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Principals Of Financial Accounting Final Exam 1 Homework 1.1 1.2 2.1 2.2 3.1 3.2 4.1 4.2 5.1 5.2 6.1 6.2 7.1 7.2 8.1 8.2 9.1 9.2 10.1 10.2 11.1 11.2 12.1 12.2 13.1 13.2
Learnsmart 1.1 2.1 3.1 4.1 5.1 6.1 7.1 8.1 9.1 10.1 11.1 12.1 13.1 13.2 | Exam 1 2 3 4 5 6 7 8 9 10 11 12 13 | Final Exam 1 2
The primary objective of financial accounting is:
A. To serve the decision-making needs of internal users B. To provide financial statements to help external users analyze and interpret an organization's activities C. To monitor and control company activities D. To provide information on both the costs and benefits of managing products and services E. To know what, when and how much to produce Which of the following accounting principles dictates when expenses are recognized? A. Revenue recognition principle B. Monetary unit principle C. Business entity principle D. Matching principle E. Full disclosure principle The amounts reported in the accounts for assets used in operations are based on their costs. This practice is best justified by the: A. Cost principle B. Going-concern principle C. Objectivity principle D. Business entity principle E. Revenue recognition principle Which of the following accounting principles would prescribe that all goods and services purchased is recorded at cost? A. Going-concern principle B. Continuing-concern principle C. Cost principle D. Business entity principle E. Consideration principle The difference between a company's assets and its liabilities or its net assets is: A. Net income B. Expense C. Equity D. Revenue E. Net loss Assets = Liabilities + Equity is known as the: A. Income statement equation B. Cost principle C. Objectivity principle D. Accounting equation E. Transaction principle Revenues are: A. The same as net income B. The excess of expenses over assets C. Resources owned or controlled by a company D. Increases in retained earnings from a company's earning activities E. The costs of assets or services used Which of the following statements is not true about assets? A. They are economic resources owned or controlled by the business B. They are expected to provide future benefits to the business C. They appear on the balance sheet D. They appear on the statement of retained earnings E. Claims on them are shared between creditors and owners A. Dividends B. Expenses C. Assets D. Retained earnings E. Net Income How would the accounting equation of Boston Company be affected by the billing of a client for $10,000 of consulting work completed? A. + $10,000 accounts receivable, -$10,000 accounts payable B. + $10,000 accounts receivable, + $10,000 accounts payable C. + $10,000 accounts receivable, + $10,000 cash D. + $10,000 accounts receivable, + $10,000 consulting revenue E. + $10,000 accounts receivable, -$10,000 consulting revenue Risk is: A. Net income divided by average total assets B. The reward for investment C. The uncertainty about the expected return that will be earned from an investment. D. Unrelated to expected return E. Derived from the idea of getting something back from an investment A balance sheet lists: A. The types and amounts of the revenues and expenses of a business B. Only the information about what happened to retained earnings during a time period C. The types and amounts of assets, liabilities and equity of a business as of a specific date D. The cash inflows and outflows during the period E. The assets and liabilities of a company, but not the equity Rent expense that is paid with cash appears on which of the following statements? A. Balance sheet B. Income statement C. Statement of retained earnings D. Schedule of Accounts Receivable E. Statement of Cash Received Beginning Assets were $437,600, Beginning Liabilities were $262,560, Common Stock sold during the year totaled $45,000, Revenue for the year was $414,250, Expenses for the year were $280,000, Dividends declared was $22,700, and Ending Liabilities is $350,000. What was the Beginning Equity for the year? A. $700,160 B. $787,600 C. $187,600 D. $612,560 E. $175,040 437,600-262,560 = 175,040 Beginning Assets were $700,000, Beginning Equity was $225,000, Revenue for the year was $523,000, Common Stock sold during the year totaled $320,000, Expenses for the year were $392,000, Ending Equity is $751,000, and Ending Assets are $963,000. What are the Ending Liabilities for the year? A. $738,000 B. $998,000 C. $212,000 D. $203,000 E. $475,000 963,000 - 751,000 = 212,000 Ending Liabilities are 67,000, Beginning Equity was $87,000, Common Stock sold during year totaled $31,000, Expenses for the year were $22,000, Dividends declared totaled $13,000, Ending Equity for the year is $181,000 and Beginning Assets for the year were $222,000. What are the Ending Assets for the year? A. $154,000 B. $134,000 C. $212,000 D. $248,000 E. $155,000 67,000 + 181,000 = 248,000 Ending Liabilities are 67,000, Beginning Equity was $87,000, Common Stock sold during year totaled $31,000, Expenses for the year were $22,000, Dividends declared totaled $13,000, Ending Equity for the year is $181,000 and Beginning Assets for the year were $222,000. What was Beginning Liabilities for the year? A. $154,000 B. $155,000 C. $212,000 D. $248,000 E. $135,000 222,000 - 87,000 = 135,000 Below is accounting information for Cascade Company for 2010: 
