final

  

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.