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ACC230 Uses of Accounting Information I At Home Midterm - Part 2

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Question;his part is worth 75 points.Please make sure you have answered all questions prior to submitting. Once submitted, you will not be able to return. After 1.5 hours have passed, part 2 of the exam will automatically be saved and submitted. There is a timer in the upper right hand corner of the exam to help you keep track.Part 2Question1 of 37Accounts receivable is an example of which of the following?Prepaid expenseAn accrued expenseUnearned revenueAccrued revenueQuestion2 of 37On August 1, 2011, Xcel Auto Repair paid $6,000 for six months rent. After adjusting entries are made, what will be the balance of Prepaid Rent on December 31, 2011?$4,000$6,000$2,000$1,000Question3 of 37On December 31, 2010, the balance in Pinnacle Exploration Company's Unearned Revenue was $4,200. In January, 2011, the company received an advance payment of $12,000 for services to be performed. By May 31, adjustments had been made to recognize $8,500 of the revenue. What would be the balance in Unearned Revenue on May 31, 2011?$16,200$3,500$8,500$7,700Question4 of 37At the end of the current year, the accountant for Navistar Graphics failed to make an adjusting entry for wages due to the company's employees for the last week in December. The wages will be paid in January. What is one of the effects of this error?Total assets are overstated.Net income is understated.Total liabilities are overstated.Net income is overstated.Question5 of 37What is the effect of the adjusting entry for depreciation expense?The entry increases total assets and increases total expenses.The entry decreases total assets and increases total expenses.The entry increases total liabilities and increases total expenses.The entry decreases total liabilities and increases total expenses.Question6 of 37The adjusting entry to record supplies expense accomplishes which of the following?Decreases a liability and increases a revenueDecreases a liability and increases an expenseIncreases an asset and increases an expenseDecreases an asset and increases an expenseQuestion7 of 37The adjusting entry to record unearned revenue that has now been earned accomplishes which of the following?Increases an asset and increases an expenseDecreases a liability and increases an expenseDecreases an asset and increases an expenseDecreases a liability and increases a revenueQuestion8 of 37Plant assets are long-lived tangible assets used in the operation of a business. The allocation of a plant asset's cost to expense is which of the following?Revenue allocationDepreciationThe revenue principleHistorical costQuestion9 of 37The accountant for Wilson Consulting Company failed to make an adjusting entry to record $3,000 of unearned service revenue that has now been earned. Which of the following is true?Total liabilities are overstated.Total liabilities are understated.Total assets are overstated.Total assets are understated.Question10 of 37Which of the following reports a company's financial position?Balance sheetIncome statementStatement of owner's equityAdjusted trial balanceQuestion11 of 37All of the financial statements include which of the following elements?Title of the statementDate, or period, covered by the statementName of the companyAll of the aboveQuestion12 of 37Which of the following is TRUE of plant asset accounts and their related accumulated depreciation accounts?The allocation of a plant asset's cost to expenses is called depreciation.Accumulated depreciation is a contra-asset account that has a normal balance of a credit amount.Accounting for plant assets is the same as accounting for a prepaid expense.All of the above are true.Question13 of 37Under which of the following inventory costing methods is the cost of goods sold based on the cost of the oldest purchases?Specific unit costAverage costLast in first outFirst in first outQuestion14 of 37Under which of the following inventory costing methods is the cost of goods sold based on the average cost of the purchases during the period?Specific unit costAverage costLast in first outFirst in first outQuestion15 of 37A company purchased 100 units for $20 each on January 31. It purchased 100 units for $30 on February 28. It sold 150 units for $45 each from March 1 through December 31. If the company uses the LIFO inventory costing method, which of the following amounts will be the amount of inventory on the December 31 balance sheet?$1,000$2,250$1,500$1,250Question16 of 37Which of the following inventory costing methods yields the highest ending inventory when prices increase during the accounting period?Specific unit costAverage costLast in first outFirst in first outQuestion17 of 37Which of the following inventory costing methods is often adopted when a company sells relatively few costly items?Specific unit costAverage costLast in first outFirst in first outQuestion18 of 37On December 31 of the current year, the trial balance for a company reports the following amounts:Cost of goods available for sale$1,074,450Ending inventory (FIFO)85,430Replacement cost of ending inventory91,730What amount must be reported for cost of goods sold on the income statement?$897,290$1,074,450$982,720$989,020Question19 of 37Which of the following are common schemes for "cooking the books" involving inventory that are used to increase net income?a) Overstate ending inventory.b) Create fictitious sales.c) Bribe the auditing firm.d) Both A and B are common schemes.Question20 of 37Which of the following statements is a TRUE statement concerning the worksheet?The worksheet is a ledger.The worksheet is a document used to summarize data to prepare the financial statements.The worksheet is a journal.The worksheet is a financial statement.Question21 of 37Which of the following is the correct order of the steps for preparing the worksheet?Compute each account's adjusted balance by combining the trial balance and adjustment figures. Enter each account's adjusted amount in the Adjusted Trail Balance columns.Enter the account titles and their unadjusted balances in the Trial Balance columns of the worksheet and total the