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Week 5, Quiz;1. Cost of goods sold is determined only at the end of the accounting period in;A). neither a perpetual nor a periodic inventory system.;B). a perpetual inventory system.;C). a periodic inventory system.;D). both a perpetual and a periodic inventory system;2. A sales invoice is a source document that;A). provides evidence of incurred operating expenses.;B). provides evidence of credit sales.;C). serves only as a customer receipt.;D). provides support for goods purchased for resale.;3. Financial information is presented below;Operating Expenses $ 45,000;Sales Returns and Allowances 9,000;Sales Discounts 6,000;Sales Revenue 160,000;Cost of Goods Sold 87,000;The gross profit rate would be;A).503.;B).363.;C).400.;D).456.;4. The Sales Returns and Allowances account is classified as a(n);A). contra revenue account.;B). contra asset account.;C). expense account.;D). asset account.;5. On October 4, 2013, JT Corporation had credit sales transactions of $3,200 from merchandise having cost $1,900. The entries to record the day's credit transactions include a;A). credit of $1,900 to Cost of Goods Sold.;B). credit of $3,200 to Sales Revenue.;C). debit of $1,900 to Inventory.;D). debit of $3,200 to Inventory.;6. Comprehensive income under IFRS;A). excludes unrealized gains and losses included in net income, in contrast to GAAP.;B). includes unrealized gains and losses included in net income, similar to GAAP.;C). excludes unrealized gains and losses included in net income, similar to GAAP.;D). includes unrealized gains and losses included in net income, in contrast to GAAP;7. If a company has net sales of $700,000 and cost of goods sold of $490,000, the gross profit percentage is;A). 30%.;B). 70%.;C). 100%.;D). 15%.;8. The consistent application of an inventory costing method is essential for;A). accuracy.;B). efficiency.;C). comparability.;D). conservatism.;9. The inventory turnover ratio is computed by dividing cost of goods sold by;A). beginning inventory.;B). ending inventory.;C). average inventory.;D). 365 days.;10. Switzer, Inc. has 5 computers which have been part of the inventory for over two years. Each computer cost $600 and originally retailed for $900. At the statement date, each computer has a current replacement cost of $400. How much loss should Switzer, Inc., record for the year?;A). $2,000.;B). $2,500.;C). $1,000.;D). $1,500.;11. Which one of the following inventory methods is often impractical to use?;A). LIFO;B). FIFO;C). Specific identification;D). Average cost;12. Overstating ending inventory will overstate all of the following except;A). net income.;B). owner's equity.;C). assets.;D). cost of goods sold.;13. Under IFRS, companies can choose which inventory system?;LIFO FIFO;Yes No;Yes Yes;No Yes;No No;14. The lower-of-cost-or-market (LCM) basis may be used with all of the following methods except;A). FIFO.;B). LIFO.;C). The LCM basis may be used with all of these.;D). average cost.;15. Inventory items on an assembly line in various stages of production are classified as;A). Raw materials.;B). Merchandise inventory.;C). Finished goods.;D). Work in process.;Week 7, Quiz;1. A company has the following assets;Buildings and Equipment, less accumulated depreciation of $2,000,000 $ 7,600,000;Copyrights 960,000;Patents 4,000,000;Timberlands, less accumulated depletion of $2,800,000 4,800,000;The total amount reported under Property, Plant, and Equipment would be;A). $16,400,000.;B). $13,360,000.;C). $12,400,000.;D). $17,360,000.;2. Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally;A). expensed when incurred.;B). not recorded until they become material in amount.;C). capitalized as a part of the cost of the asset.;D). debited to the Accumulated Depreciation account;3. A gain or loss on disposal of a plant asset is determined by comparing the;A). original cost of the asset with the proceeds received from its sale.;B). book value of the asset with the asset's original cost.;C). book value of the asset with the proceeds received from its sale.;D). replacement cost of the asset with the asset's original cost.;4. Salem Company hired Kirk Construction to construct an office building for ?8,000,000 on land costing ?2,000,000, which Salem Company owned. The building was complete and ready to be used on January 1, 2013 and it has a useful life of 40 years. The price of the building included land improvements costing ?600,000 and personal property costing ?750,000. The useful lives of the land improvements and the personal property are 10 years and 5 years, respectively. Salem Company uses component depreciation, and the company uses straight-line depreciation for other similar assets. What is the net amount reported for the building on Salem Company's December 31, 2013 statement of financial position?;A). ?7,573,750;B). ?6,483,750;C). ?7,800,000;D). ?7,665,000;5. Yocum Company purchased equipment on January 1 at a list price of $100,000, with credit terms 2/10, n/30. Payment was made within the discount