acct 2001

How is net income for a period determined?

by subtracting total expenses from revenues

Ethics are the principles of conduct that are used to judge whether decisions are

right, wrong, fair, unfair, honest, dishonest, moral, or immoral.

Which of the following would a company record as an expense?

cost of finished products sold

Gerardi Supply started the year with total assets of $210,000 and total liabilities of $85,000. During the year, the business recorded $275,000 in revenues, $120,000 in expenses, and dividends of $50,000. The net income reported by Gerardi Supply for the year was

$155,000.

Flex-Mat started the year with total assets of $160,000 and total liabilities of $90,000. During the year, the business recorded $210,000 in revenues, $120,000 in expenses, and dividends of $35,000. Stockholders' equity at the end of the year was

$125,000.

Moran Steel started the year with total assets of $210,000 and total liabilities of $95,000. During the year, the business recorded $200,000 in revenues, $110,000 in expenses, and dividends of $45,000. Stockholders' equity at the end of the year was

$160,000.00

Porter Veterinary Services recently purchased several new stock trailers for their equine and bovine clients. The stock trailers increased their long-term assets by 50%. Porter Veterinary Services most likely used cash obtained from ________ activities to purchase these trailers.

financing

Kim’s Flowers decided to borrow $26,000 from the bank and use the proceeds to purchase a new delivery vehicle. How should they categorize these business activities?

as both a financing activity and an investing activity

Coleman Camping Supplies decided to use cash to purchase a new tent sewing machine. It will effectively double their ability to produce tents. How will this purchase affect Coleman’s operating activities?

It will increase their finished goods inventory and hopefully increase revenue.

Which of the following statements about the proprietorship form of business is true?

It generally receives favorable tax treatment relative to a corporation.

What is the primary purpose of the statement of cash flows?

to provide information about cash receipts and cash payments

Hector has decided that he wants to open a business in which he sells garden and landscaping plants and provides classes on how to care for flowers and vegetables. Which form of business organization will Hector most likely choose when he initially opens his business?

sole proprietorship

A written code of ethics for a business would be most helpful to company employees when

identifying ethical and unethical situations.

If total liabilities decreased by $75,000 and stockholders' equity increased by $20,000 during a period of time, then total assets must change by what amount and direction during that same period?

$55,000 decrease

According to the ________ principle, a company can purchase an asset for $1,000 and, despite an increase in value over time, can continue to report the asset for $1,000.

historical cost

Which of the following would be listed as an intangible asset on a classified balance sheet?

a trademark that grants exclusive rights to an image and name for the next 15 years

Granite Monuments reported $69,000 net cash provided by its operating activities. It invested $2,000 in new equipment and paid $3,000 in dividends. What was Granite Monuments’ free cash flow?

$64,000

Elizabeth Coal Ltd has total assets of $8,000,000, common stock of $4,200,000, and liabilities of $1,200,000. What is the amount for retained earnings?

$2,600,000.00

Aaron is preparing the balance sheet for his company. Copyrights and goodwill are the only two assets classified as intangible assets, and each has a cost of $24,000. Copyrights also has accumulated amortization of $7,000. How should Aaron list this information on the balance sheet?

Copyrights and goodwill should be listed individually at $24,000 each, and accumulated amortization should be listed with a negative total of $7,000.

Sigma Motors has assets of $5,000,000, liabilities of $1,200,000, and retained earnings of $1,500,000. What is the amount for common stock?

$2,300,000

Welsford Company has current assets of $1,700,000 and current liabilities of $1,400,000. If they issue $100,000 of new stock, what will their new current ratio be?

1.29:1

For 2022, East Corporation reported net income $50,000, net sales $800,000, and average shares outstanding 10,000. There were no preferred dividends. What was the 2022 earnings per share?

$5.00

Goodman's has current assets of $2,500,000 and current liabilities of $1,000,000. If they pay $250,000 of their accounts payable, what will their new current ratio be?

3:1

Two foreign companies want to trade shares of their stock on U.S. stock exchanges. One company follows IFRS but the other company does not. If the FASB changes an accounting standard for GAAP, how will this affect each foreign company?

Only the company that does not conform to IFRS will have to change their accounting practices to conform to GAAP.

The CFO at Turner Enterprises knew of an important circumstance that would affect the interpretation of the company’s financial statements. However, the information had not been announced publicly yet, so he did not reference the circumstance in the financial statements. This is in clear violation of the

full disclosure principle.

The important information included in customer satisfaction reports is not included in the financial statements because it fails to support which of the following assumptions?

monetary unit assumption

Identifying the type of account involved and whether to make a debit or a credit to the account is the purpose of

transaction analysis.

