Strayer acc557 midterm exam latest 2015

 

 

Question

Question 1

3 out of 3 points

Radio Moscow Industries purchased supplies for $1,000. They paid $400 in cash and agreed to pay the balance in 30 days. The journal entry to record this transaction would include a debit to an asset account for $1,000, a credit to a liability account for $600. Which of the following would be the correct way to complete the recording of the transaction?

a. Credit an asset account for $400.
b. Credit another liability account for $400.
c. Credit the retained earnings account for $400.
d. Debit the retained earnings account for $400.

Question 2

3 out of 3 points

The first step in posting involves

a. entering in the appropriate ledger account the date, journal page, and debit amount

shown in the journal.

b. writing in the journal the account number to which the debit amount was posted.

c. writing in the journal the account number to which the credit amount was posted.

d. entering in the appropriate ledger account the date, journal page, and credit amount

shown in the journal.

Question 3

3 out of 3 points

Credits

a. decrease both assets and liabilities.

b. decrease assets and increase liabilities.

c. increase both assets and liabilities.

d. increase assets and decrease liabilities.

Question 4

3 out of 3 points

The first step in the recording process is to

a. analyze each transaction.

b. enter the transaction in a journal.

c. prepare a trial balance.

d. transfer journal information to ledger accounts.

Question 5

3 out of 3 points

Deerhoof Company purchases equipment for $2,700 and supplies for $400 from Milkman Co. for $3,100 cash. The entry for this transaction will include a

a. debit to Equipment $2,700 and a debit to Supplies Expense $400 for Milkman.
b. credit to Cash for Milkman.
c. credit to Accounts Payable for Deerhoof.
d. debit to Equipment $2,700 and a debit to Supplies $400 for Deerhoof.

Question 6

3 out of 3 points

The chart of accounts is a

a. list of accounts and their balances at a given time.

b. device used to prove the mathematical accuracy of the ledger.

c. listing of the accounts and the account numbers which identify their location in the

ledger.

d. required step in the recording process.

Question 7

3 out of 3 points

Equipment is classified in the balance sheet as

a. a current asset.

b. property, plant, and equipment.

c. an intangible asset.

d. a long-term investment.

Question 8

3 out of 3 points

The first required step in the accounting cycle is

a. posting transactions.

b. reversing entries.

c. journalizing transactions in the book of original entry.

d. analyzing transactions.

Question 9

3 out of 3 points

The operating cycle of a company is the average time that is required to go from cash to

a. sales in producing revenues.

b. cash in producing revenues.

c. inventory in producing revenues.

d. accounts receivable in producing revenues.

Question 10

3 out of 3 points

Correcting entries are made

a. at the beginning of an accounting period.

b. at the end of an accounting period.

c. whenever an error is discovered.

d. after closing entries.

Question 11

3 out of 3 points

The information for preparing a trial balance on a worksheet is obtained from

a. financial statements.

b. general ledger accounts.

c. general journal entries.

d. business documents

Question 12

3 out of 3 points

A post-closing trial balance will show

a. only permanent account balances.

b. only temporary account balances.

c. zero balances for all accounts.

d. the amount of net income (or loss) for the period.

Question 13

3 out of 3 points

All of the following statements about the post-closing trial balance are correct except it

a. shows that the accounting equation is in balance.

b. provides evidence that the journalizi

ng and posting of closing entries have been

properly completed.

c. contains only permanent accounts.

d. proves that all transactions have been recorded.

Question 14

3 out of 3 points

Which one of the following is not an enhancing quality of useful information?

a. Timeliness
b. Understandability
c. Materiality
d. Comparability

Question 15

3 out of 3 points

Accounts often need to be adjusted because

a.   there are never enough accounts to record all the transactions.

b.   many transactions affect more than one time period.

c.   there are always errors made in recording transactions.

d.   management can't decide what they want to report.

Question 16

3 out of 3 points

Dinosaur Junior Corporation purchased a one-year insurance policy in January 2015 for $75,000. The insurance policy is in effect from May 2015 through April 2016. If the company neglects to make the proper year-end adjustment for the expired insurance

a. net income and assets will be understated by $50,000.

b. net income and assets will be overstated by $50,000.

c. net income and assets will be understated by $25,000.

d. net income and assets will be overstated by $25,000.

Question 17

3 out of 3 points

The balance in the Prepaid Rent account before adjustment at the end of the year is $21,000, which represents three months’ rent paid on December 1. The adjusting entry required on December 31 is to

a.  debit Rent Expense, $7,000; credit Prepaid Rent, $7,000.

b.  debit Rent Expense, $14,000; credit Prepaid Rent $14,000.

c.  debit Prepaid Rent, $7,000; credit Rent Expense, $7,000.

d. debit Prepaid Rent, $14,000; credit Rent Expense, $14,000.

