Liabilities

Equity

Revenues

Assets

an increase in assets

a decrease in liabilities

a decrease in revenue

an increase in liabilities

an increase in a liability

a decrease in an asset

an increase in an equity account

none of these

receipt of advance fees from clients

recording salaries of employees earned but not yet paid

payment of six months rent

purchase of supplies on account

assets

equity

revenues

liabilities

their current replacement cost

fair market value

an amount estimated by the company's management

historic cost

increase assets, increase stockholders' equity

increase assets, increase liabilities

increase assets, decrease liabilities

this transaction will have no impact on major classification totals

cash must be received before revenue is recognized

net income is calculated by matching cash outflows against cash inflows

events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid/received

the ledger, accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accountant principles

interest earned but not received

supplies purchased with cash but not yet used

a cash payment received from a customer before services provided

A and C

an increase in assets

a decrease in liabilities

a decrease in revenue

an increase in liabilities

none of the above

Rent expense

Service revenue

Dividends

Prepaid Insurance

prepaid insurance

unearned subscriptions revenue

retained earnings

subscription revenue

expenses and liabilities

expenses and revenues

assets and equity

assets and liabilities

recording the payment of 3 months rent

recording the interest earned (but not received) on a certificate of deposit

recording interest accepted on a note payable

recording salaries of employees earned but not yet paid

net income for ProTex Painting for 1997 is overstated

net income for ProTex Painting for 1997 is understated

assets of ProTex Painting are understated at December 31, 1997

liabilities of ProTex Painting are overstated at December 31, 1997

failure to make an adjustment does not affect the financial statements

expenses will be overstated and net income and owner's equity will be understated

assets will be overstated and net income and owner's equity will be understated

assets will be overstated and net income and owner's equity will be overstated

a decrease in a liability

an increase in a liability

an increase in assets

A and C

valuing an asset at its fair market value

increasing the value of an asset over its useful life in a rational and systematic manner

allocating the cost of a productive asset to expense over its useful life in a rational and systematic manner

writing down an asset to its real value each accounting period

accounts receivable

cash

capital stock

retained earnings

report revenue when received

improve the matching of revenue and expense in the proper period

report expenses when cash disbursements are made

improve the company's earnings per share

Equipment increased by $600

Accounts payable increased by $600

Expenses increased by $600

All of the above are true

Increase Prepaid Rent by $400 and increase Rent Expense by $400

Decrease Prepaid Rent by $2,400 and decrease Rent Expense by $2,400

Decrease Prepaid Rent by $400 and decrease Rent Expense by $400

None of the above

increase unearned revenue

increase cash

increase insurance revenue

increase insurance expense

borrowed $40,000 from First National Bank

purchased land for cash

received $3,800 for fees earned

paid $4,000 for office salaries

Increase Cash, $5,700; decrease Fees Earned, $5,700

Increase Accounts Receivable, $5,700; increase Fees Earned, $5,700

Increase Cash, $5,700; decrease Accounts Receivable, $5,700

Increase Cash, $5,700; increase Fees Earned, $5,700

understate revenues, understate net income, overstate assets, understate stockholders' equity

understate revenues, understate net income, overstate liabilities, overstate stockholders' equity

understate revenues, understate net income, understate liabilities, understate stockholders' equity

understate revenues, understate net income, overstate liabilities understate stockholders' equity

to reduce the number of expense accounts

to prepare the temporary accounts for the recording of the next period's activities

to establish new balances j.n the asset and liability accounts

to enable the accountant to prepare financial statements at the end of the accounting period

none of the above

Assets would be overstated.

Stockholders' equity would be understated.

Net income for the period would be understated.

Liabilities would be understated.

Net income for the period would be unaffected.

assign revenues to the period in which they are earned.

help to properly measure the periods net income or net loss.

bring asset and liability accounts to correct balances.

all of the above.

