Only permanent accounts appear on the post-closing trial balance.
Freight out is an addition to the Merchandise Inventory account if the seller uses the
perpetual inventory system.
Consolidated statements combine the balance sheets, income statements, and statements
of cash flow of the parent company with those of its controlling interest affiliates.
An overstatement of ending merchandise inventory in the current period results in an
overstatement of cost of goods sold in the current period.
The asset turnover ratio is a way to evaluate how well a company can pay its short-term
liabilities.
In order to keep accurate records about the collection of cash for a previously written
off account, collection of cash for a previously written off account, a business should
re-establish the Accounts Receivable by crediting the receivable account.
A debit always means a decrease, and a credit always means an increase.
Qtopia Electric Company uses the direct method to prepare its statement of cash flows.
Qtopia has reported cost of goods sold of $85,000 on its income statement for 2017. If
the balance in Accounts Payable, for merchandise inventory suppliers only, has
decreased by $8,000 during the year, then $8,000 needs to be subtracted from $85,000
to calculate payments to suppliers for merchandise inventory purchases.
In reviewing the T-account for Accounts Payable, you find that the beginning balance is
zero, the total increases are $7,200 and the total decreases are $4,000. This means that
the ending balance of the account is a credit balance of $3,200.
The Public Company Accounting Oversight Board is a watchdog agency that monitors
the work of independent accountants who audit public companies.
A publicly traded company in the United States does not come under Securities and
Exchange Commission regulations as long as it follows the rules of GAAP.
Ocean Auto Parts Company uses the direct method to prepare its statement of cash
flows. Refer to the following information reported for 2017:1. Sales Revenue, $520,000
2. Accounts Receivable, beginning balance, $99,000
3. Accounts Receivable, ending balance, $62,000Compute the collections from
customers.
A) $557,000
B) $458,000
C) $161,000
D) $359,000
Zebra, Inc. cost of goods sold for the year is $2,300,000, and the average merchandise
inventory for the year is $139,000. Calculate the inventory turnover ratio of the
company. (Round your answer to two decimal places.)
A) 6.04 times
B) 16.55 times
C) 8.27 times
D) 93.96 times
Which of the following describes a debenture?
A) a bond that matures in installments at regular intervals
B) a bond that gives the bondholder a claim for specific assets
C) a bond that matures at one specified time
D) a bond that is not backed by specific assets
On August 31, 2016, Peter Services received $3,500 in advance of performing the
service. Which journal entry is needed to record the receipt of cash?
A) Debit Unearned Revenue $3,500, and credit Cash $3,500.
B) Debit Cash $3,500, and credit Service Revenue $3,500.
C) Debit Unearned Revenue $3,500, and credit Service Revenue $3,500.
D) Debit Cash $3,500, and credit Unearned Revenue $3,500.
A stream of equal cash payments made at equal time intervals is called a(n) ________.
A) present value
B) annuity
C) compound interest
D) future value
Which of the following is a source document that provides the evidence and data for
accounting transactions?
A) Journal
B) Sales invoice
C) Ledger
D) Trial balance
A liability created when a business collects cash from customers in advance of
providing services or delivering goods is called a(n) ________.
A) notes receivable
B) unearned revenue
C) accrued liability
D) service revenue
Cash is a(n) ________ account and has a normal ________ balance.
A) asset; debit
B) liability; credit
C) liability; debit
D) asset; credit
Which of the following remains the same regardless of the inventory costing method
used by a company? Assume the cost of inventory is rising.
A) purchases
B) cost of goods sold
C) ending merchandise inventory
D) net income
On July 1, Alpha, Inc. prepaid rent for a small equipment storage area. Alpha paid
$20,000 to rent the area from July 1 through the end of the year. Provide the journal
entry needed on July 1 when the payment is made. (Ignore explanation). Assume the
deferred expense is initially recorded as an asset.