accounting 2301 and 2301 questions and answers

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Accounting is an information and measurement system that identifies, records, and communicates financial information to users.   True or false	True
Generally accepted accounting principles are the concepts and rules for preparing financial statements. true or false	True
The difference between a company's assets and its liabilities is: net income expenses equity net loss revenu	Equity
Risk is the amount of uncertainty about the return we expect to earn in the future. True or False	True
The financial statement that reports whether the business earned a profit and also lists the types and amounts of the revenues and expenses is called a(n):	Income statement.
If equity is $300,000 and liabilities are $192,000, then assets equal:	→ $492,000 Assets = liabilities+Equity192000+300000=492000
Investing activities involve the buying and selling of assets such as land and equipment that are held for long-term use in the business.              True or False	True
Ending liabilities are 67,000, beginning equity was $87,000, common stock issued during year totaled $31,000, expenses for the year were $22,000, dividends declared totaled $13,000, ending equity for the year is $181,000, and beginning assets for the year were $222,000. What was revenue for the year?	→ $98,000 181,000 + 13,000 + 22,000 - 31,000 - 87,000 = 98,000
Below is accounting information for Cascade Company for 2013, its first year of business revenue            416000. cash                 120000. commonstock  200000.  Expenses        300000.  Equipment       240000.  Accounts Recievable 35000.  Notes Payable     50000. Notes Recievable   62000. What was total equity at year end?	$316,000 416,000 - 300,000 = 116,000 + 200,000
The balance sheet is based on the accounting equation.      True or False	True
Which of the following statements best describes the relationship of U.S. GAAP and IFRS?	They are similar but not identical.
The Financial Accounting Standards Board is a private group that sets both broad and specific accounting principles. true or False	False
Ownership of a corporation is divided into units called shares or stock. True or False	True
Which accounting assumption assumes that all accounting information can be reported monthly or yearly?	Time Period Assumption
To include the personal assets and transactions of a business's owner in the records and reports of the business would be in conflict with the:	Business entity principle.
The International Accounting Standards Board (IASB)	Hopes to create harmony among accounting practices of different countries
The organization that attempts to create more harmony among the accounting practices of different countries by identifying preferred practices and encouraging their worldwide acceptance is the:	IASB
Ethical behavior requires:	That an auditor's pay not depend on the figures in the client's reports.
On December 15, 2013, Myers Legal Services signed a $50,000 contract with a client to provide legal services to the client in 2014. Which accounting principle would require Myers Legal Services to record the legal fees revenue in 2014 and not 2013?	Revenue recognition principle.
A company reported total equity of $145,000 on its December 31, 2013, balance sheet. The following information is available for the year ended December 31, 2014: 2014 Revenue    210000.  2014                  165.00  Liabilties, at Dec. 31,2014 92000. What are the total assets of the company at December 31, 2014?	282,000.2014 net income = $210,000 - $165,000 = $45,000 2014 year-end equity = $145,000 + $45,000 = $190,000 2014 year-end assets = $92,000 + $190,000 = $282,000
A corporation purchased a $40,000 delivery truck by paying 4,000 cash and signing a $36,000 note payable. Immediately prior to this transaction the corporation had assets, liabilities, and owners' equity in the amounts of $75,000, $52,000, and $23,000 respectively. What is the total amount of the corporation's assets after this transaction has been recorded?	111,000. 75,000 (assets prior to transaction) + 40,000 (truck) - 4,000 (cash) = 111,000
The Maximum Experience Company acquired a building for $500,000. Maximum Experience had an appraisal done and found that the building was worth $575,000. The seller had paid $300,000 for the building six years ago. Which accounting principle would prescribe that Maximum Experience record the building on its records at $500,000?	Cost principle.
Generally Accepted Accounting Principles:	Intend to make information on the financial statements relevant, reliable, and comparable.
A company acquires equipment for $75,000 cash. This represents a(n):	Investing Activity
The principle that (A) requires revenue to be recognized at the time it is earned, (B) allows the inflow of assets associated with revenue to be in a form other than cash, and (C) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services is called the:	Revenue recognition principle.
