ACC 280 Final Exam (9th Set) 50 Questions.doc
ACC 280 Final Exam (9th Set) 50 Questions.doc PRG211
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Date Created: 11/16/15
ACC 280 Final Exam. P.S. Your questions will be chosen randomly from a large set of questions. Nobody can guarantee that these questions will cover completely your exam. If I helped you please leave “A” feedback (I need it very much). Thank you and good luck. 1. The ACE Company has five plants nationwide that cost $100 million. The current market value of the plants is $500 million. The plants will be recorded and reported as assets at a. $100 million. b. $600 million. c. $400 million. d. $500 million. _____ 2. A basic assumption of accounting that requires activities of an entity be kept separate from the activities of its owner is referred to as the a. stand alone concept. b. monetary unit assumption. c. corporate form of ownership. d. economic entity assumption. _____ 3. A net loss will result during a time period when a. liabilities exceed assets. b. dividends exceed revenues. c. expenses exceed revenues. d. revenues exceed expenses. _____ 4. As of December 31, 2008, Anders Company has assets of $35,000 and stockholders' equity of $20,000. What are the liabilities for Anders Company as of December 31, 2008? a. $15,000 b. $10,000 c. $25,000 d. $20,000 _____ 5. A credit is not the normal balance for which account listed below? a. Common stock account b. Revenue account c. Liability account d. Dividend account _____ 6. An accountant has debited an asset account for $1,000 and credited a liability account for $500. What can be done to complete the recording of the transaction? a. Nothing further must be done. b. Debit an stockholders' equity account for $500. c. Debit another asset account for $500. d. Credit a different asset account for $500. _____ 7. Which of the following is not true of the terms debit and credit? a. They can be abbreviated as Dr. and Cr. b. They can be interpreted to mean increase and decrease. c. They can be used to describe the balance of an account. d. They can be interpreted to mean left and right. _____ 8 . In the first month of operations, the total of the debit entries to the cash account amounted to $900 and the total of the credit entries to the cash account amounted to $500. The cash account has a(n) a. $500 credit balance. b. $800 debit balance. c. $400 debit balance. d. $400 credit balance. _____ 9. On January 14, Franco Industries purchased supplies of $500 on account. The entry to record the purchase will include a. a debit to Supplies and a credit to Accounts Payable. b. a debit to Supplies Expense and a credit to Accounts Receivable. c. a debit to Supplies and a credit to Cash. d. a debit to Accounts Receivable and a credit to Supplies. _____ 10. Management could determine the amounts due from customers by examining which ledger account? a. Service Revenue b. Accounts Payable c. Accounts Receivable d. Supplies _____ 11 . A list of accounts and their balances at a given time is called a(n) a. journal. b. posting. c. trial balance. d. income statement. _____ 12. Management usually desires ________ financial statements and the IRS requires all businesses to file _________ tax returns. a. annual, annual b. monthly, annual c. quarterly, monthly d. monthly, monthly _____ 13. In a servicetype business, revenue is considered earned a. at the end of the month. b. at the end of the year. c. when the service is performed. d. when cash is received. _____ 14. Ken's Tuneup Shop follows the revenue recognition principle. Ken services a car on July 31. The customer picks up the vehicle on August 1 and mails the payment to Ken on August 5. Ken receives the check in the mail on August 6. When should Ken show that the revenue was earned? a. July 31 b. August 1 c. August 5 d. August 6 _____ 15. A furniture factory's employees work overtime to finish an order that is sold on February 28. The office sends a statement to the customer in early March and payment is received by mid March. The overtime wages should be expensed in a. February. b. March. c. the period when the workers receive their checks. d. either in February or March depending on when the pay period ends. _____ 16. A small company may be able to justify using a cash basis of accounting if they have a. sales under $1,000,000. b. no accountants on staff. c. few receivables and payables. d. all sales and purchases on account. _____ 17. Which one of the following is not a justification for adjusting entries? a. Adjusting entries are necessary to ensure that revenue recognition principles are followed. b. Adjusting entries are necessary to ensure that the matching principle is followed. c. Adjusting entries are necessary