ACCT 1 - FINAL

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Our company has three times as many assets as it does liabilities. If total liabilities are $55,000, what is the amount of owners' equity?

$220,000

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

Maintain adequate records

Management Services, Inc. provides services to clients. On May 1, a client prepaid Management Services $60,000 for 6-months contract in advance. Management Services' general journal entry to record this transaction will include a

Credit to Unearned Management Fees for $60,000

Which of the following statements is incorrect?

Adjusting entries affect the cash account

Alpha Company had cash sales of $94,275, credit sales of $83,450, sales returns and allowances of $1,700 and sales discounts of $3,475. Alpha's net sales for this period equal:

$172,550

Which of the following list of events properly reflects the early steps taken in the accounting process?

Analyze each transaction, Record relevant transactions, Post journal information to ledger accounts, Prepare and analyze the trial balance

A $15 credit to Sales was posted as a $150 credit. By what amount is Sales in error?

$135 overstated

Apatha Company has assets of $600,000, liabilities of $250,000 and equity of $350,000. It buys office equipment on credit for $75,000. The effects of this transaction include:

Assets increase by $75,000 and liabilities increase by $75,000

At the end of the day, the cash register's record shows $1,000 but the count of cash in the register is $1,035. The proper entry to record this excess includes a:

Credit to Cash Over and Short for $35

Which of the following statements is true of external information users?

They have limited access to an organization's accounting information

A company sold a machine that originally cost $100,000 for $60,000 cash. The accumulated depreciation on the machine was $40,000. The company should recognize a:

$0 gain or loss

A company purchased a POS cash register on January 1 for $5,400. This register has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second-year of its useful life using the double-declining-balance method?

$864

If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:

Increased $22,000

If a company failed to make the end-of-period adjustment to remove the amount earned from the Unearned Management Fees account, there would be:

An overstatement of liabilities

Double-entry accounting is an accounting system:

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

Uncertainties such as natural disasters:

Are not contingent liabilities because they are future events not arising out of past transactions or events

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

A change in an accounting estimate is:

A change in a calculated amount that is part of financial statements that results from new information or subsequent developments and from better insight or improved judgment

Which of the following is the appropriate journal entry if a company purchases equipment costing $100,000 by paying cash of $10,000?

Debit to Equipment, Credit to Notes Payable, Credit to Cash

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

Specific identification method

A company receives a 10%, 90-day note for $1,500. The total interest due upon the maturity date is:

$37.50

A company had no office supplies available 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?

$175

How would the accounting equation of Boston Company be affected by the billing of a client for $10,000 of consulting work completed?

+ $10,000 accounts receivable, + $10,000 consulting revenue

Operating activities:

Involve using resources to research, develop, purchase, produce, distribute and market products and services

Photometer Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

Assets, $30,000 decrease; liabilities, $30,000 decrease; equity, no effect

Fast-Forward has beginning equity of $257,000, net income of $51,000, dividends of $40,000 and investments by owners in exchange for stock of $6,000. Its ending equity is:

$274,000

Which of the following statements is not true about assets?

They appear on the statement of retained earnings

Operating leases differ from capital leases in that

Operating leases do not transfer ownership of the asset under the lease, but capital leases often do

Various types of documents and other papers that companies use when they conduct their business:

All of the above

A 90-day note issued on April 20 has a maturity date of:

July 19

If equity is $300,000 and liabilities are $192,000, then assets equal:

$492,000

A bond traded at 102 ½ means that:

The bond traded at $1,025 per $1,000 bond

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

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

Weighted average

If liabilities are $51,500 and assets are $173,425, then equity equals:

$224,925

If a company forgot to record depreciation on office equipment at the end of an accounting period, the financial statements prepared at that time would show:

Assets, net income and equity overstated

Assets, net income and equity overstated

$7,000

Cardco Inc. has an annual accounting period which ends on December 31. During the current year a depreciable asset which cost $42,000 was purchased on September 2. The asset has a $4,000 estimated salvage value. The company uses straight-line depreciation and expects the asset to have a 5 year life. What is the total depreciation expense for the current year?

$2,533.33

The amount of bad debt expense can be estimated by:

Bad debt expense can be estimated by any of the three methods listed above

Which of the following statements is true regarding the closing process of a merchandiser?

Sales Discounts and Sales Returns and Allowances are not closed. Cost of Goods Sold should be credited

Which of the following is a true statement regarding debits and credits?

Assets and expenses are both increased with a debit

Inadequacy refers to:

The insufficient capacity of a company's plant assets to meet the company's growing production demands

An employee earned $4,300 working for an employer. The current rate for FICA social security is 6.2% and the FICA Medicare rate is 1.45%. The employer's total FICA payroll tax for this employee is:

$328.95

Viscount Company collected $42,000 cash on its accounts receivable. How does this transaction affect the company's accounting equation?

Assets, liabilities and equity are unchanged

The principle that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash and (3) measures the amount of revenue as the cash plus the cash equivalent value of any non-cash assets received from customers in exchange for goods or services is called the:

Revenue recognition principle

On April 1, 2009, a company paid the $1,350 premium on a three-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the year ended December 31, 2009?

$337.50

A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000 and accounts payable $17,000. What is the amount of equity?

$71,000

Which of the following statements is correct?

The left side of a T-account is the debit side

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

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

A company failed to post a $50 debit to the Office Supplies account. The effect of this error will be that:

The trial balance will not balance

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