Recording the items on the financial statements in dollars is done because of the	Monetary unit principle
According to the cost principle, it is preferable for managers to report the most current estimate of an asset's value.                        True or False	False
Social responsibility:	Is a concern for the impact of one's actions on society as a whole.
Accounts payable appear on which of the following statements?	Balance Sheet
Return on assets is:	Computed by dividing net income by average total assets.
Owner financing refers to resources contributed by creditors or lenders. True or False	False
Identifying business activities requires selecting transactions and events relevant to an organization. Which of the following events would be recorded in the accounting records of Acme Car Wash?	Acme washes 500 Cars
Resources owned or controlled by a company that are expected to yield benefits are:	Assets
Cash investments by owners in exchange for stock are listed on which of the following statements?	Statement of Cash Flow
Which of the following accounting principles dictates when expenses are recognized?	Matching priciple
A trial balance that balances is not proof of complete accuracy in recording transactions. True or False	True
A collection of all accounts (with account balances) used by a business is called a:	General Ledger
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. true or False	True
Doing a credit Entry	Decreases asset and expense accounts and increases liability, common stock, and revenue accounts.
Which of the following is the appropriate journal entry if a company performs a service and then bills the customer?	Debit to Accounts Receivable, credit to Service Revenue.
A trial balance prepared after the closing entries have been journalized and posted is the Unadjusted trial balance. Post-closing trial balance. General ledger. Adjusted trial balance. Work sheet.	post closing trial balance
A 10-column spreadsheet used to draft a company's unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements and which is an optional tool in the accounting process is a(n): Adjusted trial balance. Work sheet. Post-closing trial balance. Unadjusted trial balance. General ledger.	worksheet
A company pays each of its two office employees each Friday at the rate of $100 per day each for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is: Debit Unpaid Salaries $600 and credit Salaries Payable $600. Debit Salaries Expense $400 and credit Salaries Payable $400. Debit Salaries Expense $600 and credit Salaries Payable $600. Debit Salaries Payable $400 and credit Salaries Expense $400.Debit Salaries Expense $400 and credit Cash $400.	Debit Salaries Expense $400 and credit Salaries Payable $400 2 employees x 2 days x $100/employee/day = $400
The revenue recognition principle is the basis for making adjusting entries that pertain to unearned and accrued revenues. True or False	True
Which of the following accounts would not be impacted by adjusting journal entries? Accounts Receivable Consulting Fee Earned Unearned Consulting Fees Cash Wages Payable	Cash
A company had revenues of $75,000 and expenses of $62,000 and paid $1,000 dividends during the accounting period. Which of the following entries could not be a closing entry for this company? income summary      13000   Retained Earnings              13000 Income Summary       75000   Revenue                               75000 revenue                        62000   Income Summary                62000 Reatianed Earnings       1000     Dividens                              1000	Income Summary  75000    Revrenue                       75000
Which of the following accounts would not be impacted by adjusting journal entries? Accounts Receivable Consulting Fee Earned Unearned Consulting Fees Cash Wages Payable	Cash
Which of the following accounts would not be on the post- closing trial balance? Accounts Payable Accounts Receivable Common Stock Dividends Retained Earnings	Dividens
The last four steps in the accounting cycle include preparing the adjusted trial balance, preparing financial statements, and recording closing and adjusting entries. True False	False
An unadjusted trial balance is a listing of accounts and their balances prepared before adjustments are recorded. True or False	true
A publishing company records the subscriptions paid in advance by its customers in an account called Unearned Subscription Revenue. If the company fails to make the end-of-period adjusting entry to record the portion of the subscriptions that have been earned, one effect will be: An overstatement of equity. An overstatement of liabilities. An understatement of assets. An understatement of liabilities. An overstatement of assets.	overstated liabilties
The Unadjusted Trial Balance columns of a company's work sheet show the balance in the Office Supplies account as $750. The Adjustments columns show that $425 of these supplies were used during the period. The amount shown as Office Supplies in the Balance Sheet columns of the work sheet is: $325 debit $325 credit $425 debit $750 debit $750 credit	325.00 debit $750 - $425 = $325 remaining balance
Intangible assets are long-term resources that benefit business operations, usually lack physical form, and have uncertain benefits. True False	True
The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of those expenses is the: Recognition principle. Cost principle. Cash basis of accounting. Matching principle. Time period principle.	Matching Principle
if a company records prepayment of expenses in an asset account, the adjusting entry would: Result in a debit to an expense and a credit to an asset account. Cause an adjustment to prior expense to be overstated and assets to be understated. Cause an accrued liability account to exist. Result in a debit to a liability and a credit to an asset account. Decrease cash.	Result in a debit to an expense and a credit to an asset account.