to enable financial statements to be in conformity with GAAP. d. Adjusting entries are necessary to bring the general ledger accounts in line with the budget. _____ 18. If a resource has been consumed but a bill has not been received at the end of the accounting period, then a. an expense should be recorded when the bill is received. b. an expense should be recorded when the cash is paid out. c. an adjusting entry should be made recognizing the expense. d. it is optional whether to record the expense before the bill is received. _____ 19. Quirk Company purchased office supplies costing $6,000 and debited Office Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $2,400 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be a. Debit Office Supplies Expense, $2,400; Credit Office Supplies, $2,400. b. Debit Office Supplies, $3,600; Credit Office Supplies Expense, $3,600. c. Debit Office Supplies Expense, $3,600; Credit Office Supplies, $3,600. d. Debit Office Supplies, $2,400; Credit Office Supplies Expense, $2,400. _____ 20. Closing entries are made a. in order to terminate the business as an operating entity. b. so that all assets, liabilities, and Stockholders' equity accounts will have zero balances when the next accounting period starts. c. in order to transfer net income (or loss) and dividends to the retained earnings account. d. so that financial statements can be prepared. _____ 21. The relationship between current assets and current liabilities is important in evaluating a company's a. profitability. b. liquidity. c. market value. d. accounting cycle. _____ 22. An objective of financial reporting is to provide information that is mainly useful to a. governmental taxing bodies. b. employees and labor unions. c. investors and creditors. d. internal and external auditors. _____ 23. Which of the following statements is not true? a. Comparability means using the same accounting principles from year to year within a company. b. Reliability is the quality of information that gives assurance that it is free of error or bias. c. Relevant accounting information must be capable of making a difference in the decision. d. The FASB concluded that the overriding criterion by which accounting choices can be judged is decision usefulness. _____ 24. The going concern assumption assumes that the business a. will be liquidated in the near future. b. will be purchased by another business. c. is in a growth industry. d. will continue in operation long enough to carry out its existing commitments. _____ 25. The revenue recognition principle a. states that revenue should be recognized in the period when received. b. states that expense recognition is tied to revenue recognition. c. requires that revenue be recognized in the accounting period when it is earned . d. requires that events making a difference to financial statement users be clearly disclosed. _____ 26. Which of the following is not a characteristic of the cost principle? a. Reliability b. Subjectivity c. Objectivity d. Verifiability _____ 27) The adjusted trial balance is prepared A. after financial statements are prepared. B. before the trial balance. C. after adjusting entries have been journalized and posted. D. to prove the equality of total assets and total liabilities. 28) Financial statements are prepared directly from the A. general journal. B. ledger. C. adjusted trial balance. D. trial balance. 29) An adjusted trial balance A. is prepared after the financial statements are completed. B. proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made. C. cannot be used to prepare financial statements. D. is a required financial statement under generally accepted accounting principles. 30. A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $80; Second purchase $95; Third purchase $85. If the company sold two units for a total of $250 and used FIFO costing, the gross profit for the period would be a. $75. b. $85. c. $70. d. $60. A company just starting business made the following four inventory purchases in June: June 1 150 units $ 770 June 10 200 units 1,180 June 15 200 units 1,260 June 28 150 units 990 &nbs p; —————— &nbs p; $4,200 &nbs p; A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. 31. Using the LIFO inventory method, the value of the ending inventory on June 30 is a. $1,065 . b. $1,305. c. $2,895. d. $3,135. 32. The cost of goods available for sale is allocated between a. beginning inventory and ending inventory. b. beginning inventory and cost of goods on hand. c. ending inventory and cost of goods sold . d. beginning inventory and cost of goods purchased. 