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ACG 3100 MULTIPLE QUESTION PROBLEM

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Question;1.;Which of the following is NOT normally an objective of financial reporting?;a. To provide information about an entity's assets and claims;against those assets;b. To provide information that is useful in assessing an;entity's sources and uses of cash;c. To provide information that is useful in lending and;investing decisions;d. To provide information about an entity's liquidation value;2. As independent (or external) auditors, CPAs are primarily;responsible for;a. preparing financial statements in conformity with GAAP.;b. certifying the accuracy of financial statements.;c. expressing an opinion as to the fairness of financial;statements.;d. filing financial statements with the SEC.;3. The assumed continuation of a business entity in the;absence of evidence to the contrary is an example of the accounting concept of;a. accrual.;b. consistency.;c. comparability.;d. going concern.;4. According to the FASB's conceptual framework, the process;of reporting an item in the financial statements of an entity is;a. realization.;b. recognition.;c. matching.;d. allocation.;5. Generally accepted accounting principles;a. are accounting adaptations based on the laws of economic;science.;b. derive their credibility and authority from legal rulings;and court precedents.;c. derive their credibility and authority from the federal;government through the financial reporting section of the SEC.;d. derive their credibility and authority from general;recognition and acceptance by the accounting profession.;6. On June 30, a company paid $3,600 for insurance premiums;for the current year and debited the amount to Prepaid Insurance. At December;31, the bookkeeper forgot to record the amount expired. The omission has the;following effect on the financial statements prepared December 31;a. overstates owners' equity.;b. overstates assets.;c. understates net income.;d. overstates both owners? equity and assets.;7. Which of the following criteria must be met before an;event should be recorded for accounting purposes?;a. The event must be an arm's-length transaction.;b. The event must be repeatable in a future period.;c. The event must be measurable in financial terms.;d. The event must be disclosed in the reported footnotes.;8. Adjusting entries normally involve;a. real accounts only.;b. nominal accounts only.;c. real and nominal accounts.;d. liability accounts only.;9. If an inventory account is understated at year end, the;effect will be to overstate the;a. net purchases.;b. gross margin.;c. cost of goods available for sale.;d. cost of goods sold.;10. Beginning and ending Accounts Receivable balances were;$28,000 and $24,000, respectively. If collections from clients during the;period were $80,000, then total services rendered on account were apparently;a. $76,000.;b. $84,000.;c. $104,000.;d. $108,000.;11. The following balances have been excerpted from Edwards;balance sheets;December 31, 2013 December 31, 2012;Prepaid Insurance............ $ 6,000 $;7,500;Interest Receivable.......... 3,700;14,500;Salaries Payable............. 61,500;53,000;Edwards Company paid or collected during 2013 the following items;Insurance premiums paid...... $ 41,500;Interest collected........... 123,500;Salaries paid................ 481,000;The interest revenue on the income statement for 2013 was;a. $90,500.;b. $112,700.;c. $117,500.;d. $156,500.;12. Comet Corporation's liability account balances at June;30, 2013, included a 10 percent note payable. The note is dated October 1;2011, and carried an original principal amount of $600,000. The note is payable;in three equal annual payments of $200,000 plus interest. The first interest;and principal payment was made on October 1, 2012. In Comet's June 30, 2013;balance sheet, what amount should be reported as Interest Payable for this note?;a. $10,000;b. $15,000;c. $30,000;d. $45,000;13. The correct order to present current assets is;a. cash, inventories, prepaid items, accounts receivable.;b. cash, inventories, accounts receivable, prepaid items.;c. cash, accounts receivable, prepaid items, inventories.;d. cash, accounts receivable, inventories, prepaid items.;14. Unearned rent would normally appear on the balance sheet;as a;a. plant asset.;b. current liability.;c. long-term liability.;d. current asset.;15. Which of the following is NOT a long-term investment?;a. Stock held to exert influence on another company;b. Land held for speculation;c. Trademarks;d. Cash surrender value of life insurance;16. The operating