Question;Week 5, Quiz1. Cost of goods;sold is determined only at the end of the accounting period in;A). neither a;perpetual nor a periodic inventory system.;B). a perpetual;inventory system.;C).;a periodic inventory system.;D). both a;perpetual and a periodic inventory system;2. A sales invoice;is a source document that;A). provides;evidence of incurred operating expenses.;B).;provides evidence of credit sales.;C). serves only as;a customer receipt.;D). provides;support for goods purchased for resale.;3. Financial;information is presented below;Operating Expenses;$ 45,000;Sales Returns and;Allowances 9,000;Sales Discounts 6,000;Sales Revenue 160,000;Cost of Goods Sold;87,000;The gross profit;rate would be;A).503.;B).363.;C).400.;D).456.;4. The Sales;Returns and Allowances account is classified as a(n);A).;contra revenue account.;B). contra asset;account.;C). expense;account.;D). asset account.;5. On October 4;2013, JT Corporation had credit sales transactions of $3,200 from merchandise;having cost $1,900. The entries to record the day's credit transactions include;a;A). credit of;$1,900 to Cost of Goods Sold.;B).;credit of $3,200 to Sales Revenue.;C). debit of;$1,900 to Inventory.;D). debit of;$3,200 to Inventory.;6. Comprehensive;income under IFRS;A). excludes;unrealized gains and losses included in net income, in contrast to GAAP.;B).;includes unrealized gains and losses included in net income, similar to GAAP.;C). excludes;unrealized gains and losses included in net income, similar to GAAP.;D). includes;unrealized gains and losses included in net income, in contrast to GAAP;7. If a company;has net sales of $700,000 and cost of goods sold of $490,000, the gross profit;percentage is;A).;30%.;B). 70%.;C). 100%.;D). 15%.;8. The consistent;application of an inventory costing method is essential for;A). accuracy.;B). efficiency.;C).;comparability.;D). conservatism.;9. The inventory;turnover ratio is computed by dividing cost of goods sold by;A). beginning;inventory.;B). ending;inventory.;C).;average inventory.;D). 365 days.;10. Switzer, Inc.;has 5 computers which have been part of the inventory for over two years. Each;computer cost $600 and originally retailed for $900. At the statement date;each computer has a current replacement cost of $400. How much loss should;Switzer, Inc., record for the year?;A). $2,000.;B). $2,500.;C).;$1,000.;D). $1,500.;11. Which one of;the following inventory methods is often impractical to use?;A). LIFO;B). FIFO;C).;Specific identification;D). Average cost;12. Overstating;ending inventory will overstate all of the following except;A). net income.;B). owner's;equity.;C). assets.;D).;cost of goods sold.;13. Under IFRS;companies can choose which inventory system?;LIFO FIFO;Yes No;Yes Yes;No;Yes;No No;14. The lower-of-cost-or-market (LCM) basis may;be used with all of the following methods except;A). FIFO.;B). LIFO.;C).;The LCM basis may be used with all of these.;D). average cost.;15. Inventory;items on an assembly line in various stages of production are classified as;A). Raw materials.;B). Merchandise;inventory.;C). Finished;goods.;D).;Work in process.;Week 7, Quiz1. A company has;the following assets;Buildings and;Equipment, less accumulated depreciation of $2,000,000 $ 7,600,000;Copyrights 960,000;Patents 4,000,000;Timberlands, less;accumulated depletion of $2,800,000 4,800,000;The total amount;reported under Property, Plant, and Equipment would be;A). $16,400,000.;B). $13,360,000.;C).;$12,400,000.;D). $17,360,000.;2. Expenditures that;maintain the operating efficiency and expected productive life of a plant asset;are generally;A).;expensed when incurred.;B). not recorded;until they become material in amount.;C). capitalized as;a part of the cost of the asset.;D). debited to the;Accumulated Depreciation account;3. A gain or loss;on disposal of a plant asset is determined by comparing the;A). original cost;of the asset with the proceeds received from its sale.;B). book value of;the asset with the asset's original cost.;C).;book value of the asset with the proceeds received from its sale.;D). replacement;cost of the asset with the asset's original cost.;4. Salem Company;hired Kirk Construction to construct an office building for ?8,000,000 on land;costing ?2,000,000, which Salem Company owned. The building was complete and;ready to be used on