Mini Test 1 Form B - [la-J The recegniticn of a revenue...

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Unformatted text preview: [la-J The recegniticn of a revenue ceuld be accompanied by which of the t‘nllnwing'? A. a dee rease in assets B. an increase in liabilities C. an increase in assets 1}. The centributien et‘ capital by an owner E. None at" the share Ending inyentnry is equal tn the east of items physically nn hand plus: A. Items suld, still in transit (flab. shipping paint). H. Items purchased, still in transit (flab. shipping paint}. C. items purchased. still in transit (flab. destination}. D. A Sc B E. Nelle ef the abeye would be added In the physical inventory. Panther Ce. had a warranty liability Ltf Silflfleflflfl at the beginning of EDDIE-1. and $45fltflflfl at end Uf Eflflfi. Each year Panther reeerds warranty expense based on an estimate of the 1ralue at future warranty claims that will be incurred as a result el'eurrent year product sales. For 2131315. Panther estimated l'uture warranty work tn be apprnxitnately 1% (if current year sales. During Eflflt‘i Panther incurred $25fl1flflfl nf actual east to sen-ice eustentcr warranty elailns. 1What was the amount of warranty expense reeerded in EDDIE? A. W. H. .‘E 200,?10'0 C . $3flfl ,CICIU D. $2 5t] .tJtJt] I-I. None at the above Cyclmte Ce. uses the periodic inventory system and had the following inventory purchases during the year. T'.l of Cost Per Extended in: 'l'raiisaction UL'HS Uiit ‘v'aluc Han Beg. Inventory 200 5-9 00 S hmflflfl I E-Apr Purchase 100 S | CLDD S LUUUUU ll—J'Iil Purchase It'll] 5| Hm S l.|[ll'.|.t'll] 22-Sep Purchase ltltl Slltltl S W S illlflflfl During the year, 3131] units were sold at a price of $3!) each. 1|Ip‘r'hat was ending inventtiry and cost of goods sold on 12.31 under the LIFO cost flew assumption? A. SEJUU and 3&2le B. searion s2.on C. static and 5.3.3ch D. 5.3.3th and trace E. sasoa and scscc Dn Decenrber 15. secs. Transport Company accepted delivery of merchandise which it purchased on credit. as ot'Dccernbcr 3 l._ EDDIE. the company had neither recorded the transaction not included the merchandise in its inventory because the seller” s invoice had not been received. The effect of this omission on its balance sheet at December 3 I, sacs. {end ofthe accounting period} was that A. assets and stockholders equity were overstated hut liabilities were not affected. l3. stockholdcr's equity was the only item affected by the omission. C. assets and stockholders' equity were understated hut liabilities were not affected. D. assets and liabilities were understated but stockholders' equity was not affected. E. Transport was correct in their treatment ofthis- transaction 3:. the balance sheet is therefore correct. 6. Which of the Following statements are true? A. l[Zine of the benefits of having a centralized purchasing department is that it improves accuracy and efficiency by allowing the employee working closest with the ordered item [and thus ntost knowledgeable about what is needed} to handle the purchase. a. A companyr policy requiring that invoices be stamped "paid" is a corrective control procedure designed primarily to alert management it' an MP elerk pays the same inyoiee twice. C. The receiving report once accepted by accounting is a legally binding contract. D. A contpany philosophy encouraging management to hire competent workers and to train employees enhances the control environment. H. Iioth C d: I} For questions 3' through lfl please indicate whether the account would be increased or decreased by a debit entry. 3". Retained Earnings A. Increased Is. Decreased 8. Prepaid Insurance Expense A. Increased El. Deerea sed 9. Accounts Payable A. Inc reascd B. Decreased It}. Cost ot‘tfioods Sold A. Increased B. Decreased I I. On September 20, 200b, Precision Electric Company purchased $ltl.flflfl of stereo equipment for resale on credit. subject to the temts 2.:‘lfi, hilt}. The company records all pureltascs using the gross method. If the company paid for these goods on Sept. 23. the entry made to record the payment should include a-"an A. $2flfl debit to Purchases discounts. B. $|tl,tltltl credit to Accounts payable. C. tattoo credit to lCash. I}. $IU,UUU debit to Merchandise Inventory E. None of the above is correct. IE. Which of the Following control procedures [Found in the purchasing 3: disbursement cycle} would ltelp mitigate the risk that the wrong goods are ordered {please choose the new answer]. A. The accounting department should independentlyr match [i.e. compare] the voucher package components prior to payment. a. The receiving department should periodically review open purchase orders. C. The requisitioning department should rnaleh (Le. compare} their copy of the purchase order to the purchase requisition. D. Departmental inventory requisitions should be based on a monitored need and require supervisory approval. 