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

c. Weighted average
d. Specific detoxification.