ACC 290 Final Exam-Latest

31 Jul ACC 290 Final Exam-Latest

Question 1

Jackson Company recorded the following cash transactions for the year:

Paid $135,000 for salaries.

Paid $60,000 to purchase office equipment.

Paid $15,000 for utilities.

Paid $6,000 in dividends.

Collected $245,000 from customers.

 

What was Jackson’s net cash provided by operating activities?

$89,000

 $95,000

$110,000

$35,000

 

Question 2

Which of the following describes the classification and normal balance of the Unearned Rent Revenue account?

Asset, debit

 Expense, debit

Liability, credit

Revenues, credit

Question 3

Posting

involves transferring all debits and credits on a journal page to the trial balance.

 is accomplished by examining ledger accounts and seeing which ones need updating.

 should be performed in account number order.

 accumulates the effects of journalized transactions in the individual accounts.

 

Question 4

The following is selected information from L Corporation for the fiscal year ending October 31, 2014.

Cash received from customers  $300,000

Revenue earned              390,000

Cash paid for expenses 170,000

Cash paid for computers on November 1, 2013 that will be used for 3 years          48,000

Expenses incurred including any depreciation     216,000

Proceeds from a bank loan, part of which was used to pay for the computers     100,000

Based on the accrual basis of accounting, what is L Corporation’s net income for the year ending October 31, 2014?

 $204,000

 $220,000

$174,000

 $158,000

 

 

Question 5

 

La More Company had the following transactions during 2013.

• Sales of $4,500 on account

• Collected $2,000 for services to be performed in 2014

• Paid $1,325 cash in salaries

• Purchased airline tickets for $250 in December for a trip to take place in 2014

 

What is La More’s 2013 net income using cash basis accounting?

 $4,925

 $675

$425

$5,175

 

Question 6

 Which one of the following is not a justification for adjusting entries?

Adjusting entries are necessary to bring the general ledger accounts in line with the budget.

 Adjusting entries are necessary to enable financial statements to be in conformity with GAAP.

 Adjusting entries are necessary to ensure that the revenue recognition principle is followed.

 Adjusting entries are necessary to ensure that the expense recognition principle is followed.

 

 

 

Question 7

 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 indi-cated only $1,000 on hand. The adjusting entry that should be made by the company on June 30 is:

debit Laundry Expense, $5,500; credit Laundry Supplies, $5,500.

 debit Laundry, $1,000; credit Laundry Supplies Expense, $1,000.

 debit Laundry Expense, $1,000; credit Laundry Supplies, $1,000.

 debit Laundry, $5,500; credit Laundry Supplies Expense, $5,500.

 

Question 8

Similarities between International Financial Reporting Standards (IFRS) and U.S. GAAP in-clude all of the following except

Cash-basis accounting is not in accordance with either IFRS or U.S. GAAP.

 Both IFRS and U.S. GAAP divide the economic life of companies into artificial time periods.

 The form and content of financial statements are very similar under IFRS and U.S. GAAP.

 Both IFRS and U.S. GAAP allow revaluation of items such as land and buildings to fair value.

 

Question 9

 Conway Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Conway Company pays within the discount period?

$8,280

 $9,000

 $8,820

 $8,100

 

Question 10

Stan’s Market recorded the following events involving a recent purchase of inventory:

     Received goods for $90,000, terms 2/10, n/30.

     Returned $1,800 of the shipment for credit.

     Paid $450 freight on the shipment.

     Paid the invoice within the discount period.

As a result of these events, the company’s inventory

increased by $88,650.

 increased by $86,886.

 increased by $86,877.

 increased by $86,436.

 

Question 11

Financial information is presented below:

                Operating expenses       $36,000

                Sales revenue   150,000

                Cost of goods sold           105,000

Gross profit would be

$45,000.

 $24,000.

 $114,000.

 $36,000.

 

Question 12

At December 31, 2014 Mohling Company’s inventory records indicated a balance of $602,000. Upon further investigation it was determined that this amount included the following:

▪ $112,000 in inventory purchases made by Mohling shipped from the seller 12/27/14 terms FOB destination, but not due to be received until January 2nd

▪ $74,000 in goods sold by Mohling with terms FOB destination on December 27th. The goods are not expected to reach their destination until January 6th

▪ $6,000 of goods received on consignment from Dollywood Company

What is Mohling’s correct ending inventory balance at December 31, 2014?

$410,000

 $490,000

 $484,000

 $596,000

 

 

 

 

 

 

 

 

 

 

 

Question 13

Olympus Climbers Company has the following inventory data:

 

July 1                     Beginning inventory                       20 units at $19                   $380

7                              Purchases                           70 units at $20                   1,400

22                           Purchases                           10 units at $22                   220

                                                                                                $2,000

A physical count of merchandise inventory on July 30 reveals that there are 32 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is

$1,380.

 $620.

 $660.

$1,340.

 

 

 

 

 

 

 

 

 

 

Question 14

Jenks Company developed the following information about its inventories in applying the lower of cost or market (LCM) basis in valuing inventories:

 

Product                                Cost                       Market

A                             $57,000                 $60,000

B                             40,000                   38,000

C                             80,000                   81,000

 

If Jenks applies the LCM basis, the value of the inventory reported on the balance sheet would be

$179,000.

 $175,000.

 $177,000.

