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final exam
financial
167
Accounting
Undergraduate 2
04/28/2016

Additional Accounting Flashcards

 


 

Cards

Term

What term best describes the term "retained earnings" of a company?

a. The amount of total profits earned by a company since it began operatiobs

b. The amount of claim that the owners have on the assets of the company

c. The future economic resources of a company

d. The accumulated net income of a company that has not been distrubuted to owners in the form of dividends

Definition
d. The accumulated net income of a company that has not been distrubuted to owners in the form of dividends
Term
Depreciation is normally associated with which asset on the balance sheet?
A. land
B. accounts receivable
C. inventory
d. equpiment
Definition
D. Equipment
Term

Which of the following statements regarding accounts is false?

 

  1. An asset is increased by a debit and decreased be a credit

  2. dividends are increased by credits and decreased by debits

  3. A liability is decreased by a debit and increased by a credit

  4. Revenue is increased by a credit and an expense is increased by a debit
Definition
b. dividends are increased by credits and decreased by debits
Term

The normal balance of accounts receivable is a ________ because it is a(n) ___ account

 

  1. Credit, liability

  2. debit, expense

  3. Credit, liabilities

  4. debit, asset

Definition
d. debit, asset
Term

A trial balance is a useful device because it provides a check on accuracy by showing whether:

 

  1. Total assets equal total liabilities

  2. total debits equal total credits

  3. Total revenues plus gains equal total expenses plus losses

  4. Total of all the income statement accounts equals the total of all the balance sheets accounts
Definition
Total debits equal total credits
Term

The normal balance of an expense account is a _______ because expenses decrease_________

 

  1. Credit, assets

  2. debit, stockholder's equity

  3. Credit, liabilities

  4. Debit, unearned revenue
Definition
b. debit, stockholder's equity
Term

An accrual refers to an event:

  1. That will never involve an income statement account

  2. That will never involve cash being paid at any time

  3. Where the cash has already exchanged hands between the two parties

  4. d. where the cash has not yet been exchanged between two parties

Definition
d. where the cash has not yet been exchanged between the two parties
Term

In order for accounting information to be useful in making informed decisions, it must be

 

  1. Internal

  2. Relevant

  3. Faithful representation

  4. d. both b and c

Definition
d. both b and c
Term

An expense incurred in 2010 is not until 2011. Using the accrual basis of accounting, the expense should appear on:

 

  1. The 2011 income statement

  2. the 2010 income statement

  3. Neither the 2010 nor 2011 income statement

  4. Both the 2010 and 2011 income statements
Definition
b. the 2010 income statement
Term

The adjusting entry made to record prepaid rent which has expired during the period would include a debit to:

 

  1. Unearned revenue

  2. Prepaid rent

  3. Accrued rent

  4. rent expense

Definition
d. rent expense
Term

In what order are financial statements generally prepared?

 

  1. Balance sheet, statement of retained earnings, and income statement

  2. income statement, statement of retained earnings, and balance sheet

  3. Income statement, balance sheet, and statement of retained earnings

  4. Statement of retained earnings, income statement, and balance sheet
Definition
Income statement, statement of retained earnings, and balance sheet
Term

The entry made to close service revenue would include:

 

  1. A debit to service revenue and a credit to dividends

  2. A credit to service revenue and a debit to unearned revenue

  3. A debit to retained earnings and a credit to service revenue

  4. a debit to service revenue and a credit to income summary

Definition
d. a debit to service revenue and a credit to income summary
Term

When a business records revenue before it is earned, it has violated the measurement issue of revenue:

 

  1. Recognition

  2. Evaluation

  3. Classification

  4. Valuation
Definition
a. recognition
Term

All of the following will affect retained earnings except:

 

  1. Expenses incurred

  2. Dividends declared and paid

  3. Revenues earned

  4. an equipment purchase

Definition
d. an equipment purchase
Term

The process of transferring journal entry information from the journal to the ledger is called

 

  1. Journalizing

  2. Posting

  3. Footing

  4. Analyzing
Definition
b. posting
Term

Which of the following errors will not cause the debit and credit columns of the trial balance to be unequal?

 

  1. A debit entry was recorded in the wrong account

  2. A debit was entered in an account as a credit

  3. The account balance was carried to the wrong column of the trial balance

  4. The balance of an account was incorrectly computer
Definition
a. a debit entry was recordedin the wrong account
Term

Formal closing entries will ultimately affect what accounts?

 

  1. Common stock

  2. Cash

  3. retained earnings

  4. None

Definition
c. retained earnings
Term

The matching rule is applied

 

  1. Because it is required by the internal revenue code

  2. By expensing certain items immediately in their entirety

  3. To help make the bookkeeper’s job easier

  4. to help produce an accurate measurement of a company's performance by matching expenses to revunes in the appropriate accounting period

Definition
  1. To help produce an accurate measurement of a company's performance by matching expenses to revenues in the appropriate accounting period
Term

Which of the following accounts would not need to be adjusted at year end?

