A company buys equipment for $5,000 cash. What is the journal entry?

Which of these accounts is increased by a credit?

A company has assets of $500,000 and liabilities of $200,000. It then borrows $50,000 from a bank. After the loan, what are its total assets, liabilities and equity?

At year-end, employees have earned $3,000 of wages that will be paid next month. What adjusting entry is required?

On October 1 a company receives $12,000 for a 12-month service contract starting that day. At December 31, how much revenue has it earned and what liability remains?

On July 1 a company pays $2,400 for a two-year insurance policy. What is the insurance expense for the year ending December 31?

A corporation's board declares a $40,000 cash dividend, to be paid next month. What is the effect on the financial statements at the declaration date?

A trial balance's debit and credit columns agree. Which of these errors could still be present?

During its first year a company makes $10,000 of sales on credit and collects $6,000 of it. It incurs $4,000 of expenses, all paid in cash. What is net income under the accrual basis, and under the cash basis?

Retained earnings began the year at $150,000. Net income was $60,000 and dividends declared were $25,000. What is the ending balance?

Accounts receivable total $100,000 and management estimates 5% will never be collected. The allowance for doubtful accounts already has a credit balance of $1,200. What is the bad debt expense for the period?

Under the allowance method, a customer's $800 account is written off as uncollectible. What is the effect on bad debt expense and on net accounts receivable?

A store starts the month with no inventory, buys 100 units at $10 each and later 100 units at $12 each, then sells 150 units.

What is the cost of goods sold under FIFO?

A store starts the month with no inventory, buys 100 units at $10 each and later 100 units at $12 each, then sells 150 units.

What is the cost of goods sold under LIFO?

Purchase prices are rising. Which inventory method reports the lowest net income and therefore the lowest income tax, and which accounting framework prohibits it?

A store starts the month with no inventory, buys 100 units at $10 each and later 100 units at $12 each, then sells 150 units.

What is the cost of goods sold under the weighted-average method?

Inventory cost $50 per unit. Its estimated selling price is $48 and selling costs are $3 per unit. What is the carrying amount per unit, and what is the write-down?

Cost of goods sold for the year is $600,000 and average inventory is $100,000. What is inventory turnover, and about how many days does inventory sit on hand?

A company using a periodic inventory system had beginning inventory of $20,000, purchases of $100,000 and ending inventory (by physical count) of $30,000. What is cost of goods sold?

Sales are $200,000 and cost of goods sold is $120,000. What is the gross profit margin?

A machine costs $50,000, has an estimated salvage value of $5,000 and a useful life of 5 years.

Under straight-line depreciation, what are the annual expense and the book value after 2 years?

A machine costs $50,000, has an estimated salvage value of $5,000 and a useful life of 5 years.

Under the double-declining-balance method, what is the depreciation expense in year 1 and in year 2?

A machine costs $50,000, has an estimated salvage value of $5,000 and a useful life of 5 years.

Under the sum-of-the-years'-digits method, what is the depreciation expense in year 1?

A machine costs $50,000, has an estimated salvage value of $5,000 and a useful life of 5 years.

The machine is expected to produce 100,000 units over its life. Under the units-of-production method, what is the depreciation for a year in which it produces 20,000 units?

Equipment with a cost of $50,000 and accumulated depreciation of $18,000 is sold for $35,000 cash. What gain or loss is recorded?

A company buys a machine for $40,000 and also pays $2,000 freight, $3,000 installation and $1,500 for the first year's routine maintenance. What amount is capitalised as the cost of the machine?

A long-lived asset held for use has a carrying amount of $100,000. Undiscounted future cash flows are $105,000; its fair value is $80,000. Under US GAAP, is the asset impaired?

A company pays $1,000,000 for another business whose identifiable assets have a fair value of $1,200,000 and whose liabilities have a fair value of $400,000. How much goodwill is recorded, and how is it treated afterwards?

A company sells a device and a two-year service plan together for $900. Sold separately, the device is $800 and the plan is $400. How much of the price is allocated to each?

Under the five-step revenue model, which of these performance obligations is satisfied over time rather than at a point in time?

A contractor has a fixed-price contract of $1,000,000 with total estimated costs of $800,000. By year-end it has incurred $200,000 of costs. Using the cost-to-cost method, how much revenue and gross profit does it recognise in year 1?

A company issues $100,000 of 5-year bonds with a 6% annual coupon when the market rate for similar bonds is 8%.

What are the issue proceeds?

A company issued bonds at a premium. Each year, how does interest expense compare with the cash coupon paid?

A company issues $100,000 of 5-year bonds with a 6% annual coupon when the market rate for similar bonds is 8%.

The bonds were issued for $92,015. Under the effective interest method, what is interest expense for year 1 and the carrying amount at the end of year 1?

Sales for the year are $500,000 and the company estimates warranty costs at 2% of sales. During the year it spent $6,000 honouring warranty claims. What is the warranty expense and the year-end warranty liability, assuming none at the start?

A company is being sued. Its lawyers say a loss is probable and can be reasonably estimated at $300,000. A second suit has a loss that is reasonably possible but not probable. How is each treated under US GAAP?

Book depreciation is $10,000 but tax depreciation is $15,000. The tax rate is 25%. What deferred tax item arises, and how much?

A five-year lease transfers ownership of the equipment to the lessee at the end of the term. How does the lessee classify it, and what does the classification change?

Net income is $100,000. Depreciation was $20,000, accounts receivable increased by $15,000 and accounts payable increased by $5,000. What is cash flow from operating activities (indirect method)?

Under US GAAP, how are these three cash flows classified: purchase of equipment, dividends paid to shareholders, and interest paid on a loan?

Current assets are $300,000, of which $100,000 is inventory. Current liabilities are $150,000. What are the current ratio and the quick ratio?

Net income is $1,000,000. Preferred dividends of $100,000 were declared, and the weighted-average number of common shares outstanding is 450,000. What is basic EPS?

Net income is $120,000 and average shareholders' equity is $800,000. Total liabilities are $400,000 at year-end. What are return on equity and the debt-to-equity ratio?

A company buys back 1,000 of its own shares for $50 each and later reissues them for $60 each. How are these transactions recorded?

The bank statement shows a balance of $10,000. Deposits in transit total $2,000 and outstanding cheques total $3,500. The company's own cash ledger shows $8,800 and has not yet recorded a $300 bank service charge. What is the correct cash balance?