What term refers to a company’s ability to pay debts as they come due?

The ability of a business firm to satisfy its short‑term obligations as they become due is called:

The ability of a business firm to satisfy its long‑term obligations as they become due is called:

Two basic measures of liquidity are:

What is the procedure set up to protect company property and equipment, ensure reliable accounting reports, promote efficiency, and encourage adherence to company policies?

Which principle says that a company must record expenses incurred to generate the revenues it reported?

During July, a company recorded: cash received 900 for services provided in July; owner cash investment 2,200; cash received 750 from a customer as partial payment of June receivables; services provided on credit 375; borrowed 6,000 by signing a promissory note; cash received 1,250 for services to be rendered next year. What was the total revenue for July?

At the beginning of the current year, Taunton Company’s total assets were $$248,000 and total liabilities were$$ 175,000. During the year, revenues were $$93,000, expenses$$ 76,000, owner withdrawals $$5,000, and there were no other changes. At year‑end, total assets were$$ 260,000 and current assets were $63,249. What is Taunton Company’s debt ratio at year‑end (round to two decimals)?

A $$15 credit to Sales was posted as a$$ 51 credit. What kind of error is this?

On October 31, 2015, a company paid $2,400 in advance for office rent and debited Rent Expense. The lease runs for two and a half years, starting immediately. What reversing entry should be made on January 1, 2016?

On December 31, an adjusted trial balance shows Accounts Receivable $$24,000; Interest Expense$$ 7,800; Commission Revenue $$92,000; Interest Payable$$ 1,500. Adjusting entries were made to accrue $$4,500 of commission revenue and$$ 1,500 of interest expense. After payment of all interest due of $2,500 on January 15, what is the balance of Interest Expense?

On April 30, 2015, Major Inc. paid $$31,500 for a 3‑year fire insurance policy that would start after 3 months. The company also had a remaining$$ 25,000 balance of prepaid insurance for its car from a policy paid on February 1, 2014 for 3 years. What is the total insurance expense of the company for the year 2015?

The area of accounting aimed at serving the decision‑making needs of internal users is:

Which accounting guideline requires financial statement information to be supported by independent, unbiased evidence rather than someone’s belief or opinion?

A complete set of financial statements for Citywide Company at December 31, 2009 would include each of the following, EXCEPT:

A parcel of land was originally purchased for $$85,000, offered for sale at$$ 150,000, assessed for tax at $$95,000, recognized by purchasers as worth$$ 140,000, and sold for $137,000. In the seller’s books, by how much should the land account be decreased or increased to handle the sale?

An example of a financing activity, EXCEPT:

The best definition of an accounting system is:

At the beginning of the year, a company had $$120,000 of liabilities. During the year, assets increased by$$ 160,000 and at year‑end assets equaled $$360,000. Liabilities decreased$$ 20,000 during the year. Calculate the beginning and ending values of equity.

Flash reported net income of $$17,500 for the year. Assets at the beginning of the year were$$ 200,000 and increased by $70,000 by year‑end. Calculate the return on assets (ROA).

Major Company paid $$12,960 for a 4‑year insurance policy on September 1, 2013 and recorded the$$ 12,960 as a nominal (expense) account. What adjusting entry should be made on December 31, 2014?

A company made the following adjusting entry on December 31, 2013: Prepaid Rent 1,800; Rent Expense 1,800. If annual rent is paid in advance every October 1, what was the original transaction entry?

Forget Company’s Unearned Rent account had a beginning balance of $$11,000 and an ending balance of$$ 15,000. Warehouse quarterly rent received in advance was $$18,000. During the year, equipment was rented to another company at an annual rent of$$ 9,000. Quarterly rent payments were credited to Rent Income; annual equipment rental was credited to Unearned Rent. What adjusting entry was made to arrive at the ending balance?

A company receives interest on a $30,000, 8%, 5‑year note receivable on April 1. On December 31, 2008, the proper adjusting entry was made to accrue interest receivable. Assuming the company does not use reversing entries, what entry should be made on April 1, 2009 when the annual interest payment is received?

