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Date Created: 11/11/15
Final Exam ACC4OO 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 8 rec 10 11 12 13 The receivable that is usually evidenced by a formal instrument of credit is an a trade receivable b note receivable c accounts receivable d income tax receivable Which of the following receivables would not be classified as an quotother eivable a Advance to an employee b Refundable income tax c Notes receivable d Interest receivable Notes or accounts receivables that result from sales transactions are often called a sales receivables b nontrade receivables c trade receivables d merchandise receivables The term quotreceivablesquot 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 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 Nontrade 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 nontrade receivables are long term b It is false because all current receivables must be grouped together in one account c It is true because nontrade 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 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 14 15 16 17 18 3month note due from Dee Elle s main customer 2000 Interest due this month on the above note 100 Due and unpaid from this months sales 3000 Due and unpaid from last months sales 1000 a 4000 b 6000 c 5000 d 6900 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 d Writedown of inventories Gains or losses from sales of equipment When a change in accounting principle occurs a b prior years39 financial statements should not be changed to reflect the newly adopted principle the new principle should be used in reporting the results of operations of the current year the cumulative effect of the change in principle should be reflected on the income statement as of the beginning of the next year the cumulative effect of the change in accounting principle should be classified as an extraordinary item on the income statement If an item meets one but not both of the criteria for an extraordinary item it a b only needs to be disclosed in the footnotes of the financial statements may be treated as sales revenue if it is a gain and as an operating expense if it is a loss is reported as an quotother revenue or gainquot or quotother expense and lossquot net of tax is reported at its gross amount as an quotother revenue or gainquot or quotother expense or lossquot The order of presentation of items that may appear on the income statement is a b c Extraordinary items Discontinued operations Income before income taxes Discontinued operations Extraordinary items Income before income taxes Income before income taxes Discontinued operations Extraordinary items d Income before income taxes Extraordinary items Discontinued operations Which of the following items appears on the income statement before income before irregular items a b c d Other comprehensive income Extraordinary items Income tax expense Discontinued operations 19 20 21 22 23 24 25 26 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 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 Liabilities are classified on the balance sheet as current or a deferred b unearned c longterm d accrued Most companies pay current liabilities a out of current assets b by issuing interestbearing notes payable 0 by issuing stock 1 by creating longterm liabilities 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 between 6 months and 18 months out of currently recognized revenues out of cash currently on hand 906 Which of the following most likely would be classified as a current liability a Dividends payable b Bonds payable in 5 years c Threeyear notes payable 1 Mortgage payable as a single payment in 10 years Failure to record a liability will probably a result in an overstated net income b result in overstated total liabilities and owner s equity 0 have no effect on net income 1 result in understated total assets Very often failure to record a liability means failure to record an a revenue 27 28 29 30 31 b asset conversion 0 footnote d expense The term legal capital is a descriptive term for stockholders equity par value residual equity market value 919039s A corporation has the following account balances Common Stock 1 par value 40000 Paidin Capital in Excess of Par Value 1800000 Based on this information the legal capital is 1840000 number of shares issued is 40000 number of shares outstanding is 1840000 average price per share issued is 460 919039s The authorized stock of a corporation a only reflects the initial capital needs of the company b is indicated in its bylaws c is indicated in its charter d must be recorded in a formal accounting entry 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 If Morgan Company issues 2000 shares of 5 par value common stock for 140000 the account Common Stock will be credited for 140000 b Paidin Capital in Excess of Par Value will be credited for 10000 c Paidin Capital in Excess of Par Value will be credited for 130000 d Cash will be debited for 130000 9 140000 2000 x 5 130000 32 New Corp issues 1000 shares of 10 par value common stock at 14 per share When the transaction is recorded credits are made to a Common Stock 10000 and Paidin Capital in Excess of Stated Value 4000 b Common Stock 14000 c Common Stock 10000 and Paidin Capital in Excess of Par Value 4000 d Common Stock 10000 and Retained Earnings 4000
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