Kicking Assets
Which business organizational form provides investors with reduced personal liability?
Corporation
Which accounting assumption states that the economic life of a business can be divided into artificial time periods for reporting purposes?
A) Going concern assumption
B) Periodicity assumption
B) Periodicity assumption
Which elements make up the fraud triangle?
Opportunity
Pressure
Rationalization
Current maturities of long-term debt refer to
If a company fails to record a liability what will probably happen?
A) result in overstated total assets
B) result in an overstated net income
B) result in an overstated net income
Which type of asset (current or long-tern) is expected to be converted to cash or used up in the business within one year or one operating cycle, whichever is longer?
Current Asset
Summit Supplies purchased merchandise inventory with an invoice price of $18,400 and credit terms of 2/10, n/30.
What is the net cost of the goods if Summit Supplies pays within the discount period?
$18,032
18,400 - (18,400 X .02)
What is another term used for notes receivable and accounts receivable?
Trade Receivables
A statement of cash flows indicates the
A) Sources and uses of cash during a period
B) Gains and losses from cash during a period.
A) Sources and uses of cash during a period
Which of the accounts is a permanent account (does not close to income summary)
The purchase of an asset on credit
B) increases assets and liabilities.
Materials that a company has purchased but has not yet moved into production are classified as
A) Raw Materials
B) Work in process
A) Raw Materials
An income statement would not include
When a change in depreciation method occurs:
A) the change should be reported in current and future years.
B) prior years' financial statements should be changed to reflect the newly adopted method.
A) the change should be reported in current and future years.
Bonds with a face value of $750,000 and a quoted price of 102.5 have a selling price of?
$768,750
TechMart places an order for iPads from Apple on March 5. The iPads are delivered on March 8. TechMart pays invoice on March 15.
On what date does Apple satisfy its performance obligation?
A) March 5
B) March 15
C) March 8
March 8 because Apple fulfilled performance obligation upon delivery or product EVEN IF THEY DO NOT GET PAID UNTIL A LATER DATE
Harrison Supply Company reported net income of $95,000 for the year 2025. During 2025, the following changes occurred:
Accounts receivable increased by $8,000
Accounts payable decreased by $5,000
Depreciation expense of $12,000 was recorded
What is the net cash provided by operating activities for 2025?
$94,000
During the month, a company sells goods for a total of $114480 which includes sales taxes of $6480. The company should recognize:
A company purchased factory equipment on March 1, 2025 for $96,000 with a $12,000 salvage and an 8-year useful life. Using the straight-line method, the amount of depreciation expense at December 31, 2025 is:
Hint how many months of depreciation should be calculated?
$8,750
Depreciation for 2025=
10,500×(10/12)=8,750
10 months Mar1 - Dec 31
MAMJJASOND
If Amazon's retained earnings account increases from the beginning of the year to the end of the year, then
A) net income is greater than dividends.
B) net income is less than dividends.
A) net income is greater than dividends.
Land $170,000
Land (held for future use) 250,500
Buildings 1,360,000
Inventory 442,000
Equipment 969,500
Furniture 271,000
Accumulated Depreciation 613,000
What is the total amount of property, plant, and equipment that will appear on the balance sheet?
2,157,500
At December 31, 2025, Nash’s Company’s inventory records show a balance of $620,000. Further review shows:
$62,000 of goods sold FOB destination on December 27, 2025 (not yet delivered)
$4,000 of goods received on consignment
What is Nash’s correct ending inventory balance at December 31, 2025?
$616,000
FOB destination means ownership transfers only when goods reach the buyer.
Since the goods are still in transit on Dec 31, they still belong to Nash.
So, we do NOT remove the $62,000 from inventory.
Step 2: Remove consigned goods from inventory
Goods on consignment belong to the consignor, not the consignee (Nash).
So, the $4,000 from Mary Company should not be included.
Step 3: Calculate correct inventory
Correct inventory=620,000−4,000=616,000
A company purchased land for $500,000 cash. The real estate broker’s commission was $30,000, and $20,000 was spent to remove an old building on the land before construction of a new building could begin.
What is the cost of the land?
$550,000
Assume the following sales data for a company:
Year Sales
2026 $920,000
2025 $810,000
2024 $700,000
If 2024 is the base year, what is the percentage increase in sales from 2024 to 2025?
Hint: (Current-base)/Base
15.71%
(810,000-700,000)/(700,000)
Horizontal Analysis
Which of the following statements about the LIFO (Last-In, First-Out) inventory method is true?
A) LIFO assumes that the oldest inventory items are sold first.
B) LIFO assigns the cost of the most recently purchased items to cost of goods sold.
B) LIFO assigns the cost of the most recently purchased items to cost of goods sold.