ACC230 Uses of Accounting Information I At Home Midterm - Part 2

Question

ACC230 Uses of Accounting Information I At Home Midterm - Part 2

Question # 00002409 Posted By: mac123 Updated on: 10/17/2013 03:42 PM Due on: 10/19/2013

Subject Accounting Topic Accounting Tutorials:

Question

his part is worth 75 points.

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Part 2

Question

1 of 37

Accounts receivable is an example of which of the following?

	Prepaid expense
	An accrued expense
	Unearned revenue
	Accrued revenue

Question

2 of 37

On August 1, 2011, Xcel Auto Repair paid $6,000 for six months rent. After adjusting entries are made, what will be the balance of Prepaid Rent on December 31, 2011?

	$4,000
	$6,000
	$2,000
	$1,000

Question

3 of 37

On December 31, 2010, the balance in Pinnacle Exploration Company's Unearned Revenue was $4,200. In January, 2011, the company received an advance payment of $12,000 for services to be performed. By May 31, adjustments had been made to recognize $8,500 of the revenue. What would be the balance in Unearned Revenue on May 31, 2011?

	$16,200
	$3,500
	$8,500
	$7,700

Question

4 of 37

At the end of the current year, the accountant for Navistar Graphics failed to make an adjusting entry for wages due to the company's employees for the last week in December. The wages will be paid in January. What is one of the effects of this error?

	Total assets are overstated.
	Net income is understated.
	Total liabilities are overstated.
	Net income is overstated.

Question

5 of 37

What is the effect of the adjusting entry for depreciation expense?

	The entry increases total assets and increases total expenses.
	The entry decreases total assets and increases total expenses.
	The entry increases total liabilities and increases total expenses.
	The entry decreases total liabilities and increases total expenses.

Question

6 of 37

The adjusting entry to record supplies expense accomplishes which of the following?

	Decreases a liability and increases a revenue
	Decreases a liability and increases an expense
	Increases an asset and increases an expense
	Decreases an asset and increases an expense

Question

7 of 37

The adjusting entry to record unearned revenue that has now been earned accomplishes which of the following?

	Increases an asset and increases an expense
	Decreases a liability and increases an expense
	Decreases an asset and increases an expense
	Decreases a liability and increases a revenue

Question

8 of 37

Plant assets are long-lived tangible assets used in the operation of a business. The allocation of a plant asset's cost to expense is which of the following?

	Revenue allocation
	Depreciation
	The revenue principle
	Historical cost

Question

9 of 37

The accountant for Wilson Consulting Company failed to make an adjusting entry to record $3,000 of unearned service revenue that has now been earned. Which of the following is true?

	Total liabilities are overstated.
	Total liabilities are understated.
	Total assets are overstated.
	Total assets are understated.

Question

10 of 37

Which of the following reports a company's financial position?

	Balance sheet
	Income statement
	Statement of owner's equity
	Adjusted trial balance

Question

11 of 37

All of the financial statements include which of the following elements?

	Title of the statement
	Date, or period, covered by the statement
	Name of the company
	All of the above

Question

12 of 37

Which of the following is TRUE of plant asset accounts and their related accumulated depreciation accounts?

	The allocation of a plant asset's cost to expenses is called depreciation.
	Accumulated depreciation is a contra-asset account that has a normal balance of a credit amount.
	Accounting for plant assets is the same as accounting for a prepaid expense.
	All of the above are true.

Question

13 of 37

Under which of the following inventory costing methods is the cost of goods sold based on the cost of the oldest purchases?

	Specific unit cost
	Average cost
	Last in first out
	First in first out

Question

14 of 37

Under which of the following inventory costing methods is the cost of goods sold based on the average cost of the purchases during the period?

	Specific unit cost
	Average cost
	Last in first out
	First in first out

Question

15 of 37

A company purchased 100 units for $20 each on January 31. It purchased 100 units for $30 on February 28. It sold 150 units for $45 each from March 1 through December 31. If the company uses the LIFO inventory costing method, which of the following amounts will be the amount of inventory on the December 31 balance sheet?