January 1, 2013 and it has a useful life of 40 years. The;price of the building included land improvements costing ?600,000 and personal;property costing ?750,000. The useful lives of the land improvements and the;personal property are 10 years and 5 years, respectively. Salem Company uses;component depreciation, and the company uses straight-line depreciation for;other similar assets. What is the net amount reported for the building on Salem;Company's December 31, 2013 statement of financial position?;A). ?7,573,750;B).;?6,483,750;C). ?7,800,000;D). ?7,665,000;5. Yocum Company;purchased equipment on January 1 at a list price of $100,000, with credit terms;2/10, n/30. Payment was made within the discount period and Yocum was given a;$2,000 cash discount. Yocum paid $5,000 sales tax on the equipment, and paid;installation charges of $1,760. Prior to installation, Yocum paid $4,000 to;pour a concrete slab on which to place the equipment. What is the total cost of;the new equipment?;A). $104,760;B).;$108,760;C). $110,760;D). $101,000;6). A company;purchased factory equipment for $350,000. It is estimated that the equipment;will have a $35,000 salvage value at the end of its estimated 5-year useful;life. If the company uses the double-declining-balance method of depreciation;the amount of annual depreciation recorded for the second year after purchase;would be;A).;$84,000.;B). $140,000.;C). $126,000.;D). $60,480.;7. On a balance;sheet, natural resources may be described more specifically as all of the;following except;A). oil reserves.;B). timberlands.;C).;land improvements.;D). mineral;deposits.;8). On January 1;2013, Donahue Company, a calendar-year company, issued $500,000 of notes;payable, of which $125,000 is due on January 1 for each of the next four years.;The proper balance sheet presentation on December 31, 2013, is;A).;Current Liabilities, $125,000, Long-term Debt, $375,000.;B). Current;Liabilities, $375,000, Long-term Debt, $125,000.;C). Current;Liabilities, $500,000.;D). Long-term Debt, $500,000.;9). When an;interest-bearing note matures, the balance in the Notes Payable account is;A).;less than the total amount repaid by the borrower.;B). the difference;between the maturity value of the note and the face value of the note.;C). equal to the;total amount repaid by the borrower.;D). greater than;the total amount repaid by the borrower;10. From the;standpoint of the issuing company, a disadvantage of using bonds as a means of;long-term financing is that;A).;interest must be paid on a periodic basis regardless of earnings.;B). the;bondholders do not have voting rights.;C). income to;stockholders may increase as a result of trading on the equity.;D). bond interest;is deductible for tax purposes.;11). The times;interest earned ratio is computed by dividing;A). income before;interest expense by interest expense.;B). net income by;interest expense.;C).;income before income taxes and interest expense by interest expense.;D). income before;income taxes by interest expense.;12. If the market;interest rate is greater than the contractual interest rate, bonds will sell;A).;at a discount.;B). only after the;stated interest rate is increased.;C). at face value.;D). at a premium.;13). The market;interest rate is often called the;A). coupon rate.;B). contractual;rate.;C). stated rate.;D).;effective rate.;14. On October 1, Steve's;Carpet Service borrows $250,000 from First National Bank on a 3-month;$250,000, 8% note. The entry by Steve's Carpet Service to record payment of the;note and accrued interest on January 1 is;A). Notes Payable;255,000 Cash 255,000;B).;Notes Payable 250,000 Interest;Payable 5,000 Cash 255,000;C). Notes Payable;250,000 Interest Payable;20,000 Cash 270,000;D). Notes Payable;250,000 Interest Expense;5,000;Cash 255,000;15. Most companies;pay current liabilities;A). by creating;long-term liabilities.;B).;out of current assets.;C). by issuing;interest-bearing notes payable.;D). by issuing;stock.;Week 3, Quiz1. Transactions in;a journal are recorded in;A). alphabetical;order.;B). dollar amount;order.;C).;chronological order.;D). account number;order.;2. In the first;month of operations, the total of the debit entries to the cash account;amounted to $900 and the total of the credit entries to the cash account;amounted to $600. The cash account has a(n);A). $300 