period and Yocum was given a $2,000 cash discount. Yocum paid $5,000 sales tax on the equipment, and paid installation charges of $1,760. Prior to installation, Yocum paid $4,000 to pour a concrete slab on which to place the equipment. What is the total cost of the new equipment?;A). $104,760;B). $108,760;C). $110,760;D). $101,000;6). A company purchased factory equipment for $350,000. It is estimated that the equipment will have a $35,000 salvage value at the end of its estimated 5-year useful life. If the company uses the double-declining-balance method of depreciation, the amount of annual depreciation recorded for the second year after purchase would be;A). $84,000.;B). $140,000.;C). $126,000.;D). $60,480.;7. On a balance sheet, natural resources may be described more specifically as all of the following except;A). oil reserves.;B). timberlands.;C). land improvements.;D). mineral deposits.;8). On January 1, 2013, Donahue Company, a calendar-year company, issued $500,000 of notes payable, of which $125,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2013, is;A). Current Liabilities, $125,000, Long-term Debt, $375,000.;B). Current Liabilities, $375,000, Long-term Debt, $125,000.;C). Current Liabilities, $500,000.;D). Long-term Debt, $500,000.;9). 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 borrower.;D). greater than the total amount repaid by the borrower;10. From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that;A). interest must be paid on a periodic basis regardless of earnings.;B). the bondholders do not have voting rights.;C). income to stockholders may increase as a result of trading on the equity.;D). bond interest is deductible for tax purposes.;11). The times interest earned ratio is computed by dividing;A). income before interest expense by interest expense.;B). net income by interest expense.;C). income before income taxes and interest expense by interest expense.;D). income before income taxes by interest expense.;12. If the market interest rate is greater than the contractual interest rate, bonds will sell;A). at a discount.;B). only after the stated interest rate is increased.;C). at face value.;D). at a premium.;13). The market interest rate is often called the;A). coupon rate.;B). contractual rate.;C). stated rate.;D). effective rate.;14. On October 1, Steve's Carpet Service borrows $250,000 from First National Bank on a 3-month, $250,000, 8% note. The entry by Steve's Carpet Service to record payment of the note and accrued interest on January 1 is;A). Notes Payable 255,000 Cash 255,000;B). Notes Payable 250,000 Interest Payable 5,000 Cash 255,000;C). Notes Payable 250,000 Interest Payable 20,000 Cash 270,000;D). Notes Payable 250,000 Interest Expense 5,000;Cash 255,000;15. Most companies pay current liabilities;A). by creating long-term liabilities.;B). out of current assets.;C). by issuing interest-bearing notes payable.;D). by issuing stock.;Week 3, Quiz;1. Transactions in a journal are recorded in;A). alphabetical order.;B). dollar amount order.;C). chronological order.;D). account number order.;2. In the first month of operations, the total of the debit entries to the cash account amounted to $900 and the total of the credit entries to the cash account amounted to $600. The cash account has a(n);A). $300 credit balance.;B). $900 debit balance.;C). $600 credit balance.;D). $300 debit balance.;3. Which of the following statements is true?;A). Credits decrease assets and decrease liabilities.;B). Debits increase assets and increase liabilities.;C). Credits decrease assets and increase liabilities.;D). Debits decrease liabilities and decrease assets;4). The final step in the recording process is to transfer the journal information to the;A). trial balance.;B). financial statements.;C). ledger.;D). file cabinets.;5. The usual sequence of steps in the transaction recording process is;A). analyze? journal? ledger.;B). journal? ledger? analyze.;C). ledger? journal? analyze.;D). journal? analyze? ledger.;6). Which one of the following represents the expanded basic accounting equation?;A). Assets = Liabilities + Common Stock + Retained Earnings + Dividends ? Revenue ? Expenses.;B). Assets + Dividends + Expenses = Liabilities + Common Stock + Retained Earnings + Revenues.;C). Assets ? Liabilities ? Dividends = Common Stock + Retained Earnings + Revenues ? Expenses.;D). Assets = Revenues + Expenses ? Liabilities.;7. A trial balance may balance even when each of the following occurs except when;A). a transposition error is made.;B). a journal entry is posted twice.;C). incorrect accounts are used in journalizing.;D). a transaction is not journalized.;8). An accounting time period that is one year in length, but does not begin on January 1, is referred to as;A). a fiscal year.;B). an interim period.;C). the time period assumption.;D). a reporting period.;9). Which of the following reflect the balances of prepayment accounts prior to adjustment?;A). Balance sheet accounts are understated and income statement accounts are