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Final Examination Acct 220: Principles of Accounting I

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Question;University of Maryland University;College;Final Examination;Acct220: Principles of Accounting I;Problem 1: 15% points;The account balances appearing on the trial balance;(below) were taken from the general ledger of Flap's Copy Shop at September 30;2012.;Additional information for the month of September which;has not yet been recorded in the accounts is as follows;(a) A physical count of supplies indicates $400;on hand at September 30.;(b) The amount of insurance that expired in the;month of September was $300.;(c) Depreciation on equipment for September was;$500.;(d) Rent owed on the copy shop for the month of September;was $400 but will not be paid until July.;Flap?s Copy Shop;Trial Balance;For the Month Ended September 30, 2012;Account Titles;Debit;Credit;Cash;$1,000;Supplies;1,100;Prepaid Insurance;2,200;Equipment;24,000;Accum. Depreciation? Equipment;$4,500;Accounts Payable;2,400;Notes Payable;4,000;Flap?s Capital;15,300;Flap?s Drawings;2,400;Service Revenue;4,900;Utilities Expense;400;Totals;$31,100;$31,100;Instructions;Prepare in journal form, without;explanations, the end of month adjusting entries for Flap's Copy Shop for the month of September.Prepare a partial adjusted trial balance for;the accounts provided.Prepare in journal form, without;explanations, the end of month closing entries for Flap's Copy Shop for the month of September.;Acct220 Page;1 of 9;Problem 2: 15% points;The following information is available for Flip Company;Beginning;inventory 600 units at $5;First purchase 900 units at $6;Second purchase 500 units at $7.25;Assume that Flip uses a periodic inventory;system and that there are 700 units left at the end of the month. (Round all;final answers to the nearest dollar.);Instructions;a. Compute the cost of goods available for;sale.;b. Compute the value of ending inventory and;Cost of Good Sold under the;(1) LIFO method.;(2) FIFO method.;(3) Average-cost;method;Problem 3: 15% points;The following items were taken;from the post adjusted trial balance of Flop Company. (All balances are;normal.);Mortgage;payable $ 1,443 Accumulated;depreciation 3,655;Prepaid;expenses 880 Accounts payable 1,200;Equipment;11,000 Notes payable after 2016 1,444;Long-term;investments 1,100 Flop?s capital 10,480;Short-term;investments 1,756 Accounts receivable 2,690;Notes;payable in 2015 1,000 Inventories 2,100;Cash 1,696 Service Revenue 9,000;Rent Expense 1,000 Wages Expense 5,000;Utilities;Expense 1,000;Instructions:Prepare a classified balance;sheet in good form as of December 31, 2014.;Acct220 Page;2 of 9;Problem 4: 10% points;Prepare journal entries;to record the following transactions entered into by Flip Company;2012;June 1 Accepted;a $10,000, 12%, 1-year note from Flop as full payment on her account.;Nov. 1 Sold;merchandise on account to Flap, Inc. for $12,000, terms 2/10, n/30.;Nov. 5 Flap;Inc. returned merchandise worth $500.;Nov. 9 Received;payment in full from Flap, Inc.;Dec. 31 Accrued;interest on Flop's note.;2013;June 1 Flop;honored her promissory note by sending the face amount plus interest. No interest;has been accrued in 2013;Problem 5: 10% points;Flip Company purchased equipment;on July 1, 2011 for $90,000. It is estimated that the equipment will have a;$5,000 salvage value at the end of its 5-year useful life. It is also estimated;that the equipment will produce 125,000 units over its 5-year life.;Instructions;Answer the following independent questions.;1. Compute the amount of depreciation expense;for the year ended December 31, 2011, using the straight-line method of;depreciation.;2. If 14,000 units of product are produced in 2011;and 26,000 units are produced in 2012, what is the book value of the equipment;at December 31, 2012? The company uses the units-of-activity depreciation;method.;3. If the company uses the;double-declining-balance method of depreciation, what is the balance of the;Accumulated Depreciation?Equipment account at December 31, 2013?;Acct220 Page;3 of 9;Problem 6: 10% points;Flip earns a salary of $7,500 per month during the year. FICA taxes are;8% on the first $100,000 of gross earnings. Federal unemployment insurance;taxes are 6.2% of the first $7,000, however, a credit is allowed equal to the;state unemployment