On January 1, Acme College received $1,200,000 in Unearned Tuition Revenue from its students for the spring semester, which spans four months beginning on January 2. What amount of tuition revenue should the college recognize on January 31? $300,000 $600,000 $800,000 $900,000 $1,200,000	300,000 $1,200,000/4 = $300,000
A company purchased a new truck at a cost of $42,000 on July 1, 2014. The truck is estimated to have a useful life of 6 years and a salvage value of $3,000. Using the straight- line method, how much depreciation expense will be recorded for the truck for the year ended December 31, 2014? $3,250 $3,500 $4,000 $6,500 $7,000	$3,250 [$42,000 - $3,000/6] x 1/2 = $3,250
A company had service revenue of $250,000, rent expense of $10,000, utility expense of $3,500, salary expense of $18,500, depreciation expense of $9,000, advertising expense of $4,500, dividends in the amount of $18,000, and a beginning balance in retained earnings of $17,900. What is the balance in the income summary account before it is closed for the period? $250,000 $45,500 $204,500 $222,400 $232,100	$204,500 250,000 - 10,000 - 3,500 - 18,500 - 9,000 - 4,500 = 204,500
A company had no office supplies at the beginning of the year. During the year, the company purchased $250 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year? $75 $125 $175 $250 $325	175.00 $250 - $75 = $175
A post-closing trial balance is a list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted. TrueFalse	True
Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of an asset. True or False	True
On June 30, 2014, Apricot Co. paid $5,000 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses in asset accounts at the time of cash payment. On June 30, 2014 Apricot should record: A credit to an expense for $5,000. A debit to an expense for $5,000. A credit to a prepaid expense for $5,000. A debit to a prepaid expense for $5,000. A debit to Cash for $5,000.	A debit to a prepaid expense for $5,000.
The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the retained earnings account is the: Income Summary account Closing account Balance column account Contra account Nominal account	Income Summary
An account linked with another account that has an opposite normal balance and that is subtracted from the balance of the related account is a(n): Accrued expense. Contra account. Accrued revenue. Intangible asset. Adjunct account.	Contra Account
Prior to recording adjusting entries at the end of an accounting period, some accounts may not show proper financial statement amounts even though all transactions were correctly recorded. true or false	True
The first five steps in the accounting cycle include analyzing transactions, journalizing, posting, preparing an unadjusted trial balance, and recording adjusting entries. tue or false	True
The cash basis of accounting requires that revenues be recognized when cash payments from customers are received. True or false	True
The cash basis of accounting requires that revenues be recognized when cash payments from customers are received. True or false	False
The Income Summary account is closed to the retained earnings account. true or false	True
The Income Summary account is used to close the permanent accounts at the end of an accounting period. True or False	False
The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is: Cash basis accounting. The matching principle. The time period principle. Accrual basis accounting. Revenue basis accounting.	Accural  basis Accounting
Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues are all examples of: Items that require contra accounts. tems that require adjusting entries. Asset and equity. Asset accounts. Income statement accounts.	Items that require adjusting entries.
The accrual basis of accounting: Is generally accepted for external reporting since it is more useful for most business decisions. Is flawed because it gives complete information about cash flows. Recognizes revenues when received in cash. Recognizes expenses when paid in cash. Eliminates the need for adjusting entries at the end of each period.	Is generally accepted for external reporting since it is more useful for most business decisions.
