ACC 290 Final Exam

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Question 1The best definition of assets is thea.resources belonging to a company that have future benefit to the company.b.collections of resources belonging to the company and the claims on these resources.c.cash owned by the company.d.owners’ investment in the business.Answer:  
     
     
     
  Question 2Which of the following is not a liability?a.Accounts Receivableb.Accounts Payablec.Interest Payabled.Unearned Service RevenueAnswer:  
     
     
     
  Question 3Which of the following financial statements is divided into major categories of operating, investing, and financing activities?a.The income statement.b.The balance sheet.c.The statement of cash flows.d.The retained earnings statement.Answer:  
     
     
     
  Question 4Ending retained earnings for a period is equal to beginninga.Retained earnings – Net income + Dividends.b.Retained earnings – Net income – Dividends.c.Retained earnings + Net income – Dividends.d.Retained earnings + Net income + Dividends.Answer:  
     
     
     
  Question 5Which of the following is not an advantage of the corporate form of business organization?a.Easy to raise fundsb.Favorable tax treatmentc.No personal liabilityd.Easy to transfer ownershipAnswer:  
     
     
     
  Question 6An advantage of the corporate form of business is thata.it has limited life.b.its ownership is easily transferable via the sale of shares of stock.c.it is simple to establish.d.its owner’s personal resources are at stake.Answer:  
     
     
     
  Question 7A small neighborhood barber shop that is operated by its owner would likely be organized as aa.partnership.b.corporation.c.proprietorship.d.joint venture.Answer:  
     
     
     
  Question 8If services are rendered for cash, thena.assets will increase.b.stockholders’ equity will decrease.c.liabilities will decrease.d.liabilities will increase.Answer:  
     
     
     
  Question 9A revenue generallya.increases assets and decreases stockholders’ equity.b.increases assets and liabilities.c.increases assets and stockholders’ equity.d.leaves total assets unchanged.Answer:  
     
     
     
  Question 10A revenue accounta.is increased by debits.b.is increased by credits.c.is decreased by credits.d.has a normal balance of a debit.Answer:  
     
     
     
  Question 11Which accounts normally have debit balances?a.Assets, expenses, and revenuesb.Assets, liabilities, and dividendsc.Assets, expenses, and dividendsd.Assets, expense, and retained earningsAnswer:  
     
     
     
  Question 12In recording an accounting transaction in a double-entry systema.the amount of the debits must equal the amount of the credits.b.there must only be two accounts affected by any transaction.c.the number of debit accounts must equal the number of credit accounts.d.there must always be entries made on both sides of the accounting equation.Answer:  
     
     
     
  Question 13The usual sequence of steps in the transaction recording process isa.journalize, analyze, post to the ledger.b.analyze, journalize, post to the ledger.c.journalize, post to the ledger, analyze.d.post to the ledger, journalize, analyze.Answer:  
     
     
     
  Question 14Under the expense recognition principle expenses are recognized whena.they are paid.b.they are billed by the supplier.c.the invoice is received.d.they contribute to the production of revenue.Answer:  
     
     
     
  Question 15The revenue recognition principle dictates that revenue should be recognized in the accounting records:a.when cash is received.b.when the performance obligation is satisfied.c.at the end of the month.d.in the period that income taxes are paid.Answer:  
     
     
     
  Question 16Merchandising companies that sell to retailers are known asa.wholesalers.b.service firms.c.brokers.d.corporations.Answer:  
     
     
     
  Question 17Gross profit equals the difference betweena.sales revenue and operating expenses.b.net income and operating expenses.c.sales revenue and cost of goods sold plus operating expenses.d.sales revenue and cost of goods sold.Answer:  
     
     
     
  Question 18Net income will result if gross profit exceedsa.purchases.b.cost of goods sold plus operating expenses.c.operating expenses.d.cost of goods sold.Answer:  
     
     
     
  Question 19Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account?a.Freight-Outb.Freight Expensec.Freight-Ind.InventoryAnswer:  
     
     
     
  Question 20Financial information is presented below:Operating expenses$ 32000Sales revenue205000Cost of goods sold165000The profit margin ratio would bea.0.04.b.0.20.c.0.96.d.0.80.Answer:  
     
     
     
  Question 21Financial information is presented below:Operating expenses$ 20000Sales returns and allowances9000Sales discounts4000Sales revenue190000Cost of goods sold91000The gross profit rate would bea.0.54.b.0.45.c.0.49.d.0.53.Answer:  
     
     
     
  Question 22Financial information is presented below:Operating expenses$ 49000Sales returns and allowances5000Sales discounts6000Sales revenue206000Cost of goods sold108000Gross Profit would bea.$93000.b.$87000.c.$103000.d.$98000.Answer:  
     
     
     
  Question 23The LIFO inventory method assumes that the cost of the latest units purchased area.the first to be allocated to ending inventory.b.the last to be allocated to cost of goods sold.c.the first to be allocated to cost of goods sold.d.not allocated to cost of goods sold or ending inventory.Answer:  
     
     
     
  Question 24Which of the following statements is correct with respect to inventories?a.Under FIFO, the ending inventory is based on the latest units purchased.b.FIFO seldom coincides with the actual physical flow of inventory.c.The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.d.It is generally good business management to sell the most recently acquired goods first.Answer:  
     
     
     
  Question 25All of the following are examples of internal control procedures excepta.customer satisfaction surveys.b.insistence that employees take vacations.c.using prenumbered documents.d.reconciling the bank statement.Answer:  
     
     
     
  Question 26Each of the following is a feature of internal control excepta.separation of duties.b.an extensive marketing plan.c.recording of all transactions.d.bonding of employees.Answer:  
     
     
     
  Question 27For which of the following errors should the appropriate amount be subtracted from the balance per books on a bank reconciliation?a.Deposit of $900 recorded by the bank as $90.b.Check written for $63, but recorded by the company as $36.c.A returned $200 check recorded by the bank as $20.d.Check written for $59, but recorded by the company as $95.Answer:  
     
     
     
  Question 28A check written by the company for $116 is incorrectly recorded by a company as $161. On the bank reconciliation, the $45 error should bea.added to the balance per books.b.deducted from the balance per books.c.added to the balance per bank.d.deducted from the balance per bank.Answer:  
     
     
     
  Question 29The following information was available for Pharoah Company at December 31, 2017: beginning inventory $70000; ending inventory $102000; cost of goods sold $624000; and sales $816000. Pharoah inventory turnover ratio (rounded) in 2017 wasa.7.3 times.b.6.1 times.c.9.5 times.d.8.9 times.Answer:  
     
     
     
  Question 30The following information was available for Tamarisk, Inc. at December 31, 2017: beginning inventory $86000; ending inventory $132000; cost of goods sold $652000; and sales $864000. Tamarisk days in inventory (rounded) in 2017 wasa.74.5 days.b.60.8 days.c.46.2 days.d.48.0 days.Answer:  
     
     
     



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