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13 Apr 2018

15 Messed Up Co. inadvertently missed counting a section of its warehouse during its year-end physical inventory count. The missed items had a cost of $100,000 for inventory purposes. What effect would this error have on each of assets, liabilities and owner's equity? a. Assets understated, Liabilities overstated, Owner's equity no effect b. Assets understated, Liabilities no effect, Owner's equity overstated C. Assets no effect, Liabilities overstated, Owner's equity understated d. Assets understated, Liabilities no effect, Owner's equity understated e. None of the above The correct answer is 'd'.

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14 Apr 2018

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Effect of Errors in Physical Inventory Eclipse Motorcycle Shopsells motorcycles, ATVs, and other related supplies andaccessories. During the taking of its physical inventory onDecember 31, 2014, Eclipse Motorcycle Shop incorrectly counted itsinventory as $262,400 instead of the correct amount of $251,900.Enter all amounts as positive numbers. a. State the effect of theerror on the December 31, 2014, balance sheet of Eclipse MotorcycleShop. Balance Sheet Items Overstated / Understated AmountMerchandise Inventory $ Current Assets $ Total Assets $ Owner'sEquity $ b. State the effect of the error on the income statementof Eclipse Motorcycle Shop for the year ended December 31, 2014.Income Statement Items Overstated / Understated Amount Cost ofMerchandise Sold $ Gross Profit $ Net Income $ c. If uncorrected,what would be the effect of the error on the 2015 income statement?Income Statement Items Understated / Overstated Amount Cost ofMerchandise Sold $ Gross Profit $ Net Income $

1.
The realizationprinciple indicates that revenue usually should be recorded inthe accounting records:
Question 1 options:
A) when cash is collected from customers
B) when goods are sold or services are rendered to customers
C) at the end of the accounting period
D) only when the revenue can be matched by an equal dollar amountof expenses
E) both (b) and (d) are correct

2.
Which of the following account(s) would be part ofworking capital?
Question 2 options:
A) accounts payable
B) land
C) supplies
D) retained earnings
E) cost of goods sold
F) two of the above accounts are part of working capital
G) three of the above accounts are part of working capital
H) four of the above accounts are part of working capital
I) all of the above accounts are part of working capital

3.
On May 17, Buckeye Corporation performed $800 ofservices for ABC Company, a customer. ABC paid for one-half ofthe
bill on May 17 and agreed to pay the remainder within 30 days. OnJune 9, ABC paid the remaining amount owed. Which
of the following journal entries would ABC Company make onJune 9?
Question 3 options:
A) debit accounts receivable $400 and credit cash $400
B) debit cash $400 and credit service revenue $400
C) debit accounts payable $400 and credit service revenue$400
D) debit cash $400 and credit accounts payable $400
E) debit cash $400 and credit accounts receivable $400
F) debit accounts payable $400 and credit cash $400

4.
The following information is available for XYZ Company: January 1, 2003 December 31, 2003Assets $500,000 $700,000Liabilities $300,000 $400,000 Equity $200,000 $300,000
XYZ Company reported a net income of $50,000 during 2003.
XYZ Company's return on equity (ROE) for 2003 was equal to:
Question 4 options:
A) 8.3%
B) 50.0%
C) 25.0%
D) 20.0%
E) 16.7%

5.
Fletcher, Inc. reported an ending notes payablebalance of $57,000. An examination of the notes payablet-account
revealed debits of $25,000 and credits of $39,000 during the year.The beginning notes payable balance for Fletcher,
Inc. was equal to:
Question 5 options:
A) $71,000 credit
B) $71,000 debit
C) $43,000 debit
D) $43,000 credit
E) none of the above are correct

6.

Indicate the effect each of the following transactions has onthe accounting equation (i.e., assets, liabilities, and equity).Enter the number corresponding to your answer in the box provided.Answer choices may be used once, more than once, or not atall.

