ACCT 212

					                DeVry University – Houston
                Financial Accounting 212 K
                        Final Exam
                        August 26, 2008
                Professor: Michael A. Abner, MBA, MS, JD
Student Name Aisha Thomas ID D03122219
1.3-13 The accounting equation can be stated as:

        A. Assets + Stockholders’ Equity = Liabilities

        B. Assets - Liabilities = Stockholders’ Equity    My Answer

        C. Assets = Liabilities - Stockholders’ Equity

        D. Assets - Stockholders’ Equity + Liabilities = Zero

1.3-14 Which of the following best describes a liability? Liabilities are:

        A. a form of paid-in capital.

        B. future economic benefits to which a company is entitled.

        C. payables of the corporation. My Answer

        D. economic obligations to owners to be paid at some future date by the corporation.

1.3-15 The owners’ interest in the assets of a corporation is known as:

        A. common stock.

        B. stockholders’ equity. My Answer

        C. long-term assets.

        D. operating expenses.
1.3-16 Claims held by the stockholders of a corporation are also known as:

        A. retained earnings.

        B. paid-in capital.

        C. paid-in capital plus retained earnings. My Answer

        D. net income.

1.3-17 Payables are classified as:

        A. increases in earnings.

        B. decreases in earnings.

        C. liabilities. My Answer

        D. assets.

1.3-18 Receivables are classified as:

        A. increases in earnings.

        B. decreases in earnings.

        C. liabilities.

        D. assets. My Answer

1.3-19 The sum of "outsider claims" plus "insider claims" equals:

        A. net income.

        B. total liabilities.

        C. total assets. My Answer

        D. total stockholders’ equity.

1.3-20 Revenues are:

        A. decreases in assets resulting from delivering goods or services to customers.

        B. increases in liabilities resulting from delivering goods or services to customers.

        C. increases in retained earnings resulting from delivering goods or services to
        customers. My Answer
        D. decreases in retained earnings resulting from delivering goods or services to
        customers.

1.3-21 How do revenues for a period relate to the beginning and ending balances in retained
earnings?

        A. Revenues will increase the beginning balance of retained earnings for the period.

        B. Revenues will increase the ending balance of retained earnings for the period. My
        Answer

        C. Revenues less expenses will either increase or decrease the beginning balance of
           retained earnings for the period.

        D. None of these answers are correct.

1.3-22 Expenses are:

        A. increases in liabilities resulting from purchasing assets.

        B. increases in assets resulting from operations.

        C. increases in retained earnings resulting from operations.

        D. decreases in retained earnings resulting from operations. My Answer

1.3-23 Dividends:

        A. are expenses.

        B. always affect net income.

        C. are distributions to stockholders of assets (usually cash) generated by net income. My
        Answer

        D. are distributions to stockholders of assets (usually cash) generated by a favorable
           balance in retained earnings.

1.3-24 A corporation’s paid-in capital consists of

        A. revenues and expenses.

        B. assets and liabilities.

        C. common stock and retained earnings. My Answer

        D. net income and dividends.
1.3-25 Net income is computed as:

        A. revenues – expenses – dividends.

        B. revenues + expenses.

        C. revenues – expenses. My Answer

        D. revenues – expenses + dividends.

1.3-26 Which of the following must be added to beginning Retained Earnings to compute ending
Retained      Earnings?

        A. Net income My Answer

        B. Expenses

        C. Dividends

        D. All of these answers are correct.

1.3-27 At the end of the current accounting period, account balances were as follows: Cash,
$180,000; Accounts       Receivable, $75,000; Common Stock, $20,000; Retained Earnings,
$65,000. Liabilities for the period    were:

        A. $ 70,000.

        B. $170,000. My Answer

        C. $190,000.

        D. $210,000.

2.3-19 The entry to record the purchase of supplies on account would include a debit to:

        A. Supplies. My Answer

        B. Accounts Payable.

        C. Supplies Expense.

        D. Retained Earnings.

2.3-20 The entry to record the payment of salaries to employees would include a:

        A. credit to Salary Expense.

        B. debit to Accounts Payable.
        C. debit to Salary Expense. My Answer

        D. debit to Accounts Receivable.

2.3-21 The journal entry to record performing a service on account would include a debit to:

        A. Cash.

        B. Service Revenue Expense.

        C. Accounts Receivable. My Answer

        D. Retained Earnings.

2.3-22 The payment for rent of the office building for one month would include a:

        A. debit to Cash.

        B. debit to Prepaid Rent.

        C. debit to Rent Expense. My Answer

        D. credit to Revenue.

2.3-23 The purchase of office furniture for cash would include a debit to:

        A. Accounts Payable.

        B. Office Furniture.

        C. Office Furniture Expense.

        D. Cash. My Answer

2.3-24 An owner makes an investment of cash into the business. This transaction would include
a:

        A. debit to Common Stock and a credit to Common Stock.

        B. debit to Cash and a credit to Common Stock. My Answer

        C. debit to Retained Earnings and a credit to Cash.

        D. debit to Common Stock and a credit to Retained Earnings.

2.3-25 A stockholder’s investment of land and a building into the business would include a debit
to:

        A. Land and a credit to Common Stock. My Answer
       B. Land and a credit to Building.

       C. Common Stock and a credit to Building.

       D. Building and a credit to Retained Earnings.

3.2-10 A company using the accrual basis of accounting pays $15,000 for a television
advertising campaign. Commercials will run evenly in December, January, and February. How
much expense will be reported on an income statement prepared for the month of December?

       A. $0

       B. $5,000 My Answer

       C. $10,000

       D. $15,000

3.2-11 The revenue principle governs two things:

       A. when to record a revenue and where to record this revenue.

       B. where to record a revenue and the amount of revenue to record.

       C. when to record revenue and the amount of revenue to record. My Answer

       D. to record the amount to be received and in which journal to record this amount.

3.2-12 Thompson Company executives are planning a $5 million advertising campaign. The
expense of this advertising campaign should be recognized when:

       A. planning for the campaign is complete.

       B. cash is paid to the television stations which will run the commercials. My Answer

       C. commercials are filmed.

       D. commercials are broadcast.

3.2-13 The revenue principle requires that a business record revenue when the business:

       A. receives an order from a customer.

       B. prepares the invoice (bill) for the customer.

       C. delivers goods or services to a customer. My Answer

       D. receives payment from a customer.
3.2-14 On July 25, Hamilton Bey Company’s accountant prepared a check for August’s rent
payment. Hamilton Bey Company mails the check on July 27 to the landlord. The landlord
receives the check July 31 and cashes the check on August 02. When should Hamilton Bey
Company record the rent expense associated    with this transaction?

       A. July 25

       B. July 27

       C. August 30 My Answer

       D. August 02

4.2-11 When preparing a bank reconciliation, which of the following items should be subtracted
from the bank balance?

       A. Deposits in transit

       B. Bank service charges

       C. EFT cash receipts

       D. Outstanding checks My Answer

4.2-12 When preparing a bank reconciliation, which of the following items should be added to
the book balance?

       A. EFT receipts

       B. Deposits in transit My Answer

       C. Collection items

       D. Both EFT receipts and collection items

4.2-13 The checks that have been paid by the bank on behalf of the depositor, which are
included with the bank statement, are called:

       A. outstanding checks.

       B. canceled checks. My Answer

       C. checks in transit.

       D. NSF checks.
4.2-14 Differences between the amount of cash reported on a company’s bank statement and the
balance in the company’s Cash account before the bank reconciliation are primarily due to:

       A. errors in the accounting process by the company.

       B. errors made by the bank.

       C. differences between the cash basis and accrual basis of accounting.

       D. timing difference in recording transactions. My Answer

4.2-15 Many businesses have their customers pay directly to a special post office box. This
       system is known as a(n):

       A. EFT system.

       B. lock-box system. My Answer

       C. imprest system.

       D. bank account reconciliation system.

4.2-16 Which of the following items will cause a difference between the book balance and the
bank balance?

       A. Deposits in timing

       B. Bank collections My Answer

       C. Canceled checks

       D. Outstanding voided checks

4.2-17 A bank charge of $40 for imprinting checks would appear on the bank reconciliation as
       a(n) ________ to or from the ___________ balance.

       A. addition; bank

       B. deduction; bank

       C. addition; book

       D. deduction; book My Answer

4.2-18 Herbert Company deposited $25,000 in its bank on the same day as—but after—the bank
       prepared Herbert Company’s bank statement. The deposit should appear on the bank
       reconciliation as a(n) _________ and is called a(n) __________.