What were the Total Assets for the year? A. $320,000 B. $296,000 C. $316,000 D. $457,000 E. $116,000 120,000 + 35,000 + 62,000 + 240,000 = 457,000 The accounting process begins with: A. Analysis of business transactions and events B. Preparation of financial statements and other reports C. Summarizing the recorded effects of business transactions D. Presentation of financial information to decision-makers E. Preparation of the trial balance Source documents include all of the following except: A. Sales tickets B. Ledgers C. Checks D. Purchase orders E. Bank statements Which of the following statements is correct? A. When a future expense is paid in advance, the payment is normally recorded in a liability account called Prepaid Expense B. Promises of future payment are called accounts payable C. Increases and decreases in cash are always recorded in the retained earnings account D. An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business E. Accrued liabilities include accounts receivable Prepaid expenses are: A. Payments made for products and services that do not ever expire B. Classified as liabilities on the balance sheet C. Decreases in retained earnings D. Assets that represent prepayments of future expenses E. Promises of payments by customers A collection of all accounts (with account balances) used by a business is called a: A. Journal B. Book of original entry C. General Journal D. Balance column journal E. Ledger The general ledger of a business A. Is a collection of all accounts used in a company's information system B. Must be kept in a computer file C. A and B D. Is a set standard not affected by a company's size and diversity E. A, B and D A credit is used to record: A. An increase in an expense account B. An increase in an asset account C. An increase in an unearned revenue account D. An increase in a revenue account E. A decrease to retained earnings A credit entry: A. Increases asset and expense accounts and decreases liability, common stock and revenue accounts B. Is always a decrease in an account C. Decreases asset and expense accounts and increases liability, common stock and revenue accounts D. Is recorded on the left side of a T-account E. Is always an increase in an account Robert Haddon contributed $70,000 in cash and some land worth $130,000 to open a new business, RH Consulting. Which of the following general journal entries will RH Consulting make to record this transaction? 
A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is: A. Recorded as a debit to an unearned revenue account B. Recorded as a debit to a prepaid expense account C. Recorded as a credit to an unearned revenue account D. Recorded as a credit to a prepaid expense account E. Not recorded in the accounting records until the earnings process is complete On October 31, a company's Cash account had a normal balance of $7,000. During October, the account was debited for a total of $4,250 and credited for a total of $5,340. What was the balance in the Cash account at the beginning of October? A. $0 balance B. $1,090 debit balance C. $2,590 credit balance D. $8,090 debit balance E. $9,590 credit balance Normal balance = debit On April 30, Holden Company had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May? A. $5,000 B. $47,000 C. $52,000 D. $57,000 E. $32,000 Normal balance = debit The Fireside Country Inn is a very popular destination for tourists. The Inn requires guests to make reservations at least two months in advance of their stay. A twenty percent down payment is required at the time the reservation is made. When should this inn recognize room rental revenue? A. On the date the reservation is received B. On the date the money for the reservation is received C. On the date the guests stay in the inn D. On the date the guests pay the remaining eighty percent due E. Once all cash has been received During March, a company had cash receipts of $2,300 and cash disbursements of $6,600. The March 31 cash balance was $2,780. What was the March 1 beginning cash balance? A. $1,520 B. $7,080 C. $4,300 D. $8,900 E. $11,680 x + $2,300 - $6,600 = $2,780 Which of the following formulas can be used to calculate the debt ratio? A. Total Equity/Total Liabilities B. Total Liabilities/Total Equity C. Total Liabilities/Total Assets D. Total Assets/Total Liabilities E. Total Equity/Total Assets Stride Rite has total assets of $425 million. Its total liabilities are $110 million. Its equity is $315 million. Calculate the debt ratio. A. 38.6% B. 13.4% C. 34.9% D. 25.9% E. 14.9% $110 / $425 = 25.9% Which of the following is a TRUE statement concerning a company's financial statements? A. Balance Sheet and Income Statement data combined contain the complete financial picture of a given company B. A Trial Balance is another name for a Balance Sheet C. Another name for the Income Statement is the Earnings Statement D. Dividends paid to a company's shareholders are shown on the Income Statement E. The Balance Sheet shows the financial position of a company for a period of time Which of the following is the appropriate journal entry if a company performs a service and is paid immediately? A. Debit to Cash, Debit to Revenue B. Debit to Cash, Credit to Revenue C. Debit to Accounts Receivable, Credit to Cash D. Debit to Revenue, Credit to Accounts Receivable E. Debit to Accounts Receivable, Credit to Revenue What would be the account balance in the revenue ledger account after the following transactions? 
