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66 Cards in this Set
- Front
- Back
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Which Statement is FALSE -Bookkeeping is only a part of accounting -Professional accountants are held to a high standard of ethical conduct -A proprietorship is a business with several owners -The organization that formulates generally accepted accounting principles in the US is the Financial Accounting Standards Board |
-A proprietorship is a business with several owners |
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The valuation of assets on the balance sheet is generally based on... |
historical cost |
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The accounting equation can be expressed as... |
Assets - Liabilities = Owner's equity |
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During the year, Aynsley, Inc. has $280,000 in revenues, $145,000 in expenses, and $6,000 in dividend payments. Aynsley, Inc., had... |
Subtract the revenues from the expenses, do nothing with the dividend payments -net income of $135,000 |
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Which of the following is a true statement about the International Financial Reporting Standards? -They're not being applied anywhere in the world yet, but soon will be -They're not needed for US businesses since the US already has the strongest accounting standards in the world -They are converging gradually with US standards -They are more exact (contain more rules) than US generally accepted accounting principles |
- they are converging gradually with US standards |
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The primary objective of financial reporting is to provide information... |
Useful for making investment and credit decision |
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Which type of business organization provides the least amount of protection for bankers and other creditors of the company? -Partnership -Corporation -Proprietorship -Both A & C |
-Corporation |
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During February, assets increased by $85,000 and liabilities increased by $22,000. Stockholders' equity must have... |
A - L = S.H.Equity 85,000 - 22,000 = S.H.Equity increased by $63,000 |
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Williams Instruments had retained earnings of $350,000 at Dec 31, 2013. Net income for 2014 totaled $183750, and dividends for 2014 were $78,750. How much retained earnings should Williams report at December 31, 2014? |
RE Beg. Bal. + Net Income - Dividends = RE End Bal. $350,000 + $183,750 - $78,750 = $455,000 |
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Cash paid to purchase a building appears on the statement of cash flows among the... -stockholders' equity -financing activities -investing activities -operating activities |
Investing activities |
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A debit entry to an account... -increases assets -increases liabilities -increases stockholders' equity |
-INCREASES ASSETS |
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Which account types normally have a credit balance? -Expenses -Revenues -Liabilities -Both expenses and liabilities |
-Both expenses and liabilities |
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Accounts Payable had a normal beginning balance of $1,000. During the period, there were debit postings of $500 and credit postings of $600. What was the ending balance? |
Remember the T-account, debit/credit credit = 1,000 + 600 = 1600 debit = $500 = $1,100 credit |
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The list of all the accounts with their balances is the... -journal -trial balance -chart of accounts -balance sheet |
-trial balance |
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In a double-entry accounting system... -liabilities, owners equity, and revenue accounts all have normal debit balances -half of all the accounts have a normal credit balance -a debit entry is recorded on the left side of a T-account |
-a debit entry is recorded on the left side of a T-account |
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Which accounts appear on which financial statement? Balance Sheet Income Statement -Recievables, land, payables Revenues, supplies -Cash, revenues, land Expenses, payables -Cash, receivables, payables Revenues, expenses -Expenses, payables, cash Revenues, recievables, land |
Balance Sheet Income Statement -Cash, receivables, payables Revenues, expenses |
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Which is the correct sequence for recording transactions and preparing financial statements? |
J,L,T,F Journal, Ledger, Trial Balance, Financial Statements |
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The error of posting $50 as $500 can be detected by... -totaling each account's balance in the ledger -dividing the out-of-balance amount by 2 -examining the chart of accounts -dividing the out-of-balance amount by 9 |
-dividing the out-of-balance amount by 9. |
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An investment of cash by stockholders into the business will... -decrease total liabilities -increase stockholders' equity -have no effect on total assets -decrease total assets |
-increase stockholders' equity |
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Purchasing a laptop computer on account will... -increase total assets -increase total liabilities -have no effect on stockholders' equity -all of the above |
-all of the above |
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Receiving cash from a customer on account will... -have no effect on total assets -decrease liabilities -increase total assets -increase stockholders' equity |
-have no effect on total assets |
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Purchasing a building for $95,000 by paying cash of $25,000 and signing a note payable for $70,000 will... |
Increase both total assets and total liabilities by $70,000 |
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Which of the following transaction will increase an asset and increase stockholders' equity? -performing a service on account for a customer -borrowing money from the bank -collecting cash from a customer on account receivable -purchasing supplies on account |
