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ACC 290 FINAL EXAM STUDY GUIDE

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Question;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;Office Supplies, $1,100;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. 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;14. 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;15. 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;16. 3.2.1 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;17. 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;18. 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%;19. 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;20. 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 acc 290 final exam 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%;21. The entry to record of sale of $900 with;terms of 2/10, n/30 will include a;A. debit to Sales Discount for $18;B. debit to Sales Revenue for $882;C. credit to Accounts Receivable for $900;D. credit to Sales Revenue for $900;22.Dobler Company uses a periodic inventory;system. Details for the inventory account for the month of January 2012 are as;follows;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;23. 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;24. A consistent application of an inventory;costing method enhances;A. conservatism;B. accuracy;C. comparability;D. efficiency;25. 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 acc290 final exam 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;26. 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;27. 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;28. 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;29. 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;30. which of the following financial statements is;divided into major categories of operating, investing, and financing;activities?;A. The income statement;B. The balancesheet;C. The retained earnings statement;D. The statement of cashflow;31. Based on the account balance below, what is the;total of the debit credit columns of the adjusted trial balance?;Service Revenue $3,300;Equipment $6,400;Cash $1,525;Prepaid insurance 1,225;Unearned Revenue 5,320;Depreciation Expense 640;Salary 1,050;Accum, Depreciation 1,280;Common stock 390;Retained Earnings 550;A. $9,150;B. $10,840;C. $9,560;D. $10,430

 

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