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Kaplan University AC 499 Final Exam (Graded)

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Question;Grade Details - All Questions 1. Question: Internal controls are important because they Student Answer: prevent fraud and misleading financial statements. eliminate fraud. guarantee accurate financial statements. 2. Question: Which of the following reflects a strong internal control system? Student Answer: All employees are well supervised. A single employee is responsible for comparing a receiving report to an invoice. All employees must take their vacations. All of the above would be part of a strong internal control system. 3. Question: The bank reconciliation Student Answer: should be prepared by an employee who records cash transactions. is sent to the bank for verification. is for information purposes only. 4. Question: A special cash fund used to make small payments that occur frequently is called a(n) Student Answer: operating expenses fund. change fund. market fund. petty cash fund. 5. Question: The organization responsible for expressing an opinion about the fair reporting (ie, in accordance with GAAP) of financial statements is: Student Answer: As independent (or external) auditors, CPAs are primarily responsible for the company?s internal auditor the DEO & CFO. the SEC. 6. Question: The following is one of the fundamental criteria for recognition? Student Answer: Reliability Measurability Relevance All of the above. 7. Question: Which of the following is a purpose of the conceptual framework of accounting? Student Answer: To provide definitions of key terms and fundamental concepts To assist accountants in selecting among alternative accounting and reporting methods To assist the FASB in the standard-setting process All of the above. 8. Question: Which of the following statements concerning the objectives of financial reporting is NOT correct? Student Answer: The objectives are intended to be specific in nature. The objectives are primarily for the needs of internal users of accounting information. The objectives were the end result of the FASB's conceptual framework project. None of the above are correct.. 9. Question: Which of the following is NOT true? Student Answer: Form 10-K is required under the FASB Conceptual Framework. Form 10-Q is a quarterly report of significant events required by the SEC. Form 8-K is the annual report submitted by small businesses to the SEC. None of the above are true. 10. Question: Which of the following is included in the highest authoritative level of GAAP? Student Answer: FASB Statements APB Opinions FASB Staff Positions All of the above are included in the highest authoritative level of GAAP. 11. Question: Which of the following is NOT a characteristic of the Financial Accounting Standards Board? Student Answer: FASB members may retain their positions with previous employers. FASB members must come from CPA firms. FASB members are part-time. None of the above. 12. Question: Documents issued by the FASB include which of the following: Student Answer: Statements of Financial Accounting Standards. Interpretations of Statements of Financial Accounting Standards. Statements of Financial Accounting Concepts. All of the above.. 13. Question: Which of the following are included in gross income? Student Answer: Jury duty fees Gains from illegal activities Clergy fees and contributions All of the above 14. Question: Mr. Rogers has a membership at the University Club. He pays the following during the year:Membership dues $1,600Business lunches 4,500Personal dinners with his wife 250How much may Mr. Rogers deduct as entertainment expenses? Student Answer: $6,100 $1,850 $6,350 $2,250 15. Question: If a capital asset were purchased on January 22, 2010 and sold on February 24, 2010 for a gain and this were the only capital asset sold during the year, then the capital asset is treated as: Student Answer: a long-term asset and will be taxed using ordinary income tax rate. a long-term asset and will be taxed using capital gains rate. a short-term asset and will be taxed using ordinary income tax rate. a short-term asset and will be taxed using capital gains rate. 16. Question: Which of the following statements is correct with respect to the taxation of capital gains? Student Answer: All of the above are correct statements. In any year, only $3,000 of net capital losses can be deducted against ordinary income. Long-term gains have preferential tax rates of zero percent and 15 percent. All of the above are correct.. 17. Question: Which of the following is NOT true for income tax purposes: Student Answer: S corporations are taxable entities only. partnerships are taxable entities only. corporations are reporting entities only. none of the above are true. 18. Question: Voluntary payroll deductions include which of the following deductions: Student Answer: union dues 401K deductions group hospital insurance All of the above 19. Question: Which of the following payroll taxes are levied against the employer? Student Answer: FICA taxes federal unemployment taxes state unemployment taxes All of the above 20. Question: FICA defines all of the following as employees except: Student Answer: vice presidents. full-time life insurance salespersons. superintendents. All of the above are considered employees 21. Question: Mr. Jones worked 46 hours during this pay-week. He is paid time-and-a-half for hours over 40 and his pay rate is $17.90/hour. What was his overtime pay for this workweek? Student Answer: $107.40 $161.10 $50.70 $53.70 22. Question: The employee?s earnings record provides information for which of the following: Student Answer: completing Forms W-2. preparing reports required by state unemployment compensation laws. determining when the accumulated wages of an employee reach cutoff levels. All of the above 23. Question: The accounting equation could be expressed as: Student Answer: Stockholders' Equity = Assets - Liabilities. Assets - Stockholders' Equity = Revenues. Assets - Liabilities = Operating Income. Assets + Liabilities = Stockholders' Equity. 24. Question: Which of the following statements is true? Student Answer: Financial statements are prepared by management. A secondary objective of financial reporting includes determining prospective cash flows Internal users of financial information include management of the company. All of the above. 25. Question: One of the Pervasive Constraints of the accounting conceptual framework is: Student Answer: The time value of money The risk to return ratio The cost benefit ratio None of the above * Times are displayed in (GMT-07:00) Mountain Time (US & Canada)Grade Details - All Questions 1. Question: The following is NOT one of the fundamental criteria for recognition? Student Answer: Timeliness Measurability Relevance Reliability 2. Question: Internal control does NOT consist of policies and procedures that Student Answer: guarantee the company will not go bankrupt. ensure that laws and regulations are being followed. protect assets from misuse. ensure that business information is accurate. 