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ACC 400 final exam




ACC 400/Final Exam;1. Zelma Company's last financial statements provided the following ratios;Current ratio 3:2;Quick ratio 1:2;Accounts receivable turnover 9.0 times;Inventory turnover 8.0 times;Net income percentage 12.5%;Return on equity 22.6%;Return on assets 9.8%;To the nearest day, what is the operating cycle for Zelma?;a) 80 days;b) 86 days;c) 172 days;d) 129 days;2. The following events have been projected;A. Cash sales and collections from customers totaling $980,000;B. Cash payments for operating expenses of $560,000;C. Cash payments for income taxes and interest expense of $45,000;D. Cash payments of prior period accruals of $80,000;E. Borrowed $50,000 cash by issuing a note payable;F. Cash dividends of $20,000;The beginning balance of cash is $45,000. What is the budgeted ending balance of cash?;a. $325,000;b. $370,000;c. $275,000;d. $245,000;3. On January 1, a business exchanged a plant asset with a cost of $18,000 and accumulated depreciation of $16,500 for a similar asset that had a list price of $23,000. The business received a trade-in allowance of $2,100 on the old plant asset. What was the result of the exchange?;a. A $600 gain on the disposal of a plant asset.;b. A $1,000 unrecognized gain on the exchange of a plant asset.;c. A cost basis of $22,400 for the new plant asset;d. A cost basis of $23,600 for the new plant asset;4. Which one of the following is not an objective of a system of internal controls?;a. Safeguard company assets;b. Overstate liabilities in order to be conservative;c. Enhance the accuracy and reliability of accounting records;d. Reduce the risks of errors;5. A company?s past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5 % in the second month after the sale, the remainder is never collected. Budgeted credit sales were;July $120,000;August 72,000;September 180,000;The cash inflow in the month of September is expected to be;a. $135,600;b. $102,600;c. $108,000;d. $129,600;6. A check for $275 is incorrectly recorded by a company as $257. On the bank reconciliation, the $18 error should be;a. Added to the balance per books.;b. Deducted from the balance per book.;c. Added to the balance per bank.;d. Deducted from the balance per bank.;7. The Allowance for Doubtful Accounts is necessary because;a. when recording uncollectible accounts expense, it is not possible to know which specific accounts will not pay.;b. uncollectible accounts that are written off must be accumulated in a separate account.;c. a liability results when a credit sale is made.;d. management needs to accumulate all the credit losses over the years.;8. Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited;a. when a credit sale is past due.;b. at the end of each accounting period.;c. whenever a pre-determined amount of credit sales have been made.;d. when an account is determined to be uncollectible;9. Manning Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $200,000 and credit sales are $1,000,000. Management estimates that 5% of accounts receivable will be uncollectible. What adjusting entry will Manning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,000 before adjustment?;a. Bad Debts Expense 10,000;Allowance for Doubtful Accounts 10,000;b. Bad Debts Expense 8,000;Allowance for Doubtful Accounts 8,000;c. Bad Debts Expense 8,000;Accounts Receivable 8,000;d. Bad Debts Expense 10,000;Accounts Receivable 10,000;10. The receivables turnover ratio;a. Is computed by dividing net credit sales for the accounting period by the cash realizable value of accounts receivable on the last day of the accounting period.;b. Can be used to compute the average collection period.;c. Is a method of evaluating the solvency of net accounts receivable.;d. Is only important to internal users of accounting information.;11. A measure of a company?s solvency is the;a. acid-test ratio.;b. current ratio.;c. times interest earned ratio.;d. asset turnover ratio.;12. The times interest earned ratio is computed by dividing;a. net income by interest expense.;b. income before income taxes by interest expense.;c. income before interest expense by interest expense.;d. income before interest expense and income taxes by interest expense.;13. The 2007 financial statements of Shadow Co. contain the following selected data (in millions).;Current Assets $ 75;Total Assets 120;Current Liabilities 40;Total Liabilities 85;Cash 8;Interest Expense 5;Income Taxes 10;Net Income 16;The debt to total assets ratio is;a. 70.8%;b. 53.3%;c. 1.41%;d. 6.2 times;14. The statement "Bond prices vary inversely with changes in the market rate of interest" means that if the;a. market rate of interest increases, the contractual interest rate will decrease.;b. contractual interest rate increases, then bond prices will go down.;c. market rate of interest decreases, then bond prices will go up.;d. contractual interest rate increases, the market rate of interest will decrease.;15. A company would not acquire treasury stock;a. in order to reissue shares to officers.;b. as an asset investment.;c. in order to increase trading of the company?s stock.;d. to have additional shares available to use in acquisitions of other companies.;16. Which of the following is the appropriate general journal entry to record the declaration of cash dividends?;a. Retained Earnings;Cash;b. Dividends Payable;Cash;c. Paid-in Capital;Dividends Payable;d. Retained Earnings;Dividends Payable;17. Allstate, Inc., has 10,000 shares of 6%, $100 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2007. If the board of directors declares a $50,000 dividend, the;a. preferred stockholders will receive 1/10th of what the common stockholders will receive.;b. preferred stockholders will receive the entire $50,000.;c. $50,000 will be held as restricted retained earnings and paid out at some future date.;d. preferred stockholders will receive $25,000 and the common stockholders will receive $25,000.;18. When a change in accounting principle occurs;a. prior years' financial statements should not be changed to reflect the newly adopted principle.;b. the new principle should be used in reporting the results of operations of the current year.;c. the cumulative effect of the change in principle should be reflected on the income statement as of the beginning of the next year.;d. the cumulative effect of the change in accounting principle should be classified as an extraordinary item on the income statement.;19. Which of the following is not an irregular item on the income statement?;a. Discontinued operations;b. Extraordinary items;c. Other revenues and expenses;20. Vertical analysis is a technique that expresses each item in a financial statement;a. in dollars and cents.;b. as a percent of the item in the previous year.;c. as a percent of a base amount.;d. starting with the highest value down to the lowest value.


Paper#74023 | Written in 18-Jul-2015

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