 

  1. Prepaid advertising

  2. Land

  3. Office supplies

  4. Unearned revenue
Definition
b.  land
Term

Which of the following accounts is most likely to increase as a result of adjusting entries?

 

  1. Prepaid insurance

  2. Accounts Receivable

  3. Unearned fees

  4. Office equipment
Definition
b. accounts receivable
Term

What type of account is prepaid rent?

 

  1. A liability

  2. An expense

  3. Stockholders’ equity

  4. An asset

Definition
d. an asset
Term

Receiving a check from a customer on account would include a :

 

  1. Debit to accounts receivable and a credit to cash

  2. Debit to cash and a credit to accounts payable

  3. Debit to accounts payable and a credit to cash

  4. Debit to cash and a credit to accounts receivable

Definition
d. Debit to cash and a credit to accounts receivable
Term

Which of the following business structures offer limited liability to its owners?

 

  1. Sole proprietorship

  2. Corporation

  3. Partnership

  4. Cooperative
Definition
b. Corporation
Term

Which of the following is not one of the main financial statements prepared at the end of an accounting period?

 

  1. Income statement

  2. Balance sheet

  3. Trial Balance

  4. Retained earnings statement

  5. All of the above are the main financial statements of a company
Definition
c. Trial balance
Term

Which pair of accounts reacts to debits and credits the same way?

 

  1. Service revenue and rent expense

  2. Dividends and retained earnings

  3. Equipment and salary expense

  4. Accounts receivable and accounts payable
Definition
c. Equipment and salary expense
Term

Source documents:

 

  1. Include the ledger

  2. are sources of accounting information

  3. Must be in electronic form

  4. Are based on accounting entries

  5. Include the chart of accounts
Definition
b. are sources of accounting information
Term

Which of the following statements in correct?

a. When a future expense is  paid in advance, the payment is nromally recorded in a liability account called Prepaid Expense

b. Promises of furture payment are called accounts payable

c. Increases and decreases in cash are always recored in the reatined earnings account

d. An account called LAnd is commonly used to recored increases and decreases in both the land and buildings owned by a business

E. Accrued liabilites include accounts receivable

Definition
b. Promises of furture payment are called accounts payable
Term

A list of all accounts used by a company and the identification umner assigned to each account is called a:

a. ledger

b. journal

c. trial balance

d. charts of accounts

e. general journal

Definition
d. charts of accounts
Term

A simple account form widley used in accounting to illustrate how debits and credits work is called a:

a. dividend account

b. common stock account

c. drawing account

d. t-account 

e. balance column sheet

Definition
d. t-account
Term

A general ledger is:

A. a record containing all individual accounts (with amounts) for a buisness

B. A journal in which transactions are first recorded

C. A collection of documents that describe transactions and events during the accounting process

D. A list of all accounts with their debit balances at a point in time

E. A list of all accounts a compant uses and includes an identification number assigned to each account

Definition
A. a record containing all individual accounts (with amounts) for a buisness
Term

A debit is used to record:

A. a decrease in an asset accounts

B. a decrease in an expense account

C. an increase in a revenue account

D. an increase in the balance of common stock

E. a decrease in the balance of retained earnings 

Definition
E. a decrease in the balance of retained earnings
Term

Double-entry accounting is an accounting system:

A. That records each transaction twice

B. That records the effects of transactions and other events in at least two accounts with equal debits and crdits

C. In which the impact of each transaction is recorded in two or more accounts but that could include two debits and no credits

D. That may only be used if T-accouts are used

E. That insures that errors never occur

Definition
B. That records the effects of transactions and other events in at least two accounts with equal debits and crdits
Term

 A liability created by the reciept of cash from customers to payment for products or services that have not yet been delivered to the customers is:

A. recorded as a debit to an unearned revenue account

B. recorded as a debit to a prepaid expense account

C. recorded as a credit to an unearned revenue account

D. recorded as a credit to a prepaid expense account

E. Not recorded in the accounting records until the earnings process is complete 

Definition
C. recorded as a credit to an unearned revenue account
Term

A broad principle that requires identifying the activites of a business with a specific time periods such as months, quarters or years is the:

A. Operating cycle of business

B. Time period principle

C. Going-concern principle

D. Matching principle

E. Accural basis of accounting

Definition
B. Time period principle
Term

On September 30, the cash account of value compant had a normal alance of $5,000. During September, the account was debitied for a toal of 12,200 and credited for a total of 11,500. What was the balance in the cash account at the beginning of September.

A. 0

B. 4,300 debit balance

C. 4,300 credit balance

D. 5,700 debit balance

E. 5,700 credit balance

Definition
B. 4,300 debit balance
Term

Adjusting entries:

A. Affect only income statement accounts

B. Affect only balance sheet accounts

C. Affect both income statement and balance sheet accounts

D. Affect only cash flow statement accounts

E. Affect only equity account

Definition
C. Affect both income statement and balance sheet accounts
Term

Which of the following accounts would not be impacted by qdjusting journal entries?

