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125 terms

accounting final

STUDY
PLAY
which of the following payroll costs are shared equally by the employer and the employee
social security
if a bond is issues at par and between interest dates
the cash received by the corporation will be greater than the face value of the bond
one advantage of issuing bonds instead of stock is that
interest is tax deductible wheras dividends are not
which payroll taxes do not stop once an employee reaches a certain level of income
medicare taxes
the amortization of a bond discount
increases the carrying value of a bond and increases interest expense
the principal amount of a bond is
the unpaid balance exclusive of any interest charges
premium on bonds payable
increases the carrying value of the liability
book value per share of common stock is derived by which of the following
stockholders equity divided by the number of shares outstandin
the net assets of a corporation are equal to
total assets minus total liabilities
most preferred stocks have the following characteristics, except
voting rights
a primary disadvantage of the corporate for of organization is
corporate earnings are subject to double taxation
which of the following would usually be the greatest amount
the number of share authorized
the par value of the common stock of a large listed corporation
represents legal capital and is not related to the market price of the stock
treasury stock
decreases total stockholder's equity
stock splits
allow management to conserve cash, give stockholders more shares, cause no change in total assets, liabilities, or stockholder's equity
treasury stock appears as
an equity account
which of the following would have no effect on retained earnings
declaration of a stock split
large stock dividends tend to
keep stock prices down
dividends become a liability of a corporation
on the date the board of directors declares the dividend
when a stock dividend is declared, total stockholder's equity will
not change
which of the following items would reduce retained earnings
common stock dividend, preferred stock dividend, and cash dividend
cash flows from operating activities include all of the following except
payments of dividends
in a statement of cash flows, cash transactions are classified into three major categories
operating activities, financing activities, and investing activities
in a statement of cash flows, collections of accounts receivable are classified as
operating activities
which of the following indicates a cash receipt
a decrease in accounts receivable
when using the indirect method, depreciation expense
increases net cash flow from operations
when equipment is sold at a loss
the net proceeds are show in the investing section
in japan, financial reporting requirements are based primarily on the need to provide information to the
banks
when the government uses central planning to allocate resources and to determine output among various segments of the economy, this is known as
a planned economy
gains and losses from fluctuations in exchange rates on transactions carried out in a foreign currency are reported in
the income statement
the FICA tax paid by an employer is
equal to the amount paid by the employee
which of the following is a characteristic of current liabilities
they are due within one year or within the operating cycle, they may involve estimated amounts, the may be replaced with a new short-term liability rather than being paid in cash
which of the following payroll costs are shared equally by the employer and the employee
social security
unearned revenue
appears on the balance sheet as a liability
cash dividends paid to stockholders will appear in which section of the statement of cash flows
financing activities
a primary disadvantage of the corporate form of organization is
corporate earnings are subject to double taxation
which of the following individuals has the most power to influence corporate policy on a long-term basis
a shareholder with 60% of common stock NOT 80% of preferred stock
retained earnings represents
income that has been invested in the business rather than distributed as dividends to stockholders
the entry to record the issuance of common stock at a price above its par value includes
a credit to additional paid-in capital
a small stock dividend is recorded at
market value
which of the following would have no effect on retained earnings
declaration of a stock split
dividends are first recorded and retained earnings are reduced on
the date of declaration
as a result of 5% stock dividend
the number of shares owned by each stockholder increases by 5%, but the total stockholder's equity does not change
a large stock dividend and a stock split are similar in that they both cause
a reduction in the market price per share
when a stock dividend is declared, total stockholder's equity will
not change
cash flows from operating activities include all of the following except
payments of dividends
cash flows from investing activities include all of the following except
cash proceeds from borrowing
a stock dividend is reported on the
balance sheet
the "bottom line" in a statement of cash flows shows
the cash (including cash equivalents) on the balance sheet at the end of the period
in a statement of cash flows, collections of accounts receivable are classified as
operating activities
which of the following would indicate a cash disbursement
an increase in prepaid expenses
in a statement of cash flows the term cash includes
bank accounts, cash on hand, and cash equivalents
which method will yield the higher cash flows from financing activities
both direct and indirect methods will yield the same amount
a comparative financial statement
places two or more years of a financial statement side by side in order to compare the results
the change in financial statement items from a base year to following years are called
trend percentages
quick assets include
cash, marketable securities, and receivables
all of the following ratios are considered measures of liquidity except
debt ratio
the current ratio will be ______ to the quick ratio
greater than or equal to
the current ratio
is computed by dividing current assets by current liabilities
current assets are those assets that can be converted into cash within
one year or the operating cycle
which of the following is considered a quick asset
accounts receivable
the cost of goods sold account is closed by
debiting income summary and crediting cost of goods sold
which of the following factors would suggest the use of a periodic inventory system
a small company, high volume of sales and a manual accounting system
gross profit is the difference between
