Mini%20Test%201%20SP%2008%20Version%20A0

Mini%20Test%201%20SP%2008%20Version%20A0 - lit-J '41 a...

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Unformatted text preview: lit-J '41 a ““ fix The recognition of an expense could be accompanied by wltieh of the following?I a h 'L a!" A. an increase in assets Kl B. a decrease in liabilities C a decrease in revenue I}, an increase in liabilities E. Hone ot'the above Ending inventory is equal to the cost or items physically on hand plus: A. Items sold, still in transit {l'.o.b. shipping pointl. B. Items purchased still in transit [f_o_h_ destination}. C. [tents sold, still in transit (fob. destination}. D. B and C E. None of‘ the above would be added to the physical inventory Panther Co. had a warranty liability of $350,000 at the beginning ot‘200tn, and 5300.000 at end ot‘2000. Each year Panther records warranty expense based on an estimate ol" the value of home warranty claims that will be incurred as a result of euirent year product sales. For 2000, Panther estimates $200,000 {representing 1% of sales}. What were the actual warranty expenditures for 2006'? A. $0. El. $200,000 C. $150,000 D. $250,000 E. None of the above Explain how the collection ot‘ an advance payment From a customer affects the accounting equation. A. Both assets and equity increase. l3. Both liabilities and assets increase. C. r‘tssets increase and liabilities decrease. I}. Assets increase and equity decreases. E. The eqttation will not change Cyclone Co. uses the periodic inventory system and had the following inventory purchases during the yean I! of Cost Per Extended its Transaction Llntts Ll“ Value l-Jan Beg. Inventory EUU 59.00 S LHtJUJJtJ IE-Apr Purchase 100 Slflflfl S l.t.||£|f.|.{|t] R-Jul Purchase 100 511.00 S l.l{|(|.{|{| 23—Ecp Purchase lliillil Slim? 5 m S 5.tt'|l't.t'|fl During the year. Stilt} units were sold at a price of fit} each. 1|fv'hat was ending inventory and cost of goods sold on 128] under the FIFti]I cost flow assumption“? A. 55. I an and some El. sedan and sauna C. slsuu altd ssscu D. sauce and SLKUU E. scans and sssea 1v‘lthich of the following statements about stockholders' equity is false? A. Stockholders' equity is the shareholders' residual interest in the company resulting from the difference in assets and liabilities. D. Stockholders equity accounts are increased with credits. C. Stockholders' equity results only from contributions ofthc owners. I}. The purchase of land for cash has no effect on stockholders‘ equity. E. Beth f." a D are false statements On December IS. EDGE. Transport Company accepted delivery of merchandise which it purchased on credit. As of December 3 I._ EDDt‘i. the company had neither recorded the transaction nor included the merchandise it] its inventory because the sellel’s invoice had not been received. The effect of this emission on its balance sheet at December 3 l. Bflfld. tend ol'the accounting period} was that A. assets and stockholder's equity were overstated but liabilities were not affected. 13. assets. liabilities and stockholdersr equity were understated. {3. assets and liabilities were understated but stockholders' equity was not affected. D. assets and stockholders' equity were understated but liabilities were not affected. E. Transport was correct in their treatment of this transaction :3: the balance sheet is therefore correct. 8. All {recognized} contingent liabilities are reported on the balance sheet. on tlte ineonte statement. on the statement of retained earnings . only as a disclosure in the notes to the financial statements E. None of the above is correct. one? 9. On September 2U, lflflo, Precision Electric Company purchas cd 5 ltmflt) ol‘stcreo equipment for resale on credit, subject to the terms 2! 15, n.-"3l1 The company records all purchases using the gross method. if the companyr paid for these goods on October IS, the entry made to record the payment should include also A. Fulfil] debit to Purchases discounts. B. $1fl.flflfl debit to Accounts payable. C. $9,300 credit to Cash. D. $1fl,flflfl debit to Merchandise inventory E. None of the above is correct. Hi. The assumption that in the absence of contrary information a business entity will continue indefiniter is the: A. Periodicity assumption. B. Entity assumption. C. Going concern assumption. 