Expenses decrease owner's equity

Contributions of owners increase owner's equity

Dividends distributed to owners increase owner's equity

Revenues increase owner's equity

In April

In May

$2,000 in April and $4,000 in June

In June

In April

In May

$2,000 in April and $4,000 in June

In June

salaries payable, depreciation of equipment, and prepaid insurance

taxes payable, rent received in advance, and office supplies

prepaid rent, revenue received in advance, and prepaid salaries

salaries payable, interest receivable, and taxes payable

decrease a liability and decrease an asset

increase owner's equity and increase an asset

increase an asset and decrease and asset

decrease owner's equity and increase an asset

understatement of liability, and an overstatement of net income and owner's equity

overstatement of liabilities and an understatement of net income and owner's equity

overstatement of assets, net income, and owner's equity

understatement of assets, net income, and owner's equity

revenues and expenses

sales and costs of goods sold

assets and liabilities

contributed capital and retained earnings

owner's equity will not be impacted

owner's equity will be increased

owner's equity will be decreased

one cannot determine the impact on owner's equity without additional information

paid and recorded in an asset account before they are used or consumed

paid and recorded in an asset account after they are used or consumed

incurred but not yet paid or recorded

incurred and already paid or recorded

The changes in the Cash account occunirig during the the accounting period

The revenue, expense, and dividends of the accounting period

The types of assets which have been purchased with the earnings retained during the accounting period

The changed in the retained earnings account occurring during the accounting period

risky investments always generate low returns

when one goes up, the other usually goes up

they generally rise and fall somewhat inversely

smaller investments usually incur smaller risk but generate higher returns

interest paid decreases and dividends paid increases retained earnings

interest paid is on the income statement and dividends paid are not

interest paid is not on the income statement and dividends paid are

Both are treated identically by accountants

When the company first signs the policy

When the company pays for the policy

When the company receives the benefits from the policy over its period of coverage

When the company receives payments from the insurance company for its insurance claims

the IRS

the lottery

the business

the SEC

an expense should be recorded when the bill is received

an expense should be recorded when the cash is paid out

an adjusting entry should be made recognizing the expense

it is optional whether to record the expense before the bill is received

assets will increase

liabilities will increase

owner's equity will increase

assets will decrease

expenses are recorded in the same period as the revenues to which they are related

debits are matched with credits in each journal entry so that the entry balances

the taxable income of a corporation matches the income reported to shareholder

manufacturers of matches use accounting principles that are different from those used by retailers of matches

some business persons do not realize how much their income their business is earning

expenses may not be recorded until the related revenue is earned

revenues are recorded when earned, regardless of the time payment is received

revenues cannot occur unless an exchange or performance rakes place

of its cash account and retained earnings account

of its common stock account and its cash account

of its retained earnings account and its capital account

of its dividends account and its common stock account

money available for the payment of dividends

dividends actually paid during the period

expenses the company incurred on the last day of the accounting period

revenues earned during the accounting period

Liabilities

Owner's equity

Revenues

Expenses

Net losses

income statement

balance sheet

statement of cash flows

retained earnings statement

assets and liabilities

revenues and dividends

revenues and expenses

assets and dividends

Mr. Brown is wealthier than Mr. Greene.

Mr. Brown' s balance sheet is different from Mr. Greene's

Mr. Brown's first name is Charlie

Mr. Brown owes more money than Mr. Greene

liabilities and capital stock

assets and retained earnings

assets and liabilities

capital stock and retained earnings

the asset is overstated and income is understated

the asset is understated and income is overstated

both the asset and income are overstated

both the asset and income are understated

increase total assets

decrease total assets

have no effect on total assets

decrease total liabilities

salaries payable, depreciation of equipment, and prepaid insurance

taxes payable, rent received in advance, and office supplies

prepaid rent, revenue received in advance, and prepaid salaries

salaries payable, interest receivable, and taxes payable

Decrease a liability and decrease an asset

Increase owners' equity and increase an asset

Increase an asset and decrease an asset

Decrease owners' equity and increase an assett

expenses decrease owners' equity

contributions of owners' equity increase owners' equity

dividends distributed to owners increase owners' equity

revenues increase owners' equity

stay the same

double as well

increase, but will not double

decrease

interest revenue

gross profit

advertising expenses

income taxes expense

period costs

selling and administrative expenses

operating expenses

inventory costs

gross margin - merchandise inventory at the end of the period = net income

gross margin - selling and admin. expenses = net income

gross margin + selling and admin. expenses = net income

sales revenue * gross margin percentage = net income

period costs never appear in the balance sheet

product costs appear on the income statement but never on the balance sheet

period costs appear first on the balance sheet and then later on the income statement

