GB518 Unit 3 Midterm Exam A Graded

GB518 Unit 3 Midterm Exam A Graded

1. Question : Prepaid expenses are:Payments made for products and services that do not ever expireClassified as liabilities on the balance sheetDecreases in retained earningsAssets that represent prepayments of future expensesQuestion 2. Question : An example of an operating activity is:Paying wagesPurchasing office equipmentBorrowing money from a bankSelling stockPaying off a loanQuestion 3. Question : Fast-Forward had cash inflows from operations of $62,500; cash outflows from investing activities of $47,000; and cash inflows from financing of $25,000. The net change in cash was:$40,500 increase$40,500 decrease$134,500 decrease$134,000 increaseQuestion 4. Question : Which of the following is the primary purpose of accounting?To establish a businessTo identify, record and communicate business transactionsTo deceive stockholdersTo keep from paying taxesTo establish credit for a companyQuestion 5. Question : An asset created by prepayment of an expense is:Recorded as a debit to an unearned revenue accountRecorded as a debit to a prepaid expense accountRecorded as a credit to an unearned revenue accountRecorded as a credit to a prepaid expense accountNot recorded in the accounting records until the earnings process is completeQuestion 6. Question : What would be the appropriate entry for the following transaction?Bill Co. performed $5,200 in consulting services on accountCredit to Cash, Debit to Accounts ReceivableDebit to Revenue, Debit to CashDebit to Accounts Receivable, Credit to CashDebit to Revenue, Credit to CashDebit to Accounts Receivable, Credit to RevenueQuestion 7. Question : Ethical behavior requires:That an auditors pay not depend on the figures in the clients reportsAuditors to invest in businesses they auditAnalysts to report information favorable to their companiesManagers to use accounting information to benefit themselvesThat an auditor provides a favorable opinionQuestion 8. Question : Technological advancementHas replaced accountingHas not changed the work that accountants doHas freed accounting professionals to concentrate more on the analysis and interpretation of informationIn accounting has replaced the need for decision makersIn accounting is only available to large corporationsQuestion 9. Question : Distributions of assets by a business to its stockholders are called:DividendsExpensesAssetsRetained earningsNet IncomeQuestion 10. Question : The principle prescribing that financial statements reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue is the:Going-concern principleBusiness entity principleObjectivity principleCost PrincipleMonetary unit principleQuestion 11. Question : If equity is $300,000 and liabilities are $192,000, then assets equal:$108,000$192,000$300,000$492,000$792,000Question 12. Question : To include the personal assets and transactions of a businesss owner in the records and reports of the business would be in conflict with the:Objectivity principleRealization principleBusiness entity principleGoing-concern principleRevenue recognition principleQuestion 13. Question : Double-entry accounting is an accounting system:That records each transaction twiceThat records the effects of transactions and other events in at least two accounts with equal debits and creditsIn which the impact of each transaction is recorded in two or more accounts but that could include two debits and no creditsThat may only be used if T-accounts are usedThat insures that errors never occurQuestion 14. Question : Which of the following statements best describes the relationship of U.S. GAAP and IFRS?They are identicalThey are entirely different conceptual frameworksThey are similar but not identicalNeither has anything to do with accountingThey both relate only to publicly traded companiesQuestion 15. Question : Net Income:Decreases equityRepresents the amount of assets owners put into a businessEquals assets minus liabilitiesIs the excess of revenues over expensesRepresents the owners claims against assetsQuestion 16. Question : Which of the following accounts would not be on the post closing trial balance?Accounts PayableAccounts ReceivableCommon StockDividendsQuestion 17. Question : A trial balance prepared after the closing entries have been journalized and posted is the:Unadjusted trial balancePost-closing trial balanceGeneral ledgerAdjusted trial balanceWork sheetQuestion 18. Question : A companys Office Supplies account shows a beginning balance of $600 and an ending balance of $400. If office supplies expense for the year is $3,100, what amount of office supplies was purchased during the period?$2,700$2,900$3,300$3,500$3,700Question 19. Question : A company purchased a new truck at a cost of $42,000 on July 1, 2011. The truck is estimated to have a useful life of 6 years and a salvage value of $3,000. How much depreciation expense will be recorded for the truck for the year ended December 31, 2011?