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ACC 497 Final Exam




Question;ACC 497 Final Exam;1) The uniform law, issued in 1984 by the Committee;on Corporate Laws of the American Bar Association, that regulates the;formation, operation, and termination of corporations is;2) Which of the following statements is true?;3) Which of the following statements is true?;4) What effect would a decrease in interest rates by;the Federal Reserve most likely have in the nation?s manufacturing sector, all;other factors remaining constant?;5) A table that shows the relationship between the;price of a good and the quantity demanded of that good is called;6) If policymakers increase aggregate demand, the;price level;7) Which table would show the largest factor for an;interest rate of 8% for five periods?;8) Financial service;9) As the interest rate increases for any given;period, the future value interest factor will;10) The specific cost of each source of long-term;financing is based on ________ and ________ costs.;11) At the operating break-even point;equals zero.;Section;4: Information Technology (IT) Implications in the Business Environment;12) Justifying expenditures for new technologies is;especially difficult because;13) The hardware of a computer system includes the;computer itself and other devices that help the computer perform its tasks.;These other devices are commonly also called;14) Software that enables businesses and government;agencies to transmit and manipulate financial data on an organization-wide;basis best describes;15) A simple diagram that shows estimated completion;times versus actual completion times for the various activities in a systems;implementation project;16) What would be the best explanation for the;absence of complete information on computer crime?;17) Which of the following processes would be;accounted for using a job order cost system?;18) In traditional costing systems, overhead is;generally applied based on;19) If standard costs are incorporated into the;accounting system;20) Generally accepted accounting principles are;21) 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?;22) 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;23) 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?;24) Kershaw Bookstore had 600 units on hand at;January 1, costing $18 each. Purchases and sales during the month of January;were as follows: Kershaw does not maintain perpetual inventory records.;According to a physical count, 450 units were on hand at January 31. The cost;of the inventory at January 31, under the LIFO method is;25) The process of formally recording or;incorporating an item in the financial statements of an entity is;26) The primary purpose of the statement of cash;flows is to provide information;27) Which of the following is considered cash?;28) 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. Assuming there is no beginning liability;balance, what is the rebate expense and liability, respectively, shown on the;2007 financial statements dated December 31?;29) Which of the following is a debt security?;30) The balance in Newsprint Corp.'s foreign;exchange loss account was $10,000 on December 31, 2008, before any necessary;year-end adjustment relating to the following;31) Costs incurred internally to create intangibles;are;32) The amount to be recorded as the cost of an;asset under capital lease is equal to the;33) In computations of weighted average of shares;outstanding, when a stock dividend or stock split occurs, the additional shares;are;34) Debt securities that are accounted for at;amortized cost, NOT fair value, are;35) Elvis Company purchases inventory for $70,000 on;March 19, 2008, and sells it to Graceland Corporation for $95,000 on May 14;2008. Graceland still holds the inventory on December 31, 2008, and determines;that its market value (replacement cost) is $82,000 at that time. Graceland;writes the inventory down from $95,000 to its lower market value of $82,000 at;the end of the year. Elvis owns 75% of Graceland. Based on this information;what amount of inventory should be eliminated in the consolidation workpaper;for 2008?;36) Which of the following objectives is considered;the cornerstone of financial reporting by a governmental entity?;37) Expenditures should be budgeted by character. An;example of a character classification is;38) Which of the following funds is accounted for on;the modified accrual basis of accounting?;39) Several years ago, Durham City issued $1 million;in zero coupon bonds due and payable in 2010. The bonds were sold at an amount;to yield investors 6% over the life of the bonds. During the current year, how;much interest expenditures would Durham City recognize related to these bonds?;40) As used in governmental accounting, interperiod;equity refers to a concept of;41) The state has a legally separate State Building;Authority, which has a board appointed by the Governor. The authority issues;debt in its name, holds title to buildings in its name, and leases its building;exclusively to the state. The authority would be considered a(n);42) Revenues of a not-for-profit organization should;be reported as;43) Financial statements for a church-supported;college should be prepared according to standards set by the;44) For a not-for-profit hospital, which of the;following financial statements is required?;45) What agency has the ultimate authority in;defining independence for publicly traded companies?;46) A report on internal control effectiveness by;management of public companies is required by which of the following;47) Once sufficient predication has been;established, what is the first step a fraud examiner following the fraud theory;approach should take?;48) Which of the following best describes the;objective of a fraud examination?;49) Damages intended to punish a defendant and deter;the defendant and others from engaging in the same tortious conduct in the;future are called;50) Where a contract calls for action that violates;a statute, in a breach of contract case the court will;51) Ted?s Gifts and Sweets enters into a written;contract with Bannon Candies to supply Ted?s with 60 boxes containing a dozen;coconut clusters each month for sale to the public. The agreement contained an;integration clause. Before the first delivery under the contract, Ted and his;warehouse manager called Debbie, the Bannon?s account representative, to;request that the candies be delivered in special Valentine?s Day boxes. Debbie;told Ted, ?Don?t worry, I?ll tell the shipping department to take care of;that.? When the candies were delivered, they were in standard cardboard boxes.;Ted called Bannon and threatened to sue for breach of contract. Will Ted;prevail in his suit?;52) Jane and Bill are married. They purchase a house;and lot as tenants by the entirety. Then Jane is killed in a car accident. Her;will leaves everything to her sister, Ruth. What will happen to Jane?s interest;in the property?;53) Which of the following is a correct statement of;the requirements for a bona fide occupational qualification?;54) Which of the following statements accurately;describes the workers? compensation rules?;55) When