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ACC 300 final exam




1. Which of the following is the most appropriate and modern definition of accounting?;A) The information system that identifies, records, and communicates the economic events of an organization to interested users;B) A means of collecting information;C) The interconnected network of subsystems necessary to operate a business;D) Electronic collection, organization, and communication of vast amounts of information;2. Which of the following groups uses accounting information primarily to insure the entity is operating within prescribed rules?;A) Taxing authorities;B) Regulatory agencies;C) Labor Unions;D) Management;3. Which of the following would not be considered an internal user of accounting data for a company?;A) The president of a company;B) The controller of a company;C) Creditor of a company;D) Salesperson of a company;4. Stockholders' equity is increased by;A) Dividends;B) Revenues;C) Expenses;D) Liabilities;5. The left side of an account is;A) Blank;B) a description of the account;C) the debit side;D) The balance of the account;6. Which one of the following is not a part of an account?;A) Credit side;B) Trial balance;C) Debit side;D) Title;7. The right side of an account;A) is the correct side;B) reflects all transactions for the accounting period;C) shows all the balances of the accounts in the system;D) is the credit side;8. The normal balance of any account is the;A) left side;B) right side;C) side which increases that account;D) side which decreases that account;9. The double-entry system requires that each transaction must be recorded;A) in at least two different accounts;B) in two sets of books;C) in a journal and in a ledger;D) first as a revenue and then as an expense;10. A credit is not the normal balance for which account listed below?;A) Common Stock account;B) Revenue account;C) Liability account;D) Dividends account;11. Which accounts normally have debit balances?;A) Assets, expenses, and revenues;B) Assets, expense, and retained earnings.;C) Assets, liabilities, and dividends;D) Assets, expenses, and dividends;12. Which accounts normally have credit balances?;A) Revenues, liabilities, and dividends;B) Revenues, liabilities, and assets;C) Revenues, liabilities, and retained earnings;D) Revenues, liabilities, and expenses;13. External users want answers to all of the following questions except;A) Is the company earning satisfactory income?;B) Will the company be able to pay its debts as they come due?;C) Will the company be able to afford employee pay raises this year?;D) How does the company compare in profitability with competitors?;14. Borrowing money is an example of a(n);A) delivering activity;B) financing activity;C) investing activity;D) operating activity;15. Debt securities sold to investors that must be repaid at a particular date some years in the future are called;A) accounts payable;B) notes receivable;C) taxes payable;D) bonds payable;16. Debt and obligations of a business are referred to as;A) Assets;B) Equities;C) Liabilities;D) Expenses;17. The financial statement that summarizes the changes in retained earnings for a specific period of time is the;A) balance sheet;B) income statement;C) statement of cash flows;D) retained earnings statement;18. To show how successfully your business performed during a period of time, you would report its revenues and expense in the;A) balance sheet;B) income statement;C) statement of cash flows;D) retained earnings statement;19. Net income results when;A) Assets > Liabilities;B) Revenues = Expenses;C) Revenues > Expenses;D) Revenues < Expenses;20. Net income will result during a time period when;A) assets exceed liabilities;B) assets exceed revenues;C) expenses exceed revenues;D) revenues exceed expenses;21. Retained earnings at the end of the period is equal to;A) retained earnings at the beginning of the period plus net income minus liabilities;B) retained earnings at the beginning of the period plus net income minus dividends;C) net income;D) assets plus liabilities;22. Which of the following financial statements is concerned with the company at a point in time?;A) Balance sheet;B) Income statement;C) Retained Earnings statement;D) Statement of cash flows;23. The retained earnings statement would not show;A) the retained earnings beginning balance;B) revenues and expenses;C) Dividends;D) the ending retained earning balance;24. A balance sheet shows;A) revenues, liabilities, and stockholders' equity;B) expenses, dividends, and stockholders' equity;C) revenues, expenses, and dividends;D) assets, liabilities, and stockholders' equity;25. The accounting equation may be expressed as;A) Assets = Stockholders' Equity ? Liabilities.;B) Assets = Liabilities + Stockholders' Equity.;C) Assets + Liabilities = Stockholders' Equity.;D) Assets + Stockholders' Equity = Liabilities.;26. Under the accrual basis of accounting;A) cash must be received before revenue is recognized;B) net income is calculated by matching cash outflows against cash inflows;C) 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;D) the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles;27. Using accrual