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ACC 422 Final Exam

ACC 422 Final Exam | New Homeworkmye FInal Exam | Scoop.it
ACC 422 FINAL EXAM
1) Which of the following is NOT considered cash for financial reporting purposes?
A. Coin, currency, and available funds
B. Money orders, certified checks, and personal checks
C. Petty cash funds and change funds
D. Postdated checks and I.O.U.'s
2) What is the preferable presentation of accounts receivable from officers, employees, or affiliated companies on a balance sheet?
A. As assets but separately from other receivables.
B. As offsets to capital.
C. As trade notes and accounts receivable if they otherwise qualify as current assets.
D. By means of footnotes only.
3) Which of the following is considered cash?
A. Money market savings certificates
B. Certificates of deposit (CDs)
C. Postdated checks
D. Money market checking accounts
4) If a company employs the gross method of recording accounts receivable from customers, then sales discounts taken should be reported as
A. an item of "other expense" in the income statement
B. a deduction from accounts receivable in determining the net realizable value of accounts receivable
C. a deduction from sales in the income statement
D. sales discounts forfeited in the cost of goods sold section of the income statement
5) Assuming that the ideal measure of short-term receivables in the balance sheet is the discounted value of the cash to be received in the future, failure to follow this practice usually does NOT make the balance sheet misleading because
A. the allowance for uncollectible accounts includes a discount element
B. the amount of the discount is NOT material
C. most short-term receivables are NOT interest-bearing
D. most receivables can be sold to a bank or factor
6) Which of the following methods of determining annual bad debt expense best achieves the matching concept?
A. Direct write-off
B. Percentage of average accounts receivable
C. Percentage of ending accounts receivable
D. Percentage of sales
7) The accountant for the Orion Sales Company is preparing the income statement for 2007 and the balance sheet at December 31, 2007. Orion uses the periodic inventory system. The January 1, 2007 merchandise inventory balance will appear
A. as an addition in the cost of goods sold section of the income statement and as a current asset on the balance sheet
B. only as an asset on the balance sheet
C. only in the cost of goods sold section of the income statement
D. as a deduction in the cost of goods sold section of the income statement and as a current asset on the balance sheet
8) Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in inventory, but did NOT record the transaction. The effect of this on its financial statements for January 31 would be
A. net income, current assets, and retained earnings were understated
B. net income, current assets, and retained earnings were overstated
C. net income was correct and current assets were understated
D. net income and current assets were overstated and current liabilities were understated
9. If the beginning inventory for 2006 is overstated, the effects of this error on cost of goods sold for 2006, net income for 2006, and assets at December 31, 2007, respectively, are
A. understatement, overstatement, no effect
B. overstatement, understatement, overstatement
C. overstatement, understatement, no effect
D. understatement, overstatement, overstatement
10) Assuming no beginning inventory, what can be said about the trend of inventory prices if cost of goods sold computed when inventory is valued using the FIFO method exceeds cost of goods sold when inventory is valued using the LIFO method?
A. Price trend cannot be determined from information given
B. Prices decreased
C. Prices remained unchanged
D. Prices increased
11) Which method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations?
A. Base stock
B. Average cost
C. First-in, first-out
D. Last-in, first-out
12) All of the following costs should be charged against revenue in the period in which costs are incurred EXCEPT for
A. costs of normal shrinkage and scrap incurred for the manufacture of a product in ending inventory
B. manufacturing overhead costs for a product manufactured and sold in the same accounting period
C. costs which will NOT benefit any future period
D. costs from idle manufacturing capacity resulting from an unexpected plant shutdown
13) In no case can "market" in the lower-of-cost-or-market rule be more than
A. estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal, an allowance for an approximately normal profit margin, and an adequate reserve for possible future losses
B. estimated selling price in the ordinary course of business
C. estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal
D. estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal and an allowance for an approximately normal profit margin
14) When the direct method is used to record inventory at market
A. the market value figure for ending inventory is substituted for cost and the loss is buried in cost of goods sold
B. there is a direct reduction in the selling price of the product that results in a loss being recorded on the income statement prior to the sale
C. a loss is recorded directly in the inventory account by crediting inventory and debiting loss on inventory decline
D. only the portion of the loss attributable to inventory sold during the period is recorded in the financial statements
15) An item of inventory purchased this period for $15.00 has been incorrectly written down to its current replacement cost of $10.00. It sells during the following period for $30.00, its normal selling price, with disposal costs of $3.00 and normal profit of $12.00. Which of the following statements is NOT true?
A. Income of the following year will be understated
B. The cost of sales of the following year will be understated
C. The current year's income is understated
D. The closing inventory of the current year is understated
16) The retail inventory method is based on the assumption that the
A. proportions of markups and markdowns to selling price are the same
B. final inventory and the total of goods available for sale contain the same proportion of high-cost and low-cost ratio goods
C. ratio of gross margin to sales is approximately the same each period
D. ratio of cost to retail changes at a constant rate
17) A major advantage of the retail inventory method is that it
A. provides a method for inventory control and facilitates determination of the periodic inventory for certain types of companies
B. provides reliable results in cases where the distribution of items in the inventory is different from that of items sold during the period
C. hides costs from competitors and customers
D. gives a more accurate statement of inventory costs than other methods
18) In 2006, Lucas Manufacturing signed a contract with a supplier to purchase raw materials in 2007 for $700,000. Before the December 31, 2006 balance sheet date, the market price for these materials dropped to $510,000. The journal entry to record this situation at December 31, 2006 will result in a credit that should be reported
A. on the income statement
B. as a valuation account to Inventory on the balance sheet
C. as a current liability
D. as an appropriation of retained earnings
19) The cost of land typically includes the purchase price and all of the following costs EXCEPT
A. assumption of any liens or mortgages on the property
B. grading, filling, draining, and clearing costs
C. street lights, sewers, and drainage systems cost
D. private driveways and parking lots
20) Cotton Hotel Corporation recently purchased Holiday Hotel and the land on which it is located with the plan to tear down the Holiday Hotel and build a new luxury hotel on the site. The cost of the Holiday Hotel should be
A. capitalized as part of the cost of the new hotel
B. depreciated over the period from acquisition to the date the hotel is scheduled to be torn down
C. written off as an extraordinary loss in the year the hotel is torn down
D. capitalized as part of the cost of the land
21) If a corporation purchases a lot and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on
A. the intention of management for the property when the building was acquired
B. the length of time for which the building was held prior to its demolition
C. the significance of the cost allocated to the building in relation to the combined cost of the lot and building
D. the contemplated future use of the parking lot
22) The period of time during which interest must be capitalized ends when
A. the activities that are necessary to get the asset ready for its intended use have begun
B. no further interest cost is being incurred
C. the asset is substantially complete and ready for its intended use
D. the asset is abandoned, sold, or fully depreciated
23) Which of the following assets do NOT qualify for capitalization of interest costs incurred during construction of the assets?
A. Assets NOT currently undergoing the activities necessary to prepare them for their intended use
B. Assets intended for sale or lease that are produced as discrete projects
C. Assets under construction for an enterprise's own use
D. Assets financed through the issuance of long-term debt
24) When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to
A. that portion of average accumulated expenditures on which no interest cost was incurred
B. a cost of capital charge for stockholders' equity
C. the total interest cost actually incurred
D. that portion of total interest cost which would NOT have been incurred if expenditures for asset construction had NOT been made
25) The King-Kong Corporation exchanges one plant asset for a similar plant asset and gives cash in the exchange. The exchange is NOT expected to cause a material change in the future cash flows for either entity. If a gain on the disposal of the old asset is indicated, the gain will
A. be credited directly to the owner's capital account
B. effectively reduce the amount to be recorded as the cost of the new asset
C. be reported in the Other Revenues and Gains section of the income statement
D. effectively increase the amount to be recorded as the cost of the new asset
26) When a plant asset is acquired by issuance of common stock, the cost of the plant asset is properly measured by the
A. market value of the stock
B. stated value of the stock
C. par value of the stock
D. book value of the stock
27) The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset and the exchange has commercial substance is usually recorded at
A. either the fair value of the asset given up or the asset received, whichever one results in the largest gain (smallest loss) to the company
B. the fair value of the asset given up, and a gain but NOT a loss may be recognized
C. the fair value of the asset given up, and a gain or loss is recognized
D. the fair value of the asset received if it is equally reliable as the fair value of the asset given up
28) Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?
A. Partial recognition
B. Systematic and rational allocation
C. Associating cause and effect
D. Immediate recognition
29) If an industrial firm uses the units-of-production method for computing depreciation on its only plant asset, factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will
A. vary with production
B. vary with unit sales
C. be constant
D. vary with sales revenue
30) Which of the following most accurately reflects the concept of depreciation as used in accounting?
A. An accounting concept that allocates the portion of an asset used up during the year to the contra asset account for the purpose of properly recording the fair market value of tangible assets
B. The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset
C. The process of charging the decline in value of an economic resource to income in the period in which the benefit occurred
D. A method of allocating asset cost to an expense account in a manner which closely matches the physical deterioration of the tangible asset involved
31) Prentice Company purchased a depreciable asset for $200,000. The estimated salvage value is $20,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset?
A. $200,000
B. $20,000
C. $18,000
D. $180,000
32) Harrison Company purchased a depreciable asset for $100,000. The estimated salvage value is $10,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset?