3. Question: The bank reconciliation Student Answer: should be prepared by an employee who records cash transactions. is part of the internal control system. is for information purposes only. is sent to the bank for verification. 4. Question: An element of internal control is Student Answer: risk assessment. journals. subsidiary ledgers. controlling accounts. 5. Question: Important constraints underlying the qualitative characteristics of accounting information are Student Answer: historical cost and going concern. materiality, conservatism, and cost-effectiveness. consistency, comparability, and conservatism. verifiability, neutrality, and representational faithfulness. 6. Question: Which of the following is not included in the highest authoritative level of GAAP? Student Answer: FASB Statements AICPA Statements of Position FASB Staff Positions Accounting Principles Board (APB) Opinions 7. Question: A major difference between the Financial Accounting Standards Board (FASB) and its predecessor, the Accounting Principles Board (APB), is Student Answer: all members of the FASB serve full time, are paid a salary, and are independent of any public or private enterprises. over 50 percent of the members of the FASB are required to be Certified Public Accountants. the FASB issues exposure drafts of proposed standards. all members of the FASB possess experience in both public and corporate accounting. 8. Question: Proper application of accounting principles is most dependent upon the Student Answer: existence of specific guidelines. oversight of regulatory bodies. external audit function. professional judgment of the accountant. 9. Question: Which of the following is NOT a purpose of the conceptual framework of accounting? Student Answer: To provide definitions of key terms and fundamental concepts To provide specific guidelines for resolving situations not covered by existing accounting standards To assist accountants and others in selecting among alternative accounting and reporting methods To assist the FASB in the standard-setting process 10. Question: Which of the following is a characteristic of the Financial Accounting Standards Board? Student Answer: The FASB is composed of five members. FASB members must come from CPA firms. FASB members are part-time. FASB members may retain their positions with previous employers. 11. Question: Alimony payments: Student Answer: must still be made after the death of the recipient. do not include payments made while the parties are living in the same household, even though they may be divorced or legally separated. can be in the form of either cash or property. do not include payments made under a decree of separate maintenance. 12. Question: An exemption can be claimed for a taxpayer's child: Student Answer: in the year of birth not in the year of death. if the child is a premature baby kept in the hospital until after the end of the year. but the exemption must be prorated in the year of birth or death, based on the number of months the dependent was alive in those years. who works and pays more than half of his or her own support. 13. Question: A widow or widower: Student Answer: may benefit from the joint return rates for 2 years after the death of a spouse if there is a dependent child. may benefit from the joint return rates for 3 years after the death of a spouse if there is a dependent child. after the initial period of joint return rates, can use head of household rates after the death of a spouse even if the children are no longer dependents. can file a joint return in the year of the spouse's death, but in the next year and thereafter must file as head of household if he or she has a dependent child. 14. Question: Heads of households: Student Answer: can only qualify if they have a dependent child living with them. can have dependent parents living in a separate residence, and still qualify as head of household. can have half of the cost of keeping a home paid by the dependent and still be classified as head of household. have the same tax rates as married taxpayers filing separately. 15. Question: Which of the following statements is not correct with respect to the taxation of capital gains? Student Answer: All of the above are correct statements. In any year, only $3,000 of net capital losses can be deducted against ordinary income. Long-term gains have preferential tax rates of zero percent and 15 percent. Short-term capital gains have preferential tax rates. 16. Question: Which of the following requires an adjusting entry at the end of each accounting period? Student Answer: Garnishment for child support payments Withholdings for a 401(k) plan Vacation pay earned by employees Union dues withheld 17. Question: FICA defines all of the following as employees except: Student Answer: vice presidents. partners. superintendents. full-time life insurance salespersons. 18. Question: Which of the following payroll taxes are paid by the employer? Student Answer: FICA taxes Federal unemployment taxes State unemployment taxes All of these 19. Question: Which of the following is not an expense of the employer? Student Answer: FUTA tax FICA tax?HI FICA tax?OASDI Union dues withheld 20. Question: FASB Statement No. 43 on compensated absences Student Answer: applies to items such as vacation pay, severance pay, sick pay, and other L/T fringe benefits establishes the same accruing standards for vacation pay, holiday pay, and sick pay requires the use of current pay rates to accrue for compensated absences does not require the accrual of accumulated nonvested sick pay 21. Question: The Sarbanes-Oxley Act requires that public companies: Student Answer: submit an annual report to the SEC within 10 days after issuance of their 10-K. provide a proxy ballot to shareholders at the annual meeting of a public company. issue a report on their internal controls. All of the answers are correct. 22. Question: A decrease in the profit margin of a company might mean that: Student Answer: the company's sales are decreasing. the company's costs are increasing. the company's net income is decreasing. the company's net income relative to sales is decreasing. 23. Question: The responsibility for presenting the financial statements of a company rests with the: Student Answer: independent auditors of the company. management of the company. Securities and Exchange Commission. Financial Accounting Standards Board. 24. Question: Stockholders' equity represents the owners' claims on the assets of the business. These claims arise from which of the following two sources? Student Answer: contributed capital and earned capital capital stock and common stock contributed capital and capital stock earned capital and retained earnings 25. Question: A compilation performed by an auditor: Student Answer: is less reliable than audited financial statements. does not require a statement of cash flows. is the same as a review. can be on a cash basis.

 

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