-performing a service on account for a customer |
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Which statement is FALSE... -assets are increased by debits -dividends are increased by credits -liabilities are decreased by debits -revenues are increased by credits |
-dividends are increased by credits |
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On November 1, Brownstone Apartments received $3600 from a tenant for four months' rent. The receipt was credited to Unearned Rent Revenue. What adjusting entry is needed on December 31? |
Unearned Rent / Total Months Paid x Months Expired = Rent Revenue $3600 / 4 x 2 = $1800 Unearned Rent Revenue 1,800 Rent Revenue 1,800 |
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The following normal balances appear on the adjusted trial balance of Adams Company: Equipment: $90,000 Accumulated dep, equip: 12,000 Dep expense, equip: 3,000 The book value of the equipment is... |
Equipment - Accumulated Depreciation, Equipment = Book Value 90,000 - 12,000 = 78,000 *you do not need to add depreciation expense, equipment |
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Sullivan, Inc purchased supplies for $1500 during 2014. At year-end, Sullivan had $400 of supplies left. The adjusting entry should.... |
Supps available during the period - supps on hand @ the end of the period = supps used during the period $1500 - $400 = $1100 Debit Supplies Expense $1100 |
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The accountant for Max Corp, failed to make the asjusting entry to record depreciation for the current year. the effect of this error is... |
Assets, Net Income & Stock.H.Equity are all OVERSTATED |
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The account Unearned Revenue is an... |
LIABILITY |
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An adjusting entry that debits an expense and credits a liability is which type? -prepaid expense -depreciation expense -accrued expense -cash expense |
-accrued expense |
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Total assets (of which 25% are current..... 6,000 current liabilities...........................................500 Bonds Payable (long-term)..........................1,400 common stock...............................................300 Retained Earnings.........................................3,800 Total Liabilities and Stockholders' equity...6,000 Paris's current ratio at the end of 2014 is? |
Total Current Assets / Total Current Liabilities = Current Ratio (6,000 x .25=1,500) / 500 = 3.00 |
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What is the formula for Current Ratio? |
Total Current Assets / Total Current Liabilities = Current Ratio |
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What is the formula for debt ratio? Total Assets (30% are current).....................$7,000 Current Liabilities...........................................700 Bonds payable (long-term)...........................1,300 Common Stock.............................................1,200 Retained Earnings........................................3,800 Total Liabilities and stockholders' equity..7,000 Stampers Debt ratio at the end of 2014 is? (rounded) |
Total liabilities / Total assets = Debt Ratio % (700+1,300=2,000) / 7,000 = .29 x 100 = 29% |
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On a trial balance, which of the following would indicate that an error has been made? -accumulated depreciation has a credit balance -service revenue has a debit balance -salary expense has a debit balance |
-service revenue has a debit balance |
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The journal entry to close Management Fee Revenue would be? |
Management Fee Revenue Retained Earnings |
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Which of the following accounts is not closed? -depreciation expense -accumulated depreciation -dividends -interest revenue |
-accumulated depreciation |
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In which month should revenue be recorded? |
In the month that goods are SHIPPED to the customer |
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On Jan 1 of the current year, Chuy paid $2,400 in rent to cover 6 months (Jan - June). Chuy recorded this as a debit to prepaid rent and credit to cash of 2,400. Chuy adjusts the accounts at the end of EACH month. Based on these facts, the adjusting entry at the end of Jan should include... |
2,400 / 6 = 400 a CREDIT to Prepaid Rent for $400 |
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An adjusting entry recorded June salary expense that will be paid in July. Which statement best describes the effect of this adjusting entry on the company's accounting equation? |
Assets are not affected, liabilities are increased, and stockholders equity is decreased |
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The Unearned Revenue account of Muffett Incorporated began 2014 with a normal balance of $5,000 and ended 2014 with a normal balance of $15,000. During 2014, the Unearned Revenue account was credited for $26,100 that Muffett will earn later. Based on these facts, how much revenue did Muffett earn in 2014? |
Unearned revenue, beginning + Advance payments - Unearned revenue, ending = Earned revenue 5,000 + 26,100 - 15,000 = 16,100 |
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What is the effect on the financial statements of recording depreciation on equipment? |
Net income, assets, and stockholders' equity are ALL decreased |
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For 2014, Wyndham Company had revenues in excess of expenses. Which statement describes Wyndham's closing entries at the end of 2014 (assume there is only one closing entry for both revenue and expenses)? |
Revenues will be Debited, Expenses will be Credited, and Retained Earnings will be Credited |
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Which of the following accounts would not be included in the closing entries? -accumulated depreciation -depreciation expense - service revenue -retained earnings |
-accumulated depreciation |
