DeVry ACCT504 Wk 4 Midterm latest 2016 September

1. Question : (TCO A) Which of the following accounts is recorded as part of stockholders’ equity on the Balance Sheet?

Long-term debt

Retained earnings

Revenue

Expenses

Question 2. Question : (TCO B) For 2014, CAP Corporation reported net income of $96,000; net sales $1,440,000; and weighted average shares outstanding of 9,600. There were no preferred dividends. What was the 2014 earnings per share?

$100.00

$150.00

$10.00

$15.00

Question 3. Question : (TCO C) Purchasing inventory is an example of a(n)

operating activity.

investing activity.

financing activity.

noncash investing and financing activity.

Question 4. Question : (TCO D) Dividends declared are reported on which of the following statements?

Income Statement

Statement of Retained Earnings

Balance Sheet

Statement of Financial Position

Question 5. Question : (TCO E) Which of the following describes the normal balance and classification of the Unearned Revenue account?

Credit, liability

Debit, liability

Debit, stockholders’ equity

Credit, stockholders’ equity

Question 6. Question : (TCO F) The accrual accounting term used to indicate recording an expense before paying cash for the item is

deferral.

accrual.

depreciation.

prepayment.

Question 7. Question : (TCO A) LBJ Company recorded the following events involving a recent purchase of merchandise.

- Received goods for $95,000, terms 2/10, n/30.

- Returned $4,500 of the shipment for credit due to damaged goods.

- Paid $1,000 for freight in.

- Paid the invoice within the discount period.

As a result of these events, the company's merchandise inventory

increased by 89,580.

increased by $89,690.

increased by $89,600.

increased by $91,500.

Question 8. Question : (TCO B) In periods of rising prices, which of the following inventory methods results in the highest gross profit figure?

FIFO

LIFO

Average cost method

Cannot be determined based on the information given

Question 9. Question : (TCO A) Which of the following is not a current liability?

Unearned revenue

Accounts payable

Accrued liabilities

Prepaid expenses

Question 10. Question : (TCO E) Which of the following is an objective of internal control?

Risk assessment

Information technology

Adequate records

Comply with legal requirements

Question 11. Question : (TCOs A and E) Your friend, Ellen, has hired you to evaluate the following internal control procedures.

Explain to your friend whether each of the numbered items below is an internal control strength or weakness. You must also state which internal control procedure relates to each of the internal controls.

For the weaknesses, you also need to state a recommendation for improvement.

(1) The cashier counts the total receipts and reconciles the receipts with the cash register total.

(2) Electronic documents are password-protected.

(3) The accountant is completely independent of the sales department.

(4) Invoices are not numbered.

(5) Large purchase orders must be approved by a manager.

Question 12. Question : (TCOs E and F) Please prepare the following journal entries. Indicate which account should be debited and which account should be credited, along with the dollar amount of the debit and credit.

(1) Investors invest $500,000 in exchange for 50,000 shares of common stock.

(2) Company purchased equipment for $25,000 on account.

(3) Company paid Rent for $4,000.

(4) Company received $15,000 for services not yet performed.

(5) Employees work Monday through Friday and are paid on Friday. Salary expense is $10,000 per day and this year, December 31 falls on a Wednesday.

Points Received: 30 of 30

Comments:

Question 13. Question : (TCOs B and D) The following items are taken from the financial statements of Ashe Company for 2012:

Equipment $100,000

Accounts Receivable 12,000

Accounts Payable 9,000

Cost of Goods Sold 72,000

Utilities Expense 11,000

Depreciation Expense 17,000

Insurance Expense 9,000

Common Stock 200,000

Dividends 12,000

Rent Expense 3,000

Note Payable (due 2014) 40,000

Advertising Expense 14,000

Prepaid Insurance 17,000

Retained Earnings (beginning) 44,000

Accumulated Depreciation 50,000

Salaries Expense 60,000

Salaries Payable 3,500

Net sales 205,000

Supplies 4,000

Supplies Expense 5,000

Instructions

(a) Calculate the net income. (18 points)

(b) Calculate the balance of Retained Earnings that would appear on a balance sheet at December 31, 2012. (7 points)

(c) Calculate the gross profit percentage. (5 points)

Points Received: 28 of 30

Comments:

Question 14. Question : (TCO D) The following items are taken from the financial statements of PQR Company for 2012:

Cash $250,000

Accounts Receivable 150,000

Prepaid Rent 120,000

Accounts Payable 168,000

Unearned Service Revenue 25,000

Equipment, net of accumulated depreciation 333,000

Common Stock 250,000

Retained Earnings 12/31/2011 41,000

Long-term debt 300,000

Service revenue 165,000

Cost of Goods Sold 50,000

Rent expense 24,000

Supplies expense 10,000

Insurance expense 12,000

Instructions:

(a) Please create a classified Balance Sheet in good form for the year ended 2012. (25 points)

(b) Please calculate the current ratio. (5 points)