Hatfield 1Accounting 2001 final1. Generally accepted accounting principles are primarily formulated by: A. the Securities and Exchange CommissionB. the American institute of Certified Public AccountantsC. The Financial Accounting Standards BoardD. The Federal Reserve Board2. Use the following selected information from ABC Corporation to determine the amount that will be reported on the balance sheet for retained earnings:Beginning Retained Earnings $3,000,000Beginning Common Stock $300,000Ending Common Stock $430,000Total Revenues $850,000Total Expenses $1,120,000Dividends $0A. $3,540,000B. $2,730,000C. $2,860,000D. $3,160,0003. Ch. 1 Which of the following is a false statement regarding partnerships? Sole Proprietorship A. Partnerships are limited to less than one hundred partnersB. partners may be held personally liable for the partnership debtsC. The accounting records for the partnership should be maintained separately from the accounting records of the partnersD. Partnerships may have as few as two partnersSole Proprietorship- Owned by 1 person- Simple to set up- Owner has control over the business- Many thousands of businesses Partnership- Two or more persons associated as partners- Each partner may bring economic resourcesHatfield 24. Ch. 11 A credit decreases the balance of which types of accounts? A. expenses and assetsB. liabilities and expensesC. assets and liabilitiesD. assets and stockholders’ equityTreasury Stock and effects:- Debited and Cash is Credited- Decrease in Assets (Cash) and Decrease in Stockholders’ Equity- Contra Stockholders’ Equity5. Cash dividends paid to the stockholders will:A. increase assets and decrease liabilitiesB. decrease assets and increase liabilitiesC. have no effect on stockholders’ equity pg. 585D. decrease assets and decrease stockholders’ equityDividends:- Decrease Assets (Cash)- Decrease Liabilities (Dividends Payable)- No effect of Stockholders’ Equity 6. A business purchases a truck by signing a note payable to the seller. Such a transaction would include:A. credit to truckB. debit to Note PayableC. credit to Note PayableD. debit to an expense accountPg. 451Debit TruckCredit Notes Payable 7. On December 31, 2011, salaries owed to employees total $2,350 and will be paid on January 4, 2012. The adjusting entry prepared on December 31, 2011, includes a:A. debit to Salary Expense for $2,350B. debit to Salary Payable for $2,350C. credit to Cash for $2,350D. credit to Salary Expense for $2,350Pg. 179Salaries Expense 2350Salaries Payable 2350Hatfield 38. The closing entry for utilities expense would include:A. a debit to Utilities Expense and a credit to Income SummaryB. a debit to net income and a credit to Utilities ExpenseC. a debit to Utilities Expense and a credit to net incomeD. a debit to Income Summary and a credit to Utilities ExpensePg. 187-188 Closing the BooksTemporary accounts:- Revenue: Revenue Income Summary - ExpensesIncome SummaryExpenses- DividendsRetained EarningsDividends- Retained EarningsIncome SummaryRetained Earnings 9. Where would “Sales Returns and Allowances” be included on a multiple step income statement?A. As part of Net SalesB. As part of Other Revenues and GainsC. As part of Other Expenses and LossesD. As Operating ExpensesPg. 241Sales Revenues – Sales Returns and Allowances/Sales Discounts = Net SalesHatfield 410. If a company uses a perpetual inventory system, it will maintain all of the following accounts except:A. Cost of Goods SoldB. PurchasesC. SalesD. InventoryBegin InventoryAdd: Cost of Goods Purchased=Costs of Goods Available for SaleLess: Ending Inventory=Cost of Goods SoldPerpetual Inventory:- Maintain detailed records of the cost of each inventory purchase and sale - Determines the Cost of Goods Sold each time a sale occurs11. Given the following data, calculate the cost of ending inventory using the LIFO costing method: Sales Revenue, Begin. Inventory, PurchasesPg. 2891/1 Beginning Inventory 35 Units at $10 per unit 3502/25 Purchase of Inventory 10 units at $12 per unit 1205/20 Purchase of Inventory 5 units at $13 per unit 65Purchase of Inventory 15 units at $13 per unit 1958/15 Purchase of Inventory 30 units at $14 per unit 42010/17 Purchase of Inventory 25 units at $15 per unit 375Total: 120 units 1525COGS: 99012/31 Ending Inventory 50 units 535A. $500B. $750C. $725D. $535Hatfield 512. FIFO tends to decrease taxes when: A. costs are constantB. costs are decreasingC. costs are increasingD. FIFO will always yield the lowest possible taxesPg. 293 Lower income taxes during deflation under FIFOLower income taxes during inflation under LIFO13. Each of the following items affect the cash balance per books except:A. bank service chargesB. notes collected by the bankC. NSF checksD. outstanding checksPg. 354Per Bank Statement Per BooksAdd: Deposits In Transit Add: Notes Collected by BanksLess: Outstanding Checks Less: NSF Checks+/- Bank Errors Less: Service Charges+/- Book Errors 14. Which one of the following is not an objective of a system of internal controls?A. Safeguard company assetsB. Overstate liabilities in order to be conservativeC. Enhance the accuracy and reliability of accounting recordsD. reduce the risk of errorsPg. 337- Safeguard its assets- Enhance Reliability of its Accounting Records- Increase Efficiency of Operations- Ensure Compliance with Laws and RegulationsHatfield 615. What type of account is the Allowance for Doubtful Accounts?A. AssetB. Contra-AssetC. LiabilityD. Contra RevenuePg. 237 Sales Returns and Allowances- Debit Sales Returns and Allowances (contra account to Sales Revenue)- Credit to Accounts Receivable 16. A company uses the percentage-of-receivables method of accounting for uncollectables. The year-end accounts receivable are $225,000 and 2% are estimated uncollectible. The Allowance for Doubtful Accounts prior to adjustment has a debit balance of $1,400. The amount of the adjusting entry is: Same numberA. $1,400B. $3,100C. $4,500D. $5,900Pg. 404-405Accounts Receivable: 225,000Unadjusted DEBIT balance: +1,400Allowance for Doubtful Accounts: 4500 (225000 * 2% = 4500)= 1400 + 4500 = 5,900***If the Unadjusted balance for Allowance for Doubtful Accounts had a CREDIT balance, then the amount would be deducted Estimated: Write-Off:Debit Bad Debts Expense Allowance for Doubtful AccountsCredit Allowance for Doubtful Accounts Accounts ReceivableHatfield 717. ******The Mitchell Global Company accepts a note in exchange for the sale of goods.