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A major purpose of preparing closing entries is to... |
update the Retained Earnings Account |
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Each of the following is an example of a control procedure, except... -limited access to assets -a sound marketing plan -a sound personnel procedures -separation of duties |
-a sound marketing plan |
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The bank statement showed interest earned of $50, how is this shown on the bank reconciliation? |
ADD to the book balance |
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A check for $753 written by Trisha during the current month was erroneously recorded as a $375 payment, how is this reported on the bank reconciliation? |
DEDUCT from the book balance |
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A $600 deposit made on the last day of the current month did not appear on this months bank statement, how would this be reported on the bank reconciliation? |
ADD to the bank balance |
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Which of the following reconciling items does not require a journal entry? -bank service charge -bank collection of note recievable -deposit in transit -NSF check |
-Deposit in transit |
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A check was written for $462 to purchase supplies. The check was recorded in the journal as $426. The entry to correct this error would... |
INCREASE Supplies, $36 & DECREASE Cash, $36 |
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A cash budget helps control cash by... |
helping to determine whether additional cash is available for investments or new financing is needed |
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All of the following are objectives of internal control except... -to safeguard assets -to ensure accurate and reliable accounting rcords -to maximize net income -to comply with legal requirements |
-to maximize net income |
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All of the following are internal control procedures except.. -Sarbanes-Oxley reforms -assignment of responsibilities -internal and external audits -adequate records |
-Sarbanes-Oxley reforms |
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Requiring that an employee with no access to cash do the accounting is an example of which characteristic of internal control? |
separation of duties |
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All of the following are controls for cash received over the counter except... -the customer should be able to see the amounts entered into the cash register -the cash drawer should open only when the sales clerk enters an amount on the keys -a printed receipt must be given to the customer -the sales clerk must have access to the cash register tape |
-the sales clerk must have access to the cash register tape |
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In a bank reconciliation, an outstanding check is... |
DEDUCTED from the BANK balance |
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In a bank reconciliation, an EFT cash payment is... |
DEDUCTED from the BOOK balance |
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If a bookkeeper mistakenly recorded a $72 deposit as $27, the error would be shown on the bank reconciliation as a... |
$45 addition to the book balance |
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Before paying an invoice for goods received on account, the controller on the treasurer should ensure that... |
The company is paying for the goods it ordered, the company is paying for the goods it actually received , AND the company has not already paid this invoice |
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Uncollectible accounts are determine by the percent-of-sales method to be 4% of credit sales. How much is uncollectible-account expense for 2014? Accts rec: 7,000 Allowance for uncollectible acct: 750 Credit sales: 45,000 Cash sales: 14,000 |
Credit sales x uncollectible - account percent = uncollectible - account expense 45,000 x .04 = 1800 |
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Accounts Receivable has a debit balance of $2,800, and the allowance for Uncollectible Accounts has a credit balance of $200. A $40 account receivable is written off. What is the amount of net receivables (net realizable value) after the write-off? |
Accounts receivable - Allowance for uncollectible accounts = Net realizable value 2,800 - 200 = $2,600 |
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Angelina Corporation began 2014 with Accounts Receivable of $450,000. Sales for the year totaled $1,820,000. Angelina ended the year with accounts receivable of $525,000. Angelina's bad-debt losses are minimal. How much cash did Angelina collect from customer in 2014? |
Beginning Accounts Receivable + Sales - Ending Accounts Receivable = 2014 Cash Collections 450,000 + 1,820,000 - 525,000 = $$1,745,000 |
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Stripes Ltd. received a four-month 7%, $15,000 note receivable on March 1. The adjusting entry on March 31 will include... |
Note receivable x Interest rate x Time period = Interest revenue 15,000 x .07 x (1/12) = $87.50 A credit to Interest Revenue for $87.50 |
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What is the maturity value of a $40,000, 5%, six-month note? |
Principal x Interest rate x Time = Amount of interest then take the amount of interest and ADD it from the principal 40,000 x 0.05 x (6/12) = 1,000 40,000 - 1,000 = $41,000 |
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If the adjusting entry to accrue interest on a note receivable is omitted, then... |
Assets, Net income, and Stockholders' equity are UNDERSTATED |
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Net sales total $621,500. Beginning and ending accounts receivable are $36,000 and $46,000, respectively. Calculate days' sales in receivables. |
Net Sales/365 days = Average daily sales 621500/365 = 1,703 (beg net receivables + end net receivables)/2 = average net receivables 36000 + 46000/2 = 41,000 Avg net receivables/Avg daily sales=Days sales in receivables 41,000/1703 = 24 days |