A. $100,000
B. $10,000
C. $9,000
D. $90,000
33) Starr Company purchased a depreciable asset for $150,000. The estimated salvage value is $10,000, and the estimated useful life is 8 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset?
A. $37,500
B. $26,250
C. $17,500
D. $28,125
34) Costs incurred internally to create intangibles are
A. capitalized
B. expensed only if they have a limited life
C. capitalized if they have an indefinite life
D. expensed as incurred
35) Factors considered in determining an intangible asset’s useful life include all of the following EXCEPT
A. the expected use of the asset
B. the amortization method used
C. any legal or contractual provisions that may limit the useful life
D. any provisions for renewal or extension of the asset’s legal life
36) The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be
A. charged off in the current period
B. amortized over the remaining estimated life of the original patent covering the product whose market would have been impaired by competition from the newly patented product
C. amortized over the legal life of the purchased patent
D. added to factory overhead and allocated to production of the purchaser's product
37) Malrom Manufacturing Company acquired a patent on a manufacturing process on January 1, 2006 for $10,000,000. It was expected to have a 10 year life and no residual value. Malrom uses straight-line amortization for patents. On December 31, 2007, the expected future cash flows expected from the patent were expected to be $800,000 per year for the next eight years. The present value of these cash flows, discounted at Malrom’s market interest rate, is $4,800,000. At what amount should the patent be carried on the December 31, 2007 balance sheet?
A. $10,000,000
B. $4,800,000
C. $8,000,000
D. $6,400,000
38) Mining Company acquired a patent on an oil extraction technique on January 1, 2006 for $5,000,000. It was expected to have a 10 year life and no residual value. Mining uses straight-line amortization for patents. On December 31, 2007, the expected future cash flows expected from the patent were expected to be $600,000 per year for the next eight years. The present value of these cash flows, discounted at Mining’s market interest rate, is $2,800,000. At what amount should the patent be carried on the December 31, 2007 balance sheet?
A. $5,000,000
B. $2,800,000
C. $4,800,000
D. $4,000,000
39) General Products Company bought Special Products Division in 2006 and appropriately booked $250,000 of goodwill related to the purchase. On December 31, 2007, the fair value of Special Products Division is $2,000,000 and it is carried on General Product’s books for a total of $1,700,000, including the goodwill. An analysis of Special Products Division’s assets indicates that goodwill of $200,000 exists on December 31, 2007. What goodwill impairment should be recognized by General Products in 2007?
A. $0
B. $300,000
C. $200,000
D. $50,000
40) The intangible asset goodwill may be
A. capitalized only when purchased
B. written off directly to retained earnings
C. capitalized either when purchased or created internally
D. capitalized only when created internally
41) The reason goodwill is sometimes referred to as a master valuation account is because
A. it represents the purchase price of a business that is about to be sold
B. it is the only account in the financial statements that is based on value, all other accounts are recorded at an amount other than their value
C. it is the difference between the fair market value of the net tangible and identifiable intangible assets as compared with the purchase price of the acquired business
D. the value of a business is computed without consideration of goodwill and then goodwill is added to arrive at a master valuation
42) Goodwill
A. generated internally should NOT be capitalized unless it is measured by an individual independent of the enterprise involved
B. exists in any company that has earnings that differ from those of a competitor
C. is easily computed by assigning a value to the individual attributes that comprise its existence
D. represents a unique asset in that its value can be identified only with the business as a whole
43) If a short-term obligation is excluded from current liabilities because of refinancing, the footnote to the financial statements describing this event should include all of the following information EXCEPT
A. a general description of the financing arrangement
B. the number of financing institutions that refused to refinance the debt, if any
C. the terms of the new obligation incurred or to be incurred
D. the terms of any equity security issued or to be issued
44) Stock dividends distributable should be classified on the
A. income statement as an expense
B. balance sheet as an item of stockholders' equity
C. balance sheet as an asset
D. balance sheet as a liability
45) Which of the following items is a current liability?
A. Bonds (for which there is an adequate sinking fund properly classified as a long-term investment) due in three months
B. Bonds to be refunded when due in eight months, there being no doubt about the marketability of the refunding issue
C. Bonds due in three years
D. Bonds (for which there is an adequate appropriation of retained earnings) due in eleven months.
46) A company offers a cash rebate of $1 on each $4 package of light bulbs sold during 2007. Historically, 10% of customers mail in the rebate form. During 2007, 4,000,000 packages of light bulbs are sold, and 140,000 $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31?
A. $400,000; $400,000
B. $140,000; $260,000
C. $400,000; $260,000
D. $260,000; $260,000
47) A company offers a cash rebate of $1 on each $4 package of batteries sold during 2007. Historically, 10% of customers mail in the rebate form. During 2007, 6,000,000 packages of batteries are sold, and 210,000 $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31?
A. $600,000; $600,000
B. $210,000; $390,000
C. $600,000; $390,000
D. $390,000; $390,000
48) A company buys an oil rig for $1,000,000 on January 1, 2007. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is $200,000 (present value at 10% is $77,110). 10% is an appropriate interest rate for this company. What expense should be recorded for 2007 as a result of these events?
A. Depreciation expense of $120,000
B. Depreciation expense of $100,000 and interest expense of $7,711
C. Depreciation expense of $100,000 and interest expense of $20,000
D. Depreciation expense of $107,710 and interest expense of $7,711
49) A contingency can be accrued when
A. it is certain that funds are available to settle the disputed amount
B. an asset may have been impaired
C. the amount of the loss can be reasonably estimated and it is probable that an asset has been impaired or a liability incurred
D. it is probable that an asset has been impaired or a liability incurred even though the amount of the loss cannot be reasonably estimated
50) Mark Ward is a farmer who owns land which borders on the right-of-way of the Northern Railroad. On August 10, 2007, due to the admitted negligence of the Railroad, hay on the farm was set on fire and burned. Ward had had a dispute with the Railroad for several years concerning the ownership of a small parcel of land. The representative of the Railroad has offered to assign any rights which the Railroad may have in the land to Ward in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Ward appears inclined to accept the Railroad's offer. The Railroad's 2007 financial statements should include the following related to the incident:
A. recognition of a loss and creation of a liability for the value of the land
B. recognition of a loss only
C. creation of a liability only
D. disclosure in note form only
51) Which of the following contingencies need NOT be disclosed in the financial statements or the notes thereto?
A. Probable losses NOT reasonably estimable
B. Environmental liabilities that cannot be reasonably estimated
C. Guarantees of indebtedness of others
D. All of these must be disclosed
52) The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the
A. bond indenture
B. bond debenture
C. registered bond
D. bond coupon
53) If bonds are issued initially at a premium and the effective-interest method of amortization is used, interest expense in the earlier years will be
A. greater than if the straight-line method were used
B. greater than the amount of the interest payments
C. the same as if the straight-line method were used
D. less than if the straight-line method were used
54) Bonds that pay no interest unless the issuing company is profitable are called
A. collateral trust bonds
B. debenture bonds
C. revenue bonds
D. income bonds
55) Minimum lease payments may include a
A. penalty for failure to renew
B. bargain purchase option
C. guaranteed residual value
D. any of these
56) An essential element of a lease conveyance is that the
A. lessor conveys less than his or her total interest in the property
B. lessee provides a sinking fund equal to one year's lease payments
C. property that is the subject of the lease agreement must be held for sale by the lessor prior to the drafting of the lease agreement
D. term of the lease is substantially equal to the economic life of the leased property
57) While only certain leases are currently accounted for as a sale or purchase, there is theoretic justification for considering all leases to be sales or purchases. The principal reason that supports this idea is that
A. [Answer Text]all leases are generally for the economic life of the property and the residual value of the property at the end of the lease is minimal
B. at the end of the lease the property usually can be purchased by the lessee
C. a lease reflects the purchase or sale of a quantifiable right to the use of property
D. during the life of the lease the lessee can effectively treat the property as if it were owned by the lessee
58) In the earlier years of a lease, from the lessee's perspective, the use of the
A. capital method will enable the lessee to report higher income, compared to the operating method.
B. capital method will cause debt to increase, compared to the operating method
C. operating method will cause income to decrease, compared to the capital method
D. operating method will cause debt to increase, compared to the capital method
59) In a lease that is appropriately recorded as a direct-financing lease by the lessor, unearned income
A. should be amortized over the period of the lease using the interest method
B. should be amortized over the period of the lease using the straight-line method
C. does NOT arise
D. should be recognized at the lease's expiration
60) In order to properly record a direct-financing lease, the lessor needs to know how to calculate the lease receivable. The lease receivable in a direct-financing lease is best defined as
A. the amount of funds the lessor has tied up in the asset which is the subject of the direct-financing lease
B. the difference between the lease payments receivable and the fair market value of the leased property
C. the present value of minimum lease payments
D. the total book value of the asset less any accumulated depreciation recorded by the lessor prior to the lease agreement
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ACC 400 Final Exam

ACC 400 Final Exam | New Homeworkmye FInal Exam | Scoop.it
ACC 400/Final Exam
Below is the course final. Please number you answer sheet from 1-20 and include the correct response by each number.
Good Luck!