credit;balance.;B). $900 debit;balance.;C). $600 credit;balance.;D).;$300 debit balance.;3. Which of the;following statements is true?;A). Credits;decrease assets and decrease liabilities.;B). Debits;increase assets and increase liabilities.;C).;Credits decrease assets and increase liabilities.;D). Debits;decrease liabilities and decrease assets;4). The final step;in the recording process is to transfer the journal information to the;A). trial balance.;B). financial;statements.;C).;ledger.;D). file cabinets.;5. The usual;sequence of steps in the transaction recording process is;A).;analyze? journal? ledger.;B). journal?;ledger? analyze.;C). ledger?;journal? analyze.;D). journal?;analyze? ledger.;6). Which one of the;following represents the expanded basic accounting equation?;A). Assets =;Liabilities + Common Stock + Retained Earnings + Dividends ? Revenue ?;Expenses.;B).;Assets + Dividends + Expenses = Liabilities + Common Stock + Retained Earnings;+ Revenues.;C). Assets ?;Liabilities ? Dividends = Common Stock + Retained Earnings + Revenues ?;Expenses.;D). Assets =;Revenues + Expenses ? Liabilities.;7. A trial balance;may balance even when each of the following occurs except when;A).;a transposition error is made.;B). a journal;entry is posted twice.;C). incorrect;accounts are used in journalizing.;D). a transaction;is not journalized.;8). An accounting;time period that is one year in length, but does not begin on January 1, is;referred to as;A).;a fiscal year.;B). an interim;period.;C). the time;period assumption.;D). a reporting;period.;9). Which of the;following reflect the balances of prepayment accounts prior to adjustment?;A). Balance sheet;accounts are understated and income statement accounts are understated.;B). Balance sheet;accounts are overstated and income statement accounts are overstated.;C). Balance sheet;accounts are understated and income statement accounts are overstated.;D).;Balance sheet accounts are overstated and income statement accounts are;understated.;10). Crue Company;had the following transactions during 2013: ? Sales of $4,500 on account ?;Collected $2,000 for services to be performed in 2014 ? Paid $1,625 cash in;salaries ? Purchased airline tickets for $250 in December for a trip to take;place in 2014 What is Crue?s 2013 net income using cash basis accounting?;A). $375.;B). $4,875.;C). $4,625.;D).;$125.;11). Which;statement is correct?;A). The cash basis;of accounting is objective because no one can be certain of the amount of;revenue until the cash is received.;B). As long as;management is ethical, there are no problems with using the cash basis of;accounting.;C). As long as a;company consistently uses the cash basis of accounting, generally accepted;accounting principles allow its use.;D).;The use of the cash basis of accounting violates both the revenue recognition;and expense recognition principles.;12). Under;accrual-basis accounting;A). net income is;calculated by matching cash outflows against cash inflows.;B). the ledger;accounts must be adjusted to reflect a cash basis of accounting before;financial statements are prepared under generally accepted accounting;principles.;C). cash must be;received before revenue is recognized.;D).;events that change a company's financial statements are recognized in the;period they occur rather than in the period in which cash is paid or received.;13). Expenses paid;and recorded as assets before they are used are called;A). accrued expenses.;B). interim;expenses.;C).;prepaid expenses.;D). unearned;expenses.;14). The adjusted;trial balance is prepared;A). after;financial statements are prepared.;B).;after adjusting entries have been journalized and posted.;C). before the trial;balance.;D). to prove the;equality of total assets and total liabilities;15). Management;usually desires ________ financial statements and the IRS requires all;businesses to file _________ tax returns.;A). quarterly;monthly;B).;monthly, annual;C). monthly;monthly;D). annual, annual;Week 6, Quiz1. A bank;statement;A). is a bill from;the bank for services rendered.;B). is a credit;reference letter written by the depositor's bank.;C).;shows the activity which increased or decreased the depositor's account;balance.;D). lets a;depositor know the financial position of the bank as of a certain date.;2. The principles;of internal control