284_s06_finala

284_s06_finala - Accounting 284 1. Final Exam Spring 2006...

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Accounting 284 Final Exam Spring 2006 1. Matlock Company reported total sales revenue of $55,000 and total expenses amounting to $45,000 (i.e., net income $10,000) on its income statement for the year ended December 31, 2005. During 2005, accounts receivable decreased by $4,000, merchandise inventory decreased by $6,000, accounts payable increased by $2,000 and depreciation of $8,000 was recorded. Therefore, based only on this information, the net cash flow from operating activities for 2005 was: A) $10,000. B) $18,000. C) $19,000. D) $30,000. 2. The principle which holds that all of the expenses incurred in earning revenue should be identified with the revenue recognized and reported for the same period is the A) revenue principle. B) liability principle. C) timing principle. D) matching principle. 3. Which of the following statements about the effective interest amortization method is false ? A) We must compute interest expense before computing the amortized discount or premium. B) The difference between interest expense and cash interest is the portion of premium or discount amortized. C) Interest expense is computed by multiplying the stated interest rate times the book value of the bonds payable. D) None of the above are false. 4. During 2006, Abby Corporation reacquired some shares of its own common stock. It records treasury stock at cost. What effect did this transaction have on 2006 stockholders' equity and assets, respectively? A) Stockholders' Equity: Decrease; Assets: No effect B) Stockholders' Equity: Increase; Assets: No effect C) Stockholders' Equity: Decrease; Assets: Decrease D) Stockholders' Equity: Increase; Assets: Decrease 5. Schager Company purchased a computer system on January 1, 2006, at a cash cost of $25,000. The estimated useful life is 10 years, and the estimated residual value is $3,000. The company will use the double-declining balance (declining-balance based on a 200 percent acceleration rate) method. Depreciation expense for the second year will be A) $5,000. B) $4,000. C) $3,800. D) $2,200.
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Acct 284 Final Exam – Spring 2006 Page 2 6. Belmond Company uses the periodic FIFO method to value inventory and had the following transactions in the period. What are the cost of goods sold and ending inventory balances in dollars for the period? Date Transaction # of units Cost per unit 1/1 Beginning balance 150 $10 1/2 Purchase 200 $12 1/5 Sale 100 1/6 Sale 200 COGS Ending Inventory A) 3,900 1,000 B) 2,500 1,400 C) 3,100 800 D) 3,300 600 7. Restless Company's 2005 income statement reported total credit sales revenue of $100,000. The 2004- 2005, comparative balance sheets showed that accounts receivable decreased by $10,000. The 2005 “cash receipts from customers” would be A) $100,000. B) $110,000.
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This note was uploaded on 09/23/2009 for the course ACCT 284 taught by Professor Clem during the Spring '08 term at Iowa State.

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284_s06_finala - Accounting 284 1. Final Exam Spring 2006...

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