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ACCT 284 AD Clem fionaguo Old Exam Packet




;;Old Exam Packet ? Acct 284 Fall 2009;Exam 1 ? Fall 2008;Investing activities;a. involve day to day events like selling goods and services, which occur when running a business.;b. involve the buying or selling of land, buildings, equipment, and other longer-term investments.;c. only involve financial exchanges.;d. All of these.;Accumulated depreciation;a. is an expense account.;b. is a liability account.;c. is a regular asset account.;d. is an asset contra-account.;At the end of last year, the company's assets totaled $860,000 and its liabilities totaled $740,000. During the current year, the company's total assets increased by $58,000 and its total liabilities increased by $24,000. At the end of the current year, stockholders' equity was;a. $154,000.;b. $120,000.;c. $34,000.;d. $178,000.;In the U.S., generally accepted accounting principles are established;a. directly by the 1933 Securities Act.;b. by the Public Company Accounting Oversight Board.;c. by the Financial Accounting Standards Board.;d. by the Association of Certified Public Accountants.;On March 1, 2006, the premium on a two-year insurance policy on equipment was paid amounting to $1,800. At the end of 2006 (end of the accounting period), the financial statements for 2006, would report;a. Insurance expense, $750, Prepaid insurance $1,050.;b. Insurance expense, $900, Prepaid insurance $900.;c. Insurance expense, $1,800, Prepaid insurance $0.;d. Insurance expense, $0, Prepaid insurance $1,800.;Which of the following would be listed as a current liability?;a. Cash in the bank.;b. Notes payable due in two years.;c. Supplies.;d. Accounts payable.;Which of the following describes the classification and normal balance of the retained earnings account?;a. Asset, debit;b. Stockholders' equity, credit;c. Liability, credit;d. Stockholders' equity, debit;1. A company buys equipment for $500,000 and signs a promissory note for the full amount. How does this transaction affect the accounting equation?;a. Assets: ? Property and equipment, ? Cash, Liabilities: no change, Stockholders' Equity: no change.;b. Assets: ? Property and equipment, Liabilities: ? Notes payable, Stockholders' Equity, no change.;c. Assets: ? Property and equipment, Liabilities: no change, Stockholders' Equity: ? Retained earnings.;d. Assets: ? Property and equipment, Liabilities: no change, Stockholders' Equity: ? Contributed capital.;At the end of the month, the adjusting journal entry to record the use of supplies would include;a. An increase to supplies and an increase to expenses.;b. A decrease to supplies and an increase to expenses.;c. An increase to supplies and an increase to revenue.;d. A decrease to supplies and a decrease to cash.;2. According to the principle of conservatism, when faced with uncertainty about the value of an item, a company should use the measure that avoids;a. overstating assets and liabilities.;b. overstating assets and understating liabilities.;c. understating assets and overstating liabilities.;d. understating assets and liabilities.;Which of the following is not considered to be a liability?;a. accounts payable;b. unearned revenue;c. wages payable;d. cost of goods sold;Cy?s Bar and Grill has $10,000 in utilities expense during the year. At the beginning of the year, Cy?s had utilities payable amounting to $520. At the end of the year, utilities payable totaled $470. What amount of cash did Cy?s pay for utilities during the year? (Hint: use a T-account of utilities payable);a. $9,950;b. $10,000;c. $10,050;d. $10,990;During 2007, Sensa Corporation incurred operating expenses amounting to $100,000 of which $75,000 was paid in cash, the balance will be paid in January 2008. Transaction analysis of operating expenses for 2007, should reflect only the following;a. decrease stockholders' equity, $75,000, decrease assets, $75,000.;b. decrease assets, $100,000, decrease stockholders' equity, $100,000.;c. decrease assets, $100,000, increase liabilities, $25,000, decrease stockholders' equity, $100,000.;d. decrease stockholders' equity, $100,000, decrease assets, $75,000, increase liabilities, $25,000.;The primary objective of financial reporting is to;a. provide accurate historical information.;b. provide useful information to external decision makers.;c. provide operating information to managers.;d. meet legal requirements.;Adjusting entries;a. always affect one balance sheet account and one income statement account.;b. never involve cash.;c. are necessary to get revenues and expenses into the proper time periods.;d. all of the above.;Primary responsibility for the information in a corporation's financial statements rests with;a. the shareholders of the corporation.;b. the managers of the corporation.;c. the Securities and Exchange Commission.;d. the