1. Zelma Company's last financial statements provided the following ratios:
Current ratio 3:2
Quick ratio 1:2
Accounts receivable turnover 9.0 times
Inventory turnover 8.0 times
Net income percentage 12.5%
Return on equity 22.6%
Return on assets 9.8%
To the nearest day, what is the operating cycle for Zelma?
a) 80 days
b) 86 days
c) 172 days
d) 129 days
2. The following events have been projected:
A. Cash sales and collections from customers totaling $980,000
B. Cash payments for operating expenses of $560,000
C. Cash payments for income taxes and interest expense of $45,000
D. Cash payments of prior period accruals of $80,000
E. Borrowed $50,000 cash by issuing a note payable
F. Cash dividends of $20,000
The beginning balance of cash is $45,000. What is the budgeted ending balance of cash?
a. $325,000
b. $370,000
c. $275,000
d. $245,000
3. On January 1, a business exchanged a plant asset with a cost of $18,000 and accumulated depreciation of $16,500 for a similar asset that had a list price of $23,000. The business received a trade-in allowance of $2,100 on the old plant asset. What was the result of the exchange?
a. A $600 gain on the disposal of a plant asset.
b. A $1,000 unrecognized gain on the exchange of a plant asset.
c. A cost basis of $22,400 for the new plant asset
d. A cost basis of $23,600 for the new plant asset
4. Which one of the following is not an objective of a system of internal controls?
a.Safeguard company assets
b.Overstate liabilities in order to be conservative
c.Enhance the accuracy and reliability of accounting records
d.Reduce the risks of errors
5. A company’s past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5 % in the second month after the sale; the remainder is never collected. Budgeted credit sales were:
July $120,000
August 72,000
September 180,000
The cash inflow in the month of September is expected to be
a.$135,600
b.$102,600
c.$108,000
d.$129,600
6. A check for $275 is incorrectly recorded by a company as $257. On the bank reconciliation, the $18 error should be
a. Added to the balance per books.
b. Deducted from the balance per book.
c. Added to the balance per bank.
d. Deducted from the balance per bank.
7.The Allowance for Doubtful Accounts is necessary because
a. when recording uncollectible accounts expense, it is not possible to know which specific accounts will not pay.
b. uncollectible accounts that are written off must be accumulated in a separate account.
c. a liability results when a credit sale is made.
d. management needs to accumulate all the credit losses over the years.
8.Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited
a.when a credit sale is past due.
b.at the end of each accounting period.
c.whenever a pre-determined amount of credit sales have been made.
d.when an account is determined to be uncollectible
9. Manning Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $200,000 and credit sales are $1,000,000. Management estimates that 5% of accounts receivable will be uncollectible. What adjusting entry will Manning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,000 before adjustment?
a.Bad Debts Expense 10,000
Allowance for Doubtful Accounts 10,000
b.Bad Debts Expense 8,000
Allowance for Doubtful Accounts 8,000
c.Bad Debts Expense 8,000
Accounts Receivable 8,000
d.Bad Debts Expense 10,000
Accounts Receivable 10,000
10.The receivables turnover ratio
a. Is computed by dividing net credit sales for the accounting period by the cash realizable value of accounts receivable on the last day of the accounting period.
b. Can be used to compute the average collection period.
c. Is a method of evaluating the solvency of net accounts receivable.
d. Is only important to internal users of accounting information.
11. A measure of a company’s solvency is the
a.acid-test ratio.
b.current ratio.
c.times interest earned ratio.
d.asset turnover ratio.
12. The times interest earned ratio is computed by dividing
a.net income by interest expense.
b.income before income taxes by interest expense.
c.income before interest expense by interest expense.
d.income before interest expense and income taxes by interest expense.
13.The 2007 financial statements of Shadow Co. contain the following selected data (in millions).
Current Assets$ 75
Total Assets120
Current Liabilities40
Total Liabilities85
Cash8
Interest Expense5
Income Taxes10
Net Income16
The debt to total assets ratio is
a.70.8%
b.53.3%
c.1.41%
d.6.2 times
14.The statement "Bond prices vary inversely with changes in the market rate of interest" means that if the
a.market rate of interest increases, the contractual interest rate will decrease.
b.contractual interest rate increases, then bond prices will go down.
c.market rate of interest decreases, then bond prices will go up.
d.contractual interest rate increases, the market rate of interest will decrease.
15. A company would not acquire treasury stock
a.in order to reissue shares to officers.
b.as an asset investment.
c.in order to increase trading of the company’s stock.
d.to have additional shares available to use in acquisitions of other companies.
16. Which of the following is the appropriate general journal entry to record the declaration of cash dividends?
a.Retained Earnings
Cash
b.Dividends Payable
Cash
c.Paid-in Capital
Dividends Payable
d.Retained Earnings
Dividends Payable
17. Allstate, Inc., has 10,000 shares of 6%, $100 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2007. If the board of directors declares a $50,000 dividend, the
a.preferred stockholders will receive 1/10th of what the common stockholders will receive.
b.preferred stockholders will receive the entire $50,000.
c.$50,000 will be held as restricted retained earnings and paid out at some future date.
d.preferred stockholders will receive $25,000 and the common stockholders will receive $25,000.
18. When a change in accounting principle occurs
a.prior years' financial statements should not be changed to reflect the newly adopted principle.
b.the new principle should be used in reporting the results of operations of the current year.
c.the cumulative effect of the change in principle should be reflected on the income statement as of the beginning of the next year.
d.the cumulative effect of the change in accounting principle should be classified as an extraordinary item on the income statement.
19.Which of the following is not an irregular item on the income statement?
a.Discontinued operations
b.Extraordinary items
c.Other revenues and expenses
20.Vertical analysis is a technique that expresses each item in a financial statement
a.in dollars and cents.
b.as a percent of the item in the previous year.
c.as a percent of a base amount.
d.starting with the highest value down to the lowest value.
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ACC 300 Final Exam

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ACC 300 Final Exam 100% Correct ACC 300 FINAL EXAM 100% CORRECT
1. Which of the following is the most appropriate and modern definition of accounting?
A)The information system that identifies, records, and communicates the economic events of an organization to interested users
B)A means of collecting information
C)The interconnected network of subsystems necessary to operate a business
D)Electronic collection, organization, and communication of vast amounts of information
2.Which of the following groups uses accounting information primarily to insure the entity is operating within prescribed rules?
A)Taxing authorities
B)Regulatory agencies
C)Labor Unions
D)Management
3.Which of the following would not be considered an internal user of accounting data for a company?
A)The president of a company
B)The controller of a company
C)Creditor of a company
D)Salesperson of a company
4.Stockholders' equity is increased by
A)Dividends
B)Revenues
C)Expenses
D)Liabilities
5.The left side of an account is
A)Blank
B)a description of the account
C)the debit side
D)The balance of the account
6.Which one of the following is not a part of an account?
A)Credit side
B)Trial balance
C)Debit side
D)Title
7.The right side of an account
A)is the correct side
B)reflects all transactions for the accounting period
C)shows all the balances of the accounts in the system
D)is the credit side
8.The normal balance of any account is the
A)left side
B)right side
C)side which increases that account
D)side which decreases that account
9.The double-entry system requires that each transaction must be recorded
A)in at least two different accounts
B)in two sets of books
C)in a journal and in a ledger
D)first as a revenue and then as an expense
10.A credit is not the normal balance for which account listed below?
A)Common Stock account
B)Revenue account
C)Liability account
D)Dividends account
11.Which accounts normally have debit balances?
A)Assets, expenses, and revenues
B)Assets, expense, and retained earnings.
C)Assets, liabilities, and dividends
D)Assets, expenses, and dividends
12.Which accounts normally have credit balances?
A)Revenues, liabilities, and dividends
B)Revenues, liabilities, and assets
C)Revenues, liabilities, and retained earnings
D)Revenues, liabilities, and expenses
13.External users want answers to all of the following questions except
A)Is the company earning satisfactory income?
B)Will the company be able to pay its debts as they come due?
C)Will the company be able to afford employee pay raises this year?
D)How does the company compare in profitability with competitors?
14.Borrowing money is an example of a(n)
A)delivering activity
B)financing activity
C)investing activity
D)operating activity
15.Debt securities sold to investors that must be repaid at a particular date some years in the future are called
A)accounts payable
B)notes receivable
C)taxes payable
D)bonds payable
16.Debt and obligations of a business are referred to as
A)Assets
B)Equities
C)Liabilities
D)Expenses
17.The financial statement that summarizes the changes in retained earnings for a specific period of time is the
A)balance sheet
B)income statement
C)statement of cash flows
D)retained earnings statement
18.To show how successfully your business performed during a period of time, you would report its revenues and expense in the
A)balance sheet
B)income statement
C)statement of cash flows
D)retained earnings statement
19.Net income results when
A)Assets > Liabilities
B)Revenues = Expenses
C)Revenues > Expenses
D)Revenues
20.Net income will result during a time period when:
A)assets exceed liabilities
B)assets exceed revenues
C)expenses exceed revenues
D)revenues exceed expenses
21.Retained earnings at the end of the period is equal to
A)retained earnings at the beginning of the period plus net income minus liabilities
B)retained earnings at the beginning of the period plus net income minus dividends
C)net income
D)assets plus liabilities
22.Which of the following financial statements is concerned with the company at a point in time?
A)Balance sheet
B)Income statement
C)Retained Earnings statement
D)Statement of cash flows
23.The retained earnings statement would not show
A)the retained earnings beginning balance
B)revenues and expenses
C)Dividends
D)the ending retained earning balance
24.A balance sheet shows
A)revenues, liabilities, and stockholders' equity
B)expenses, dividends, and stockholders' equity
C)revenues, expenses, and dividends
D)assets, liabilities, and stockholders' equity
25.The accounting equation may be expressed as:
A)Assets = Stockholders' Equity ? Liabilities.
