Midterm Form C Solutions - Midterm SP 2010 C Key 1. Maltec...

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Midterm SP 2010 C Key 1. Maltec Corporation has started placing its quarterly financial statements on its web page, thereby reducing by ten days the time to get information to investors and creditors. The qualitative concept improved is: A. Relevance. B. Comparability. C. Materiality. D. Reliability. E. Consistency. 2. Radio Corporation had the following inventory purchases and sales during January of the current year: Quantity Unit Extended Date in Units Price Value Beg. Inventory 1-Jan 1,000 $1 $1,000 Purchase 8-Jan 1,000 $2 $2,000 Purchase 15-Jan 1,000 $3 $3,000 Purchase 22-Jan 1,000 $4 $4,000 Purchase 28-Jan 1,000 $5 $5,000 Sale 14-Jan 1,000 $6 $6,000 Sale 31-Jan 3,000 $6 $18,000 Using the first-in-first-out cost flow assumption what was Radio's ending inventory assuming a periodic inventory system is maintained? A. $5,000 B. $4,000 C. $3,000 D. $2,000 E. $1,000 3. Continuing with question # 2, assume instead that Radio uses the last-in-first-out cost flow assumption and maintains a perpetual inventory system. What is the dollar amount of Radio's cost of goods sold? A. $9,000 B. $10,000 C. $12,000 D. $13,000 E. $14,000
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4. Sunny Acres has operated a successful retirement community for the last ten years. In late March, Sunny Acres paid $24,000 for two years of business liability coverage (effective April 1st). This entire payment was debited to insurance expense. Which of the following adjusting entries should be made by Sunny Acres in 2009 to properly account for the policy? A. DEBIT CREDIT Insurance Expense 9,000 Prepaid Insurance 9,000 B. DEBIT CREDIT Insurance Expense 12,000 Prepaid Insurance 12,000 C. DEBIT CREDIT Prepaid Insurance 15,000 Insurance Expense 15,000 D. DEBIT CREDIT Prepaid Insurance 24,000 Cash 24,000 E. None of the above 5. Winton Enterprises had the following events during 2007: Services were provided to customers for $5,000 on account. Cash totaling $3,000 was collected from customers for services performed on account. The business issued $10,000 of common stock to its stockholders. The business purchased land for $6,000 cash. The company borrowed $8,000 from the bank. Interest of $500 was accrued on the bank loan. The business purchased supplies on account for $5,000. Services were provided to customers for $10,000 cash. Winton used up $4,500 of the supplies purchased Operating expenses of $6,000 were incurred and paid in cash. A dividend of $1,000 was paid to the owners of Winton Enterprises. Assuming the company began operations during 2007, the amount of retained earnings as of December 31, 2007 would be: A. $8,500 B. $3,000 C. $7,500 D. $14,000 E. None of the above
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6. A manager of a large retail firm is interested in knowing what the company's product costs are. Which of the following would be considered a product cost for the manager's company?
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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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Midterm Form C Solutions - Midterm SP 2010 C Key 1. Maltec...

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