Questions and Answers of Survey of Accounting 2nd

A business doesn’t bother to reconcile its monthly bank statement balance and its cash account balance, claiming that its bookkeepers have more important things to do and, besides, the bank never
The purchasing manager of the business has authority to issue purchase orders. He also inspects shipments as they arrive, approves vendors’ invoices for payment, and mails checks to the vendors. Do
The business is organized legally as a partnership and therefore doesn’t pay income tax. (A partnership’s annual taxable income or loss is passed through to its partners who pick up their share
Refer to the closing entry in the answer to the example in this section. The T accounts before the closing entry is recorded are provided here. What are the balances in the revenue and expense
At the end of the year, the business counts and inspects its ending inventory of products on hand, which is stored in its warehouse and retail sales areas. Usually, employees discover some damaged
At the end of the year, the business owes $10,000,000 on interestbearing notes payable. During the year, it records interest expense as it’s paid to lenders. Accordingly, the business recorded
Based on the final determination of its federal income tax for the year, the business owes $431,500. During the year, it made$3,978,500 total installment payments towards its income tax, which were
At the end of the year, the business owes its employees $58,300 for accumulated vacation and sick pay. This amount will be paid when employees actually take their vacations and time off for sick
The business has more cash than it needs for day-to-day operations, so the excess cash is invested in short-term marketable securities that pay interest. During the year, the business receives
A business makes almost all credit sales. At the end of the year, the business has $485,000 total accounts receivable. This ending balance doesn’t include $28,500 specific accounts receivable that
The business signs a ten-year contract with the inventor of a secret process that it will use in its manufacturing operations. As an incentive to agree to the contract, the business immediately pays
A business pays the owner of a patent $500,000 for the right to use the patent for a period of five years.a. What entry should be made for the purchase of the patent right?b. What adjusting entry
On the last day of the year, a particular piece of equipment that originally cost $87,500 many years ago was removed from the production line and put on the shipping dock. The equipment is of no
A bookkeeper who was recently hired by a business recorded the depreciation expense on delivery trucks for the year as follows:Depreciation Expense — Delivery Trucks $215,000 Delivery Trucks
Rather than own the real estate, a business leases its land and buildings. The lease agreement calls for monthly rents. Does the business record depreciation on this real estate?
Based on its depreciation schedules, the annual depreciation on the business’s machinery is $420,000. The business uses the straight-line depreciation method. The business recorded a machinery
In the hustle and bustle of the end-of-year accounting activities, the bookkeeper simply forgot to record the business’s social security taxes on its last payroll in the year. As you may know, a
The $1,500 trash collection bill for the last month of the fiscal year normally arrives before the end of the month. However, the waste management company didn’t get its bills out on time, so the
In its year-end review for errors, a business discovers that an order of products was shipped to a customer, and the cost of the products was correctly charged to cost of goods sold expense. However,
In its year-end review for errors, a business discovers that the recent bill from its law firm was entered as $6,500 instead of $5,600, which is the correct amount. The bill has not been paid yet.
A business has had a very good year; its $58,000,000 net income for the year is an all-time high. Being in a generous mood, its board of directors declares a whopping cash distribution of $30,000,000
A business corporation needed more capital to expand and grow, so it issued additional stock shares for a total of $25,000,000. What journal entry should be made for this financing transaction?
A few days after recording the purchase of products on credit, the business discovers that some of the products are defective. The business hasn’t paid for the purchase yet, and the vendor agrees
The business enters into a contract with a major supplier in which it agrees to buy a minimum amount of products every month over the next five years. Also, set prices are established in the
The business receives $49,000 from customers in payment for their previous purchases on credit from the business. To encourage prompt payment, the business offered its customers a 2 percent discount
The business buys on credit a large supply of shipping containers that should be enough for the next six months of deliveries. The bill for the purchase is $26,500, and the business will pay it in
Unfortunately, one of the major customers of the business declared bankruptcy. This customer owes the business $35,000. The business has already recorded the credit sale to the customer and the cost
Its actuarial firm informs the business that the cost of its employees’retirement pension benefit for the period is $565,000. According to the contract with its employees, the business decides to
The business just received a bill for $15,000 from the outside security firm that guards its warehouse and offices. No entry has been made for this expense yet, and the business normally waits
The business’s cost of goods sold for its sales during the period is$938,450. The sales revenue for these sales has been recorded. What journal entry should be made for this expense?
A business invests in short-term government securities to earn income on excess cash that it doesn’t need for its day-to-day operations. It just received a $4,500 check from the government for
Over the course of a business day, a few customers return products to the business. For the day, the total of customer returns is $2,300, and the business refunds cash to these customers. How should
For the day, a business makes $48,000 of sales which customers pay with a credit card. It immediately sends the credit card information to its bank, which deducts 2.5 percent on credit card charges
For the day, a business makes $38,900 credit sales to other businesses. How should these credit sales be recorded? (Use the journal entry format shown in the preceding example answer.)
What is the explanation for this journal entry?Accounts Payable $19,250 Cash $19,250
What is the explanation for this journal entry?Rent Expense $48,325 Cash $48,325
What is the explanation for this journal entry?Cash $250,000 Notes Payable $250,000
What is the explanation for this journal entry?Inventory $48,325 Accounts Payable $48,325
The owners invest an additional $25,000 in the business. How should this transaction be recorded in the accounts?
The business pays a note payable that came due in the amount of$5,000. (Ignore interest expense.) How should this transaction be recorded in the accounts?
The business pays the $425 liability for the operating expenses noted in the example question’s transaction list. How should this transaction be recorded in the accounts?
The business purchases products for inventory and pays $3,500 cash for the purchase. How should this transaction be recorded in the accounts?
A good friend is reading the most recent financial statements prepared for your business. In the balance sheet, they come across the account called “owners’ equity — retained earnings.” She
The following condensed balance sheet presents eight core accounts of a business. Which of the eight accounts have a high frequency of transactions recorded in them during the year, and which have a
This question focuses on just two accounts taken from the chart of accounts of a business that makes credit sales. The first is a real account, accounts receivable. The second is a nominal account,
Suppose a business just opened its doors on the first day of the current year. Not a single transaction has taken place yet in the new year.Which of the following accounts have balances in them, and
The income tax Form 1120 for business corporations requires the reporting of the following assets: trade notes and accounts receivables; buildings and other depreciable assets; and loans to
A business employs a typical range of employees — janitors, salespeople, bookkeepers, truck drivers, managers, and so on. It provides a basic retirement plan and pays the premiums for employees’
A business borrows money from its bank. Identify the liability account and the expense account that it should include in its chart of accounts for the borrowing of money and associated cost of
A business rents the building that houses its retail store, its warehouse, and its administrative offices. It pays rent via check, so obviously the business needs a bank account. Should the business
During its first year of business, a company made $6,250,000 credit sales. The business collected $5,600,000 cash from customers during the year from these sales. Unfortunately, a few customers
During the year, a business made $3,650,000 cash sales. The business has a very liberal product return policy and, therefore, accepted product returns from customers and refunded $450,000 cash.What
A business requires advance payments on all sales. In other words, it collects cash from customers before products are delivered to them later. During the year, the business received $12,500,000 in
A business sells only to other businesses and makes all sales on credit;it doesn’t have any cash sales or advance payment sales. During the year, the business made $35,000,000 sales. From these
A note payable liability came due (meaning it reached its maturity date) during the year, and the business decided not to renew (or rollover) this loan. Accordingly, the business paid $500,000 to the
A freak flood caused extensive damage to inventory. Unfortunately, these losses weren’t insured, and the business had to write off$175,000 of its inventory. Ignoring the income tax effects of this
During the year, a business borrowed $850,000 and used $750,000 of those funds to invest in new long-term operating assets. How do these actions change its financial condition? Cash Receivables
Suppose that all revenue transactions during the year increase cash and that all expense transactions during the year decrease cash. In other words, suppose no other assets and no operating
A business pays a vendor for a previous purchase of products bought on credit. Which type of transaction is this?
A business records the cost of electricity and gas used during the period. Which type of transaction is this?
A business records employees’ wages and salaries for the period.Which type of transaction is this?
A business’s shareowners invest additional capital in the business.Which type of transaction is this?
Suppose a business commits accounting fraud by deliberately not writing down its inventory of $268,000, which is the cost of certain products that it can no longer sell and will be thrown in the junk
Three of the four components of cash flow for the year of a business are as follows:Cash flow from operating activities ????Cash flow from investing activities ($480,000)Cash flow from financing
Three of the four components of cash flow for the year of a business are as follows:Cash flow from operating activities $650,000 Cash flow from investing activities ($925,000)Cash flow from financing
Three of the four components of cash flow for the year of a business are as follows:Cash flow from operating activities $2,680,000 Cash flow from investing activities ????Cash flow from financing
Three of the four components of cash flow for the year of a business are as follows:Cash flow from operating activities $450,000 Cash flow from investing activities ($725,000)Cash flow from financing
In a balance sheet, assets usually are listed in the order of their“nearness” to cash. Cash is listed first, followed by the asset closest to being converted into cash, and so on. Is the sequence
Can you tell the amount of profit the business earned in the period just ended?
