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ACCT 504 Week 8 Final Exam All Correct Set 1 Answer

ACCT 504 Week 8 Final Exam All Correct Set 1 Answer

ACCT 504 Week 8 Final Exam All Correct Set 1 Answer

ACCT 504 Week 8 Final Exam All Correct Set 1 Answer

ACCT 504 Week 8 Final Exam All Correct Set 1 Answer

ACCT 504 Week 8 Final Exam All Correct Set 1 Answer


ACCT 504 Final Exam Solution (MCQ + Problems) (All Correct)

Question 1. 1. (TCOs A, B, and C) Which type of corporate information is not available to investors? (Points : 3)
Dividend history
Forecast of cash needs for the upcoming year
Cash provided by investing activities
Beginning cash balance
Question 2. 2. (TCO C) Debt securities sold to investors that must be repaid at a particular date some years in the future are called (Points : 3)
accounts payable.
notes receivable.
taxes payable.
bonds payable.
Question 3. 3. (TCO C) Buying and selling products are examples of (Points : 3)
operating activities.
investing activities.
financing activities.
delivering activities.
Question 4. 4. (TCO A) The cost of assets consumed or services used is also known as (Points : 3)
a revenue.
an expense.
a liability.
an asset.
Question 5. 5. (TCO C) Finley Company recorded the following cash transactions for the year.
Paid $90,000 for salaries
Paid $40,000 to purchase office equipment
Paid $10,000 for utilities
Paid $4,000 in dividends
Collected $150,000 from customers

What was Finley’s net cash provided by operating activities? (Points : 3)
$50,000
$10,000
$60,000
$46,000

Question 6. 6. (TCO A) On a classified balance sheet, prepaid insurance is classified as (Points : 3)
an intangible asset.
property, plant, and equipment.
a current asset.
a long-term investment.
Question 7. 7. (TCO A) An intangible asset (Points : 3)
may have the capacity to earn revenue for its owner.
is worthless because it has no physical substance.
is converted into a tangible asset during the operating cycle.
cannot be reported on the balance sheet because it lacks physical substance.

Question 8. 8. (TCO A) The following are selected account balances on December 31, 2010.

-Land (location of the corporation’s office building): $100,000
-Land (held for future use): 150,000
-Corporate Office Building: 600,000
-Inventory: 200,000
-Equipment: 450,000
-Office Furniture: 100,000
-Accumulated Depreciation: 300,000
What is the total NET amount of property, plant, and equipment that will appear on the balance sheet? (Points : 3)
$1,300,000
$1,100,000
$1,600,000
$950,000
Question 9. 9. (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? (Points : 3)
$4.66
$0.20
$66.67
$5.00
Question 10. 10. (TCO B) At December 31, 2010, Shorts Company had retained earnings of $2,184,000. During 2010 they issued stock for $98,000, and paid dividends of $34,000. Net income for 2010 was $402,000. The retained earnings balance at the beginning of 2010 was: (Points : 3)
$2,552,000
$1,816,000
$1,914,000
$2,454,000
Question 11. 11. (TCO D) Money collected from customers before the work is done is treated as (Points : 3)
prepaid expenses.
accrued revenues.
unearned revenues.
accrued expenses.
Question 12. 12. (TCO D) An account is a part of the financial information system and is described by all except which one of the following? (Points : 3)
An account has a debit and credit side.
An account has to be in paper form.
An account has a zero or nonzero balance.
An account has a title.
Question 13. 13. (TCO D) Which of the following describes the classification and normal balance of the retained earnings account? (Points : 3)
Asset, debit
Stockholders’ equity, credit
Revenues, credit
Expense, debit
Question 14. 14. (TCO D) In recording an accounting transaction in a double-entry system (Points : 3)
the number of debit accounts must equal the number of credit accounts.
there must always be entries made on both sides of the accounting equation.
the amount of the debits must equal the amount of the credits.
there must only be two accounts affected by any transaction.
Question 15. 15. (TCO D) Which of the following accounts follows the rules of debit and credit in relation to increases and decreases in the opposite manner? (Points : 3)
Prepaid insurance and dividends
Dividends and medical fees earned
Interest payable and common stock
Advertising expense and land
Question 16. 16. (TCO E) An accounting time period that is 1 year in length is called (Points : 3)
a fiscal year.
an interim period.
the time period assumption.
a reporting period.
Question 17. 17. (TCO E) In a service-type business, revenue is considered earned (Points : 3)
at the end of the month.
at the end of the year.
when the service is performed.
when cash is received.
Question 18. 18. (TCO E) Why do generally accepted accounting principles require the application of the revenue recognition principle? (Points : 3)
Failure to apply the revenue recognition principle could lead to an overstatement of revenue.
It is easy to apply the revenue recognition principle because revenue issues are always easy to identify and resolve.
Recording revenue when cash is received is an objective application of the revenue recognition principle.
Accounting software has made the revenue recognition easy to apply.