$3,250$3,500$4,000$6,500$7,000Question 20. Question : On June 30, 2011, Apricot Co. paid $5,000 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry on December 31, 2011 for Apricot would include:A debit to an expense for $1,250A debit to a prepaid expense for $1,250A credit to an expense for $3,750A debit to a prepaid expense for $3,750Question 21. Question : An account linked with another account that has an opposite normal balance and that is subtracted from the balance of the related account is a(n):Accrued expenseContra accountAccrued revenueIntangible assetAdjunct accountQuestion 22. Question : The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the retained earnings account is the:Income Summary accountClosing accountBalance column accountContra accountQuestion 23. Question : A company pays each of its two office employees each Friday at the rate of $100 per day each for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is:Debit Unpaid Salaries $600 and credit Salaries Payable $600Debit Salaries Expense $400 and credit Salaries Payable $400Debit Salaries Expense $600 and credit Salaries Payable $600Debit Salaries Payable $400 and credit Salaries Expense $400Question 24. Question : Based on the following information, what would be the beginning balance in the Retained Earnings Account, assuming all accounts have a normal balance?Cash $ 6,754 Dividends $ 2,000Accounts receivable $ 13,733 Consulting fees earned $ 13,718Office supplies $ 2,625 Rent expense $ 3,673Land $ 37,153 Salaries expense $ 6,642Office equipment $ 14,535 Telephone expense $ 560Accounts payable $ 6,463 Miscellaneous expense $ 280Common stock $ 54,490 Retained Earnings ?$0$13,718$13,155$13,284Question 25. Question : The Income Summary account is used:To adjust and update asset and liability accountsTo close the revenue and expense accountsTo determine the appropriate dividend amountIn some situations to replace the income statementTo replace the retained earnings account in some businessesQuestion 26. Question : The Retained Earnings account has a credit balance of $17,000 before closing entries are made. If total revenues for the period are $55,200, total expenses are $39,800 and dividends are $9,000, what is the ending balance in the Retained Earnings account after all closing entries are made?$8,000$15,400$23,400$17,000$32,400Question 27. Question : On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:Debit Prepaid Insurance, $1,800; credit Cash, $1,800Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440Debit Prepaid Insurance, $360; credit Insurance Expense, $360Debit Insurance Expense, $360; credit Prepaid Insurance, $360Debit Insurance Expense, $360; credit Prepaid Insurance, $1,440Question 28. Question : A balance sheet that places the assets above the liabilities and equity is called a(n):Report form balance sheetAccount form balance sheetClassified balance sheetUnadjusted balance sheetQuestion 29. Question : If accrued salaries were recorded on December 31 with a credit to Salaries Payable, the entry to record payment of these wages on the following January 5 would include:A debit to Cash and a credit to Salaries PayableA debit to Cash and a credit to Prepaid SalariesA debit to Salaries Payable and a credit to CashA debit to Salaries Payable and a credit to Salaries ExpenseNo entry would be necessary on January 5Question 30. Question : Unearned revenue is reported on the financial statements as:A revenue on the balance sheetA liability on the balance sheetAn unearned revenue on the income statementAn asset on the balance sheetAn operating activity on the statement of cash flowsQuestion 31. Question : Our company has three times as many assets as it does liabilities. If total liabilities are $55,000, what is the amount of owners equity?$55,000$110,000$165,000$220,000Cannot be determined from the given informationQuestion 32. Question : Multiple-step income statements:Are required by the FASBContain more detail than a simple listing of revenues and expensesAre required for the perpetual inventory systemList cost of goods sold as an operating expenseCan only be used in perpetual inventory systemsQuestion 33. Question : The full disclosure principle:Requires that when a change in inventory valuation method is made, the notes to the financial statements report the type of change, why it was made and its effect on net incomeRequires that companies use the same accounting method for inventory valuation period after periodIs not subject to the materiality principleIs only applied to retailersIs also called the consistency principleQuestion 34. Question : The inventory valuation method that tends to smooth out erratic changes in costs is:FIFOWeighted averageLIFOSpecific identificationWIFOQuestion 35. Question : Which of the following procedures would weaken the control over cash receipts that arrive through the mail?After the mail is opened, a list (in triplicate) of the money received is