AEM 2210 Financial Accounting

Published: 11 months ago

AEM 2210 Financial Accounting

ACCOUNTING QUESTIONS

1. Multiple Choice Questions 1.The revenue recognition principle states that: A.Revenue should be...

Multiple Choice Questions

 

1.The revenue recognition principle states that:

A.Revenue should be recognized in the period the cash is received.

B.Revenue should be recognized in the period earned.

C.Revenue should be recognized in the balance sheet.

D.Revenue is a component of common stock.

2.The matching principle is the principle that states:

A.All costs that are used to generate revenue are recorded in the period the revenue is recognized.

B.All transactions are recorded at the exchange price.

C.The business is separate from its owners.

D.The business will continue to operate indefinitely unless there is evidence to the contrary.

3.Which of the following accounting principles states that expenses are recognized in the same period as the revenues they help to generate?

A.Accounting equation.

B.Revenue recognition.

C.Matching principle.

D.Conservatism.

4.Air France collected cash on February 4 from the sale of a ticket to a customer on January 26.The flight took place on April 5. According to the revenue recognition principle, in which month should Air France have recognized this revenue?

A.January.

B.February.

C.April.

D.Evenly in each of the three months.

5.A customer purchased a drill press on November 14 on account from Sears. The drill press was delivered two weeks later. The customer paid for the drill press on December 5. When should Sears record the revenue for this transaction according to the revenue recognition principle?

A.November.

B.December.

C.Evenly in each of the two months.

D.One-third in November and two-thirds in December.

6.Which accounting principle states that a company should "record revenues when they are earned"?

A.Matching

B.Revenue recognition

C.Conservatism

D.Materiality

7.The primary difference between accrual-basis and cash-basis accounting is:

A.The timing of when revenues and expenses are recorded.

B.Cash-basis accounting is allowed for financial reporting purposes but not accrual-basis accounting.

C.Accrual-basis accounting violates both the revenue recognition and matching principles.

D.Adjusting entries are only a necessary part of cash-basis accounting.

8.When the amount of interest receivable decreases during an accounting period:

A.Accrual-basis revenues exceed cash collections from borrowers.

B.Accrual-basis net income exceeds cash-basis net income.

C.Accrual-basis revenues are less than cash collections from borrowers.

D.Accrual-basis expenses are less than cash payments to borrowers.

9.When the balance of the Unearned Revenue account decreases during an accounting period:

A.Accrual-basis revenues exceed cash collections from customers.

B.Accrual-basis expenses exceed cash collections from customers.

C.Accrual-basis revenues are less than cash collections from customers.

D.Accrual-basis net income is less than cash-basis net income.

10.Which transaction would not be recorded under cash-basis accounting?

A.Providing services to customers for cash.

B.Purchasing one year of rent in advance.

C.Paying salaries to employees.

D.Purchasing supplies on account.

2. Paige Candy Company offers a coffee mug as a premium for every ten 50-cent candy bar wrappers...

Paige Candy Company offers a coffee mug as a premium for every ten 50-cent candy bar wrappers presented by customers together with $1.00. The purchase price of each mug to the company is 90 cents; in addition it costs 60 cents to mail each mug. The results of the premium plan for the years 2010 and 2011 are as follows(assume all purchases and sales are for cash):





2010 2011



Coffee mugs purchased 720,000 800,000

Candy bars sold 5,600,000 6,750,000

Wrappers redeemed 2,800,000 4,200,000

2010 wrappers expected to be redeemed in 2011 2,000,000

2011 wrappers expected to be redeemed in 2012 2,700,000



(a) Prepare the general journal entries that should be made in 2010 and 2011 related to the above plan by Paige Candy.

(b) Indicate the account names, amounts, and classifications of the items related to the premium plan that would appear on the Paige Candy Company balance sheet and income statement at the end of 2010 and 2011.

3. Ready-Set-Go Co_ Inventory Accounting

Ready-Set-Go Co. distributes suitcases to retail stores and extends credit terms of 2/10, n/30 to all of its customers. At the end of June, Ready-Set-Go s inventory consisted of suitcases costing $2,400. During the month of July, the following merchandising transactions occurred.

July 1 Purchased suitcases on account for $3,400 from Trunk Manufacturers, FOB destination, terms 3/10, n/30. The appropriate party also made a cash payment of $180 for freight on this date.

3 Sold suitcases on account to Satchel World for $3,600. The cost of suitcases sold is $2,160.

9 Paid Trunk Manufacturers in full.

12 Received payment in full from Satchel World.

17 Sold suitcases on account to Lady GoGo for $1,900. The cost of the suitcases sold was $1,140.

18 Purchased suitcases on account for $1,820 from Holiday Manufacturers, FOB shipping point, terms 2/10, n/30. The appropriate party also made a cash payment of $170 for freight on this date.

20 Received $360 credit (including freight) for suitcases returned to Holiday Manufacturers.

21 Received payment in full from Lady GoGo.

22 Sold suitcases on account to Vagabond for $3,000. The cost of suitcases sold was $1,800.

30 Paid Holiday Manufacturers in full.

31 Granted Vagabond $270 credit for suitcases returned costing $162.



Ready-Set-Go s chart of accounts includes the following: No. 101 Cash, No. 112 Accounts Receivable, No. 120 Inventory, No. 201 Accounts Payable, No. 401 Sales Revenue, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, and No. 505 Cost of Goods Sold.



Journalize the transactions for the month of July for Ready-Set-Go using a perpetual inventory system. (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

4. _____ pricing is product driven. The company designs what it considers to be a good product, totals...

_____ pricing is product driven.  The company designs what it considers to be a good product, totals the expenses of making the product, and sets a price that covers costs plus a target profit.

a.Value-based

b.Fixed cost

c.Cost-based

d.Variable

5. Study guide 4 part three-analyzing posting from a journal to a general ledger

Study guide 4 part three-analyzing posting from a journal to a general ledger

6. Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout South Eas...

Please fill in the blanks and show calculations please.

Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout South East Asia. Three cubic centimeters (cc) of solvent H300 are required to manufacture each unit of Supermix, one of the company's products. The company is now planning raw materials needs for the third quarter, the quarter in which peak sales of Supermix occur. o keep production and sales moving smoothly, the company has the following inventory requirements: a. The finished goods inventory on hand at the end of each month must be equal to 4,000 units of Supermix plus 20% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 14,200 units. b. The raw materials inventory on hand at the end of each month must be equal to one-half of the following month's production needs for raw materials. The raw materials inventory on June 30 is budgeted to be 70,000 cc of solvent H300 C. The company maintains no work in process inventories. A sales budget for Supermix for the last six months of the year follows. Budgeted Sales n7.  Units July 51,000 56,000 August 66,000 September October 46,000 36,000 November 26,000 December Required 1. Prepare a production budget for Supermix for the months July, August, September, and October Pearl Products Limited Production Budget July August September October 51.000 66,000 Budgeted unit sales 56.000 46.000 15.200 17.200 13.200 11.200 Add: Desired units of ending finished goods inventory 57 200 73,200 79,200 Total needs. 66.200 15.200 17,200 Less: Units of beginning finished goods inventory 14.200 13.200 52,000 58,000 62,000 44,000 Required production in units

7. "the perpetual inventory control system is an integral part of material control." discuss this...

"the perpetual inventory control system is an integral part of material control." discuss this statement bringing out briefly the salient features and advantages of the system.

8. When prices fluctuate widely, the method of pricing that smoothes out the effects of fluctuations is...

When prices fluctuate widely, the method of pricing that smoothes out the effects of fluctuations is

a. FIFO

b. LIFO

c. Weighted average

d. Simple average

9. Gitano Products operates a job-order costing system and applies overhead cost to jobs on the basi...

How do you do 4&5 of this question?

Gitano Products operates a job-order costing system and applies overhead cost to jobs on the basis of direct materials used in production (not on the basis of raw materials purchased). lts predetermined overhead rate was based on a cost formula that estimated $113,100 of manufacturing overhead for an estimated allocation base of $87,000 direct material dollars to be used in production. The company has provided the following data for the just completed year: Purchase of raw materials Direct labor cost Manufacturing overhead costs $138,000 $ 83,000 Indirect labor Property taxes Depreciation of equipment Maintenance Insurance Rent, building $118,800 $ 8,800 $15,000 $15,000 $11,100 $ 37,000 Raw Materials Work in Process Finished Goods Beginning Ending $ 29,000 $12,000 $ 49,000 $40,000 $ 72,000 $59,000 Required 1-a. Compute the predetermined overhead rate for the year Predetermined overhead rate 1301% 1-b. Compute the amount of underapplied or overapplied overhead for the year. Underapplied overhead 4,200

10. What three documents must accompany the payment of an invoice? Discuss where these three documents...

1. What three documents must accompany the payment of an invoice? Discuss where these three documents originate and the resulting control implications.

2. Are any time lags in recording economic events typically experienced in cash disbursements systems?

If so, what are they? Discuss the accounting profession’s view on this matter as it pertains to financial reporting.

3. Discuss the importance of supervision controls in the receiving department and the reasons behind blind fields on the receiving report, such as quantity and price.

11. “Young people with little wealth should not invest money in risky assets such as the stock market,...

“Young people with little wealth should not invest money in risky assets such as the stock market, because they can"t afford to lose what little money they have.” Do you agree or disagree with this statement? Why?

