1) Which of the following statements is true?
2) Notes to the financial statements include which of the following:
3) Which of the following financial statements is divided into major categories of operating, investing, and financing activities?
4) If the retained earnings account increases from the beginning of the year to the end of the year, then
5) If services are rendered on account, then
6) An investment by the stockholders in a business increases
7) Using accrual accounting, expenses are recorded and reported only:
8) A small company may be able to justify using a cash basis of accounting if they have: 9) Stockholders’ equity can be described as claims of 10) Common stock is reported on the 11) The Vintage Laundry Company purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $2,000 on hand. The adjusting entry that should be made by the company on June 12) On July 1 the Fisher Shoe Store paid $15,000 to Acme Realty for 6 months rent beginning July 1. Prepaid Rent was debited for the full amount. 13) Use the following data to determine the total dollar amount of assets to be classified as current assets. 14) Use the following data to calculate the current ratio. KoonceOffice Supplies Balance Sheet December 31, 2012 Cash $130,000 Accounts Payable $140,000 Prepaid Insurance 60,000 Salaries Payable 20,000 Accounts Receivable 100,000 Mortgage Payable 160,000 15) In horizontal analysis, each item is expressed as a percentage of the 16) When a change in depreciation method occurs: 17) Which of the following statements is true with respect to financial statement reporting for all cases when a company changes from one acceptable accounting method to another? 18) Which of the following would be considered a change in accounting principle? 19) From an internal control standpoint, the asset most susceptible to improper diversion and use is 20) A very small company would have the most difficulty in implementing which of the following internal control activities? 21) The reconciliation of the cash register tape with the cash in the register is an example of 22) Deposits in transit 23) Which of the following items on a bank reconciliation would require an adjusting entry on the company’s books? 24) Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjusting entry: 25) Why do pension and mutual funds invest in debt and equity securities? 26) Which of the following is a debt security? 27) Reed Company acquires 80 Holmes 10%, 5 year, $1,000 bonds on January 1, 2012 for $82,000. This includes a brokerage commission of $2,000. The journal entry to record this investment includes a debit to 28) Reed Company acquires 80 Holmes 10%, 5 year, $1,000 bonds on January 1, 2012 for $82,000. This includes a brokerage commission of $2,000. Assume Holmes pays interest semiannually and the July 1 entry was done correctly. The journal entry at December 31, 2012 would include a credit to 29) A company that owns more than 50% of the common stock of another company is known as the 30) If a parent company has two wholly owned subsidiaries, how many legal and economic entities are there from the viewpoint of the shareholders of the parent company?
ACC 291 Final Exam
1) Hahn Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $300,000 and credit sales are $1,200,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Hahn Company make to record the bad debts expense?
2) Using the percentage of receivables method for recording bad debts expense, estimated uncollectible accounts are $15,000. If the balance of the Allowance for Doubtful Accounts is $3,000 credit before adjustment, what is the amount of bad debts expense for that period?
3) Intangible assets
4) Intangible assets are the rights and privileges that result from ownership of long-lived assets that
5) The book value of an asset is equal to the
6) Gains on an exchange of plant assets that has commercial substance are
7) Ordinary repairs are expenditures to maintain the operating efficiency of a plant asset and are referred to as
8) Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as
9) When an interest-bearing note matures, the balance in the Notes Payable account is
10) The interest charged on a $200,000 note payable, at a rate of 6%, on a 2-month note would be
11) If a corporation issued $3,000,000 in bonds which pay 10% annual interest, what is the annual net cash cost of this borrowing if the income tax rate is 30%?
12) Hilton Company issued a four-year interest-bearing note payable for $300,000 on January 1, 2011. Each January the company is required to pay $75,000 on the note. How will this note be reported on the December 31, 2012 balance sheet?
13) A corporation issued $600,000, 10%, 5-year bonds on January 1, 2011 for 648,666, which reflects an effective-interest rate of 8%. Interest is paid semiannually on January 1 and July 1. If the corporation uses the effective-interest method of amortization of bond premium, the amount of bond interest expense to be recognized on July 1, 2011, is
14) When the effective-interest method of bond discount amortization is used
15) If a corporation has only one class of stock, it is referred to as
16) Capital stock to which the charter has assigned a value per share is called
17) ABC, Inc. has 1,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2011. What is the annual dividend on the preferred stock?