A. $17,400 B. $10,900 C. $14,400 D. $9,000 E. $15,900 The cash basis of accounting requires that revenues be recognized when cash payments from customers are received. TRUE The accrual basis of accounting is an accounting system in which revenues are reported as earned when cash is received. FALSE On October 15, a company received $15,000 cash as a down payment on a consulting contract. The amount was credited to Unearned Consulting Revenue. By October 31, 10% of the services required by the contract were completed. The company will record consulting revenue of $1,500 from this contract for October. TRUE Revenue = $15,000 x 10% = $1,500 The accrual basis of accounting is a system of accounting in which the adjustments are needed to assign revenues to periods in which they are earned and to match expenses with revenues. TRUE Before an adjusting entry is made to accrue employee salaries, Salaries Expense and Salaries Payable are both understated. TRUE The current ratio is computed by dividing current liabilities by current assets. FALSE Which of the following statements is incorrect? A. Prepaid expenses, depreciation and unearned revenues involve previously recorded assets and liabilities B. Accrued expenses and accrued revenues involve assets and liabilities that were not previously been recorded C. Adjusting entries can be used to record both accrued expenses and accrued revenues D. Prepaid expenses, depreciation and unearned revenues often require adjusting entries to record the effects of the passage of time E. Adjusting entries affect the cash account The periodic expense created by allocating the cost of plant and equipment to the periods in which they are used, representing the expense of using the assets is called: A. Accumulated depreciation B. A contra account C. The matching principle D. Depreciation E. An accrued account A company had no office supplies available at the beginning of the year. During the year, the company purchased $250 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year? A. $75 B. $125 C. $175 D. $250 E. $325 $250 - $75 = $175 On April 30, 2009, a three-year insurance policy was purchased for $18,000 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the year ended December 31, 2009? A. $0500 B. $4,000 C. $6,000 D. $14,000 E. $18,000 $18,000 x 8 / 36 = $4,000 Which of the following statements is incorrect? A. An income statement reports revenues earned less expenses incurred B. An unadjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments C. Interim financial reports can be based on one-month or three-month accounting periods D. The fiscal year is any 12 consecutive months (or 52 weeks) used by a business as its annual accounting period E. Property, plant and equipment are referred to as plant assets Shown below are a company's ledger accounts and their end-of-period balances before closing entries are posted. What amount will be posted to Retained Earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.) 
A. $16,780 debit B. $15,460 credit C. $48,660 credit D. $34,660 credit E. $17,960 credit Items closed to Income Summary: 
The Unadjusted Trial Balance columns of a work sheet total $84,000. The Adjustments columns contain entries for the following: Office supplies used during the period, $1,200. Expiration of prepaid rent, $700. Accrued salaries expense, $500. Depreciation expense, $800. Accrued service fees receivable, $400. The Adjusted Trial Balance columns total is: A. $80,400 B. $84,000 C. $85,700 D. $85,900 E. $87,600 Explanation 
List the steps in the accounting cycle. The accounting cycle consists of ten steps: (1) analyze transactions (2) journalize entries (3) post information to the ledgers (4) prepare an unadjusted trial balance (5) prepare adjusting entries (6) prepare an adjusted trial balance (7) prepare financial statement (8) close the temporary accounts (9) prepare a post-closing trial balance (10) prepare reversing entries (optional). What is the purpose of closing entries? Describe the closing process. The purpose of closing entries is to transfer the end of period balances in the temporary accounts to the equity account(s). The closing process has four steps: (1) Close credit balances in revenue accounts to income summary (2) close debit balances in expense accounts to income summary (3) close dividends to the retained earnings (4) close income summary to retained earnings. What is the purpose of a post-closing trial balance? A post-closing trial balance is a list of permanent accounts and their balances after all the closing entries are journalized and posted. It is used to verify the equality of debits and credits of the permanent account balances. It also verifies that the temporary accounts have zero balances. June 30, 2010, the end of the quarter is on a Wednesday. Employees get paid each Friday for the week worked. Abel Co. has five employees who earn $100 per day each. Assuming the proper adjusting journal entry was made on June 30, prepare the journal entry to record the payment of wages on July 2. 
