Test #2

Created by fost5571 

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Indicate which of the following will NOT appear on both a single - step income statement and a multiple - step income statement...

Gross Profit

In a service type, revenues is considered earned...

When the service is preformed

A law firm received $2,000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause...

Revenues to be understated

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

Land

Prepaid expenses are...

Paid and recorded in an asset account before they are used or consumed

Goods purchased for future use in the business, such as supplies, are called...

Prepaid Expenses

The Village Laundry Company purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $3,000 on hand. The adjusting entry that should be made by the company on June 30 is...

Debit Laundry Supplies Expense, $3,500; Credit Laundry Supplies $3,500

Unearned revenue is classified as an...

Liability

Accumulated Depreciation is an...

Contra Asset Account

Which of the following would NOT be considered a merchandising operation...

Service Firm

At December 21, 2007 Sunrise Company's inventory records indicated a balance of $752,000. Upon further investigation it was determined that this amount included the following:
What is Sunrises correct ending inventory balance at December 31, 2007?

$634,000

If goods in transit are shipped FOB destination...

The seller has legal title to the goods until they are delivered.

In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the...

FIFO Method

One of the accounting concepts upon which adjustments for prepayments and accruals are based is...

Matching

Sales Revenue...

May be recorded before cash is collected

Failure to prepare an adjusting entry at the end of the period to record an accrual expense would cause...

An understatement of expenses and an understatement of liabilities

The Sales Returns and Allowances account is classified as an

Contra revenue account

Closing Entries

Cause the revenues and expense accounts to have zero balances

A company spends $20 million dollars for an office building. Over what period should the cost be written off?

Over the useful life of the building

Using accrual accounting, expenses are recorded and reported only...

When they are incurred whether or not cash is paid

Sales revenues less cost of goods sold is called...

Gross Profit

In a period of rising prices, which of the following inventory methods generally results in the lowest net income figure?

LIFO Method

Multiple - step income statements show...

Both income from operation and gross profit

advantage of the single - step income statement over the multiple - step form is...

It's simplicity

If a company fails to adjust for accrued revenues...

Assets will be understated and revenues will be understated

Which of the following should NOT be included in the physical inventory of a company?

Goods held on consignment from another company

Barnes Company is taking a physical inventory on March 31st, the last day of its fiscal year. Which of the following must be included in the inventory count?

Goods that Barnes is holding in inventory on March 31st for which the related accounts payable is 15 days past due

Expenses sometimes make their contribution to revenues in a different period than when the expense is paid. When wages are incurred in one period and paid in the next period, this often leads to which account appearing on the balance sheet at the end of the first period?

Wages Payable

The revenue principle dictates that revenues should be recognized in the accounting records...

When it is earned

Net income will result if gross profit exceeds...

Operating Expenses

Hunter Company purchases merchandise inventory with an invoice price of $6,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Hunter Company pays within the discount period?

$5,880

As prepaid expenses expire with the passage of time, the correct adjusting entry will be a...

Debit to an expense account and a credit to an asset account

The factor which determines whether or not good should be included in a physical count of inventory is

Legal Title

In a period of declining prices which of the following methods generally result in lowest balance sheet figure for inventory?

FIFO Method

The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit...

Merchandise Inventory

When sales of merchandise are made for cash, the transition may be recorded by the following entry

Debit Cash, Credit Sales

Failure to prepare an adjusting entry at the end of period to record an accrued revenue would cause

An understatement of assets and an understatement of revenues

Which of the following is NOT a common cost flow assumption used in costing inventory?

Middle in, First Out

Which of the following items will increase inventorial costs for the buy of goods?

Freight charges paid by the purchaser

inventory method which results in the highest gross profit for June is

FIFO Method

Using LIFO, the value of the ending inventory on June 30 is...

$1,072.50

Using the average cost method, the amount allocated to the ending inventory for June 30

$1,200

Using FIFO, the amount allocated to ending inventory for June is...

$1,305.00

At December 31,2007, before any year-end adjustments, Janis Company's prepaid Insurance had a balance of $1,900. It was determined that $1,400 of the prepaid insurance had expired. The adjusted balance for Prepaid Insurance for the year would be...

$500

The operating expenses section of an income statement for a merchandising company would NOT include

Cost of Goods Sold

If a resource has been consumed but a bill has NOT been received at the end of the accounting period then

An adjusting entry should be made recognizing the expense

Adjusting entries are made to ensure that

All the above

Which o the following terms best describes the assumption made in the applying the four inventory methods

Cost Flow Method

The accounting principle that requires that the cost flow assumption be consistent with the physical movement of goods is

Non existent; that is no such accounting requirement

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