Match the term with its definition. (There are more definitions than terms.)
TERM
_____ (1) Duality Of Effects
_____ (2) Journal Entry
_____ (3) Posting
_____ (4) Debit
_____ (5) Chart Of Accounts
_____ (6) T-Account
_____ (7) Credit
_____ (8) Cost Principle
DEFINTION
A. A journal entry that lowers the balance of the account.
B. When journal entries are recorded in the appropriate T-account.
C. The concept that a company must keep separate accounts by time period.
D. A simplified version of an account in the General Ledger.
E. The mechanism used to record each transaction in the General Journal.
F. When a company’s balance sheet has been verified by an outside auditor.
G. The concept that any transaction must have at least two effects on the accounting
equation.
H. When a dollar value is assigned to an item recorded in the accounting system.
I. Compares balance sheet items from two different time periods.
J. An amount that is posted on the left side of a T-account or ledger.
K. The principle that a company should use the least optimistic measure, when
uncertainty exists.
L. Assets are initially recorded at the amount paid to acquire them.
M. A journal entry that raises the balance of the account.
N. A balance sheet where assets appear on the top, liabilities in the middle and
stockholders’ equity appears on the bottom.
O. An amount that is posted on the right side of a T-account.
P. A summary of account names and numbers.
A company uses a weighted-average perpetual inventory system. The following
transactions took place during the month of August:
What is the per-unit value of ending inventory on August 31?(Round each per unit cost
to two decimal points.)
A) $12.00
B) $13.80
C) $15.42
D) $16.00
E) $17.74
A company sells a long-lived asset that originally cost $200,000 for $50,000 on
December 31, 2016. The Accumulated Depreciation account had a balance of $110,000
after the current year’s depreciation of $45,000 had been recorded. The company should
recognize a:
A) $100,000 loss on sale.
B) $40,000 gain on sale.
C) $40,000 loss on sale.
D) $25,000 loss on sale.
Companies are concerned about the cost of extending credit for all the following
reasons except the:
A) time delay in receiving payment.
B) expense of the extra goods that must be produced or purchased for resale.
C) risk of nonpayment.
D) administrative costs associated with extending credit.
On December 1, 2015, Newco borrowed $200,000 from First National Bank, and
signed a 9% note payable due in one year. Interest on the note is due at maturity.
Required:
Part a. Prepare the journal entry to record the borrowing transaction.
Part b. Prepare the required adjusting entry on December 31, 2015.
Part c. Prepare the journal entry to record the payment of the interest on December 1,
2016.
Part d. Prepare the journal entry to record the payment of the note on December 1,
2016.
Harney Inc. uses the percentage of credit sales method of estimating doubtful accounts.
The Allowance for Doubtful Accounts has an unadjusted credit balance of $2,700 and
the company had $140,000 of net credit sales during the period. Harney has
experienced bad debt losses of 4% of credit sales in prior periods. After making the
adjusting entry for estimated bad debts, what is the ending balance in the Allowance for
Doubtful Accounts account?
A) $8,300
B) $5,400
C) $2,900
D) $5,600
Which of the following is calculated by dividing net income by revenues?
A) Gross profit margin
B) Current ratio
C) Net profit margin
D) Asset turnover
Choose the appropriate letter to match the term and the definition. Not all definitions
will be used.
Term
1) _____ Time-Series Analysis
2) _____ Common-Size Financial Statements
3) _____ Management Discussion and Analysis
4) _____ Price/Earnings Ratio
5) _____ Earnings Per Share
6) _____ Comprehensive Income
7) _____ Discontinued Operations
8) _____ Net Income
Definition
A) The practice of reporting accounting data in the national monetary unit.
B) A nonrecurring item associated with abandoning or selling an operation.
C) The earnings of a company after taxes.
D) An increase in an asset or a decrease in a liability that results from peripheral
activities.
E) After-tax earnings adjusted for gains and losses that may disappear before they are
realized.
F) A section of the annual report that can be used in interpreting the results of financial
statement analysis.
G) The ratio calculated by dividing the net income by the number of common shares
outstanding.
H) The ratio calculated by dividing the price of a share of stock by the earnings per
share.
I) Also known as ratio analysis.
J) A nonrecurring item on the income statement that reflects gains and losses associated
with extraordinary events.
K) Another name for a trend analysis.
L) The practice of reporting information in percentages rather than monetary amounts.
Katy Company uses the allowance method. Katy writes off a customer account balance
when it becomes clear that the particular customer will never pay. How will this
write-off affect the company’s net income and accounts receivable turnover ratio?
A) Net income and the account receivable turnover ratio will both decrease.
B) Net income will decrease; the account receivable turnover ratio will not change.
C) Net income will not change; the account receivable turnover ratio will decrease.
D) Net income will not change; the account receivable turnover ratio will not change.
A company made a bank deposit on September 30 that did not appear on the bank
statement dated September 30. In preparing the September 30 bank reconciliation, the
company should:
A) deduct the deposit from the bank statement balance.
B) send the bank a debit memorandum.
C) deduct the deposit from the September 30 book balance and add it to the October 1
book balance.
D) add the deposit to the end cash balance per bank statement.
The most commonly used inventory costing method in the U.S. is:
A) FIFO.
B) specific identification.
C) LIFO.
D) weighted average.
Use the information above to answer the following question. What is the depreciation
expense for the first year using the double-declining-balance method?
A) $52,800
B) $57,600
C) $53,000
D) $55,200
Internal users of financial data include:
A) investors.
B) creditors.
C) management.
D) regulatory authorities.
Manning Company updates its inventory periodically. The company’s beginning
inventory was $2,700 and purchases were $5,600 during the year. The company’s
ending inventory count was $5,000. What was the amount of its cost of goods sold?
A) $3,300
B) $8,300
C) $13,300
D) $2,100