Question 6 options:
ABC Company performed $2,000 of delivery servicesfor a customer who agreed to pay next month

ABC Company paid $2,000 cash to the bank; $1,800of this amount was the repayment of a bank loan and the other $200paid was interest

ABC Company made the adjusting entry to accrueincome taxes owed but not yet paid

ABC Company purchased equipment for $3,000cash

1.
assets increase; liabilities increase; equitydecrease
2.
assets decrease; liabilities decrease; equity noeffect
3.
assets increase; liabilities no effect; equityincrease
4.
assets no effect; liabilities no effect; equity noeffect
5.
assets no effect; liabilities increase; equitydecrease
6.
assets increase; liabilities increase; equityincrease
7.
assets increase; liabilities increase; equity noeffect
8.
assets no effect; liabilities decrease; equityincrease
9.
assets decrease; liabilities no effect; equitydecrease
10.
assets decrease; liabilities decrease; equitydecrease
1.
The realizationprinciple indicates that revenue usually should be recorded inthe accounting records:
Question 1 options:
A) when cash is collected from customers
B) when goods are sold or services are rendered to customers
C) at the end of the accounting period
D) only when the revenue can be matched by an equal dollar amountof expenses
E) both (b) and (d) are correct

2.
Which of the following account(s) would be part ofworking capital?
Question 2 options:
A) accounts payable
B) land
C) supplies
D) retained earnings
E) cost of goods sold
F) two of the above accounts are part of working capital
G) three of the above accounts are part of working capital
H) four of the above accounts are part of working capital
I) all of the above accounts are part of working capital

3.
On May 17, Buckeye Corporation performed $800 ofservices for ABC Company, a customer. ABC paid for one-half ofthe
bill on May 17 and agreed to pay the remainder within 30 days. OnJune 9, ABC paid the remaining amount owed. Which
of the following journal entries would ABC Company make onJune 9?
Question 3 options:
A) debit accounts receivable $400 and credit cash $400
B) debit cash $400 and credit service revenue $400
C) debit accounts payable $400 and credit service revenue$400
D) debit cash $400 and credit accounts payable $400
E) debit cash $400 and credit accounts receivable $400
F) debit accounts payable $400 and credit cash $400

4.
The following information is available for XYZ Company: January 1, 2003 December 31, 2003Assets $500,000 $700,000Liabilities $300,000 $400,000 Equity $200,000 $300,000
XYZ Company reported a net income of $50,000 during 2003.
XYZ Company's return on equity (ROE) for 2003 was equal to:
Question 4 options:
A) 8.3%
B) 50.0%
C) 25.0%
D) 20.0%
E) 16.7%

5.
Fletcher, Inc. reported an ending notes payablebalance of $57,000. An examination of the notes payablet-account
revealed debits of $25,000 and credits of $39,000 during the year.The beginning notes payable balance for Fletcher,
Inc. was equal to:
Question 5 options:
A) $71,000 credit
B) $71,000 debit
C) $43,000 debit
D) $43,000 credit
E) none of the above are correct

6.

Indicate the effect each of the following transactions has onthe accounting equation (i.e., assets, liabilities, and equity).Enter the number corresponding to your answer in the box provided.Answer choices may be used once, more than once, or not atall.

Question 6 options:
ABC Company performed $2,000 of delivery servicesfor a customer who agreed to pay next month

ABC Company paid $2,000 cash to the bank; $1,800of this amount was the repayment of a bank loan and the other $200paid was interest

ABC Company made the adjusting entry to accrueincome taxes owed but not yet paid

ABC Company purchased equipment for $3,000cash

1.
assets increase; liabilities increase; equitydecrease
2.
assets decrease; liabilities decrease; equity noeffect
3.
assets increase; liabilities no effect; equityincrease
4.
assets no effect; liabilities no effect; equity noeffect
5.
assets no effect; liabilities increase; equitydecrease
6.
assets increase; liabilities increase; equityincrease
7.
assets increase; liabilities increase; equity noeffect
8.
assets no effect; liabilities decrease; equityincrease
9.
assets decrease; liabilities no effect; equitydecrease
10.
assets decrease; liabilities decrease; equitydecrease

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