A company makes a deferral adjustment that decreased a liability. This must mean that
a(n):
A) expense account was decreased by the same amount.
B) expense account was increased by the same amount.
C) revenue account was increased by the same amount.
D) revenue account was decreased by the same amount.
The following company purchases and sells collectors’ coin sets. The company uses the
LIFO inventory costing method. In the first two sections of the table below, each coin
set is identified by its letter and its cost. The third section indicates when coin sets were
sold.
Required:
For each inventory costing method given below, fill in the blanks to indicate the letter
of the coin set which will be used to calculate either cost of goods sold or the cost of
ending inventory.
Part a. Periodic Inventory System
Cost of Goods Sold = _____ + _____ + _____ + _____ + _____
Ending Inventory = _____ + _____ + _____
Part b. Perpetual Inventory System
Cost of Goods Sold = _____ + _____ + _____ + _____ + _____
Ending Inventory = _____ + _____ + _____
Flynn Company uses a perpetual inventory system and reported $500,000 of inventory
at the beginning of the month based on a physical count of inventory. During the month,
the company bought $45,000 of inventory and sold inventory that had cost $30,000. At
the end of the month, the physical count of inventory shows $510,000 on hand. How
much shrinkage occurred during the month?
A) $35,000
B) $25,000
C) $5,000
D) $10,000
An account used in the periodic inventory system that is not used in the perpetual
inventory system is:
A) Inventory
B) Sales
C) Sales Returns & Allowances
D) Purchases
CSI Inc. uses accrual basis accounting. During April, the company recorded sales
revenue of $50,000 from sales of goods to customers who promised to pay in May.
During May, the company received payment from these customers of $45,000. No other
transactions with customers took place during these two months. Which of the
following statements about income statement accounts is correct?
A) The Sales Revenue account will have a $45,000 balance at April 30.
B) The Accounts Receivable account has a balance of $5,000 at May 31.
C) The Accounts Payable account has a balance of $5,000 at May 31.
D) The Sales Revenue account will have a $45,000 balance at May 31.
If Salaries and Wages Expense is $450,000 during the year and the beginning and
ending balances of Salaries and Wages Payable are $18,000 and $16,500, respectively,
the cash paid to employees is:
A) $450,000.
B) $433,500.
C) $448,500.
D) $451,500.
A company paid $500,000 to purchase equipment and $15,000 to have the equipment
delivered to and installed in the company’s production facilities. The equipment is
expected to be used a total of 28,000 hours throughout its estimated useful life of six
years. The estimated residual value of the equipment is $5,000. The company began
using the equipment on May 1, 2016. The company has an October 31, 2016 year-end.
It used the equipment for a total of 11,200 hours between May 1 and October 31, 2016.
Using the units-of- production method, what amount of depreciation expense would the
company report in the income statement prepared for the year-ended October 31, 2016?
A) $102,000
B) $198,000
C) $204,000
D) $206,000
Use the information above to answer the following question. The journal entry prepared
by Seconds Best to record the March sales would include a debit to:
A) Cash for $10,000, debit to Accounts Receivable for $60,000, and credit to Sales
Revenue for $70,000.
B) Cash for $10,000, debit to Unearned Revenue for $60,000, and credit to Sales
Revenue for $70,000.
C) Cash for $10,000, debit to Accounts Payable for $60,000, and credit to Sales
Revenue for $70,000.
D) Cash and credit to Sales Revenue for $10,000.
A company decides to start allowing its customers to pay with national credit cards and
PayPal. This decision would:
A) slow down its cash collection.
B) speeds up its cash collection, but increase losses from customers writing bad checks.
C) speeds up its cash collection and reduce losses from customers writing bad checks.
D) slow down its cash collection, but decrease losses from customers writing bad
checks
Use the information above to answer the following question. What journal entry will
record the reissuance on July 3?
A) Debit Cash and credit Treasury Stock for $20,000
B) Debit Cash for $20,000, credit Treasury Stock for $16,000, and credit Additional
Paid-in Capital for $4,000
C) Debit Cash for $20,000, credit Common Stock for $6,000, and credit Additional
Paid-in Capital for $14,000
D) Debit Cash for $20,000, credit Common Stock for $16,000, and credit Gain on
Reissuance of Stock for $4,000
Which of the following would not be reported as a liability on the balance sheet?
A) Accounts Payable
B) Common Stock
C) Notes Payable
D) Salaries and Wages Payable
Urban Outsiders has a building that originally cost $375,000. The company expects to
be able to sell the facility for $107,000 at the end of its useful life. The balance of the
related Accumulated Depreciation account is $258,000. The depreciable cost of the
facility is:
A) $117,000.
B) $151,000.
C) $268,000.
D) $107,000.
In the U.S., public companies have to be audited by independent auditors using rules
approved by the:
A) International Accounting Standards Board (IASB).
B) Public Company Accounting Oversight Board (PCAOB).
C) Financial Accounting Standards Board (FASB).
D) American Institute of Certified Public Accountants (AICPA)..
Use the information above to answer the following question. What amount is
represented by letter C in the statement of cash flows?
A) $14,000
B) $10,000
C) ($14,000)
D) $0