activities are used in the;A).;internationally but not in the U.S.;B). in the U.S.;and Canada but not globally.;C).;globally.;D). U.S.but not;globally.;3. Postage stamps;on hand are considered to be;A). cash.;B). petty cash.;C). a prepaid;expense.;D). cash;equivalents.;4. Tangible frauds;include;A). asset;misappropriation.;B). false;pretenses.;C).;counterfeiting.;D). All of these.;5. All of the following requirements about;internal controls were enacted under the Sarbanes- Oxley Act except;A). independent;outside auditors must eliminate redundant internal controls.;B). independent;outside auditors must attest to the level of internal control.;C). companies must;develop sound internal controls over financial reporting.;D).;companies must continually assess the functionality of internal controls.;6. A deposit made;by a company will appear on the bank statement as a;A). debit.;B).;credit.;C). debit;memorandum.;D). credit;memorandum.;7. In large;companies, the independent internal verification procedure is often assigned to;A). computer;operators.;B). management.;C).;internal auditors.;D). outside CP;8. An aging of a;company's accounts receivable indicates that $10,000 are estimated to be;uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance;the adjustment to record bad debts for the period will require a;A).;debit to Bad Debts Expense for $8,900.;B). credit to;Allowance for Doubtful Accounts for $10,000.;C). debit to Bad;Debts Expense for $10,000.;D). debit to;Allowance for Doubtful Accounts for $8,900.;9. A reasonable amount;of uncollectible accounts is evidence;A). that the;credit policy is too strict.;B). of poor;judgments on the part of the credit manager.;C). that the;credit policy is too lenient.;D).;of a sound credit policy.;10. Kill;Corporation's unadjusted trial balance includes the following balances (assume;normal balances);Accounts;Receivable $ 750,000;Allowance for;Doubtful Accounts 15,000;Bad debts are;estimated to be 6% of outstanding receivables. What amount of bad debts expense;will the company record?;A). $15,000;B). $44,100;C).;$30,000;D). $45,000;11. Using the;percentage-of-receivables basis, the uncollectible accounts for the year is;estimated to be $31,000. If the balance for the Allowance for Doubtful Accounts;is a $7,000 debit before adjustment, what is the amount of bad debts expense;for the period?;A). $31,000;B).;$38,000;C). $7,000;D). $24,000;12. Using the;following information;12/31/12;Accounts;receivable $ 525,000;Allowance (35,000);Cash realizable;value $ 490,000;During 2013, sales;on account were $145,000 and collections on account were $100,000. Also during;2013, the company wrote off $8,000 in uncollectible accounts. An analysis of;outstanding receivable accounts at year end indicated that uncollectible;accounts should be estimated at $40,000. Bad debts expense for 2013 is;A). $40,000.;B).;$13,000.;C). $5,000.;D). $8,000.;13. If a retailer;regularly sells its receivables to a factor, the service charge of the factor;should be classified as a(n);A). contra asset.;B). other expense.;C).;selling expense.;D). interest;expense.;14. During 2013;Alfred Inc. had sales on account of $132,000, cash sales of $54,000, and;collections on account of $84,000. In addition, they collected $1,450 which had;been written off as uncollectible in 2012. As a result of these transactions;the change in the accounts receivable balance indicates a;A). $102,000;increase.;B). $100,550;increase.;C). $46,550;increase.;D).;$48,000 increase.;15. A 5%, 120-day;note receivable is received from a customer to settle an existing account;receivable of $75,000. Assuming a 360 day year, the accounting entry for;acquisition of the note will include a;A).;debit to Notes Receivable for $75,000 and no entry for interest.;B). debit to Notes;Receivable for $76,250.;C). debit to Notes;Receivable for $78,720.;D). credit to;Interest Revenue for $1,250.;Week 9, Quiz1. Eck Corporation;sells 250 shares of common stock being held as an investment. The shares were acquired;six months ago at a cost of $25 a share. Eck sold the shares for $40 a share.;The entry to record the sale is;A).;Cash 10,000;Gain on Sale of Stock Investments 3,750;Stock Investments;6,250;B). Stock Investments 10,000;Cash 10,000;C). Cash 10,000;Stock Investments 10,000;D). Cash 6,250;Loss on Sale of Stock Investments 3,750;Stock