Which of the following is MOST likely prepared after using the trial balance?

financial statements

Under which circumstances would Cash be credited and Equipment be debited

When equipment is purchased using cash.

Which of the following is used as evidence to determine a transaction's effects on specific accounts?

source documents

How would the Salaries and Wages Payable account compare with the Salaries and Wages Expense account in terms of classification in the ledger?

Salaries and Wages Payable would be found in the liabilities section while Salaries and Wages Expense would be found in the stockholders'; equity section.

The first step in the recording process is to

analyze the transaction.

What happens when a portion of an account payable is paid?

There is no effect on stockholders' equity.

Which of the following accounting entries would you MOST expect to accompany a $2,500 increase in cash, and why?

A $2,500 increase in unearned service revenue, because unearned service revenue is considered a liability until the service is actually performed.

Which of the following statements is true?

A debit to an asset account always indicates an increase in the asset.

During October, Blue Sky Inc. correctly enters a $10,000 credit to its Revenues account. What conclusions can be made based on this accounting entry?

This entry indicates that Blue Sky recognized $10,000 in revenue in October, which likely means that the firm's net income, ending retained earnings, and stockholders' equity all increased.

During the month of May, Apex Industries recorded a $3,000 debit to an expense account. Which of the following explanations of this transaction is the MOST accurate?

This entry indicates that Apex incurred $3,000 in expenses. It also suggests that the firm may have recorded a $3,000 credit to an asset account in order to offset the corresponding decrease in stockholders' equity.

When calculating the balance of the Sales Revenue account, you find that the balance is lower than expected. However, according to your Balance Sheet and your analysis of the accounting equation, all of your debits and credits are equal across accounts. What is the most likely explanation for this?

You failed to record a sales transaction in the journal, so it never got transferred to the ledger or financial documents.

You are the accountant responsible for creating financial documents and recording transactions. In which order will you perform the following actions related to these tasks?

I. create financial statements

II. record transactions in the ledger

III. examine business documents

IV. record transactions in the journal

III, IV, II, I

Pickett, Inc. recorded its monthly transactions in the journal but failed to record a transaction involving cash received from customers on January 14. Assuming Pickett performed all subsequent steps in the recording process correctly for the month, what will likely occur?

The transaction will not be transferred to the ledger, nor incorporated in the financial statements.

On September 1, Pike Products purchases $5,000 of supplies from Indigo Industries, with the understanding that Pike will provide payment within 60 days. When posting the journal entries related to this transaction, Pike's accounting staff debits Supplies for $5,000 and debits Cash for $5,000. Which of the following statements best describes the results of this posting?

In Pike’s general ledger, the ending balance for the Supplies account will be correct. However, the ending balance for the Cash account will be too high, while the ending balance for the Accounts Payable account will be too low.

On December 30, Mega Industries pays employee salaries of $50,000 in cash. When posting the journal entries related to this transaction, Mega's accounting staff credits Cash for $50,000 and credits Accounts Payable for $50,000. Which of the following statements best describes the results of this posting?

In Mega's general ledger, the ending balance for the Cash account will be correct. However, the ending balance for the Accounts Payable account will be too high and the ending balance for the Salaries Expense account will be too low.

On November 15, Paulson Painting received a $6,000 cash payment from Apex Inc. in exchange for painting services to be provided in December. When posting the journal entries related to this payment, Paulson's accountant debits the Cash account for $6,000 and credits Service Revenue for $6,000. Which of the following statements best describes the results of this posting?

In Paulson's general ledger, the ending balance for the Cash account will be correct. However, the ending balance for the Service Revenue account will be too high and the ending balance for the Unearned Service Revenue account will be too low.

Geyer Company has the following account balances:  Accounts Receivable: $40, Accounts Payable: $45, Cash: $70, and Notes Payable: $65. If the Notes Payable balance is listed as $56 in the trial balance, what impact will this have on the accounts?

The total credit balance will be $9 less than the total debit balance.

Some of the balances on Carla's Cookies June 30^th trial balance include Cash $100,000, Accounts Receivable $50,000, Equipment $25,000, and Accounts Payable $75,000. During the month of July, the company used cash to purchase $8,000 of equipment. How will this transaction affect the equipment account balance on the July 31^st trial balance?

An increase of $8,000.

Paulson Oil account balances at January 31^st include: Cash $70,000, Accounts Receivable $100,000, Common Stock $120,000 and Accounts Payable $50,000. During the month of February, the company collected $25,000 of its account receivable and paid $10,000 of its accounts payable. What is Paulson’s cash balance on their February 28^th trial balance?

$85,000.00