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DeVry Cincinnati ACCT 212 Midterm Exam




Multiple choice;When preparing a bank reconciliation, which of the following items should be added to the book balance?;EFT receipts;deposits in transit;collection items;both EFT receipts and collection items;Which of the following must be added to beginning Retained Earnings to compute ending Retained Earnings?;net income;expenses;dividends;all of these answers are correct;The use of the FIFO method increases taxable income;when prices are constant;when prices are declining;when prices are increasing;under all circumstances;A company mistakenly destroys a unit of inventory that originally cost $12. The company included the cost of the destroyed unit in cost of goods sold on the income statement, rather than recognizing it as a loss. This action is justifiable based on;the revenue concept;accounting conservatism;the materiality concept;none of the above answers. All of them are incorrect, according to GAAP, a separate loss must be recognized;When applying the lower-of-cost-or-market rule, market value generally refers to;fifo cost using the periodic method;lifo cost using the periodic method;current sales price of the inventory;current replacement cost;A company performed services for a customer on account. This transaction increased assets and _______.;decreased equity;increased liabilities;increased expenses;increased revenues;The two methods of estimating uncollectible receivables are the;aging-of-receivables method and direct write-off method;percent of sales method and the aging-of-receivables method;allowance method and the direct write-off method;percent of sales method and the direct write-off method;The use of the allowance method of accounting for bad debts is preferred over the direct write-off method because of the;matching principle;historical cost principle;revenue recognition principle;full disclosure principle;For which form of business ownership are the owners of a business legally distinct from the business?;Corporation;Partnership;Proprietorship;all of the above;A written promise to pay a specified amount of money at a particular future date is called a(n);maturity note;promissory note;account receivable;unearned revenue;If the interest is $5,000 on a 6%, 60 day note, what is the principal?;$500,000;$300,000;$5,000,000;not enough information to calculate;Which characteristic will NOT be found in an effective system of internal control?;competent, reliable, and ethical personnel;a combination of duties;a separation of duties;documents and records;An accountant recognizes the impact of a business event as it occurs and accounts for it appropriately under which basis of accounting?;Cash;Prepaid;Accrual;Deferred;The stable-monetary-unit concept of accounting;ensures that accounting records and statements are based on the most reliable data available;holds that the entity will remain in operation for the foreseeable future;maintains that each organization or section of an organization stands apart from other organizations and individuals;enables accountants to ignore the effect of inflation in the accounting records;In a bank reconciliation, a NSF check is;added to the bank balance;added to the book balance;deducted from the book balance;deducted from the bank balance;Problems;1.) Given the following data, calculate the gross profit using the average-cost method, if the selling price was $20 per unit.;Date, Item, Unit;1/1, Beginning inventory, 40 units at $12 per unit;3/5, Purchase of inventory, 18 units at $14 per unit;5/30, Purchase of inventory, 24 units at $18 per unit;12/31, Ending inventory, 20 unites;2.) Eckle Ltd. has the following unadjusted Trial Balance as of March 31, 2009;Account Debit Credit;Cash $600;Account Receivable $1,800;Inventory $3,000;Store Supplies $1,900;Prepaid Rent $1,500;Land $23,300;Building $50,000;Accumulated Depreciation?Building $7,500;Store Equipment $27,000;Accumulated Depreciation--Store Equipment $15,625;Accounts Payable $6,000;Notes Payable $2,500;Salaries Payable;Unearned Revenue $8,000;Common Stock $31,655;Retained Earnings $2,520;Retained Earnings $35,000;Rent Expense;Store Supplies Expense;Salaries Expense;Depreciation Expense--Building;Depreciation Expense--Store Equipment;Totals $108,000 $108,000;The following data is available from Shantrice Meadows, Controller for Eckle Ltd.;a. Store Supplies used for the period were $1,225.;b. The Building has been depreciated for three years, this Fiscal year is year 4.;c. The Store Equipment has been depreciated for 5 years, this Fiscal year is year 6.;d. Prepaid Rent is for six months purchased on January 1, 2009.;e. Forty percent of the Unearned Revenue has been earned.;f. There are 8 employees, each receiving a salary of $2,000 per week for a five-day (Monday through Friday) week. FYE ends on a Tuesday.;Prepare the appropriate Adjusting Journal entries.;Make sure your answer is in Journal Entry Form. List the Account Name and Debit or Credit. Remember all Journal Entries should balance.;3.) John Smith started a consulting business and completed the following transactions during January 2007. Journalize the transactions. Explanations are not required.;1. John incorporated the business, Consulting Inc., and invested $10,000 for common stock.;2. Paid $2,000 monthly rent for office space.;3. Purchased $3,000 of office equipment, paying cash.;4. Purchased $500 of office supplies on account.;5. Recorded $1,000 of revenue, receiving cash.;6. Recorded $1,500 of revenue on account and mailed invoices to the customers.;7. Paid utilities expense of $300.;8. Collected cash from a customer on account, $500.;Make sure your answer is in Journal Entry Form. List the Account Name and Debit or Credit. Remember all Journal Entries should balance.


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