The beginning of the year total equity for a firm was $$40,000. During the year, the firm issued ordinary shares for total proceeds of$$ 20,000, earned $$20,000 net income, and paid$$ 5,000 in cash dividends. If ending total liabilities are $100,000, what are ending total assets?

Caddis Co. had these unadjusted account balances on December 31, 2009: Inventory, January 1, 2009 $$188,250; Purchases$$ 142,700; Freight‑in $$12,880; Purchase discounts$$ 2,140; Purchase returns $$26,170. Assuming ending inventory is$$ 97,900, what adjusting entry should be made to the inventory accounts?

The use of reversing entries doesn’t change the amounts reported in the financial statements.

It is possible to reverse an incorrect entry and then prepare the correct entry.

The purpose of the post‑closing trial balance is to prove the equality of the temporary account balances carried forward into the next accounting period.

Companies record closing entries in the special journal.

The Prepaid Insurance account had a $$455 debit balance at the beginning of the year;$$ 650 of insurance premium was paid during the year; and the year‑end balance sheet showed $420 of prepaid insurance. Consequently, the income statement for the year must have shown ______ of insurance expense.

The office supplies account began the year with a $$235 debit balance; the income statement showed$$ 475 of office supplies expense; and the year‑end balance sheet showed the current asset Office Supplies at $225. Consequently, how much office supplies must have been purchased during the year?

On December 31, Jovemel Co. correctly accrued $$2,000 of salaries payable. On January 8 of the next year, salaries were paid and an additional$$ 1,400 of salary was incurred. The company withholds 2% of total salary for tax purposes. Assuming the correct reversing entry was made on January 1, what amounts will the compound entry on January 8 include?

Leomel Majer Inc. pays salaries of $10,000 every Monday for the preceding 5‑day week (Monday–Friday). Assume December 31 falls on Wednesday and the company used a reversing entry on January 1 of the next year. How much is the credit to Salaries Payable on January 5 of the next year?

Romabelle Co. purchased an insurance policy of $$65,000 in 2013 and made the adjusting entry at year‑end: Insurance Expense$$ 16,250; Prepaid Insurance $16,250. If the insurance was for 3 years, when did Romabelle Co. take the policy?

Ariamel Company began 2013 with 15,000 customers billed at P10 per subscription. On April 1, 2013, the company raised its billing to P12 per subscription. Customers increased evenly during the year and totaled 16,200 at year‑end. Find Ariamel’s subscription revenue for the year ended December 31, 2013.

In November and December, Year 1, Dorr Co., a newly organized magazine publisher, received $$72,000 for 1,000 three‑year subscriptions at$$ 24 per year, starting with the January Year 2 issue. Dorr elected to include the entire $72,000 in its Year 1 income tax return. What amount should Dorr report in its Year 1 income statement for subscriptions revenue?

Web Services is a limited partnership. David White’s capital account began the year with a balance of $$45,000. During the year, David’s share of partnership income was$$ 7,500, and David received $4,000 in distribution from the partnership. What is David’s partner return on equity?

The credit total of a trial balance exceeds the debit total by 700. The following errors were determined: a credit to accounts receivable of 1,100 was not posted; a 10,000 debit to be made to the purchase account was debited to Accounts payable instead; a 6,000 credit to be made to the Sales account was credited to the Accounts Receivable account instead; the interest payable account balance of 9,000 was included in the trial balance as 10,800. How much is the correct balance of the trial balance?

Which of the following statements about adjusting entries is/are correct? Select all that apply. I. Every adjusting entry impacts both a balance sheet account and a statement of profit or loss account. II. Every adjusting entry impacts comprehensive income. III. If only year-end financial reports are prepared for both external and internal users, then adjusting entries need only be prepared once a year. IV. Adjusting entries are necessitated by accrual-basis accounting; if an entity uses the pure cash basis, there is no need for adjusting entries.