a company holds between 20% and 50% of the;outstanding stock of an investee, which of the following statements applies?;56) On December 31, 2008, Kean Company changed its;method of accounting for inventory from weighted-average cost method to the;FIFO method. This change caused the 2008 beginning inventory to increase by;$420,000. The cumulative effect of this accounting change to be reported for;the year ended December 31, 2008, assuming a 40% tax rate, is;57) Which of the following serves as the highest;authority for tax research, planning, and compliance activities?;58) The retail inventory method is based on the;assumption that the;59) When an item of expense is paid and recorded in;advance, it is normally called;60) Antonio owns land held for investment with a;basis of $28,000. The city of Lafayette exercises the right of eminent domain;and Antonio receives a payment of $48,000. What is Antonio's realized gain?;61) In April 2009 of this year, Emma acquired a;machine for $50,000 for use in her business. The machine is classified as;7-year property. Emma elects out of bonus depreciation and does not expense the;asset under Sec. 179. Emma's depreciation on the machine this year is;62) During the current year, a corporation sells;equipment for $300,000 that it had purchased and placed in service in 2007. The;equipment cost $270,000, and $60,000 of depreciation deductions was allowed.;The results of the sale are;63) Susie owns a ranch in Wyoming, which Pat offers;to purchase. Susie is not willing to sell the ranch but is willing to exchange;the ranch for an apartment complex in Louisiana. The complex is available for;sale. Pat purchases the apartment complex in Louisiana from Jody and transfers;it to Susie in exchange for Susie's ranch. The ranch and the complex each have;a $1,000,000 fair market value. Which of the following is true?;64) A married person who files a separate return can;claim a personal exemption for his or her spouse if the spouse is not the;dependent of another and has;65) Ricky has rented a house from Sarah since last;year. The rent is usually $800 per month, but Sarah reduced the monthly rent;down to $600 for all 12 months this year in exchange for Ricky constructing an;addition to the house. The addition has a fair market value of $3,500. How much;total rental income must Sarah report this year?;66) Alex is a calendar-year sole proprietor. He;began business on December 1 of this year. He uses the accrual method of;accounting. Alex had the following collections in the same month: He collected;$7,000 in December from clients who paid cash for services to be performed next;year. He collected $5,000 in December for services performed during December;which he deposited in an operating account on December 31 of this year. He;collected $9,000 in December on accounts receivable for services performed in;December, which he deposited in an operating account on January 2 of next year.;What is the amount Alex must include in his income for December?;67) Bianca is beneficiary of an $80,000 insurance;policy on her father's life. Upon his death, she may elect to receive the;proceeds in 5 yearly installments of $17,500 or may take the $80,000 lump sum.;She elects to take the lump sum payment. What are the tax consequences in year;one?;68) Nonrefundable tax credits;69) Paul makes the following property transfers in;the current year: $22,000 cash to his wife, $34,000 cash to a qualified;charity, $120,000 house to his son, and $3,000 computer to an unrelated friend.;The total of Paul's taxable gifts, assuming he does not elect gift splitting;with his spouse, subject to the unified transfer tax, is;70) Which of the following best describes the weight;of a revenue ruling?;71) Which of the following statements is true?;72) One consequence of a property distribution by a;corporation to a shareholder is;73) Joshua owns 100% of Steeler Corporation's stock.;Joshua's basis in the stock is $8,000. Steeler Corporation has E&P of;$40,000. If Steeler Corporation redeems 60% of Joshua's stock for $50,000;Joshua must report dividend income of;74) In computing the ordinary income of a;partnership, a deduction is allowed for;75) Which of the following would terminate a;Subchapter S election?;76) The function of auditing is;77) Auditing is based on the assumption that;financial data are verifiable. Data are verifiable when two or more qualified;individuals;78) Statement on Quality Control Standards No. 2;identifies certain quality control elements that should be considered when;performing which types of services?;79) Internal auditors are primarily involved with;80) The statement that the reviewer ?is not aware of;any material modifications that should be made to the statements in order for;them to be in conformity with GAAP? is known as;81) The assessment of inherent risk requires;considering matters that have a pervasive effect on assertions for all or many;accounts and matters that may pertain only to assertions for specific accounts.;Which of the following is an example of a pervasive effects matter?;82) Specific audit objectives are normally;83) The Committee of Sponsoring Organizations (COSO);report identified five interrelated components of internal control. Since then;a sixth category has been identified, which is;84) Which of the following necessary controls would;address a potential misstatement arising from a voucher being paid twice?;85) An effective accounting system should identify;and record only the valid transaction of the entity that occurred in the;current period, which relates to the;86) One of the six steps involved in performing;analytical procedures includes the following;87) In a normal audit, the relationship between the;level of materiality used to plan the engagement and the level of materiality;used to evaluate evidence is that;88) Use of auditor judgment or of a risk matrix is;necessary in revising planned detection risk whenever;89) In the audit risk model, audit sampling applies;to;90) Audit sampling is involved whenever an auditor;91) How can long-term assets best be tested for;ownership?;92) How can long-term assets best be tested for;current present value?;93) Because of the effects of circulation, some;audit evidence is more reliable than other evidence. Which of the following is;generally considered to be most reliable?;94) Which of the following accounts in a;merchandising company is affected by both the revenue cycle and another cycle?;95) The auditor?s strategy in performing test counts;during the inventory observation is to;96) Which one of the following analytical procedures;may indicate possible inventory obsolescence problems when ratios are large?;97) The control of all funds during the count of;cash on hand is meant primarily to prevent;98) Whether the entity maintains effective controls;to provide reasonable assurance that private customer information obtained;because of e-commerce is protected is defined as;99) A lawyer?s refusal to respond to a letter of;audit inquiry normally requires the auditor to;100) Which of the following is a tort?


Paper#37954 | Written in 18-Jul-2015

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