Investments 10,000;2. On January 1;Talent Company purchased as a short-term investment a $1,000, 8% bond for;$1,050. The bond pays interest on January 1 and July 1. The bond is sold on;October 1 for $1,200 plus accrued interest. Interest has not been accrued since;the last interest payment date. What is the entry to record the cash proceeds;at the time the bond is sold?;A). Cash 1,200;Debt Investments 1,200;B).;Cash 1,220;Debt Investments 1,050;Gain on Sale of Debt Investments 150;Interest Revenue 20;C). Cash 1,220;Debt Investments 1,200;Interest Revenue 20;D). Cash 1,200;Debt Investments 1,050;Gain on Sale of Debt Investments 150;3. At the end of its;first year, the trading securities portfolio consisted of the following common;stocks.;Cost;Fair Value;Atrium Corporation;$ 46,400 $ 50,000;Barnes Inc. 60,000 55,800;Cantor Corporation;80,000 76,000;$186,400 $181,800;In the following;year, the Barnes common stock is sold for cash proceeds of $56,000. The gain or;loss to be recognized on the sale is a;A).;loss of $4,000.;B). gain of;$1,200.;C). gain of $200.;D). loss of;$4,200.;4. At the time of;acquisition of a debt investment;A). the Stock;Investments account is debited when bonds are purchased.;B). the Investment;account is credited for its cost plus brokerage fees.;C). no journal;entry is required.;D).;the cost principle applies.;5. The account;Stock Investments, is;A).;a general ledger control account.;B). another name;for Debt Investments.;C). a subsidiary;ledger account.;D). a long-term;liability account.;6. Tan Company had;these transactions pertaining to stock investments: Feb. 1 Purchased 3,000 shares;of Norton Company (10%) for $48,800 cash plus brokerage fees of $1,400.;June 1 Received;cash dividends of $2 per share on Norton stock. Oct. 1 Sold 1,200 shares of;Norton stock for $24,000 less brokerage fees of $600. The entry to record the;purchase of the Norton stock would include a;A). credit to Cash;for $48,800.;B). debit to Stock;Investments for $48,800.;C).;debit to Stock Investments for $50,200.;D). debit to;Investment Expense for $1,400.;7. Mission Inc.;earns $450,000 and pays cash dividends of $150,000 during 2013. Cox Corporation;owns 70,000 of the 210,000 outstanding shares of Mission. How much revenue from;investment should Cox report in 2013?;A).;$150,000;B). $200,000;C). $50,000;D). $100,000;8. Which of the;following reasons best explains why a company that experiences seasonal;fluctuations in sales may purchase investments in debt or stock securities?;A).;The company may have excess cash.;B). The company;may invest for speculative reasons to increase the value in pension funds.;C). The company;may generate a significant portion of its earnings from investment income.;D). The company;may invest for the strategic reason of establishing a presence in a related;industry.;9. The balance;sheet presentation of an unrealized loss on a non-trading security is similar;to the statement presentation of;A).;treasury stock.;B). discount on;bonds payable.;C). prepaid;expenses.;D). allowance for;doubtful accounts.;10. A company that;acquires less than 20% ownership interest in another company should account for;the stock investment in that company using;A). the;significant method.;B). the equity;method.;C). consolidated;financial statements.;D).;the cost method.;11. Which of the;following is not a true statement regarding short-term debt investments?;A). Investments;are frequently government or corporate bonds.;B). The securities;usually pay interest.;C). This type of;investment must be currently traded in the securities market.;D).;Debt investments are recorded at the price paid less brokerage fees.;12. Revenue is;recognized when cash dividends are received under;A).;the cost method.;B). the equity;method.;C). the;controlling interest method.;D). both the cost and;equity methods.;13. An unrealized;loss on non-trading securities is;A). closed-out at;the end of the accounting period.;B). deducted from;the cost of the investment.;C).;reported as a separate component of stockholders' equity.;D). reported under;Other Expenses and Losses in the income statement.;14. Mission Inc.;earns $600,000 and pays cash dividends of $150,000 during 2013. Cox Corporation;owns 70,000 of the 210,000 outstanding shares of Mission. What amount should;Cox show in the investment account at