Finance Accounting

Question 1

Stockholders equity can be described as claims on A. Expense B. Liability C. Assets D. Revenue E. None

Answer 1

C

Question 2

Stockholders equity consists of two parts

Answer 2

: common stock and retained earnings

Question 3

On the balance sheet, which financial statement is prepared first

Answer 3

income statement

Question 4

The rules adopted by the accounting profession as guides in measuring, recording, and reporting the financial affairs and activities of a business are: a. Both broad and specific principles. b. Known as geberally accepted accounting principles. c. Abbreviated as GAAP. d. Both b and c. e. All of the above.

Answer 4

E

Question 5

28. The primary objective of financial accounting is: a. To help organizations keep track of financing activities b. To provide financial statements to help users analyze an organization’s activities c. To help an organization define its ideas, goals, and actions. d. To help an organization keep track of its buying and selling of resources. e. All of the above

Answer 5

B

Question 6

Which one of the following is not qualitative characteristic

Answer 6

chaptism ————————————————————————– no idea what this is haha >

Question 7

A 20,000 machine is purchased by paying 5000 cash and signing a note payable for the remainder

Answer 7

the journal entry should involve a CREDIT on cash and debit on notes payable ————————————————————————- Inventory 20000 Cash 5000 Notes Payable 15000 *Notes Payable is normal credit balance. Does this sound familiar? Normal Debit: account increases with a debit Normal Credit: account increases with a credit.

Question 8

Type of activity is the following “sold 2000 shares of a company own common stock for cash A. Operating activities B. Financial activities C. Investing activities D. Non cash transaction E. None

Answer 8

B. financing activity

Question 9

An accounts receivable previously written off as uncollectible is finally collected

Answer 9

a reversal of the entry made to write off the account & recording the cash collection on the account ————————————————————————- Now: two steps: (1) a reversal of the entry that was made to write off the account, and (2) recording the cash collection on the account: 1.Reversal: Accounts Receivable XXXX Allowance for Uncollectible Accounts XXXX 2. Recording Collection: Cash XXXX Accounts Receivable XXXX

Question 10

Which statement is false regarding the lower cost of market (LCM) method of inventory?

Answer 10

NOT ANSWER BUT LCM MEANS: LCM is an approach to valuing & reporting inventory assets such as inventory to be valued at either historical cost or at current replacement cost

Question 11

Interest = 8 , PV = 10000, N = 10, FIND FV=?

Answer 11

Answer: 21589 ————————————————————————– FV = PV*(1 + r) ^ n FV = 10000 x (1+.08) ^ 10 FV = 10000 x 2.158925 FV = 21589.25

Question 12

A dress shop makes a large sale for 1000 on November 30, sent statement on December 5, check received by shop on December 10 When is it recorded

Answer 12

December 10 ————————————————————————- Recognized/ recorded when the revenue is earned: November 30.

Question 13

Company A current liability equal 500,000, working capital 120,000. Company B same amount of working capital, but total current liability of 30,000. The company with the better working capital position is? A. They both has exact the same working capital B. Company B C. Company A D. Don’t determined with the information given E. None

Answer 13

B ————————————————————————– Is the wording for this question correct? Working Capital = Current Assets - Current Liabilities. Since Company B has lower liabilities it looks like they have the better position, but im not sure.

Question 14

Depreciation by Straight line method

Answer 14

company’s expense and equal amount of the depreciation of the assets useful life ————————————————————————– (Cost of the Asset - Scrap Value)/ Useful Life http://puu.sh/5iDOP.png

Question 15

Declining-balance method

Answer 15

an accelerated depreciation method that yields larger depreciation expense during the early years of an asset’s life and less depreciation in the later years ————————————————————————– http://puu.sh/5iDMz.png

Question 16

Units of activity method

Answer 16

charges a varying amount to expense for each period of an asset’s useful life depending on its usage ————————————————————————- Example - Units of Usage (Activity) Depreciation Plastic LTD purchases a steel mold costing $1 million to be used in the production of plastic glasses. The mold could be used in 8 production batches after which it will have a scrap value of $.2 million. During the first year, the company manufactures 2 batches of glasses. Depreciation charge for the year is calculated as follows: Depreciation Expense = ($1 - $0.2m) x 2 / 8 = $0.2 million

