Ch. 1
Ch. 2
Ch. 3
Ch. 4
Wild Card
100
True or False?
Revenues should not be recognized in the accounting records when earned, but rather when cash is received.
False
100
True or False?
In a double-entry accounting system, for each transaction at least two accounts are involved, with at least one debit and one credit, and the total amount debited must equal the total amount credited.
True
100
True of False
The cash basis of accounting records revenues when cash payments from customers are received.
True
100
Sales less sales discounts, less sales returns and allowances equals:
Net sales
100
Charlie’s Chocolates’ has accounts receivable of $50,000 and accounts payable of $20,000. The company has revenues of $83,000 and expenses of $64,000. Calculate its net income.
$19,000.
200
Marsha Bogs is the owner of Bogs Legal Services. Which accounting principle requires Marsha to keep her personal financial information separate from the financial information of Bogs Legal Services?
Business entity assumption.
200
The collection of all accounts and their balances is called a(n):
Ledger (or General Ledger)
200
On July 1 Olive Company paid $7,500 cash for management services to be performed over a two-year period. On July 1 Olive should record (journal entry):
A debit to a prepaid expense and a credit to Cash for $7,500.
200
True or False?
The operating cycle is shortened by credit sales.
False
200
Cushman Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in operating expenses. Net income equals:
$115,000.
300
Rush Company had net income of $177 million and average total assets of $1,900 million. Its return on assets (ROA) is:
9.3%.
300
Write debit or credit to identify the kind of entry that would increase the following account balances (debit or credit):
A. Notes Payable
B. Legal Expense
C. Supplies
D. Consulting Revenue
E. Prepaid rent
F. Cash
A. Credit
B. Debit
C. Debit
D. Credit
E. Debit
F. Debit
300
Cash received in advance from clients for legal services is recorded in Unearned Revenue. The end-of-period adjusting entry to record the portion of revenue that has been earned is:
Debit Unearned Revenue and credit Legal Revenue.
300
Cushman Company had $836,000 in net sales, $365,750 in gross profit, and $209,000 in operating expenses. Cost of goods sold equals:
$470,250.
300
If the liabilities of a business increased $75,000 during a period of time and equity in the business decreased $30,000 during the same period, the assets of the business must have increased or decreased by how much?
Change in Assets = Increase of $45,000
400
On May 31 of the current year, the assets and liabilities of Riser, Incorporated are as follows: Cash $15,800; Accounts Receivable, $7,000; Supplies, $600; Equipment, $11,650; Accounts Payable, $8,950. What is the amount of equity as of May 31 of the current year?
$26,100.
400
Identify the statement below that is correct.
-When a future expense is paid in advance, the payment is normally recorded in a liability account called Prepaid Expense.
-Accounts receivable are held by a seller and are promises of payment from customers to sellers.
-Prepaid revenue accounts are used to record when customers pay in advance for products or services.
-A liability account is commonly used to record increases and decreases in both the land and buildings owned by a business.
-Accrued liabilities include accounts receivable.
-Accounts receivable are held by a seller and are promises of payment from customers to sellers.
400
On April 1, a company paid the $3,750 premium on a three-year insurance policy with benefits beginning on that date. What amount of insurance expense will be reported on the annual income statement for the first year ended December 31?
$937.50.
400
A company purchased $2,600 of merchandise on July 5 with terms, n30. On July 7, it returned $285 worth of merchandise. On July 8, it paid the full amount due. The amount of the cash paid on July 8 equals:
Cash Paid = ($2,600 − $285) × 0.99 = $2,292
400
A company's net sales are $775,000, its costs of goods sold are $413,850, and its net income is $117,220. Its gross margin ratio equals:
Gross Margin Ratio = ($775,000 − $413,850) ÷ $775,000 = 46.6%
500
A company reported total equity of $165,000 at the beginning of the year. The company reported $230,000 in revenues and $175,000 in expenses for the year. Liabilities at the end of the year totaled $102,000. There were no owner investments or dividends during the year. What are the total assets of the company at the end of the year?
$322,000.
500
On January 1 of the current year, Jimmy's Sandwich Company reported total equity of $122,500. During the current year, total revenues were $96,000, while total expenses were $105,500. No other changes in equity occurred during the year. The change in total equity during the year was:
A decrease of $9,500.
500
A company made no adjusting entry for accrued and unpaid employee wages of $28,000 on December 31. This oversight would overstate, understate, or have no effect on the financial statements? If overstated/understated, by how much?
Overstate net income $28,000
500
A company purchased $4,800 worth of merchandise. Transportation costs for the buyer were an additional $420. The company returned $330 worth of merchandise and then paid the invoice within the 3% cash discount period. The total cost of this merchandise is:
Cash Paid = [($4,800 − $330) × 0.97] + $420 = $4,755.90
500
An adjusting entry was made on year-end December 31 to accrue salary expense of $2,300. Assuming the company does not prepare reversing entries, what entry would be prepared to record the $5,200 payment of salaries in January of the following year?
Debit Salaries Payable 2,300
Debit Salaries Expense 2,900
Credit Cash 5,200