Feedback: 5 * $100 * 3 days = 1500 (Wages Payable) 5*$100*2 days (Wages Expense) Topflight Company had $1,500 of store supplies at the beginning of the current year. During this year, Topflight purchased $8,250 worth of store supplies. On December 31, $1,125 worth of store supplies remained. Calculate the amount of Topflight Company's store supplies expense for the current year. $8,625 $1,500 + $8,250 - $1,125 = $8,625 Accrual accounting and the adjusting process rely on two principles: the ___________________ principle and the ________________________ principle. Revenue recognition; matching __________________ expenses are those costs that are incurred in a period but are both unpaid and unrecorded. Accrued Gross profit is the same as gross margin. TRUE Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio. TRUE The gross margin ratio is defined as gross margin divided by net sales. TRUE Cost of goods sold is reported on both the income statement and the balance sheet. FALSE ABC Corporation had total quick assets $5,888,000, current assets $11,700,000 and current liabilities $8,000,000. Its acid-test ratio equals: A. 0.50 B. 0.68 C. 0.74 D. 1.50 E. 2.20 $5,888,000/$8,000,000 = 0.74 Sales less sales discounts less sales returns and allowances equals: A. Net purchases B. Cost of goods sold C. Net sales D. Gross profit E. Net income A company has the following accounts. What is the acid test ratio? 
A. 3.58% B. 3.16% C. 1.80% D. 4.00% E. 2.68% (6,750+13733) / 6463 = 0.03160 or 3.160% A company has net sales of $1,909,000, sales commissions in the amount of $250,000, net income was $866,400, and the gross profit ratio is 60%, what is the amount of cost of goods sold? $763,600 Feedback: 1,909,000*(1-.60) = 763,600 ___________________ refer to reductions in the selling price of merchandise sold to customers, often involving damaged or defective merchandise that a customer is willing to purchase with a decrease in the selling price. Sales allowances When a company has no reportable non-operating activities, its income from operations is reported as ___________________. Net income Neither GAAP nor IFRS allow inventory to be adjusted upward beyond the original cost. TRUE The reliability of the gross profit method depends on a good estimate of the gross profit ratio. TRUE Acme-Jones Corporation uses a FIFO perpetual inventory system. August 2, 25 units were purchased at $12 per unit. August 5, 10 units were purchased at $13 per unit. August 15, 12 units were sold at $25 per unit. August 18, 15 units were purchased at $14 per unit. What was the amount of the ending inventory for the month of August? A. $496.00 B. $486.00 C. $492.57 D. $300.00 E. $510.00 Given the following information, determine the cost of goods sold for December 31 using the FIFO perpetual inventory method. December 2: 5 units were purchased at $7 per unit. December 9: 10 units were purchased at $9.40 per unit. December 11: 12 units were sold at $35 per unit. December 15: 20 units were purchased at $10.15 per unit. December 22: 18 units were sold at $35 per unit. A. $282.15 B. $332.10 C. $281.25 D. $290.70 E. $210.30 A company normally sells its product for $40 per unit. However, the selling price has fallen to $30 per unit. This company's current inventory consists of 200 units purchased at $32 per unit. Replacement cost has now fallen to $26 per unit. Calculate the value of this company's inventory at the lower of cost or market. A. $5,200 B. $6,400 C. $6,000 D. $8,000 E. $7,000 200 units @ $26 per unit = $5,200 A company has the following per unit original costs and replacement costs for its inventory: Part A: 50 units with a cost of $5 and replacement cost of $4.50 Part B: 75 units with a cost of $6 and replacement cost of $6.50 Part C: 160 units with a cost of $3 and replacement cost of $2.50 Under the lower of cost or market method, the total value of this company's ending inventory is: A. $1,180.00 B. $1,075.00 C. $1,112.50 or $1075.00, depending upon whether LCM is applied to individual items or the inventory as a whole D. $1,112.50 E. $1180.00 or $1075.00, depending upon whether LCM is applied to individual items or to the inventory as a whole Stockholders' equity is decreased by all of the following except. A. sales of stock B. Decreased by C. expenses D. dividends E. net losses A company has inventory of 10 units at a cost of $10 each on June 1. On June 3, they purchased 20 units at $12 each. 12 units are sold on June 5. Using the FIFO periodic inventory method, what is the cost of the 12 units that were sold? A. $120 B. $124 C. $128 D. $130 E. $140 (10 units x $10) + ($2 x $12) = $124 If a business pays rent in advance and debits a Prepaid Rent account, the company receiving the rent payment will credit Unearned Rent Revenue. Which of the following statements is