B)Assets = Liabilities + Stockholders' Equity.
C)Assets + Liabilities = Stockholders' Equity.
D)Assets + Stockholders' Equity = Liabilities.
26.Under the accrual basis of accounting
A)cash must be received before revenue is recognized
B)net income is calculated by matching cash outflows against cash inflows
C)events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received
D)the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles
27.Using accrual accounting, expenses are recorded and reported only
A)when they are incurred whether or not cash is paid
B)when they are incurred and paid at the same time
C)if they are paid before they are incurred
D)if they are paid after they are incurred
28.Which statement is correct?
A)As long as a company consistently uses the cash basis of accounting, generally accepted accounting principles allow its use.
B)The use of the cash basis of accounting violates both the revenue recognition and matching principles.
C)The cash basis of accounting is objective because no one can be certain of the amount of revenue until the cash is received.
D)As long as management is ethical, there are no problems with using the cash basis of accounting.
29.Which one of the following is not a tool in financial statement analysis?
A)Horizontal analysis
B)Circular analysis
C)Vertical analysis
D)Ratio analysis
30.If year one equals $800, year two equals $840, and year three equals $880, the percentage to be assigned for year three in a trend analysis, assuming that year 1 is the base year, is
A)110%.
B)105%.
C)95%.
D)100%.
31.Assume the following sales data for a company:
2008$945,000
2007780,000
2006650,000
If 2006 is the base year, what is the percentage increase in sales from 2006 to 2007?
A)25%
B)20%
C)125%
D)143%
32.Ratios are most useful in identifying
A)Trends
B)Differences
C)Causes
D)Relationships
33.Return on assets ratio is most closely related to
A)profit margin and debt to total assets ratio
B)profit margin and asset turnover ratio
C)times interest earned and debt to stockholders' equity ratio
D)profit margin and free cash flow
34.Return on common stockholders' equity ratio is most closely related to
A)gross profit rate and operating expenses to sales ratio
B)profit margin and free cash flow
C)times interest earned and debt to stockholders' equity ratio
D)return on asset ratio and leverage (debt to total assets ratio)
35.Which one of the following would be considered a long-term solvency ratio?
A)Receivables turnover
B)Return on total assets
C)Current cash debt coverage ratio
D)Debt to total assets ratio
36.The current ratio is
A)calculated by dividing current liabilities by current assets
B)used to evaluate a company's liquidity and short-term debt paying ability
C)used to evaluate a company's solvency and long-term debt paying ability
D)calculated by subtracting current liabilities from current assets
37.The current ratio is a
A)liquidity ratio
B)profitability ratio
C)long-term solvency ratio
D)cash flow ratio
38.The receivables turnover and inventory turnover ratios are used to analyze
A)long-term solvency
B)Profitability
C)Liquidity
D)Leverage
39.The asset turnover ratio is
A)net sales divided by net income
B)average total assets divided by net income
C)net sales divided by average total assets
D)average total assets divided by net sales
40.The assets turnover ratio measures
A)how often a company replaces its assets
B)how efficiently a company uses its assets to generate sales
C)the portion of the assets that have been financed by creditors
D)the overall rate of return on assets
41.The profit margin ratio is calculated by dividing
A)sales by cost of goods sold
B)gross profit by net sales
C)net income by stockholders' equity
D)net income by net sales
42.The debt to total assets ratio measures
A)the company's profitability
B)whether interest can be paid on debt in the current year
C)the proportion of interest paid relative to dividends paid
D)the percentage of the total assets provided by creditors
43.Which one of the following is not an objective of a system of internal controls?
A)Safeguard company assets
B)Overstate liabilities in order to be conservative
C)Enhance the accuracy and reliability of accounting records
D)Reduce the risks of errors
44.Internal control is defined, in part, as a plan that safeguards
A)all balance sheet accounts
B)Assets
C)Liabilities
D)capital stock
45.Internal controls are not designed to safeguard assets from
A)natural disasters
B)employee theft
C)Robbery
D)unauthorized use
46.Having one person responsible for the related activities of ordering merchandise, receiving goods, and paying for them
A)increases the potential for errors and fraud
B)decreases the potential for errors and fraud
C)is an example of good internal control
D)is a good example of safeguarding the company's assets
47.From an internal control standpoint, the asset most susceptible to improper diversion and use is
A)prepaid insurance
B)Cash
C)Buildings
D)Land
48.Internal controls are concerned with
A)only manual systems of accounting
B)the extent of government regulations
C)safeguarding assets
D)preparing income tax returns
49.A consequence of separation of duties is that
A)theft by employees becomes impossible
B)operations become extremely inefficient because of constant training of employees
C)more employees will need to be bonded
D)theft is still possible when several employees are involved
50.A very small company would have the most difficulty in implementing which of the following internal control activities?
A)Separation of duties
B)Limited access to assets
C)Periodic independent verification
D)Sound personnel procedures
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ACC 290 Final Exam

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ACC 290 Final
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1) Which financial statement is used to determine cash generated from operations?
A. Income statement
B. Statement of operations
C. Statement of cash flows
D. Retained earnings statement
2) In terms of sequence, in what order must the four basic financial statements be prepared?
A. Balance sheet, income statement, statement of cash flows, and capital statement
B. Income statement, capital statement, statement of cash flows, and balance sheet
C. Balance sheet, capital statement, statement of cash flows, and income statement
D. Income statement, capital statement, balance sheet, and statement of cash flows
3) In classifying transactions, which of the following is true in regard to assets?
A. Normal balances and increases are debits.
B. Normal balances and decreases are credits.
C. Normal balances can either be debits or credits for assets.
D. Normal balances are debits and increases can be debits or credits.
4) An increase in an expense account must be
A. debited
B. credited
C. either debited or credited, depending on the circumstances
D. capitalized
5) ABC Corporation issues 100 shares of $1 par common stock at $5 per share, which of the following is the correct journal entry?
A.
Cash$100
Common Stock $100
B.
Cash$500
Common Stock $500
C.
Cash$500
Paid-in Capital, Excess of Par $400
Common Stock $100
D.
Cash$100
Paid-in Capital, Excess of Par$400
Common Stock $500
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
A. $600 credit balance
B. $1,400 debit balance
C. $800 debit balance
D. $800 credit balance
7) Which ledger contains control accounts?
A. Accounts receivable subsidiary ledger
B. General ledger
C. Accounts payable subsidiary ledger
D. General revenue and expense ledger
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?
A. Accounts receivable subsidiary ledger
B. Accounts receivable control ledger
C. General ledger
D. Accounts payable subsidiary ledger
9) Under the cash basis of accounting,
A. revenue is recognized when services are performed
B. expenses are matched with the revenue that is produced
C. cash must be received before revenue is recognized
D. a promise to pay is sufficient to recognize revenue
10) Under the accrual basis of accounting,
A. cash must be received before revenue is recognized
B. net income is calculated by matching cash outflows against cash inflows
C. events that change a company’s financial statements are recognized in the period they occur rather than in the period in which the cash is paid or received
D. the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles
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
A. debit Laundry Expense, $2,000; credit Laundry Expense $2,000
B. debit Laundry Expense, $4,500; credit Laundry Supplies Expense, $4,500
C. debit Laundry Supplies, $2,000; credit Laundry Supplies Expense, $2,000
D. debit Laundry Supplies Expense, $4,500; credit Laundry Supplies, $4,500
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
A. debit Office Supplies Expense, $1,100; credit debit Office Supplies Expense
B. debit Office Supplies, $2,900; credit Office Supplies Expense, $2,900
C. debit Office Supplies Expense, $2,900; credit Office Supplies, $2,900
D. debit Office Supplies, $1,100; credit Office Supplies Expense, $1,100
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
Cash1,525 Prepaid insurance1,225
Unearned revenue5,320 Depreciation expense640
Salary1,050 Accum. depreciation1,280
Common stock390 Retained earnings550
A. $9,150
B. $10,840
C. $9,560
D. $10,430
14) An adjusted trial balance
A. is prepared after the financial statements are completed
B. proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made
C. is a required financial statement under generally accepted accounting principles
D. cannot be used to prepare financial statements
15) 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
Net income for the year is
A. $248
B. $135
C. $162
D. $49
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
A. $7,396
B. $7,118
C. $7,334
D. $7,170
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
A. $3,256
B. $3,170
C. $3,440
D. $3,354 (This is not correct)
18) Net income is recorded on the work sheet under the
A. debit column of the adjusted trial balance and the credit column of retained earnings
B. debit column of the income statement and the credit column of the balance sheet
C. credit column of the adjusted trial balance and the debit column of retained earnings
D. credit column of the income statement and the debit column of the balance sheet
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
A. $900,000 and 65%
B. $1,300,000 and 35%
C. $900,000 and 35%
D. $1,300,000 and 65%
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 year was $450,000, purchases would have been
A. $480,000
B. $420,000
C. $390,000
D. Insufficient data to determine
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
A. $400,000 and 60%
B. $600,000 and 40%
C. $400,000 and 40%
D. $600,000 and 60%
22) The entry to record of sale of $900 with terms of 2/10, n/30 will include a
A. debit to Sales Discount for $18354 (This is not correct)
B. debit to Sales Revenue for $882
C. credit to Accounts Receivable for $900 (Probably correct)
D. credit to Sales Revenue for $900354 (This is not correct)
23) Dobler Company uses a periodic inventory system. Details for the inventory account for the
month of January 2012 are as follows:
Units Per unit price Total
Balance, 1/1/2012 200 $5.00 $1,000
Purchase, 1/15/2012 100 5.30 530
Purchase, 1/28/2012 100 5.50 550
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?