13'. Historical cost assumption. E. None of the above I I. In its 2flfl4 annual report. Apple Computer reported the following in one of its disclosure notes: "Warranty Expense: The Company provides currently for the estimated cost for product warranties at the time tlte related revenue is recognized.” This note exemplifies Apple's use of: A. Conservatism B. The matching principle C. Realization principle D. Full disclosure principle E. None ot" the above IE. The following represents selected intiormation talten from Acorn lCorporation‘s annual report dated I28 IEEUUE: T's-m Salt-i Sbj [lflfififl Total Assets Sltitlflllfllil End of‘year balance in cash and cash equivalents tCCEi SttUUlIULI 'T'tital Sloekholdcr‘s Equity trieiieit‘i S[5|'I|.'l|.[lll.'l[lli Total [lash {Tolleeted on customer accounts 54.T[i[i.[i[i[i 'I'otal Iii‘aslt paid to ycndors on amounts owed for credit purchases 53.2 DECIDE! Operating Expense 53.5 [lflflflfl Total Deferred Expenses 51 .2 litltitl What was the total amount of liabilities reported by r—‘teorn at ll-"B NEWS? A. $6.,IIIIIIIIIIIIJIIIIIIIIIII H. titlflflflflflfl C. $3.,SIJIJJJIJIJ D. $2.5flfliflflfl E. None ot‘the aboye I3. * In class we discussed that a business could categorize its "sources of funds" in to three broad categories. Which of the following would be considered an example of one ot‘these three sources? A. Limbo Corporation borrowed $Eflflflflfl from a finance company. The company is charging Limbo Tilt: interest and ex pects to be paid back in monthly installments oycr the next 8 years. B. Limbo Corporation was unable to obtain traditional bank financing and instead dealt with a venture capitalist firm obtaining SESUflUt} cash. Limbo must repay $1 SUJJUU of the cash received within 5 years plus |2% interest. The remaining 3 lflflflflfl provided by the VC firm gave them a 51% ownership stake in Limbo Corporation. C. Limbo Corp-oration collected SZSDflDD of Accounts Recciyablc created in the ordinary course of business. D. .t-‘tll of the above are examples of the three broad sources of fimds discussed in class. E. A and B only l4. * In class we used the “three sources o’r‘funds" discussion (see question #13} as justification tbr what accounting concept? A. Accrual basis accounting 1tr'crsus cash basis B. Justification for depreciation of long lived assets to be [bought of as "llie recovery ofcosl” versus a true measure of the decline in value C. The equality of the basic accounting equation 13- "espenditure":t"espense" E. None ot‘the above represent the reasons for the discussion For questions 15 through 18 please indicate whether the account would be increased or dccrcascd by a credit entr}.r to the account. I5. Unearned Subscription Revenue A. Increased H. Decreased l6. Retained Earnings A. [ncrcascd B. Decreased IT. Wage Expense A. Increased 1'5. Decreased IS. Accounts Receivable A. Increased B. Dec reased IEi'. Adam‘s Apples opened businees on January I, 20061, and paid for two insurance pelieies effeetive that dale. The liability pfilicy was $36,000 I'nr three years nl'enverage, and flu: erep damage pnlieg.r was $24,000 for a fine—year term. Which nflhe fulluwing adjusting entries: wnuld be made by Adam at 128130015? A. DEBI'J' L'REIJI'J' Prepaid lnsuranee enrer ('nsh {film} Insurance Expense 34,04“ Prepaid lnaumnee 24.011} E. DEBI'J' CREDI'J' Prepaid Insurance 2-LIHIII Insurance Expenee E-IJIH} C. DEBIT CREDIT lrleuranee Expenne seep-p Prepaid ]nnur:1nee 360‘!) D. DEBIT CREDIT Ineurnnee Expense SfiJ'H'H'I' Crop Damage: Pay-ab]: 34,1'H'H'II Prepaid II'LHIJTHJLL'I.‘ fI-I'IIJ'H'H} E. None efthe nbeue 2i}. The employees of Heat I[Tlothes work Monday through Friday. Every other Friday the company issues payroll cheeks totalingr $3fl,flflfl. The eurrenl pay period ends on Friday. July 3th. Neat Clothes is now preparing quarterly financial statements for the three months ended June 3t}. What is the adjusting entiy to record seemed salaries at the end of June“! A. nsalt t'asolt Salaries unponsr: llflflfl Prupaid Salarius lliflflfl Salaries Payalile 3t].t]tltl B. DEBJ'I' CREDJ'I' Salary Expense Stlfiltltl lCash 30.000 C. DEmT L'REEllT Salaries expense lllfllfllfl Salarius Payable lE‘DnD D. UFFtIT CR F BIT Salary Ex punsu lfiiflflfl Salary Payable Iiiflflfl E. There would he no required adjusting entry on June fifl'h 2 |. Each 13]” Whiuer lCorporation is required to make a single payment to its landlord pre-paying the rent for the next 12 months. Whiner‘s rental payment covers the period beginning on Til” and ending on fiflfl‘h of the i'bllowing year. Afier making year —end adjustments 1Whiner had the following activity in its prc-paid rent account tier the year ended 2W9. Prepaid Ftent BB 1f 1! 