	$1,000
	$2,250
	$1,500
	$1,250

Question

16 of 37

Which of the following inventory costing methods yields the highest ending inventory when prices increase during the accounting period?

	Specific unit cost
	Average cost
	Last in first out
	First in first out

Question

17 of 37

Which of the following inventory costing methods is often adopted when a company sells relatively few costly items?

	Specific unit cost
	Average cost
	Last in first out
	First in first out

Question

18 of 37

On December 31 of the current year, the trial balance for a company reports the following amounts:

Cost of goods available for sale	$1,074,450
Ending inventory (FIFO)	85,430
Replacement cost of ending inventory	91,730

What amount must be reported for cost of goods sold on the income statement?

	$897,290
	$1,074,450
	$982,720
	$989,020

Question

19 of 37

Which of the following are common schemes for "cooking the books" involving inventory that are used to increase net income?

	a) Overstate ending inventory.
	b) Create fictitious sales.
	c) Bribe the auditing firm.
	d) Both A and B are common schemes.

Question

20 of 37

Which of the following statements is a TRUE statement concerning the worksheet?

	The worksheet is a ledger.
	The worksheet is a document used to summarize data to prepare the financial statements.
	The worksheet is a journal.
	The worksheet is a financial statement.

Question

21 of 37

Which of the following is the correct order of the steps for preparing the worksheet?

Compute each account's adjusted balance by combining the trial balance and adjustment figures. Enter each account's adjusted amount in the Adjusted Trail Balance columns.
Enter the account titles and their unadjusted balances in the Trial Balance columns of the worksheet and total the columns.
Extend (copy) the asset, liability, and owner's equity amounts from the Adjusted Trial Balance to the Balance Sheet columns. Copy the revenue and expense amounts to the Income Statement columns. Total the statement columns.
Enter the adjusting entries in the Adjustments columns and total the amounts.
On the income statement column, compute net income. Enter net income as the balancing amount on the income statement and balance sheet columns. Total the income statement and balance sheet columns.

	II, IV, I, III, V
	IV, I, III, V, II
	III, V, IV, I, II
	I, II, III, IV, V

Question

22 of 37

Which of the following statements is a TRUE statement about the worksheet?

	Net income appears in the Income Statement debit column.
	Net income appears in the Adjusted Trial Balance debit column.
	Net income appears in the Income Statement credit column.
	Net income appears in the Balance Sheet debit column.

Question

23 of 37

Where does net income appear on a worksheet?

	Net income appears only in the Balance Sheet credit column.
	Net income appears in the Income Statement credit column and in the Balance Sheet debit column.
	Net income appears only in the Income Statement debit column.
	Net income appears in the Balance Sheet credit column and in the Income Statement debit column.

Question

24 of 37

In which of the columns of the worksheet would the owner's capital account be found?

	In the Trial Balance debit column, the Adjusted Trial Balance debit column and the Balance Sheet debit column
	In the Trial Balance credit column, the Adjusted Trial Balance credit column and the Balance Sheet credit column
	In the Balance Sheet debit column and the Income Statement credit column
	In the Balance Sheet credit column and the Income Statement debit column

Question

25 of 37

Which of the following situations would indicate that an error has been made?

	The total of the debit column of Adjustments does not equal the total of the credit column of Adjustments.
	The total of the debit column of the Balance Sheet does not equal the total of the debit column of the Income Statement.
	The total of the debit column of the Trial Balance does not equal the total of the debit column of the Adjusted Trial Balance.
	All of these situations are the result of an error.

Question

26 of 37

Which of the following accounts will be closed by debiting the Income Summary?

	Accounts Payable
	Accumulated Depreciation
	Service Revenue
	Depreciation Expense

Question

27 of 37

Adkins Company has a current ratio of 1.0 and a debt ratio of .7. Wilson Company has a current ratio of 1.4 and a debt ratio of .5. Which of the following statements is true?

