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devry acct504 midterm exam




Question;1. (TCO A, B, C) Which of the following statements;concerning users of accounting information is incorrect? (Points: 3) Management is;considered an internal user. Present and;prospective creditors are considered external users. Regulatory;authorities such as the SEC are considered internal users. Taxing;authorities are considered external users.2. (TCO C) Issuing shares of stock in exchange for cash is;an example of a(n) (Points: 3) delivering;activity. investing;activity. financing;activity. operating;activity.3. (TCO C) The statement of cash flows would disclose the;payment of a dividend (Points: 3) nowhere on the;statement. in the;operating activities section. in the;investing activities section. in the;financing activities section.4. (TCO A) The cost of assets consumed or services used is;also known as (Points: 3) a revenue. an expense. a liability. an asset.5. (TCO C) Finley Company recorded the following cash;transactions for the year:Paid $90,000 for salaries.Paid $40,000 to purchase office equipment.Paid $10,000 for utilities.Paid $4,000 in dividends.Collected $150,000 from customers.What was Finley's net cash provided by operating activities?;(Points: 3) $50,000 $10,000 $60,000 $46,0006. (TCO A) A current asset is (Points: 3) the last asset;purchased by a business. an asset which;is currently being used to produce a product or service. usually found;as a separate classification in the income statement. expected to be;converted to cash or used in the business within a relatively short period of;time.7. (TCO A) Which of the following is not considered an;asset? (Points: 3) Equipment Dividends Accounts receivable Inventory8. (TCO A) These are selected account balances on December;31, 2007.-Land (location of the corporation's office building);$200,000-Land (held for future use) 300,000-Corporate Office Building 1,200,000-Inventory;400,000-Equipment;900,000-Office Furniture 200,000-Accumulated Depreciation 600,000What is the total NET amount of property, plant, and;equipment that will appear on the balance sheet? (Points: 3) $1,900,000 $2,600,000 $2,200,000 $3,200,0009. (TCO B) For 2007 Landford Corporation reported net income;of $30,000, net sales $400,000, and average share outstanding 6,000. There were;no preferred stock dividends. What was the 2007 earnings per share? (Points;3) $4.66 $0.20 $66.67 $5.0010. (TCO B) Liondale Corporation had beginning retained;earnings of $2,292,000 and ending retained earnings of $2,499,000. During the;year, they issued common stock totaling $141,000. There were no dividends;issued. What was their net income for the year? (Points: 3) $207,000 $ 66,000 $348,000 $273,00011. (TCO D) Is the purchase of equipment treated as an;expense at the time of purchase? Why or why not? (Points: 3) No, GAAP;requires that 10% of the cost be expensed each year. This minimizes attempts to;mislead financial statement users. Yes, the;matching principle requires that the cost be expensed in the period of;purchase. No, the cost;needs to be allocated to the years of expected use. Yes, the actual;life of the asset is not known, thus there is no acceptable way to allocate the;cost.12. (TCO D) Which one of the following is not a part of an;account? (Points: 3) Credit side Trial balance Debit side Title13. (TCO D) The classification and normal balance of the;dividend account is (Points: 3) a revenue, with;a credit balance. an expense;with a debit balance. a liability;with a credit balance. under;stockholders' equity, with a debit balance.14. (TCO D) A debit is not the normal balance for which;account listed below? (Points: 3) Dividends Cash Accounts;Receivable Service Revenue15. (TCO D) Which of the following accounts follows the;rules of debit and credit in relation to increases and decreases in the;opposite manner? (Points: 3) Prepaid;insurance and dividends Dividends and;medical fees earned Interest;payable and common stock Advertising;expense and landPage 21. (TCO E) One of the accounting concepts upon which;adjustments for prepayments and accruals are based is (Points: 3) matching. cost. monetary unit. economic;entity.2. (TCO E) In a merchandising business, revenue may be;considered earned when (Points: 3) cash is;received from the customers a product is;delivered to a customer. an order is;received from a customer a customer;shows interest in a product3. (TCO E) Why do generally accepted accounting principles;require the application of the revenue recognition principle? (Points: 3) Failure to;apply the revenue recognition principle could lead to an overstatement of;revenue. It is easy to;apply the revenue recognition principle because revenue issues are always easy;to identify and resolve. Recording;revenue when cash is received is an objective application of the revenue;recognition principle. Accounting software;has made the revenue recognition easy to apply.4. The following is selected information from M Corporation;for the fiscal year ending October 31, 2007:Cash received from customers $300,000Revenue earned 350,000Cash paid for expenses 170,000Expenses incurred, 200,000(TCO E) Based on the accrual basis of accounting, what is M;Corporation's net income for the year ending October 31, 2007?