20139 bflflfl taboo | 15.noa EB IEIEIIEUUE SJUDD Given the above information. what was the amount of expense that 1|Jr'hiner would have recorded on its accrual basis income statement for the year ended 12:"3lr’2flfl9’.’ _ $24.,flflfl . $13,000 . $15.,IJIJI] I}. Hillflflfl E. None ofthe above A B C 22. Which ofthe following statements best describes Whiner‘s rental agreement at TI'HEUUE versus 7"! lr'EUUQ'? A. ‘v‘v’hiner‘s annual rent payment increased by 56.000 between "H lr'tJB and "H |.-’I]9. B. 1|tit-"hiner's annual rent payment decreased by $3.flflfl between 7"! lfflfi and TI tree. C. Whiners annual rent payment increased by BMW between anus and Tr'ltflg. D. Whiner's annual rent payment decreased by $9.1]flfl between wires and lit-"fig. Ii. The problem does not provide the necessaly information to answer this question. 23. Judy is in the process of hiring a nanny for her 8 month old son. She hires a private detective to run background checks on all viable candidates. What type of control procedure is the background check? A. Preventative B. Detective C. Corrective D. Preventative and Corrective only H. None ofthe above 24. Chill started 2006 with $511,111.11! of merchandise on hand. During zoos. $275,1l1l1l in merchandise was purchased on account with credit terms of arm n-"45. The shipping terms were f.o.h. shipping point with 1:: N H paying total freight charges of $511111]. Before the invoice 1was paid. merchandise witlt an invoice amount of 525.1100 was returned to the vendor. All purchase discouttts were taken. [‘HH reported cost of gttods old totaling 322111111]. 1|Iiiihat is the dollar amount ol'heginning inventory reponed at 1:"li2flfli'? A. $25,001] B. $5 11.11111} C . $TSJJIJIJ I]. 96251111111] E. Hone ofthe above 25. 1tirhich ofthe following statements are truc‘.’ A. One of the benefits ofhaving a centralized purchasing department is that it helps to insure that purchases companywide are being properly authorized. H. A company policy requiring that invoices be stamped "paid" is a detective centre] procedUre designec primarily to alert management if an MP clerk pays the satnc invoice twice. C. The purchase requisition once accepted is a legally binding contract. D. A company philosophy encouraging management to hire competent workers and to train etnployees enhances the control environment. E. Beth A. ii I] 26. 1riihich ot' the following control procedures [found in the purchasing 3c disbursement cycle} would help mitigate the risk that goods which are ordered are not received on a timely basis. causing production delays and inventory shortages. A. The accounting department should independently match {i.e. compare] the voucher package eotnponents prior to paytnent. B. The receiving department should periodically review open purchase orders. C. The requisitioning department should match (Le. compare} their copy of the purchase order to the purchase requisition. 1}. Departmental inventory requisitions should be based on a monitored need and require supervisory approval. E. None of the above control procedttres are designed to mitigate the risk described. 113 2?. At the end of mm, the felinwing data were taken from the accounts efhlbert i{Tarnnanjit ("untrihuleil Capital] fiflfifll'm Retained Eurningn. ]-"| 321109 El'llimt'llfll Total Revenue Earned during, anna liUflflU Tntal Expenses incurred during EUU‘J 90,000 Total Cash ti‘nlleeled during lflfl‘i 125.0110 Total Expenses Paid during 2009 TiL‘JEJL‘J The anna chiming L'IitriL'n m1th include: A. EEEIJJJIJIJ net credit in Retained earnings. B. $fifl.flflfl net debit tn Retained earnings. C. $5U,UUU debit tn Retained earnings. D. $fifliflflfl net credit to: Retained earnings. E. El ILLUUIUI net credit to Retained Earnings. 11 ...
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Mini%20Test%201%20SP%2008%20Version%20A0 - lit-J '41 a...

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