Question 19. 19. (TCO E) The following is selected information from G Corporation for the fiscal year ending October 31, 2010.

-Cash received from customers: $150,000
-Revenue earned: 175,000
-Cash paid for expenses: 85,000
-Expenses incurred: 100,000
Based on the accrual basis of accounting, what is G Corporation’s net income for the year ending October 31, 2010? (Points : 3)
$57,000
$75,000
$41,000
$85,000

Question 20. 20. (TCO E) Accounts often need to be adjusted because (Points : 3)
there are never enough accounts to record all the transactions.
many transactions affect more than one time period.
there are always errors made in recording transactions.
management can’t decide what they want to report.

Question 21. 21. (TCOs A and B) Which of the following expressions is incorrect? (Points : 3)
Gross profit – operating expenses = net income
Sales – cost of goods sold – operating expenses = net income
Net income + operating expenses = gross profit
Operating expenses – cost of goods sold = gross profit

Question 22. 22. (TCO B) Hunter Company purchased merchandise inventory with an invoice price of $12,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Hunter Company pays within the discount period? (Points : 3)
$11,040
$10,800
$11,760
$12,000
Question 23. 23. (TCOs A and 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 (Points : 3)
increased by $19,208.
increased by $19,700.
increased by $19,306.
increased by $19,308.

Question 24. 24. (TCO A) If goods in transit are shipped FOB destination (Points : 3)
the seller has legal title to the goods until they are delivered.
the buyer has legal title to the goods until they are delivered.
the transportation company has legal title to the goods while the goods are in transit.
no one has legal title to the goods until they are delivered.

Question 25. 25. (TCO A) Which statement is false? (Points : 3)
Taking a physical inventory involves actually counting, weighing, or measuring each kind of inventory on hand.
No matter whether a periodic or perpetual inventory system is used, all companies need to determine inventory quantities at the end of each accounting period.
An inventory count is generally more accurate when goods are not being sold or received during the counting.
Companies that use a perpetual inventory system must take a physical inventory to determine inventory on hand on the balance-sheet date and to determine cost of goods sold for the accounting period.

Question 26. 26. (TCO A) Of the following companies, which one would not likely employ the specific identification method for inventory costing? (Points : 3)
Music store specializing in piano sales
Custom jewelry store
Antique shop
Hardware store
Question 27. 27. (TCO A) Which of the following statements is correct with respect to inventories? (Points : 3)
The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.
It is generally good business management to sell the most recently acquired goods first.
Under FIFO, the ending inventory is based on the latest units purchased.
FIFO seldom coincides with the actual physical flow of inventory.
Question 28. 28. (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 (Points : 3)
FIFO method.
LIFO method.
average cost method.
tax method.
Question 29. 29. (TCO B) In a perpetual inventory system, cost of goods sold is recorded (Points : 3)
on a daily basis.
on a monthly basis.
on an annual basis.
each time a sale occurs.
Question 30. 30. (TCO B) The primary source of revenue for a retailer is (Points : 3)
investment income.
service revenue.
the sale of merchandise.
the sale of plant assets the company owns.

Question 31. 31. (TCO D) An account is an important accounting record where financial information is stored until needed. Briefly explain (1) the nature of an account, (2) the different types of accounts, and (3) the manner in which an account is increased and decreased, and the normal balance of each type of accounts. (Points : 25)

Question 32. 32. (TCOs B and E) The adjusted trial balance of Gertz Company included the following selected accounts.

Debit Credit
Sales $575,000
Sales returns and allowances $ 50,000
Sales discounts 9,500
Cost of goods sold 347,000
Freight-out 2,000
Advertising expense 15,000
Interest expense 19,000
Store salaries expense 74,000
Utilities expense 18,000
Depreciation expense 3,500
Interest revenue 25,000

Instructions:

1.Use the above information to prepare a multiple-step income statement for the year ended December 31, 2010.
2.Calculate the profit margin ratio and gross profit rate. To qualify for full credit, you must state the formula you are using, show your computations, and explain your findings.
(Points : 35)

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ACCT 504 SET 1