A. accounts receivable 

B. consuting fee earned

C. unearned consulting fees

D. Cash

E. Wages Payable

 

Definition
D. Cash
Term

The approach to preparing financial statements based on recognizing revnues when they are earned and matching expenses to those revenues is:

A. Cash basis accounting

B. The matching principle

C. The time period principle

D. Accural basis accounting

E. Revenue basis accounting

Definition
D. Accural basis accounting
Term

The recurring steps preformed each accounting period, starting with anazlying and recording transactions in the jorunal and continuing all the way trhough the post-cycling trail balance are referred to as the:

A. Accounting Period

B. Operating Cycle

C. Accounting Cycle

D. Closing Cycle

E. Natural business year

Definition
C. Accounting cycle
Term

The total amount of depreciation recorded againist an asset or group of assets during the entire time the asset or assets have been used in the day to day opertaions of the business:

A. is referred to as accumulated depreciation

B. is referred to as a depreciation expense

C. is shown on the income statement of the final period

D. is only recoreded when the asset is disposed of

E. is referred to as an accured asset

Definition
B. is referred to as a depreciation expense
Term

Merchandise inventory:

A. is a long term asset

B. is a current asset

C. includes supplies

d. is classified with investments on the balance sheet

e. must be sold within one month

Definition
b. is a currect asset
Term

The current period's ending inventory is:

A. the next period's beginning inventory

B. the current period's cost of goods sold

C. the prior period's beginning inventory

D. the current period's net purchases

E. the current period's beginning inventory

Definition
A. the next period's beginning inventory
Term

The credit terms 2/10,n/30 are interpreted as:

A. 2% cash discount if the amount is paid within 10 days, with the balance due in 30 days

B. 10% cash discount if the is paid within 2 day, with balance due in 30 days

C. 30% discount if paid within 10 days

D. 30% discount if paid within 10 days

E. 2% discount if paid within 30 days

Definition
A. 2% cash discount if the amount is paid within 10 days, with the balance due in 30 days
Term

A trade discount is:

A. a term used by a purchaser to describe a cash discount given to customers for prompt payment

B. a reduction in price below the list price 

C. A term used by a seller to describe a cash discount granted to customers for prompt payment

D. a reduction in price for prompt payment

E. Also called a rebate

Definition
B. a reduction in price below the list price
Term

A comapny purchased 1,800 of merchandise on December 5. On December 7, it returned 200 worth of merchansdise. On December 8, it paid the balance in full, taking a 2% discount. The amount of the cash paid on Deember 8 equals:

A.  200

B. 1564

C. 1568

D. 1600

E. 1800

Definition
C. 1568
Term

Sales returns:

A. refer to merchandise that customers return to the seller after the sale

B. refer to reduction in the seeling prie of merchandise sold to customers

C. represent cash discounts

D. represent trade discounts

E. are not recorded under the perpetual inventory system until the end of each accounting period 

Definition
A. refer to merchandise that customers return to the seller after the sale
Term

An income statement that includes cost of goods sold as another expense and shows only one subtotal for total expenses is a:

A. balanced income statement

B. single step income statement

C. multiple step income statement

D. combined income statement

E. simplified income statement

Definition
B. single step income statement
Term

Expenses that support the overall operations of a business and include the expenses relating to accounting, human resource management and financial mangerment are called:

A. cost of goods sold

B. selling expense

C. purchasing expenses

D. general and administrative expenses

E. non-operating activites 

Definition
D. general and administrative expenses
Term

An account used in the periodic inventory system that is not used in perpetual inventory system is:

A. merchandise inventory

B. sales

C. sales returns and allowances

D. accounts payable

E. purchases

Definition
E. purchases
Term

Merchandise inventory includes:

a. all goods owed by a company and held for sale

b. all goods in transit

c. all goods on consignment

d. only damaged goods

e. only items that are on the shelt

Definition
a. all goods owed by a company and held for sale
Term

Goods in transit are included in a purchaser's inventory:

A. at any time during transit

B. when the purchaser is responsible for paying freight chargers

C. when the supplier is responsible for freight charges 

D. if the goods are shipped FOB desination 

E. After the half-way point between the buyer and seller

Definition
B. when the purchaser is responsible for paying freight chargers
Term

Goods on consignment:

A. are goods shipped by the owner to the consignee who sells the goods for the owner

B. are repored in the consignee's books as inventory

C. are goods shipped in the conignor who sells the goods for the owner

D. are not reported in the consignor's inventory since they do not have posession of the inventory 

E. are always paid for by the consignee when they take possession of the goods 

Definition
A. are goods shipped by the owner to the consignee who sells the goods for the owner
Term

physical inventory counts:

a. are not necessary under the perpetual system

b. are necessary to measure and adjust for inventory shrinkage

c. must be taked at least once a month

d. require the use of hand held protable computers

e. are necessary under the cost to benefit constraint 

Definition
b. are necessary to measure and adjust for inventory shrinkage
Term

during a period of steadily rising costs, the inventory valuation method that yeilds the lowest reported net income is:

A. specific identification method

B. average cost method

C. weighted average method

D. FIFO method

E. LIFO Method

Definition
E. LIFO method
Term

Which inventory valuation method that tends to smooth out erratic changes in costs is:

A. FIFO

B. Weighted average 

C. LIFO

D. Specific identification 

E. WIFO

Definition
B. weighted average
Term

Which inventory valuation method assigns a value to the inventory on the balance sheet that approximates current cost and also miics the actual flow of goods for most businesses?

