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20 Multiple Choice Accounting Questions

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1. Cummings is a construction company and uses the percentage of completion method. In 2013 they signed a contract to complete a job for $2,000,000. The estimated costs to complete were $1,800,000. At the end of 2013, costs of $540,000 were incurred and the estimated costs to complete are $1,260,000. In 2014 additional costs of $940,000 were incurred and costs to complete were $370,000. How much profit is shown in 2013 and in 2014?;a) $60,000 in 2013, $100,000 in 2014;b) $60,000 in 2013, $60,000 in 2014;c) $0 in 2013 and $0 in 2014;d) $60,000 in 2013 and $47,633;2. Jordan also uses the percentage of completion method. In 2013, they enter into a contract with a sales price of $900,000. The estimated costs are $840,000. In 2013, they incur costs of $435,000 and additional costs of $435,000 are anticipated. In 2014, costs of $301,000 and additional costs are estimated at $184,000. What profit is shown in 2013 and 2014?;a) $15,000 and $20,000 loss;b) $15,000 and $35,000 loss;c) $15,000 and $31,000 loss;d) $15,000 and no profit or loss;3. In 2014, Cummings shows Partial Billings of $360,000 and CIP of $420,000. How would this be shown on the balance sheet?;a) As a current asset of $420,000 and a current liability of $360,000;b) Netted in the current asset section with CIP minus Partial Billings;c) Netted in the current liability section with Partial Billings minus CIP;d) $420,000 in Plant & Equipment and $360,000 in current liability section;4. Olsen sells merchandise on the installment basis and uses the installment basis. Sales in 2012 totaled $100,000, in 2013 they were $120,000 and in 2014 $150,000. The cost of installment sales was $70,000 in 2012, $90,000 in 2013, and $96,000 in 2014. Collections in 2014 were: $30,000 from 2012, $50,000 from 2013 and $60,000 from 2014. How much profit would be reported in 2014 using the installment sales method?;a) $38,100;b) $54,000;c) $35,800;d) $42,000;5. Refer to question 4. Merchandise from 2013 was repossessed in 2014. The original cost was $1,500 and thus far $900 has been collected. The merchandise is worth $500. What effect will this transaction have on income in 2014?;a) A loss of $600;b) A loss of $100;c) A gain of $500;d) A gain of $50;6. A company is preparing a cash flow statement and is using the indirect method for finding cash from operations. One of the transactions involves the sale of surplus equipment that cost $22,000, had accumulated depreciation of $14,500 and was sold for $8,000. On the cash flow statement, how should this be shown?;a) As an $8,000 cash inflow from operations;b) As an $8,000 inflow from investing activities but the gain of $500 must be subtracted from net income to arrive at cash from operations;c) As a $7,500 cash inflow from Investing activities;d) As an $8,000 inflow from financing activities but the gain of $500 must be subtracted from net income to arrive at cash from operations;7. Morrow uses Dollar LIFO. Inventory at year end prices are as follow;2010 = $90,000. 2011 = $98,700. 2012 = $113,360. 2013 = $115,000. 2014 = $132,000. 2015 = $135,000;Price Indexes are: 2010 = 100. 2011 = 1.05. 2012 = 1.09 2013= 1.15 2014= 1.20 2015 = 1.25;What is the ending inventory for 2015 using dollar LIFO?;a) $117,540;b) $ 130,500;c) $121,540;d) $132,000;8. Izzo uses the direct method for reporting cash from operating activities. Credit sales for 2014 totaled $180,000. Accounts Receivable had a balance of $34,000 on 1-1-2014 and of $39,200 on 12-31-2014. How much cash was collected from customers in 2014?;a) $180,000;b) $185,200;c) $174,800;d) $219,200;9. Adams reports cost of goods sold on the income statement of $250,000. The beginning inventory was $36,000 and the ending was $31,000. Trade Accounts Payable were $22,000 on 1-1-2014 and $25,300 on 12-31-2014. How much cash was paid to suppliers in 2014?;a) $258,300;b) $241,700;c) $248,800;d) $251,700;10. Calvin shows insurance expense of $12,800 on their income statement. The Prepaid Insurance