Financial and Managerial Accounting Assignment
Answer each:
1. What is a deposit in transit?
2. When a "debit memo" is included in a bank statement, what effect does that have on the cash balance?
3. In preparing a bank reconciliation, is an outstanding check an adjustment to the book balance, the bank balance, or neither?
4. In preparing a bank reconciliation, is a deposit in transit an adjustment to the book balance, the bank balance, or neither?
5. What are NSF checks?
6. What is an outstanding check?
7. The following information is for Carmen Company for 2012:
Beginning inventory, 100 units @$25
Units purchased, 200 units @ $28
During the year, Carmen sold 250 units for $45 each.
Required:
a) Calculate gross margin assuming Carmen uses: 1) FIFO; 2) LIFO
b) Disregarding the effect of income taxes, what would be the dollar amount of difference in net income between FIFO and LIFO?
c) Calculate the cash flow from operating activities assuming that Carmen uses 1) LIFO; 2) FIFO. Assume that all transactions during the year were for cash.
8. Zephyr Sewing Machine Company makes many of its sales on account. For 2012, its beginning balance in Accounts Receivable was $91,000. Sales on account for the year were $412,000, and the amount of cash collected from its accounts receivable was $394,950. During the year, uncollectible accounts of $4,050 were written off. What was the ending balance in Accounts Receivable?
Indicate whether the following statements are True or False:
9. The principal on a promissory note is the person to whom the note is payable.
10. A promissory note may be secured by assets belonging to the maker.
11. Loaning money to another company through a promissory note is an asset source transaction.
12. Accruing interest on a note receivable at the end of the fiscal year is an asset source transaction.
13. Delta Company was accruing interest on a note receivable at the end of 2012. The note had principal of $10,000, an interest rate of 8%, and it had been outstanding for three months. Delta should accrue $200 of interest income for 2012.
14. Interest and notes receivable are reported on the balance sheet in the order of liquidity.
15. Accepting credit cards rather than offering credit directly to customers can help a business reduce its costs.
16. When a company accepts a credit card payment for a sale, the amount of sales revenue to be recorded is reduced by the amount of the credit card company's fee.
17. Collection of a credit card receivable is an asset source transaction.
18. One of the disadvantages of the specific identification inventory cost flow method is that it can allow managers of a business to manipulate the amount of income the business reports.
19. The specific identification inventory method is not practical for companies that sell many low-priced, high turnover items.
20. The inventory cost flow method a company chooses affects both the income statement and the balance sheet.
21. A company's gross margin reported on the income statement is not affected by the inventory cost flow method it uses.
22. In 2012, Harold Corporation Co. acquired a patent from a competitor for $65,000. At the time of purchase, it had 12 years of its legal life remaining; however, Harold believes that the patent will only be useful for 7 years. Compute the amortization expense for 2012.
23. Which of the following would be classified as a long-term operational asset?
A. Accounts Receivable.
B. Prepaid Insurance.
C. Office Equipment.
D. Inventory.
24. Which of the following would not be classified as a tangible long-term asset?
A. Delivery trucks
B. Trademarks
C. Land
D. Oil and gas reserves
25. Which of the following is not classified as Property, Plant and Equipment?
A. Computers
B. Goodwill
C. Machinery
D. Office furniture
26. Which of the following terms is used to identify the process of expense recognition for buildings and equipment?
A. Amortization
B. Depletion
C. Depreciation
D. Revision
27. Which of the following is an intangible asset with an identifiable useful life?
A. copyrights
B. renewable franchises
C. goodwill
D. trademarks
28. Which one of the following would not be classified as an intangible operational asset?
A. Patent
B. Copyright
C. Iron Ore Deposit
D. Goodwill
29. Which of the following would be classified as a tangible asset?
A. Copyright.
B. Goodwill.
C. Timber reserves.
D. Patent.
30. Which of the following is considered an accelerated depreciation method?
A. straight line
B. units of production
C. LIFO
D. double declining balance
31. Which method of depreciation is used by most U. S. companies for financial reporting purposes?
A. straight line
B. units of production
C. double declining balance
D. LIFO
TRUE OR FALSE -
32. A trademark is an intangible asset with an indefinite useful life.
33. Title search and document costs incurred to purchase a building are expensed in the period the building is acquired.
34. When several long-term assets are purchased in a single transaction, the purchase price is allocated among the assets based on their relative fair values.
35. The depreciable cost of a long-term asset is the difference between its original cost and its salvage value.
36. Double-declining-balance depreciation produces more depreciation in the later years of an asset's life than does the straight-line method.
37. Recognizing depreciation expense on equipment or a building is an asset use transaction.
38. Accumulated Depreciation is a temporary account that is closed each year.
39. With an accelerated depreciation method, an asset can be depreciated below its salvage value.
40. Different depreciation methods affect the total amount of depreciation that can be taken over an asset's useful life.
41. Gains and losses are reported as non-operating items on the income statement.
42. The use of estimates and revision of estimates are uncommon in financial reporting
43. Generally accepted accounting principles require that, when the estimated useful life of a long-term asset is changed, previously-issued financial statements are not revised.