18) Manner, Inc. has 5,000 shares of 5%, $100 par value, noncumulative preferred stock and 20,000 shares of $1 par value common stock outstanding at December 31, 2011. There were no dividends declared in 2010. The board of directors declares and pays a $45,000 dividend in 2011. What is the amount of dividends received by the common stockholders in 2011?
19) When the selling price of treasury stock is greater than its cost, the company credits the difference to
20) The purchase of treasury stock
21) Marsh Company has other operating expenses of $240,000. There has been an increase in prepaid expenses of $16,000 during the year, and accrued liabilities are $24,000 lower than in the prior period. Using the direct method of reporting cash flows from operating activities, what were Marshs cash payments for operating expenses?
22) Where would the event purchased land for cash appear, if at all, on the indirect statement of cash flows?
23) In performing a vertical analysis, the base for cost of goods sold is
24) Blanco, Inc. has the following income statement (in millions): BLANCO, INC. Income Statement For the Year Ended December 31, 2011 Net Sales .............................. $200 Cost of Goods Sold .............................. 120 Gross Profit .............................. 80 Operating Expenses .............................. 44 Net Income .............................. $ 36 Using vertical analysis, what percentage is assigned to Net Income?
25) Dawson Company issued 500 shares of no-par common stock for $4,500. Which of the following journal entries would be made if the stock has a stated value of $2 per share?
26) Andrews, Inc. paid $45,000 to buy back 9,000 shares of its $1 par value common stock. This stock was sold later at a selling price of $6 per share. The entry to record the sale includes a
27) Which of the following is a fundamental factor in having an effective, ethical corporate culture?
28) Two individuals at a retail store work the same cash register. You evaluate this situation as
29) The Sarbanes-Oxley Act imposed which new penalty for executives?
30) The Sarbanes-Oxley Act requires that all publicly traded companies maintain a system of internal controls. Internal controls can be defined as a plan to
1) Which financial statement is used to determine cash generated from operations?
2) In terms of sequence, in what order must the four basic financial statements be prepared?
3) In classifying transactions, which of the following is true in regard to assets?
4) An increase in an expense account must be
5) ABC Corporation issues 100 shares of $1 par common stock at $5 per share, which of the following is the correct journal entry?
6) In the first month of operations, the total of the debit entries to the cash account amounted to $1,400 and the total of the credit entries to the cash account amounted to $600. The cash account has a
7) Which ledger contains control accounts?
8) Smith is a customer of ABC Corporation. Smith typically purchases merchandise from ABC on account. Which ledger would ABC use to keep track of the details of Smith s account?
9) Under the cash basis of accounting,
10) Under the accrual basis of accounting
11) The Vintage Laundry Company purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $2,000 on hand. The adjusting entry that should be made by the company on June 30 is
12) Greese Company purchased office supplies costing $4,000 and debited Office Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $1,100 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be
13) Based on the account balance below, what is the total of the debit and credit columns of the adjusted trial balance? Service revenue $3,300 Equipment $6,400 Cash 1,525 Prepaid insurance 1,225 Unearned revenue 5,320 Depreciation expense 640 Salary 1,050 Accum. depreciation 1,280 Common stock 390 Retained earnings 550
14) An adjusted trial balance
15) Given the following adjusted trial balance, net income for the year is: Debit Credit Cash $781 Accounts receivable 1,049 Inventory 1,562 Prepaid rent 43 Property, plant & equipment 150 Accumulated depreciation 26 Accounts payable 41 Unearned revenue 61 Common stock 103 Retained earnings 3,305 Service revenue 134 Interest revenue 28 Salary expense 80 Travel expense 33 Total $3,698 $3,698
16) Given the following adjusted trial balance, what will be the totals for the debit and credit columns of the post-closing trial balance? Debit Credit Cash $1,562 Accounts receivable 2,098 Inventory 3,124 Prepaid rent 86 Property, plant, & equipment 300 Accumulated depreciation $52 Accounts payable 82 Unearned revenue 172 Common stock 206 Retained earnings 6,610 Service revenue 218 Interest revenue 56 Salary expense 160 Travel expense 66 Totals $7,396 $7,396