Which of the following events is considered an internal event?

Biden Corporation reports on a calendar-year basis. Its 2009 and 2010 financial statements contained the following errors: 2009 — over(under) statement of ending inventory (10,000); depreciation understatement 4,000; failure to accrue salaries at year-end 8,000. 2010 — over(under) statement of ending inventory 4,000; depreciation understatement 6,000; failure to accrue salaries at year-end 12,000. As a result of the above errors, 2010 income would be which of the following? Indicate amount and whether overstated or understated.

The following statements relate to the concept of revenue. Which statement is NOT TRUE? a. Income determination is a technical term that refers to the process of identifying, measuring and relating revenue and expenses during an accounting period. b. Transactions like issuance of capital stock and payment of dividends between the business entity and its owners cannot give rise in revenue. c. Deferred revenue is synonymous with unrealized revenue. d. The definition of income encompasses both revenue and gains.

The following information is available for Mart Company for 2010: disbursement for purchases 580,000; increase in trade accounts payable 50,000; decrease in merchandise inventory 30,000. What is the cost of goods sold for 2010?

Panda Company assigns some of its patent to other enterprises under a variety of licensing agreements. Data for 2010: Unearned revenue — 12/31/09: 500,000; 12/31/10: 1,500,000. Royalties receivable — 12/31/09: 2,000,000; 12/31/10: 2,500,000. During 2010, Panda received royalty remittances of 5,000,000. What amount of royalty income should Panda report for the year ended December 31, 2010?

A company has beginning inventory 315,638.50, inventory turnover 12.8, cash 35,236, gross profit margin 32% and profit margin 14% respectively. Operating expense is 12% of sales and the administrative expense amounted to 236,350. Income tax amounted to 321,000. What is the ending inventory of the company?

The first year of operation shows net cash receipts (disbursements) from operating, investing, and financing activities amounting to 325,700; (125,000); and 423,500 respectively. The company bought a machine worth 29,635 and furniture priced at 125,425. Cash is just a quarter of the company’s current assets, while accounts receivable is half of the current assets. What are the balances of accounts receivable and the cash receipt from investing activities, respectively?

If ending inventory is understated, the effect is to

If beginning inventory is overstated, the effect is to

The overstatement of ending inventory in the current year will cause

At the middle of the year, an entity paid for insurance premium for the current year and debited the amount to prepaid insurance. At year-end, the bookkeeper forgot to record the amount that had expired. In the financial statements prepared at year-end, the omission

If at end of current reporting period, an entity erroneously excluded some goods from ending inventory and also these errors would cause erroneously did not record the purchase of these goods,

When the current year's ending inventory is overstated

An overstatement of ending inventory in the current period would result in income of the next period being

Which would result if the current year's ending inventory is understated in the cost of goods sold calculation?

If the beginning inventory in the current year was overstated, the income for the current year would be

Which of the following would cause income to be overstated in the period of occurrence?

Failure to record the expired amount of prepaid rent expense would not

Failure to record accrued salaries at year-end results in

Failure to record depreciation at year-end results in

Which of the following is a counterbalancing error?

Which error will not self-correct next year?

At year-end, avas ship ordered merchandise for resale. The merchandise was shipped f.o.b. shipping point at year-end and the goods arrived early next year. The entity did not record the purchase in the current year and did not include statements for the current year were the goods in ending inventory. The effects on the financial

Which of the following should not be reported retroactively?

At the end of the current year, special insurance costs, incurred but unpaid, were not recorded. If these insurance costs were related to work in process, what is the effect of the omission on accrued liabilities and retained earnings, respectively, in the current year-end statement of financial position?

Which of the following errors would result in an overstatement of both current assets and shareholders' equity?

At the end of the current year, an entity failed to accrue sales commissions during the current year but paid in the next year. The error was not repeated in the next year. What was the effect of the error on current year-end working capital and retained earnings, respectively?