33. The managers of Tong Company receive performance bonuses based on the net income of the firm. Which inventory costing method are they likely to favor in periods of declining prices? a. LIFO b. Average Cost c. FIFO d. Physical inventory method 34. The accountant at Lloyd Company is figuring out the difference in income taxes the company will pay depending on the choice of either FIFO or LIFO as an inventory costing method. The tax rate is 30% and the FIFO method will result in income before taxes of $5,244. The LIFO method will result in income before taxes of $4,740. What is the difference in tax that would be paid between the two methods? a. $504. b. $353. c. $151. d. Cannot be determined from the information provided. 35. Which one of the following is not an objective of financial reporting according to the conceptual framework? a. To provide information that will increase the value of the company b. To provide information in assessing future cash flows c. To provide information that is useful for making investment and credit decisions d. To provide information that identifies economic resources, the claims to those resources, and the changes in those resources and claims 36. Expenses are recognized when a. cash is paid. b. the work is performed. c. the product is produced. d. they make their contribution to revenue. 37. Internal controls are not designed to safeguard assets from a. natural disasters. b. employee theft. c. robbery. d. unauthorized use. 38. An accounts payable clerk also has access to the approved supplier master file for purchases. The control principle of a. establishment of responsibility is violated. b. independent internal verification is violated. c. documentation procedures is violated. d. separation of duties is violated . 39. For accounting purposes, postdated checks (checks payable in the future) are considered to be a. money orders. b. cash. c. petty cash. d. accounts receivable . 40. An employee authorized to sign checks should not record a. owner cash contributions. b. mail receipts. c. cash disbursement transactions. d. sales transactions. 41. Which one of the following would not cause a bank to debit a depositor's account? a. Bank service charge b. Collection of a note receivable c. Wiring of funds to other locations d. Checks marked NSF 42. A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account which is a. a contraasset account. b. a liability account. c. also an asset account. d. an owner's equity account. 43. Deposits in transit a. have been recorded on the company's books but not yet by the bank . b. have been recorded by the bank but not yet by the company. c. have not been recorded by the bank or the company. d. are checks from customers which have not yet been received by the company. 44. In preparing a bank reconciliation, outstanding checks are a. added to the balance per bank. b. deducted from the balance per books. c. added to the balance per books. d. deducted from the balance per bank . 45. Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjusting entry: a. Accounts Receivable Cash b. Cash Accounts Receivable c. Miscellaneous Expense Accounts Receivable d. No adjusting entry is necessary. 46. Eaton Company had checks outstanding totaling $4,400 on its June bank reconciliation. In July, Eaton Company issued checks totaling $38,900. The July bank statement shows that $28,300 in checks cleared the bank in July. A check from one of Eaton Company's customers in the amount of $300 was also returned marked "NSF." The amount of outstanding checks on Eaton Company's July bank reconciliation should be a. $10,600. b. $15,000. c. $14,700. d. $6,200. 47. Gagne Company gathered the following reconciling information in preparing its July bank reconciliation: Cash balance per books, 7/31 $3,000 Depositsintransit &nb sp; 150 Notes receivable and interest collected by bank 850 Bank charge for check printing 20 Outstanding checks 2,000 NSF check ; ` 170 The adjusted cash balance per books on July 31 is a. $3,66 . b. $3,510. c. $1,810. d. $1,960. 48. An adjusting entry is not required for a. outstanding checks. b. collection of a note by the bank. c. NSF checks. d. bank service charges. 49. Weber Company developed the following reconciling information in preparing its September bank reconciliation: Cash balance per bank, 9/30 $15,000 Note receivable collected by bank 6,000 Outstanding checks 9,000 Depositsintransit 4,500 Bank service charge 75 NSF check 1,200 Using the above information, determine the cash balance per books (before adjustments) for the Weber Company. a. $11,775. b. $19,500. c. $5,775 . d. $15,000. 50. A system of internal control a. is infallible. b. can be rendered ineffective by employee collusion. c. invariably will have costs exceeding benefits. d. is premised on the concept of absolute assurance.
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