17) Given the following adjusted trial balance: Debit Credit Cash $781 Accounts receivable 1,049 Inventory 1,562 Prepaid rent 43 Property, plant & equipment 150 Accumulated depreciation $26 Accounts payable 41 Unearned revenue 61 Common stock 103 Retained earnings 3,305 Service revenue 134 Interest revenue 28 Salary expense 80 Travel expense 33 Total $3,698 $3,698 After closing entries have been posted, the balance in retained earnings will be
18) Net income is recorded on the work sheet under the
19) At the beginning of the year, Uptown Athletic had an inventory of $400,000. During the year, the company purchased goods costing $1,500,000. If Uptown Athletic reported ending inventory of $600,000 and sales of $2,000,000, their cost of goods sold and gross profit rate would be
20) During the year, Sarah s Pet Shop s merchandise inventory decreased by $30,000. If the company s cost of goods sold for the y ear was $450,000, purchases would have been
21) At the beginning of the year, Wildcat Athletic had an inventory of $200,000. During the year, the company purchased goods costing $700,000. If Wildcat Athletic reported ending inventory of $300,000 and sales of $1,000,000, their cost of goods sold and gross profit rate would be
22) The entry to record of sale of $900 with terms of 2/10, n/30 will include a
23) Dobler Company uses a periodic inventory system. Details for the inventory account for the Units Per unit price Total Balance, 1/1/2012 200 $5.00 $1,000 Purchase, 1/15/2012 100 5.3 530 Purchase, 1/28/2012 100 5.5 550 An end of the month (1/31/2012), inventory showed that 140 units were on hand. If the company uses LIFO, what is the value of the ending inventory?
24) The difference between ending inventory using LIFO and ending inventory using FIFO is referred to as
25) A consistent application of an inventory costing method enhances
26) The accountant at Patton Company has determined that income before income taxes amounted to $11,000 using the FIFO costing assumption. If the income tax rate is 30% and the amount of income taxes paid would be $300 greater if the LIFO assumption were used, what would be the amount of income before taxes under the LIFO assumption?
27) A very small company would have the most difficulty in implementing which of the following internal control activities?
28) A system of internal control
29) The custodian of a company asset should
30) The Sarbanes Oxley Act (2002) applies to
1) The accounting process is correctly sequenced as
2) Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process?
3) Generally accepted accounting principles are
4) The private sector organization involved in developing accounting principles is the
5) GAAP stands for
6) The four primary financial statements are
7) Which of the following financial statements is a point in time report?
8) In recording an accounting transaction in a double-entry system,
9) An account will have a credit balance if the
10) Which of the following statements is true?
11) On June 1, 2008, Leno Inc. buys a copier machine for its business and finances this purchase with cash and a note. When journalizing this transaction, the companys accountant will
12) Posting of journal entries should be done in
13) Bank errors
14) A $2,000 advance payment for a 1-year insurance is recorded as
15) Carson company purchased a 2-year insurance policy for $4,800 on January 1, 2010. The $4,800 was debited to the Prepaid Insurance account. What adjustment should be made to record expired insurance January 31, 2010?
16) Can financial statements be prepared directly from the adjusted trial balance?
17) The information for preparing a trial balance on a worksheet is obtained from
18) If the total debit column exceeds the total credit column of the income statement columns on a worksheet, then the company has
19) After all of the account balances have been extended to the income statement columns of the work sheet, the totals of the debit and credit columns are $50,000 and $40,000, respectively. What is the amount of net income or net loss for the period?
20) The income summary account
21) Which of the following is an income statement account?
22) Which of the following is a balance sheet account?
23) In order to close the dividends account, the
24) In preparing closing entries,
25) Profit margin is a measure of
26) Working capital is
27) Internal control is defined, in part, as a plan that safeguards
28) Having one person post entries to accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of
29) Certified Public Accounting firms that audit public companies are reviewed by
30) The entity responsible for setting International Accounting Standards is