prepared with a record of the senders name, the amount and an explanation of why the money is sentThe bank reconciliation is prepared by a person who does not handle cash or record cash receiptsFor safety, only one person should open the mail and that person should immediately deposit the cash received in the bankThe cashier should not also be the record keeper who records the amounts received in the accounting recordsAll of the above are good internal control procedures over cash receipts that arrive through the mailQuestion 36. Question : When two clerks share the same cash register, which internal control principle is violated?Establish responsibilitiesMaintain adequate recordsInsure assetsBond key employeesQuestion 37. Question : The impact of technology on internal controls includes which of the following:Reduced processing errorsElimination of the need for regular auditsElimination of the need to bond employeesMore efficient separation of dutiesElimination of fraudQuestion 38. Question : Given the following information, determine the cost of goods sold at December 31 using the LIFO periodic inventory method.December 2: 5 units were purchased at $7 per unit.December 9: 10 units were purchased at $9.40 per unit.December 11: 12 units were sold at $35 per unitDecember 15: 20 units were purchased at $10.15 per unitDecember 22: 18 units were sold at $35 per unit$284.70$332.10$281.25$290.70$297.00Question 39. Question : Toys ?R Us had cost of goods sold of $9,421 million, ending inventory of $2,089 million and average inventory of $1,965 million. Its days sales in inventory equals:0.214.514.7976.1 days80.9 daysQuestion 40. Question : A remittance advice is:An explanation for a payment by checkA bank statementA voucherAn EFTA cancelled checkQuestion 41. Question : J.C. Penny had net sales of $28,496 million, its cost of goods sold was $19,092 million and its net income was $997 million. Its gross margin ratio equals:3.5%5.2%33%67%149.3%Question 42. Question : Given the following information:Petty cash balance $ 450.00 Courier receipt $ 82.50Postage receipt $ 48.00 Office Supplies receipt $ 56.22Business Meal receipt $ 102.34 Cash on hand at the end of the month $ 76.21What is the amount of cash over and short?debit $84.73credit $84.73debit $160.94credit $160.94no cash over or short would be recordedQuestion 43. Question : Merchandise inventory:Is a long-term assetIs a current assetIncludes suppliesIs classified with investments on the balance sheetMust be sold within one monthQuestion 44. Question : Cost of goods sold:Is another term for merchandise salesIs the term used for the cost of buying and preparing merchandise for saleIs another term for revenueIs also called gross marginIs a term only used by service firmsQuestion 45. Question : A company has sales of $1,500,000, sales discounts of $102,000, sales returns and allowances of $123,000, shipping charges of $15,000, sales commissions of $34,000,net income totaled $263,500, and cost of goods sold of $420,000. What is the net sales amount for the period?$1,500,000$1,275,000$1,725,000$1,521,000$1,479,000Question 46. Question : A company purchased $1,800 of merchandise on December 5. On December 7, it returned $200 worth of merchandise. On December 8, it paid the balance in full, taking a 2% discount. The amount of the cash paid on December 8 equals:$200$1,564$1,568$1,600$1,800Question 47. Question : The conservatism principle:Requires that when there are more than one equally likely estimate of amounts expected to be received or paid in the future, then the less optimistic amount should be usedRequires that a company use the same accounting methods period after periodRequires that revenues and expenses be reported in the period in which they are earned or incurredRequires that all items of a material nature be included in financial statementsRequires that all inventory items be reported at full costQuestion 48. Question : Which of the following is the most serious limitation of internal controls?Computer errorHuman fraud or human errorCost-benefit principleCybercrimeManagement fraudQuestion 49. Question : Acme-Jones Corporation uses a weighted-average perpetual inventory system.August 2, 10 units were purchased at $12 per unit.August 18, 15 units were purchased at $14 per unit.August 29, 12 units were sold.What was the amount of the cost of goods sold for this sale?$148.00$150.50$158.40$210.00$330.00Question 50. Question : In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that check number 4239 for Novembers rent was correctly written and drawn for $7,390, but was erroneously entered in the accounting records as $3,790. When preparing the November bank statement, the company should:Deduct $3,600 from the book balance of cashAdd $3,600 to the bank statement balanceAdd $7,390 to the book balance of cashDeduct $3,600 from the bank statement balanceAdd $3,600 to the book balance of cash


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