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ACC 300 FINAL EXAM

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1) Which of the following statements is true?;A. only when operating conditions change significantly.;B. An unqualified independent auditor?s report must be included in the annual report.;C. because that information is only for internal users.;D. shareholders even when financial results are positive.;2) Notes to the financial statements include which of the following;A. An independent auditors report.;B. Explanations of uncertainties.;C. Short-form Income Statement;D. Subsidiary ledger for Accounts Receivable;3) Which of the following financial statements is divided into major categories of;operating, investing, and financing activities?;A. The income statement.;B. The balance sheet.;C. The retained earnings statement.;D. The statement of cash flows.;4) If the retained earnings account increases from the beginning of the year to the;end of the year, then;A. net income is less than dividends.;B. a net loss is less than dividends.;C. additional investments are less than net losses.;D. net income is greater than dividends.;5) If services are rendered on account, then;A. assets will decrease.;B. liabilities will increase.;C. stockholders? equity will increase.;D. liabilities will decrease.;6) An investment by the stockholders in a business increases;A. assets and stockholders? equity.;B. assets and liabilities.;C. liabilities and stockholders? equity.;D. assets only.;7) 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.;8) A small company may be able to justify using a cash basis of accounting if they;have;A. sales under $1,000,000.;B. no accountants on staff.;C. few receivables and payables.;D. all sales and purchases on account.;9) Stockholders? equity can be described as claims of;A. creditors on total assets.;B. owners on total assets.;C. customers on total assets.;D. debtors on total assets.;10) Common stock is reported on the;A. statement of cash flows.;B. retained earnings statement.;C. income statement.;D. balance sheet.;11) The Vintage Laundry Company purchased $6,500 worth of laundry supplies on;June 2 and recorded the purchase as an asset. On June 30, an inventory of the;laundry supplies indicated only $2,000 on hand. The adjusting entry that should be;made by the company on June 30 is;A. debit Laundry Supplies Expense, $2,000, credit Laundry Supplies, $2,000.;B. debit Laundry Supplies, $4,500, credit Laundry Supplies Expense, $4,500.;C. debit Laundry Supplies, $2,000, credit Laundry Supplies Expense, $2,000.;D. debit Laundry Supplies Expense, $4,500, credit Laundry Supplies, $4,500.;12) On July 1 the Fisher Shoe Store paid $15,000 to Acme Realty for 6 months rent;beginning July 1. Prepaid Rent was debited for the full amount. If financial;statements are prepared on July 31, the adjusting entry to be made by the Fisher;Shoe Store is;A. debit Rent Expense, $15,000, credit Prepaid Rent, $2,500.;B. debit Prepaid Rent, $2,500, credit Rent Expense, $2,500.;C. debit Rent Expense, $2,500, credit Prepaid Rent, $2,500.;D. debit Rent Expense, $15,000, credit Prepaid Rent, $12,500.;13) Use the following data to determine the total dollar amount of assets to be;classified as current assets.;Koonce Office Supplies;Balance Sheet;December 31, 2012;Cash $130,000 Accounts Payable $140,000;Prepaid Insurance 60,000 Salaries Payable 20,000;Accounts Receivable 100,000 Mortgage Payable 160,000;Inventory 140,000 Total Liabilities $320,000;Land held for Investment 150,000;Land 180,000;Buildings $200,000 Common Stock $240,000;Less Accumulated Retained Earnings 500,000;Depreciation (40,000) 160,000 Total Stockholders? Equity $740,000;Trademarks 140,000 Total Liabilities and;Total Assets $1,060,000 Stockholders? Equity $1,060,000;A. $580,000.;B. $430,000.;C. $360,000.;D. $290,000.;14) Use the following data to calculate the current ratio.;Koonce Office Supplies;Balance Sheet;December 31, 2012;Cash $130,000 Accounts Payable $140,000;Prepaid Insurance 60,000 Salaries Payable 20,000;Accounts Receivable 100,000 Mortgage Payable 160,000;Inventory 140,000 Total Liabilities $320,000;Land held for Investment 