Matrix, Inc. — Information from the records and bank statement as of July 31, 2018: Cash balance per bank P9,610; Cash balance per general ledger P7,430; Outstanding checks P2,417; Check mailed for deposit not yet reached bank P500; NSF check returned by bank P281; July interest earned per bank statement P30; Check no. 781 for supplies expense cleared the bank for P240 but was recorded in the books at P268; Deposit by Acme Company erroneously credited by the bank to our account P486. What is the adjusted cash balance?

Matrix, Inc. — Based on the July 31, 2018 bank reconciliation described (bank balance P9,610; general ledger balance P7,430; deposit in transit P500; outstanding checks P2,417; bank error P486; NSF check P281; interest earned P30; recording error on check no. 781 where bank cleared P240 but books recorded P268), which set of journal entries should be recorded to update the company’s books?

Donna’s Day Care — Prepare the bank reconciliation using: Cash balance per bank (June 30) P5,586; Cash balance per general ledger (June 30) P5,055; Outstanding checks P1,816; Deposit in transit P750; NSF check returned by bank P450; June interest earned P15; Check no. 800 paid by bank for P1,100 but recorded in books at P800; Deposit on books P6,000 erroneously credited on bank statement as P6,200 (bank error). What is the adjusted cash in bank?

Able Company — For the month of March, use the following: February 28 book balance 1,460,000; Note collected by bank 100,000; Interest earned on note 10,000; NSF check of customer 130,000; Bank service charge on NSF check 2,000; Other bank service charges 3,000; Outstanding checks 200,000; Deposit of February 28 placed in night depository 85,000; Check issued by Axle Company erroneously charged to Able’s account 20,000. What is the cash balance per bank statement?

Stellar Company provided the following bank statement information for December: • Ending balance, December 31: 2,800,000 • Bank service charge for December: 12,000 • Interest paid by bank to Stellar Company for December: 10,000 In comparing the bank statement to its cash records, the entity found: • Deposits made but not yet recorded by the bank: 350,000 • Checks written and mailed but not yet recorded by the bank: 650,000 The entity also discovered it had drawn and erroneously recorded a check for 46,000 that should have been recorded for 64,000. What is the cash per ledger on December 31?

Rancor Company provided the following information for December: • Balance per bank statement: 4,000,000 • Balance per cash book: 2,700,000 • Outstanding checks: 600,000 • Deposit in transit: 475,000 • Service charge: 10,000 • Proceeds of bank loan, December 1, discounted for 6 months at 12%, not recorded on company books: 940,000 • Customer’s check charged back by bank for absence of counter signature: 50,000 • Deposit of 100,000 incorrectly recorded by bank as 10,000 • Check of Rancid Company charged by bank against Rancor Company account: 150,000 • Customer’s note collected by bank in favor of Rancor Company (face 400,000; interest 40,000; collection fee 5,000): net 435,000 • Erroneous debit memo of December 28 to charge company’s account with settlement of bank loan: 200,000 • Deposit of Rancid Company credited to Rancor account: 300,000 Based on these printed facts, what is the adjusted cash balance after preparing the bank reconciliation for December?

Pathetic Company revealed the following facts on August 31: • Balance of cash in bank account: 1,300,000 • Balance of bank statement: 1,200,000 • Outstanding checks (August 31): No. 555: 10,000; 761: 55,000; 762: 40,000; 763: 25,000; 764: 65,000; 765: 70,000 • Receipts of August 31, deposited September 1: 275,000 • Bank statement charges: service charge for August: 5,000; NSF check received from a customer: 85,000 • The stub for check number 765 and the related invoice show it was for 50,000. • The check was recorded incorrectly in the cash disbursements journal as 70,000. • Payment has been stopped on check number 555 issued in payment of an account payable; the payee cannot be located. Based on these printed facts, what is the adjusted cash balance after preparing the bank reconciliation on August 31?

Basic steps in the recording process include all of the following except

Which statement is true regarding debits and credits?

Which of the following is not a possible combination of a journal entry?

A subsidiary ledger is