ACCTG 202 Study Guide - Final Guide: Current Liability, Promissory Note, Perpetual Inventory

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tealswan964

11 Sep 2017

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Distinguish between the activities and financial statements of service and merchandising businesses. Differences reflected in operating cycles as well as in their financial statements. Merchandising business must purchase merchandise for sale to customers. The time in days to complete an operating cycle. Revenue activities of a service business include providing services. Thus, on income statements for service, revenues from services are fees earned. Revenue activities of a merchandising business= buying and selling merchandise. Merchandise sold- revenue is sales and cost is expense (cost of merchandise sold) Sales minus the cost of merchandise sold (sales - cost of merchandise sold= gross profit) Describe and illustrate the accounting for merchandise transactions. The accounting system should be designed to provide info on accounts receivable and accounts payable. Subsidiary inventory: a large number of individual accounts with a common characteric grouped together in a separate ledger. Is a secondary ledger that supports a controlling account in the general ledger.

Related Questions

1. Which statement is normally prepared first? (Points : 3) Income statement Balance sheet Statement of cash flows Retained earnings statement2. When a business borrows money, it incurs a(n) (Points : 3) tax. liability. cash payment. all of these.3. More than 70% of businesses are organized as what type of business? (Points : 3) Not-for-profit Corporation Partnership Sole proprietorship4. Brennan, Inc. had revenues of $234,000, expenses of $175,000, and dividends of $40,000 during 2009. Which of the following statements is correct? (Points : 3) Net income for 2009 totaled $19,000. Net income for 2009 totaled $59,000. Total retained earnings increased by $59,000 during 2009. Total retained earnings decreased by $40,000 during 2009.5. The statement of cash flows is integrated with the balance sheet because (Points : 3) the cash at the beginning of the period plus or minus the cash flows from operating, investing, and financing activities equals the end of period cash reported on the balance sheet. the cash at the beginning of the period plus or minus the net income equals the end of period cash reported on the balance sheet. the cash at the beginning of the period plus or minus assets and liabilities equals the end of period cash reported on the balance sheet. the cash at the beginning of the period plus or minus the cash flows from operating activities equals the end of period cash reported on the balance sheet.6. The basic financial statements do NOT include the (Points : 3) income statement. tax return balance sheet. statement of cash flows.7. A __________ is an economic event that under generally accepted accounting principles affects an element of the financial statements and must be recorded. (Points : 3) framework control set of rules transaction8. The payment of a liability (Points : 3) decreases assets and stockholders' equity. increases assets and decreases liabilities. decreases assets and increases liabilities. decreases assets and decreases liabilities. 9. Co. received $1,000 from Newbie as rent for the use of a building owned by UNI. How does this transaction affect UNI's accounts if UNI recognizes a liability? (Points : 3) Cash is increased and revenue is increased. Cash is increased and revenue is decreased. Cash is increased and unearned revenue is increased. It is not recorded.10. Depreciation Expense and Accumulated Depreciation are classified, respectively, as (Points : 3) expense and contra asset. asset and contra liability. revenue and asset. contra asset and expense.11. Deferred expenses (prepaid expenses) are items initially recorded as assets but are expected to become __________ over time. (Points : 3) Liabilities Assets stockholders%u2019 equity Expenses12. A&M Co. provided services of $1,000,000 to clients on account. How does this transaction affect A&M%u2019s accounts? (Points : 3) Increase accounts receivable and cash by $1,000,000 each Increase accounts receivable and revenues by $1,000,000 each Increase accounts receivable and unearned revenues by $1,000,000 each No effect at this time13. Multiple-step income statements show: (Points : 3) gross profit but not income from operations. neither gross profit nor income from operations. both gross profit and income from operations. income from operations but not gross profit.14. Since merchandise inventory is normally sold within a year, how is it reported on the balance sheet? (Points : 3) As a revenue As the cost of merchandise sold It does not appear on the Balance Sheet As a current asset15. The credit terms of a sale are normally indicated on a(n) (Points : 3) purchase order. invoice. bill of lading. account receivable.16. Inventory shortage is recorded when (Points : 3) merchandise is returned by a buyer. merchandise purchased from a seller is incomplete or short. merchandise is returned to a seller. there is a difference between a physical count of inventory and inventory records. 