Hatfield 1 Accounting 2001 final Red exact Blue close 1 Generally accepted accounting principles are primarily formulated by A the Securities and Exchange Commission B the American institute of Certified Public Accountants C The Financial Accounting Standards Board D The Federal Reserve Board 2 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 3 000 000 Beginning Common Stock 300 000 Ending Common Stock 430 000 Total Revenues 850 000 Total Expenses 1 120 000 Dividends 0 A 3 540 000 B 2 730 000 C 2 860 000 D 3 160 000 Proprietorship 3 Ch 1 Which of the following is a false statement regarding partnerships Sole A Partnerships are limited to less than one hundred partners B partners may be held personally liable for the partnership debts C The accounting records for the partnership should be maintained separately from the accounting records of the partners D Partnerships may have as few as two partners Sole Proprietorship Simple to set up Owned by 1 person Owner has control over the business Many thousands of businesses Partnership Two or more persons associated as partners Each partner may bring economic resources 4 Ch 11 A credit decreases the balance of which types of accounts A expenses and assets B liabilities and expenses Hatfield 2 C assets and liabilities D assets and stockholders equity Treasury Stock and effects Debited and Cash is Credited Decrease in Assets Cash and Decrease in Stockholders Equity Contra Stockholders Equity 6 A business purchases a truck by signing a note payable to the seller Such a transaction 5 Cash dividends paid to the stockholders will A increase assets and decrease liabilities B decrease assets and increase liabilities C have no effect on stockholders equity pg 585 D decrease assets and decrease stockholders equity Dividends Decrease Assets Cash Decrease Liabilities Dividends Payable No effect of Stockholders Equity would include a A credit to truck B debit to Note Payable C credit to Note Payable D debit to an expense account Pg 451 Debit Truck Credit Notes Payable A debit to Salary Expense for 2350 B debit to Salary Payable for 2 350 C credit to Cash for 2 350 D credit to Salary Expense for 2 350 Pg 179 Salaries Expense Salaries Payable 2350 2350 8 The closing entry for utilities expense would include 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 a debit to Utilities Expense and a credit to Income Summary B a debit to net income and a credit to Utilities Expense C a debit to Utilities Expense and a credit to net income D a debit to Income Summary and a credit to Utilities Expense Hatfield 3 Pg 187 188 Closing the Books Temporary accounts Revenue Revenue Income Summary Expenses Dividends Income Summary Expenses Retained Earnings Dividends Retained Earnings Income Summary Retained Earnings statement A As part of Net Sales B As part of Other Revenues and Gains C As part of Other Expenses and Losses D As Operating Expenses accounts except A Cost of Goods Sold B Purchases C Sales D Inventory Begin Inventory Add Cost of Goods Purchased Costs of Goods Available for Sale Less Ending Inventory Cost of Goods Sold 9 Where would Sales Returns and Allowances be included on a multiple step income Pg 241 Sales Revenues Sales Returns and Allowances Sales Discounts Net Sales 10 If a company uses a perpetual inventory system it will maintain all of the following Hatfield 4 Perpetual Inventory Maintain detailed records of the cost of each inventory purchase and sale Determines the Cost of Goods Sold each time a sale occurs 11 Given the following data calculate the cost of ending inventory using the LIFO costing method Sales Revenue Begin Inventory Purchases Pg 289 1 1 2 25 5 20 Beginning Inventory Purchase of Inventory Purchase of Inventory Purchase of Inventory 8 15 Purchase of Inventory 10 17 Purchase of Inventory Total 12 31 Ending Inventory 50 units 35 Units 10 units 5 units 15 units 30 units 25 units 120 units at 10 per unit at 12 per unit at 13 per unit at 13 per unit at 14 per unit at 15 per unit 350 120 65 195 420 375 1525 COGS 990 535 A 500 B 750 C 725 D 535 12 FIFO tends to decrease taxes when A costs are constant B costs are decreasing C costs are increasing D FIFO will always yield the lowest possible taxes Pg 293 Lower income taxes during deflation under FIFO Lower income taxes during inflation under LIFO 13 Each of the following items affect the cash balance per books except A bank service charges B notes collected by the bank C NSF checks D outstanding checks Hatfield 5 Pg 354 Per Bank Statement Add Deposits In Transit Less Outstanding Checks Bank Errors Per Books Add Notes Collected by Banks Less NSF Checks Less Service Charges Book Errors 14 Which one of the following is not an objective of a system of internal controls A Safeguard company assets B Overstate liabilities in order to be conservative C Enhance the accuracy and reliability of accounting records D reduce the risk of errors Safeguard its assets Pg 337 Enhance Reliability of its Accounting Records Ensure Compliance with Laws and Regulations Increase Efficiency of Operations 15 What type of account is the Allowance for Doubtful Accounts 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 yearend 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 number A Asset B Contra Asset C Liability D Contra Revenue Pg 237 Sales Returns and Allowances A 1 400 B 3 100 C 4 500 D 5 900 Pg 404 405 Accounts Receivable 225 000 Unadjusted DEBIT balance 1 400 Allowance for Doubtful Accounts 4500 225000 2 4500 1400 4500 5 900 Hatfield 6 If the Unadjusted balance for Allowance for Doubtful Accounts had a CREDIT balance then the amount would be deducted Estimated Debit Bad Debts Expense Credit Allowance for Doubtful Accounts Write Off Allowance for Doubtful Accounts Accounts Receivable 17 The Mitchell Global Company accepts a note in exchange for the sale of goods The journal entry on Mitchell Global Company includes a A credit to Sales B credit to Note Receivable C debit to Accounts Receivable D debit