 $181,000.

 

 

 

 

 

 

 

 

 

Question 15

Nilson Company gathered the following reconciling information in preparing its August bank reconciliation:

Cash balance per books, 8/31                     $21,000

Deposits in transit                            900

Notes receivable and interest collected by bank                                5,100

Bank charge for check printing                   120

Outstanding checks                        12,000

NSF check                           1,020

The adjusted cash balance per books on August 31 is

$24,960.

 $24,060.

 $14,760.

$13,800.

 

 Question 16

 Which of the following is not a basic principle of cash management?

Increase collection of receivables.

 Keep inventory levels low.

 Pay all liabilities early.

 Invest idle cash.

 

 

Question 17

Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment.

Eddy Auto Supplies

Balance Sheet

December 31, 2014

Cash                      $84,000                 Accounts payable            $110,000

Accounts receivable                       80,000                   Salaries and wages payable         20,000

Inventory                            140,000                 Mortgage payable           180,000

Prepaid insurance                            60,000                   Total liabilities    $310,000

Stock Investments                          170,000                                

Land                      190,000                                

Buildings              $226,000                                              Common stock  $240,000

Less: Accumulated depreciation                (40,000)                186,000                 Retained earnings           500,000

Trademarks                        140,000                       Total stockholders’ equity      $740,000

Total assets                        $1,050,000                                      Total liabilities and stockholders’ equity      $1,050,000

 

 

 

$516,000

$556,000

$376,000

$686,000

 

Question 18

Accounting information is relevant to business decisions because it

confirms prior expectations.

 has been verified by external audit.

 is prepared on an annual basis.

 is neutral in its representations.

 

Question 19

Howard Company had a transaction that caused a $5,000 increase in both assets and total liabilities. This transaction could have been a(n)

investment of $5,000 cash in the business by the stockholders.

 purchase of office equipment for $12,000, paying $7,000 cash and issuing a note payable for the balance.

 purchase of office equipment for $5,000 cash.

 repayment of a $5,000 bank loan.

 

 

 

 

 

 

 

Question 20

 Can financial statements be prepared directly from the adjusted trial balance?

Yes, adjusting entries have been recorded in the general journal and posted to the ledger accounts.

 No, the adjusted trial balance merely proves the equality of the total debit and total credit balances in the ledger after adjustments are posted. It has no other purpose.

 They can because that is the only reason that an adjusted trial balance is prepared.

 They cannot. The general ledger must be used.

 

Question 21

Which trial balance will consist of the greatest number of accounts?

All of these answer choices will contain the same number of accounts.

 Post-closing trial balance

Trial balance

Adjusted trial balance

 

Question 22

All of the following are required steps in the accounting cycle except:

preparing a post-closing trial balance.

preparing an adjusted trial balance.

preparing a work sheet.

journalizing and posting closing entries.

 

 

Question 23

 A sales discount does not

increase a contra revenue account.

 increase an operating expense account.

 reduce the amount of cash received from a credit sale.

provide the purchaser with a cash saving.

 

Question 24

American Importers reports net income of $50,000 and cost of goods sold of $450,000. If the company’s gross profit rate was 40%, net sales were

$1,125,000.

 $1,175,000.

 $825,000.

 $750,000.

 

Question 25

 The manager of Weiser is given a bonus based on net income before taxes. The net income after taxes is $35,700 for FIFO and $29,400 for LIFO. The tax rate is 30%. The bonus rate is 20%. How much higher is the manager’s bonus if FIFO is adopted instead of LIFO?

 $6,300

$9,000

$1,800

$12,600

 

Question 26

Classic Floors has the following inventory data:

 

July 1                     Beginning inventory                       15 units at $6.00

5                              Purchases                           60 units at $6.60

14                           Sale                        40 units

21                           Purchases                           30 units at $7.20

30                           Sale                        28 units

 

Assuming that a perpetual inventory system is used, what is the cost of goods sold on a LIFO basis for July?

$348.00

 $702.00

 $236.40

 $465.60

 

 

 

 

 

 

 

 

Question 27

 

Classic Floors has the following inventory data:

 

July 1                     Beginning inventory                       15 units at $6.00

5                              Purchases                           60 units at $6.60

14                           Sale                        40 units

21                           Purchases                           30 units at $7.20

30                           Sale                        28 units

 

Assuming that a perpetual inventory system is used, what is the value of ending inventory on a LIFO basis for July?

$236.40

 $465.60

 $702.00

 $354.00

 

Question 28

Which of the following is not one of the main factors that contribute to fraudulent activity?

Opportunity.

Rationalization.

Incompatible duties.

Financial pressure.

 

Question 29

What is the rationale for the internal control principle, segregation of duties?

The work of one employee should, without duplication of effort, provide a reliable basis for evaluating the work of another employee.

 History has shown that employees are generally dishonest and thus cannot be entrusted with performing related duties.

 Control is most effective when only one person is responsible for a give task.

 Segregation of duties causes companies to hire more employees and thus it supports the economy.

 

Question 30         

Under IFRS

comparative prior-period information is not required, but financial statements must be provided annually.

comparative prior-period information must be presented, but financial statements need not be provided annually.

 comparative prior-period information must be presented, and financial statements must be provided annually.

 comparative prior-period information is not required, but financial statements need not be provided annually.