Question 17

An obligation of a business that claims of others against the assets of the business is called A. Expense B. Liability C. Assets D. Revenue E. None

Answer 17

B

Question 18

Accounting Equation is

Answer 18

Assets = Liability + Stockholders Equity

Question 19

The common characteristic possessed by all assets is

Answer 19

future economic benefit

Question 20

The relevant measure of a value of the assets of a company that is going out of business is there

Answer 20

current market value

Question 21

Accounting information should be verifiable in order to enhance

Answer 21

reliability

Question 22

What is retained earnings

Answer 22

Answer: it is the net income retained in the corporation

Question 23

If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called unearned legal fees, the end of the period adjusting entry is to record is

Answer 23

debit legal fees earned & credit unearned legal fees

Question 24

FV = 400, I= 12%, N= 2 years,

Answer 24

319

Question 25

FV = 900, I = 6%, n=3, solve for PV

Answer 25

756

Question 26

28. the book value of the plant asset is the difference between the a. replacement cost of the asset + history b. cost of the asset + depreciation c. cost of the asset - accumulated depreciation d. proceeds received from the sale of the asset e. none of the above

Answer 26

B or C -------------------------------------------------------------------------- Cost - Accum. Dep. C.

Question 27

29. truck costing 12000, 9000 of accumulated depreciation has been recorded was discarded as having no value. The entry to record in this event would include a a. gain of 3000 b. loss of 3000 c. credit accumulated depreciation for 9000 d. credit accumulated depreciation for 120000 e. e. none of the above

Answer 27

A or B ------------------------------------------------------------------------- Cash 0 Accum. Dep 9000 Loss on Disposal of Asset 3000 Equipment 12000 Loss since the book value (12000 - 9000 = 3000) is greater than the value of the sale of the truck (0 since they threw it away). B.

Question 28

Liabilities of a company are owed to

Answer 28

creditors

Question 29

If owners equity is 30000, and liabilities are 73000, then asset equal

Answer 29

: 103,000 Asset=OE+ L=103,000

Question 30

Liabilities are

Answer 30

: are debts and obligations

Question 31

Treasury stock is classified as

Answer 31

contra equity account

Question 32

An accounts receivable previously written off as uncollectable is finally collected. The amount collected was $500. Which of the following journal entries

Answer 32

cash 500 -------------------------------------------------------------------------- 1.Reversal: Accounts Receivable 500 Allowance for Uncollectible Accounts 500 2. Recording Collection: Cash 500 Accounts Receivable 500

Question 33

What is accumulation depreciation

Answer 33

account shows the total amount of depreciation that the company has expensed thus for in the assets life

Question 34

Which one is for auditors

Answer 34

: A & C

Question 35

Inventory of product Y at January 1 consisted of 15000 units valued at a cost of $1125000. Purchases during the year were March 20 500 units at 7.74 per unit - $ 158875 November 28 8500 units at 8.44 per unit = $71740 Compute the December 31 inventory, using the last in, first out method

Answer 35

None of the above Add all the $

Question 36

Last in first – out method A. 250,000 B. 228,750 C. 234,875 (WA) D. 225,550 E. None \>\>\>\>\>\>\>\>\>\>\>\>\>\>Not sure if this is the question

Answer 36

??? Prob E?

Question 37

Y during accounting period the asset increases by 5,000 equity increased by 1,000. How did liability damage? A. Increase by 6,000 B. Increase by 4,000 C. Decrease by 4,000 D. Decrease by 6,000 E. Decrease by 1,000

Answer 37

B --------------------------------------------------------------------------- Assets = Liabilities + Owners Equity (+5000) ? (+1000) (+4000) Liabiities increase by 4000. B.

