Acc 290 final exam

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ACC 290 Final
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1) Which financial statementis used to determine cash generated from operations?
A. Income statement
B. Statementof operations
C. Statementof cash flows
D. Retained earnings statement
2) In terms of sequence,in whatorder mustthe four basic financial statements be prepared?
A. Balance sheet,income statement,statementofcash flows,and capital statement
B. Income statement,capital statement,statementofcash flows,and balance sheet
C. Balance sheet,capital statement,statementofcash flows,and income statement
D. Income statement,capital statement,balance sheet,and statementofcash flows
3) In classifying transactions,which ofthe following is true in regard to assets?
A. Normal balances and increases are debits.
B. Normal balances and decreases are credits.
C. Normal balances can either be debits or credits for assets.
D. Normal balances are debits and increases can be debits or credits.
4) An increase in an expense accountmustbe
A. debited
B. credited
C. either debited or credited, depending on the circumstances
D. capitalized
5) ABC Corporation issues 100 shares of$1 par common stock at$5 per share,which of the following is the correct
journal entry?
A.
Cash$100
Common Stock $100
B.
Cash$500
Common Stock $500
C.
Cash$500
Paid-in Capital,Excess of Par $400
Common Stock $100
D.
Cash$100
Paid-in Capital,Excess of Par$400
Common Stock $500
6) In the first month of operations,the total of the debit entries to the cash accountamounted to $1,400 and the total
of the credit entries to the cash accountamounted to $600.The cash accounthas a

2. A. $600 creditbalance
B. $1,400 debitbalance
C. $800 debit balance
D. $800 credit balance
7) Which ledger contains control accounts?
A. Accounts receivable subsidiaryledger
B. General ledger
C. Accounts payable subsidiaryledger
D. General revenue and expense ledger
8) Smith is a customer of ABC Corporation.Smith typically purchases merchandise from ABC on account. Which
ledger would ABC use to keep track of the details ofSmith’s account?
A. Accounts receivable subsidiaryledger
B. Accounts receivable control ledger
C. General ledger
D. Accounts payable subsidiaryledger
9) Under the cash basis ofaccounting,
A. revenue is recognized when services are performed
B. expenses are matched with the revenue that is produced
C. cash mustbe received before revenue is recognized
D. a promise to pay is sufficientto recognize revenue
10) Under the accrual basis ofaccounting,
A. cash mustbe received before revenue is recognized
B. net income is calculated bymatching cash outflows againstcash inflows
C. events that change a company’s financial statements are recognized in the period they occur rather than in the
period in which the cash is paid or received
D. the ledger accounts mustbe adjusted to reflect a cash basis ofaccounting before financial statements are
prepared under generallyaccepted accounting principles
11) The Vintage LaundryCompanypurchased $6,500 worth of laundrysupplies on June 2 and recorded the
purchase as an asset.On June 30, an inventory of the laundrysupplies indicated only$2,000 on hand. The adjusting
entry that should be made by the companyon June 30 is
A. debitLaundry Expense,$2,000; creditLaundry Expense $2,000
B. debitLaundry Expense,$4,500; creditLaundry Supplies Expense,$4,500
C. debit LaundrySupplies,$2,000;creditLaundry Supplies Expense,$2,000
D. debit LaundrySupplies Expense,$4,500;creditLaundry Supplies,$4,500
12) Greese Companypurchased office supplies costing $4,000 and debited Office Supplies for the full amount.At the
end of the accounting period,a physical count of office supplies revealed $1,100 still on hand.The appropriate
adjusting journal entryto be made at the end of the period would be
A. debitOffice Supplies Expense,$1,100;creditdebitOffice Supplies Expense
B. debitOffice Supplies,$2,900;creditOffice Supplies Expense, $2,900
C. debit Office Supplies Expense,$2,900;creditOffice Supplies,$2,900
D. debit Office Supplies,$1,100;creditOffice Supplies Expense,$1,100
13) Based on the accountbalance below,whatis the total of the debitand credit columns ofthe adjusted trial
balance?
Service revenue$3,300 Equipment$6,400

3. Cash1,525 Prepaid insurance1,225
Unearned revenue5,320 Depreciation expense640
Salary1,050 Accum. depreciation1,280
Common stock390 Retained earnings550
A. $9,150
B. $10,840
C. $9,560
D. $10,430
14) An adjusted trial balance
A. is prepared after the financial statements are completed
B. proves the equality of the total debit balances and total creditbalances ofledger accounts after all adjustments
have been made
C. is a required financial statement under generallyaccepted accounting principles
D. cannot be used to prepare financial statements
15) Given the following adjusted trial balance:
DebitCredit
Cash $781
Accounts receivable 1,049
Inventory 1,562
Prepaid rent 43
Property, plant& equipment150
Accumulated depreciation 26
Accounts payable 41
Unearned revenue 61
Common stock 103
Retained earnings 3,305
Service revenue 134
Interestrevenue 28
Salary expense 80
Travel expense 33
Total $3,698 $3,698
Net income for the year is
A. $248
B. $135
C. $162
D. $49
16) Given the following adjusted trial balance,whatwill be the totals for the debit and credit columns ofthe post-
closing trial balance?
DebitCredit
Cash $1,562
Accounts receivable 2,098
Inventory 3,124
Prepaid rent 86
Property, plant, & equipment300

