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DeVry Chicago STATS AC 505 Midterm Week 4 (Graded)

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Question;1. Question: (TCO A, B, C) Which of the following statements concerning users of accounting information isincorrect? Your Answer: 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. Question: (TCO C) Debt securities sold to investors that must be repaid at a particular date some years in the future are called Your Answer: accounts payable. notes receivable. taxes payable. bonds payable. 3. Question: (TCO C) Which activities involve putting the resources of the business into action to generate a profit? Your Answer: Delivering Financing Investing Operating4. Question: (TCO A) The best definition of assets is, the Your Answer: cash owned by the company. collections of resources belonging to the company and the claims on these resources. Owners' investment in the business. resources belonging to a company that offer future benefits to the company. 5. Question: (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? Your Answer: $50,000 $10,000 $60,000 $46,000 6. Question: (TCO A) In a classified balance sheet, assets are usually classified as: Your Answer: current assets, long-term assets, property, plant, and equipment, and intangible assets. current assets, long-term investments, property, plant, and equipment, and common stocks. current assets, long-term investments, and tangible assets. current assets, long-term investments, property, plant, and equipment, and intangible assets. 7. Question: (TCO A) Which of the following is not considered an asset? Your Answer: Equipment Dividends Accounts receivable Inventory8. Question: (TCO A) These are selected account balances on December 31, 2007.-Land (location of the corporation's office building) $50,000-Land (held for future use) 75,000-Corporate Office Building 300,000-Inventory 100,000-Equipment 225,000-Office Furniture 50,000-Accumulated Depreciation 150,000What is the total NET amount of property, plant, and equipment that will appear on the balance sheet? Your Answer: $650,000 $550,000 $475,000 $800,0009. Question: (TCO B) For 2007 Mossland Corporation reported net income of $28,000, net sales $400,000, and average share outstanding 6,000. There were no preferred stock dividends. What was the 2007 earnings per share? Your Answer: $4.67 $0.25 $66.67 $14.86 10. Question: (TCO B) Morten Corporation had beginning retained earnings of $764,000 and ending retained earnings of $833,000. During the year they issued common stock totaling $47,000. There were no dividends issued. What was their net income for the year? Your Answer: $69,000 $22,000 $116,000 $91,00011. Question: (TCO D) On March 1, 2007, Dillon Company hires a new employee who will start the work on March 6.The employee will be paid on the last day of each month. Should a journal entry be made on March 6? Why or why not? Your Answer: Yes, the company is now obligated to pay the employee, thus that event must be recorded on March 6. No, hiring an employee is an important event, however it is not an economic event that should be recorded on March 6. Yes, failure to record the event on March 6 would cause the financial statements to be misleading. No, the journal entry should be made on March 1 which is the date of hiring. 12. Question: (TCO D) Which one of the following is not a part of an account? Your Answer: Credit side Trial balance Debit side Title 13. Question: (TCO D) A credit is not the normal balance for which account listed below? Your Answer: Common Stock account Revenue account Liability account Dividends account14. Question: (TCO D) A debit is not the normal balance for which account listed below? Your Answer: Dividends Cash Accounts Receivable Service Revenue 15. Question: (TCO D) Which of the following accounts follows the rules of debit and credit in relation to increases and decreases in the opposite manner? Your Answer: Prepaid insurance and dividends Dividends and medical fees earned Interest payable and common stock Advertising expense and land 1. Question: (TCO E) The time period assumption states that Your Answer: a transaction can only affect one period of time. estimates should not be made if a transaction affects more than one time period. adjustments to the enterprise's accounts can only be made in the time period when the business terminates its operations. the economic life of a business can be divided into artificial time periods. 2. Question: (TCO E) The matching principle matches Your Answer: customers with businesses. expenses with revenues. assets with liabilities. creditors with businesses. 3. Question: (TCO E) Why do generally accepted accounting principles require the application of the revenue recognition principle? Your Answer: 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. Question: The following is selected information from J Corporation for the fiscal year ending October 31, 2007.Cash received from customers $75,000Revenue earned 87,500Cash paid for expenses 42,500Expenses incurred 50,000(TCO E) Based on the accrual basis of accounting, what is J Corporation's net income for the year ending October 31, 2007? Your Answer: $28,500 $33,500 $20,500 $37,500 5. Question: (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 Your Answer: contra asset. prepayment. asset. accrual. 6. Question: (TCO B) Two categories of expenses in merchandising companies are Your Answer: cost of goods sold and financing expenses. operating expenses and financing expenses. cost of goods sold and operating expenses. sales and cost of goods sold. 7. Question: (TCO A,B) A perpetual inventory system would most likely be used by a(n) Your Answer: automobile dealership. hardware store. drugstore. convenience store. 8. Question: (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? Your Answer: $11,040 $10,800 $11,760 $12,000 9. Question: 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 Your Answer: increased by $48,020. increased by $49,250. increased by $48,265. increased by $48,270. 10. Question: (TCO A) The factor which determines whether or not goods should be included in a physical count of inventory is Your Answer: physical possession. legal title. management's judgment. whether or not the purchase price has been paid. 11. Question: (TCO A) Barnes Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count? Your Answer: Goods in transit to Barnes, FOB destination Goods that Barnes is holding on consignment for Parker Company Goods in transit that Barnes has sold to Smith Company, FOB shipping point Goods that Barnes is holding in inventory on March 31 for which the related Accounts Payable is 15 days past due 12. Question: (TCO A) Which of the following items will increase inventoriable costs for the buyer of goods? Your Answer: 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 purchaser 13. Question: (TCO A) The accounting principle that requires that the cost flow assumption be consistent with the physical movement of goods is Your Answer: called the matching principle. called the consistency principle. nonexistent, that is, there is no such accounting requirement. called the physical flow assumption. 14. Question: TCO A -- In a period of rising prices, which of the following inventory methods generally results in the lowest net income figure? Your Answer: Average Cost Method LIFO method FIFO method Need more information to answer 15. Question: (TCO B) In a perpetual inventory system, cost of goods sold is recorded Your Answer: on a daily basis. on a monthly basis. on an annual basis. each time a sale occurs. 1. Question: (TCO D) An account is an important accounting record where financial information is stored until needed. Briefly explain (1) the nature of an account, (2) the different types of accounts, and (3) the manner in which an account is increased and decreased, and the normal balance of each type of accounts. 20 of 202. Question: (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.

 

Paper#40127 | Written in 18-Jul-2015

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