49 terms

Test #2

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?
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...
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?
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...
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?
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...
Using the average cost method, the amount allocated to the ending inventory for June 30
Using FIFO, the amount allocated to ending inventory for June is...
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...
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