Practice Final Exam Questions

Question 1

If something is likely to influence the decision of an investor or creditor this item would be considered what?

Answer 1

A material item

Question 2

If a firm is collection $600 dollars on Accounts Receivable than what is happening to the assets of the firm?

Answer 2

One Asset will increase / and one asset will decrease. More specifically the AR asset account will decrease while the cash asset account will increase

Question 3

Many times transactions affect more than one time period. In order to deal this what kind of accounting entry is made?

Answer 3

An Adjusting Entry must be made

Question 4

On January 31st 2012 the balance in Goebel Inc.’s supplies account was $500. During February Goebel purchased supplies of $600 and used supplies and used $800 of supplies. What was the supplies account balance at the end of the of Febuary?

Answer 4

500+600-800=300 in the debit supplies asset account

Question 5

If you take the current assets and DIVIDE current liabilities what will the answer give you for you accounts?

Answer 5

Your working capital

Question 6

Mitchell Corporation has current assets of $1,600,000 and current liabilities of $750,000. If they pay $250,000 of their accounts payable what will their new current ration be?

Answer 6

2.7:1

Question 7

In order to be relevant must be one of the following: A)capable of making a difference in a decision B)be presented on the balance sheet C)be recorded at historical cost D) improve the company’s internal control

Answer 7

Be capable of making a difference in a decision

Question 8

A firm that is easy to transfer the ownership of, raise funds, and has no personal liability would defined as a partnership or corporation?

Answer 8

A corporation has these traits

Question 9

Raxon Company borrowed $30,000 from the bank signing a 6%, 3-month note on September 1st: Principal and interest are payable to the bank on December 1st. If the company prepares monthly financial statements, the adjusting entry that the company should make for interest on September 30 would be what?

Answer 9

Debit note payable: $1,800 Credit Cash: $1,800

Question 10

Events that change a company’s financial statements are recognized in the period they occur rather than in the period in which cash is paid or received would be considered what type of accounting?

Answer 10

This is under the Accrual basis of accounting

Question 11

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

Answer 11

Merchandise Inventory

Question 12

The collection of an $800 account within the 2% discount period would result in an entry in what account?

Answer 12

Debit Sales Discount for $16

Question 13

If a transaction for equipment purchase totaling $20,000 takes place by putting $5,000 Cash down and then signing a notes payable for the remainder what would the journal entry include?

Answer 13

Credit to Notes Payable

Question 14

This is the totals for Barnes Company at the end of its first year Cash-$14,000 Prepaid Insurance-$700 AR-$3,500 AP-$2,800 NP-$4,200 Common Stock-$5,400 Dividends-$700 Revenues-$24,000 Expenses-$17,000 With the above in mind what did Barnes Company show as total credits on its trial balance? This is assuming normal balances are in every account

Answer 14

Credits totaled:=$36,400

Question 15

The cumulative effect of the declaration and payment of a cash dividend on a company’s financial statement is to do what?

Answer 15

Decrease total assets and stockholders equity

Question 16

La More Company had the following transactions during 2011: Sales of $4500 on account Collected $2,000 for service to be performed in ‘12 Paid $1375 Cash in salaries for 2011 Purchased airline tickets for $250 in December for a trip to take place in 2012 What is La More’s 2011 Net income using Accrual based accounting?

Answer 16

$3,125

Question 17

Sampson Company’s accounting records sow the following at the year ending on December 31 2012 Purchase Discount-$5600 FrieghtIN-$7800 Purchases-$300,010 Beginning Inventory-$23,500 Ending Inventory-$28,800 Purchase Returns-$6400 Using the periodic system what is the cost of goods sold?

Answer 17

$290,510

Question 18

On December 31st 2012 Mohling Company’s inventory records indicated a balance of $652,000. Upon Further Investigation it was determined that this amount included the following: $112,000 in inventory purchases made by Mohling shipped from the seller 12/27/12 terms FOB destination but not due to be received until January 2nd $74,000 in goods sold by Mohling with terms FOB destination on December 27th. The goods are not expected to reach their destination until January 6th $6,000 of goods received on consignment from Dollywood Company With this in mind what is Mohlings correct ending inventory ending balance at December 31st 2012?

Answer 18

$534,000

Question 19

Which of the following is NOT an objective of a system of internal controls? Safeguard company assets Overstate Liabilities in order to be conservative Enhance the accuracy and reliability of accounting records Reduce the risk of errors

Answer 19

Overstate liabilities in order to be conservative

Question 20

A very small company would have the most difficulty in implementing which of the following internal control activities? Separation of duties Limited access to assets periodic independent verification sound personnel procedures

Answer 20

Separation of duties

Question 21

Dobler Company uses a periodic inventory system. Details of the inventory account for the month of January are as follows:

Date–Units—PUP——TOTAL

1/1/12–200–$5.00–$1,000

1/15/12–100–$5.30–$530

1/28/12–100–$5.50–$550

An end of the month inventory showe that 140 units were on hand. If the company uses FIFO what is the value of the ending inventory?