1:". None of the above l3. At the end ot‘2tl'tl'9. the following data were taken from the accounts ot‘f‘tlbcrt Company: Fttnlrihuled Capital Hflfiflflfl Retained Earnings. lit-"EDIE Etttllttttt Total Revenue Earned during ltJtJE" litlfltttt Total Expenses Incurred during EUU‘J ZURUUU Total Cash Collected during 200‘? 1210110 Total Expenses l’aid during EDDIE} JUDLHJL‘J The 2:109 closing ultlriex would include: A. $25fl1flflfl net credit to Retained eantings. B. $5tl,tl|tl|t.l net debit to Retained earnings. C. $25.UUU net credit to Retained earnings. I]. $5U,UUU net credit to Retained earnings. E. $35fllflflt] net credit to Retained Earnings I4. Recognizing expected losses immediately, but det‘en‘ing expected gains, is an example ot‘: A. Materialitv. El. Conservatism. {3. Cost etTectiveness. D. Timeliness. IS. The following represents selected information taken from Acorn Corporation‘s annual report dated IZB IEEUUE: “(:1 Salas-t 55.5 flfolflID Total Assets 53.tl[ltl.[l[l[l End ofycar balance in cash and cash equivalents tCCEl Stitltlllflltl Total liabilities 54.5 [lflfififl Total [Tosh {Tollocted on cusleirter accounts 54.T[l[i.[l[i[l Total Cash paid to vendors on amounts owed 53.2 00.000 Operating Fit punsa 53.5 [lflllflfil Total Deferred Espciiscs S] .2 litltltl 1|What was the total amount of stockholders equity reported by Acorn at ll-"B NEWS? A. sasooncc a. so {3. $l.fiflfl.{l{l{l o. ${I.5tltl.tltltl} deficit 13. None of the above In. Explain how the collection of amounts due on outstandng customer accounts affects the accounting equation. A. Both assets and equity increase. B. Both liabilities and. assets increase. C. Assets increase and liabilities decrease. D. Liabilities increase and equity decreases. H. The equation will not change IT. * In class we discussed that a business could categorize it's “sources ot‘t‘unds" in to three broad categories. Which of the tollowing would be considered an example ot'one ol'these three sources? A. Limbo Corporation borrowed 5250.000 from a finance cotnpany. The cotnpany is charging Limbo Taxi: interest and expects to be paid back in monthly installments over the next 3 years. a. Limbo Corporation was unable to obtain traditional banl-t financing and instead dealt with a venture capitalist firm obtaining 5250.000 cash. Limbo must repay 5150.000 ol'thc cash received within 5 years plus 12% interest. The remaining 5100.000 provided by the VI: firm gave them a filll’a ownership stake in Limbo Corporation. C. Limbo Corporation collected $250,000 oFAccounts Receivable created in the ordinary course of business. D. fitll ot'the above are examples ot'the three broad sources of funds discussed in class. 1i. A and C only I8. * In class we used the “sources of funds” discussion {see question #1?) asjustification for what accounting coneept':1 A. Accrual basis accounting versus cash basis 13. Justification for depreciation ot'tong lived assets to be thought of as "the recovery ot‘cost" versus a true measure of the decline in value {3. The equality of the basic accounting equation 13- "capenditure"as"espcnse" ti. None of the above represent the reasons for the discussion I9. Deferred Revenue is reported A. on the balance sheet. H. on the income statement. C. on the statetnent of retained earnings D. only as a disclosure in the notes to the financial statements E. None of the above is correct. 20. .ludy has recently hired a nanny for her 8 month old son. During the interview, candidates were informed that they must agree to random dntg dc alcohol testing as a condition ot‘their employment. What type of control procedure is the random drug £5 alcohol testing ‘? A. Preventative B. Detective C . Corrective I}. Primarily Detective and Corrective and potentially preventative E. Primarily Detective and potentially preventative 2 |. Adam‘s Apples apeneel business en January it 2000, and paid for two insurance pelieies effective that date. The liability pfilitly was $36,000 far three years of coverage, and the erep damage paiieg.r was $24,000 for a cine—year term. 1|h‘Ir'hieh 0f the fullest-int; adjusting entries WULIILi be made by Adam at 123 |.