Accounting 201 Final

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Components of Financial Statements
Income Statement: Net income= Revenues - Expenses
Statement of Retained Earnings: RE= net income - dividends
Balance Sheet: Assets= Liabilities + SE
Statement of Cash Flows: Cash received from operating, financing, investing

Which are the components of SE on the Balance Sheet?
Common Stock and Retained Earnings

In what order are currents assets listed on a BS?
By liquidity

Which of the following best describes the primary objective of financial accounting?
To provide useful info. about a business to help external parties make informed decisions

Which of the following journal entries is prepared when cash is received from a customer prior to delivery of the goods or services?
Cash
Unearned Revenue

Which of the following journal entries is prepared by an auto repair shop when a customer will pay cash after delivery of goods or services?
Accounts Receivable
Revenue

Which of the following journal entries correctly records the receipt of a utility bill, which will be paid for in later weeks?
Utilities Expense
Utilities Payable

On December 31, 2016, Avery Corporation paid $10,000 for next year's insurance policy. This transaction should be recorded as follows by Avery:
Prepaid insurance expense
Cash

Which of the following describes the transaction resulting in a journal entry with a debit to Wages Payable and a credit to Cash?
Cash was used to pay for wages that were previously recorded as an expense

Credit Balances
Unearned revenue
REVENUE
LIABILITES
STOCKHOLDER'S EQUITY
allowance for doubtful accounts
sales revenue
accounts payable
additional paid in capital
retained earnings notes paayable

Debit Balances
ASSETS
DIVIDENDS EXPENSE
supplies
accounts receivable
expense
bad debt expense
sales return and allowances
credit card discounts
sales discounts
notes recievable
nontrade receivables
equipment
prepaid insurance expense
land

Which is the correct sequence of the following steps in the accounting cycle?
Post adjusting journal entries, prepare adjusted trial balance, prepare financial statements

Which of the following journal entries is created as the result of an accrual?
accrual is payment received after expense is incurred.
Interest expense
Interest payable

Which of the following journal entries is created as the result of a deferral?
deferral is payment received before an expense is incurred
Cash
Unearned revenue

Interest expense
reported on income statement
Principal x Interest % x time

Which of the following best describes the difference between an unadjusted trial balance and an adjusted trial balance?
An unadjusted trial balance is prepared before the adjusting entries have been made, while an adjusted trial balance is prepared after the adjusting entries have been made.

Which of the following account balances would be closed at year-end?
Expenses and revenues are closed out (exp: interest expense)

FOB destination
Sale will be recorded when the shipment is received by the customer

FOB shipping point
Sale will be recorded when the shipment is shipped

Which of the following journal entries correctly records bad debt expense?
Bad debt expense
Allowance for Doubtful Accounts

Which of the following journal entries correctly records the write off of an uncollectible account receivable when using the allowance method?
AFDA
Accounts receivable

Which of the following statements is correct when inventory unit costs are increasing?
FIFO will result in higher net income and a higher inventory valuation than will LIFO

Which of the following statements is correct regarding either the perpetual or periodic inventory systems?
In a perpetual inventory system, cost of goods sold is recorded at the time of each sale during the accounting period

Depreciation expense
straight line formula
(cost-residual value) x 1/useful life

Which of the following describes an accrued liability?
It is an expense that has been incurred but not yet paid.

How should a contingent liability that is reasonably possible but cannot reasonably be estimated be reported within the financial statements?
It must only be disclosed as a note to the financial statements.

Eaton Company issued $5 million of bonds with a 10% coupon rate of interest.

When Eaton issued the bonds, the market rate of interest was 11%. Which of the following statements is correct?
Annual interest expense will exceed the company's actual cash payments for interest.

Which of the following statements correctly describes the accounting for bonds that were issued at a discount?
The book value of the bond liability increases when interest payments are made on the due dates.

Which of the following statements correctly describes the accounting for bonds that were issued at a premium?
The interest expense over the life of the bond is less than the total cash interest payments.

When a bond payable is issued at a premium, subsequent amortization of the premium does which of the following?
Decreases the book value of the bonds.

If a bond is issued at 101, the coupon rate was
higher than the market rate of interest.

If a bond is issued at 98, the coupon rate was
lower than the market rate of interest.

Which of the following represents the number of shares currently owned by investors?
outstanding shares

Treasury stock shares are shares of stock that are:
Authorized and issued, but not outstanding.

Dates
Date on which the board of directors approves the dividend: declaration date
Date on which a list of stockholder names is prepared: Date of record
Date on which the dividend checks are written: date of payment