Exam 2: Review of the Accounting Process

The Hamada Company sales for 2009 totaled $150,000 and purchases totaled $95,000. Selected January 1, 2009, balances were: accounts receivable, $18,000; inventory, $14,000; and accounts payable, $12,000. December 31, 2009, balances were: accounts receivable, $16,000; inventory, $15,000; and accounts payable, $13,000. Net cash flows from these activities were:

In its first year of operations Acme Corp. had income before tax of $400,000. Acme made income tax payments totaling $150,000 during the year and has an income tax rate of 40%. What would be the balance in income tax payable at the end of the year?

Cal Farms reported supplies expense of $2,000,000 this year. The supplies account decreased by $200,000 during the year to an ending balance of $400,000. What was the cost of supplies the Cal Farms purchased during the year?

In its first year of operations Best Corp. had income before tax of $500,000. Best made income tax payments totaling $210,000 during the year and has an income tax rate of 40%. What was Best's net income for the year?

When an employer makes an end-of-period adjusting entry with a debit to supplies expense, the usual credit entry is made to:

A sale on account would be recorded by:

What is the difference between permanent accounts and temporary accounts and why does an accounting system have both types of accounts?

When converting an income statement from a cash basis to an accrual basis, which of the following is incorrect?

Recording revenue earned, but not yet collected, from a customer is an example of:

Accruals occur when cash flows:

-Capital stock

Silicon Chip Company's fiscal year-end is December 31.At the end of 2009, it owed employees $22,000 in wages that will be paid on January 7, 2010. Required: 1. Prepare an adjusting entry to record accrued salaries, a reversing entry on January 1, 2010, and an entry to record the payment of wages on January 7, 2010. 2. Prepare journal entries to record the accrued salaries on December 31 and the payment of salaries on January 7 assuming a reversing entry is not made.

Kline's 12/31/09 total current liabilities:

Which of the following accounts has a debit balance?

Purchased inventory on account.

The adjusted trial balance contains only permanent accounts.

The statement of cash flows summarizes transactions that caused cash and cash equivalents to change during a reporting period.

Temporary accounts would not include:

-Inventory

Examples of internal transactions include all of the following except: