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ACCT504 Week 4 Midterm




Question;(TCO A;B, C) Which of the following statements concerning users of accounting;information is incorrect?;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.;ACCT 504 Wk_4 Midterm 30 Multiple Chioce and 2 Explainatory;2. Question;(TCO C) Issuing shares of;stock in exchange for cash is an example of a(n);delivering activity.;investing activity.;financing activity.;operating activity.;3. Question;(TCO C) Which activities;involve putting the resources of the business into action to generate a profit?;Delivering;Financing;Investing;Operating;4. Question;(TCO A) The cost of assets;consumed or services used is also known as;a revenue.;an expense.;a liability.;an asset.;5. Question;(TCO C) Edwards Company;recorded the following cash transactions for the year;Paid $45,000 for salaries.;Paid $20,000 to purchase office equipment.;Paid $5,000 for utilities.;Paid $2,000 in dividends.;Collected $75,000 from customers.;What was Edwards' net cash provided by operating activities?;$25,000;$5,000;$30,000;$23,000;6. Question;(TCO A) On a classified;balance sheet, prepaid insurance is classified as;an intangible asset.;property, plant, and equipment.;a current asset.;a long-term investment.;7. Question;(TCO A) An intangible asset;may have the capacity to earn revenue for its;owner.;is worthless because it has no physical;substance.;is converted into a tangible asset during the;operating cycle.;cannot be reported on the balance sheet;because it lacks physical substance.;8. Question;(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 600,000;What is the total NET amount of property, plant, and;equipment that will appear on the balance sheet?;$1,900,000;$2,600,000;$2,200,000;$3,200,000;9. Question;(TCO B) For 2010, 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;2010 earnings per share?;$4.66;$0.20;$66.67;$5.00;10. Question: (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?;$207,000;$ 66,000;$348,000;11. Question: (TCO D) On March 1, 2010, 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?;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?;Credit side;Trial balance;Debit side;Title;13. Question: (TCO D) Which of the following;describes the classification and normal balance of the retained earnings;account?;Asset, debit;Stockholders' equity, credit;Revenues, credit;Expense, debit;14. Question: (TCO D) A debit is the normal balance;for which account listed below?;Furniture;Accounts payable;Rent revenue;Capital stock issued;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?;Prepaid insurance and dividends;Dividends and medical fees earned;Interest payable and common stock;Advertising expense and land;* Times are displayed in (GMT-07:00) Mountain Time (US;Canada);(TCO E);An accounting time period that is one year in length is called;a fiscal year.;an interim period.;the time period assumption.;a reporting period.;2. Question;(TCO E) In a merchandising;business, revenue may be considered earned when;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 product;3. Question;(TCO E) On April 1, 2010, M;Corporation paid $48,000 cash for equipment that will be used in business;operations. The equipment will be used for four years and will have no residual;value. M records depreciation expense of $9,000 for the calendar year ending;December 31, 2010. Which accounting principle has been violated?;Revenue recognition principle;No principle has been violated because M has;correctly matched the expense for using the equipment to the period during;which it generated revenue.;Matching principle because the cash was paid;in 2007 and should be expensed in 2007.;Cost principle;4. Question;(TCO E) The following is;selected information from M Corporation for the fiscal year ending October 31;2010;Cash received from customers $300,000;Revenue earned 350,000;Cash paid for expenses 170,000;Expenses incurred 200,000;Based on the accrual basis of accounting, what is M;Corporation's net income for the year ending October 31, 2010?;$140,000;$114,000;$82,000;$150,000;5. Question;(TCO E) Adjusting entries are;made to ensure that;expense are recognized in the period in which;they are incurred.;revenues are recorded in the period in which they;are earned.;balance sheet and income statement accounts;have correct balances at the end of an accounting period.;All of the above;6. Question;(TCO A, B) Which of the;following expressions is incorrect?;Gross profit - operating expenses = net income;Sales - cost of goods sold - operating;expenses = net income;Net income + operating expenses = gross profit;Operating expenses - cost of goods sold =;gross profit;7. Question;(TCO B) Hunter Company;purchased merchandise inventory with an invoice price of $3,000 and credit;terms of 2/10, n/30. What is the net cost of the goods if Hunter Company pays;within the discount period?;$2,940;$2,760;$2,700;$3,000;8. Question;(TCO A, B) Jake's Market;recorded the following events involving a recent purchase of merchandise;Received goods for $20,000, terms 2/10, n/30.;Returned $400 of the shipment for credit.;Paid $100 freight on the shipment.;Paid the invoice within the discount period.;As a result of these events, the company's merchandise;inventory;increased by $19,208.;increased by $19,700.;increased by $19,306.;increased by $19,308.;9. Question;(TCO A) The factor which;determines whether or not goods should be included in a physical count of;inventory is;physical possession.;legal title.;management's judgment.;whether or not the purchase price has been;paid.;10. 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?;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;11. Question: (TCO A) A problem with the specific;identification method is that;inventories can;be reported at actual costs.;management can manipulate income.;matching is not achieved.;the lower of cost or market basis cannot be;applied;12. Question: (TCO A) Which of the following;statements is true regarding inventory cost flow assumptions?;A company may use more than one cost-flow;assumption 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.;13. Question: (TCO A) In periods of rising prices;the inventory method which results in the inventory value on the balance sheet;that is closest to current cost is the;FIFO method.;LIFO method.;average cost method.;tax method.;14. Question: (TCO B) Which of the following is a;true statement about inventory systems?;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.;15. Question: (TCO B) A merchandiser that sells;directly to consumers is;a retailer.;a wholesaler.;a broker.;a service enterprise.;TCO D) A classmate is considering dropping his accounting;class because he cannot understand the rules of debits and credits.;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).;2. Question;(TCOs B & E) The Caltor;Company gathered the following condensed data for the year ended December 31;2010;Cost of goods sold $ 710,000;Net sales 1,279,000;Administrative expenses 239,000;Interest expense 68,000;Dividends paid 38,000;Selling expenses 45,000;Instructions;1. Prepare;an income statement for the year ended December 31, 2010.;2. Compute;the profit margin ratio and gross profit rate. Caltor Company s assets at the;beginning of the year were $770,000 and were $830,000 at the end of the year.;To qualify for full credit, you must state the formula you are using, show your;computations and explain your findings.


Paper#40306 | Written in 18-Jul-2015

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