neither product nor period costs ever appear on the balance sheet

neither product nor period costs ever appear on the income statement

fixed costs are fixed in total and fixed per unit of the activity base

fixed costs are variable in total and fixed per unit of the activity base

fixed costs are fixed in total and variable per unit of the activity base

fixed costs are variable in the short-run, but are fixed in the long-run

direct material and direct labor

direct labor and manufacturing overhead

direct material only

direct material, direct labor, and direct manufacturing overhead

LIFO

FIFO

retail method

weighted average

advertising expenditures

insurance on the office buildings

depreciation of the salesmen's car

depreciation of the production facilities

it includes the asset, accounts receivable

it reports the cost of goods sold

it includes the asset, merchandise inventory

it reports various period costs

total cost

fixed cost

variable cost

product cost

spreads variable costs over a greater number of units, thereby reducing the variable cost per unit

spreads fixed costs over a greater number of units, thereby reducing the fixed cost per unit

reduces total variable costs

reduces total fixed costs

a discount of 4% will be allowed if payment is made within 15 days from the date of the invoice

a discount of 15% will be allowed if payment is made with 4 days grin the date of the invoice

a discount of 4% will be allowed if payment is made by the 15th of the month

a discount of 15% will be allowed if payment is made by the 4th day after the data of the invoice

a reduction in the amount of money tied up in inventory

the company must use FIFO inventory method, and forgo the income tax advantages of LIFO

smaller inventories may reduce the company's current ratio and working capital

the risk is increased of losing sales opportunities or having to shut down manufacturing operations because of inventory shortages

the purchase price of merchandise only

all costs necessary to acquire inventory and prepare it for sale

an allocated portion of period costs

the purchase price of the merchandise + selling expenses

FIFO

LIFO

weighted average

work-in-process

Balance sheet - FIFO
Income statement - LIFO

Balance sheet - FIFO
Income statement - FIFO

Balance sheet - LIFO
Income statement - LIFO

Balance sheet - LIFO
Income statement - FIFO

a raw materials account

a direct materials account

a work in process account

a costs of goods sold account

2 and 3

1 and 4

1 and 3

2 and 4

a sales discount

free delivery

a sales allowance

a sales return

a cost of goods sold

gross profit

net income

contribution margin

LIFO will have the highest ending inventory

FIFO will have the highest cost of goods sold

FIFO will have the highest ending inventory

LIFO will have the lowers cost of goods sold

the last to be allocated to cost of goods sold

the first to be allocated to ending inventory

the first to be allocated to cost of goods sold

not allocated to cost of goods sold or ending inventory

increases

stays the same

decreases

the answer cannot be determined from the above information

cost of goods sold and financing expenses

operating expenses and financing expenses

cost of goods sold and operating expenses

sales and cost of goods sold

the customer must pay the bill within 10 days

the customer can deduct a 2% discount if the bill is paid between the 10th and 30th day of the invoice data

the customer can deduct a 2% discount if the bill is paid within the 10 days of the invoice date

two sales returns can be made within 10 days of the invoice date and no returns thereafter

physical possession

legal title

management's judgements

whether or not the purchase price has been paid

the seller has legal title to the goods until they are delivered

the buyer has legal title to the goods until they are delivered

the transportation company has legal title to the goods while the goods are in transit

no one has legal title to the goods until they are delivered

raw materials

finished goods

work in process

cost of goods sold

decrease sales price

decrease fixed costs

decrease sales volume

increase variable costs

profit

total contribution margin

contribution margin per unit

none of the above

how costs respond to changes in profits

how costs change over time

how costs change as output changes

none of the above

total costs exceed total revenues

marginal costs exceed marginal revenues

total revenues exceed total costs

it depends on the facts of the situation

gross profit

contribution margin

gross margin

manufacturing margin

paid office salaries

paid factory maintenance costs

paid product advertising costs

paid sales commissions

product costs flow from the balance sheet to the income statement

unlike direct material and direct labor costs, overhead costs must be allocated products