Question 38

The revenue recognition principle dictates that revenue should be recognized in the accounting records

Answer 38

when it is earned

Question 39

In the present value calculators, the process of determining the PV(present value) is called

Answer 39

discounting

Question 40

What is the formula to calculate earning per share

Answer 40

Answer: net income / Common stocks outstanding

Question 41

Obsolescence A. Occurs when as asset is at the end of its useful life B. Refers to a condition where plant asset is no longer useful in producing and services. C. Refers to a condition where the capacity of a company’s plant assets is too small to meet the company’s productive demand. (WA) D. Occurs when as assets salvage value is less than its replacement cost E. Does not affect plant asset.

Answer 41

B

Question 42

A non current intangible asset such as leasehold improvements and patents are all subject to: a. amortization. b. depreciation. c. accretion. d. capitalization. e. none of the options listed

Answer 42

A Amortization = Intangible asset Depreciation = Tangible asset.

Question 43

2. Net income results when A. Assets \> liability B. Revenue = expenses C. Revenue \> expenses D. Revenue \< expenses E. None

Answer 43

C

Question 44

. Resources owned by a business are referred to as A. Stockholders equity B. Liability C. Assets D. Revenue E. None

Answer 44

C

Question 45

4. Expenses are incurred A. Only one rare occasion B. To produce asset C. To produce liability D. To generate revenue E. None.

Answer 45

D

Question 46

5. Which is NOT an accounting assumption A. Integrity B. Going concern C. Time period D. Economic entity E. None.

Answer 46

A -------------------------------------------------------------------------- Accounting Assumptions: The Economic Entity Concept The Going Concern The Time Period The Monetary Unit

Question 47

Under the accurate (accrual) basis of accounting

Answer 47

Answer: C. Events that change a company’s financial statements are recognized in the Periods they occur rather than in the period in which cash flow is paid or received

Question 48

What type of activity is the following “sold $ 120,000 worth of product? A. Operating activities B. Financial activities C. Investing activities D. Non cash transaction E. None

Answer 48

A

Question 49

16. The accumulated depreciation account is a (an) A. Contra assets B. Liability C. Assets D. Operating expanse E. none of the listed

Answer 49

A

Question 50

Operating cycle of a company is the average time that is require to go from cash to A. Sales B. Cash C. Inventory D. Accounts Receivable E. None

Answer 50

B/C/D ------------------------------------------------------------------------- Cash to Inventory to Accounts Receivable to Cash; Cash to Cash. B. hopefully o.o

Question 51

Present Value Formula

Answer 51

= Future Value ÷ (1+i) ^ n

Question 52

Price-Earnings Ratio Formula

Answer 52

Answer: (P-E) = STOCK PRICE PER SHARE/ EARNINGS PER SHARE

Question 53

Simple Interest formula

Answer 53

Answer: PRINCIPAL x RATE x Time (p) (i) (n)

Question 54

What is the price earning - ration formula

Answer 54

Market price of a share of common stock/Earnings per share

Question 55

30. Which of the following accounts is used in the calculate of working capital a. retained earnings b. sales c. merchandise inventory d. common stock e. long term debt

Answer 55

C

Question 56

Cash flow has 3 categories

Answer 56

Answer: operating, investing, financing activitie

Question 57

Balance sheet reflects 3 statements

Answer 57

Answer: balance sheet, income statement and cash flow

Question 58

Profit margin is a measure of

Answer 58

Answer: profitability

Question 59

The operating cycle

Answer 59

Answer: is the average time required to collect the receivables resulting from producing revenues

Question 60

A current asset is

Answer 60

Answer: an asset that a company expects to convert to cash or use up within one year

Question 61

An intangible asset

Answer 61

Answer: does not have physical substance, yet often is very valuable

Question 62

Expenses are recognized in cash bases accounting

Answer 62

Answer: when cash is paid

Question 63

Expenses are recognized in accrual bases accounting

Answer 63

Answer: when Incurred

Question 64

52. The cost principle requires that when assets are acquired, they be recorded at a. market value. b. the amount paid for them. c. selling price. d. list price. e. none

Answer 64

B. the amount paid for them. Also call exchange price paid.

Question 65

The accounting method that will be least likely to overstate assets and income is an example of the constraint of

Answer 65

Answer: Conservatism -------------------------------------------------------------------------- In reporting financial data, accountants follow the principle of conservatism, which requires that the less optimistic estimate be chosen when two estimates are judged to be equally likely.