understated.;B). Balance sheet accounts are overstated and income statement accounts are overstated.;C). Balance sheet accounts are understated and income statement accounts are overstated.;D). Balance sheet accounts are overstated and income statement accounts are understated.;10). Crue Company had the following transactions during 2013: ? Sales of $4,500 on account ? Collected $2,000 for services to be performed in 2014 ? Paid $1,625 cash in salaries ? Purchased airline tickets for $250 in December for a trip to take place in 2014 What is Crue?s 2013 net income using cash basis accounting?;A). $375.;B). $4,875.;C). $4,625.;D). $125.;11). Which statement is correct?;A). The cash basis of accounting is objective because no one can be certain of the amount of revenue until the cash is received.;B). As long as management is ethical, there are no problems with using the cash basis of accounting.;C). As long as a company consistently uses the cash basis of accounting, generally accepted accounting principles allow its use.;D). The use of the cash basis of accounting violates both the revenue recognition and expense recognition principles.;12). Under accrual-basis accounting;A). net income is calculated by matching cash outflows against cash inflows.;B). the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles.;C). cash must be received before revenue is recognized.;D). 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.;13). Expenses paid and recorded as assets before they are used are called;A). accrued expenses.;B). interim expenses.;C). prepaid expenses.;D). unearned expenses.;14). The adjusted trial balance is prepared;A). after financial statements are prepared.;B). after adjusting entries have been journalized and posted.;C). before the trial balance.;D). to prove the equality of total assets and total liabilities;15). Management usually desires ________ financial statements and the IRS requires all businesses to file _________ tax returns.;A). quarterly, monthly;B). monthly, annual;C). monthly, monthly;D). annual, annual;Week 6, Quiz;1. A bank statement;A). is a bill from the bank for services rendered.;B). is a credit reference letter written by the depositor's bank.;C). shows the activity which increased or decreased the depositor's account balance.;D). lets a depositor know the financial position of the bank as of a certain date.;2. The principles of internal control activities are used in the;A). internationally but not in the U.S.;B). in the U.S. and Canada but not globally.;C). globally.;D). U.S.but not globally.;3. Postage stamps on hand are considered to be;A). cash.;B). petty cash.;C). a prepaid expense.;D). cash equivalents.;4. Tangible frauds include;A). asset misappropriation.;B). false pretenses.;C). counterfeiting.;D). All of these.;5. All of the following requirements about internal controls were enacted under the Sarbanes- Oxley Act except;A). independent outside auditors must eliminate redundant internal controls.;B). independent outside auditors must attest to the level of internal control.;C). companies must develop sound internal controls over financial reporting.;D). companies must continually assess the functionality of internal controls.;6. A deposit made by a company will appear on the bank statement as a;A). debit.;B). credit.;C). debit memorandum.;D). credit memorandum.;7. In large companies, the independent internal verification procedure is often assigned to;A). computer operators.;B). management.;C). internal auditors.;D). outside CP;8. An aging of a company's accounts receivable indicates that $10,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a;A). debit to Bad Debts Expense for $8,900.;B). credit to Allowance for Doubtful Accounts for $10,000.;C). debit to Bad Debts Expense for $10,000.;D). debit to Allowance for Doubtful Accounts for $8,900.;9. A reasonable amount of uncollectible accounts is evidence;A). that the credit policy is too strict.;B). of poor judgments on the part of the credit manager.;C). that the credit policy is too lenient.;D). of a sound credit policy.;10. Kill Corporation's unadjusted trial balance includes the following balances (assume normal balances);Accounts Receivable $ 750,000;Allowance for Doubtful Accounts 15,000;Bad debts are estimated to be 6% of outstanding receivables. What amount of bad debts expense will the company record?;A). $15,000;B). $44,100;C). $30,000;D). $45,000;11. Using the percentage-of-receivables basis, the uncollectible accounts for the year is estimated to be $31,000. If the balance for the Allowance for Doubtful Accounts is a $7,000 debit before adjustment, what is the amount of bad debts expense for the period?;A). $31,000;B). $38,000;C). $7,000;D). $24,000;12. Using the following information;12/31/12;Accounts receivable $ 525,000;Allowance (35,000);Cash realizable value $ 490,000;During 2013, sales on account were $145,000 and collections on account were $100,000. Also during 2013, the company wrote off $8,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that uncollectible