	The two companies' debt ratios and current ratios vary in different directions and the companies appear to be in similar financial shape.
	Wilson appears to be in better financial shape than Adkins.
	The two companies' debt ratios and current ratios vary in different directions and these results do not make sense.
	Adkins appears to be in better financial shape than Wilson.

Question

28 of 37

A company that uses the perpetual inventory method purchases inventory of $1,000 on account with terms of 2/10 net/30. Which of the following entries would be made to record the payment for the inventory if the payment is made within 10 days?

	The accounting entry would be a $1,000 debit to Accounts Payable and a $1,000 credit to Cash.
	The accounting entry would be a $1,000 debit to Accounts Payable, a $20 credit to Inventory and a $980 credit to Cash.
	The accounting entry would be a $980 debit to Accounts Payable, a $20 debit to Inventory and a $1,000 credit to Cash.
	The accounting entry would be a $20 debit to Inventory, a $1,000 debit to Accounts Payable and a $1,020 credit to Cash.

Question

29 of 37

Which of the following is generally a merchandiser's major cost?

	Salary expense
	Buildings
	Cost of goods sold
	Advertising

Question

30 of 37

A company uses the perpetual inventory method. Which of the following entries would be made to record a sale of merchandise on account?

	a) The accounting entry would be a debit to Accounts Receivable and a credit to Sales Revenue.
	b) The accounting entry would be a debit to Sales Revenue and a credit to Accounts Receivable.
	c) The accounting entry would be a debit to Cost of Goods Sold and a credit to Inventory.
	d) Both A and C would be necessary to record the sale.

Question

31 of 37

Which of the following is Net Sales Revenue?

	Sales less Sales Returns and Allowances
	Sales less Cost of Goods Sold
	Sales less Sales Discounts
	Sales less Sales Discounts and Sales Returns and Allowances

Question

32 of 37

Table 5.1

Sales revenue	$460,000
Costs of goods sold	300,000
Operating expenses	85,000
Sales discounts	20,000
Sales returns and allowances	15,000
Interest Revenue	5,000

Refer to Table 5.1. What is gross profit?

	$160,000
	$140,000
	$90,000
	$125,000

Question

33 of 37

Which of the following is subtracted from gross profit to arrive at operating income?

	Operating expenses
	Cost of goods sold
	Sales discounts and sales returns and allowances
	Cost of goods available for sale

Question

34 of 37

A company's cost of goods sold is $1,000,000. Its average inventory is $100,000. Which of the following is its rate of inventory turnover?

	100
	10
	.1
	.01

Question

35 of 37

A business receives cash in payment of accounts receivable. Which of the following occurs?

	An asset is debited and a liability is credited.
	A liability is debited and a liability is credited.
	An asset is credited and a liability is debited.
	An asset is debited and an asset is credited.

Question

36 of 37

A business makes a cash payment of rent. Which of the following occurs?

	An asset is credited and a liability is debited.
	An asset is debited and a liability is credited.
	A liability is debited and an expense is credited.
	An asset is credited and an expense is debited.

Question

37 of 37

The following entries were made by the accountant of Patel Pastries during its first month of operations.

James Patel, the owner, deposited $3,000 in the company's new checking account.
Mr. Patel paid the first month's rent of $400.
Mr. Patel purchased equipment by signing a note payable of $11,000.
Cash sales for the month were $4,500.
Mr. Patel purchased cooking supplies for $1,400.

After the accountant posts these entries to the general ledger, what is the balance in the cash account?

	$16,700
	$7,500
	$5,700
	$7,100

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score 2 · Accepted Answer · 10/19/2013 11:03 PM

Solution: ACC230 Uses of Accounting Information I At Home Midterm - Part 2_Solution

Tutorial # 00002326 Posted By: ACCOUNTS_GURU Posted on: 10/19/2013 11:03 PM

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ACC230 Uses of Accounting Information I At Home Midterm - Part 2

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