ACCT 504 Midterm Exam Help

ACCT 504 Midterm Exam Help

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ACCT 504 Midterm Exam Help(30 MCQ,s and 2 Expalainatory)

(TCO A, B, C) Which of the following statements concerning users of accounting information is incorrect?

(TCO C) Issuing shares of stock in exchange for cash is an example of a(n):

(TCO C) Which activities involve putting the resources of the business into action to generate a profit?

(TCO A) The cost of assets consumed or services used is also known as:

(TCO C) Edwards Company recorded the following cash transactions for the year:

Paid $45,000 for salaries.
Paid $20,000 to purchase office equipment.
Paid $5,000 for utilities.
Paid $2,000 in dividends.
Collected $75,000 from customers.

What was Edwards’ net cash provided by operating activities?

(TCO A) On a classified balance sheet, prepaid insurance is classified as:

(TCO A) An intangible asset:

(TCO A) These are selected account balances on December 31, 2007.

-Land (location of the corporation’s office building) $200,000
-Land (held for future use) 300,000
-Corporate Office Building 1,200,000
-Inventory 400,000
-Equipment 900,000
-Office Furniture 200,000
-Accumulated Depreciation 600,000

What is the total NET amount of property, plant, and equipment that will appear on the balance sheet

(TCO B) For 2010, Landford Corporation reported net income of $30,000; net sales $400,000; and average share outstanding 6,000. There were no preferred stock dividends. What was the 2010 earnings per share?

(TCO B) Liondale Corporation had beginning retained earnings of $2,292,000 and ending retained earnings of $2,499,000. During the year, they issued common stock totaling $141,000. There were no dividends issued. What was their net income for the year?

(TCO D) On March 1, 2010, Dillon Company hires a new employee who will start the work on March 6. The employee will be paid on the last day of each month. Should a journal entry be made on March 6? Why or why not?

(TCO D) Which one of the following is not a part of an account?

(TCO D) Which of the following describes the classification and normal balance of the retained earnings account?

(TCO D) A debit is the normal balance for which account listed below?

(TCO D) Which of the following accounts follows the rules of debit and credit in relation to increases and decreases in the opposite manner?

(TCO E) An accounting time period that is one year in length is called

(TCO E) In a merchandising business, revenue may be considered earned when

(TCO E) On April 1, 2010, M Corporation paid $48,000 cash for equipment that will be used in business operations. The equipment will be used for four years and will have no residual value. M records depreciation expense of $9,000 for the calendar year ending December 31, 2010. Which accounting principle has been violated?

(TCO E) The following is selected information from M Corporation for the fiscal year ending October 31, 2010:

Cash received from customers $300,000
Revenue earned 350,000
Cash paid for expenses 170,000
Expenses incurred 200,000

Based on the accrual basis of accounting, what is M Corporation’s net income for the year ending October 31, 2010?

(TCO E) Adjusting entries are made to ensure that:

(TCO A, B) Which of the following expressions is incorrect?

(TCO B) Hunter Company purchased merchandise inventory with an invoice price of $3,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Hunter Company pays within the discount period?

(TCO A, B) Jake’s Market recorded the following events involving a recent purchase of merchandise:

Received goods for $20,000, terms 2/10, n/30.
Returned $400 of the shipment for credit.
Paid $100 freight on the shipment.
Paid the invoice within the discount period.

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

(TCO A) The factor which determines whether or not goods should be included in a physical count of inventory is:

(TCO A) Barnes Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count?

(TCO A) A problem with the specific identification method is that:

(TCO A) Which of the following statements is true regarding inventory cost flow assumptions?

(TCO A) In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the:

(TCO B) Which of the following is a true statement about inventory systems?

(TCO B) A merchandiser that sells directly to consumers is:

(TCO D) A classmate is considering dropping his accounting class because he cannot understand the rules of debits and credits.
Explain the rules of debits and credits in a way that will help him understand them. Cite examples for each of the major sections of the balance sheet (assets, liabilities and stockholders’ equity) and the income statement (revenues and expenses).