A. FIFO

B. Weighted Average

C. LIFO

D. Specific identification

E. First is still here

Definition
A. FIFO
Term

The consistency principle:

A. requires a company to consistently use the same accounting method of inventory valuation unless a change will improve financial reporting

B. requires a company to use one method of inventory valuation exclusively

C. requires that all companies in the same industry use the same accounting methods of inventory valutation 

D. is also called the full disclosure principle

E. is also called the matching principle

Definition
A. requires a company to consistently use the same accounting method of inventory valuation unless a change will improve financial reporting
Term

The full disclosure principle:

A. requires that when a change  inventory valuation method is made, the notes to the financial statements report the type of change, why it was made and its effect on net income

B. requires that companies use the same accounting method for inventory valuation period after period

C. is not only subject to the materiality principle

D. is only applied to retailers

E. is also called the consistency principle

Definition
A. requires that when a change  inventory valuation method is made, the notes to the financial statements report the type of change, why it was made and its effect on net income
Term

An error in the period end inventory causes an offsetting error in the next period and therefore:

A. mangers can ignore the error

B. is it sometimes said to be self correcting

C. it affets only income statement accounts

D. it affects only balance sheet accounts

E. it is immaterial for managerial decision making 

Definition
B. is it sometimes said to be self correcting
Term

the understatment of the ending inventory balance causes:

A. Cost of goods sold to be overstated and net income to be understated

B. Cost of goods sold to be overstated and net income to be overstated

C. Cost of goods sold to be understand and net income to be understated

D. Cost of goods solde to be understated and net income to be over stated

E. Cost of goods sole to be overstated and net income to be correct

Definition
A. Cost of goods sold to be overstated and net income to be understated
Term

The inventory valuation method that identifies the invoice cost of each item in ending inventory to determine the cost assinged to that inventory is the:

A. weighted average inventory method

B. FIFO

C. LIFO

D. specific indentification method

e. retail inventory method

Definition
D. specific indentification method
Term

In applying the lower of cost or markey method to inventory valuation markey is defined as:

A. historical cost

b. current replacement cost

c. current sales price

d. fifo

e. lifo 

Definition
B. currect replacement cost
Term

Generally accepted accounting principles require that the inventory of a compant be reported at:

A. market value

b. hisorical cost

c. lower of cost or market

d. replacement cost

e. retail value

Definition
c. lower of cost or market
Term

the convervatism principle:

A. requires that when there are more than one equally likely estimate of ammounts exoencted to be recieved or paid in the futire, then the less optimistic amount should be used

B. requires that a company use the same accounting methods period after period

C. requires that revenues and expenses be reoprted in the period in whcih tey are earned or incurred

D. requires that all items of a material nature be included in financial statments

E. requires that all inventory items be reported at full cost 

Definition
A. requires that when there are more than one equally likely estimate of ammounts exoencted to be recieved or paid in the futire, then the less optimistic amount should be used
Term

Interim statements:

A. are required by the congress

B. are necessary to achieve full disclosure about a business's opertaions

C. are usually monthly or quartley statements prepard in between the traditional annual statements 

D. require the use of the perpetual method for inventories

E. cannot be prepared if the company follows the converatism principle

Definition
C. are usually monthly or quartely statements prepared in between the traditional annual statements
Term

The main principles of internal control include which of the following:

A. Establish Resposibilites

B. Maintain minimal records

C. Use only computerized systems

D. Bond all employees

E. Require automated sales systems

Definition
A. establish responisibilites
Term

A good system of internal control:

A. urges adherance to prescribed managerial policies

B. insures profitable opertaions

C. eliminated the need for an audit

D. requries the use of non computerized systems

e. is not necessary if the company uses a computerized system 

Definition
B. insures profitable opertaions
Term

a company's internal control system:

A. eliminates the risk of loss

B. monitors and controls business activities

C. insure assets

D. eliminates the need for audits

E. is not necessary in large companies

Definition
B. monitors and controls business activities
Term

When two clerks share the same cash register, which internal control principle?

a. establish responibilities

b. maintain adequate records

c. insure assets

d. bond key employees

e. apply technological controls

Definition
a. establish responibilities
Term

pre-numbered printed checks are an example of which internal control principle?

a. technological controls

b. maintain adequate records

c. perform regular and independent reviews

d. establish responsibilities

e. divide responsibility for related transactions

Definition
b. maintain adequate records
Term

 which of the following is the most serious limitation of interal controls?

a. computer arror

b. human fraud or human error

c. cost benefit principle

d. cybercrime

e. management fraud

Definition
b. human fraud or human error
Term

cash, not including cash equvalents, includes:

a. postage stamps

b. coins, currency and checking accounts

c. iou's 

d. two year certificates of deposit

e. money market funds

Definition
b. coins, currency and checking accounts
Term

cash eqivalents

a. include savings accounts

b. include checking accounts

c. are short term investments sufficiently close to their maturity date that their value is not sensitive to interest rate change

d. include time deposit

e. have no immediate value 

Definition
c. are short term investments sufficiently close to their maturity date that their value is not sensitive to interest rate change
Term

for which  item does a bank NOT issue a debit memorandum?

a. to notify a depositor of al withdrawls through an ATM

b. to notify a depositor of a deduction to a depositpr's accounts

c. to notify a depositor of a bounced check

d. to notify a depositor of a period payments arranged in advance, by a depositor

e. to notify a depositor of a deposit to their account

Definition
e. to notify a depositor of a deposit to their account
Term

An income statement account that is used to record cash overages and cash shortages arising from omitted petty cash receipts and form errors in making change is called the:

A. cash lost account

B. bank reconciliation account

C. petty cash account

D. cash over and short account

e. cash receivable account

Definition
D, cash over and short account
Term

at the end of the day, the cash register's record shows 1000 but the count of cash in the register is 1035. The proper entry to record this excess includes a:

A. credit fo cash for 35

B. debit to cash for 35

C. credit to cash over and short for 35

D. debit to cash over and short for 35

E. debit to petty cash for 35

 

Definition
c. credit to cash over and short for 35
Term

the entry necessary to establish a petty cash fund should include:

A. a debit to cash and a credit to petty cash

b. a debit to cash and a credit to cash over and short

c. a debit to petty cash and a credit to cash

d. a debit to petty cash and a crdit to accounts receivable

e. a debit to cash and a credit to petty cash oer and short

Definition
C. a debit to petty cash and a credit to cash
Term

when a petty cash fund is in use:

a. expenses paid with pettyucash are recorded when the fund is replenished

b. petty cash is debitd when funds are replenishes

c. petty cash is credited when funds are replenished

d. expenses are not recorded

e. cash is debited when funds are replenished

Definition
a. expenses paid with pettyucash are recorded when the fund is replenished
Term

Assume that the cusodian of a 450 petty cash fund has 62.50 in coins and currency plus 382.50 in receipts at the end of the month. The entry to replenish the petty cash fund will include:

A. a debit to cash for 377.50

B. a credit to cash over and short for 5

C. a debit to petty cash for 382.50

D. a credit to cash for 387.50

E. a debit to cash for 387.50

Definition
D. a credit to cash for 387.50
Term

An analysis that explains any differnes between the cehcking account balance according to the depositor's records and the balance reported on the bank statement is a(n):

A. internal auit

B. bank reconciliation

C. bank audit

D. trial reconciliation

E. analysis of debits and credits

Definition
B. bank reconciliation
Term

On a bank reonciliation an unrecoreded debut memorandum from printing checks is:

A. noted as a memorandum only

b. added to the book balance of cash

c. deducted from the book balance of cash

d. added to the bank balance of cash 

e. deducted from the bank balance of cash 

Definition
c. deducted from the book balance of cash
Term

A check that was outstanding on last period's bank reconciliation was not included with the cancelled checks returned by the bank this period. As a result, in preparting this period's reconicilation m the amount of this check should be:

A. added to the book balance of cash

B. deducted from the book balance of cash

C. added to the bank balance of cash

D. deducted from the bank balance of cash

E. ignored in preparting the period's bank reconciliation 

Definition
D. deducted from the bank balance of cash
Term

Which of the following is the primary purpose of accounting?

A. to establish a buisness

B. to identify, record, and communicate business transactions

C. to decieve stockholders

D. to keep from paying taxes

E.  to establish credit for a company

Definition
B. to identify, record, and communicate business transactions
Term

Identifying business activites requires selecting transactions and events to an organization. Which of the following events would be recorded in the accounting records of Acme Car Wash?

A. Acme washed 500 cars

B. J.B. Smith a customer buys lunch at the restaurant next door to Acme while waiting for her car to be washed

C. Clean company a supplier sells 50 pounds of soap to ABC company

D. Sudsey Company a supplier goes out of business

E. Acme hires Andrea as a receptionist

Definition
A. Acme washed 500 cars
Term

Internal users of accounting information include:

A. Shareholders

B. Customers

C. Creditors

D. Government regulators

E. Production Line Supervisor

Definition
E. Production Line Supervisor
Term

The primary obejective of financial accounting is:

A. to serve the decision making needs of internal users

B. to provide financial statements to help external users analyze and interpret an organization's activities

C. To monitor and control compant activities

D. To provide information on both the cost and benefits of managing products and services

E. to know what, when and how much to produce

Definition
B. to provide financial statements to help external users analyze and interpret an organization's activities
Term

Which accounting assumption assumes that all accounting information is reported monthly or yearly?

A. business entity assumption

B. monetary unit assumption

C. value assumption

D. cost assumption

E. time period assumption

Definition
E. time period assumption
Term

Which of the following accounting principles dictates when expenses are recognized?