(Points: 3) $140,000 $114,000 $82,000 $150,0005. (TCO E) The general term employed to indicate an expense;that has not been paid or revenue that has not been received and has not yet;been recognized in the accounts is (Points: 3) contra asset. prepayment. asset. accrual.6. (TCO B) A merchandiser that sells directly to consumers;is a (Points: 3) retailer. wholesaler. broker. service;enterprise.7. (TCO A,B) Detailed records of movements in merchandise;(each purchase and sale) are not maintained in the inventory account in a;(Points: 3) perpetual;inventory system. periodic;inventory system. double entry;accounting system. business that sells expensive merchandise.8. (TCO B) Hunter Company purchased merchandise inventory;with an invoice price of $12,000 and credit terms of 2/10, n/30. What is the;net cost of the goods if Hunter Company pays within the discount period?;(Points: 3) $11,040 $10,800 $11,760 $12,0009. Zach's Market recorded the following events involving a;recent purchase of merchandise: ? Received;goods for $50,000, terms 2/10, n/30.? Returned;$1,000 of the shipment for credit.? Paid $250;freight on the shipment.? Paid the;invoice within the discount period.(TCO A) As a result of these events, the company's;merchandise inventory(Points: 3) increased by;$48,020. increased by;$49,250. increased by;$48,265. increased by;$48,270.10. (TCO A) The factor which determines whether or not goods;should be included in a physical count of inventory is (Points: 3) physical;possession. legal title. management's;judgment. whether or not;the purchase price has been paid.11. TCO A -- Which statement is false? (Points: 3) Taking a;physical inventory involves actually counting, weighing, or measuring each kind;of inventory on hand. No matter;whether a periodic or perpetual inventory system is used, all companies need to;determine inventory quantities at the end of each accounting period. An inventory;count is generally more accurate when goods are not being sold or received;during the counting. Companies that;use a perpetual inventory system must take a physical inventory to determine;inventory on hand on the balance sheet date and to determine cost of goods sold;for the accounting period.12. (TCO A) Which of the following items will increase;inventoriable costs for the buyer of goods? (Points: 3) Purchase;returns and allowances granted by the seller Purchase;discounts taken by the purchaser Freight charges;paid by the seller Freight charges;paid by the purchaser13. TCO A -- Which of the following statements is true;regarding inventory cost flow assumptions? (Points: 3) A company may;use more than one cost-flow assumptions concurrently for different product;lines. A company must;comply with the method specified by industry standards. A company must;use the same method for domestic and foreign operations. A company may;never change its inventory costing method once it has chosen a method.14. TCO A -- In a period of declining prices, which of the;following inventory methods generally results in the lowest balance sheet;figure for inventory? (Points: 3) Average cost;method LIFO method FIFO method Need more;information to answer15. (TCO B) Which of the following is a true statement about;inventory systems? (Points: 3) Periodic;inventory systems require more detailed inventory records. Perpetual;inventory systems require more detailed inventory records. A periodic system requires cost of goods sold;be determined after each sale. A perpetual;system determines cost of goods sold only at the end of the accounting period.2. (TCOs B&E);The adjusted trial balance of Gertz Company included the following;selected accounts;Debit CreditSales $575,000Sales Returns and Allowances $ 50,000;Sales Discounts 9,500 Cost of Goods Sold 347,000 Freight-out 2,000 Advertising Expense 15,000 Interest Expense 19,000 Store Salaries Expense 74,000 Utilities Expense 18,000 Depreciation Expense 3,500 Interest Revenue;25,000Instructions(1). Use the above information to prepare a multiple-step;income statement for the year ended December 31, 2007.(2). Calculate the profit margin ratio and gross profit;rate. To qualify for full credit, you;must state the formula you are using, show your computations, and explain your;findings. (Points: 35);Explain the rules of debits and credits in a way that will;help him understand them. Cite examples for each of the major sections of the;balance sheet (assets, liabilities and stockholders equity) and the income;statement (revenues and expenses)="msonormal">


Paper#39969 | Written in 18-Jul-2015

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