(TCOs B & E) The Caltor Company gathered the following condensed data for the year ended December 31, 2010:

(TCO A, B, C) External users want answers to all of the following questions except:

(TCO C) Borrowing money is an example of a(n):

(TCO C) Buying and selling products are examples of:

(TCO A) Resources owned by a business are referred to as:

(TCO C) Jamie Company recorded the following cash transactions for the year:

Paid $70,000 for salaries.
Paid $20,000 to purchase office equipment.
Paid $6,000 for utilities.
Paid $7,000 in dividends.
Collected $130,000 from customers.

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

(TCO A) In a classified balance sheet, assets are usually classified as:
(TCO A) These are selected account balances on December 31, 2010.

-Land (location of the corporation’s office building) $50,000
-Land (held for future use) 75,000
-Corporate Office Building 300,000
-Inventory 100,000
-Equipment 225,000
-Office Furniture 50,000
-Accumulated Depreciation 150,000

What is the total NET amount of property, plant, and equipment that will appear on the balance sheet?

(TCO B) For 2010, Ford Corporation reported net income of $15,000; net sales $200,000; and average share outstanding 6,000. There were no preferred stock dividends. What was the 2010 earnings per share?

(TCO B) Morten Corporation had beginning retained earnings of $764,000 and ending retained earnings of $833,000. During the year they issued common stock totaling $47,000. There were no dividends issued. What was their net income for the year?

(TCO D) Is the purchase of equipment treated as an expense at the time of purchase? Why or why not?

(TCO D) The left side of an account is:

(TCO D) A credit is not the normal balance for which account listed below?

(TCO D) A debit is not the normal balance for which account listed below?

(TCO D) Which pair of accounts follows the rules of debit and credit in relation to increases and decreases in the same manner?

(TCO E) The time period assumption states that:

(TCO E) The matching principle matches:

(TCO E) Expenses sometimes make their contribution to revenue in a different period than when the expense is paid. When wages are incurred in one period and paid in the next period, this often leads to which account appearing on the balance sheet at the end of the first period?

(TCO E) The following is selected information from J Corporation for the fiscal year ending October 31, 2010.

Cash received from customers $75,000
Revenue earned 87,500
Cash paid for expenses 42,500
Expenses incurred 50,000

Based on the accrual basis of accounting, what is J Corporation’s net income for the year ending October 31, 2007?

(TCO E) The general term employed to indicate an expense that has not been paid or revenue that has not been received and has not yet been recognized in the accounts is:

(TCO A, B) Which of the following expressions is incorrect?

(TCO B) Hunter Company purchased merchandise inventory with an invoice price of $6,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Hunter Company pays within the discount period?

(TCO A, B) Jake’s Market recorded the following events involving a recent purchase of merchandise:

Received goods for $20,000, terms 2/10, n/30.
Returned $400 of the shipment for credit.
Paid $100 freight on the shipment.
Paid the invoice within the discount period.

(TCO A) The Freight-in account:

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

(TCO A) Barnes Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count?

(TCO A) Of the following companies, which one would not likely employ the specific identification method for inventory costing?

(TCO A) Which of the following statements is correct with respect to inventories?

(TCO A) In a period of declining prices, which of the following inventory methods generally results in the lowest balance sheet figure for inventory?

(TCO B) Which of the following is a true statement about inventory systems?

(TCO B) Two categories of expenses in merchandising companies are:

(TCOs B & E) The Caltor Company gathered the following condensed data for the year ended December 31, 2010:

Cost of goods sold                            $ 710,000
Net sales                                         1,279,000
Administrative expenses                      239,000
Interest expense                                   68,000
Dividends paid                                      38,000
Selling expenses                                  45,000

Instructions:

1.        Prepare a multiple-step income statement for the year ended December 31, 2010.

Compute the profit margin ratio and gross profit rate. Caltor Company s assets at the beginning of the year were $770,000 and were $830,000 at the end of the year. To qualify for full credit, you must state the formula you are using, show your computations and explain your findings.

(TCO C) Debt securities sold to investors that must be repaid at a particular date some years in the future are called: