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Devry ACCt304 final exam (August 2014)




Question;The final exam has three pages. Please be sure you complete;all three pages and answer all open-ended questions completely. If space is;provided for a response, you should clearly show your thought process and any;necessary work you used to arrive at the answer if you wish to receive partial;credit.;Question 1.1.(TCO 1) The SEC issues accounting standards in the form of (Points: 6);accounting research reporting accounting technical bulletins.;Question 2.2.(TCO 1) When a registrant company submits its annual filing to the;SEC, it uses (Points: 6);Form 10-A.Form 10-K.Form 10-Q.Form S-1.;Question 3.3.(TCO 2) The conceptual framework's qualitative characteristic of;relevance includes (Points: 6);predictive value.verifiability.completeness.neutrality.;Question 4.4.(TCO 2) Enhancing qualitative characteristics of accounting;information include each of the following, except (Points: 6);timeliness.materiality.comparability.verifiability.;Question 5.5.(TCO 3) A sale on account would be recorded by (Points: 6);debiting revenue.crediting assets.crediting liabilities.debiting assets.;Question 6.6.(TCO 3) Prepayments occur when (Points;6);cash flow precedes expense recognition.sales are delayed pending credit approval.customers are unable to pay the full amount due when goods are;delivered.manufactured goods await quality control inspections.;Question 7.7.(TCO 4) An asset that is not expected to be converted to cash or;consumed within 1 year or the operating cycle is (Points: 6);goodwill.accounts;Question 8.8.(TCO 4) Which of the following is never a current liability;account? (Points: 6);Accrued payrollDividends payablePrepaid rentSubscriptions collected in advance;Question 9.9.(TCO 5) The distinction between operating and nonoperating income;relates to (Points: 6);continuity of income.principal activities of the reporting entity.consistency of income stream.reliability of measurements.;Question 10.10.(TCO 5) On May 1, Foxtrot Co. agreed to sell the assets of its;Footwear Division to Albanese Inc. for $80 million. The sale was;completed on December 31, 2012. The following additional facts pertain to;the transaction;The Footwear Division qualifies as a;component of the entity, according to GAAP, regarding discontinued;operations.;The book value of Footwear's assets totaled $48 million on the date of;the sale.;Footwear's operating income was a pre-tax loss of $10 million in 2012.;Foxtrot's income tax rate is 40%.;In the 2012 income statement for Foxtrot Co.;it would report;(Points: 6);income (loss) on its total operations for the year without;separation.income (loss) on its continuing operation only.income (loss) from its continuing and discontinued operations;separately.income and gains separately from losses.;Question 11.11.(TCO 5) Operating cash outflows would include (Points: 6);purchase of investments.purchase of equipment.payment of cash dividends.purchases of inventory.;Question 12.12.(TCO 5) The FASB's stated preference for reporting operating cash;flows is the (Points: 6);indirect method.working capital method.all financial resources method.;Question 13.13.(TCO 5) Merchandise sold FOB shipping point indicates that (Points: 6);the seller pays the freight.the buyer holds title after the merchandise leaves the seller's;location.the common carrier holds title until the merchandise is delivered.the sale is not consummated until the merchandise reaches the point;to which it is being shipped.;Question 14.14.(TCO 5) Todd Sweeney is an artist who sells his work under;consignment. (He displays his work in local barbershops, and customers;buy the work there.) Sweeney recently transferred a painting to a local;barbershop. After Sweeney has transferred a painting to a;barbershop, the painting (Points;6);should be counted in Sweeney's inventory until the barbershop sells;it.should be counted in the barbershop's inventory, as they now possess;it.should be counted in either Sweeney's or the barbershop's inventory;depending on which incurred the cost of preparing the painting for display.None of the above;Question 15.15.(TCO 6) Reba wishes to know how much money would be in her savings;account if she deposits a given sum in an account and leaves it there at;6% interest for 5 years. She should use a table for the (Points: 6);future value of an ordinary annuity of 1.future value of 1.future value of an annuity of 1.present value of an annuity due of 1.;Question 16.16.(TCO 6) Loan A has the same original principal, interest rate, and;payment amount as Loan B. However, Loan A is structured as an annuity;due, while Loan B is structured as an ordinary annuity. The maturity date;of Loan A will be (Points: 6);earlier than Loan B.later than Loan B.the same as Loan B.indeterminate with respect to Loan B.;Question 17.17.(TCO 7) Compensating balances represent (Points: 6);funds in a bank account that cannot be spent.balances in a payroll checking account.accounts that are subject to bank service charges.accounts on which banks pay interest, such as NOW accounts.;Question 18.18.(TCO 7) Oswego Clay Pipe Company sold $46,000 of pipe to;Southeast Water District #45 on April 12 of the current year with terms;1/15, n/60. Oswego uses the gross method of accounting for cash;discounts. What entry would Oswego make on April 23, assuming the;customer made the correct payment on that date?;(Points: 6);Option aOption bOption cOption d;Question 19.19.(TCO 8) In a periodic inventory system, the cost of purchases is;debited to (Points: 6);purchases.cost of goods sold.inventory.accounts payable.;Question 20.20.(TCO 8) During periods when costs are rising and inventory;quantities are stable, cost of goods sold will be (Points: 6);higher under FIFO than LIFO.higher under FIFO than average cost.lower under average cost than LIFO.lower under LIFO than FIFO.;Question 21.21.(TCO 8) In applying LCM, market cannot be (Points: 6);less than net realizable value.greater than the normal profit.less than the normal profit margin.greater than net realizable value.;Question 22.22.(TCO 8) In calculating the cost-to-retail percentage for the;retail method, the retail column will not include (Points: 6);purchases.purchase returns.abnormal shortages.freight-in.;Question 1. 1. (TCO 8) Fulbright Corp. uses the periodic;inventory system. During its first year of operation, Fulbright made the;following purchases (listed in chronological order of acquisition);? 40 units at $100;? 70 units at $80;? 170 units at $60;Sales for the year totaled 270 units, leaving 10 units on;hand at the end of the year. What is the ending inventory using the average;cost method (rounded)? (Points: 15);Question 2. 2. (TCO 5) Describe what is meant by unearned;revenues, and give two examples. (Points: 28);Question 3. 3. (TCO 7) Briefly compare and contrast the two;allowance estimation approaches to estimating bad debt expense. In your answer;indicate which approach, if either, is superior and explain your;reasoning. (Points: 25);1. (TCO 8);Briefly explain when there would be a tax benefit from electing LIFO rather;than FIFO. (Points: 25);Question 2. 2. (TCO 4) You are the independent accountant;assigned to the audit of Neophyte Company. The company's accountant, a graduate;of Rival State University, has prepared financial statements that contained the;following questionable items;a. The balance sheet reports land at $100,000. Included in;this amount is a piece of property held for speculation at a cost of $30,000.;b. Current liabilities include $50,000 for long-term debt;that comes due in 3 months. The company has received a suitable firm commitment;to refinance the debt for 5 years and intends to do so.;c. Long-term Investments (non-current) in marketable;securities include $20,000 in short-term, high-grade commercial paper.;Please discuss how the above items should be correctly;classified and accounted for. (Points: 25)


Paper#40591 | Written in 18-Jul-2015

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