A. revenue rocognition principle

B. monetary unit principle

C. business entity principle

D. matching principle

E. full disclosure principle

Definition
D. matching principle
Term

Which of the following is the correct sequence for the heading for ABC company's 2010 balance sheet?

A. ABC Company, for the year ended 12/31/10, Balance Sheet

B. For the year ended 12/31/10, Balance Sheet, ABC Company

C. Balance Sheet, 12/31/10, ABC Company

D. 12/30/10, ABC Company, Balance Sheet

E. ABC Company, Balance Sheet, 12/31/10

Definition
E. ABC Company, Balance Sheet, 12/31/10
Term

Ethical behavior requires:

A. That an auitors' pay not depend on the figures in the clinet's reports

B. Auditors to invest in businesses they audit

C. Analysts to report information favorable to their companies

D. Managers to use accounting information to benefit themselves

E. Than an auditor provides a favorable opinion

Definition
A. That an auitors' pay not depend on the figures in the clinet's reports
Term

The organization that attempts to create more harmony amoung the accounting practices of different countires by identifying preferred practices and encouraging their worldwide acceptance is the:

A. AICPA B.FASB C.CAP D.SEC E. IASB

Definition
E. IASB
Term

Social Responsibility:

A. is a cocern for the impact of one's actions on society as a whole

B. is a code that helps in dealing with confidential information

C. is required by the SEC

D. requires that all business conduct social audits

E. is mandated by the federal government

Definition
A. is a cocern for the impact of one's actions on society as a whole
Term

 

The accounting guideline prescribing that financial statement information be supported by independent, unbiased evidence other than someone's belief or opinion is the:

 

A. Business entity principle

 

B. Monetary unit principle

 

C. Going-concern principle

 

D. Cost principle

 

E. Measurement principle

 

Definition
E. Measurement principle
Term

 

12. A parcel of land is: offered for sale at $150,000, assessed for tax purposes at $95,000, recognized by its purchasers as being worth $140,000 and purchased for $137,000. The land should be recorded in the purchaser's books at:

 

A. $95,000

 

B. $137,000

 

C. $138,500

 

D. $140,000

 

E. $150,000

 

Definition
B. $137,000
Term

 

On December 15, 2010, Myers Legal Services signed a $50,000 contract with a client to provide legal services to the client in 2011. Which accounting principle would require Myers Legal Services to record the legal fees revenue in 2011 and not 2010?

 

A. Monetary unit principle

B. Going-concern principle

C. Cost principle

 

D. Business entity principle

 

E. Revenue recognition principle

 

Definition
E. Revenue recognition principle
Term

 

According to generally accepted accounting principles, the balance sheet should show the company's assets at:

 

A. The cash equivalent value of what was given up

 

B. The current market value of the assets at the balance sheet date

 

C. The cash paid to acquire them, even if something other than cash was given in the exchange

 

D. The best estimate from a certified internal auditor

 

E. The objective value to external users

 

Definition
A. The cash equivalent value of what was given up
Term
Decreases in retained earnings that represent costs of assets or services that are used to earn revenues are called:
A. Liabilities
B. Equity
C. Withdrawals
D. Expenses
E. Contributed Capital
Definition
D. Expenses
Term
If assets are $365,000 and equity is $120,000, then liabilities are:
A. $120,000
B. $245,000
C. $365,000
D. $485,000
E. $610,000
Definition
B. $245,000
Term
A company purchases supplies on account, what is the effect on the accounting equation?
A. assets decrease; equity increases
B. assets decrease; equity decreases
C. liabilities decrease; equity decreases
D. liabilities increase; equity increases
E. liabilities increase; assets increase
Definition
E. liabilities increase; assets increase
Term
Photometer Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?
A. Assets, $30,000 increase; liabilities, no effect; equity, $30,000 increase
B. Assets, $30,000 decrease; liabilities, $30,000 decrease; equity, no effect
C. Assets, $30,000 decrease; liabilities, $30,000 increase; equity, no effect
D. Assets, no effect; liabilities, $30,000 decrease; equity, $30,000 increase
E. Assets, $30,000 decrease; liabilities, no effect; equity $30,000 decrease
Definition
B. Assets, $30,000 decrease; liabilities, $30,000 decrease; equity, no effect
Term
The statement of retained earnings:
A. Reports how retained earnings changes at a point in time
B. Reports how retained earnings changes over a period of time
C. Reports on cash flows for operating, financing and investing activities over a period of time
D. Reports on cash flows for operating, financing and investing activities at a point in time
E. Reports on amounts for assets, liabilities and equity at a point in time
Definition
B. Reports how retained earnings changes over a period of time
Term

D.    Equipment

Definition
C. land
Term

D.    Useful life of more than a year

Definition
B. for resale
Term

   Book value:

D.    Is the same as residual value

Definition
A. equals cost - accumlated dep
Term

    The cost of a long term asser is expensed

D.    When it is paid for

Definition
C.     As the asset benefits the company
Term

1. a capital expenditure results in a debit to the…

a. expense account

b. capital account

c. asset account

d. liability account

Definition
c. asset account
Term

d.     Betterment

Definition
b.     Ordinary repair
Term

d.     Extended to the useful life or increase the residual value of the asset

 