Question 18

3 out of 3 points

A law firm received $3,000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause

a.  expenses to be overstated.

b.  net income to be overstated.

c.  liabilities to be understated.

d. revenues to be understated.

Question 19

0 out of 3 points

If an adjusting entry is not made for an accrued revenue

a.  assets will be overstated.

b.  expenses will be understated.

c.  owner's equity will be understated.

d. revenues will be overstated.

Question 20

3 out of 3 points

Financial information that is capable of making a difference in a decision is

a. faithfully representative.
b. relevant.
c. convergent.
d. generally accepted.

Question 21

0 out of 3 points

Fat Possum’s Service Shop started the year with total assets of $330,000 and total liabilities of $2400,000. During the year, the business recorded $630,000 in revenues, $420,000 in expenses, and paid dividends of $60,000. The net income reported by Fat Possum’s Service Shop for the year was

a. $150,000.
b. $210,000.
c. $240,000.
d. $270,000.

Solution: ($330,000 − $240,000) + ($630,000 − $420,000) − $60,000 = $240,000

Question 22

3 out of 3 points

The accounting process involves all of the following except

a. identifying economic transactions that are relevant to the business.
b. communicating financial information to users by preparing financial reports.
c. recording nonquantifiable economic events.
d. analyzing and interpreting financial reports.

Question 23

3 out of 3 points

Accounting consists of three basic activities which are related to economic events of an organization. These include

a. identifying, recording, and communicating
b. identifying, calculating, and responding
c. classifying, numbering, and reporting
d. issuing, reporting, and classifying

Question 24

3 out of 3 points

The final step in solving an ethical dilemma is to

a. identify and analyze the principal elements in the situation.
b. recognize an ethical situation.
c. identify the alternatives and weigh the impact of each alternative on stakeholders.
d. recognize the ethical issues involved.

Question 25

3 out of 3 points

Revenues would not result from

a. sale of merchandise.
b. issuance of common stock.
c. performance of services.
d. rental of property.

 

 

Question 1

3 out of 3 points

Sales revenue less cost of goods sold is called

a. gross profit.
b. net profit.
c. net income.
d. marginal income.

Question 2

3 out of 3 points

The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit

a. Accounts Payable.
b. Purchase Returns and Allowances.
c. Sales Revenue.
d. Inventory.

Question 3

3 out of 3 points

A merchandising company using a perpetual system will make

a. the same number of adjusting entries as a service company does.
b. one more adjusting entry than a service company does.
c. one less adjusting entry than a service company does.
d. different types of adjusting entries compared to a service company.

Question 4

3 out of 3 points

Net income is gross profit less

a. financing expenses.
b. operating expenses.
c. other expenses and losses.
d. other expenses.

Question 5

3 out of 3 points

Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using

a. LIFO will have the highest ending inventory.
b. FIFO will have the highest cost of good sold.
c. FIFO will have the highest ending inventory.
d. LIFO will have the lowest cost of goods sold.

Question 6

3 out of 3 points

A company just starting business made the following four inventory purchases in June:

June 1 150 units $ 390

June 10 200 units 585

June 15 200 units 630

June 28 150 units 510

$2,115

A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for June is

a. $683.
b. $825.
c. $1,290.
d. $1,432.

June 1 150 units $ 390

June 10 200 units 585

June 15 100 units 315

                        $1,290

Question 7

3 out of 3 points

Alfalfa Company developed the following information about its inventories in applying the lower-of-cost-or-market (LCM) basis in valuing inventories:

Product Cost Market

A $112,000 $120,000

B 80,000 76,000

C 155,000 162,000

If Alfalfa applies the LCM basis, the value of the inventory reported on the balance sheet would be
a. $343,000.
b. $347,000.
c. $358,000.
d. $362,000.

Solution: $112,000+$76,000+$155,000=$343,000

Question 8

3 out of 3 points

Inventoriable costs include all of the following except the

a. freight costs incurred when buying inventory.
b. costs of the purchasing and warehousing departments.
c. cost of the beginning inventory.
d. cost of goods purchased.

Question 9

3 out of 3 points

Romanoff Industries had the following inventory transactions occur during 2015:

Units Cost/unit

2/1/15 Purchase 54 $45

3/14/15 Purchase 93 $47

5/1/15 Purchase 66 $49

The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company’s gross profit using FIFO? (rounded to whole dollars)

a. $3,318
b. $3,552
c. $6,948
d. $7,182

(54 × $45) + (93 × $47) + [(150 - 147) × $49] = $6,948; (150 × $70) - $6,948 =  $3,552

Question 10

3 out of 3 points

To record estimated uncollectible accounts using the allowance method, the adjusting entry would be a

a. debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts.
b. debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts.
c. debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.
d. debit to Loss on Credit Sales Revenue and a credit to Accounts Receivable.