accounts should be estimated at $40,000. Bad debts expense for 2013 is;A). $40,000.;B). $13,000.;C). $5,000.;D). $8,000.;13. If a retailer regularly sells its receivables to a factor, the service charge of the factor should be classified as a(n);A). contra asset.;B). other expense.;C). selling expense.;D). interest expense.;14. During 2013, Alfred Inc. had sales on account of $132,000, cash sales of $54,000, and collections on account of $84,000. In addition, they collected $1,450 which had been written off as uncollectible in 2012. As a result of these transactions, the change in the accounts receivable balance indicates a;A). $102,000 increase.;B). $100,550 increase.;C). $46,550 increase.;D). $48,000 increase.;15. A 5%, 120-day note receivable is received from a customer to settle an existing account receivable of $75,000. Assuming a 360 day year, the accounting entry for acquisition of the note will include a;A). debit to Notes Receivable for $75,000 and no entry for interest.;B). debit to Notes Receivable for $76,250.;C). debit to Notes Receivable for $78,720.;D). credit to Interest Revenue for $1,250.;Week 9, Quiz;1. Eck Corporation sells 250 shares of common stock being held as an investment. The shares were acquired six months ago at a cost of $25 a share. Eck sold the shares for $40 a share. The entry to record the sale is;A). Cash 10,000;Gain on Sale of Stock Investments 3,750;Stock Investments 6,250;B). Stock Investments 10,000;Cash 10,000;C). Cash 10,000;Stock Investments 10,000;D). Cash 6,250;Loss on Sale of Stock Investments 3,750;Stock Investments 10,000;2. On January 1, Talent Company purchased as a short-term investment a $1,000, 8% bond for $1,050. The bond pays interest on January 1 and July 1. The bond is sold on October 1 for $1,200 plus accrued interest. Interest has not been accrued since the last interest payment date. What is the entry to record the cash proceeds at the time the bond is sold?;A). Cash 1,200;Debt Investments 1,200;B). Cash 1,220;Debt Investments 1,050;Gain on Sale of Debt Investments 150;Interest Revenue 20;C). Cash 1,220;Debt Investments 1,200;Interest Revenue 20;D). Cash 1,200;Debt Investments 1,050;Gain on Sale of Debt Investments 150;3. At the end of its first year, the trading securities portfolio consisted of the following common stocks.;Cost Fair Value;Atrium Corporation $ 46,400 $ 50,000;Barnes Inc. 60,000 55,800;Cantor Corporation 80,000 76,000;$186,400 $181,800;In the following year, the Barnes common stock is sold for cash proceeds of $56,000. The gain or loss to be recognized on the sale is a;A). loss of $4,000.;B). gain of $1,200.;C). gain of $200.;D). loss of $4,200.;4. At the time of acquisition of a debt investment;A). the Stock Investments account is debited when bonds are purchased.;B). the Investment account is credited for its cost plus brokerage fees.;C). no journal entry is required.;D). the cost principle applies.;5. The account, Stock Investments, is;A). a general ledger control account.;B). another name for Debt Investments.;C). a subsidiary ledger account.;D). a long-term liability account.;6. Tan Company had these transactions pertaining to stock investments: Feb. 1 Purchased 3,000 shares of Norton Company (10%) for $48,800 cash plus brokerage fees of $1,400.;June 1 Received cash dividends of $2 per share on Norton stock. Oct. 1 Sold 1,200 shares of Norton stock for $24,000 less brokerage fees of $600. The entry to record the purchase of the Norton stock would include a;A). credit to Cash for $48,800.;B). debit to Stock Investments for $48,800.;C). debit to Stock Investments for $50,200.;D). debit to Investment Expense for $1,400.;7. Mission Inc. earns $450,000 and pays cash dividends of $150,000 during 2013. Cox Corporation owns 70,000 of the 210,000 outstanding shares of Mission. How much revenue from investment should Cox report in 2013?;A). $150,000;B). $200,000;C). $50,000;D). $100,000;8. Which of the following reasons best explains why a company that experiences seasonal fluctuations in sales may purchase investments in debt or stock securities?;A). The company may have excess cash.;B). The company may invest for speculative reasons to increase the value in pension funds.;C). The company may generate a significant portion of its earnings from investment income.;D). The company may invest for the strategic reason of establishing a presence in a related industry.;9. The balance sheet presentation of an unrealized loss on a non-trading security is similar to the statement presentation of;A). treasury stock.;B). discount on bonds payable.;C). prepaid expenses.;D). allowance for doubtful accounts.;10. A company that acquires less than 20% ownership interest in another company should account for the stock investment in that company using;A). the significant method.;B). the equity method.;C). consolidated financial statements.;D). the cost method.;11. Which of the following is not a true statement regarding short-term debt investments?;A). Investments are frequently government or corporate