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ACG Practice Final 3 (1)
ACG Practice Final 3 (1)
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ACG Practice Final 3Sampson Company's accounting records show the following account balances:
Purchase Discounts $ 3,000
Purchases 350,000
Beginning Inventory 32,000
Ending Inventory 39,000
Sales 690,000
Using the periodic system, the cost of goods sold is - ANS-$340,000.
Cost of goods sold = Beginning inventory + purchases - purchase returns & allowances -
purchase discounts - ending inventory
Cost of goods sold = 32,000 + 350,000 − 0 - 3,000 - 39,000 = 340,000
Chapter 5, Learning objective 5, Pool 1
Payments to a corporation's stockholders are called - ANS-dividends.
Payments to a corporation's stockholders are called dividends. Dividends are paid from the
earnings or profits of a corporation.
What type of account or account classification is Cost of Goods Sold? - ANS-Expense
Cost of goods sold is an expense. When a company sells inventory to a customer it reduces its
inventory and it records the cost of the inventory sold as an expense.
Pinson Company began the year with retained earnings of $570,000. During the year, the
company issued $50,000 of additional common stock, recorded revenues of $600,000, recorded
expenses of $380,000, and paid dividends of $140,000. What was Pinson's retained earnings at
the end of the year? - ANS-$650,000
Ending retained earnings = Beginning retained earnings + Net income - Dividends
Replace net income with revenue - expenses
Ending retained earnings = Beginning retained earnings + Revenue - Expenses - Dividends
Ending retained earnings = 570,000 + 600,000 - 380,000 - 140,000
Revenue = 650,000
Felix Company's retained earnings at the start of the year was $300,000. At the end of the
current year, its accounts had the following balances:
Accounts payable, $80,000
Accounts receivable, $60,000
Cash, $140,000
, Common stock, $120,000
Dividends, $40,000
Equipment, $300,000
Salaries expense, $500,000
Service revenue, $560,000
Supplies, $20,000
Felix Company's year-end retained earnings is not given. Felix Company's total assets at
year-end are - ANS-$520,000.
Identify this company's assets and sum their asset account balances.
Assets = Cash + Accounts receivable + Supplies + Equipment
Assets = 140,000 + 60,000 + 20,000 + 300,000 = 520,000
Which of the following best identifies a company's ability to pay its obligations that will become
due within the next year or operating cycle. - ANS-Current assets divided by current liabilities
Financial accounting ratios are commonly categorized into three categories, including
profitability ratios, liquidity ratios, and solvency ratios. Liquidity ratios measure the short-term
ability of the company to pay its maturing obligations and to meet unexpected needs for cash.
Short-term refers to one year or operating cycle (whichever is less). An example of a liquidity
ratio is the current ratio. The current ratio is computed current assets divided by current
liabilities.
Use the following data to determine the total amount of working capital.
Accounts payable................................. $ 65,000
Accounts receivable............................. 50,000
Accumulated depreciation.................. 30,000
Buildings................................................. 115,000
Cash........................................................ 35,000
Common stock...................................... 120,000
Inventory................................................ 70,000
Land......................................................... 95,000
Long-term stock investments............. 90,000
Notes payable (due in 18 months)..... 90,000
Prepaid insurance................................. 40,000
Salaries and wages payable................. 10,000
Trademarks.............................................. 70,000 - ANS-$120,000
From the list provided:Current assets = accounts receivable + cash + inventory + prepaid
insurance
Current assets = 50,000 + 35,000 + 70,000 + 40,000 = 195,000
Current liabilities = accounts payable + salaries and wages payable = 65,000 + 10,000 = 75,000
Working capital = current assets - current liabilities
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