ACCT 2300

Texas Tech University ACCT 2300 Final Exam Flashcard set

the trial balance is used to determine if

total debits of all the accounts equal total credits of all the accounts.

the principle stating that assets acquired from the business should be recorded at their actual cost on the date of purchase in

historical cost

for long term business success a successful business must generate most of its cash from

operating activities

Wisconsin Bank lends Local Furniture Company $110,000 on November 1. Local Furniture Company signs a $110000 6% 4-month note. The fiscal year end of Local Furniture Company is December 31. The journal entry made by Local Furniture Company on December 31 is:

debit - interest expense 1,100

credit - interest expense 1,100

the statement of cash flows is designed to fufill all the following purposes except to

asses the collectibility of accounts receivable

A company buys treasury stock for $10 per share. The company later sells the treasury stock for $11 per share. What is the difference between the resale price and the cost of the treasury stock called?

paid in capital stock , treasury stock transactions

The balance of Accounts Receivable at the beginning of the year was 532,000 the balance is accounts receivable at the end of the year was 710,000

4,760,000

the proper order for the accounting process is

Transaction occurs, journalizing and posting

the journal entry to record common stock issued at its par value includes a credit to

common stock

the NRV of accounts receivable is the difference between gross accounts receivable and

allowance for uncollectible accounts

the accounting principal that requires a company to record warranty expense in same period that it records sales revenue

expense recognition principle

a company recieved 35000 cash and issued common stock in exchange. how does the transaction effect the accounting equation

add 35000 to cash

add 35000 to common stock

cash and cash equivalence do not include

high grade us government securities maturing in 5 years

on January 1, Hanley Corp. issued 2,300,000, 10 year, 9% bond at 103. the journal entry to record this transaction would include a...

credit to premium on bonds payable - 69,000

When goods are shipped FOB destination

Revenue is recognized when the goods are received by the customer

Mary Andrews inc. had the following transactions:

cash proceeds on sale of land - 430,000
cash proceeds on sale of equipment -140,000
purchase of treasury stock with cash -53,000
purchase of equipment with cash -48,000
issuance of common stock for cash -70,000

on the statement of cash flows prepared under the indirect method, net cash provided by investing activities is...

522,000

the following accounts and balances are blank from martins company's unadjusted trial balance

in the closing process, which accounts are credited?

service revenue, interest revenue

on jan 1st 2018, a bond was issued at a discount. the journal entry to record the journal entry to record the semiannual interest payment on july 1st 2018, would include a

debit-interest expense

credit- discount on bonds payable

credit- cash

to record a 8% stock dividend, accounts use ______ to record a 55% stock dividend, accounts use _____.

market price per share, par value per share

on the statement of cash flows in which section would the purchase of land with cash appear

investing activities

the three types of activities reported on the statement on cash flows are presented in the following order

operating, investing, and financing

equipment costing 40,000 with a book value of 10,000 is sold for 23,000. which journal entry is used to record the sale

Debit- cash: 23000

debit- accumalted depreciation- equipment: 24000

credit -equipment: 40000

credit- cash on sale of equipment : 7000

Bloom Corp. issued 60,000 shares of common stock. Bloom purchased 9,000 shares and later reissued 900 shares.

How many shares are issued and outstanding?

60,000 - issued

51,900 - outstanding

Revenues were 150,000, expenses were 144,000, and cash dividends declared and paid were 3000. What were the net income and the change in retained earnings for the period.

Net income - 6,000

change in retained earnings - 3,000

under the indirect method of preparing the statement of cash flows, the starting point to determine net cash provided by operating activity's is

net income

As a plant asset is used in operations

Accumulated depreciation increases and the book value of the asset decreases.

all of the following will appear on the book side of the bank reconciliation EXCEPT for

deposit in transit

the revenue principal requires that a business records revenue when the business...

receives an order from a customer

the statement of cash flows does not recieve

cash payment in the current year

In 2019 cherry corporation purchased treasury stock with the cost of 49,000 during the year, the company declared and paid dividends of 8,000 and issued bonds payable for 1,100,000. net cash provided by financing activities for 2019 is

1,043,000

If a corporation has only one class of stock it is understood to be

Common Stock

The accounting equation can be stated as

Assets - Liabilities= Stockholders Equity

Legal capital for a corporation equals

The par value of stock that has been issued

The journal entry to record depreciation expense for equipment is

Debit depreciation expense-equipment, Credit accumulated depreciation-equipment

The left side of the T account is always the

debit side

Stockholders equity is divided into

Retained earnings and paid in capital

if a corporation declares 100,000 cash dividend, the account to be divided on the

common stock

financing activities on a statement of cash flows record as

long term liabilities and stockholders equity

under the average-cost inventory method, to determine the average cost per unit

the cost of beginning inventory plus the cost of purchases is divided by the number of units available

adjusting entries

are made before the financial statements can be prepared

the normal balance of an account

falls on the side where increases are recorded

Which of the following is not considered to be an advantage of a​ corporation?

Double Taxations

What is a characteristic of a corporation?

Limited liability of stockholders

Preferred stock is least likely to have which of the following​ characteristics?

Preference as to voting

The par value of a share of common stock…

is stated in the charter

Total paid-in capital= ?

Common Stock + paid-in capital in excess of par

Which of the following classifications represents the MOST shares of Common​ Stock?

Authorized shares

A company would NOT purchase treasury stock for this reason

to decrease the earnings per share of common stock.

When treasury stock is sold for less than its​ cost, the entry should include a debit to

Retained Earnings

How does the declaration of a cash dividend affect a​ company's assets,​ liabilities, and​ equity?

It results in an INCREASE to LIABILITIES and a DECREASE to stockholders' EQUITY, while ASSETS remain the same

A stock split…

has no effect on total​ stockholders' equity.

Stockholders are eligible for a dividend if they own the stock on the date of

record

A company declares a​ 5% stock dividend. The debit to Retained Earnings is an amount equal to

the market value of the shares to be issued.

What will NOT happen if there is a stock split

Total​ stockholders' equity WILL NOT increases.

The statement of cash flows is designed for all of the following purposes except

to list all revenues and expenses.

A company uses the direct method to prepare the statement of cash flows. Select an activity for each of the following​ transactions:

1. Receiving cash dividends is​ a(n)

OPERATING activity

2. Paying cash dividends is​ a(n)

FINANCING activity.

Which of the following transactions does NOT affect cash during a​ period?

A​ write-off of an uncollectible account

If the indirect method is used to calculate net cash provided by operating​ activities, an increase in accounts receivable is...

subtracted from net income.

If the indirect method is​ used, which of the following items appears on a statement of cash​ flows?

A. Collections from customers

B. Depreciation expense

C. Cash receipt of interest revenue

D. Payments to suppliers

Depreciation Expense

On an indirect method statement of cash​ flows, an increase in a prepaid insurance is....

deducted from net income

On an indirect method statement of cash​ flows, a gain on the sale of plant assets is....

deducted from net income in the operating activities section.