bonds.;B). The securities usually pay interest.;C). This type of investment must be currently traded in the securities market.;D). Debt investments are recorded at the price paid less brokerage fees.;12. Revenue is recognized when cash dividends are received under;A). the cost method.;B). the equity method.;C). the controlling interest method.;D). both the cost and equity methods.;13. An unrealized loss on non-trading securities is;A). closed-out at the end of the accounting period.;B). deducted from the cost of the investment.;C). reported as a separate component of stockholders' equity.;D). reported under Other Expenses and Losses in the income statement.;14. Mission Inc. earns $600,000 and pays cash dividends of $150,000 during 2013. Cox Corporation owns 70,000 of the 210,000 outstanding shares of Mission. What amount should Cox show in the investment account at December 31, 2013 if the beginning of the year balance in the account was $40,000?;A). $190,000;B). $200,000;C). $175,000;D). $180,000;15. The contra-account, Fair value Adjustment, is also called a(n);A). valuation account.;B). offset account.;C).opposite account.;D). adjustment account.;Week 10, Quiz;1. Which one of the following affects cash during a period?;A). Payment of an accounts payable;B). Recording depreciation expense;C). Write-off of an uncollectible account receivable;D). Declaration of a cash dividend;2. Land acquired from the issuance of common stock is reported;A). as a financing activity.;B). in a separate schedule at the bottom of the statement.;C). as an investing activity.;D). as an operating activity.;3. The information to prepare the statement of cash flows usually comes from each of the following except;A). the comparative balance sheet.;B). the current income statement.;C). the retained earnings statement.;D). additional information.;4. The statement of cash flows will not report the;A). amount of checks outstanding at the end of the period.;B). change in the cash balance for the current period.;C). sources of cash in the current period.;D). uses of cash in the current period.;5. Starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the;A).cost-benefit method.;B). direct method.;C). indirect method.;D). working capital method;6. In developing the cash flows from operating activities, most companies in the U. S.;A). prepare the operating activities section on the accrual basis.;B). use the direct method.;C). use the indirect method.;D). present both the indirect and direct methods in their financial reports.;7. Carrot Company issued common stock for proceeds of $381,000 during 2013. The company paid dividends of $90,000 and issued a long-term note payable for $95,000 in exchange for equipment during the year. The company also purchased treasury stock that had a cost of $18,000. The financing section of the statement of cash flows will report net cash inflows of;A). $489,000.;B). $183,000.;C). $363,000.;D). $273,000;8. Each of the following items may be classified as operating or financing activities under IFRS except;A). dividends paid.;B). dividends received.;C). interest paid.;D). All of these may be classified as such.;9. Accounts receivable arising from sales to customers amounted to $45,000 and $50,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $160,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is;A). $205,000.;B). $155,000.;C). $165,000.;D). $160,000;10. The statement of cash flows will not provide insight into;A). whether cash flow is greater than net income.;B). why dividends were not increased.;C). the exact proceeds of a future bond issue.;D). how the retirement of debt was accomplished.;11. Which one of the following items is not necessary in preparing a statement of cash flows?;A). Determine the cash in all bank accounts;B). Determine the change in cash;C). Determine the cash provided by operations;D). Determine cash from financing and investing activities;12. If a company reports a net loss, it;A). will not be able to pay cash dividends.;B). may still have a net increase in cash.;C). will not be able to get a loan.;D). will not be able to make capital expenditures.;13. In Flagg Company, net income is $280,000. If accounts receivable increased $145,000 and accounts payable decreased $50,000, net cash provided by operating activities using the indirect method is;A). $475,000.;B). $185,000.;C). $85,000.;D). $375,000.;14. The category that is generally considered to be the best measure of a company's ability to continue as a going concern is;A). usually different from year to year.;B). cash flows from operating activities.;C). cash flows from investing activities.;D). cash flows from financing activities.;15. Financing activities involve;A). cash receipts from sales of goods and services.;B). acquiring and disposing of productive long-lived assets.;C). lending money to other entities and collecting on those loans.;D). long-term liability and owners' equity items.

 

Paper#26008 | Written in 18-Jul-2015

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