Acct 305

Name: Date: Alpha Company''s stock trades on the NY stock exchange. For Alpha Company, revenue on account amounted to $5,150. Cash collections of accounts receivable amounted to $2,300. Expenses incurred on account were $2,100. Cash paid on accounts payable was $1 ,950. Alpha''s net income was A) $2,900 B) $3,050 C) $350 D) $200 2. Hamilton Company began operations in 2009. During the year, the following cash transactions occurred: 1 . issued stock for $40,000 2. borrowed $20,000 from bank 3. provided services to customers for $53,000 cash 4. aid back $8,000 of the loan from the bank 5. paid rent expense, $9,000 . purchased equipment costing $15,000 7. paid operating expenses, $25,000 8. paid $4,000 dividend to stockholders What was the company''s net cash flow from operating activities? A) $15,000 $19,000 $52,000 ($48,000) 3. The first organization created with the purpose of establishing generally accepted Opinions Standards Concepts Accounting Research Bulletins 4. Merlin Inc. has the following transactions and must make adjusting entries on Dec. 31 . Which of the following is an example of an accrued revenue?

A) On September 1, the company loaned $3,000 to an officer who will repay the loan in ne year at an annual interest rate of 12 percent. B) The company owed wages to 10 employees who worked three days at $120 each per day at the end of December. The company will pay employees at the end of the first week of next month. C) The company received a $220 utility bill for electricity usage in December to be paid next month in January. D) Collected $900 rent for the period December 1, this year, to March 1 next year. The amount was added to Unearned Rent Revenue on December 1, this year. 5.

A company paid $2400 for a two-year insurance premium on July 1, this year. The amount was debited to Prepaid Insurance. On Dec. 31 the company made an adjusting entry. This adjusting entry was a(n) A) accrued asset deferred asset accrued expense deferred expense 6. A generally accepted method of valuation is: Accounts Receivable Trading Securities Equipment at at Lower of Net Realizable Value Inventories Historical Cost Yes Book Value Cost or Market A) Yes No Yes B) Yes 7. According to Statement of Financial Accounting Concepts No. 2, timeliness is an ingredient of the primary quality of Relevance A) 8.

Reliability Adjusting Journal entries have all of the following characteristics EXCEPT A) they are always made at the end of a period hey never touch cash they always debit an expense account they always affect an income statement account and a balance sheet account 9. Which of the following statements is associated with the accrual basis of accounting? Revenues are recognized in the period they are earned, regardless of the time period the cash is received. B) A minimum amount of record keeping is required. This method is used less frequently by businesses than the cash method of accounting.

D) The timing of cash receipts and disbursements is emphasized 10. Penn Company reported the following information for 2010: 50,000 Operating expenses on available-for-sale securities 2,000 55,000 Unrealized holding gain 40,000 Cash dividends received on the securities For 2010, Penn would report other comprehensive income of A) $135,000. B) $137,000. C) $ 42,000. D) $ 40,000. 11. Mune Company recorded Journal entries for the declaration of $40,000 of dividends, the $32,000 increase in accounts receivable for services rendered, the purchase of equipment for $21 ,OOO, and depreciation on the equipment of $3,000.

What net effect do these entries have on owners'' equity? A) Decrease of $71 ,OOO. Decrease of $1 1 ,OOO. Increase of $29,000. Decrease of $32,000. 12. Information about which one of the following is included in current financial statements? A) historical data about hard assets forward-looking data non-financial measurements soft assets 13. During the first year of Wilkinson Co. ''s operations, all purchases were recorded as assets. Store supplies in the amount of $19,350 were purchased. Actual year-end store supplies amounted to $6,450.

The adjusting entry for store supplies will A) debit Accounts Payable for $6,450. decrease store supplies by $6,450. increase expenses by $12,900. 14. Simmons Corporation reports the following information: Correction of understatement of depreciation expense in prior years, net of tax Dividends declared $ 430,000 320,000 Net income 1,000,000 Retained earnings, 1/1110, as reported Simmons should report retained earnings, 12/31110, as adjusted at 15. Which organizational form provides limited liability?

Sole Proprietorship Corporation Partnership Sole Proprietorship and Partnership 16. The post-closing trial balance consists only of asset and liability accounts nominal or temporary accounts revenue and expense accounts real or permanent accounts 7. What accounting concept Justifies the usage of accruals and deferrals? A) Consistency characteristic B) Materiality constraint C) Going concern assumption D) Monetary unit assumption 18. Lopez Company received $6,400 on April 1, 2010 for one year''s rent in advance and recorded the transaction with a credit to a nominal account.

The December 31, 2010 adjusting entry is A) debit Unearned Rent and credit Rent Revenue, $4,800. debit Rent Revenue and credit Unearned Rent, $4,800. debit Unearned Rent and credit Rent Revenue, $1 ,600. debit Rent Revenue and credit Unearned Rent, $1 ,600. 19. If an amount has been recognized, that means it has been collected or paid in cash recorded in the Journal accrued or deferred posted to the ledger 20. In the conceptual framework for financial reporting, what provides "the why"--the goals and purposes of accounting?

A) Measurement and recognition concepts such as assumptions, principles, and constraints B) Qualitative characteristics of accounting information D) Elements of financial statements 21. Gold and Silver Company had the following adjusted trial balance on Dec. 31 , 2010: cr Cash 10,ooo Supplies 1,250 Equipment 17,000 Accumulated Depreciation ,250 Note Payable 12,000 Stock Retained Earnings 4,000 Sales Revenue Supplies Expense 3,000 Salaries Expense 6,000 Dividends 39,250 Prepare the closing entries on Journal paper for Gold and Silver Company.

The following selected accounts are taken from the Psychic Corporation''s December 31, 2008 adjusted trial balance. Interest expense 4,900 Depreciation expense (sales fixtures) 8,500 Sales returns and allowances 11,300 Advertising expense 11,100 Common stock, $10 par 110,000 Administrative salaries expense 28,500 Dividend Revenue 1 ,ooo Sales 338,000 Gain on sale of sales fixtures 5,000 Income tax expense

Sales salaries expense 16,500 Cost of Goods Sold 1 57,700 Bad Debt Expense (administrative) 1 ,900 Depreciation expense office 7,000 Tax rate In addition to the preceding account balances, you have available the following information: 1 . In the middle of December 2008, the company incurred a material extraordinary $5,000 pretax loss as a result of a freak flood of a river that had never flooded before. 2. On April 1, 2008 the company sold segment M, which had been unprofitable for several years. Segment M was sold at a pretax loss of $7,000. Prepare a multi-step income statement in good form. Answer Key c