-"200?? A. DEBIT FREDiT Prepaid lnsuranee seem L‘aslt 00.000 Insurance Expense 2-LILHSH} Prepaid Insuranee E-IJIH} B. DEBIT (IREDiT insurance Expense IEJI'H'H'II Prepaid insurance IEJ'H'H'II {3. anatr eaantr insurance Expense JfiJ'H'H'II Crap Damage Payahie 24.01]? Prepaid Insurance film D. DEE“ L'REDH Prepaid Insuraitee 24.000 [nsuranee Expense 24,000 E. Nant- et‘llte above 22. Each Tr‘i’” 1|titr’hiner Corporation is required to make a single payment to its landlord pure-paying the rent for the next 12 months. 1vi’hiner's rental payment covers the period beginning on W1“ and ending on seat" of each year. After making year —enr.l adjustments Whiner had the following activityr in its pre-paid rent aeeount tbr the year ended 2W9. Prepaid Rent BB IIIHEWQ lflflflfl cacao Jl 22pm | EB 12r31f2oos 12.1101] l{iii-en the above information. what was the amount ofeash paid by 1i’tfhiner on W1.-'2UU9‘.’ A. 34.131313 B. $22 .flflfl E. ii I 2 ,{JUU D. $ 34.131313 E. None of the above 23. Which of the following statements best describes Whiner’s rental agreement at Tr'l flflflg versus 1-" 1313139? A. 1|Winner‘s annual rent payment increased by swoon between "H HUS and "H ] :“tlil. Et. 1Whiner’s annual rent payment decreased by $2.flt}t} between 7"! | EDS and 7"! | .ifl‘}. C. Whiners annual rent payment increased by liltltlft between TEL-“fig and Tr’lffl‘}. D. 1|tir‘hincr‘s annual rent payment increased by $14.flflfl between "H Mitt and Tilfflg. E. The problem does not provide the necessary information to answer this question. 24. CNH started Eflflb with Sltttt.tttttt of merchandise on hand. During zoos. $25Gflflfl in merchandise was purchased on account with credit terms of |.-"1fl HMS. The shipping terms were fob. shipping point with CNII paying total freight charges of Hilflflfl. Before the invoice was paid, merchandise with an invoice amount ot'SStlflflt] was rctumed to the vendor. All purchase discounts were taken. CNH reported cost ofgoods old totaling Eli-lififlfltl. 1|Nhat is the dollar amount of beginning inventory reported at 1:"li2IIIIIIIIT? A. "52% ,{lflfl B. 5 3t] 5.1312112] C. l; l T 5 ,UUU D. $ | 311131313 11'. lit 1 [ltllltlfl 25. Which ot‘ the Following statements about stockholders1 equity is correct?I A. .‘itocltholdersr equityr is the shareholders" residual interest in the company resulting from the dificrenee in assets and accrued liabilities. B. Stoeltholdert-Lr equity aeeuunts can be increased by debits or eredits depending on whether or out the company has reported a profit for the current year. C. The transaction recording the payment ot'sn amount clue to a supplier has no ellch on stockholders' equity. D. Stockholders' equity results only from contributions of the owners. E. None or the ahoye is correct. as. 1li't’hich tifthe following husinesses would Lit have cost ofgoods sold. A. Ajewelry store It. A grocery store C. A law linn D. A manufacturer of batteries E. All of the above would disclose cost of goods sold Continued on next page!!! 113 2?. The employees of Heat Clothes work Monday through Friday. Every other Friday the company issues payroll cheeks totaling 9530.000. The current pay period ends on Friday. July 10th. Neal Clothes is now preparing quarterly financial statements for the three months ended June 30. 1|What is the adjusting entry to record accrued salaries at the end ofJune‘.’ A. naarT ca F m Salaries ertpcnst.‘ anon Prepaid Salaries 24.000 Salaries Payable 30.000 B. DEBlT L'RE Dl'l' Salary Expense 30.000 Cash 30.000 (1. LJ'EBl'J' ['HEDH' Salaries espen se 34.000 Salaries F'ayal'rlc 24,000 D. DEBl'J' L'RE DlT Salary Expense 0.000 Salary l’ayahle {1.000 E. None of the above 11 ...
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This note was uploaded on 02/14/2011 for the course ACCY 202 taught by Professor Staff during the Spring '08 term at University of Illinois, Urbana Champaign.

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Mini Test 1 Form B - [la-J The recegniticn of a revenue...

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