insurance taxes of 5.4% on the $7,000. During the year, $25,600;was withheld for federal income taxes and $5,700 was withheld for state income;taxes.;Instructions;(a) Prepare a journal entry summarizing the payment of Flip?s total;salary during the year.;(b) Prepare;a journal entry summarizing the employer payroll tax expense on Flip?s salary;for the year.;(c) Determine;the cost of employing Flip for the year.;Multiple choice;questions allocated 1% point each. Make your selection by recording the;letter in the answer box provided.;Question 7:Which of the following are the same under both GAAP;and IFRS?;a. The journal.;b. The ledger.;c. The chart of accounts.;d. All of the above.;e. Only a & c.;Question 8:Which of the following is true?;a. Transaction analysis is completely different under IFRS and GAAP.;b. Most transactions are recorded differently under IFRS and GAAP.;c. Transaction analysis is the same under IFRS and GAAP, but some;transactions are recorded differently.;d. All transactions are recorded the same under IFRS and GAAP.;Question 9:Revenue;recognition under IFRS is;a. substantially different from revenue;recognition under GAAP.;b. generally the same as revenue recognition;under GAAP, but with more detailed guidance.;c. generally the same as revenue recognition;under GAAP, but with less detailed guidance.;d. exactly the same as revenue recognition under;GAAP.;Acct220 Page;4 of 9;Question 10: Both;IFRS and GAAP require disclosure about;a. accounting policies followed.;b. judgements that management has made in the process of applying the;entity's accounting policies.;c. the key assumptions and estimation uncertainty.;d. all of the above.;e. only b & c.;Question 11:The;use of fair value to report assets;a. is not allowed under GAAP or IFRS.;b. is required by GAAP and IFRS.;c. is increasing under GAAP and IFRS, but GAAP has adopted it more;broadly.;d. is increasing under GAAP and IFRS, but IFRS has adopted it more;broadly.;Question;12:A $100 petty cash fund has cash of $16 and receipts of $81. The journal;entry to replenish the account would include a;a. debit to Cash for $81.;b. credit to Petty Cash for $84.;c. debit to Cash Over and Short for $3.;d. credit to Cash for $81.;Question 13:In preparing its;bank reconciliation for the month of April 2013, Flip, Inc. has available the;following information.;Balance per bank statement, 4/30/13 $39,300;NSF check returned with 4/30/13 bank statement 470;Deposits in transit, 4/30/13 5,000;Outstanding checks, 4/30/13 5,200;Bank service charges for April 30;What should;be the adjusted cash balance at April 30, 2013?;a. $38,630.;b. $38,800.;c. $39,010.;d. $39,100.;Question;14:If a check correctly written and paid by the bank for $591 is;incorrectly recorded on the company?s books for $519, the appropriate treatment;on the bank reconciliation would be to;a. deduct $72 from the book?s balance.;b. add $72 to the book?s balance.;c. deduct $72 from the bank?s balance.;d. deduct $591 from the book?s balance.;Acct220 Page;5 of 9;Question 15:Flip;Company had net credit sales during the year of $1,200,000 and cost of goods;sold of $720,000. The balance in accounts receivable at the beginning of the;year was $180,000, and the end of the year it was $120,000. What was the;accounts receivable turnover ratio?;a. 5.0;b. 6.7;c. 8.0;d. 10.0;Question 16:The financial;statements of Flip Manufacturing Company report net sales of $400,000 and;accounts receivable of $80,000 and $40,000 at the beginning and end of the;year, respectively. What is the average collection period for accounts receivable;in days?;a. 40 days;b. 50 days;c. 54.7 days;d. 80 days;Question 17:Cash equivalents include each of the following except;a. bank certificates of deposit.;b. money market funds.;c. petty cash.;d. U.S. Treasury bills.;Question 18:Flip Company is building a new plant that will take;three years to construct. The construction will be financed in part by funds;borrowed during the construction period. There are significant architect fees;excavation fees, and building permit fees. Which of the following statements is;true?;a. Excavation fees are capitalized but building;permit fees are not.;b. Architect fees are capitalized but building;permit fees are not.;c. Interest is capitalized during the;construction as part of the cost of the building.;d. The capitalized cost is equal to the contract;price to build the plant less any interest on borrowed funds.;Question 19:Depreciation is the process of allocating the cost of;a plant asset over its service life in;a. an equal and equitable manner.;b. an accelerated and accurate manner.;c. a systematic and rational manner.;d. a conservative market-based manner.;Acct220 Page;6 of 9;Question 20:Sales taxes;collected by a retailer are expenses;a. of the;retailer.;b. of the;customers.;c. of the;government.;d. that are not;recognized by the retailer until they are submitted to the government.;Question 21:Flip?