In Class Midterm Flashcards
Valance Company purchased a 2-year insurance policy on April 1, 2010 and debited Prepaid Insurance for $3600.
$3600/24= $150 per month
Insurance Expense $150
Prepaid Insurance $150
On April 1, 2010 a tenant in an apartment building owned by the Valance Company paid $4500, which represents three months’ rent in advance. The amount revised was credited to the Unearned Rent account.
$4500/3 = $1500
Unearned Rent $1500
Rent Revenue $1500
On June 1, 2010 the balance in the Office Supplies account was $130. During June, office supplies costing $750 were purchased. A physical count of office supplies at June 30 revealed that there was $150 still on hand.
Office Supplies
---------------------
Debit I Credit
$130 I
$750 I
I $730
--------
$150
Supplies Expense $730
Supplies $730
On March 31, 2010, the Valance Company purchased a delivery van for $30,000. It is estimated that the annual depreciation will be $7,500.
$7500 / 12 = $625 per month
Depreciation Expense $625
Accumulated Depreciation $625
Valance Company has two office employees who earn $100 and $125 per day, respectively. They are paid each Friday for a five-day work week that begins each Monday. June 30 is a Wednesday in 2010.
$225 @ 3Days = $675
Salaries Expense $675
Salaries $675
The retained Earnings account had a beginning balance of $60,000 and an ending balance of $70,000. If $20,000of dividends were declared and paid during the period, net income must have
a. $20,000
b. $30,000
c. $10,000
d. $50,000
Credit I Debit
I $60,000 Beginning
$20,000 I
I - $30,000-
I\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
$70,000The accumulated Depreciation account is an(a)
a. contra asset
b. liability
c. asset
d. operating expense
A
The procedure of transferring journal entries to ledger accounts is called
a. journalizing
b. ledgering
c. recording
d. posting
D
Transactions are initially recorded in the
a. ledger
b. trial balance
c. journal
d. balance sheet
C
A credit will reduce _____________, but increase _____________.
a. accounts receivable; accounts payable
b. expenses; accounts receivable
c. accounts payable; common stock
d. common stock; prepaid insurance
A
An accrued expense account represents expenses that have
a. that have been used and paid
b. been paid but not used
c. not been used or paid
d. been used but not paid
D
The book value of a depreciable asset is defined as the asset’s
a. cost less accumulated depreciation
b. current market value
c. replacement cost
d. cost
A
A business pays weekly salaries of $15,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Thursday is:
a. Debit Salaries Payable, $12,000; credit cash $12,000
b. Debit Salaries Expense, $12,000; credit cash $12,000
c. Debit Salaries Expense, $12,000; credit accounts payable $12,000
d. Debit Salaries Expense, $12,000; credit Salaries Payable $12,000
D
. What a customer returns goods for credit, the seller should
a. Credit Accounts Receivable
b. Credit Accounts Payable
c. Debit accounts Receivable
d. Credit Merchandise Inventory
A
Credit terms of 3/10, n/30 means that a(n)
a. 10% cash discount may be taken if payment is made immediately; a 3% discount if paid
b. 3% cash discount may be taken if payment is made within 10 days of the invoice date; otherwise the full amount is due within 30 days.
c. 3% cash discount may be taken if payment is made within 10 days of the invoice data; otherwise the full amount is due at the end of the month.
d. Additional amount equal to 3% of the invoice price must be paid if payment is not received within 10 days; the account is overdue after 30 days.
B
In accordance with the revenue recognition principle, sales revenues are recorded when
a. Earned, which typically occurs when the goods are transferred from the seller to the buyer
b. Cash is received from the customer for items already delivered.
c. An order received from a customer with delivery of the product expected to take within the next 30 days.
d. The accountant determines which period’s income statement “needs” more revenue.
A
Which of the following items would appear in the income statement of both a merchandising company and a service company?
a. Cost of goods sold
b. Gross profit
c. Operating expenses
d. Sales
C
Fright terms of FOB destination point mean that the
a. buyer must bear the freight costs.
b. seller must debit fright out
c. goods are placed free on board at the buyer’s place of business.
d. it is not decided who will pay the freight cost.
C
A corporation with total stockholder’s equity of $75,000 paid a $12,000 business debt. As a result of this transaction, total stock holder’s equity:
a. Did not change
b. Increased by $12,000
c. Decreased by $12,000
d. Increased to $75,000
A
The Sales Returns and Allowances account
a. Normally has a credit balance.
b. Should not be closed at the end of the period.
c. Is a contra account to Accounts Receivable
d. Is a contra Sales account.
D
An entry debiting Accounts payable and crediting Inventory indicates a
a. Sale on account to the customer
b. LCM is an example of the revenue recognition principle.
c. Return of goods originally sold on account to a customer.
d. Return of good originally purchased on account to the supplier
C
On November 10 of the current year, Flores Mills sold carpet to a customer for $8,000 with credit terms 2/10, n/30. How would Flores record the sales on November 10? a. Accounts Receivable 7,840 Sales Revenue 7,840 b. Accounts Receivable 8,000 Sales Revenue 8,000 c. Accounts Receivable 7,840 Cash Discounts 160 Sales Revenue 8,000 d. Accounts Receivable 8,000 Cash Discounts 160 Sales Revenue 7,840
B
On November 10 of the current year, Flores Mills provides services to a customer for$8,000 with credit terms 2/10, n/30. The customer made the correct payment on November 17. How would Flores record the collection of cash on November 17?
a.Cash 7,840
Accounts Receivable 7,840
b.Cash 8,000
Accounts Receivable 8,000
c.Cash 7,840
Sales Discount 160
Accounts Receivable 8,000
d.Cash 8,000
Sales Discounts 160
Accounts Receivable 7,840C
Suppose that the balance of a company’s Allowance for Uncollectible Accounts was $6,200 (credit) at the end of 2012, prior to any adjustments. The company estimated that the total of uncollectible accounts in its accounts receivable was $44,300 at the end of 2012. Total accounts receivable were $150,000 on December 31, 2012, and total credit sales for 2012 were $330,000. What amount of bed debt expense would appear in the company’s 2012 income statement, assuming the company uses the percentage-of –receivables methods?
a. $38,100
b. $105,700
c. $33,000
d. $50,500.26
A
Allowance
---------------------------------------------
Debit I Credit
--------------------------------------------
I $6,200
I -$38,100-
I\_\_\_\_\_\_\_\_\_\_\_\_\_
$44,300
- Baker Fine Foods has beginning inventory for the year of $12,000. During the year, Baker purchases inventory for $150,000 and ends the year with $20,000 of inventory. Baker will report cost of goods sold equal to:
a. $150,000
b. $158,000
c. $142,000
d. $170,000
C
$ 12,000
\+ $150,000
= $162,000
- $ 20,000
= $142,000A financial statement that reports accounting data at a specific date is the
a. Balance sheet
b. Retained earnings statement
c. Income statement
d. Statement of cash flows
A
Which of the following is not considered an external user of accounting information?
a. Bankers.
b. Taxing authority.
c. Manager
d. Labor Unions
C
- GAAP refers to
a. General Accounting and Auditing Principles
b. Guidelines for American Accounting Procedures
c. General Association of Accounting Practitioners.
d. Generally accepted Accounting Principles
D
- Current assets are listed:
a. Alphabetically
b. By importance
c. By longevity
d. By liquidity
D