correct? A. Unearned revenues are revenue for services performed but not yet received in cash or recorded. B. A liability—revenue relationship exists with unearned revenue adjusting entries. C. An asset—expense relationship exists with accrued expense adjusting entries. D. Depreciation expense for a period is the original cost of an asset - accumulated depreciation. B is correct Explain the effects of inventory valuation methods on the cost of ending inventory, income and income taxes. The specific identification method identifies the exact costs of the inventory items sold. The weighted average method evens out changes in costs by "averaging" inventory costs. However, LIFO and FIFO provide different amounts in periods of rising or falling costs. For example, in periods of rising costs, LIFO provides a lower income and thus lower taxes. In periods of falling costs, LIFO provides a higher income and thus higher taxes. FIFO calculations provide both higher income and taxes in periods of rising costs and lower income and taxes in periods of declining costs. During January, a company that uses a perpetual inventory system had beginning inventory, purchases and sales as follows. What was the FIFO cost of the company's January 31 inventory? 
A company that uses a perpetual inventory system made the following cash purchases and sales. There was no beginning inventory. 
Prepare the general journal entries to record the March 16 sale using the LIFO inventory valuation method. 
Cash includes currency, coins and the deposits in most checking accounts. TRUE Money orders, cashier's checks and certified checks are examples of cash equivalents. FALSE If a company fails to make an adjusting entry to record supplies expense, then: expense will be understated. A set of procedures and approvals that is designed to control cash disbursements and the acceptance of obligations is referred to as a(n): A. Internal cash system B. Petty cash system C. Cash disbursement system D. Voucher system E. Cash control system Which of the following statements is correct? A. The revenue recognition principle dictates the period that income taxes are paid. B. If an adjusting entry is not made for an accrued expense, net income will be understated. C. The adjusted trial balance is prepared after financial statements are prepared. D. If an adjusting entry is not made for an accrued revenue, stockholders' equity will be understated. E. The adjusted trial balance is prepared before all transactions have been journalized. The entry necessary to establish a petty cash fund should include: A. A debit to Cash and a credit to Petty Cash B. A debit to Cash and a credit to Cash Over and Short C. A debit to Petty Cash and a credit to Cash D. A debit to Petty Cash and a credit to Accounts Receivable E. A debit to Cash and a credit to Petty Cash Over and Short
If a customer owes interest on accounts receivable, the Interest Revenue account is debited and Accounts Receivable is credited. FALSE The formula for computing interest on a note is principal of the note times the annual interest rate times time expressed in years. TRUE The person that borrows money and signs a promissory note is referred to as the payee. FALSE During a given year, a company had net sales of $500,000 and average accounts receivable of $80,000. Its accounts receivable turnover is equal to 6.25. TRUE $500,000/$80,000 = 6.25 When using the allowance method of accounting for uncollectible accounts, the entry to write off Harold's uncollectible account is a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable - Harold. TRUE The aging method of determining bad debts expense is based on the knowledge that the longer a receivable is past due, the lower the likelihood of collection. TRUE A trial balance would only help in detecting which one of the following errors? A transposition error when transferring the debit side of journal entry to the ledger On October 3, Karl Schickele, a carpenter, received a cash payment for services previously billed to a client. Karl paid his telephone bill, and he also bought equipment on credit. For the three transactions, at least one of the entries will include a Credit to Accounts Payable. Outdoors Unlimited accepts the Explorer credit card from its customers. Explorer charges a 3.5% service fee and pays Outdoors Unlimited the amount net of Explorer charges once a month. During February, Outdoors Unlimited sold $27,000 worth of merchandise to customers using the Explorer charge card. On February 28, Outdoor Unlimited sent the $27,000 worth of credit card receipts to Explorer. On March 4, Outdoors Unlimited received cash proceeds from Explorer for the February credit sales less the service charge. Prepare the general journal entries to record February sales and the March 4 cash receipt. 