A. $737
B. $700
C. $762
D. $1,380
24) The difference between ending inventory using LIFO and ending inventory using FIFO is referred to as
A. FIFO reserve
B. inventory reserve
C. LIFO reserve
D. periodic reserve
25) A consistent application of an inventory costing method enhances
A. conservatism
B. accuracy
C. comparability
D. efficiency
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?
A. $11,300
B. $12,000
C. $10,000
D. $10,700
27) A very small company would have the most difficulty in implementing which of the following internal control activities?
A. Separation of duties
B. Limited access to assets
C. Periodic independent verification
D. Sound personnel procedures
28) A system of internal control
A. is infallible
B. can be rendered ineffective by employee collusion
C. invariably will have costs exceeding benefits
D. is premised on the concept of absolute assurance
29) The custodian of a company asset should
A. have access to the accounting record for that asset
B. be someone outside the company
C. not have access to the accounting record for that asset
D. be an accountant
30) The Sarbanes Oxley Act (2002) applies to
A. U.S. companies but not international companies
B. international companies but not U.S. companies
C. U.S. and Canadian companies but not other international companies
D. U.S. and international companies
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ACC 421 Final Exam

ACC 421 Final Exam | New Homeworkmye FInal Exam | Scoop.it
ACC 421 FINAL EXAM CORRECT 100%
1) An accrued expense can best be described as an amount
2) When an item of revenue is collected and recorded in advance, it is normally called a(n) ___________ revenue.
3) When an item of expense is paid and recorded in advance, it is normally called a(n)
4) A common set of accounting standards and procedures are called
5) One objective of financial reporting is to provide
6) The information provided by financial reporting pertains to
7) The Financial Accounting Foundation
8) The major distinction between the Financial Accounting Standards Board (FASB) and its predecessor, the Accounting Principles Board (APB), is
9) The body that has the power to prescribe the accounting practices and standards to be employed by companies that fall under its jurisdiction is the
10) Limitations of the income statement include all of the following except
11) The income statement reveals
12) Which of the following would represent the least likely use of an income statement prepared for a business enterprise?
13) The process of formally recording or incorporating an item in the financial statements of an entity is
14) Which of the following is not a reason why revenue is recognized at time of sale?
15) Which of the following is not an accurate representation concerning revenue recognition?
16) One criticism not normally aimed at a balance sheet prepared using current accounting and reporting standards is
17) The basis for classifying assets as current or noncurrent is conversion to cash within
18) The correct order to present current assets is
19) If a business entity entered into certain related party transactions, it would be required to disclose all of the following information except the
20) Events that occur after the December 31, 2008 balance sheet date (but before the balance sheet is issued) and provide additional evidence about conditions that existed at the balance sheet date and affect the realizability of accounts receivable should be
21) The full disclosure principle, as adopted by the accounting profession, is best described by which of the following?
22) The MD&A section of an enterprise's annual report is to cover the following three items:
23) If the financial statements examined by an auditor lead the auditor to issue an opinion that contains an exception that is not of sufficient magnitude to invalidate the statement as a whole, the opinion is said to be
24) Which of the following best characterizes the difference between a financial forecast and a financial projection?
25) Theoretically, in computing the receivables turnover, the numerator should include
26) Which of the following ratios measures long-term solvency?
27) The rate of return on common stock equity is calculated by dividing
28) The primary purpose of the statement of cash flows is to provide information
29) The first step in the preparation of the statement of cash flows requires the use of information included in which comparative financial statements?
30) To arrive at net cash provided by operating activities, it is necessary to report revenues and expenses on a cash basis. This is done by
31) The amortization of bond premium on long-term debt should be presented in a statement of cash flows (using the indirect method for operating activities) as a(n)
32) In determining net cash flow from operating activities, a decrease in accounts payable during a period
33) In reporting extraordinary transactions on a statement of cash flows (indirect method), the
34) Which of the following transactions would require the use of the present value of an annuity due concept in order to calculate the present value of the asset obtained or liability owed at the date of incurrence?
35) Which of the following tables would show the smallest value for an interest rate of 5% for six periods?
36) Which table would show the largest factor for an interest rate of 8% for five periods?
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ACC 349 Final Exam

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ACC 349 FINAL EXAM 100% CORRECT
1) What is the best way to handle manufacturing overhead costs in order to get the most timely job cost information?
A. The company should add actual manufacturing overhead costs to jobs as soon as the overhead costs are incurred.
B. The company should determine an allocation rate as soon as the actual costs are known, and then apply manufacturing overhead to jobs.
C. The company should apply overhead using an estimated rate throughout the year. D. The company should account for only the direct production costs.
2) At the end of the year, manufacturing overhead has been overapplied. What occurred to create this situation?
A. The company incurred more manufacturing overhead costs than the manufacturing overhead assigned to jobs
B. The actual manufacturing overhead costs were less than the manufacturing overhead assigned to jobs
C. The company incurred more total job costs than the amount budgeted for the job
D. Estimated manufacturing overhead was less than actual manufacturing overhead costs
3) Luca Company overapplied manufacturing overhead during 2006. Which one of the following is part of the year end entry to dispose of the overapplied amount assuming the amount is material
A. A decrease to work in process inventory
B. A decrease to applied overhead
C. An increase to finished goods
D. An increase to cost of goods sold
4) Which of the following would be accounted for using a job order cost system?
A. The production of textbooks
B. The production of town homes
C. The pasteurization of milk
D. The production of cans of spinach
5) Which one of the following is NEVER part of recording the issuance of raw materials in a job order cost system?
A. Debit Manufacturing Overhead
B. Debit Finished Goods Inventory
C. Debit Work in Process Inventory
D. Credit Raw Materials Inventory
Finished Goods Inventory is debited when goods are transferred from work in process to finished goods, not when raw materials are issued for a job.
6. What is unique about the flow of costs in a job order cost system?
A. It involves accumulating material, labor, and manufacturing overhead costs as they are incurred in order to determine the job cost
B. Each job is costed separately in a Work in Process subsidiary ledger
C. Job costs cannot be measured until all overhead costs are determined
D. There are no costs remaining in Work in Process at year end
7) Which one of the following costs would be included in manufacturing overhead of a lawn mower manufacturer?
A. The cost of the fuel lines that run from the motor to the gas tank
B. The cost of the wheels
C. Depreciation on the testing equipment
D. The wages earned by motor assemblers
Depreciation on testing equipment would be included in manufacturing overhead because it is indirectly associated with the finished product.
8) What broad functions do the management of an organization perform?
A. Planning, directing, and controlling
B. Directing, manufacturing, and controlling
C. Planning, directing, and selling
D. Planning, manufacturing, and controlling
9) Which of the following represents the correct order in which inventories are reported on a manufacturer’s balance sheet?
A. Work in process, finished goods raw materials
B. Raw materials, work in process, finished goods
C. Finished goods, work in process, raw materials
D. Work in process, raw materials, finished goods
10) In traditional costing systems, overhead is generally applied based on
A. machine hours
B. direct labor
C. direct material dollars
D. units of production
11) An activity that has a direct cause-effect relationship with the resources consumed is a(n)
A. overhead rate
B. product activity
C. cost driver
D. cost pool
12) A well-designed activity-based costing system starts with
A. computing the activity-based overhead rate
B. analyzing the activities performed to manufacture a product
C. identifying the activity-cost pools
D. assigning manufacturing overhead costs for each activity cost pool to products
13) Which of the following factors would suggest a switch to activity-based costing?
A. Overhead costs constitute a significant portion of total costs
B. Production managers use data provided by the existing system.
C. Product lines similar in volume and manufacturing complexity
D. The manufacturing process has been stable
14) All of the following statements are correct EXCEPT that
A. the objective of installing ABC in service firms is different than it is in a manufacturing firm
B. the general approach to identifying activities and activity cost pools is the same in a service company as in a manufacturing company
C. activity-based costing has been widely adopted in service industries
D. a larger proportion of overhead costs are company-wide costs in service industries
15) What sometimes makes implementation of activity-based costing difficult in service industries is
A. identifying activities, activity cost plus, and cost drivers
B. attempting to reduce or eliminate nonvalue-added activities
C. the labeling of activities as value-added
D. that a larger proportion of overhead costs are company-wide costs
16) One of Astro Company's activity cost pools is machine setups, with estimated overhead of $150,000. Astro produces sparklers (400 setups) and lighters (600 setups). How much of the machine setup cost pool should be assigned to sparklers?
A. $60,000
B. $90,000
C. $150,000
D. $75,000
17) Poodle Company manufactures two products, Mini A and Maxi B. Poodle's overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is:
Mini AMaxi B
Direct labor hours15,00025,000
Machine setups600400
Machine hours24,00026,000
Inspections800700
Overhead applied to Mini A using activity-based costing is
A. $1,536,000
B. $1,664,000
C. $1,920,000
D. $1,200,000
18) Poodle Company manufactures two products, Mini A and Maxi B. Poodle's overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is:
Mini AMaxi B
Direct labor hours15,00025,000
Machine setups600400
Machine hours24,00026,000
Inspections800700
Overhead applied to Maxi B using activity-based costing is
A. $1,536,000
B. $1,664,000
C. $2,000,000
D. $1,280,000
19) Seran Company has contacted Truckel Inc. with an offer to sell it 5,000 of the wickets for $18 each. If Truckel makes the wickets, variable costs are $11 per unit. Fixed costs are $12 per unit; however, $5 per unit is avoidable. Should Truckel make or buy the wickets?