Question 66

The time period assumption states that the economic life of a business can be divided into

Answer 66

Answer: artificial time periods

Question 67

Only those things that can be expressed in money are included in the accounting records

Answer 67

Answer: Monetary unit assumption

Question 68

Every economic entity that can separately be identified is called

Answer 68

Answer: Economic entity assumption

Question 69

A company that receives money in advance of performing a service

Answer 69

Answer: debit cash credit unearned revenue

Question 70

Profit margin

Answer 70

Answer: Net income/Sales---CORRECT

Question 71

3. Intangible asset is a. research and development costs b. copyrights, patents, trademark c. organization cost d. goodwill e. none

Answer 71

B ------------------------------------------------------------------------ This question... B and D are both intangible assets o.o

Question 72

The income statement reports all of the following except: a. Revenues earned by a business b. Expenses incurred by a business c. Assets owned by a business d. Net income or loss earned by a business e. The time period over which the earnings occurred

Answer 72

Answer: Assets owned by a business C ------------------------------------------------------------------------- Assets are reported on the balance sheet (: C.

Question 73

Which one is a balance sheet

Answer 73

Answer: Assets = liabilities +stockholders equity

Question 74

Prime object of a business is to increase equity

Answer 74

Answer: Acquiring assets

Question 75

Amortize provides following benefit

Answer 75

Answer: To …assets users that financial statement and it will

Question 76

A financial statement that reports accounting data a specific date is the

Answer 76

Answer: Balance sheet

Question 77

FASB (financial accounting standards board)

Answer 77

Answer: is the primary accounting standard setting board in the U.S

Question 78

SEC (Securities and Exchange Commission)

Answer 78

Answer: is the agency of the U.S Government that oversees financial markets and accounting standards setting bodies

Question 79

IASB (International Accounting Standards Board)

Answer 79

Answer: is an accounting method used outside the U.S

Question 80

If ending inventory is overstated what effect will there be on cost of good and net income? A. COGS will overstated and Net income overstate B. COGS will overstated and Net income understated C. COGS will understated and Net income overstate D. COGS will understated and Net income understate E. None.

Answer 80

C -------------------------------------------------------------------------- reduces the amount of inventory that would otherwise have been charged to the cost of goods sold during the period. COGS is understated and Net Income will appear larger than it actually is. C.

Question 81

The principle entry business to be accounted for separating distinction from it owner or owners what principle would it be.

Answer 81

Answer: Business entity principle

Question 82

A method of estimating bad debt that in owns cash of outstanding debt

Answer 82

Answer: allowance method

Question 83

Depreciation is the process

Answer 83

Answer: is the process of allocating the depreciable cost of a long-lived asset to a number of years

Question 84

Johnny’s car repair shop started the year with total assets of $60,000 and total liabilities of $ 40,000. During the year the business recorded $100,000 in car repair revenues and $55,000 in expenses, and dividends of $10,000 The Net Income reported for the year was?

Answer 84

Answer: 45,000 ------------------------------------------------------------------------- Net Income = Revenues - Expenses = 100,000 - 55,000 = 45,000

Question 85

What is net income

Answer 85

Answer: retained earnings represent net income, (assets = liabilities)

Question 86

Define and articulate the three basic financial statements. a. The balance (or statement of financial position) describes the financial position of a firm at a particular point in time b. The income statement or a company compares its revenues to its expenses Revenues $20,000 Less Expenses $12,000 NET INCOME $ 8,000 c. The balance sheet and income statement are the traditional financial statements that have been parts of annual reports of companies for many years

Answer 86

? -------------------------------------------------------------------------- No idea about the a, b, c, d. The balance sheet represents a business' assets, liabilities, and shareholders' equity at a specific point in time. The income statement shows revenues, expenses, gains, and losses during a specific period. The cash flow statement shows the amount of cash generated and used by your business in a given period.