Definition
d.     Extended to the useful life or increase the residual value of the asset
Term

d.     Cost to paint the factory wall

 

Definition
a.     Cost to aquire a printing press
Term

d.     Original cost minus accumulated depreciation

 

Definition
b.     Original cost minus residual value
Term

 

Definition
A. book value
Term

d.     Production

 

Definition
b.     Double declining balance
Term

d.     Loss of 26,000

Definition
A. gain of 2,000
Term

d.     Sale price and the original cost of the asset sold

 

Definition
b.     Sale price of the book value
Term

d.     Credit to accumulated depreciation for 18,000

 

Definition
b.     Debit to loss on sale of asset for 800
Term
17. All of the following are needed for the computation of the depreciation EXCEPT
a. Residual value
b. Estimated useful life
c. Cost
d. Current market value
Definition
D
Term
18. Par value is?
a. Is established for a share of stock after it is issued
b. Is the legal capital established for a share of stock
c. Represents what a share of stock is worth
d. Represents the original selling price for a share of stock
Definition
B
Term
19. The board of directors of BC declared a cash dividend on 1/18/2017 to be paid on 2/18/2017 to the share holders holding the stock on 2/2/2017 given these facts the date 2/2/2017 is referred to as the
a. Date of declaration
b. Date of payment
c. Ex-dividend date
d. Date of record
Definition
D
Term
20. The net effects on a corporation of the declaration and payment of a cash dividend are to
a. Increases assets and increases stockholders equity
b. Decreases liabilities and decreases stockholders equity
c. Decreases assets and decreases stockholders equity
d. Increases stockholders equity and decreases liabilities
Definition
c
Term
21. A corporation records a dividend related liability
a. On the payment dater
b. On the record date
c. On the declaration date
d. When the stock sells ex dividend
Definition
c
Term
22. The number of shares of issued stock equals
a. Unissued shares minus authorized shares
b. Outstanding shares plus treasury shares
c. Subscribed shares plus outstanding shares
d. Authorized shares minus treasury shares.
Definition
b
Term
23. The contributed capital of a corporation does NOT include
a. Additional paid in capital
b. Preferred stock
c. The stated value of common stock issued
d. Retained earnings
Definition
d
Term
24. A corporations residual equity is its
a. Preferred sotck
b. Retained ernings
c. Common stock
d. Cash
Definition
c
Term
25. The max number of shares of common stock that may be issued iaccording to the coproations charter is referred to as
a. Authorized shared
b. Outstanding shares
c. Unissued shares
d. Issued shares
Definition
A
Term
26. Which is NOT apart of a corporations stockholders equity section
a. Common stock
b. Additional paid in capital
c. Retained earnings
d. Dividends in arrears
Definition
d
Term
27. Holders of preferred stock normally do NOT have
a. Preference as to dividends
b. Preference as to assets in liquidations
c. Full voting rights
d. Ownership interests in the corporations
Definition
c
Term
28. Outstanding shares of stocks are
a. Issued shares that have not yet been issued
b. Also called treasury shares
c. Shares of stocks owned by unknown individuals
d. Issued shares that are still in circulation
Definition
d
Term
29. Shares of treasury stock are
a. Issued shares that have been bought back and being held by the corporation
b. Shares held by the US tresuary department
c. Part of the total outstanding shares but NOT apart of the total issued shares of a corporation
d. Unissued shares that are held by the treasurer of the corporation
Definition
A
Term
30. Legal capital is a descriptive phrase for
a. Stockholders equity
b. Par value
c. Market value
d. Residual equity
Definition
b
Term
Dividends in arrears are dividends on
a. –
b. –
c. Cumulative preferred stock that have been declared but not yet paid
d. Cumulative preferred stock that have NOT been declares for some specified period of time
Definition
c
Term
Blahblah corporation has 3000 shares of $100 par value, 7 percent cumulative preferred stock, and 10,000shares of $10 par value common stock outstanding during its first 5 years of operation. Blahblah paid cash dividends as follows:
2014, $14,000 2015, $0 2016, $65,000 2017, $30,000 2018, $15,000
33. the amount of dividends that common stockholders received for 2014 was:
a. $0 B. $7,000 C. $14,000 D.$21,000
34. the amount of dividends in arrears at the end of 2015 was:
a. $0 B.$7,000 C.$21,000 D. $28,000
35. the amount of dividends received by the preferred stockholders during 2016 was:
a. $65,000 B.$49,000 C. $28,000 D.$21,000
Definition
33.a
34.d
35.b
Term
36. a corporation has 5,000 shares 8 percent noncumulative preferred stock and 10,000 shares of common stock outstanding. Par value each is $100. No dividends were paid last year, but this year a $100,000 dividend is paid. How much of this $100,000 goes to the stock holders of common stock?
a. $60,000
b. $40,000
c. $80,000
d. $20,000
Definition
A
Term
Dividends in arrears cannot exist in conjunction with
a. callable preferred stock
b. convertible preffered stock
c. noncumulative preferred stock
d. cumulative preferred stock
Definition
c
Term
preferred stock is least likely to have what:
a. preference as to dividends
b. the right of the holder to vote at stockholders meetings
c. preference as to assets upon liquidation of the corporation
Definition
b
Term
. the excess of the issuance price over the stated value of a non-par common stock should be credited to the
a. common stock account
b. retained earnings account
c. additional paid in capital
d. Treasury stock
Definition
c
Term
. a company purchases 600 shares of tis $100 par value common stock at $110 per share. It then reissues 100 shares at $114 per share. The entry upon reissue of the stock would include a credit to
a. paid in capital, tresuary stock for $400
b. tresuary stock, common for $11,400
c. gain on sale of treasury stock for $400
d. retained earnings for $1,400
Definition
A
Term
the sale of tresuary stock cannot result in
a. an increase in retained earnings
b. the crediting of paid in capital, - Treasury stock
c. the debiting of paid in capital, - Treasury stock
Definition
A
Term
which will NOT affect the balance of the Retained Earnings account?
a. stock splits
b. net loss
c. cash dividends declared
d. stock dividend declared
Definition
A
Term
what is NOT true about the 2-for-1 stock split?
a. total contributed capital increases.
b. par value per share is reduced to half of what it was before the split
c. a stockholder with ten shares before the split owns 20 shares after the split
d. the market price probably will decrease.
Definition
A
Term
. on may 1, 2001 bryson corp had 20,000 shares of $100 par value common stock outstanding with a market value of $160 per share. On may 2, 2001 bryson announced a 4-for-1 stock split. After the split, the par value of the stock:
a. remained the same as before the split
b. was reduced to $50 per share
c. reduced to $40 per share.
d. reduced to $25 per share
Definition
D
Term
. on which of the following dates involving stovk dividends does a liability arise?
a. date of distribution
b. date of declaration
c. date of record
d. on no date
Definition
D
Term
a contingency that is remote and is of an unknown amount
a. should be disclosed
b. must be aacured as a loss
c. does not need to be disclosed
Definition
C
Term
. a current liability is a debit that can reasonably expected to be paid
a. within a year
b. between 6-18months
c. out of currently recognized revenues
Definition
A
Term
sales taxes collected by a retailer are recorded by
a. crediting sales taxes revenue
b. debiting sales taxes expenses
c. crediting sales taxes payable
Definition
C
Term
uneanred rental revenue
a. is a contra account to rental revenue
b. is a revenue account
c. is reported as a current liability
d. is debited when rent is received in advance
Definition
C
Term
. what is NOT included in an employers tax expense?
a. medicare tax
b. federal income tax
c. federal unemployment tax
d. social security tax
Definition
B
Term
. which is NOT apart of the ceiling for the amount that is subjected?
a. social secrutiy tax
b. federal unemployment tax payable
c. medicare tax payable
Definition
C
Term
. revenue collected but not yet earned is recorded as?
a. unearned revenue
b. accured revenue
Definition
A
Term
which is credited by the seller when the tax is collected at the retail store?
a. accounts payable
b. payroll tax
c. sales tax payable
Definition
C
Term
which will be credited by the borrower when a promissory note is issued?
a. note payable
b. notes recievable
c. interest payable
d. cash
Definition
A
Term
extra compensation items that are not paid directly to an employee are called\
a. bonuses
b. benefits
c. wages
d. commissions
Definition
B
Term
Accounting records are also referred to as the books.

