ACC290 Final Exam Complete Solution
ACC 290 Final Exam
1) Which financial statement is used to determine cash generated from operations? A. Income statement B. Statement of operations C. Statement of cash flows D. Retained earnings statement
2) In terms of sequence, in what order must the four basic financial statements be prepared? A. Balance sheet, income statement, statement of cash flows, and capital statement B. Income statement, capital statement, statement of cash flows, and balance sheet C. Balance sheet, capital statement, statement of cash flows, and income statement D. Income statement, capital statement, balance sheet, and statement of cash flows
3) In classifying transactions, which of the following is true in regard to assets? A. Normal balances and increases are debits. B. Normal balances and decreases are credits. C. Normal balances can either be debits or credits for assets. D. Normal balances are debits and increases can be debits or credits.
4) An increase in an expense account must be A. debited B. credited C. either debited or credited, depending on the circumstances D. capitalized 5) ABC Corporation issues 100 shares of $1 par common stock at $5 per share, which of the following is the correct journal entry? A. Cash $100 Common Stock $100 B. Cash $500 Common Stock $500 C. Cash $500 Paid-in Capital, Excess of Par $400 Common Stock $100 D. Cash $100 Paid-in Capital, Excess of Par $400 Common Stock $500 6) In the first month of operations, the total of the debit entries to the cash account amounted to $1,400 and the total of the credit entries to the cash account amounted to $600. The cash account has an
A. $600 credit balance
B. $1,400 debit balance
C. $800 debit balance
D. $800 credit balance
7) Which ledger contains control accounts? A. Accounts receivable subsidiary ledger B. General ledger C. Accounts payable subsidiary ledger D. General revenue and expense ledger
8) Smith is a customer of ABC Corporation. Smith typically purchases merchandise from ABC on the account. Which ledger would ABC use to keep track of the details of Smith’s account? A. Accounts receivable subsidiary ledger B. Accounts receivable control ledger C. General ledger D. Accounts payable subsidiary ledger
9) Under the cash basis of accounting, A. revenue is recognized when services are performed B. expenses are matched with the revenue that is produced C. cash must be received before revenue is recognized D. a promise to pay is sufficient to recognize revenue 10) Under the accrual basis of accounting, A. cash must be received before revenue is recognized B. net income is calculated by matching cash outflows against cash inflows C. events that change a company’s financial statements are recognized in the period they occur rather than in the period in which the cash is paid or received D. the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles
11) The Vintage Laundry Company purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $2,000 on hand. The adjusting entry that should be made by the company on June 30 is A. debit Laundry Expense, $2,000; credit Laundry Expense $2,000 B. debit Laundry Expense, $4,500; credit Laundry Supplies Expense, $4,500 C. debit Laundry Supplies, $2,000; credit Laundry Supplies Expense, $2,000 D. debit Laundry Supplies Expense, $4,500; credit Laundry Supplies, $4,500
12) Greese Company purchased office supplies costing $4,000 and debited Office Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $1,100 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be A. debit Office Supplies Expense, $1,100; credit debit Office Supplies Expense B. debit Office Supplies, $2,900; credit Office Supplies Expense, $2,900 C. debit Office Supplies Expense, $2,900; credit Office Supplies, $2,900 D. debit Office Supplies, $1,100; credit Office Supplies Expense, $1,100 13) Based on the account balance below, what is the total of the debit and credit columns of the adjusted trial balance? Service revenue $3,300 Equipment $6,400 Cash 1,525 Prepaid insurance 1,225 Unearned revenue 5,320 Depreciation expense 640 Salary 1,050 Accum. depreciation 1,280 Common stock 390 Retained earnings 550 A. $9,150 B. $10,840 C. $9,560 D. $10,430 14) 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. is a required financial statement under generally accepted accounting principles D. cannot be used to prepare financial statements 15) Given the following adjusted trial balance: Debit Credit Cash $781 Accounts receivable 1,049 Inventory 1,562 Prepaid rent 43 Property, plant & equipment 150 Accumulated depreciation 26 Accounts payable 41 