It appears that the business can’t pay its liabilities. The two liabilities total $938,000, but the business has a cash balance of only$396,000. Do you agree?
Suppose $950,000 of owners’ equity consists of profit earned and not distributed by the business. What is this amount usually called in the balance sheet? And, what is the other amount of owners’
Suppose the business distributed $650,000 cash to its shareowners from its profit (net income) for the year in the form of a dividend. Is this cash disbursement treated as an expense?
No specific rule governs income statement disclosure of executivelevel compensation. Suppose the $10,010,000 “Other expenses” in the income statement for the answer to the example question
No specific rule governs income statement disclosure of advertising expense. Suppose the $10,010,000 “Other expenses” in the income statement for the answer to the example question includes
One rule of income statement reporting is that interest expense and income tax expense be reported separately. The $10,010,000 “Other expenses” in the income statement for the answer to the
Based on the changes for the example given in Questions 5, 6, and 7, determine the profit or loss of the business for its first year.
What would be the amount of accrual-basis other expenses for the year if the business’s liability for unpaid expenses at year-end had been $30,000?
What would be the amount of accrual-basis cost of products sold expense for the year if the business’s cost of products held in inventory at year-end had been $95,000?
What would be the amount of accrual-basis sales revenue for the year if the business’s year-end receivables had been $92,000?
A business has $175,000 total liabilities. At start-up, the owners invested $250,000 capital. The business has earned $190,000 cumulative profit since its creation, all of which has been retained in
A business has $250,000 total liabilities. At start-up, the owners invested $500,000 in the business. Unfortunately, the business has suffered a cumulative loss of $200,000 up to the present time.
A business has $485,000 total liabilities and $1,200,000 total owners’equity. What is the amount of its total assets?
Which of the following is the normal way to present the accounting equation?a. Liabilities = Assets – Owners’ Equityb. Assets – Liabilities = Owners’ Equityc. Assets = Liabilities + Owners’
Ross Music Inc. reported the following selected information at March 31. 2022Total current assets................................................. $262,787Total
The financial statements of Columbia Sportswear Company are presented in Appendix B. Financial statements of Under Armour, Inc. are presented in Appendix C.Instructionsa. Based on the information in
Your parents are considering investing in Apple Inc. common stock. They ask you, as an accounting expert, to make an analysis of the company for them. Financial statements of Apple are presented in
The following information is available for Zoe’s Activewear Inc. for three recent fiscal years.Instructionsa. Calculate the inventory turnover, days in inventory, and gross profit rate for 2022 and
Why might the financial information from unadjusted accounts not be up-to-date and complete?
This information relates to Benser Co. for the year 2022.Retained earnings, January 1, 2022............................... $67,000Advertising
The following information is available for Randall Inc.Accounts receivable............................................. $ 2,400Cash.....................................................
Listed below are assets and liabilities of Reliable Corporation for the years 2021 and 2022. Each is listed in alphabetical order.Reliable reported net income of $48,000 for 2022 and $42,000 for
The following are the major balance sheet classifications.Classify each of the following financial statement items.Prepare assets section of balance sheet. Current assets (CA) Current liabilities
The financial statements of Columbia Sportswear Company are presented in Appendix B. Financial statements of Under Armour, Inc are presented in Appendix C.Instructionsa. For each company, calculate
Alberta Company had the following account balances on December 31, 2022.InstructionsPrepare the liability and stockholders’ equity section of a classified balance sheet in good form as of December
Nancy Tercek started a delivery service, Tercek Deliveries, on June 1, 2022. The following transactions occurred during the month of June.June 1 Stockholders invested
Consider each of the following independent situations.a. The retained earnings statement of Lee Corporation shows dividends of $68,000, while net income for the year was $75,000.b. The statement of
The financial statements of Apple Inc. are presented in Appendix A.InstructionsAnswer the following questions using the financial statements and the notes to the financial statements.a. What were
Holding all other factors constant, indicate whether each of the following signals generally good or bad news about a company.a. Increase in the current ratio.b. Increase in the debt to assets ratio.
What was Apple’s largest current asset, largest current liability, and largest item under “Assets” at September 29, 2018?
The financial statements of Apple Inc. in Appendix A contain the following selected accounts, all in thousands of dollars.Instructionsa. Identify the probable other account in the transaction and the

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