account had a balance of $5,200 on 1-1-2014 and on 12-31-2014 the balance was $6,000. How much cash was paid for insurance during 2014?;a) $12,800;b) $6,000;c) $12,000;d) $13,600;11. Salaries expense in 2014 was $174,000 and Salaries Payable totaled $3,200 on 1-1-2014 and $4,500 on 12-31-2014. How much was paid for salaries in 2014?;a) $174,000;b) $178,500;c) $175,300;d) $172,700;12. Which of the following inventory methods provides the same answer whether a company uses the periodic or perpetual inventory methods?;a) FIFO;b) LIFO;c) Average Cost;Use the following information to answer questions 13-15.;Korah purchased 80 bonds with a par value of $1,000 each and paying interest at 4% A.P.R. They were originally issued on 3-1-2008 and have a 20- year life and pay interest on 9-1 and 3-1. The bonds were sold at 97% and purchased on 11-1-2014.;13. Assume that the bonds were classified as held to maturity. How much interest income would be shown on 12-31-2014?;a) $533;b) $592;c) $472;d) $296;14. Assume the bonds are available for sale, how much interest income would be shown on 12-31-2014?;a) $533;b) $592;c) $472;d) $267;15. Again assume the bonds are available for sale. The market price of the bonds is 99%. What is the consequence of this?;a) An unrealized gain of $1,600 on the income statement;b) An unrealized gain of $1,600 on the comprehensive income statement;c) A realized gain of $1,600 on the income statement;d) No consequence;16. Where are unrealized gains and losses on available for sale securities closed at year- end?;a) To retained earnings;b) To an accumulated other comprehensive income or loss account in the owner?s equity section;c) To paid in capital;d) They are not closed;The following information is to be used to answer questions 17 and 18.;Marketable Equity Securities 12-31-2014 at cost = $45,000;Marketable Equity Securities 12-31-2014 at market value = $48,000;During 2015, securities that cost $5,000 were sold for $5,900.;Marketable Equity Securities 12-31-2015 at cost = $51,000;Marketable Equity Securities 12-31-2015 at market value = $50,000;17. The securities are classified as trading. What will be shown on the financial statements in 2014?;a) An unrealized gain on the income statement of $3,000 and in the current asset section Marketable Securities at cost of $45,000 plus a valuation account of $3,000.;b) An unrealized gain of $3,000 on the comprehensive income statement and in the current asset section Marketable Securities at cost of $45,000 plus a valuation account of $3,000;c) No gain or loss and marketable securities in the current asset section at cost of $45,000;d) A realized gain of $3,000 and in the current asset section Marketable Equity Securities at cost of $45,000 plus a valuation allowance of $3,000;18. What is reported in 2015 on the income statement and/or the comprehensive income statement assuming the stock is trading?;a) A realized gain of $900 on the income statement and a $1,000 loss on the income statement;b) A realized gain of $900 on the income statement and an unrealized loss of $1,000 on the comprehensive income statement;c) A $900 realized gain and a $4,000 unrealized loss all on the income statement;d) Only the $900 realized loss on the income statement;19. Meachem had a fire on 3-5-2014 that destroyed their entire inventory. The physical inventory last year showed $68,000 and from 1-1 until 3-5 there was another $190,000 of net purchases made. Sales during that period totaled $310,000 and the average gross profit % for the last several years had been 30%. What is the estimated loss due to the fire?;a) $41,000;b) $68,000;c) $34,000;d) None of the above;20. Evans made an installment sale on 2-1-2012 totaling $200,000. The merchandise cost $140,000. Ignore interest. Collections totaled $40,000 in 2012, $80,000 in 2013 and $30,000 in 2014. Using the cost recovery method, how much profit would be shown in 2012, 2013 and 2014?;a) $12,000, $24,000 and $9,000;b) $0, $0 and $10,000;c) $0, $0 and $3,000;d) $0, $0, and $0

 

Paper#81596 | Written in 18-Jul-2015

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