certified public accountant who audited the financial statements.;Failure to make an adjusting entry to recognize accrued salaries payable would cause an;a. understatement of expenses and liabilities and an overstatement of stockholders;equity.;b. overstatement of expenses and liabilities.;c. understatement of expenses, liabilities and stockholders' equity.;d. understatement of assets and stockholders' equity.;One of the disadvantages of a corporation when compared to a partnership is that;a. the stockholders have limited liability.;b. the stockholders are treated as a separate legal entity from the corporation.;c. the corporation and its stockholders are subject to double taxation of dividends.;d. the corporation provides continuity of life.;Brown Corporation reported the following amounts at the end of the first year of operations: contributed capital $20,000, total revenue $95,000, total assets $85,000, no dividends, and total liabilities $35,000. Stockholders? equity and total expenses would be;Stockholders? equity Total expenses;a. $60,000 $75,000;b. $80,000 $40,000;c. $50,000 $65,000;d. $70,000 $85,000;Which of the following characteristics of accounting allows users to examine the financial results of one company over an extended period of time?;a. relevance;b. reliability;c. comparability;d. consistency;Exam 2 ? Fall 2008;1. Cyclone Corporation reports the following on its most recent income statement;Cost of goods sold??..$800,000;Operating expenses?? 150,000;Pretax income????. 250,000;Assuming there are no ?other revenues and expenses? and that the company faces a 30% tax rate, what is the amount of net sales and net income reported for the year?;Net Sales Net Income;A. $1,200,000 $175,000;B. $ 950,000 $550,000;C. $1,150,000 $350,000;D. $1,050,000 $ 75,000;2. Maxell Company uses the periodic FIFO method to assign costs to inventory and cost of goods sold. Given the following information, what would be reported as the cost of goods sold and ending inventory balances for the period?;Date;Transaction;# of units;Cost per unit;January 1;Beg balance;100;$5;January 2;Purchase;75;$4;January 5;Sale;75;January 6;Sale;50;COGS Ending Inventory;A. $625 $175;B. $575 $225;C. $550 $250;D. $600 $200;3. The group that uses accounting information to evaluate companies' past performance, predict future results, and make recommendations about the companies to current and potential investors is known as;A. auditors.;B. managers.;C. creditors.;D. analysts.;4. A company has an asset turnover ratio of 1.15. Which of the following statements is true? (Hint: Asset turnover = Net sales ? Average total assets);A. The company generates $1.15 of net income for every $1 in reported assets.;B. The company buys assets more frequently than it sells them.;C. The company generates $1.15 of sales revenue for every $1 in reported assets.;D. This is an improvement over the previous period when the asset turnover rate was 1.7.;5. The Tuck Shop began the current month with inventory costing $10,000, then purchased inventory at a cost of $35,000. The perpetual inventory system indicates that inventory costing $30,000 was sold during the month for $40,000. If an inventory count shows that inventory costing $14,500 is actually on hand at month-end, what amount of shrinkage occurred during the month?;A. $500.;B. $5,000.;C. $14,495.;D. $15,000.;6. The name for comparing across companies that compete in the same section of an industry at the same point in time is;A. ratio analysis;B. cross-sectional analysis;C. time-series analysis;D. financial analysis;7. The conditions required for an employee to commit fraud include all of the following EXCEPT;A. opportunity;B. lack of character;C. job security;D. incentive;8. Which of the following statements is false?;A. A perpetual inventory system can detect inventory shrinkage.;B. A perpetual inventory system updates the inventory account for each purchase and sale.;C. A perpetual inventory system uses a purchases account.;D. A periodic inventory system uses the physical count of inventory to infer cost of goods sold.;9. A company files a Form 10-K with the SEC to submit its;A. quarterly report.;B. annual report.;C. press releases.;D. report of current events of financial importance.;10.If costs are rising, which of the following will be true?;A. Cost of goods sold will be smaller if LIFO is used rather than FIFO.;B. Ending inventory will be smaller if LIFO is used rather than FIFO.;C. Net income will be greater if LIFO is used rather than FIFO.;D. Tax expense will be greater if LIFO is used rather than FIFO.;11.Before reconciling to its bank statement, Lauren Cosmetics Corporation's general ledger had a month-end balance in the cash account of $5,250. The bank reconciliation for the month contained the following items;Deposits in transit;$750


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