What does the phrase, “Revenue is recognized at the point of sale” mean?
a.Revenue is recorded in the accounting records and reported on the income statement
when goods are sold and delivered to a customer.
b.Revenue is recorded in the accounting records when the goods are received from a
supplier, and reported on the income statement when sold to the customer.
c.Revenue is recorded in the accounting records and reported on the income statement
when the cash is received from the customer.
d.Revenue is recorded in the accounting records when the goods are sold to a customer,
and reported on the income statement when the cash payment is received from the
customer.
Calculate the discount rate that Mallory received in each of these transactions.
a.Mallory purchased office supplies costing $450 and paid within the discount period
with a check for $425.
b.Mallory purchased merchandise for $1,900. It paid within the discount period with a
check for $1,870.
Given below are several ratios. Select the accounts or amounts that would be used in
order to calculate the ratio. You will have more than one response to each ratio. Some
accounts or amounts may not be used at all. (Select all that apply.)
Times interest earned ratio
a.Total liabilities
b.Total stockholders’ equity
c.Net income
d.Interest expense
e.Income tax expense
f.Cash flow from operations before interest and tax payments
g.Cash paid for acquisitions
h.Cash flow from operations
From the following choices, select the answer that describes the effect on working
capital as a result of the transaction.
a.Working capital will increase
b.Working capital will decrease
c.Working capital will not change
Purchased inventory on account
Match the inventory-related accounts to costs that may be included in inventories for
retailers and manufacturers.
a.Merchandise Inventory
b.Raw Materials
c.Work in Process
d.Finished Goods
e.Cost of Goods Sold
Costs of direct materials, overhead, and direct labor used in goods that have been sold.
All of the following statements are true except:
a.under IFRS, an unclassified balance sheet based on the order of liquidity is acceptable
only when it provides more reliable information than a classified one.
b.U.S. standards require a classified balance sheet with liabilities in order by size or by
order of liquidity.
c.IFRS require companies to present classified balance sheets.
d.U.S. standards do not require a classified balance sheet.
Match the following terms with the best definitions for questions 212 through 219.
a.Purchase requisition.
b.Receiving Report.
c.Vendor Invoice.
d.Check.
e.Control procedures.
f.Inventory count.
g.Segregation of duties.
h.Source document control.
A form used for verification that the items originally requested have been received.
For each transaction select the letter of the type of adjustment that would be required.
a.Deferred expense
b.Deferred revenue
c.Accrued liability
d.Accrued asset
The cost of commissions to salesmen that has been earned, but not paid at the end of
the accounting period is recorded
Match the following terms with the best definitions for questions 212 through 219.
a.Purchase requisition.
b.Receiving Report.
c.Vendor Invoice.
d.Check.
e.Control procedures.
f.Inventory count.
g.Segregation of duties.
h.Source document control.
Form sent by the seller to the buyer as evidence of a sale
Match the most probable matching method to the costs listed below
a.Directly match a specific revenue
b.Indirectly match with the period during which it will provide revenue
c.Immediately recognize because no future benefits are expected.
Commissions earned by sales people
At the end of 2015, the unadjusted accounting records for Coney Corporation contain
the following selected accounts and balances.
A)Coney has not paid its employees for the final 3 days in 2015. The amount owed is
$700.
How much wage and salary expense should Bacon report for its year ending December
31, 2015?
B)What adjustments would you expect Coney to make at year end that would result in
additional revenue as a result of the accounts listed?
Match the selected items from a classified balance sheet and multiple-step income
statement to the section in which they would appear on the classified balance sheet or
the income statement.
a.Current Assets (balance sheet)
b.Property, Plant, & Equipment (balance sheet)
c.Current Liabilities (balance sheet)
d.Long-term Liabilities (balance sheet)
e.Stockholders’ Equity (balance sheet)
f.Operating Revenue (income statement)
g.Operating Expenses (income statement)
h.Other Revenue & Expenses (income statement)
i.Income Taxes (income statement)
Wages payable
Match the action with the category of internal control procedures
a.One department should check on another
b.Internal audit staff ensure all is working as intended
c.Accounting and cash collection is properly separated
d.Blank checks are locked at all times when not in use
e.Origination of initial entry into accounting system
f.Specific authority is given by management for the performance of activities.
Safeguarding assets
Refer to the data for Benton Corporation.
If the aging approach is used to estimate bad debts, what should the balance in the
Allowance for Doubtful Accounts be after the bad debts adjustment?
a. $26,900
b. $14,900
c. $13,200
d. $11,500
Select the ratio that each statement below most properly satisfies.
a.Dividend yield ratio
b.Cash flow from operations to capital expenditures ratio
c.Debt service coverage ratio
d.Return on common stockholders’ equity ratio
e.Times interest earned ratio
f.Asset turnover ratio
g.Debt-to-equity ratio
h.Dividend payout ratio
i.Price/earnings ratio
The relationship between net sales and total assets
Match the following characteristics with the statements about each qualitative
characteristic’s importance.
a.Consistency
b.Materiality
c.Conservatism
d.Comparability
e.Reliability
f.Relevance
g.Understandability
Accounting information must be verifiable and faithfully represent actual transactions.
Assets are unexpired costs, and expenses are expired costs.
a.True
b.False
Which of the following statements regarding contingencies is true?
a.Contingencies that are probable and not estimable appear on the balance sheet.
b.Contingent assets are recorded on the balance sheet, but not in the notes to the
financial statements.
c.Contingencies that are probable and not estimable are disclosed in the notes to the
financial statements.
d.Contingencies that are remote but estimable are disclosed in the notes to the financial
statements
The following unadjusted amount was reported on Rental Entertainment Corporation’s
accounting records at December 31, 2015:
A)Determine the effect on the accounting equation of any adjusting entries necessary at
December 31, 2015, for each of the following transactions:
1)During the year, Rental Entertainment sold 12-month subscriptions for its newly
developed Internet service. Half of the subscriptions began October 1, 2014, while the
other half began December 1, 2015.
2)Rental estimates its income taxes to be 30 percent of its estimated income of
$60,000
B)
Prepare the current liabilities section of Rental’s balance sheet by listing any current
liabilities and the related amounts as a result of the adjustments in Part A
