Final Exam;ACC400;Please submit your answer to each of the following questions in an Excel spreadsheet numbered 1 through 40.;1. A traditional definition of internal control specifically includes all of the following features except;a. adherence to prescribed managerial policies.;b. promotion of operational efficiency.;c. reliability of accounting data.;d. insistence that employees not take earned vacations.;2. 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.;3. 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;4. The principle of establishing responsibility does not include;a. one person being responsible for one task.;b. authorization of transactions.;c. independent internal verification.;d. approval of transactions.;5. The control principle related to not having the same person authorize and pay for goods is known as;a. establishment of responsibility.;b. independent internal verification.;c. separation of duties.;d. rotation of duties.;6. Two individuals at a retail store work the same cash register. You evaluate this situation as;a. a violation of establishment of responsibility.;b. a violation of separation of duties.;c. supporting the establishment of responsibility.;d. supporting internal independent verification.;7. The receivable that is usually evidenced by a formal instrument of credit is a(n);a. trade receivable.;b. note receivable.;c. accounts receivable.;d. income tax receivable.;8. Which of the following receivables would not be classified as an "other receivable??;a. Advance to an employee;b. Refundable income tax;c. Notes receivable;d. Interest receivable;9. Notes or accounts receivables that result from sales transactions are often called;a. sales receivables.;b. non-trade receivables.;c. trade receivables.;d. merchandise receivables.;10. The term "receivables" refers to;a. amounts due from individuals or companies.;b. merchandise to be collected from individuals or companies.;c. cash to be paid to creditors.;d. cash to be paid to debtors.;11. Receivables are;a. One of the most liquid assets and thus are always considered current assets.;b. Claims that are expected to be collected in cash.;c. Shown on the Income Statement at cash realizable value.;d. Always the result of revenue recognition.;12. Non-trade receivables should be reported separately from trade receivables. Why is this statement either true or false?;a. It is true because trade receivables are current assets and non-trade receivables are long term.;b. It is false because all current receivables must be grouped together in one account.;c. It is true because non-trade receivables do no result from business operations and should not be included with accounts receivable.;d. It is false because management can decide how to report receivables.;13. Dee Elle is a corporation that sells breakfast cereal. Based on the accounts listed below, what are Dee Elle?s total trade receivables?;Income tax refund due $ 500;Advance due to the company from;the company president 300;3-month note due from Dee Elle?s main customer 2,000;Interest due this month on the above note 100;Due and unpaid from this months sales 3,000;Due and unpaid from last months sales 1,000;a. $4,000;b. $6,000;c. $5,000;d. $6,900;14. Which one of the following would be classified as an extraordinary item?;a. Expropriation of property by a foreign government;b. Losses attributed to a labor strike;c. Write-down of inventories;d. Gains or losses from sales of equipment;15. 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.;16. If an item meets one (but not both) of the criteria for an extraordinary item, it;a. only needs to be disclosed in the footnotes of the financial statements.;b. may be treated as sales revenue (if it is a gain) and as an operating expense (if it is a loss).;c. is reported as an "other revenue or gain" or "other expense and loss," net of tax.;d. is reported at its gross amount as an "other revenue or gain" or "other expense or loss.;17. The order of presentation of items that may appear on the income statement is;a. Extraordinary items, Discontinued operations, Income before income taxes.;b. Discontinued operations, Extraordinary items, Income before income taxes.;c. Income before income taxes, Discontinued operations, Extraordinary items.;d. Income before income taxes, Extraordinary items, Discontinued operations.;18. Which of the following items appears on the income statement before income before irregular items?;a. Other comprehensive income;b. Extraordinary items;c. Income tax expense;d. Discontinued operations;19. Which of the following items should be classified as an extraordinary item on an income statement?;a. Gain on the sale of property, plant or equipment;b. Loss due to expropriation of property by a foreign government;c. Loss due to discontinued operations;d. Excess of the selling price over the cost of treasury stock;20. When a company changes from one acceptable accounting method to another, the cumulative effect of the change is disclosed;a. in the retained earnings statement, as a correction to the opening balance.;b. as a footnote.;c. in the income statement, above income from continuing operations.;d. in the income statement, below income from continuing operations.;21. Liabilities are classified on the balance sheet as current or;a. deferred.;b. unearned.;c. long-term.;d. accrued.;22. Most companies pay current liabilities;a. out of current assets.;b. by issuing interest-bearing notes payable.;c. by issuing stock.;d. by creating long-term liabilities.;23. A current liability is a debt that can reasonably be expected to be paid;a. within one year, or the operating cycle, whichever is longer.;b. between 6 months and 18 months.;c. out of currently recognized revenues.;d. out of cash currently on hand.;24. Which of the following most likely would be classified as a current liability?;a. Dividends payable;b. Bonds payable in 5 years;c. Three-year notes payable;d. Mortgage payable as a single payment in 10 years;25. Failure to record a liability will probably;a. result in an overstated net income.;b. result in overstated total liabilities and owner?s equity.;c. have no effect on net income.;d. result in understated total assets.;26. Very often, failure to record a liability means failure to record a(n);a. revenue.;b. asset conversion.;c. footnote.;d. expense.;27. The term legal capital is a descriptive term for;a. stockholders? equity.;b. par value.;c. residual equity.;d. market value.;28. A corporation has the following account balances: Common Stock, $1 par value, $40,000, Paid-in Capital in Excess of Par Value, $1,800,000. Based on this information, the;a. legal capital is $1,840,000.;b. number of shares issued is 40,000.;c. number of shares outstanding is 1,840,000.;d. average price per share issued is $4.60.;29. The authorized stock of a corporation;a. only reflects the initial capital needs of the company.;b. is indicated in its by-laws.;c. is indicated in its charter.;d. must be recorded in a formal accounting entry.;30. The amount of stock that may be issued according to the corporation?s charter is referred to as the;a. authorized stock.;b. issued stock.;c. unissued stock.;d. outstanding stock.;31. If Morgan Company issues 2,000 shares of $5 par value common stock for $140,000, the account;a. Common Stock will be credited for $140,000.;b. Paid-in Capital in Excess of Par Value will be credited for $10,000.;c. Paid-in Capital in Excess of Par Value will be credited for $130,000.;d. Cash will be debited for $130,000.;= $140,000 ? (2,000 ? $5) = $130,000;32. New Corp. issues 1,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to;a. Common Stock $10,000 and Paid-in Capital in Excess of Stated Value $4,000.;b. Common Stock $14,000.;c. Common Stock $10,000 and Paid-in Capital in Excess of Par Value $4,000.;d. Common Stock $10,000 and Retained Earnings $4,000.
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