Question 87

If the single amount of $1,400 is to be received in 2 years and discount at 12% its present value? Present value $1 0.797 Future value $1 1,254 Present value annuity 1.690 Future value annuity 2,120 A. $502 B. 312 C. 676 D. 331 E. None

Answer 87

? Not D -------------------------------------------------------------------------- Equation:

Question 88

Susana metro invested $ 7,009.87 now, and will receive $20,000 at the end of 11 years. What annual arte of investment will she be earning on her investments? Fixed cost of $ 11 Factor 7% 11 years 2.105 8% 11 years 2.332 9% 11 years 2.580 10% 11 years 2.853 A. 8 % B. 7 % C. 9 % D. 10 % E. None

Answer 88

D -------------------------------------------------------------------------- PVOA = Payment x Annuity (Rate, Time) 20000 = 7,009.87 x ? 20000/7 = ? ? = 2.853 Factor of 2.853 corresponds to 10% rate 11 years. D.

Question 89

What is amount of working capital? Account payable 31,000 Accounts Receivable 57,000 Cash 15,000 Intangible asset 50,000 Inventory 69,000 Long-Term Investment 80,000 Long Liabilities 100,000 Market Scarcity 40,000 Notes payable (Short-term) 28,000 Land build and equipment 670,000 Prepaid expenses 1,000 A. 123,000 B. 151,000 C. 203,000 D. 53,000 E. None

Answer 89

E A (Wrong) ------------------------------------------------------------------------- CA: AR, Cash, Inv, Prepaid expenses CL: AP, NP 142k - 59k E. none

Question 90

Company used Strait-Line depreciation for an item that cost 12,000 had a salvage value of 2,000 and a 5 year useful life After depreciating the assets for 3 complete years, the salvage value was reduced to 1,200 and its total useful life was increased from 5 years to 6 years. Determine the amount of depreciation to be changed against the machine during each of the remaining years of its useful life. A 1,000 B. 1,800 C. 1,467 D. 1,600 E. 2,160

Answer 90

D

Question 91

Jan. 1st, 20X1 William corporation machine cost is 45,000, estimate life is 5 years and salvage value is 3,000, depreciation expense for the first 2 tears. Use straight line method. A. 8,400 : 8,400 B. 9,000 : 9,000 C. 9,600 : 9,600 D. 9,000 : 8,500 E. None

Answer 91

A

Question 92

On October 29, Company concluded a cost’s 4,400 account receivable was uncollectible and that a acet should be written off. What affect will this write off have on this company’s Net Income and Total Assets assuming the allowing method is used to account for bad debts. A. Decrease Net income, no effect on Total assets B. No effect on Net income, no effect on Total assets C. Decrease in Net income, decrease in Total assets. D. Increase in Net income, no effect on Total Assets. E. No effect on Net income, Decrease in Total Assets.

Answer 92

B

Question 93

Balance of 80,000 in Accounts Receivable and 4,000 credit balance in Contra account the customer account of 500 is ……, net realizable upon on the account receivable A. 75,500 (WRONG ANSWER) B. 76,000 C. 76,500 D. 79,500 E. None

Answer 93

?? ------------------------------------------------------------------------- the debit balance in the asset account Accounts Receivable minus the credit balance in the contra asset account Allowance for Uncollectible Accounts 80k - 4k definitely: if the 500 is received, then the answer is 76500. if the 500 isn't part of the contra account, then it doesnt fit into the equation and the answer would be 76000. either B or C.

Question 94

A corporation is investing on a expected return 350,000 in 4 yrs. Interest is 12% 12 % 4 years Present value .636 Future value 1.574 Present value of annuity 3.037 Future value of annuity 4.780 A. 265,764 B. 55,600 C. 137,687 D. 222,600 E. 350,000

Answer 94

D ------------------------------------------------------------------------- 350000 (Expected return) = 1.574 (FV) x initial investment 350000/1.574 = initial initial = 222600 D.

Question 95

16,000:16,000

Answer 95

Answer to one of the questions