150,000;Land 180,000;Buildings $200,000 Common Stock $240,000;Less Accumulated Retained Earnings 500,000;Depreciation (40,000) 160,000 Total Stockholders? Equity $740,000;Trademarks 140,000 Total Liabilities and;Total Assets $1,060,000 Stockholders? Equity $1,060,000;A. 1.81: 1.;B. 1.44: 1.;C. 3.07: 1.;D. 2.69: 1.;15) In horizontal analysis, each item is expressed as a percentage of the;A. net income amount.;B. stockholders? equity amount.;C. total assets amount.;D. base-year amount.;16) When a change in depreciation method occurs;A. method.;B. the change should be reported in current and future years.;C. the beginning of the next year.;D. extraordinary item on the income statement.;17) Which of the following statements is true with respect to financial statement;reporting for all cases when a company changes from one acceptable accounting;method to another?;A. Comparability across periods is impaired.;B. Only a footnote is required to report the change.;C. retroactively.;D. old method.;18) Which of the following would be considered a change in accounting principle?;A. Changing the estimated percentage used in calculating bad debt expense.;B. Changing the inventory costing method used from FIFO to LIFO.;C. Changing the estimated useful life of a plant asset from 5 to 10 years;D. Changing auditing firms to find a more liberal opinion.;19) From an internal control standpoint, the asset most susceptible to improper;diversion and use is;A. prepaid insurance.;B. cash.;C. buildings.;D. land.;20) 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.;21) The reconciliation of the cash register tape with the cash in the register is an;example of;A. other controls.;B. independent internal verification.;C. establishment of responsibility.;D. segregation of duties.;22) Deposits in transit;A. have been recorded on the company?s books but not yet by the bank.;B. have been recorded by the bank but not yet by the company.;C. have not been recorded by the bank or the company.;D. are customers? checks that have not yet been received by the company;23) Which of the following items on a bank reconciliation would require an adjusting;entry on the company?s books?;A. An error by the bank.;B. Outstanding checks.;C. A bank service charge.;D. A deposit in transit;24) Notification by the bank that a deposited customer check was returned NSF;requires that the company make the following adjusting entry;A. Accounts Receivable/Cash;B. Cash/Accounts Receivable;C. Miscellaneous Expense/Accounts Receivable;D. No adjusting entry is necessary.;25) Why do pension and mutual funds invest in debt and equity securities?;A. They have excess cash.;B. They want to generate earnings from investment income.;C. They invest for strategic reasons.;D. They invest for speculative reasons;26) Which of the following is a debt security?;A. IBM stock.;B. Treasury stock.;C. Treasury bills.;D. Real Estate.;27) Reed Company acquires 80 Holmes 10%, 5 year, $1,000 bonds on January 1;2012 for $82,000. This includes a brokerage commission of $2,000. The journal entry;to record this investment includes a debit to;A. Debt Investments for $80,000.;B. Debt Investments for $82,000.;C. Cash for $82,000.;D. Stock Investments for $80,000.;28) Reed Company acquires 80 Holmes 10%, 5 year, $1,000 bonds on January 1;2012 for $82,000. This includes a brokerage commission of $2,000. Assume Holmes;pays interest semiannually and the July 1 entry was done correctly. The journal;entry at December 31, 2012 would include a credit to;A. Interest Receivable for $4,000.;B. Interest Revenue for $8,000.;C. Accrued Expense for $8,000.;D. Interest Revenue for $4,000.;29) A company that owns more than 50% of the common stock of another company;is known as the;A. charge company.;B. subsidiary company.;C. parent company.;D. management company;30) If a parent company has two wholly owned subsidiaries, how many legal and;economic entities are there from the viewpoint of the shareholders of the parent;company?;A. Legal 3 Economic 3;B. Legal 1 Economic 2;C. Legal 3 Economic 1;D. Legal 2 Economic 1

 

Paper#74374 | Written in 18-Jul-2015

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