Hospitality Management Accounting_Ch 2_ True/False & Multi Choice

As long as a business is engaged in operations for profit, economic activity will exist continuously.
T
Adjusting entries are not necessary at the end of an accounting period.
F
Dividends paid to stockholders are not operating expenses.
T
An adjusting entry is needed to recognize wages earned by employees, but not paid.
T
Accumulated depreciation is deducted from an asset’s cost to find book value.
T
A large organization will normally use the account formal for a balance sheet.
F
A profit center is expected to produce sales revenue but not to incur costs.
F
The two common balance sheet formats are called the account and the report format.
T
An adjusting entry that debits cost of sales and debits an inventory account bring the inventory account to a zero balance.
T
An adjusted trial balance does not show any sales revenue or expense accounts.
F
Wages payable is classified as a current liability.
T
The inventory method referred to as LIFO, means least in, first out.
F
A mortgage payable is a type of long-term liability.
T
Total cost divided by total units calculates a weighted average cost per unit.
T
On a balance sheet, an accrued payable is classified as a:
c. Current liability

a. Current asset
b. Non-current Fixed asset
d. Long-term liability

If the supplies account had a $1,800 debit balance and a physical count indicated that $400 of supplies was on hand at the end of a period, supplies used were:
b. $1,400

a. $2,200
c. $400
d. None of the above answers are correct.

A business ended an operating period with total assets of $100,000, capital stock of $40,000, and retained earnings of $45,000. What are the total liabilities?
a. $15,000

b. $60,000
c. $55,000
d. The correct amount is not shown above.

An example of a contra account is:
a. Accumulated depreciation

b. Dividends
c. A prepaid
d. Both a and b are correct.

A prepaid account is classified as:
d. Current asset

a. A current liability
b. Sales revenue
c. A contra account.

No adjusting entry was made to recognize interest expense of $1,300 at the end of an operating period. This omission will cause:
d. Both b and c are correct.

a. Net income to be understated by $1,200
b. Net income to be overstated by $1,200
c. Liabilities to be understated.

Beginning retained earnings was $86,300. The company reported a net loss during the year of $10,200 and declared and paid $16,800 in cash dividends. Retained earnings at the end of the year are:
d. $59,300

a. $27,000
b. $79,700
c. $92,900

One of the following is not normally considered to be a current asset:
c. Linen inventory

a. Prepaid expenses
b. Food and beverage inventories
d. Marketable securities

Cash dividends to stockholders become liabilities when they are:
b. Declared

a. Paid
c. Paid in another company’s stock
d. None of the above answers are correct.

A business reported net income of $150,000, declared and paid $50,000 in cash dividends and the ending balance of retained earnings is $150,000. The beginning balance of retained earnings was:
c. $50,000

a. $250,000
b. $100,000
d. None of the above.

During a period of rising inventory prices, which periodic inventory procedure would be expected to give the highest operating income?
a. FIFO

b. LIFO
c. Weighted average
d. Specific detoxification.