Which of the following statements is incorrect? Prepaid expenses, depreciation, and unearned revenues involve previously recorded assets and liabilities. Accrued expenses and accrued revenues involve assets and liabilities that were not previously been recorded. Adjusting entries can be used to record both accrued expenses and accrued revenues. Prepaid expenses, depreciation, and unearned revenues often require adjusting entries to record the effects of the passage of time. Adjusting entries affect the cash account.	Adjusting entries affect the cash account.
Which of the following is the usual final step in the accounting cycle? Journalizing transactions. Preparing an adjusted trial balance. Preparing a post-closing trial balance. Preparing the financial statements. Preparing a work sheet.	Preparing a post-closing trial balance.
The asset section of a classified balance sheet usually includes: Current assets, investments, plant assets, and intangible assets. Current assets, long-term assets, revenues, and intangible assets. Current assets, investments, plant assets, and equity. Current liabilities, investments, plant assets, and intangible assets. Current assets, liabilities, plant assets, and intangible assets.	urrent assets, investments, plant assets, and intangible assets.
Merchandise inventory includes: All goods owned by a company and held for sale. All goods in transit. All goods on consignment. Only damaged goods. Only items that are on the shelf	All goods owned by a company and held for sale.
An error in the period-end inventory causes an offsetting error in the next period and therefore: Managers can ignore the error. It is sometimes said to be self-correcting. It affects only income statement accounts. It affects only balance sheet accounts. Is immaterial for managerial decision making.	It is sometimes said to be self-correcting.
Physical inventory counts: Are not necessary under the perpetual system. Are necessary to measure and adjust for inventory shrinkage Must be taken at least once a month. Require the use of hand-held portable computers. Are not necessary under the cost-to benefit constraint.	Are necessary to measure and adjust for inventory shrinkage.
he inventory valuation method that tends to smooth out erratic changes in costs is: weighted average fifo lifo specific indetification wifo	Weighted average
Generally accepted accounting principles require that the inventory of a company be reported at: Market value. Historical cost. Lower of cost or market. Replacement cost. retail value	Lower of cost or market.
During a period of steadily rising costs, the inventory valuation method that yields the lowest reported net income is: Specific identification method. Average cost method. Weighted-average method. FIFO method. LIFO method.	Lifo method
A company normally sells its product for $20 per unit. However, the selling price has fallen to $15 per unit. This company's current inventory consists of 200 units purchased at $16 per unit. Replacement cost has now fallen to $13 per unit. Calculate the value of this company's inventory at the lower of cost or market. $2,550 $2,600 $2,700 $3,000 $3,200	$2,600 200 units @ $13 per unit = $2,600
he inventory valuation method that identifies the invoice cost of each item in ending inventory to determine the cost assigned to that inventory is the: Weighted-average inventory method. First-in, first-out method. Last-in, first-out method. Specific identification method. Retail inventory method.	Specific identification method.
The inventory valuation method that results in the lowest taxable income in a period of inflation is: LIFO method. FIFO method Weighted-average cost method. Specific identification method. Gross profit method	LIFO method.
Which inventory valuation method assigns a value to the inventory on the balance sheet that approximates current cost and also mimics the actual flow of goods for most businesses? FIFO Weighted average LIFO Specific identification First in still here	FIFO
Given the following items and costs as of the balance sheet date, determine the value of Faltron Company's merchandise inventory. - $1,000 goods sold by Faltron to another company. The goods are in transit and shipping terms are FOB destination. - $2,000 goods sold by another company to Faltron. The goods are in transit and shipping terms are FOB destination. - $3,000 owned by Faltron but in the possession of another company, the consignee. - Damaged goods owned by Faltron that originally cost $4,000 but now have a $500 net realizable value. $10,000 $6,500 $5,500 $5,000 $4,500	$4,500 1,000 + 3,000 + 500
One of the most important decisions in accounting for inventory is determining the unit costs assigned to each inventory item. True OR FAlse	True
Goods in transit are automatically included in a company's inventory account. True or False	False
If damaged and obsolete goods cannot be sold, they are not included in inventory. True or False	True
if obsolete or damaged goods can be sold, they will be included in inventory at their net realizable value. True OR False	True
A company's internal control system: Eliminates the risk of loss Monitors and controls business activities Eliminates human error. Eliminates the need for audits. Is not necessary in large companies	Monitors and controls business activities
Triple Company's accountant made an entry that included the following items: debit postage expense $12.42, debit office supplies expense $27.33, debit cash over/short $2.19. If the original amount in petty cash is $320, how much was the credit to cash for the reimbursement? $320.00 $202.44 $37.56 $39.75 $41.94	$41.94 $12.42 + $27.33 + $2.19 = $41.94
A set of procedures and approvals that is designed to control cash disbursements and the acceptance of obligations is referred to as a(n): nternal cash system Petty cash system Cash disbursement system Voucher system. Cash control system.	Voucher system.
Cash equivalents: Are short-term, highly liquid investments. Include six-month CDs. Include checking accounts Are recorded in petty cash nclude money orders.	Are short-term, highly liquid investments.
Outstanding checks refer to checks that have been: Written, recorded, sent to payees, and received and paid by the bank. Written and not yet recorded in the company books. Held as blank checks Written, recorded on the company books, sent to the customer, supplier, or creditor but not yet paid by the bank. ssued by the bank	Written, recorded on the company books, sent to the customer, supplier, or creditor but not yet paid by the bank.
On a bank reconciliation, an unrecorded debit memorandum for printing checks is: Noted as a memorandum only. Added to the book balance of cash. Deducted from the book balance of cash. Added to the bank balance of cash. Deducted from the bank balance of cash	Deducted from the book balance of cash.
The Cash Over and Short account: s used to record a credit balance in the cash account. s an income statement account used for recording the income effects of cash overages and cash shortages from errors in making change and from missing petty cash receipts Is not necessary in a computerized accounting system Can never have a debit balance Can never have a credit balance	s an income statement account used for recording the income effects of cash overages and cash shortages from errors in making change and from missing petty cash receipts
An analysis that explains any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement is a(n): Internal audit. Bank reconciliation. Bank audit Trial reconciliation. Analysis of debits and credits.	Bank reconciliation.
The main principles of internal control include which of the following: Establish responsibilities. Maintain minimal records Use only computerized systems. Bond all employees Require automated sales systems.	Establish responsibilities.
A good system of internal control Urges adherence to prescribed managerial policies. nsures profitable operations Eliminates the need for an audit Requires the use of noncomputerized systems. Is not necessary if the company uses a computerized system	Urges adherence to prescribed managerial policies.
When two clerks share the same cash register, which internal control principle is violated? Establish responsibilities Maintain adequate records Insure assets Bond key employees Apply technological controls	Establish responsibilities
Which of the following is the most serious limitation of internal controls? Cumpuetr Controls Human fraud or human error Cost-benefit principle Cybercrime Management fraud	Human fraud or human error
For which item does a bank NOT issue a debit memorandum? To notify a depositor of all withdrawals through an ATM. To notify a depositor of a deduction to a depositor's account. To notify a depositor of a bounced check To notify a depositor of periodic payments arranged in advance, by a depositor To notify a depositor of a deposit to their account.	To notify a depositor of a deposit to their account.
The entry necessary to establish a petty cash fund should include: A debit to Cash and a credit to Petty Cash. A debit to Cash and a credit to Cash Over and Short A debit to Petty Cash and a credit to Cash A debit to Petty Cash and a credit to Accounts Receivable. A debit to Cash and a credit to Petty Cash Over and Short.	A debit to Petty Cash and a credit to Cash
When a petty cash fund is in use: Expenses paid with petty cash are recorded when the fund is replenished. Petty Cash is debited when funds are replenished. Petty Cash is credited when funds are replenished Expenses are not recorded Cash is debited when funds are replenished	Expenses paid with petty cash are recorded when the fund is replenished.