ACC290FINAL

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The best definition of assets is the

collections of resources belonging to the company and the claims on these resources.

owners’ investment in the business.

cash owned by the company.

	resources belonging to a company that have future benefit to the company.

Which of the following is not a liability?

Interest Payable

Unearned Service Revenue

Accounts Receivable

Accounts Payable

Which of the following financial statements is divided into major categories of operating, investing, and financing activities?

The income statement.

The balance sheet.

The statement of cash flows.

The retained earnings statement.

Ending retained earnings for a period is equal to beginning

Retained earnings + Net income + Dividends.

Retained earnings – Net income + Dividends.

Retained earnings – Net income – Dividends.

Retained earnings + Net income – Dividends.

Which of the following is not an advantage of the corporate form of business organization?

Easy to transfer ownership

No personal liability

Favorable tax treatment

Easy to raise funds

An advantage of the corporate form of business is that

its owner’s personal resources are at stake.

its ownership is easily transferable via the sale of shares of stock.

it is simple to establish.

it has limited life.

A small neighborhood barber shop that is operated by its owner would likely be organized as a

corporation.

joint venture.

proprietorship.

partnership.

If services are rendered for cash, then

liabilities will increase.

assets will increase.

stockholders’ equity will decrease.

	liabilities will decrease.

A revenue generally

increases assets and decreases stockholders’ equity.

leaves total assets unchanged.

increases assets and liabilities.

increases assets and stockholders’ equity.

A revenue account

is increased by credits.

has a normal balance of a debit.

is increased by debits.

is decreased by credits.

Which accounts normally have debit balances?

Assets, expenses, and dividends

Assets, liabilities, and dividends

Assets, expense, and retained earnings

Assets, expenses, and revenues

In recording an accounting transaction in a double-entry system

there must only be two accounts affected by any transaction.

the amount of the debits must equal the amount of the credits.

there must always be entries made on both sides of the accounting equation.

the number of debit accounts must equal the number of credit accounts.

The usual sequence of steps in the transaction recording process is

analyze, journalize, post to the ledger.

journalize, analyze, post to the ledger.

journalize, post to the ledger, analyze.

post to the ledger, journalize, analyze.

Under the expense recognition principle expenses are recognized when

the invoice is received.

they contribute to the production of revenue.

they are billed by the supplier.

they are paid.

The revenue recognition principle dictates that revenue should be recognized in the accounting records:

when cash is received.

when the performance obligation is satisfied.

at the end of the month.

in the period that income taxes are paid.

Merchandising companies that sell to retailers are known as

brokers.

wholesalers.

service firms.

corporations.

Gross profit equals the difference between

net income and operating expenses.

sales revenue and cost of goods sold.

sales revenue and operating expenses.

sales revenue and cost of goods sold plus operating expenses.

Net income will result if gross profit exceeds

operating expenses.

purchases.

cost of goods sold plus operating expenses.

cost of goods sold.

Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account?

Freight-Out

Inventory

Freight Expense

Freight-In

Financial information is presented below:

Operating expenses		$ 25000
Sales revenue		247000
Cost of goods sold		167000

The profit margin ratio would be

0.68.

0.78.

0.22.

0.32.

Financial information is presented below:

Operating expenses	$ 35000
Sales returns and allowances	7000
Sales discounts	4000
Sales revenue	186000
Cost of goods sold	106000

The gross profit rate would be

0.39.

0.37.

0.43.

0.61.

Financial information is presented below:

Operating expenses	$ 49000
Sales returns and allowances	5000
Sales discounts	6000
Sales revenue	206000
Cost of goods sold	108000

Gross Profit would be

$103000.

$87000.

$93000.

$98000.

The LIFO inventory method assumes that the cost of the latest units purchased are

the first to be allocated to ending inventory.

the first to be allocated to cost of goods sold.

not allocated to cost of goods sold or ending inventory.

the last to be allocated to cost of goods sold.

Which of the following statements is correct with respect to inventories?

It is generally good business management to sell the most recently acquired goods first.

Under FIFO, the ending inventory is based on the latest units purchased.

FIFO seldom coincides with the actual physical flow of inventory.

The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.

All of the following are examples of internal control procedures except

using prenumbered documents.

customer satisfaction surveys.

insistence that employees take vacations.

reconciling the bank statement.

Each of the following is a feature of internal control except

recording of all transactions.

an extensive marketing plan.

bonding of employees.

separation of duties.

For which of the following errors should the appropriate amount be subtracted from the balance per books on a bank reconciliation?

A returned $200 check recorded by the bank as $20.

Check written for $73, but recorded by the company as $37.

Check written for $58, but recorded by the company as $85.

Deposit of $700 recorded by the bank as $70.

A check written by the company for $128 is incorrectly recorded by a company as $182. On the bank reconciliation, the $54 error should be

deducted from the balance per bank.

added to the balance per books.

added to the balance per bank.

deducted from the balance per books.

The following information was available for Kingbird, Inc. at December 31, 2017: beginning inventory $70000; ending inventory $108000; cost of goods sold $644000; and sales $888000. Kingbird inventory turnover ratio (rounded) in 2017 was

6.0 times.

7.2 times.

10.0 times.

9.2 times.

The following information was available for Novak Corp. at December 31, 2017: beginning inventory $78000; ending inventory $102000; cost of goods sold $684000; and sales $872000. Novak days in inventory (rounded) in 2017 was

54.5 days.

41.5 days.

37.6 days.

48.0 days.