A. Buy; savings = $10,000
B. Make; savings = $20,000
C. Make; savings = $10,000
D. Buy; savings = $25,000
20) Rosen, Inc. has 10,000 obsolete calculators, which are carried in inventory at a cost of $20,000. If the calculators are scrapped, they can be sold for $1.10 each (for parts). If they are repackaged, at a cost of $15,000, they could be sold to toy stores for $2.50 per unit. What alternative should be chosen, and why?
A. Repackage; revenue is $5,000 greater than cost
B. Scrap; incremental loss is $9,000
C. Repackage; receive profit of $10,000
D. Scrap; profit is $1,000 greater
21) The cost to produce Part A was $10 per unit in 2005. During 2006, it has increased to $11 per unit. In 2006, Supplier Company has offered to supply Part A for $9 per unit. For the make-or-buy decision
A. incremental costs are $1 per unit
B. net relevant costs are $1 per unit
C. differential costs are $2 per unit
D. incremental revenues are $2 per unit
22) Hartley, Inc. has one product with a selling price per unit of $200, the unit variable cost is $75, and the total monthly fixed costs are $300,000. How much is Hartley’s contribution margin ratio?
A. 37.5%
B. 150%
C. 266.6%
D. 62.5%.
23. Which statement describes a fixed cost?
A. The amount per unit varies depending on the activity level
B. It varies in total at every level of activity
C. It remains the same per unit regardless of activity level
D. Its total varies proportionally to the level of activity
24) Disney’s variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost $22,000. If sales are expected to increase $40,000, by how much will the company's net income increase?
A. $28,000
B. $18,000
C. $6,000
D. $12,000
25) Variable costing
A. is required under GAAP
B. is used for external reporting purposes
C. is also known as full costing
D. treats fixed manufacturing overhead as a period cost
26) Which cost is NOT charged to the product under variable costing?
A. Direct labor
B. Direct materials
C. Fixed manufacturing overhead
D. Variable manufacturing overhead
27) Orbach Company sells its product for $40 per unit. During 2005, it produced 60,000 units and sold 50,000 units (there was no beginning inventory). Costs per unit are: direct materials $10, direct labor $6, and variable overhead $2. Fixed costs are: $480,000 manufacturing overhead, and $60,000 selling and administrative expenses. The per unit manufacturing cost under absorption costing is
A. $18
B. $16
C. $27
D. $26
28) Which of the following is NOT considered an advantage of using standard costs?
A. Standard costs can be useful in setting prices for finished goods
B. Standard costs can reduce clerical costs
C. Standard costs can make employees "cost-conscious."
D. Standard costs can be used as a means of finding fault with performance
29) The difference between a budget and a standard is that
A. a budget expresses management's plans, while a standard reflects what actually happened
B. standards are excluded from the cost accounting system, whereas budgets are generally incorporated into the cost accounting system
C. a budget expresses a total amount while a standard expresses a unit amount
D. a budget expresses what costs were, while a standard expresses what costs should be
30) If a company is concerned with the potential negative effects of establishing standards, they should
A. offer wage incentives to those meeting standards
B. set tight standards in order to motivate people
C. not employ any standards
D. set loose standards that are easy to fulfill
31) The per-unit standards for direct materials are 2 gallons at $4 per gallon. Last month, 11,200 gallons of direct materials that actually cost $42,400 were used to produce 6,000 units of product. The direct materials quantity variance for last month was
A. $2,400 favorable
B. $5,600 unfavorable
C. $3,200 unfavorable
D. $3,200 favorable
32) The standard number of hours that should have been worked for the output attained is 8,000 direct labor hours and the actual number of direct labor hours worked was 8,400. If the direct labor price variance was $8,400 unfavorable, and the standard rate of pay was $18 per direct labor hour, what was the actual rate of pay for direct labor?
A. $15 per direct labor hour
B. $18 per direct labor hour
C. $19 per direct labor hour
D. $17 per direct labor hour
33) The total variance is $10,000. The total materials variance is $4,000. The total labor variance is twice the total overhead variance. What is the total overhead variance?
A. $2,000
B. $4,000
C. $3,000
D. $1,000
34) Manufacturing overhead costs are applied to work in process on the basis of
A. standard hours allowed
B. actual overhead costs incurred
C. ratio of actual variable to fixed costs
D. actual hours worked
35) The overhead volume variance relates only to
A. variable overhead costs
B. both variable and fixed overhead costs
C. all manufacturing costs
D. fixed overhead costs
36) If the standard hours allowed are less than the standard hours at normal capacity
A. the overhead volume variance will be unfavorable
B. the overhead controllable variance will be favorable
C. variable overhead costs will be overapplied
D. variable overhead costs will be underapplied
37) Gottberg Mugs is planning to sell 2,000 mugs and produce 2,200 mugs during April. Each mug requires 2 pounds of resin and a half hour of direct labor. Resin costs $1 per pound and employees of the company are paid $12.50 per hour. Manufacturing overhead is applied at a rate of 120% of direct labor costs. Gottberg has 2,000 pounds of resin in beginning inventory and wants to have 2,400 pounds in ending inventory. How much is the total amount of budgeted direct labor for April?
A. $12,500
B. $25,000
C. $27,500
D. $13,750
38) Lewis Hats is planning to sell 600 straw hats. Each hat requires a half pound of straw and a quarter hour of direct labor. Straw costs $0.20 per pound and employees of the company are paid $22 per hour. Lewis has 80 pounds of straw and 40 hats in beginning inventory and wants to have 50 pounds of straw and 60 hats in ending inventory. How many units should Lewis Hats produce in April?
A. 600
B. 580
C. 630
D. 620
39) At January 1, 2004, Barry, Inc. has beginning inventory of 4,000 widgets. Barry estimates it will sell 35,000 units during the first quarter of 2004 with a 10% increase in sales each quarter. Barry’s policy is to maintain an ending inventory equal to 25% of the next quarter’s sales. Each widget costs $1 and is sold for $1.50. How much is budgeted sales revenue for the third quarter of 2004?
A. $57,525
B. $63,525
C. $42,350
D. $63,000
40) In most cases, prices are set by the
A. customers
B. largest competitor
C. selling company
D. competitive market
41) A company must price its product to cover its costs and earn a reasonable profit in
A. all cases
B. its early years
C. the long run
D. the short run
42) The cost-plus pricing approach's major advantage is
A. it considers customer demand
B. that sales volume has no effect on per unit costs
C. it is simple to compute
D. it can be used to determine a product’s target cost
43) What does cost accounting measure, record, and report
A. Future costs
B. Product costs
C. Managerial accounting decisions
D. Manufacturing processes
44) Why is factory overhead applied to products and jobs by manufacturing companies?
A. Because indirect costs are easy to trace to products and jobs
B. It provides a more accurate cost of the job or products being processed
C. Total actual overhead costs can never be accurately determined for production
D. It allows managers more timely determination of product costs during the manufacturing process
45) In a job order cost accounting system, the Work in Process account is
A. a period cost
B. a control account
C. closed at year end
D. an expense
46) Managerial accounting
A. is governed by generally accepted accounting principles
B. places emphasis on special-purpose information
C. is concerned with costing products
D. pertains to the entity as a whole and is highly aggregated
47) A well-designed activity-based costing system starts with
A. computing the activity-based overhead rate
B. assigning manufacturing overhead costs for each activity cost pool to products
C. identifying the activity-cost pools
D. analyzing the activities performed to manufacture a product
48) Which of the following is a value-added activity?
A. Machinery repair
B. Inventory storage
C. Engineering design
D. Inspections
49) Which of the following is a nonvalue-added activity?
A. Machining
B. Inspection
C. Engineering design
D. Packaging
50) Each of the following is a limitation of activity-based costing EXCEPT
A. It is more complex than traditional costing
B. More cost pools are used
C. It can be expensive to use
D. Some arbitrary allocations continue
51) Ace Company sells office chairs with a selling price of $25 and a contribution margin per unit of $15. It takes 3 machine hours to produce one chair. How much is the contribution margin per unit of limited resource?
A. $3.33
B. $45
C. $10
D. $5
52) Walton, Inc. is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $16, while the cost of assembling each unit is estimated at $17. Unassembled units can be sold for $55, while assembled units could be sold for $71 per unit. What decision should Walton make?
A. Sell before assembly; the company will save $15 per unit
B. Process further; the company will save $1 per unit
C. Process further; the company will save $16 per unit
D. Sell before assembly; the company will save $1 per unit
53) Which cost is charged to the product under variable costing?
A. Fixed manufacturing overhead
B. Variable manufacturing overhead
C. Fixed administrative expenses
D. Variable administrative expenses
54) Which of the following statements is FALSE?