$27,000 x .035 = $945 Credit Card Expense Net amount + $27,000 - $945 = $26,055 At December 31 of the current year, a company reported the following: Total sales for the current year: $780,000, includes $160,000 in cash sales. Accounts receivable balance at Dec. 31, current year: $190,000. Bad debts written off during the current year: $6,800. Balance of Allowance for Doubtful Accounts at January 1, current year: $8,300 credit. Prepare the necessary adjusting entries to record bad debts expense assuming this company's bad debts are estimated to equal: (a) 1.5% of credit sales. (b) 5% of accounts receivable. (a) 
(b) 
The ____________________ of a note is the day the principle plus interest of a note must be repaid. Maturity date The following transactions took place for Xiu Xiu Company during the month of June: (a) Purchased equipment on account for $9,000. (b) Billed customers $5,000 for services performed (c) Made payment of $2,300 on account for equipment purchased earlier in the month. (d) Collected $2,900 on customer accounts for the services performed earlier in the month. Based on the information given, which of the statements is correct about ending balance of cash at the end of June assuming the balance of cash at the beginning of June is a debited amount of $2,800? the balance in cash account is a debit balance for $3,400 at the end of June An accountant has debited an asset account for $1,200 and credited a liability account for $500. What can be done to complete the recording of the transaction? Credit a different asset account for $700. 1,200 - 500 = 700 The ________________ method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible (and not before). Direct write-off The historical cost principle requires that an asset be recorded at the cash or cash equivalent amount that was given in exchange for it. TRUE A trial balance is a listing of general ledger accounts and their balances Product pricing, product mix decisions, and cost control are examples of _________________ activities. managerial In competitive markets, price is established through the forces of _______________ and _______________. supply; demand Product costs consist of direct labor, direct materials, and ______________. manufacturing overhead or indirect costs Overhead costs cannot be ________________________ in the same way that direct materials and direct labor can. directly traced to units of product The ________________________ overhead rate method uses a single rate for allocating overhead costs to products. plantwide The ________________________ overhead rate method uses multiple volume- based measures to allocate overhead costs to products. departmental ________________________focuses on activities and the cost of carrying out activities. Activity-based costing The ________________________ is the target of the cost assignment. cost object A _______________________ overhead rate is a single overhead rate determined by using volume-related measures. plantwide The ______________________ overhead rate method uses a different overhead rate for each production department departmental The departmental overhead rate method allows each department to have its own overhead rate and its own ____________________. allocation base The premise of ABC is that it takes ____________________ to make products and provide services. activities The _______________ stage of ABC is to compute an activity rate for each cost pool and then use this rate to allocate overhead costs to products. second Which of the following statements is false? Revenues decrease retained earnings but increase stockholder's equity Revenues increase retained earnings and increase stockholder's equity Revenues increase stockholders' equity. Revenues have normal credit balances. Revenues are a positive factor in the computation of net income. Another name for a capital expenditure is: A. Revenue expenditure B. Asset expenditure C. Long-term expenditure D. Contributed capital expenditure E. Balance sheet expenditure A company purchased a truck on October 1 of the current year at a cost of $40,000. The truck is expected to last six years and have a salvage value of $2,200. The company's annual accounting period ends on December 31. 1. What is the depreciation expense for the current year, assuming the straight-line method is used? 2. What is the depreciation expense for the current year, assuming the double-declining-balance method is used? $1,575 $3,333.33 [($40,000 - $2,200)/6] x 3/12 = 1,575 (100%/6) x 2 = 33.33% 40,000 x 33.33% x 3/12 = 3,333.33 A company purchased equipment on July 3 of the current year and placed it in service on August 1. The following costs were incurred in acquiring the equipment:  Determine the amount to be recorded as cost for the equipment. $223,200 
Homework 1.1 1.2 2.1 2.2 3.1 3.2 4.1 4.2 5.1 5.2 6.1 6.2 7.1 7.2 8.1 8.2 9.1 9.2 10.1 10.2 11.1 11.2 12.1 12.2 13.1 13.2
Learnsmart 1.1 2.1 3.1 4.1 5.1 6.1 7.1 8.1 9.1 10.1 11.1 12.1 13.1 13.2 | Exam 1 2 3 4 5 6 7 8 9 10 11 12 13 | Final Exam 1 2
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