T/F
Definition
true
Term
The first step in the analyzing and recording process is to analyze each transaction and event from source documents.

t/f
Definition
true
Term
Preparation of a trial balance is the first step in the analyzing and recording process

t/f
Definition
false
Term
Source documents provide evidence of business transactions and are the basis for accounting entries

t/f
Definition
true
Term
Items such as sales slips, invoices, checks and purchase orders are source documents.

t/f
Definition
true
Term
An account is a record of increases and decreases in a specific asset, liability, equity, revenue or expense item.
Definition
true
Term
According to the seller, a customer's promise to pay is called an account payable.
Definition
false
Term
Dividends are a type of business expense.
Definition
false
Term
. As prepaid expenses are used up, the costs of these assets become expenses.
Definition
true
Term
. Land and buildings are generally recorded in the same ledger account.

t/f
Definition
false
Term
. It is not necessary to keep separate accounts for all items of importance for business decisions
Definition
false
Term
When a company provides services for which cash will not be received until some future date, the company should record unearned revenue for the amount charged to the customer.

t/f
Definition
false
Term
The chart of accounts is a list of all the accounts used by a company and a corresponding identification number.
Definition
true
Term
An account balance is the difference between the debits and credits for an account including any beginning balance.
Definition
true
Term
. Debit means the right-hand side of any account.
Definition
false
Term
In a double-entry accounting system, total amount debited must always equal total amount credited
Definition
true
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