A. A standard is a unit amount
B. A standard cost is more accurate than a budgeted cost
C. The standard cost of a product is equivalent to the budgeted cost per unit of product
D. In concept, standards and budgets are essentially the same
55) If standard costs are incorporated into the accounting system
A. it can eliminate the need for the budgeting process
B. it may simplify the costing of inventories and reduce clerical costs
C. approval of the stockholders is required
D. the accounting system will produce information which is less relevant than the historical cost accounting system
56) A standard cost is
A. the average cost in an industry
B. a cost which is paid for a group of similar products
C. the historical cost of producing a product last year
D. a predetermined cost
57) The per-unit standards for direct labor are 2 direct labor hours at $12 per hour. If in producing 2,400 units, the actual direct labor cost was $51,200 for 4,000 direct labor hours worked, the total direct labor variance is
A. $6,400 favorable
B. $6,400 unfavorable
C. $1,920 unfavorable
D. $4,000 unfavorable
58) If the standard hours allowed are less than the standard hours at normal capacity, the volume variance
A. will be favorable
B. will be greater than the controllable variance
C. cannot be calculated
D. will be unfavorable
59) Which of the following statements is FALSE?
A. The costs that cause the overhead volume variance are usually controllable costs
B. The overhead volume variance is favorable if standard hours allowed for output is greater than the standard hours at normal capacity
C. The overhead volume variance indicates whether plant facilities were used efficiently during the period
D. The overhead volume variance relates solely to fixed costs
60) Looker Hats is planning to sell 600 felt hats, and 700 will be produced during June. Each hat requires a half yard of felt and a quarter hour of direct labor. Felt costs $3.00 per yard and employees of the company are paid $20 per hour. How much is the total amount of budgeted direct labor for June?
A. $48,000
B. $3,500
C. $3,000
D. $2,400
61) In cost-plus pricing, the markup percentage is computed by dividing the desired ROI per unit by the
A. total cost per unit
B. total manufacturing cost per unit
C. fixed cost per unit
D. variable cost per unit
62) Which would be an appropriate cost driver for the ordering and receiving activity cost pool?
A. Purchase orders
B. Inspections
C. Machine setups
D. Machine hours
63) The first step in activity-based costing is to
A. identify the cost driver that has a strong correlation to the activity cost pool
B. compute the activity-based overhead rate per cost driver
C. assign manufacturing overhead costs for each activity cost pool to product
D. identify and classify the major activities involved in the manufacture of specific products
64) Which one of the following is required in order for an activity base to be useful in cost behavior analysis?
A. The activity should always be based on the number of units produced
B. There should be a correlation between changes in the level of activity and changes in costs.
C. The activity should always be a fixed amount
D. The activity level should be an approved GAAP activity base
65) Which cost is NOT charged to the product under absorption costing?
A. Fixed administrative expenses
B. Variable manufacturing overhead
C. Direct labor
D. Direct materials
66) A company developed the following per-unit standards for its product: 2 pounds of direct materials at $6 per pound. Last month, 2,000 pounds of direct materials were purchased for $11,400. The direct materials price variance for last month was
A. $600 unfavorable
B. $11,400 favorable
C. $300 favorable
D. $600 favorable
67) The standard rate of pay is $5 per direct labor hour. If the actual direct labor payroll was $19,600 for 4,000 direct labor hours worked, the direct labor price (rate) variance is
A. $500 favorable
B. $400 unfavorable
C. $500 unfavorable
D. $400 favorable
68) Waco’s Widgets plans to sell 22,000 widgets during May, 19,000 units in June, and 20,000 during July. Waco keeps 10% of the next month’s sales as ending inventory. How many units should Waco produce during June?
A. 19,000
B. 18,900
C. 19,100
D. 21,000
69) In cost-plus pricing, the target selling price is computed as
A. variable cost per unit + fixed manufacturing cost per unit + desired ROI per unit
B. variable cost per unit + desired ROI per unit
C. total unit cost + desired ROI per unit
D. fixed cost per unit + desired ROI per unit
70) Which one of the following is an important feature of a job order cost system?
A. Each must be completed before a new product order is accepted
B. Each job uses similar processes to produce
C. Each consists of features which distinguish it from the next
D. Each job has characteristics similar to the next
71) Which of the following represents the two basic types of cost accounting systems?
A. Job order and process cost systems
B. Job order and batch systems
C. Job order and job accumulation systems
D. Process cost and batch systems
72) Which one of the following is indirect labor considered?
A. Product cost
B. Period cost
C. Nonmanufacturing cost
D. Raw material cost
73) Which of the following is an element of manufacturing overhead?
A. Factory workers wages
B. Plant manager’s salary
C. Components used in calculators during production
D. Flour used in manufactured cake mixes
74) Which of the following is NOT typical of traditional costing systems?
A. Use of a single predetermined overhead rate
B. Assumption of correlation between direct labor and incurrence of overhead cost
C. Use of direct labor hours or direct labor cost to assign overhead
D. Use of multiple cost drivers to allocate overhead
75) Max Company uses 10,000 units of Part A in producing its products. A supplier offers to make Part A for $7. Max Company has relevant costs of $8 a unit to manufacture Part A. If there is excess capacity, the opportunity cost of buying Part A from the supplier is
A. $80,000
B. $70,000
C. $0
D. $10,000
76) H55 Company sells two products, beer and wine. Beer has a 10 percent profit margin and wine has a 12 percent profit margin. Beer has a 27 percent contribution margin and wine has a 25 percent contribution margin. If other factors are equal, which product should H55 push to customers?
A. It should sell an equal quantity of both
B. Selling either results in the same additional income for the COMPANY
C. Beer
D. Wine
77) During December, the capital budget indicates a $280,000 purchase of equipment. The ending November cash balance is budgeted to be $40,000. Cash receipts are $840,000, and cash disbursements are $610,000 during December. The company wants to maintain a minimum cash balance of $20,000. What is the minimum cash loan that must be planned to be borrowed from the bank during December?
A. $0
B. $50,000
C. $10,000
D. $30,000
78) Prices are set by the competitive market when
A. a product is not easily distinguished from competing products
B. a company can effectively differentiate its product from others
C. there are no other producers capable of manufacturing a similar item
D. the product is specially made for a customer
79) The standards and rules that are recognized as a general guide for financial reporting are called __________.
A. standards of financial reporting
B. generally accepted accounting principles
C. generally accepted accounting standards
D. operating guidelines
80) Hess, Inc. sells a single product with a contribution margin of $12 per unit and fixed costs of $74,400 and sales for the current year of $100,000. How much is Hess’s break even point?
A. 2,133 units
B. 6,200 units
C. $25,600
D. 4,600 units
81) In what situations will a static budget be most effective in evaluating a manager's effectiveness?
A. The company has no fixed costs.
B. The planned activity levels match actual activity levels.
C. The company has substantial variable costs.
D. The company has substantial fixed costs.
82) The primary purpose of the statement of cash flows is to __________.
A. facilitate banking relationships
B. provide information about the cash receipts and cash payments during a period
C. prove that revenues exceed expenses if there is a net income
D. provide information about the investing and financing activities during a period
83) The category that is generally considered to be the best measure of a company's ability to
continue as a going concern is
A. cash flows from operating activities.
B. cash flows from investing activities.
C. cash flows from financing activities.
D. usually different from year to year.
84) Of the items below, the one that appears first on the statement of cash flows is
A. noncash investing and financing activities.
B. net increase (decrease) in cash.
C. cash at the end of the period.
D. cash at the beginning of the period.
85) Which of the following transactions does not affect cash during a period?
A. Write-off of an uncollectible account
B. Collection of an accounts receivable
C. Sale of treasury stock
D. Exercise of the call option on bonds payable
86) One of Lara Dole Company's activity cost pools is machine setups, with estimated overhead of $300,000. Dole produces flares (400 setups) and health packs (600 setups). How much of the machine setup cost pool should be assigned to flares?
A. $0.
B. $120,000.
C. $150,000.
D. $180,000
87) As compared to a high-volume product, a low-volume product
A. usually requires less special handling.
B. is usually responsible for more overhead costs per unit.
C. requires relatively fewer machine setups.
D. requires use of direct labor hours as the primary cost driver to ensure proper allocation
of overhead
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ACC 291 Final Exam

ACC 291 Final Exam | New Homeworkmye FInal Exam | Scoop.it
ACC 291 Final Exam 100% Correct
1.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
A.safeguard assets
B.monitor balance sheets
C.control liabilities
D.evaluate capital stock
2. The purchase of treasury stock
A. decreases common stock authorized
B. decreases common stock issued
C. decreases common stock outstanding
D. has no effect on common stock outstanding
3. 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 Marsh's cash payments for operating expenses?
A. $228,000
B. $232,000
C. $200,000
D. $280,000
4. In performing a vertical analysis, the base for cost of goods sold is
A. total selling expenses
B. net sales
C. total revenues
D. total expense
5. 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?
A. 100%
B. 82%
C. 18%
D. 25%
6. Where would the event purchased land for cash appear, if at all, on the indirect statement of cash flows?
A. Operating activities section
B. Investing activities section
C. Financing activities section
D. Does not represent a cash flow
7. 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?
A.
Cash ........................................................... $4,500
Common Stock 4,500
B.
Cash .................................... $4,500
Common Stock 1,000
Paid-In Capital in Excess of Par 3,500
C.
Cash ...................... $4,500
Common Stock 1,000
Paid-In Capital in Excess of Stated Value 3,500
D.