12. Ashley Williams opened Ashley's Maids Cleaning Service on July 2017. During July, the company com...

Ashley Williams opened Ashley's Maids Cleaning Service on July 2017. During July, the company completed the following transactions. July 1 Invested dollar 14,000 cash in the business 1 Purchased a used truck for dollar 10,000, paying dollar 3,000 cash and the balance on account. 3 Purchased cleaning supplies for dollar 800 on account. 5 Paid dollar 2, 160 on a 1-year insurance policy, effective July 1 12 Billed customers dollar 3, 800 for cleaning services. 18 Paid dollar 1,000 of amount owed on truck, and dollar 400 of amount owed on cleaning supplies 20 Paid dollar 1, 600 for employee salaries. 21, Collected dollar 1, 400 from customers billed on July 12 25 Billed customers dollar 1, 900 for cleaning services. 31 Paid gasoline for the month on the truck, dollar 400. 31 Withdrew dollar 700 cash for personal use The chart of accounts for Ashley's Maids cleaning Service contains the following accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 130 Prepaid Insurance, No. 157 Equipment, No. 158 Accumulated Depreciation-Equipment, No. 201 Accounts Payable, No. 212 Salaries and Wages Payable, No. 301 owner's Capital, No, 306 Owner's Drawings, No. 350 Income Summary, No. 400 Service Revenue, No. 631 Supplies Expense, No. 633 Gasoline Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 726 Salaries and Wages Expense. Instructions Journalize and post the July transactions. Use page J1 for the journal Prepare a trial balance at July 31 on a worksheet Enter the following adjustments on the worksheet, and complete the worksheet. Unbilled fees for services performed at July 31 were dollar 1, 300 Depreciation on equipment for the month was dollar 200. One-twelfth of the insurance expired. An inventory count shows dollar 100 of cleaning supplies on hand at July 31. Accrued but unpaid employee salaries were dollar 500 Prepare the income statement and owner's equity statement for July, and a classified balance sheet at July 31, 2017 Journalize and post the adjusting entries. Use page J2 for the journal. Journalize and post the closing entries, and complete the closing process. Use page J3 for the journal. Prepare a post-closing trial balance at July 31.

13. Financial statement information about

Financial statement information about four different companies is as follows.



Instructions

(a) Determine the missing amounts.

(b) Prepare the owner’s equity statement for Donatello Company.

(c) Write a memorandum explaining the sequence for preparing financial statements and the interrelationship of the owner’s equity statement to the income statement and balancesheet.

14. Business transactions completed by Hannah Venedict during the month of September are as follows. ...

Business transactions completed by Hannah Venedict during the month of September are as follows.

Using the following transactions, record journal entries, create financial statements, and assess the impact of each transaction on the financial statements.

  

15. A cash budget, by quarters, is given below for a

A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $5,000 to start each quarter.



Required:

Fill in the missing amounts in the abovetable.

16. Multiple choice

1. A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory; 80,000 units were started into production in January; and there were 20,000 units that were 40% complete in the ending work in process inventory at the end of January. What were the equivalent units of production for materials for the month of January?

a. 88,000 equivalent units.

b. 72,000 equivalent units.

c. 60,000 equivalent units.

d. 80,000 equivalent units.

2. A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory; 80,000 units were started into production in January; and there were 20,000 units that were 40% complete in the ending work in process inventory at the end of January. What were the equivalent units of production for conversion costs for the month of January?

a. 60,000 equivalent units.

b. 72,000 equivalent units.

c. 68,000 equivalent units.

d. 80,000 equivalent units.

3. In the month of June, a department had 20,000 units in beginning work in process that were 70% complete. During June, 80,000 units were transferred into production from another department. At the end of June there were 10,000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. How many units were transferred out of the process in June?

a. 80,000 units.

b. 70,000 units.

c. 90,000 units.

d. 100,000 units.

4. Harvey s variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost $33,000. If sales are expected to increase $60,000, by how much will the company's net income increase?

a. $27,000

b. $42,000

c. $18,000

d. $9,000

17. Question 8Which statement about journal entries in QuickBooks Online is true? A Journal Entry cannot

Question 8Which statement about journal entries in QuickBooks Online is true?

• A Journal Entry cannot be used to account for depreciation of an asset


•  


• The Accountant user can’t create an Adjusting Journal Entry in QuickBooks Online


•  


• Your client can’t create an Adjusting Journal Entry

18. In credit terms of 3/15, n/45, the "3" represents the number of days in the discount period full ...

In credit terms of 3/15, n/45, the "3" represents the number of days in the discount period full amount of the invoice number of days when the entire amount is due percent of the cash discount Merchandise with a sales price of $5,000 is sold on account with term. 2/10. n/30. The journal entry to record the sale would include a debit to Cash for $5,000 debit to Sales Discounts for $100 credit to Sales for $4,900 debit to Account. Receivable for $4,880 Sales to customers who use bank credit cards such as MasterCard and Visa are usually recorded by a debit to Bank Credit Card Sales, debit to Credit Card Expense, and a credit to Sales debit to Cash and a credit to Sales debit to Cash, credit to Credit Card Expense, and a credit to Sales debit to Sales, debit to Credit Card Expense, and a credit to Cash When a buyer returns merchandise purchased for cash, the buyer will record the transaction as a debit to Merchandise Inventory, a credit to Cash debit to Cash; a credit to Merchandise Inventory debit to Cash; a credit to Sales debit to Sales; a credit to Accounts Payable A sales invoice included the following information; merchandise price $12,000 terms 1/10, n/eom; FOB shipping point with prepaid freight of $900 added to the invoice. Assuming that a credit for merchandise returned of $500 is grunted prior to payment and that the invoice is paid within the discount period, what is the amount of cash that should be received the seller? $12,285 $11,500 $10,480 $11,385