ACCT 001 Lecture Notes - Lecture 3: Faithful Representation, Gross Profit, Accrual

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taupesardine275

17 Sep 2020

School

College of The Sequoias

Department

Accounting (ACCT)

Course

ACCT 001

Professor

skaff

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Document Summary

Provides information on an organisations profitability for a period of time. It matches revenues during a period against expenses incurred in earning the revenues. Sales (revenue) cogs = gross profit. Shows the changes during the period in one balance sheet account, namely cash. Shows the receipt of cash and the payment of cash. Individual transactions are normally split into the follow categories. Operating activities: provision of goods and services. Investing activities: acquisition and disposal of certain noncurrent assets. Financing activities: changing the size and composition of the financial structure of the entity. Demands on the quality of financial accounting information. Financial statements need to contain information that is useful to those who are making the decisions (relevance) Financial statements should not be deliberately misleading (faithful representation) Preparing financial statements costs money and takes time (materiality) There needs to be some standard against which an accounting method or number can be judged (gaap)

Related Questions

1) The statement of cash flows is used for _____.

A. showing the relationship of net income to changes in currentassets

B. determining a company%u2019s acceptable level of debtfinancing

C. revealing commitments that may restrict future courses ofaction

D. evaluating the creditworthiness of the organization

2) Nonoperating items on the income statement _____.

A. are revenues and expenses arising from adjusting entries

B. include interest income and expense

C. appear only on corporate income statements

D. appear on the income statement immediately after grossprofit

3) The difference between a single-step and multiple-step incomestatement is that a single-step income statement _____.

A. groups all revenues together and all expenses together, whereasa multiple-step income statement separates certain revenues andexpenses from each other and presents subtotals

B. calculates net income using one method, whereas a multiple-stepincome statement calculates net income using two or moremethods

C. calculates gross profit and operating income, whereas amultiple-step income statement does not

D. shows only 1 year's net income, whereas a multiple-step incomestatement shows multiple years' net income

4) Which one of the following statements is true?

A. The statement of cash flows reports the cash receipts but notcash payments of an entity over a period of time.

B. Both the statement of cash flows and the income statementdetermine the net income for a company.

C. Transactions affecting the sale and the purchase or productionof goods and services are reported in the financing activitiessection of the statement of cash flows.

D. Investing activities in the statement of cash flows includeacquiring and selling long-term assets.

5) The _____ accounting convention uses the acquisition cost minusdepreciation in valuing an asset on the balance sheet.

A. continuity

B. conservatism

C. cost-benefit

D. materiality

6) A new corporation issuing a common, no-par value stock for cashwould include a journal entry a debit to _____.

A. paid-in capital and a credit to retained earnings.

B. cash and a credit to common stock.

C. retained earnings and a credit to cash.

D. cash and a credit to retained income.

7) Which type of organization would most likely havework-in-process inventory?

A. A retail store

B. A manufacturing company

C. A service organization

D. A real-estate investment trust

8) _____ is a measure of income or profit divided by the investmentrequired to obtain that income or profit.

A. Return on sales

B. Capital turnover

C. Return on investment

D. Residual income

9) The following information is available for the PeterCompany:

Sales: $150,000

Invested capital: $156,250

ROI: 10%

The return on sales is _____.

A. 10.00%

B. 10.42%

C. 62.50%

D. 9.60%

10) The following information is available for the PeterCompany:

Sales: $500,000

Invested capital: $312,500

ROI: 10%

The return on sales is _____.

A. 10.00%

B. 6.250%

C. 1.000%

D. 62.50%

15 ACCOUNT QUESTIONS! I NEED HELP WITH ASAP! THANK YOU SOMUCH!

1. A company reported total stockholders' equity of $290,000 onits Dec 31, 2015, balance sheet. The following information isavailable for the year ended Dec 31, 2016:

Revenues	$620,000
Expenses	330,000
Liabilities, on December 31, 2016	144,000

3. Samores Company sold merchandise on account for $3,000 toCookie Company with credit terms of 2/10, n/30. Five days later,Cookie Company returned $1,000 of merchandise that was damaged,along with a check to settle the account.

What entry does Samores Company make upon receipt of thecheck?

Select one:

Cash		1,960
Sales Returns and Allowances		1,040
	Accounts Receivable		3,000

Cash		2,000
	Accounts Receivable		2,000

Cash		1,960
Sales Returns and Allowances		1,000
Sales Discounts		40
	Accounts Receivable		3,000

Cash		2,940
Sales Discounts		60
	Accounts Receivable		3,000

What are the total assets of the company on December 31,2016?

Select one:

A. $420,000

B. $184,000

C. $724,000

D. $ 38,000

8. The following inventory was available for sale during theyear for Thomasina Tools:

Beginning inventory	10 units at $80
First purchase	15 units at $110
Second purchase	30 units at $140
Third purchase	20 units at $130

Thomasina Tools has 25 units on hand at the end of the year.

What is the dollar amount of inventory at the end of the yearaccording to the first-in, first-out method?