cycle;a. measures the time elapsed between cash disbursement for;inventory and cash collection of the sales price.;b. refers to the seasonal variations experienced by business;enterprises.;c. should be used to classify assets and liabilities as;current if it is less than one year.;d. cannot exceed one year.;17. Wolfe Co. was incorporated on July 1, 2014, with $200,000;from the issuance of stock and borrowed funds of $30,000. During the first year;of operations, net income was $10,000. On December 15, Wolfe paid an $800 cash;dividend. No additional activities affected owners' equity in 2014. At December;31, 2014, Wolfe's liabilities had increased to $37,600. In Wolfe's December 31;2014, balance sheet, total assets should be reported at;a. $239,200.;b. $240,000.;c. $246,800.;d. $276,800.;18. Volta Electronics Inc. reported the following items on;its December 31, 2014, trial balance;Accounts Payable........................................;$108,900;Advances to Employees...................................;4,500;Unearned Rent Revenue...................................;28,800;Estimated Liability Under Warranties....................;25,800;Cash Surrender Value of Officers' Life Insurance........;7,500;Bonds Payable...........................................;555,000;Discount on Bonds Payable...............................;22,500;Trademarks..............................................;3,900;The amount that should be recorded on Volta?s balance sheet as total liabilities;is;a. $696,000.;b. $700,500.;c. $703,500.;d. $741,000.;19. In contrast with a multiple-step income statement, a;single-step income statement does not show the amount of;a. income taxes on continuing operations.;b. cost of goods sold.;c. gross profit.;d. earnings per share.;20. The term "comprehensive income" as defined by;the FASB;a. must be reported on the face of the income statement.;b. includes all changes in equity during a period except;those resulting from investments by and distributions to owners.;c. is the net change in owners' equity for the period.;d. is synonymous with the term "net income.;21. The following amounts are from Silverton Co.'s 2014;income statement;Sales.................................................;$340,000;Sales returns and allowances.......................... 5,000;Cost of goods sold....................................;132,000;Utilities expense.....................................;66,000;Interest revenue...................................... 1,000;Income tax on operations..............................;28,000;Extraordinary loss due to earthquake, net of tax...... 5,000;Interest expense...................................... 4,000;Salaries expense......................................;46,000;Loss on sale of investments........................... 3,000;What amount would Silverton show for income from continuing operations on a;multiple-step format income statement?;a. $52,000;b. $68,000;c. $57,000;d. $96,000;22. Saginaw Inc. decided on August 1, 2014, to dispose of a;component of its business. The component was sold on November 30, 2014.;Saginaw's income for 2014 included income of $250,000 from operating the;discontinued segment from January 1 to the sale date. Saginaw incurred a loss;on the November 30 sale of $220,000. Ignoring income taxes, what amount should;be reported in the 2014 income statement as the net income or loss under;Discontinued Operations"?;a. $220,000 loss;b. $30,000 loss;c. $30,000 income;d. $250,000 income;23. The financial statements of Mannassass Corporation for;2014 and 2015 contained the following errors;2014 2015;Ending Inventory $14,000 overstated $20,000;understated;Rent Expense $4,800 understated $6,600;overstated;Assuming that none of the errors were detected or corrected, by what amount;will 2014 operating income be overstated or understated?;a. $9,200 overstated;b. $9,200 understated;c. $18,800 understated;d. $18,800 overstated;24. In a statement of cash flows, receipts from sales of;property, plant, and equipment would be classified as cash inflows from;a. liquidating activities.;b. operating activities.;c. investing activities.;d. financing activities.;25. In a statement of cash flows (indirect method);depreciation is treated as an adjustment to reported net income because;depreciation;a. is an inflow of cash to a reserve account for asset;replacement.;b. reduces the reported net income and involves an inflow of;cash.;c. reduces the reported net income but does not involve an;outflow of cash.;d. usually represents a significant portion of operating;expenses.

 

Paper#47456 | Written in 18-Jul-2015

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