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.;As a result of;these events, the company?s inventory increased by;a. $48,020.;b. $48,265.;c. $48,270.;d. $49,250.;Question 22: Closing entries are made;a. in order to terminate the business as an;operating entity.;b. so that all assets, liabilities, and owner's;capital accounts will have zero balances when the next accounting period;starts.;c. in order to transfer net income (or loss) and;owner's drawings to the owner's capital account.;d. so that financial statements can be prepared.;Question 23:Flip Company;purchased merchandise from Flop Company with freight terms of FOB shipping;point. The freight costs will be paid by the;a. seller.;b. buyer.;c. transportation;company.;d. buyer and the;seller.;Question 24:A Sales Returns;and Allowances account is not debited;if a customer;a. returns defective;merchandise.;b. receives a credit;for merchandise of inferior quality.;c. utilizes a prompt;payment incentive.;d. returns goods that;are not in accordance with specifications.;Acct220 Page;7 of 9;Question 25;Which of the following statements is incorrect?;a. A major consideration in developing an;accounting system is cost effectiveness.;b. When an accounting system is designed, no;consideration needs to be given to the needs and knowledge of the various;users.;c. The accounting system should be able to;accommodate a variety of users and changing information needs.;d. To be useful, information must be;understandable, relevant, reliable, timely, and accurate.;Question 26:Flip is warehouse custodian and also maintains;the accounting record of the inventory held at the warehouse. An assessment of;this situation indicates;a. documentation procedures are violated.;b. independent internal verification is violated.;c. segregation of duties is violated.;d. establishment of responsibility is violated.;Question 27:Flip Company purchases a new delivery truck for;$60,000. The sales taxes are $4,000. The logo of the company is painted on the;side of the truck for $1,600. The truck license is $160. The truck undergoes;safety testing for $290. What does Flip record as the cost of the new truck?;a. $66,050;b. $65,890;c. $64,000;d. $65,600;Question 28:A company purchased factory equipment on April 1, 2012;for $80,000. It is estimated that the equipment will have an $10,000 salvage;value at the end of its 10-year useful life. Using the straight-line method of;depreciation, the amount to be recorded as depreciation expense at December 31;2012 is;a. $8,000.;b. $7,000.;c. $5,250.;d. $6,000.;Question 29:Flip's Boutique;has total receipts for the month of $30,660 including sales taxes. If the sales;tax rate is 5%, what are Flip's sales for the month?;a. $29,127;b. $29,200;c. $32,193;d. It cannot be;determined.;Acct220 Page;8 of 9;Question 30:Flip Electric began operations in 2012 and;provides a one year warranty on the products it sells. They estimate that;10,000 of the 200,000 units sold in 2012 will be returned for repairs and that;these repairs will cost $8 per unit. The cost of repairing 8,000 units;presented for service in 2012 was $64,000. Flip should report;a. warranty expense of $16,000 for 2012.;b. warranty expense of $80,000 for 2012.;c. warranty liability of $80,000 on December 31;2012.;d. no warranty obligation on December 31, 2012;since this is only a contingent liability.;Question 31:Partners Flip and Flop;have capital balances in a partnership of $80,000 and $120,000, respectively.;They agree to share profits and losses as follows;Flip Flop;As;salaries $20,000 $24,000;As;interest on capital at the beginning of the year 10% 10%;Remaining;profits or losses 50% 50%;If income for;the year was $60,000, what will be the distribution of income to Flip?;a. $26,000;b. $34,000;c. $20,000;d. $28,000;Acct220 Page;9 of 9

 

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