Unearned revenue 61 Common stock 103 Retained earnings 3,305 Service revenue 134 Interest revenue 28 Salary expense 80 Travel expense 33 Total $3,698 $3,698 Net income for the year is A. $248 B. $135 C. $162 D. $49 16) Given the following adjusted trial balance, what will be the totals for the debit and credit columns of the post-closing trial balance? Debit Credit Cash $1,562 Accounts receivable 2,098 Inventory 3,124 Prepaid rent 86 Property, plant, & equipment 300 Accumulated depreciation $52 Accounts payable 82 Unearned revenue 172 Common stock 206 Retained earnings 6,610 Service revenue 218 Interest revenue 56 Salary expense 160 Travel expense 66 Totals $7,396 $7,396 A. $7,396 B. $7,118 C. $7,334 D. $7,170 17) Given the following adjusted trial balance: Debit Credit Cash $781 Accounts receivable 1,049 Inventory 1,562 Prepaid rent 43 Property, plant & equipment 150 Accumulated depreciation 26 Accounts payable 41 Unearned revenue 61 Common stock 103 Retained earnings 3,305 Service revenue 134 Interest revenue 28 Salary expense 80 Travel expense 33 Total $3,698 $3,698 After closing entries have been posted, the balance in retained earnings will be A. $3,256 B. $3,170 C. $3,440 D. $3,354 18) Net income is recorded on the work sheet under the A. debit column of the adjusted trial balance and the credit column of retained earnings B. debit column of the income statement and the credit column of the balance sheet C. credit column of the adjusted trial balance and the debit column of retained earnings D. credit column of the income statement and the debit column of the balance sheet 19) At the beginning of the year, Uptown Athletic had an inventory of $400,000. During the year, the company purchased goods costing $1,500,000. If Uptown Athletic reported ending inventory of $600,000 and sales of $2,000,000, their cost of goods sold and gross profit rate would be A. $900,000 and 65% B. $1,300,000 and 35% C. $900,000 and 35% D. $1,300,000 and 65% 20) During the year, Sarah’s Pet Shop’s merchandise inventory decreased by $30,000. If the company’s cost of goods sold for the year was $450,000, purchases would have been A. $480,000 B. $420,000 C. $390,000 D. Insufficient data to determine 21) At the beginning of the year, Wildcat Athletic had an inventory of $200,000. During the year, the company purchased goods costing $700,000. If Wildcat Athletic reported ending inventory of $300,000 and sales of $1,000,000, their cost of goods sold and gross profit rate would be A. $400,000 and 60% B. $600,000 and 40% C. $400,000 and 40% D. $600,000 and 60% 22) The entry to record of sale of $900 with terms of 2/10, n/30 will include a A. debit to Sales Discount for $18354 B. debit to Sales Revenue for $882 C. credit to Accounts Receivable for $900 D. credit to Sales Revenue for $900354 23) Dobler Company uses a periodic inventory system. Details for the inventory account for the month of January 2012 are as follows: Units Per unit price Total Balance, 1/1/2012 200 $5.00 $1,000 Purchase, 1/15/2012 100 5.30 530 Purchase, 1/28/2012 100 5.50 550 An end of the month (1/31/2012), inventory showed that 140 units were on hand. If the company uses LIFO, what is the value of the ending inventory? A. $737 B. $700 C. $762 D. $1,380 24) The difference between ending inventory using LIFO and ending inventory using FIFO is referred to as A. FIFO reserve B. inventory reserve C. LIFO reserve D. periodic reserve 25) A consistent application of an inventory costing method enhances A. conservatism B. accuracy C. comparability D. efficiency 26) The accountant at Patton Company has determined that income before income taxes amounted to $11,000 using the FIFO costing assumption. If the income tax rate is 30% and the amount of income taxes paid would be $300 greater if the LIFO assumption were used, what would be the amount of income before taxes under the LIFO assumption? A. $11,300 B. $12,000 C. $10,000 D. $10,700 27) 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 28) 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
29) The custodian of a company asset should A. have access to the accounting record for that asset B. be someone outside the company C. not have access to the accounting record for that asset D. be an accountant
30) The Sarbanes Oxley Act (2002) applies to A. U.S. companies but not international companies B. international companies but not U.S. companies C. U.S. and Canadian companies but not other international companies D. U.S. and international companies
ACC290 Final Exam Complete Solution
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