       A. addition to the bank balance; outstanding deposit
        B. addition to the bank balance; deposit in transit My Answer

        C. deduction to the bank balance; deposit in transit

        D. The deposit would not appear on the bank reconciliation.

4.2-19 Checks written by a company, but not yet paid by the bank, appear on the bank
reconciliation as______     and are called _______.

        A. deductions from the bank balance; checks in transit

        B. deductions from the bank balance; outstanding checks My Answer

        C. an addition from the bank balance; checks in transit

        D. These checks would not appear on the bank reconciliation.

4.2-20 In a bank reconciliation, a NSF check is:

        A. added to the bank balance.

        B. added to the book balance.

        C. deducted from the book balance. My Answer

        D. deducted from the bank balance.

4.2-21 In a bank reconciliation, an EFT cash receipt is:E4-18

        A. added to the bank balance.

        B. added to the book balance. My Answer

        C. deducted from the book balance.

        D. deducted from the bank balance.

5.3-27 Under the allowance method, the entry to write off a $2,600 uncollectible account
includes a:

        A. debit to Accounts Receivable for $2,600.

        B. credit to Uncollectible-Account Expense for $2,600.

        C. credit to Allowance for Uncollectible Accounts for $2,600. My Answer

        D. debit to Allowance for Uncollectible Accounts for $2,600.

5.3-28 Under the direct write-off method, the entry to write off an uncollectible account of
$3,400 includes a:
        A. debit to Accounts Receivable for $3,400.

        B. credit to Uncollectible-Account Expense for $3,400.

        C. debit to Uncollectible-Account Expense for $3,400.

        D. debit to Allowance for Uncollectible Accounts for $3,400. My Answer

5.2-5 Notes receivable that are paid in installments are classified ___________ on the balance
sheet.

        A. always as current assets

        B. always as long-term assets

        C. as current assets if the final payment will be made in the current period

        D. as a current asset if the amount is to be collected in the current period, and the
           remainder is a long-term asset My Answer

5.2-6 On December 31, 2007, installment notes receivable totaled $54,000. Of this amount
$40,000 will be collected in 2008. The remainder will be collected in 2009. How should these
notes be classified on the      balance sheet?

        A. Current assets are $40,000 and long-term assets are $14,000. My Answer

        B. Current assets are $54,000 and long-term assets are $0.

        C. Current assets are $0 and long-term assets are $54,000.

        D. Current assets are $40,000 and long-term assets are $54,000.

5.2-7 One method of establishing proper internal control over collections of accounts
receivable is to:

        A. set up a petty cash fund.

        B. make all disbursements by cash.

        C. establish a bank lock box.

        D. designate an authorized check signer. My Answer

5.2-8   Under a lockbox system, customers’ payments are initially received by the company’s:

        A. accounts receivable department.

        B. mail room clerk.

        C. receiving department.
        D. bank. My Answer

6.1-15 A perpetual inventory system offers which of the following advantages?

        A. Inventory balances have to be counted to be accurate.

        B. This system is used for inexpensive goods.

        C. This system is more expensive than a periodic system.

        D. This system helps to determine if there is a sufficient supply of inventory on hand to
            fill customer orders, just by reviewing the inventory records. My Answer

6.1-16 How do purchase returns and allowances and purchase discounts affect net purchases?

        A. Both are added to purchases.

        B. Both are subtracted from purchases. My Answer

        C. Purchase returns and allowances are added to purchases; purchase discounts are
           subtracted from purchases.

        D. Purchase returns and allowances are subtracted from purchases; purchase discounts
           are added to purchases.

6.1-17 Exter Co. receives terms of 2/10, n/30 on all invoices from Garn Industries. On January
15, 2008, Exter purchased items from Garn for $4,200, excluding taxes and shipping costs. What
amount would Exter     use as the purchase discount if the invoice was paid on January 28, 2008?

        A. $     0

        B. $    84 My Answer

        C. $4,116

        D. $4,200

6.1-18 Deciding on which inventory method a company should use affects:

        A. the profits to be reported.

        B. the income taxes to be paid. My Answer

        C. the values of ratios reported from the balance sheet.

        D. all of the above.
6.1-19 What is the formula used calculate net purchases?

       A. Purchases less Purchase Returns and Allowances plus Purchase Discounts

       B. Purchases plus Purchase Returns and Allowances less Purchase Discounts

       C. Purchases less Purchase Returns and Allowances less Purchase Discounts My
           Answer

       D. Beginning Inventory less Purchases

6.1-28 A company purchased merchandise inventory on credit for $600 per unit, and later sold
the inventory for    $800 per unit. The journal entry to record the purchase of inventory
included a debit to:

       A. Accounts Receivable.

       B. Inventory. My Answer

       C. Accounts Payable.

       D. Cost of Goods Sold.

6.1-29 Bonz, Inc. is using a perpetual inventory system with a December 31 year end date. The
balance in this company’s inventory account as of September 30 would be equal to:

       A. beginning inventory as of January 01.

       B. beginning inventory as of January 01 plus all purchases from the beginning of the
          year through September 30 less all items sold from the beginning of the year through
          September 30.

