Question

1.

Question 1

a)The goal of financial accounting is:

b)To make work for accountants

c)To accurately reflect the current market value of all items owned

d)To provide information to decision makers

To calculate (and minimize) taxes owed

1 point

2.

Question 2

Accounting was created

Independently across many ancient societies as a tool to organize as economies became more complicated

In 18th century Britain as a tool of the trading companies

In 16th century Italy as a tool of the newly wealthy merchant class

Around the same time as the computer. Accounting has become more complicated as computer abilities have grown.

1 point

3.

Question 3

"Where do we stand at a given point in time?" is one of the two big questions in life. Which financial statement was created to answer this question?

The cash flow statement

The balance sheet

The income statement

1 point

4.

Question 4

Accrual accounting is designed to

Provide companies with a tool for computing taxes

Reflect the current value of all items owned or owed by the organization

Record an economic event in the period in which it occurs

1 point

5.

Question 5

Athena firm started the year with retained earnings of $1,300,000. Their net income during the year was $250,000. They paid dividends of $25,000. They also borrowed $100,000 that they will have to pay next year. How much is retained earnings at the end of the year?

(Note - for all questions asking for numerical answers, write the number only, no dollar sign ($))

1 point

6.

Question 6

If assets go down and stock holders equity stays the same, what must have happened to liabilities?

It stayed the same

We cannot tell

It went down

It went up

1 point

7.

Question 7

If Kirsten's boss ask her how much the company spent on the inventory they sold this year, she should look at the

Income statement

Cash flow statement

Balance sheet

1 point

8.

Question 8

If Luis' boss ask him how much their competitors raised in financing last year, he should look at the

Cash flow statement

Income statement

Balance sheet

1 point

9.

Question 9

If Iullia's boss asked her how much they owed to vendors, she should look at the

Balance sheet

Income statement

Cash flow statement

1 point

10.

Question 10

Which are criteria of revenue recognition

Earned

Customer signs an agreement that goods were delivered

Items to be sold are completely built

Realized or Realizable

1 point

11.

Question 11

Caroline has a retail bike company called "One Price Bike". She charges $100 for each bike. In one week, she has four customers who purchase bikes by paying cash and taking the bikes immediately. Another customers pays for a bike, but says they will come in next week to pick it up on their child's birthday. There are also two customers who take bikes, but have not yet paid. They both are trying the bikes out and will either pay next week or return the bike. Caroline knows that about 50% of the people end up buying the bike after a week trail.

How much should Caroline recognize in revenue for this week?

1 point

12.

Question 12

Kelly owns a catering company that focuses on burritos. She provides clients with food and bills them later. At the end of the year she is owed $70,000, but believes there are about $4,000 she will not be paid. What amount should she report on the face of her financial statements?

$74,000

$70,000

$66,000

1 point

13.

Question 13

At the beginning of the year, a company had $80,000 in its allowance for doubtful accounts and $9,000,000 in accounts receivable. During the year they had $23,000,000 in credit sales. By the end of the year, they had $9,700,000 in accounts receivable and believed they would not collect $92,000 of it. Assuming there were no write offs or other items to impact the allowance for doubtful accounts, what would bad debt expense be for the current year?

1 point

14.

Question 14

Renata inc. had their year end on December 31. At that time they were owed accounts receivable of $970,000 and had an allowance for doubtful accounts of $21,000. On January 3rd they were notified that one of their customers had gone bankrupt and would not be paying the $3,200 they owed Renata. By how much will this transaction decrease the accounts receivable balance Renata shows on their balance sheet?

1 point

15.

Question 15

The inventory method applied by a firm should be

applied consistently from year to year, but does not have to match actual flow.

the method that most closely approximates the physical flow in the year being reported.

the one used by most firms in their industry

1 point

16.

Question 16

Hiroaki is calculating costs of goods sold for his company. They sell toasters. He spent $4,000 on raw material, paid employees who built the toasters $7,000, spent $5,000 on advertising and had depreciation of $1,000 on a machine used to build the toasters. How much should he report as his costs of goods sold?

1 point

17.

Question 17

Paula owns a company that distributes products to coffee shops. This is her second year of operations. At the beginning of the year, she had 120 pounds of coffee that cost $15 each. She purchased 200 pounds of coffee during the year, but the cost increased to $20. At the end of the year she had 130 pounds left. How much would cost of goods sold be if she used LIFO inventory method?

