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Accounting 201 > final exam > Flashcards

final exam Flashcards

1
Q

what are the three forms of business organization?

A

Sole proprietorship - unlimited liability
Corporation - owned by stockholders. limited liability
Partnership - unlimited liability. more financial outlets

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2
Q

What kind of classification is cost of goods sold?

A

expense

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3
Q

Which financial statement reports assets, liabilities, and stockholders’ equity?

A

balance sheet

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4
Q

when does the balance sheet reports the assets, liabilities, and stockholders’ equity?

A

at a specific date

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5
Q

In a classified balance sheet, how are assets usually classified?

A

Current assets; long-term investments; property, plant, and equipment; and intangible assets

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6
Q

The beginning balance of retained earnings

A

the ending balance minus net income plus dividends

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7
Q

Issuing new shares of common stock will

A

increase common stock

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8
Q

What are generally accepted accounting principles?

A

A set of accounting rules and practices that have authoritative support

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9
Q

What are the accounting rules that have substantial authoritative support and are recognized as a general guide for financial reporting purposes in the U. S.?

A

Generally accepted accounting principles

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10
Q

The effect on the basic accounting equation of performing services for cash are to

A

increase assets and increase stockholders’ equity.

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11
Q

Retained earnings is decreased by

A

expenses

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12
Q

If cash is received in advance from a customer

A

liabilities will increase.

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13
Q

Receipt of an unearned revenue

A

increases an asset; increases a liability.

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14
Q

Which statement about an account is true?

A

An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders’ equity items.

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15
Q

What journal entry is recorded as a result of issuing stock to investors for cash?

A

A debit to Cash and a credit to Common Stock

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16
Q

What type of account is unearned revenue?

A

liability

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17
Q

On. Jan. 10, Novis Company purchased manufacturing equipment for $80,000 cash. What kind of activity is this?

A

investing activity

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18
Q

The generally accepted accounting principle which dictates that revenue be recognized in the accounting period in which the performance obligation is satisfied is the

A

revenue recognition principle

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19
Q

The use of the cash basis of accounting violates both

A

the revenue recognition and expense recognition principles

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20
Q

Adjusting entries are made to ensure that: (3)

A
  1. expenses are recognized in the period in which they are incurred.
  2. balance sheet and income statement accounts have correct balances at the end of an accounting period.
  3. revenues are recorded in the period in which the performance obligation is satisfied.
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21
Q

What is not a typical example of a prepaid expense?

A

Wages

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22
Q

The difference between an asset’s cost and its accumulated depreciation is called

A

book value

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23
Q

what is not a typical example of an accrued expense?

A

depreciation

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24
Q

Which types of accounts will appear in the post-closing trial balance?

A

permanent accounts

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25
Q

what is a merchandiser that sells directly to consumers?

A

retailer

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26
Q

Which inventory system will likely be used by a company with merchandise that has a high unit value?

A

Perpetual inventory system

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27
Q

Under what system is cost of goods sold determined at the end of an accounting period?

A

Periodic inventory system

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28
Q

When is a physical inventory usually taken?

A

At the end of the company’s fiscal year

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29
Q

what is not an inventory account?

A

equiptment

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30
Q

what are the inventory costing methods?

A

Last-in, first-out
Average cost
First-in, first-out

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31
Q

Two companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, The company using which method would..

A

The company using FIFO will have the highest ending inventory.

32
Q

What type of receivable is evidenced by a formal instrument and normally requires the payment of interest?

A

a note recievable

33
Q

When is a receivable recorded by a service organization?

A

When service is provided on account

34
Q

Bad Debts Expense

A

is a nominal account and is closed at the end of the fiscal period, while Allowance for Doubtful Accounts is a real account and remains open at the end of the fiscal period.

35
Q

Obama Company has identified that Bill Clinton’s receivable account of $100 is uncollectible. What is the journal entry needed to write off the account under the allowance method?

A

Allowance for Doubtful Accounts 100

Accounts Receivable 100

36
Q

On the date a 90-day note is honored, how much cash will the payee receive?

A

Face value plus 90 days of interest

37
Q

when reporting receivables on the balance sheet..

A

Allowance for Doubtful Accounts is shown as a deduction from Accounts Receivable on the balance sheet.

38
Q

what is not a depreciable asset?

A

land

39
Q

Which depreciation method calculates annual depreciation expense based on book value at the beginning of each year?

A

Declining-balance

40
Q

The time period for classifying a liability as current is one year or the operating cycle, whichever is

A

longer

41
Q

Which one of the following is not a typical current liability?

A

bonds payable

42
Q

When a bond is sold at a premium, at what value is it reported on the balance sheet?

A

face value plus any premium

43
Q

What is not a major advantage of a corporation?

A

Government regulations

44
Q

what is not a stockholder’s right?

A

The right to participate in management decisions

45
Q

For what reason might a company acquire treasury stock?

A

To reissue the shares to officers and employees under bonus and stock compensation plans

46
Q

what features are associated only with preferred stock?

A

Preference to assets in the event of liquidation
Dividend preference
Cumulative dividends

47
Q

In the stockholders’ equity section of the balance sheet, from what is the cost of treasury stock deducted?

A

Total paid-in capital and retained earnings

48
Q

When a stock dividend is declared, which of the following accounts is debited?

A

Stock Dividends

49
Q

positive of fifo

A

highest potential profit

50
Q

positive of lifo

A

lower taxable income

51
Q

positive of weighted average

A

quick and easy

52
Q

specific identification

A

best option but not realistic for most companies. for high price, low volume. like a car dealership or a jewelry store

53
Q

what does value of ending inventory mean

A

it is what is left

54
Q

account recievable

A

verbal and informal

55
Q

note recievable

A

formal and has interest

56
Q

allowance for doubtful accounts

A

a contra asset account. on the balance sheet. set by the businesses choice

57
Q

accumulated depreciation

A

the using up of an asset. it is a contra asset.

  1. straight line
  2. activity
  3. double declining
58
Q

only thing not an estimate in depreciation

A

cost

59
Q

current liability

A

a year or less. anything payable or unearned revenue

60
Q

long term liability

A

more than a year. a note payable or bonds

61
Q

bonds

A

long term liability. usually $1000 increments. worried about changing interests. (= par or face value) (>p= premium) (

62
Q

issued stock

A

introduced to market

63
Q

outstanding stock

A

active in the market - issue dividends

64
Q

authorized stock

A

can be sold

65
Q

treasury stock

A

co. buys back own stock. contra equity

66
Q

dividends (account, where)

A

retained earnings. statement of retained earnings.

67
Q

account receivable (account, where)

A

asset. balance sheet

68
Q

unearned revenue (account, where)

A

liability. balance sheet

69
Q

interest expense (where)

A

income statement

70
Q

required after you journalize

A

transfer to ledger

make a trial balance

71
Q

CR & DR

A

at least one CR for each DR transaction (and visa versa)

72
Q

original charter

A

how many shares of stock have been authorized (can be sold)

73
Q

intangible asset

A

amortization expense. straight line.

74
Q

natural resource

A

depletion expense. activity method

75
Q

income statement

A

revenues. expenses. net income

76
Q

balance sheet

A

assets. liabilities. SE

Accounting 201 (2 decks)

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