by:
kindra.hebert