4. Accumulated depreciation $52
Accounts payable 82
Unearned revenue 172
Common stock 206
Retained earnings 6,610
Service revenue 218
Interestrevenue 56
Salary expense 160
Travel expense 66
Totals $7,396 $7,396
A. $7,396
B. $7,118
C. $7,334
D. $7,170
17) Given the following adjusted trial balance:
DebitCredit
Cash $781
Accounts receivable 1,049
Inventory 1,562
Prepaid rent 43
Property, plant& equipment150
Accumulated depreciation 26
Accounts payable 41
Unearned revenue 61
Common stock 103
Retained earnings 3,305
Service revenue 134
Interestrevenue 28
Salary expense 80
Travel expense 33
Total $3,698 $3,698
After closing entries have been posted,the balance in retained earnings will be
A. $3,256
B. $3,170
C. $3,440
D. $3,354 (This is not correct)
18) Net income is recorded on the work sheetunder the
A. debitcolumn ofthe adjusted trial balance and the creditcolumn of retained earnings
B. debitcolumn ofthe income statementand the credit column ofthe balance sheet
C. credit column ofthe adjusted trial balance and the debitcolumn ofretained earnings
D. credit column ofthe income statementand the debitcolumn of the balance sheet
19) At the beginning ofthe year, Uptown Athletic had an inventory of $400,000.During the year, the compa ny
purchased goods costing $1,500,000.If Uptown Athletic reported ending inventory of $600,000 and sales of
$2,000,000,their cost of goods sold and gross profitrate would be

5. A. $900,000 and 65%
B. $1,300,000 and 35%
C. $900,000 and 35%
D. $1,300,000 and 65%
20) During the year, Sarah’s Pet Shop’s merchandise inventorydecreased by$30,000.If the company’s costof
goods sold for the year was $450,000,purchases would have been
A. $480,000
B. $420,000
C. $390,000
D. Insufficientdata to determine
21) At the beginning ofthe year, Wildcat Athletic had an inventory of $200,000.During the year, the company
purchased goods costing $700,000.If WildcatAthletic reported ending inventory of $300,000 and sales of
$1,000,000,their cost of goods sold and gross profitrate would be
A. $400,000 and 60%
B. $600,000 and 40%
C. $400,000 and 40%
D. $600,000 and 60%
22) The entry to record of sale of $900 with terms of 2/10, n/30 will include a
A. debitto Sales Discountfor $18354 (This is not correct)
B. debitto Sales Revenue for $882
C. credit to Accounts Receivable for $900 (Probably correct)
D. credit to Sales Revenue for $900354 (This is not correct)
23) Dobler Companyuses a periodic inventorysystem.Details for the inventory account for the
month of January 2012 are as follows:
Units Per unitprice Total
Balance,1/1/2012 200 $5.00 $1,000
Purchase,1/15/2012 100 5.30 530
Purchase,1/28/2012 100 5.50 550
An end of the month (1/31/2012),inventory showed that140 units were on hand.If the companyuses LIFO, what is
the value of the ending inventory?
A. $737
B. $700
C. $762
D. $1,380
24) The difference between ending inventory using LIFO and ending inventory using FIFO is referred to as
A. FIFO reserve
B. inventory reserve
C. LIFO reserve
D. periodic reserve
25) A consistentapplication ofan inventory costing method enhances
A. conservatism
B. accuracy
C. comparability
D. efficiency

6. 26) The accountantat Patton Companyhas determined thatincome before income taxes amounted to $11,000 using
the FIFO costing assumption.If the income tax rate is 30% and the amountof income taxes paid would be $300
greater if the LIFO assumption were used,whatwould be the amountofincome before taxes under the LIFO
assumption?
A. $11,300
B. $12,000
C. $10,000
D. $10,700
27) A very small companywould have the mostdifficulty in implementing which ofthe following internal control
activities?
A. Separation ofduties
B. Limited access to assets
C. Periodic independentverification
D. Sound personnel procedures
28) A system of internal control
A. is infallible
B. can be rendered ineffective by employee collusion
C. invariably will have costs exceeding benefits
D. is premised on the conceptof absolute assurance
29) The custodian ofa companyassetshould
A. have access to the accounting record for that asset
B. be someone outside the company
C. not have access to the accounting record for that asset
D. be an accountant
30) The Sarbanes Oxley Act (2002) applies to
A. U.S. companies butnotinternational companies
B. international companies butnotU.S. companies
C. U.S. and Canadian companies butnotother international companies
D. U.S. and international companies