Select one:

A. $3,300

B. $3,150

C. $3,900

D. $5,950

9. The following amounts and costs of platters were availablefor sale by Corpus Christy Ceramics during 2016:

Beginning inventory	10 units at $41
First purchase	15 units at $55
Second purchase	30 units at $70
Third purchase	25 units at $65

Corpus Christy Ceramics has 35 platters on hand at the end ofthe year.

What is the dollar amount of inventory at the end of the yearaccording to the weighted-average cost method?

Select one:

A. $4,340

B. $9,920

C. $3,465

D. $6,200

12. Determine Sales revenue for Ozzie Company with the followingdata:

Cost of Goods Sold	$840,000
Operating Expenses	210,000
Sales Discounts	15,000
Sales Returns and Allowances	97,500
Net Income	265,000

Select one:

A. $1,192,500

B. $1,222,500

C. $1,417,500

D. $1,387,500

17. Determine Sales revenue for Ozzie Company with the followingdata:

Cost of Goods Sold	$840,000
Operating Expenses	210,000
Sales Discounts	15,000
Sales Returns and Allowances	97,500
Net Income	265,000

Select one:

A. $1,192,500

B. $1,222,500

C. $1,417,500

D. $1,387,500

18. M. Fields Company reported the following year-endamounts:

Total Sales	$33,600
Sales Discounts	600
Sales Returns	?
Cost of Goods Sold	21,000
Gross Profit	4,350

What is the companyâs Sales Returns for the year?

Select one:

A. $ 7,650

B. $ 2,160

C. $10,860

D. $ 2,970

19. On September 1, the beginning inventory for Koppel Companywas 110 units at $200 each. Purchases and sales during Septemberwere:

Purchases During Sept 2016		Sales During Sept 2016
Sept 7	120 units @ $224	Sept 12	70 units
Sept 17	70 units @ $176	Sept 22	110 units
Sept 25	100 units @ $168	Sept 29	90 units

What is the cost of ending inventory for Koppel Company onSeptember 30 if the periodic LIFO costing method is used?

Select one:

A. $22,080

B. $26,480

C. $26,000

D. $28,640

24. On which financial statements would you look to find thetotal costs of merchandise that remains and the total that has beensold?

Select one:

A. Balance sheet and income statement

B. Statement of cash flows and balance sheet

C. Balance sheet and statement of cash flows

D. Statement of stockholders' equity and balance sheet

25. Which statement is true of the statement of stockholders'equity?

Select one:

A. It shows a company's stock issuances and dividends paid toshareholders.

B. It reports a company's assets, liabilities, and equities.

C. It reports a company's cash flows from operating activities,investing activities, and financing activities.

D. It reports a company's revenue and expenses for a period.

26. On September 1, the beginning inventory for Koppel Companywas 110 units at $200 each. Purchases and sales during Septemberwere:

Purchases During Sept 2016		Sales During Sept 2016
Sept 7	120 units @ $224	Sept 12	70 units
Sept 17	70 units @ $176	Sept 22	110 units
Sept 25	100 units @ $168	Sept 29	90 units

What is the cost of ending inventory for Koppel Company onSeptember 30 if the periodic LIFO costing method is used?

Select one:

A. $22,080

B. $26,480

C. $26,000

D. $28,640

27. The following hammers were available for sale during theyear for Waiculus Tools:

Beginning inventory	10 units at $80
First purchase	15 units at $100
Second purchase	30 units at $120
Third purchase	25 units at $130

Waiculus Tools has 30 hammers on hand at the end of theyear.

What is the dollar amount of cost of goods sold for the yearaccording to the first-in, first-out method?

Select one:

A. $3,150

B. $3,950

C. $5,300

D. $3,900

29. Nickster Company purchased $8,000 worth of merchandise, FOBshipping point. Transportation costs were an additional $700. Thecompany later returned $1,500 worth of merchandise and paid theinvoice within the 2% cash discount period.

The total amount paid for this merchandise is:

Select one:

A. $7,040

B. $8,526

C. $7,070

D. $7,056

30. The following amounts and costs of platters were availablefor sale by Utah Pottery during 2016:

Beginning inventory	10 units at $82
First purchase	15 units at $110
Second purchase	30 units at $140
Third purchase	25 units at $130

Utah Pottery has 35 platters on hand at the end of the year.

How much is cost of goods sold in dollars at the end of the yearaccording to the weighted-average cost method?

Select one:

A. $5,580

B. $3,465

C. $9,920

D. $3,720

31. Current assets are usually listed in the order of their:

Select one:

A. Lack of liquidity: least liquid to most liquid

B. Size: smallest to largest

C. Liquidity: most liquid to least liquid

D. Size: largest to smallest

34. Which of the following assets would not be classified as acurrent asset?

Select one:

A. Supplies

B. Equipment

C. Accounts receivable

D. Prepaid rent

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ACCT 001 Lecture Notes - Lecture 3: Faithful Representation, Gross Profit, Accrual

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