columns.Extend (copy) the asset, liability, and owner's equity amounts from the Adjusted Trial Balance to the Balance Sheet columns. Copy the revenue and expense amounts to the Income Statement columns. Total the statement columns.Enter the adjusting entries in the Adjustments columns and total the amounts.On the income statement column, compute net income. Enter net income as the balancing amount on the income statement and balance sheet columns. Total the income statement and balance sheet columns.II, IV, I, III, VIV, I, III, V, IIIII, V, IV, I, III, II, III, IV, VQuestion22 of 37Which of the following statements is a TRUE statement about the worksheet?Net income appears in the Income Statement debit column.Net income appears in the Adjusted Trial Balance debit column.Net income appears in the Income Statement credit column.Net income appears in the Balance Sheet debit column.Question23 of 37Where does net income appear on a worksheet?Net income appears only in the Balance Sheet credit column.Net income appears in the Income Statement credit column and in the Balance Sheet debit column.Net income appears only in the Income Statement debit column.Net income appears in the Balance Sheet credit column and in the Income Statement debit column.Question24 of 37In which of the columns of the worksheet would the owner's capital account be found?In the Trial Balance debit column, the Adjusted Trial Balance debit column and the Balance Sheet debit columnIn the Trial Balance credit column, the Adjusted Trial Balance credit column and the Balance Sheet credit columnIn the Balance Sheet debit column and the Income Statement credit columnIn the Balance Sheet credit column and the Income Statement debit columnQuestion25 of 37Which of the following situations would indicate that an error has been made?The total of the debit column of Adjustments does not equal the total of the credit column of Adjustments.The total of the debit column of the Balance Sheet does not equal the total of the debit column of the Income Statement.The total of the debit column of the Trial Balance does not equal the total of the debit column of the Adjusted Trial Balance.All of these situations are the result of an error.Question26 of 37Which of the following accounts will be closed by debiting the Income Summary?Accounts PayableAccumulated DepreciationService RevenueDepreciation ExpenseQuestion27 of 37Adkins Company has a current ratio of 1.0 and a debt ratio of.7. Wilson Company has a current ratio of 1.4 and a debt ratio of.5. Which of the following statements is true?The two companies' debt ratios and current ratios vary in different directions and the companies appear to be in similar financial shape.Wilson appears to be in better financial shape than Adkins.The two companies' debt ratios and current ratios vary in different directions and these results do not make sense.Adkins appears to be in better financial shape than Wilson.Question28 of 37A company that uses the perpetual inventory method purchases inventory of $1,000 on account with terms of 2/10 net/30. Which of the following entries would be made to record the payment for the inventory if the payment is made within 10 days?The accounting entry would be a $1,000 debit to Accounts Payable and a $1,000 credit to Cash.The accounting entry would be a $1,000 debit to Accounts Payable, a $20 credit to Inventory and a $980 credit to Cash.The accounting entry would be a $980 debit to Accounts Payable, a $20 debit to Inventory and a $1,000 credit to Cash.The accounting entry would be a $20 debit to Inventory, a $1,000 debit to Accounts Payable and a $1,020 credit to Cash.Question29 of 37Which of the following is generally a merchandiser's major cost?Salary expenseBuildingsCost of goods soldAdvertisingQuestion30 of 37A company uses the perpetual inventory method. Which of the following entries would be made to record a sale of merchandise on account?a) The accounting entry would be a debit to Accounts Receivable and a credit to Sales Revenue.b) The accounting entry would be a debit to Sales Revenue and a credit to Accounts Receivable.c) The accounting entry would be a debit to Cost of Goods Sold and a credit to Inventory.d) Both A and C would be necessary to record the sale.Question31 of 37Which of the following is Net Sales Revenue?Sales less Sales Returns and AllowancesSales less Cost of Goods SoldSales less Sales DiscountsSales less Sales Discounts and Sales Returns and AllowancesQuestion32 of 37Table 5.1Sales revenue$460,000Costs of goods sold300,000Operating expenses85,000Sales discounts20,000Sales returns and allowances15,000Interest Revenue5,000Refer to Table 5.1. What is gross profit?$160,000$140,000$90,000$125,000Question33 of 37Which of the following is subtracted from gross profit to arrive at operating income?Operating expensesCost of goods soldSales discounts and sales returns and allowancesCost of goods available for saleQuestion34 of 37A company's cost of goods sold is $1,000,000. Its average inventory is $100,000. Which of the following is its rate of inventory turnover?10010.1.01Question35 of 37A business receives cash in payment of accounts receivable. Which of the following occurs?An asset is debited and a liability is credited.A liability is debited and a liability is credited.An asset is credited and a liability is debited.An asset is debited and an asset is credited.Question36 of 37A business makes a cash payment of rent. Which of the following occurs?An asset is credited and a liability is debited.An asset is debited and a liability is credited.A liability is debited and an expense is credited.An asset is credited and an expense is debited.Question37 of 37The following entries were made by the accountant of Patel Pastries during its first month of operations.James Patel, the owner, deposited $3,000 in the company's new checking account.Mr. Patel paid the first month's rent of $400.Mr. Patel purchased equipment by signing a note payable of $11,000.Cash sales for the month were $4,500.Mr. Patel purchased cooking supplies for $1,400.After the accountant posts these entries to the general ledger, what is the balance in the cash account?$16,700$7,500$5,700$7,100

 

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