Question 11

3 out of 3 points

Which of the following receivables would not be classified as an "other receivable"?

a. Advance to an employee

b. Refundable income tax

c. Notes receivable

d. Interest receivable

Question 12

3 out of 3 points

When a note receivable is dishonored

a. interest revenue is never recorded.

b. bad debts expense is recorded.

c. the maturity value of the note is written off.

d. Accounts Receivable is debited if eventual collection is expected.

Question 13

3 out of 3 points

Claims for which formal instruments of credit are issued as proof of the debt are

a. accounts receivable.

b. interest receivable.

c. notes receivable.

d. other receivables.

Question 14

3 out of 3 points

The financial statements of Danielle Manufacturing Company report net sales of $750,000 and accounts receivable of $60,000 and $90,000 at the beginning and end of the year, respectively. What is the accounts receivable turnover for Danielle?

a. 5 times
b. 8.3 times
c. 10 times
d. 12.5 times

Solution: $750,000 ¸ [($60,000 + $90,000) ¸ 2] = 10

Question 15

3 out of 3 points

Syfy Company on July 15 sells merchandise on account to Eureka Co. for $5,000, terms 2/10, n/30. On July 20 Eureka Co. returns merchandise worth $2,000 to Syfy Company. On July 24 payment is received from Eureka Co. for the balance due. What is the amount of cash received?

a. $2,900
b. $2,940
c. $3,000
d. $5,000

Solution: ($5,000 - $2,000) ´ .98 = $2,940

Question 16

3 out of 3 points

A customer charges a treadmill at Annie's Sport Shop. The price is $4,000 and the financing charge is 6% per annum if the bill is not paid in 30 days. The customer fails to pay the bill within 30 days and a finance charge is added to the customer's account.

What is the amount of the finance charge?

a. $8
b. $20
c. $80
d. $240

Solution: $4,000 ´ .06 ´ 30 / 360 = $20

Question 17

3 out of 3 points

If a company sells its accounts receivables to a factor

a. the seller pays a commission to the factor.

b. the factor pays a commission to the seller.

c. there is a gain on the sale of the receivables.

d. the seller defers recognition of sales revenue until the account is collected

Question 18

3 out of 3 points

Maximum benefit from independent internal verification is obtained when

a. it is made on a pre-announced basis.
b. it is done by the employee possessing custody of the asset.
c. discrepancies are reported to management.
d. it is done at the time of the audit.

Question 19

3 out of 3 points

The daily cash count of cash register receipts made by department supervisors is an example of

a. other controls.
b. independent internal verification.
c. establishment of responsibility.
d. segregation of duties.

Question 20

3 out of 3 points

Control over cash disbursements is generally more effective when

a. all bills are paid in cash.
b. disbursements are made by the accounts payable subsidiary clerk.
c. payments are made by check.
d. all purchases are made on credit.

Question 21

3 out of 3 points

Cash equivalents could include each of the following except

a. bank certificates of deposit.

b. money market funds.

c. petty cash.

d. U.S Treasury bills.

Question 22

3 out of 3 points

The cash account shows a balance of $40,000 before reconciliation. The bank statement does not include a deposit of $9,200 made on the last day of the month. The bank statement shows a collection by the bank of $3,960 and a customer’s check for $1,300 was returned because it was NSF. A customer’s check for $1,380 was recorded on the books as $1,920, and a check written for $318 was recorded as $390. The correct balance in the cash account was

a. $42,048.
b. $42,192.
c. $43,128.
d. $51,392.

Solution: $40,000 + $3,960 – $1,300 – ($1,920 – $1,380) + ($390 – $318) = $42,192

Question 23

3 out of 3 points

Candy Claws Company gathered the following reconciling information in preparing its August bank reconciliation:

Cash balance per books, 8/31 $19,500

Deposits in transit 900

Notes receivable and interest collected by bank 4,800

Bank charge for check printing 120

Outstanding checks 12,000

NSF check 1,020

The adjusted cash balance per books on August 31 is

a. $11,160.
b. $12,060.

c. $23,160.
d. $24,060.

Solution: $19,500 + $4,800 – $120 – $1,020 = $23,160

Question 24

3 out of 3 points

The custodian of a company asset should

a. have access to the accounting records for that asset.

b. be someone outside the company.

c. not have access to the accounting records for that asset.

d. be an accountant.

Question 25

3 out of 3 points

A petty cash fund of $100 is replenished when the fund contains $4 in cash and receipts for $93. The entry to replenish the fund would

a. credit Cash Over and Short for $3.

b. credit Miscellaneous Revenue for $3.

c. debit Cash Over and Short for $3.

d. debit Miscellaneous Expense for $3.

 

 

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