Common Stock ........................................................... $4,500
Cash 4,500
8. 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
A. credit to Paid-In Capital from Treasury Stock for $9,000
B. credit to Retained Earnings for $9,000
C. debit to Pain-In Capital from Treasury Stock for $45,000
D. debit to Retained Earnings for $45,000
9. Which of the following is a fundamental factor in having an effective, ethical corporate culture?
A. Efficient oversight by the company’s Board of Directors
B. Workplace ethics
C. Code of conduct
D. Ethics management programs
10. Two individuals at a retail store work the same cash register. You evaluate this situation as
A. a violation of establishment of responsibility
B. a violation of segregation of duties
C. supporting the establishment of responsibility
D. supporting internal independent verification
11. The Sarbanes-Oxley Act imposed which new penalty for executives?
A. Fines
B. Suspension
C. Criminal prosecution for executives
D. Return of ill-gotten gains
12. 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?
A.
Bad Debts Expense ................ ................ $15,000
Allowances for Doubtful Accounts ................ ................ $15,000
B.
Bad Debts Expense ................ ................ $12,000
Allowances for Doubtful Accounts ................ ................ $12,000
C.
Bad Debts Expense ................ ................ $12,000
Accounts Receivable ................ ................ ................. $12,000
D.
Bad Debts Expense ................ ................ $15,000
Accounts Receivable ................ ................ ................. $15,000
13. 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?
A. $15,000
B. $12,000
C. $18,000
D. $8,000
14. Intangible assets
A. should be reported under the heading Property, Plant, and Equipment
B. should be reported as a separate classification on the balance sheet
C. should be reported as Current Assets on the balance sheet
D. are not reported on the balance sheet because they lack physical substance
15. Intangible assets are the rights and privileges that result from ownership of long-lived assets that
A. must be generated internally
B. are depletable natural resources
C. do not have physical substance
D. have been exchanged at a gain
16. The book value of an asset is equal to the
A. asset’s market value less its historic cost
B. blue book value relied on by secondary markets
C. replacement cost of the asset
D. asset’s cost less accumulated depreciation
17. Gains on an exchange of plant assets that has commercial substance are
A. deducted from the cost of the new asset acquired
B. deferred
C. not possible
D. recognized immediately
18. Ordinary repairs are expenditures to maintain the operating efficiency of a plant asset and are referred to as
A. capital expenditures
B. expense expenditures
C. improvements
D. revenue expenditures
19. When an interest-bearing note matures, the balance in the Notes Payable account is
A. less than the total amount repaid by the borrower
B. the difference between the maturity value of the note and the face value of the note
C. equal to the total amount repaid by the owner
D. greater than the total amount repaid by the owner
20. The interest charged on a $200,000 note payable, at a rate of 6%, on a 2-month note would be
A. $12,000
B. $6,000
C. $3,000
D. $2,000
21. Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as
A. capital expenditures
B. expense expenditures
C. ordinary repairs
D. revenue expenditures
22. 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%?
A. $3,000,000
B. $90,000
C. $300,000
D. $210,000
23. 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?
A. Long-term debt, $300,000.
B. Long-term debt, $225,000.
C. Long-term debt, $150,000; Long-term debt due within one year, $75,000.
D. Long-term debt, $225,000; Long-term debt due within one year, $75,000.
24. 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
A. $30,000
B. $24,000
C. $32,434
D. $25,946
25. When the effective-interest method of bond discount amortization is used
A. the applicable interest rate used to compute interest expense is the prevailing market interest rate on the date of each interest payment date
B. the carrying value of the bonds will decrease each period
C. interest expense will not be a constant dollar amount over the life of the bond
D. interest paid to bondholders will be a function of the effective-interest rate on the date the bonds were issued
26. If a corporation has only one class of stock, it is referred to as
A. classless stock
B. preferred stock
C. solitary stock
D. common stock
27. Capital stock to which the charter has assigned a value per share is called
A. par value stock
B. no-par value stock
C. stated value stock
D. assigned value stock
28. 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?
A. $50 per share
B. $5,000 in total
C. $500 in total
D. $.50 per share
29. 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?
A. $0
B. $25,000
C. $45,000
D. $20,000
30. When the selling price of treasury stock is greater than its cost, the company credits the difference to
A. Gain on Sale of Treasury Stock
B. Paid-in Capital from Treasury Stock
C. Paid-in Capital in Excess of Par Value
D. Treasury Stock
1.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
A.safeguard assets
B.monitor balance sheets
C.control liabilities
D.evaluate capital stock
2. The purchase of treasury stock
A. decreases common stock authorized
B. decreases common stock issued
C. decreases common stock outstanding
D. has no effect on common stock outstanding
3. 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 Marsh's cash payments for operating expenses?
A. $228,000
B. $232,000
C. $200,000
D. $280,000
4. In performing a vertical analysis, the base for cost of goods sold is
A. total selling expenses
B. net sales
C. total revenues
D. total expense
5. 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?
A. 100%
B. 82%
C. 18%
D. 25%
6. Where would the event purchased land for cash appear, if at all, on the indirect statement of cash flows?
A. Operating activities section
B. Investing activities section
C. Financing activities section
D. Does not represent a cash flow
7. 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?
A.
Cash ........................................................... $4,500
Common Stock 4,500
B.
Cash .................................... $4,500
Common Stock 1,000
Paid-In Capital in Excess of Par 3,500
C.
Cash ...................... $4,500
Common Stock 1,000
Paid-In Capital in Excess of Stated Value 3,500
D.
Common Stock ........................................................... $4,500
Cash 4,500
8. 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
A. credit to Paid-In Capital from Treasury Stock for $9,000
B. credit to Retained Earnings for $9,000
C. debit to Pain-In Capital from Treasury Stock for $45,000
D. debit to Retained Earnings for $45,000
9. Which of the following is a fundamental factor in having an effective, ethical corporate culture?
A. Efficient oversight by the company’s Board of Directors
B. Workplace ethics
C. Code of conduct
D. Ethics management programs
10. Two individuals at a retail store work the same cash register. You evaluate this situation as
A. a violation of establishment of responsibility
B. a violation of segregation of duties
C. supporting the establishment of responsibility
D. supporting internal independent verification
11. The Sarbanes-Oxley Act imposed which new penalty for executives?
A. Fines
B. Suspension
C. Criminal prosecution for executives
D. Return of ill-gotten gains
12. 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?
A.
Bad Debts Expense ................ ................ $15,000
Allowances for Doubtful Accounts ................ ................ $15,000
B.
Bad Debts Expense ................ ................ $12,000
Allowances for Doubtful Accounts ................ ................ $12,000
C.
Bad Debts Expense ................ ................ $12,000
Accounts Receivable ................ ................ ................. $12,000
D.
Bad Debts Expense ................ ................ $15,000
Accounts Receivable ................ ................ ................. $15,000
13. 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?
A. $15,000
B. $12,000
C. $18,000
D. $8,000
14. Intangible assets
A. should be reported under the heading Property, Plant, and Equipment
B. should be reported as a separate classification on the balance sheet
C. should be reported as Current Assets on the balance sheet
D. are not reported on the balance sheet because they lack physical substance
15. Intangible assets are the rights and privileges that result from ownership of long-lived assets that
A. must be generated internally
B. are depletable natural resources
C. do not have physical substance
D. have been exchanged at a gain
16. The book value of an asset is equal to the
A. asset’s market value less its historic cost
B. blue book value relied on by secondary markets
C. replacement cost of the asset
D. asset’s cost less accumulated depreciation
17. Gains on an exchange of plant assets that has commercial substance are
A. deducted from the cost of the new asset acquired
B. deferred
C. not possible
D. recognized immediately
18. Ordinary repairs are expenditures to maintain the operating efficiency of a plant asset and are referred to as
A. capital expenditures
B. expense expenditures
C. improvements
D. revenue expenditures
19. When an interest-bearing note matures, the balance in the Notes Payable account is
A. less than the total amount repaid by the borrower
B. the difference between the maturity value of the note and the face value of the note
C. equal to the total amount repaid by the owner
D. greater than the total amount repaid by the owner
20. The interest charged on a $200,000 note payable, at a rate of 6%, on a 2-month note would be
A. $12,000
B. $6,000
C. $3,000
D. $2,000
21. Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as
A. capital expenditures
B. expense expenditures
C. ordinary repairs
D. revenue expenditures
22. 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%?
A. $3,000,000
B. $90,000
C. $300,000
D. $210,000
23. 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?
A. Long-term debt, $300,000.
B. Long-term debt, $225,000.
C. Long-term debt, $150,000; Long-term debt due within one year, $75,000.
D. Long-term debt, $225,000; Long-term debt due within one year, $75,000.
24. 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
A. $30,000
B. $24,000
C. $32,434
D. $25,946
25. When the effective-interest method of bond discount amortization is used
A. the applicable interest rate used to compute interest expense is the prevailing market interest rate on the date of each interest payment date
B. the carrying value of the bonds will decrease each period
C. interest expense will not be a constant dollar amount over the life of the bond
D. interest paid to bondholders will be a function of the effective-interest rate on the date the bonds were issued
26. If a corporation has only one class of stock, it is referred to as
A. classless stock
B. preferred stock
C. solitary stock
D. common stock
27. Capital stock to which the charter has assigned a value per share is called
A. par value stock
B. no-par value stock
C. stated value stock
D. assigned value stock
28. 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?
A. $50 per share
B. $5,000 in total
C. $500 in total
D. $.50 per share
29. 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?
A. $0
B. $25,000
C. $45,000
D. $20,000
30. When the selling price of treasury stock is greater than its cost, the company credits the difference to
A. Gain on Sale of Treasury Stock
B. Paid-in Capital from Treasury Stock
C. Paid-in Capital in Excess of Par Value
D. Treasury Stock
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