ACCT 203 Study Guide - Final Guide: Accrual, Retained Earnings, Matching Principle

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2 Aug 2016

School

George Mason University

Department

Accounting

Course

ACCT 203

Professor

Harley

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Document Summary

All of the material covered in class and in the textbook should be studied. This guide is just an area for additional focus. Principles and assumptions revenue recognition, matching principle. Know revenue accounts and expense accounts and how to calculate net income. Know how to calculate a beginning balance, and ending. Balance and the changes over the time period. Balance sheet keep the equation in balance. Know asset accounts, liabilities accounts and equity accounts. Adjusting entries with balance in accounts after adjustment. Bi + p ei = cost of good sold. % of receivables method consider the balance in allowance account. % of sales, or credit sales, method your calculation is your adjustment. Chapter 14 managerial accounting concepts and principles. Total fixed costs, total variable costs, fc/unit, vc/ unit, direct costs, indirect costs, sunk cost, out of pocket cost, opportunity cost, product cost, period cost, Manufacturing costs, direct materials, direct labor and factory overhead costs.

Related Questions

TRUE OR FALSE:

___ The most common point of revenue recognition is when thegoods or services are transferred or provided to the seller. (Ondelivery).

___ A change in the inventory accounting method would violatethe principle of consistency.

___ When transactions occur, we must decide when to recognizethe transactions in the financial statements and how to measurethem. The principles of recognition and measurement are:Objectivity, Recognition of Income, Principle of Congruence(Matching) and Consistency.

___ Inflation changes the purchasing power of monetary units, ifinflation is material, the stable dollar hypothesis is valid.

___ The purpose of accounting theory is to provide a coherentand general framework for assessing accounting practices so thatthey can guide the development of new practices and procedures.

___ A cash deposit at a bank or similar financial institution isa financial liability because it represents, for the depositor, acontractual right to obtain cash from the entity, to write a checkagainst the balance of the same in favor of a creditor in paymentof an asset financial.

amberhedgehog49

1. Which of the following identifies the proper order of theaccounting cycle?

A. Analyze, Journalize, Unadjusted Trial Balance

B. Analyze, Post, Unadjusted Trial Balance

C. Journalize, Post, Adjusted Trial Balance

D. Unadjusted Trial Balance, Adjusted Trial Balance, Close

E. Adjusted Trial Balance, Adjustments, Financial Statements

2. Interim financial statements refer to financial reports:

A. That cover less than one year, usually spanning one, three orsix-month periods

B. That are prepared before any adjustments have beenrecorded

C. That show the assets above the liabilities and theliabilities above the equity

D. Where revenues are reported on the income statement when cashis received and expenses are reported when cash is paid

E. Where the adjustment process is used to assign revenues tothe periods in which they are earned and to match expenses withrevenues

3. The accounting principle that requires revenue to be reportedwhen earned is the:

A. Matching principle

B. Revenue recognition principle

C. Time period principle

D. Accrual reporting principle

E. Going-concern principle

4. Adjusting entries:

A. Affect only income statement accounts

B. Affect only balance sheet accounts

C. Affect both income statement and balance sheet accounts

D. Affect only cash flow statement accounts

E. Affect only equity accounts

5. The system of preparing financial statements based onrecognizing revenues when the cash is received and reportingexpenses when the cash is paid is called:

A. Accrual basis accounting

B. Operating cycle accounting

C. Cash basis accounting

D. Revenue recognition accounting

E. Current basis accounting

6. If throughout an accounting period the fees for legalservices paid in advance by clients are recorded in an accountcalled Unearned Legal Fees, the end-of-period adjusting entry torecord the portion of those fees that has been earned is:

A. Debit Cash and credit Legal Fees Earned

B. Debit Cash and credit Unearned Legal Fees

C. Debit Unearned Legal Fees and credit Legal Fees Earned

D. Debit Legal Fees Earned and credit Unearned Legal Fees

E. Debit Unearned Legal Fees and credit Accounts Receivable

7. A company had no office supplies available at the beginningof the year. During the year, the company purchased $250 worth ofoffice supplies. On December 31, $75 worth of office suppliesremained. How much should the company report as office suppliesexpense for the year? A. $75 B. $125 C. $175 D. $250 E. $325 8. OnJanuary 1 a company purchased a five-year insurance policy for$1,800 with coverage starting immediately. If the purchase wasrecorded in the Prepaid Insurance account and the company recordsadjustments only at year-end, the adjusting entry at the end of thefirst year is:

A. Debit Prepaid Insurance, $1,800; credit Cash, $1,800

B. Debit Prepaid Insurance, $1,440; credit Insurance Expense,$1,440

C. Debit Prepaid Insurance, $360; credit Insurance Expense,$360

D. Debit Insurance Expense, $360; credit Prepaid Insurance,$360

E. Debit Insurance Expense, $360; credit Prepaid Insurance,$1,440

9. Unearned revenue is reported on the financial statementsas:

A. A revenue on the balance sheet

B. A liability on the balance sheet

C. An unearned revenue on the income statement

D. An asset on the balance sheet

E. An operating activity on the statement of cash flows

10. Which of the following assets is not depreciated?

A. Store fixtures

B. Computers

C. Land

D. Buildings

E. Vehicles

11. On April 30, 2011, a three-year insurance policy waspurchased for $18,000 with coverage to begin immediately. What isthe amount of insurance expense that would appear on the company'sincome statement for the year ended December 31, 2011? A. $500 B.$4,000 C. $6,000 D. $14,000 E. $18,000 12. Expenses incurred butunpaid that are recorded during the adjusting process with a debitto an expense and a credit to a liability are:

A. Intangible expenses

B. Prepaid expenses

C. Unearned expenses

D. Net expenses

E. Accrued expenses

13 The difference between the cost of an asset and theaccumulated depreciation for that asset is called

A. Depreciation Expense

B. Unearned Depreciation

C. Prepaid Depreciation

D. Depreciation Value

E. Book Value

14. A company purchased a new truck at a cost of $42,000 on July1, 2011. The truck is estimated to have a useful life of 6 yearsand a salvage value of $3,000. How much depreciation expense willbe recorded for the truck for the year ended December 31, 2011?

A. $3,250

B. $3,500

C. $4,000

D. $6,500

E. $7,000

15. A company's Office Supplies account shows a beginningbalance of $600 and an ending balance of $400. If office suppliesexpense for the year is $3,100, what amount of office supplies waspurchased during the period?

A. $2,700

B. $2,900

C. $3,300

D. $3,500

E. $3,700

chocolatereindeer731

1) Which of the following items would be reported net of taxesafter income from continuing operations?

Select one:

a. Gain or loss on the sale of property.

b. Loss due to a factory strike.

c. Interest expense.

d. Gain or loss on the sale of a major segment of theentity.

Given the following list of accounts, calculate TotalAssets:

Accounts Receivable	$ 5,000
Capital Stock	20,000
Cash	14,300
Equipment	15,400
Fees Earned	44,400
Miscellaneous Expense	18,200
Rent Expense	4,150
Retained Earnings	6,550
Wages Expense	13,900

Select one:

a. $54,700

b. $26,550

c. $79,100

d. $34,700

Which of the following is NOT associated with accrual basisaccounting?

Select one:

a. Income statement.

b. Matching principle.

c. Statement of cash flows.

d. Revenue recognition principle.

Which of the following is an example of an intangible asset?

Select one:

a. Trademark

b. Timber

c. Equipment

d. Marketable securities

Which of the following would be shown under the financingactivities section on the statement of cash flows?

Select one:

a. Cash received from customers.

b. The payment of cash to retire a long-term note.

c. Depreciation expense.

d. The proceeds from the sale of a building.

A machine was purchased for $32,000 on April 1st. It has auseful life of 5 years and a residual value of $4,000. What is thedepreciation expense for the first fiscal year ending on December31st under the straight-line method?

Select one:

a. $1,400

b. $6,400

c. $4,200

d. $5,600

The entry to record the signing of a contract to receiveinventory and make payment at a future date includes

Select one:

a. No debits or creditsâjust a memorandum.

b. A debit to cost of goods sold.

c. A credit to cash.

d. A debit to inventory.

An inventory cost flow assumption is NOT needed for a productline

Select one:

a. If all of the inventory available for sale was purchased atthe same unit cost.

b. If all of the inventory looks the same.

c. If there is still some inventory on hand at the end of theyear.

d. If there is no beginning inventory carried over from theprevious accounting period.

Fees received this period from customers for services to beperformed in the next accounting period, would be a(n)

Select one:

a. Expense disclosed on the statement of cash flows.

b. Revenue disclosed on the income statement.

c. Liability disclosed on the balance sheet.

d. Item not included on the financial statements until the nextaccounting period.

10)

Which of the following is TRUE of a corporation?

Select one:

a. They are incorporated with a national agency.

b. At least one owner has unlimited liability.

c. They are a separate taxable entity.

d. More than 70% of businesses are organized this way.

11)

The effects on the accounts of recording the cost of merchandisesold for cash using a perpetual inventory system include an

Select one:

a. Increase in Accounts Payable.

b. Increase in Merchandise Inventory.

c. Increase in Sales.

d. Increase in Cost of Goods Sold;

12)

Which of the following is NOT a limitation of externallyreported accounting information?

Select one:

a. The income statement contains atypical data due to the timingof the fiscal year end.

b. Accounting information relies on estimates.

c. Management has some discretion regarding the reportingclassification and choice of accounting measurement methods.

d. There is a hodge-podge of valuation techniques used on thefinancial statements.

13)

Given the following information regarding merchandise inventoryat the end of the fiscal year:

Ending inventory at cost $34,000

Ending inventory at market $33,400

Which of the following is correct?

Select one:

a. No journal entry should be made based upon the informationgiven.

b. Inventory should be reported on the balance sheet at$34,000.

c. Inventory should be reported on the balance sheet at$33,400.

d. A journal entry should be made to recognize a gain of$600.

14)

Which of the following describes the closing process when acompany has net earnings for the period?

Select one:

a. The Dividends account is debited for its balance.

b. The individual asset accounts are credited for theirbalances.

c. The individual expense accounts are debited for theirbalances.

d. The Income Summary account is debited for its balance.

ACCT 203 Study Guide - Final Guide: Accrual, Retained Earnings, Matching Principle

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