       C. beginning inventory as of January 01 plus all purchases from the beginning of the
          year through September 30.

       D. all purchases from the beginning of the year through September 30. My Answer

       True / False
       7.1-1 The cost of any plant asset is the sum of all the costs incurred to bring the asset to
       its intended use. T

       7.1-2   The cost of land may include the cost to remove an unwanted building. T

       7.1-3 Of the plant assets, buildings are depreciated because these are long-term
       tangible assets. T
7.1-4    Land improvements are not subject to depreciation, as these items are subject to decay. F

7.1-5    Costs of land improvements are included in the Land account T

7.1-6 Any cost to get machinery up and running should be part of the cost of the asset
and depreciated. F


7.1-7 The cost of leasehold improvements should be expensed immediately, as this is not a
capital asset. F

7.1-8 The cost of assets purchased together in a lump sum should be allocated using the cost
paid for each of the assets. F

8.1-17     Which of the following are understated as a result of the failure to record an accrued
liability?

            A. Net income, current ratio, and rate of return on debt

            B. Current ratio, acid-test ratio, and rate of return on debt My Answer

            C. Net income, acid-test ratio, and rate of return on debt

            D. Net income, current ratio, and acid test ratio


8.1-18      Warranty expense should be recorded in the period:

            A. the product is paid for by the customer.

            B. immediately following the period in which the product is sold.

            C. the product sold is repaired or replaced.

            D. the product is sold. My Answer


 8.1-19    Monthly sales were $150,000. Warranty costs are estimated at 5% of monthly sales.
 In the month of sale, the company should record a debit to:

            A. Warranty Payable for $7,500.

            B. Warranty Expense for $7,500. My Answer

            C. Sales for $7,500.

            D. none of the accounts. No entry is required since the actual liability amount is not
 known.
8.1-30      Davis Company's sales for March 19 were $31,900. Davis is required to collect a 7%
state sales tax. The total cash received from customers was:

          A. $2,233.

          B. $21,289.

          C. $31,223.

          D. $34,133. My Answer


8.1-31    The Salary Expense account is debited for:

          A. payroll tax liabilities only.

          B. gross pay only. My Answer

          C. gross pay plus employee payroll liabilities.

          D. gross pay minus employee payroll liabilities.


8.1-32    Which of the following accounts represents a deferred revenue?

             i. Interest Revenue
             ii. Income Tax Payable
             iii. Unearned Subscription Revenue

          A. i only

          B. ii only

          C. iii only My Answer

          D. both ii and iii


8.1-33     Computing Magazine receives $100 in advance from a customer for a 2 year
subscription. Computing Magazine's entry to record this transaction would include a:

          A. debit to Subscription Revenue for $100.

          B. credit to Subscription Revenue for $100.

          C. debit to Unearned Subscription Revenue for $100.

          D. credit to Unearned Subscription Revenue for $100. My Answer
8.1-34       Kosovo Company has $45 million in long-term debt, payable in annual installments
of $15 million.        How much of the debt should be reported as current and as long-term
liabilities?

            Current Liabilities   Long-Term Liabilities

            A. $0                    $45 million

            B. $7.5 million           $40 million

            C. $15 million            $30 million My Answer

            D. $45 million            $0


9.1-16 Shareholder rights may include:

       A.       right to a proportionate share of dividends.

       B.       right to vote for managers of the corporation.

       C.       right to proportionate share of assets in the event of a liquidation.

       D.       all of the above. My Answer

9.1-17 Limited liability of a corporation means that:

       A.       shareholders are not responsible for the decisions of management.

       B.       the corporation is not required to earn net income.

       C.       the corporation is not required to pay dividends.

       D.     a shareholders' potential loss is limited to their investment in the corporation. My
       Answer



9.1-18 The number of stocks outstanding is the same as the number of stocks:

       A.       issued to the shareholders.

       B.       authorized by the board of directors.

       C.       currently in the hands of the stockholders. My Answer

       D.       ready to be sold to shareholders.
9.1-19 Which of the following types of business organizations terminates when its ownership
structure changes?

       A.      Proprietorships only

       B.      Proprietorships and corporations

       C.      Partnerships and proprietorships My Answer

       D.      Partnerships and corporations



9.2-9 Golden Eagle Corporation issues 100 shares of $10 par value common stock for $50 per
      hare. This transaction will include a credit to Common Stock for:

       A.      $1,000 and a Gain on Issue of Common Stock for $4,000. My Answer

       B.      $1,000 and a credit to Retained Earnings for $4,000.

       C.      $1,000 and a credit to Paid-in Capital for $4,000.

       D.      $5,000.



9.2-10 Hawkeye Corporation issues 100 shares of no-par value common stock for $20 per
       share. This transaction will include a credit to Common Stock for:

       A.      $1,000 and a Gain on Issue of Common Stock for $1,000.

       B.      $1,000 and a credit to Retained Earnings for $1,000.

       C.      $1,000 and a credit to Paid-in Capital for $1,000.

       D.      $2,000. My Answer



9.2-11 Falcon Crest Corporation issues 100 shares of no-par common stock for $10 per share.
       The stock has a stated value of $1 per share. This transaction will include a credit to
       Common Stock for:

       A.      $100 and a Gain on Issue of Common Stock for $900.

       B.      $100 and a credit to Retained Earnings for $900.

       C.      $100 and a credit to Paid-in Capital for $900.

       D.      $1,000. My Answer
10.1-11        How are available-for-sale investments in stock reported on the balance sheet?

          A.   As long-term assets

          B.   As current assets

          C.   As either current assets or long-term assets, depending on when the investment
                is expected to be sold My Answer

          D.   As both long-term assets and stockholders' equity

10.1-12        The Unrealized Gains and Losses on Available-for-sale Securities account
appear in which financial statement?

          A.   The balance sheet in the assets section

          B.   The balance sheet as part of stockholders' equity My Answer

          C.   The income statement as an operating expense

          D.   The balance sheet in the liabilities section

10.1-13 With regard to available-for-sale securities, which of the following is used to
compute net income?

          A.   Realized gains My Answer

          B.   Unrealized gains

          C.   Both unrealized gains and realized gains

          D.   Neither realized gains nor unrealized gains



10.1-14   The journal entry to record the receipt of a stock dividend arising from an available-
          for-sale investment held by a company includes:

          A.   a debit to Unrealized Gain on Investment and a credit to Dividend Revenue.

          B.   a debit to Cash and a credit to Dividend Revenue.

          C.   a debit to Cash and a credit to Unrealized Gain on Investments.

          D.   no journal entry. Only a memorandum entry is required. My Answer
10.1-15    The journal entry to record the receipt of a cash dividend arising from an available-
           for-sale investment held by a company includes:

           A.    a debit to Unrealized Gain on Investment and a credit to Dividend Revenue.

           B.    a debit to Cash and a credit to Dividend Revenue. My Answer

           C.    a debit to Cash and a credit to Unrealized Gain on Investments.

           D.    no journal entry. Only a memorandum entry is required.

11.1-27 A company that switches from straight-line depreciation to double-declining-balance
depreciation during an accounting period must report this change on the financial statements as:

                A. income from continuing operations.

                B. a prior-period adjustment.

                C. an extraordinary item.

                D. a cumulative effect of a change in accounting principle. My Answer



11.1-28         Which of the following must be reported on the income statement as a cumulative
                effect of change in accounting principle?

                A. Change from straight-line to double-declining-balance method of computing
                depreciation

                B. Change from double-declining-balance to straight-line method of computing
                depreciation

                C. Both A and B My Answer

                D. Neither A nor B

11.1-29         Items appear on the income statement in which order?

                A. Change in accounting principle, discontinued operations, extraordinary gains
                and losses, and income from continuing operations

                B. Income from continuing operations, discontinued operations, extraordinary
                gains and losses, and change in accounting principle My Answer

                C. Extraordinary gains and losses, income from continuing operations, change in
                accounting principle, and discontinued operations
D. Discontinued operations, extraordinary gains and losses, income from
continuing operations, and change in accounting principle

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:1900
posted:7/12/2011
language:English
pages:19