net sales and the cost of goods sold
under the perpetual inventory system which journal entry would indicate a purchase of merchandise
debit inventory and credit cash
net sales is calculated by
subtracting sales returns and sales discounts from sales
inventory shrinkage is caused by
shoplifting, breakage, spoilage
the cost of the transportation of inventory purchased
becomes part of the cost of inventory
after preparing a bank reconciliation, a journal entry would be required for which of the following
interest earned on the company's checking account
which of the following are always listed on the balance sheet at face amount
cash
the primary purpose of a petty cash fund is
convenience
a bank reconciliation explains the differences between
the balance per bank statement and the cash balance per the accounting records of the depositor
during preparation of a bank reconciliation, outstanding checks should be
deducted from the balance per the bank statement
the allowance for doubtful accounts represents
the difference between the face value of accounts receivable and the net realizable value or accounts receivable
the aging of the accounts receivable approach to estimating uncollectible accounts does not
stress the relationship between uncollectible accounts expense and net sales
under the allowance method, when a receivable that had been previously written off is collected
net income is not affected
when prices are increasing which inventory method will produce the highest cost of goods sold
LIFO
gross profit rate is equal to
gross profit divided by net sales
in periodic inventory system, recording a sale on account involves debiting which of the following accounts
only accounts receivable
which of the four inventory cost flow assumptions transfers the most recent purchase cost to the cost of goods sold and the remaining items in inventory are valued at the oldest acquisition costs
LIFO
which of the following results in the inventory being stated at the most current acquisition costs
FIFO
during periods of inflation which method will yield the smallest ending inventory and the largest cost of goods sold
LIFO
a store that sells expensive custom made jewelry is likely to determine its cost of goods sold using
specific identification
as a result of taking an annual physical inventory, it usually is necessary in a perpetual inventory system to make an entry
reducing assets and increasing the cost of goods sold
when straight-line depreciation is in use, the depreciation rate of an asset is equal to
1 divided by the life of the asset
when comparing the units-of-output method of depreciation with straight-line depreciation
the depreciation expense in the first year may be greater than, equal to, or less under the units-of-output
a gain is recognized on the disposal of plant assets when
the sales price is greater than the book value and greater than the residual value
revenue expenditures are recorded as
an expense
sales revenue is recognized in the period which
merchandise is delivered to the customer
when making sales, the sales taxes received are
a liability
if sales discounts are shown as a separate item in the financial statements, they should be shown as a
deduction from gross sales revenue
accounts receivables are
usually converted into cash in 30-60 days, relatively liquid assets, usually appear after short-term investments in marketable securities
financial assets include all of the following except
inventories
an NSF check returned by the bank should be entered in the depositor's accounting records by a debit to
accounts receivable
which of the following inventory valuation methods is only an estimate of actual costs
both retail and gross profit methods are only estimations
the just-in-time concept of inventory management is best illustrated by
homebuilder have supplies delivered the night before
which of the following is a capital expenditure
sales tax paid in conjunction with the purchase of office equipment
the application of the matching principle to depreciation of plant and equipment can best be described as
offsetting revenue of an accounting period with the portion of the cost of plant and equipment estimated to have been used up during the accounting period
capital expenditures are recorded as
an asset
financial statements may be prepared for
one year or less than one year
which organization best serves the professional needs of a cpa
AICPA
which financial statement is prepared as of a specific date
the balance sheet
profitability may be defined as
the ability to increase retained earnings
which of the following is not considered one of the 3 primary financial statements
statement of budgeting activities
a balance sheet is designed to show
the assets, liabilities, and owner's equity of a business as of a particular date
retained earnings is
the owner's equity that has accumulated as a result of profitable operations
the balance sheet item that represents the portion of owner's equity resulting from profitable operation of the business is
retained earnings
preparing a journal entry in proper form involves all of the following EXCEPT
computing the balances in accounts involved in the transaction
a trial balance that is out of balance indicates that
there is not an equality of debit and credit amounts in the ledger
collection of an accounts receivable
does not change the total assets of a company
a journal entry which records revenue must include
a credit to the revenue account
a journal entry to to recognize an expense could include each of the following except
a debit to a liability account
which of the following accounts normally does not have a debit balance
capital stock
interest that has accrued during the accounting period on a note payable to the bank calls for an adjusting entry consisting of
a debit to interest expense and credit to interest payable
unearned revenue appears
as part of the retained earnings
which of the following is considered a contra-asset account
prepaid expenses, unearned revenue, and accumulated depreciation
shop supplies are expensed when
consumed
accumulated depreciation is
the depreciation expense recorded on an asset to date
a worksheet consists of all of the following except
transaction entries
when a worksheet is prepared which account would not be entered into the income statement columns
unearned revenue
during the closing process
all revenue accounts are debited and expense accounts are credited
if income summary has a net credit balance, it signifies
net income
dividends will have what effect upon retained earnings
decrease
net income from the income statement appears on the
retained earnings statement
closing entries should be made
every year