17. The bank reconciliation (Points : 3) should be prepared by an employee who records cash transactions. is part of the internal control system. is for information purposes only. is sent to the bank for verification.18. A special cash fund used to make small payments that occur frequently is called a(n) (Points : 3) operating expenses fund. change fund. market fund. petty cash fund.19. The objectives of internal control are to (Points : 3) control the internal organization of the accounting department personnel and equipment. provide reasonable assurance that assets are safeguarded, information is processed accurately, and laws and regulations are complied with. prevent fraud and promote the social interest of the company. provide control over %u201Cinternal-use only%u201D reports and employee internal conduct.20. When a firm uses internal auditors, it is adhering to which of the following internal control elements? (Points : 3) Risk assessment Proofs and security measures Monitoring Separating responsibilities for related operations21. What type of account is Allowance for Doubtful Accounts? (Points : 3) Contra asset Asset Revenue Expense22. Merchandise inventory is reported on the balance sheet in the section entitled (Points : 3) current assets. fixed assets. current liabilities. stockholders' equity.23. Receivables are usually a significant portion of (Points : 3) total current liabilities. total liabilities. total current assets. total assets.24. The inventory data for an item for November are: Nov.1 Inventory 25 units at $20 10 Purchased 30 units at $21 30 Purchased 10 units at $22 Sold 35 unitsUsing the first-in, first-out method, what is the cost of the merchandise inventory of 30 units on November 30? (Points : 3) $640 $605 $623 $66025. All amounts paid to get an asset in place and ready for use are referred to as (Points : 3) capital expenditures. revenue expenditures. residual value. cost of an asset.26. Fixed assets are ordinarily presented in the balance sheet (Points : 3) at current market values. at replacement costs. at cost less accumulated depreciation. in a separate section along with intangible assets.27. Goodwill is (Points : 3) amortized similar to other intangibles. only written down if an impairment in value occurs. charged to expense immediately. amortized over 40 years or its economic life, whichever is shorter.28. If a capital expenditure is treated as a revenue expenditure, then (Points : 3) expenses are overstated and owners' equity is understated. expenses are overstated and assets are overstated. expenses are understated and owners' equity is overstated. net income is overstated and owners' equity is understated.29. A bond indenture is (Points : 3) a contract between the corporation issuing the bonds and the underwriters selling the bonds. the amount due at the maturity date of the bonds. a contract between the corporation issuing the bonds and the bondholders. the amount for which the corporation can buy back the bonds prior to the maturity date.30. Gross earnings for a payroll period less payroll deductions are referred to as (Points : 3) overtime pay. bonus pay. gross pay. net pay.31. How is treasury stock shown on the balance sheet? (Points : 3) As an asset As a decrease in stockholders' equity As an increase in stockholders' equity Treasury stock is not shown on the balance sheet.32. Current liabilities are (Points : 3) due but not receivable for more than one year. due but not payable for more than one year. due and receivable within one year. due and payable within one year.33. The total earnings of an employee for a payroll period are referred to as (Points : 3) take-home pay. pay net of taxes. net pay. gross pay.34. Where is interest expense listed on the income statement? (Points : 3) Other expense section Cost of merchandise sold Operating expenses Interest expense is on the balance sheet, not the income statement.35. A corporation has 50,000 shares of $100 par value stock outstanding. If the corporation issues a 4-for-1 stock split, the number of shares outstanding after the split will be (Points : 3) 200,000 shares. 50,000 shares. 250,000 shares. 12,500 shares.

sangriaporpoise636

Instructions: PLEASE ONLY SELECT THE CORRECT LETTER CHOICE AT THE END.

Use the following balance sheet information from Aggie Health and Fitness Centersâ month-end financial statements dated August 31, 2016 and open t-accounts for each balance sheet line item. Then use the enclosed TRANSACTIONS AND ADDITIONAL INFORMATION to complete the General Journal, Ledger, Worksheet and Financial Statements for the second month of operations. Use the Perpetual Inventory method as discussed in class for all sales of merchandise.