December 31, 2013 if the beginning of the;year balance in the account was $40,000?;A).;$190,000;B). $200,000;C). $175,000;D). $180,000;15. The;contra-account, Fair value Adjustment, is also called a(n);A).;valuation account.;B). offset account.;C).opposite;account.;D). adjustment;account.;Week 10, Quiz1. Which one of;the following affects cash during a period?;A).;Payment of an accounts payable;B). Recording;depreciation expense;C). Write-off of;an uncollectible account receivable;D). Declaration of;a cash dividend;2. Land acquired;from the issuance of common stock is reported;A). as a financing;activity.;B).;in a separate schedule at the bottom of the statement.;C). as an;investing activity.;D). as an;operating activity.;3. The information;to prepare the statement of cash flows usually comes from each of the following;except;A). the;comparative balance sheet.;B). the current;income statement.;C).;the retained earnings statement.;D). additional;information.;4. The statement of;cash flows will not report the;A).;amount of checks outstanding at the end of the period.;B). change in the;cash balance for the current period.;C). sources of;cash in the current period.;D). uses of cash;in the current period.;5. Starting with;net income and adjusting it for items that affected reported net income but;which did not affect cash is called the;A).cost-benefit;method.;B). direct method.;C).;indirect method.;D). working;capital method;6. In developing;the cash flows from operating activities, most companies in the U. S.;A). prepare the;operating activities section on the accrual basis.;B). use the direct;method.;C).;use the indirect method.;D). present both;the indirect and direct methods in their financial reports.;7. Carrot Company;issued common stock for proceeds of $381,000 during 2013. The company paid;dividends of $90,000 and issued a long-term note payable for $95,000 in;exchange for equipment during the year. The company also purchased treasury;stock that had a cost of $18,000. The financing section of the statement of;cash flows will report net cash inflows of;A). $489,000.;B). $183,000.;C). $363,000.;D).;$273,000;8. Each of the;following items may be classified as operating or financing activities under;IFRS except;A). dividends;paid.;B).;dividends received.;C). interest paid.;D). All of these;may be classified as such.;9. Accounts;receivable arising from sales to customers amounted to $45,000 and $50,000 at the;beginning and end of the year, respectively. Income reported on the income;statement for the year was $160,000. Exclusive of the effect of other;adjustments, the cash flows from operating activities to be reported on the;statement of cash flows is;A). $205,000.;B).;$155,000.;C). $165,000.;D). $160,000;10. The statement;of cash flows will not provide insight into;A). whether cash;flow is greater than net income.;B). why dividends;were not increased.;C).;the exact proceeds of a future bond issue.;D). how the;retirement of debt was accomplished.;11. Which one of;the following items is not necessary in preparing a statement of cash flows?;A).;Determine the cash in all bank accounts;B). Determine the;change in cash;C). Determine the;cash provided by operations;D). Determine cash;from financing and investing activities;12. If a company;reports a net loss, it;A). will not be;able to pay cash dividends.;B).;may still have a net increase in cash.;C). will not be;able to get a loan.;D). will not be;able to make capital expenditures.;13. In Flagg;Company, net income is $280,000. If accounts receivable increased $145,000 and;accounts payable decreased $50,000, net cash provided by operating activities;using the indirect method is;A). $475,000.;B). $185,000.;C).;$85,000.;D). $375,000.;14. The category;that is generally considered to be the best measure of a company's ability to;continue as a going concern is;A). usually;different from year to year.;B).;cash flows from operating activities.;C). cash flows;from investing activities.;D). cash flows;from financing activities.;15. Financing;activities involve;A). cash receipts;from sales of goods and services.;B). acquiring and;disposing of productive long-lived assets.;C). lending money;to other entities and collecting on those loans.;D).;long-term liability and owners' equity items.
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