accounting, expenses are recorded and reported only;A) when they are incurred whether or not cash is paid;B) when they are incurred and paid at the same time;C) if they are paid before they are incurred;D) if they are paid after they are incurred;28. Which statement is correct?;A) As long as a company consistently uses the cash basis of accounting, generally accepted accounting principles allow its use.;B) The use of the cash basis of accounting violates both the revenue recognition and matching principles.;C) The cash basis of accounting is objective because no one can be certain of the amount of revenue until the cash is received.;D) As long as management is ethical, there are no problems with using the cash basis of accounting.;29. Which one of the following is not a tool in financial statement analysis?;A) Horizontal analysis;B) Circular analysis;C) Vertical analysis;D) Ratio analysis;30. If year one equals $800, year two equals $840, and year three equals $880, the percentage to be assigned for year three in a trend analysis, assuming that year 1 is the base year, is;A) 110%.;B) 105%.;C) 95%.;D) 100%.;31. Assume the following sales data for a company;2008 $945,000;2007 780,000;2006 650,000;If 2006 is the base year, what is the percentage increase in sales from 2006 to 2007?;A) 25%;B) 20%;C) 125%;D) 143%;32. Ratios are most useful in identifying;A) Trends;B) Differences;C) Causes;D) Relationships;33. Return on assets ratio is most closely related to;A) profit margin and debt to total assets ratio;B) profit margin and asset turnover ratio;C) times interest earned and debt to stockholders' equity ratio;D) profit margin and free cash flow;34. Return on common stockholders' equity ratio is most closely related to;A) gross profit rate and operating expenses to sales ratio;B) profit margin and free cash flow;C) times interest earned and debt to stockholders' equity ratio;D) return on asset ratio and leverage (debt to total assets ratio);35. Which one of the following would be considered a long-term solvency ratio?;A) Receivables turnover;B) Return on total assets;C) Current cash debt coverage ratio;D) Debt to total assets ratio;36. The current ratio is;A) calculated by dividing current liabilities by current assets;B) used to evaluate a company's liquidity and short-term debt paying ability;C) used to evaluate a company's solvency and long-term debt paying ability;D) calculated by subtracting current liabilities from current assets;37. The current ratio is a;A) liquidity ratio;B) profitability ratio;C) long-term solvency ratio;D) cash flow ratio;38. The receivables turnover and inventory turnover ratios are used to analyze;A) long-term solvency;B) Profitability;C) Liquidity;D) Leverage;39. The asset turnover ratio is;A) net sales divided by net income;B) average total assets divided by net income;C) net sales divided by average total assets;D) average total assets divided by net sales;40. The assets turnover ratio measures;A) how often a company replaces its assets;B) how efficiently a company uses its assets to generate sales;C) the portion of the assets that have been financed by creditors;D) the overall rate of return on assets;41. The profit margin ratio is calculated by dividing;A) sales by cost of goods sold;B) gross profit by net sales;C) net income by stockholders' equity;D) net income by net sales;42. The debt to total assets ratio measures;A) the company's profitability;B) whether interest can be paid on debt in the current year;C) the proportion of interest paid relative to dividends paid;D) the percentage of the total assets provided by creditors;43. 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;44. Internal control is defined, in part, as a plan that safeguards;A) all balance sheet accounts;B) Assets;C) Liabilities;D) capital stock;45. Internal controls are not designed to safeguard assets from;A) natural disasters;B) employee theft;C) Robbery;D) unauthorized use;46. Having one person responsible for the related activities of ordering merchandise, receiving goods, and paying for them;A) increases the potential for errors and fraud;B) decreases the potential for errors and fraud;C) is an example of good internal control;D) is a good example of safeguarding the company's assets;47. From an internal control standpoint, the asset most susceptible to improper diversion and use is;A) prepaid insurance;B) Cash;C) Buildings;D) Land;48. Internal controls are concerned with;A) only manual systems of accounting;B) the extent of government regulations;C) safeguarding assets;D) preparing income tax returns;49. A consequence of separation of duties is that;A) theft by employees becomes impossible;B) operations become extremely inefficient because of constant training of employees;C) more employees will need to be bonded;D) theft is still possible when several employees are involved;50. A very small company would have the most difficulty in implementing which of the following internal control activities?;A) Separation of duties;B) Limited access to assets;C) Periodic independent verification;D) Sound personnel procedures


Paper#74026 | Written in 18-Jul-2015

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