Answer 21

$762

Question 22

When there is a period of rising prices which of the following inventory methods generally result in the lowest net income figures?

Answer 22

LIFO Method

Question 23

Below is the following records for Redecker’s inventory.

2012——2011——2010

$34,580–$27,650–$30,490==Ending Inventory

$182,000-$178,000-$174,200==COGS

With the above in mind what is Redeckers inventory turnover ration for 2011? (rounded)

Answer 23

6.1 Times

Question 24

Operating Expenses—$21,000

Sales Returns & Allowances–$7,000

Sales Discounts–$3,000

Sales Revenue–$150,000

COGS–$105,000

With the financial information presented above what is the gross profit rate of this company?

Answer 24

.25

Question 25

Would you amortize the cost of an intangible asset with an indefinite life?

Answer 25

It would not be Amortized

Question 26

On July 1, 2012 Dillman Kennels (Stupid name I know) sells equipment for $44,000. The equipment originally Cost $120,000 and had an estimated 5-year life and an expected salvage value of $20,000. Now the accumlated depreciation on the account had a balance of $70,000 on January 1, 2012. If the company uses the straight line method what would the gain (or loss) of the disposal be?

Answer 26

There would be a $4,000 GAIN

Question 27

Net Credit Sales—$4,866,000

AR 12/31/12—$370,000

AR 12/31/11—$430,000

Net Income—$120,000

The data above is for a company called Stevenson Industries (Stevenson seems vain). Using this data compute the average collection period

Answer 27

30 Days

Question 28

Nance Co. holds Grants INC’s $20,000, 4 month, 9% Note. What is the accounting entry for Nance CO. when the note is collected, this is assuming no interest has previously been accrued

Answer 28

Cash $20,600 Notes Receivable $20,000 Interest Revenue $600

Question 29

The reconciliation of the cash register tape with the cash in the register is an example of what?

Answer 29

Independent internal verification

Question 30

Karlin Company gathered the following reconcilling information in preparing its April bank reconciliation:

Cash Balance per books, 4/30—-$8,800

Deposits in Transit———————$1,200

NR & Interest Collected by bank–$2,960

Bank charge: check printing——–$100

Outstanding Checks——————-$6,000

NSF Check———————————$560

With the information above what is the adjusted cash balance per books on April 30th?

Answer 30

$11,100

Question 31

Let me tell you a story:

In 2012 the Golic CO. had net credit sales of $900,000. On January 1, 2012, the allowance for doubtful acounts had a credit balance of $19,000. During 2012, $36,000 of uncollectible accounts receivable were written off. Past Experience indicates that the allowance should be 10% of the balance in receivables (percentage of recievable basis). If the accounts recieveable balance at December 31st was $240,000 what is the required adjustmnet to the allowance for Doubtful accounts at December 31st, 2012.

Answer 31

$41,000

Question 32

Let me Tell you a story:

A company purchased land for $84,000 cash. Real estate brokers comission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. Proceeds from the salavage of the demolished buidling was $1,200. Under the historical cost principle, the cost of land would be recorded at what amount?

Answer 32

$94,800

Question 33

What is cash flow from operating activities?

Answer 33

This category is generally considered the best measuere of a companys ability to continue as a going conern

Question 34

Which of the following would not be included in the operating activities section of the statement of cash flows?

Answer 34

Cash payments for acquistion of investments

Question 35

Alt. Corp issues 3,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to what?

Answer 35

Common stock $30,000 and Paid in Capital in Excess Par Value

Question 36

Below is the balance sheet for Nance Corporation as of December 31st, 2012:

8% Preferred stock, $20 par value, cumulative, 20,000 shares authorized; 10,000 shares issued $200,000

Common stock, $10 par value, 2,000,000 shares authorized; 1,300,000 shares issued, 1,280,000 shares outstanding $13,000,000

Paid-in capital excess of par value-prefferred stock $40,000

Paid-in capital excess pf par value preferred stock $18,000,000

Retained Earnings————————-$5,100,000

Treasury Stock (20,000 shares)——$420,000

What is Nance’s total stockholders Equity?

Answer 36

$35,920,000

Question 37

Yanik Corporation issues 4,000, 10-year, 8%, $1,000 bonds dated January 1, 2014, at 97.

What will the Journal Entry to record this issuance show?

Answer 37

Debit To cash of $4,000,000

Question 38

What is a premium?

Answer 38

This is when the market interest rate for a bond is lower than the stated (coupon) Interest rate.

Question 39

Below is data for BOX Corporation at December 31st, 2012:

Common stock, Par $10 (Auth. 30,000 shares) $200,000

Treasury stock (at cost $15 per share) $1,200

Based on the data above, how many shares of common stock are outtanding?

Answer 39

19,920