- Description
ACC 290 Week 5 Final Exam
Question 1
The best definition of assets is the
resources belonging to a company that have future benefit to the company. |
cash owned by the company. |
collections of resources belonging to the company and the claims on these resources. |
owners’ investment in the business. |
Question 2
Which of the following is not a liability?
Accounts Payable |
Accounts Receivable |
Unearned Service Revenue |
Interest Payable |
Question 3
Which of the following financial statements is divided into major categories of operating, investing, and financing activities?
The statement of cash flows. |
The retained earnings statement. |
The income statement. |
The balance sheet. |
Question 4
Ending retained earnings for a period is equal to beginning
Retained earnings + Net income + Dividends. |
Retained earnings + Net income – Dividends. |
Retained earnings – Net income + Dividends. |
Retained earnings – Net income – Dividends. |
Question 5
Which of the following is not an advantage of the corporate form of business organization?
No personal liability |
Favorable tax treatment |
Easy to raise funds |
Easy to transfer ownership |
Question 6
An advantage of the corporate form of business is that
its ownership is easily transferable via the sale of shares of stock. |
it is simple to establish. |
it has limited life. |
its owner’s personal resources are at stake. |
Question 7
A small neighborhood barber shop that is operated by its owner would likely be organized as a
partnership. |
joint venture. |
corporation. |
proprietorship. |
Question 8
If services are rendered for cash, then
liabilities will decrease. |
stockholders’ equity will decrease. |
assets will increase. |
liabilities will increase. |
Question 9
A revenue generally
increases assets and stockholders’ equity. |
increases assets and decreases stockholders’ equity. |
leaves total assets unchanged. |
increases assets and liabilities. |
Question 10
A revenue account
is increased by credits. |
has a normal balance of a debit. |
is increased by debits. |
is decreased by credits. |
Question 11
Which accounts normally have debit balances?
Assets, expenses, and dividends |
Assets, expense, and retained earnings |
Assets, expenses, and revenues |
Assets, liabilities, and dividends |
Question 12
In recording an accounting transaction in a double-entry system
the amount of the debits must equal the amount of the credits. |
there must only be two accounts affected by any transaction. |
the number of debit accounts must equal the number of credit accounts. |
there must always be entries made on both sides of the accounting equation. |
Question 13
The usual sequence of steps in the transaction recording process is
journalize, analyze, post to the ledger. |
analyze, journalize, post to the ledger. |
journalize, post to the ledger, analyze. |
post to the ledger, journalize, analyze. |
Question 14
Under the expense recognition principle expenses are recognized when
they are billed by the supplier. |
the invoice is received. |
they contribute to the production of revenue. |
they are paid. |
Question 15
The revenue recognition principle dictates that revenue should be recognized in the accounting records:
at the end of the month. |
in the period that income taxes are paid. |
when cash is received. |
when the performance obligation is satisfied. |
Question 16
Merchandising companies that sell to retailers are known as
corporations. |
wholesalers. |
service firms. |
brokers. |
Question 17
Gross profit equals the difference between
net income and operating expenses. |
sales revenue and cost of goods sold plus operating expenses. |
sales revenue and operating expenses. |
sales revenue and cost of goods sold. |
Question 18
Net income will result if gross profit exceeds
cost of goods sold. |
cost of goods sold plus operating expenses. |
purchases. |
operating expenses. |
Question 19
Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account?
Inventory |
Freight-In |
Freight-Out |
Freight Expense |
Question 20
Financial information is presented below:
Operating expenses | $ 30000 | |
Sales revenue | 187000 | |
Cost of goods sold | 153000 |
The profit margin ratio would be
0.98. |
0.82. |
0.02. |
0.18. |
Question 21
Financial information is presented below:
Operating expenses | $ 22000 |
Sales returns and allowances | 5000 |
Sales discounts | 5000 |
Sales revenue | 150000 |
Cost of goods sold | 108000 |
The gross profit rate would be
0.75. |
0.21. |
0.26. |
0.23. |
Question 22
Financial information is presented below:
Operating expenses | $ 42000 |
Sales returns and allowances | 3000 |
Sales discounts | 8000 |
Sales revenue | 140000 |
Cost of goods sold | 98000 |
Gross Profit would be
$45000. |
$42000. |
$39000. |
$31000. |
Question 23
The LIFO inventory method assumes that the cost of the latest units purchased are
the first to be allocated to ending inventory. |
the last to be allocated to cost of goods sold. |
the first to be allocated to cost of goods sold. |
not allocated to cost of goods sold or ending inventory. |
Question 24
Which of the following statements is correct with respect to inventories
The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold. |
It is generally good business management to sell the most recently acquired goods first. |
Under FIFO, the ending inventory is based on the latest units purchased. |
FIFO seldom coincides with the actual physical flow of inventory. |
Question 25
All of the following are examples of internal control procedures except
using prenumbered documents. |
reconciling the bank statement. |
customer satisfaction surveys. |
insistence that employees take vacations. |
Question 26
Each of the following is a feature of internal control except
recording of all transactions. |
separation of duties. |
an extensive marketing plan. |
bonding of employees. |
Question 27
For which of the following errors should the appropriate amount be subtracted from the balance per books on a bank reconciliation?
Check written for $85, but recorded by the company as $58. |
Deposit of $500 recorded by the bank as $50. |
A returned $100 check recorded by the bank as $10. |
Check written for $93, but recorded by the company as $39. |
Question 28
A check written by the company for $119 is incorrectly recorded by a company as $191. On the bank reconciliation, the $72 error should be
added to the balance per books. |
deducted from the balance per bank. |
deducted from the balance per books. |
added to the balance per bank. |
Question 29
The following information was available for Concord Corporation at December 31, 2017: beginning inventory $95000; ending inventory $128000; cost of goods sold $620000; and sales $936000. Concord inventory turnover ratio (rounded) in 2017 was
6.5 times. |
8.4 times. |
5.6 times. |
4.8 times. |
Question 30
The following information was available for Skysong, Inc. at December 31, 2017: beginning inventory $79000; ending inventory $106000; cost of goods sold $640000; and sales $832000. Skysong days in inventory (rounded) in 2017 was
52.9 days. |
60.8 days. |
40.6 days. |
45.1 days. |