devry acct304 midterm exam 2014 summer

(TCO 1) Which of the following has the authority to set accounting standards in the United States?

: FASB

IRS

SEC

AICPA

Instructor Explanation: Chapter 1

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Comments:

Question 2. Question :

(TCO 2) The FASB's conceptual framework's qualitative characteristics of accounting information includes:

: full disclosure.

relevance.

going concern.

historical cost.

Instructor Explanation: Chapter 1

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Comments:

Question 3. Question :

(TCO 3) High Seas Ships sold a 40-foot yacht for $750,000, receiving a $50,000 down payment and a 8% note for the balance. The journal entry to record this sale would include a:

: credit to cash.

debit to cash discount.

debit to note receivable.

credit to note receivable.

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Question 4. Question :

(TCO 3) When a tenant makes an end-of-period adjusting entry credit to the "Prepaid rent" account:

: (s)he usually debits cash.

(s)he usually debits an expense account.

(s)he debits a liability account.

(s)he does none of the above.

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Comments:

Question 5. Question :

(TCO 3) Permanent accounts would not include:

: cost of goods sold.

inventory.

current liabilities.

accumulated depreciation.

Comments:

Question 6. Question :

(TCO 4) Noncurrent assets include:

: inventory held for sale.

prepaid rent.

accounts receivable.

land held for a possible future plant site.

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Question 7. Question :

(TCO 4) The current ratio is given by:

: current assets divided by non-current assets.

current assets divided by total assets.

current assets divided by current liabilities.

current assets divided by total liabilities.

Instructor Explanation: Chapter 3

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Comments:

Question 8. Question :

(TCO 5) Popson Inc. incurred a material loss which was not unusual in character, but was clearly an infrequent occurrence. This loss should be reported as:

: an extraordinary loss.

a separate line item between income from continuing operations and income from discontinued operations.

a separate line item within income from continuing operations.

a separate line item in the retained earnings statement.

Instructor Explanation: Chapter 4

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Comments:

Question 9. Question :

(TCO 5) A voluntary change in accounting principle is accounted for by:

: a cumulative effect on income in the year of the change.

a retrospective reporting of all comparative financial statements shown.

a prior period adjustment.

a separate line component of income.

Instructor Explanation: Chapter 4

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Comments:

Question 10. Question :

(TCO 5) Arrow Printers paid $2,000 interest on short-term notes payable, $10,000 interest on long-term bonds, and $6,000 in dividends on its common stock. Arrow would report cash outflows from activities, as follows:

: operating, $2,000; financing $16,000.

operating, $0; financing $18,000.

operating, $12,000; financing $6,000.

operating, $18,000; financing $0.

Instructor Explanation: Operating activities ($2,000 + $10,000 = $12,000); Financing activities $6,000

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Question 11. Question :

(TCO 5) The Maytag Corporation's income statement includes income from continuing operations, a loss from discontinued operations, and extraordinary items. Earnings per share information would be provided for:

: net income only.

income from continuing operations and net income only.

income from continuing operations, loss from discontinued operations, and net income only.

income from continuing operations, loss from discontinued operations, extraordinary items, and net income.

Instructor Explanation: Chapter 4

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Question 12. Question :

(TCO 5) Expenses in an income statement prepared under International Financial Reporting Standards:

: must be classified by function.

must be classified by natural description.

can be classified either by function or by natural description.

none of the above is .

Instructor Explanation: Chapter 4

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Question 13. Question :

(TCO 4) Which is a shareholders' equity account in the balance sheet?

: Accumulated depreciation

Paid-in capital

Dividends payable

Marketable securities

Instructor Explanation: Chapter 3

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Question 14. Question :

(TCO 4) Which of the following groups is not among the external users for whom financial statements are prepared?

: Customers

Suppliers

Employees

All of the above are external users of financial statements.

Instructor Explanation: Chapter 1

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Comments:

(TCO 5) Using the information below and starting with "Income before taxes and extraordinary items", prepare the last part of the income statement for Misty Company. In your response, be sure to indicate the following for full credit:

- Income before taxes and extraordinary items

- Income tax expense

- Income before extraordinary items

- Extraordinary item(s), net of tax

- Net Income

Misty Company reported the following before-tax items during the current year:

Question 2. Question :

(TCO 4) Listed below are account balances (in $millions) taken from the records of Symphony Stores. All of these are permanent accounts, except the last two that have yet to be closed. The installment receivables are current. Symphony uses a perpetual inventory system.

REQUIRED: Complete a calculation that indicates what Symphony should report as total current assets? Hint: Don’t forget the contra assets.

: total

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Question 2. Question :

(TCO 4) Listed below are account balances (in $millions) taken from the records of Symphony Stores. All of these are permanent accounts, except the last two that have yet to be closed. The installment receivables are current. Symphony uses a perpetual inventory system.

REQUIRED: Complete a calculation that indicates what Symphony should report as total current assets? Hint: Don’t forget the contra assets.

(TCO 4) Briefly explain what is meant by a subsequent event. Give two examples of subsequent events.

Comments:

Question 2. Question :

(TCO 2) Briefly describe the materiality constraint as it applies to accounting record keeping and decision-making.

Question 3. Question :

(TCO 5) What is the purpose of the statement of cash flows? List the three major categories of cash flows and give an example of a cash transaction for each category.

Question 4. Question :

(TCO 3) What is the difference between permanent accounts and temporary accounts and why does an accounting system have both types of accounts?