1 point

18.

Question 18

Paula owns a company that distributes products to coffee shops. This is her second year of operations. At the beginning of the year, she had 120 pounds of coffee that cost $15 each. She purchased 200 pounds of coffee during the year, but the cost increased to $20. At the end of the year she had 130 pounds left. How much would the inventory balance be if she used LIFO inventory method?

1 point

19.

Question 19

Matthew purchased a new motorcycle for his delivery company. It cost him $12,000. He spent $2,000 more to add storage bags and have it painted with his company colors. It is a high quality bike that will last 14 years. However, Matthew intends to sell it to an employee after 5 years. He believes it will still be worth $4,000 and views this as an easy way to make an employee happy. He purchased the bike on the first day of the year. How much depreciation expense would he recognize at the end of the year? You can assume he uses straight-line depreciation.

1 point

20.

Question 20

Matthew also owns a truck that he purchased three years ago. He plans to depreciate it over 6 years. At the time of purchase, he believed he would be able to resell the truck for $10,000. He still thinks that is correct (that is about what 6 year old trucks are selling for now). However, his current bookvalue is $18,000 and he was surprised to see that similar trucks are only selling for $16,000. How much additional depreciation expense should Matthew take this year? Assume he uses straight line depreciation.

1 point

21.

Question 21

Emily purchased a tractor for her farm four years ago. She paid $100,000 for it, planned to use it for 10 years and then to sell it $20,000. However, she has now decided to plow using Oxen as part of a bioorganic certification. It will take her two years to train the Oxen, and then she plans to sell the tractor. She believes she will be able to sell it for $35,000 at that time. How much depreciation expense should she recognize in the fifth year of use?

1 point

22.

Question 22

Joshua purchased an airplane 12 years ago. He paid $1,200,000 for the airplane. The last day of the current year he sold the plane, which had $800,000 in accumulated depreciation. He received $430,000 in cash. What impact does this sale have on his income statement for this year? Feel free to ignore taxes (as we have the entire course).

$30,000 gain, which creates $30,000 more in net income

$0 on income statement, but retained earnings increases by $30,000

$30,000 loss, which creates $30,000 less net income

1 point

23.

Question 23

A loss on the sale of an item indicates

Management is bad a negotiating deals.

Management over depreciated the item over its life.

Management under depreciated the item over its life.

Management owes more money to the company that sold them the item.

1 point

24.

Question 24

Depreciation and amortization are conceptually similar expenses.

False

True

1 point

25.

Question 25

Which is not part of the definition of an asset?

Probable future economic benefit

Tangible in nature

From a past transaction

Under the firm's control

1 point

26.

Question 26

Tocoa corp. purchases a new company for $1,000,000 in cash. The company has liabilities listed on their books for $600,000, but Tocoa believes the fair value of the liabilities is actually $550,000. The company had assets with a bookvalue of $800,000, which Tocoa believes would cost $900,000 if purchased separately. How much, if any, goodwill does Tocoa recognize for this transaction?

1 point

27.

Question 27

Tocoa had purchased another company 3 years ago. That purchase has been very successful and Tocoa has grown their sales each year. The purchase had included $400,000 of goodwill. Tocoa believes that most of her acquisitions payoff for at least 20 years. How much goodwill amortization should she recognized for this year?

1 point

28.

Question 28

Egge corp. sells souvenirs for exotic locations. A toy Komodo dragon has been a top seller for several years, selling for $25 each. Egge only paid $15 per unit, so this was a nice mark up. Unfortunately, new restrictions on how close visitors can get to take pictures has reduced interest. While the Egge corp believes they will be able to sell the 1,000 units they have in stock by shipping to toy stores, they will have to spend $2 per unit for shipping on average and sell the toys for $13. How much, if any, of a charge should Egge corp. take in their current year financial statements?

1 point

29.

Question 29

Egge corp. also sells a replica of the lost city of Petra in Jordan. She has been selling them for $50 and they only cost $20 to make. She has been able to sustain such a large mark up because she was the only company to make the replicas with Jordan dirt as one input. However, a competitor has now come into the market and she can only sell her replicas for $30 now. How much, if any, of a charge should she take in the current year financial statements?

1 point