Aggie Health and Fitness Center

Balance Sheet

As of August 31, 2016

Assets: Liabilities:

Cash $4,500 Accounts Payable $2,900

Accounts Receivable 6,500 Salaries Payable 5,600

Inventory â Concessions 1,100 Interest Payable 1,375

Supplies 400 Unearned Revenue 500

Prepaid Insurance 4,400 Note Payable 330,000

Total Current Assets 16,900 Total Current Liabilities 340,375

Land 80,000 Stockholderâs Equity

Building 408,000 Common Stock 245,500

Equipment 67,200 Retained Earnings 3,563

Furniture and Fixtures 20,016 Total Liab. and SHE $589,438

Accumulated Depreciation (2,678)

Total Assets $589,438

Fiscal Year

Aggie Health and Fitness Center was established as a business in August 2016. Aggie Health and Fitness Center follows a fiscal year end of July 31.

Inventories

Inventories consist of concessions available for resale to members. These concessions consist of energy drinks, nutritional supplements, etc. Inventories are valued on a first-in, first-out basis, using the perpetual method. (Note: The Center plans to expand its inventory during September to include logo-based apparel.)

Prepaid Insurance

Aggie Health and Fitness Center carries property insurance through Good Hands Insurance Co. The Center purchased a 12 month policy on August 1, 2016 for $4,800.

Fixed Assets

Property and Equipment are stated on the basis of historical cost.

Land and Building: The Land and Building was a group purchase made on August 1, 2016. The total purchase price amounted to $488,000. On the date of purchase the land was appraised at $80,000 and the building was appraised at $408,000. The Health and Fitness Center paid $158,000 down and signed a $330,000, 12-month, 5% note for the balance. Depreciation on the building is computed using the straight-line basis with no salvage value. The life of the building is estimated to be 20 years.

Equipment and Furniture and Fixtures: All equipment and furniture and fixtures were purchased for cash on August 1, 2016. Both equipment and furniture and fixtures are depreciated using the straight-line method of depreciation. No salvage value is anticipated. The useful life of the equipment is 8 years. The useful life of the furniture and fixtures is 6 years.

The book values of these assets are presented below:

Land $80,000 $80,000

Building 408,000

Less: Accumulated Depr 1,700 406,300

Equipment 67,200

Less: Accumulated Depr 700 66,500

Furniture and Fixtures 20,016

Less: Accumulated Depr 278 19,738

Net Plant, Property, and Equipment $572,538

Unearned Revenue

The balance in the unearned revenue account is due to the sale of gift certificates redeemable for massage therapy.

Revenue Recognition

The Company recognizes service revenue upon providing services for customers. Sales revenue is recognized upon customer receipt of goods. Revenue for gift certificate sales is recognized at redemption. (Note: all memberships sold during the first month of operations were for one month only).

Instructions

Use the following TRANSACTIONS AND ADDITIONAL INFORMATION to complete the General Journal, Ledger, Worksheet and Financial Statements for the second month of operations for Aggie Health & Fitness Center (The Fitness Center). Use the Perpetual Inventory method as discussed in class for all sales of merchandise.

11	Sept 13	The owners of the company invested an additional $18,000 into Aggie Health and Fitness Center in exchange for common stock
12	Sept 14	Gift certificates totaling $300 were redeemed for massage therapy performed

What are the journal entries for Transactions #11 and #12?

Common Stock	18,000
Accounts Receivable	18,000
Unearned Revenue	300
Service Revenue	300

Accounts Receivable	18,000
Common Stock	18,000
Unearned Revenue	300
Sales Revenue	300

Common Stock	18,000
Cash	18,000
Service Revenue	300
Unearned Revenue	300

Cash	18,000
Common Stock	18,000
Unearned Revenue	300
Service Revenue Please select the correct letter choice.	300

cerisemanatee852

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

coralyellowjacket724

ACCTG 202 Study Guide - Final Guide: Current Liability, Promissory Note, Perpetual Inventory

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