product costs are expensed in the period incurred

depreciation on manufacturing equipment is an indirect product cost

product costs incurred during the period will always appear as inventory on the balance sheet

general, selling, and administrative costs are always expensed when cash is paid

product costs may be divided between the balance sheet and income statement

general, selling, and administrative costs sometimes appear as inventory on the balance sheet

manufacturing companies incur costs for supplies but service companies do not

manufacturing companies accumulate product costs for supplies but service companies do not

service companies generally incur less labor costs than manufacturing companies

service companies are less competitive than manufacturing companies

decreases as production volume decreases

is not affected by changes in the production volume

increases as production volume increases

decreases as production volume increases

purchase less expensive direct materials

reduce direct labor hours necessary for production

reduce sales commission percentage

reduce advertising costs

decrease sales price

decrease fixed costs

decrease variable costs

increase variable costs

provide services

buy merchandise inventory and then resell it

transform raw materials into finished products

do none of the above

is physically present

the business owns

is physically presents plus merchandise shipped FOB destination

is physically presents plus merchandise shipped FOB shipping point

cost of goods sold

finished goods inventory

materials inventory

work in process inventory

increases

decreases

remains constant

increases in proportion to the change in volume

total variable costs will be lower than expected

contribution margin percentage will be higher than expected

total contribution margin will be higher than expected

per-unit contribution margin will be lower than expected

prefer to operate above the breakeven point because costs will be lower

prefer to operate above the breakeven point as revenue will be less than costs

prefer to operate above the breakeven point as revenue will be more than costs

prefer to operate at breakeven point because it provided equilibrium

perpetual inventory system

periodic inventory system

weighted-average system

LIFO inventory system

wighted-average cost

LIFO

FIFO

all of the above

average cost

FIFO

LIFO

specific identification

decrease sales price

decrease sales volume

increase variable costs

increase sales volume

zero

equal to total fixed costs

equal to total costs

equal to total variable costs

increases

stays the same

decreases

the answer cannot be determined from the information above

sales price and variable cost per unit

sales price and fixed cost per unit

total revenue and total fixed cost

total revenue and total cost

total revenue and total variable cost

the traditional income statement separates costs into their fixed and variable components

the traditional income statement subtracts all variable expenses from sales to obtain the contribution margin

cost-volume-profit relationship can be analyzed from the contribution income statement

the effect of sales volume changes on profit is readily apparent on the traditional income statement

Firm A will lose more profit than Firm B

Firm B will lose more profit than Firm A

Firm A and Firm B will lose the same amount of profit

Neither Firm A or Firm B will lose profit

direct costs

indirect costs

product costs

period costs

raw materials inventory

work in process

finished goods inventory

cost of goods sold

purchased

manufactured

inventoried

sold

raw material inventory

work in process

finished goods inventory

cost of goods sold

weighted average

retail inventory method

FIFO

LIFO

LIFO method more clearly matches current inventory cost with sales revenue

FIFO method more clearly matches current inventory cost with sales revenue

LIFO method assumes the oldest purchases are stored in the rear of the storage areas

FIFO method is more acceptable accounting method

the amount of sales revenue necessary to cover variable costs

sales revenue minus fixed costs

the amount of sales revenue necessary to cover fixed and variable costs

sales revenue minus variable costs

LIFO

FIFO

weighted average

specific identification

an inventory of office supplies such as pens and paper clips

goods purchased FOB destination for resale and not yet arrived yet

goods sold to customers FOB destination and now enroute to customers

a group of used cash registers no longer used by the store and awaiting sale

sales increased

total production decreased

total variable costs increased as a function of higher production

fixed costs increased due to addition to physical plant

lower the company's breakeven point in units

raise the company's breakeven point in units

have no effect on the company's breakeven point in units

cannot be determined without more information

a liability and an asset both increase

a revenue and liability both decrease

an asset increases and a liability decreases

an expense increases and a liability decreases

an asset and a revenue both increase

product cost - yes
period cost - yes

product cost - yes
period cost - no

product cost - no
period cost - yes

product cost - no
period cost - no

never appear on the income statement

include direct costs only

can appear on the balance sheet

never appear on the balance sheet

raise the sale price

lower the variable costs

lower the fixed costs

all of the above