When reconciling a bank account, the company has to prepare an adjusting entry for
outstanding checks.
Cost of goods sold is equal to beginning inventory plus the net cost of purchases minus
_____.
A company’s records indicate the balance in its checking account at the end of the
month is $3,918. Comparing the company’s records with the monthly bank statement
reveals several additional cash transactions, such as deposits in transit of $4,022, three
outstanding checks totaling $497, a $30 bank service charge, a $1,000 note receivable
collected by the bank plus interest earned of $35, and an NSF check for $150.
Determine the company’s adjusted cash balance and prepare the journal entries
necessary to adjust the account balance.
A chart of accounts is prepared to determine whether the books have gotten out of
balance.
Refer to Baker’s Pride Bakery. Which statement indicates the financial position of the
company? What information is provided on that statement that indicates the “financial
position” of the company? Explain.
The first step in the accounting cycle is to ________________ transactions.
Finicky Freight purchased a truck at the beginning of 2012 for $80,000. The company
decided to depreciate the truck over a 5-year period using the double-declining-balance
method. The company estimated the equipment’s salvage value at $8,000. Show how
the costs should be presented on the financial statements at December 31, 2013. Label
the statements properly.
The collection of accounts receivable results in a cash ____________________
reported in the operating activities section of the statement of cash flows using the
indirect method.
Prepare a Balance Sheet for Backus Tractor Sales in good form.
Match the costs that might be included as part of the cost of inventory to the listed
accounting treatment. (Choices may be used more than once.)
a. Add to inventory cost c. Not an inventory cost
b. Subtract from inventory cost
18. Invoice price paid for resale goods.
19. Freight costs incurred by the buyer to ship goods to its place of business.
20. Freight costs incurred by the seller to ship goods to its customers.
21. Returned goods to the seller.
22. Paid for purchased goods within the discount period.
Three common categories of long-term assets are: 1) property, plant, and equipment, 2)
long-term investments, and 3) intangibles.
Adjusting entries must be made prior to the preparation of financial statements.
An example of a current liability is the current maturity of a long-term debt.
Because the cash received from the sale of long-term assets is reported in the investing
activities section of the statement of cash flows, any gain or loss is ignored when
reporting the cash flow from operating activities under the indirect method.
During periods of rising prices, the ____________________ method results in the cost
of goods sold expense on the income statement being a close approximation of the
replacement cost of the goods sold.