devry acct304 final exam

acct304 final exam

Question 1.1. (TCO 1) The SEC issues accounting standards in
the form of (Points : 6)

accounting
research bulletins.

financial
reporting releases.

financial
accounting standards.

financial technical bulletins.

Question 2.2. (TCO 1) When a registrant company submits its
annual filing to the SEC, it uses (Points : 6)

Form 10-A.

Form 10-K.

Form 10-Q.

Form S-1.

Question 3.3. (TCO 2) The conceptual framework’s qualitative
characteristic of relevance includes (Points : 6)

predictive
value.

verifiability.

completeness.

neutrality.

Question 4.4. (TCO 2) Enhancing qualitative characteristics
of accounting information include each of the following, except (Points : 6)

timeliness.

materiality.

comparability.

verifiability.

Question 5.5. (TCO 3) A sale on account would be recorded by
(Points : 6)

debiting
revenue.

crediting
assets.

crediting
liabilities.

debiting
assets.

Question 6.6. (TCO 3) Prepayments occur when (Points : 6)

cash flow
precedes expense recognition.

sales are
delayed pending credit approval.

customers are
unable to pay the full amount due when goods are delivered.

manufactured
goods await quality control inspections.

Question 7.7. (TCO 4) An asset that is not expected to be
converted to cash or consumed within 1 year or the operating cycle is (Points :
6)

goodwill.

accounts
receivable.

inventory.

supplies.

Question 8.8. (TCO 4) Which of the following is never a
current liability account? (Points : 6)

Accrued
payroll

Dividends
payable

Prepaid rent

Subscriptions
collected in advance

Question 9.9. (TCO 5) The distinction between operating and
nonoperating income relates to (Points : 6)

continuity of
income.

principal
activities of the reporting entity.

consistency of
income stream.

reliability of
measurements.

Question 10.10. (TCO 5) On May 1, Foxtrot Co. agreed to sell
the assets of its Footwear Division to Albanese Inc. for $80 million. The sale
was completed on December 31, 2012. The following additional facts pertain to
the transaction:

The Footwear Division qualifies as a component of the
entity, according to GAAP, regarding discontinued operations.

The book value of Footwear’s assets totaled $48 million on
the date of the sale.

Footwear’s operating income was a pre-tax loss of $10
million in 2012.

Foxtrot’s income tax rate is 40%.

In the 2012 income statement for Foxtrot Co., it would
report

(Points : 6)

income (loss)
on its total operations for the year without separation.

income (loss)
on its continuing operation only.

income (loss)
from its continuing and discontinued operations separately.

income and
gains separately from losses.

Question 11.11. (TCO 5) Operating cash outflows would
include (Points : 6)

purchase of
investments.

purchase of
equipment.

payment of
cash dividends.

purchases of
inventory.

Question 12.12. (TCO 5) The FASB’s stated preference for
reporting operating cash flows is the (Points : 6)

indirect
method.

direct method.

working
capital method.

all financial
resources method.

Question 13.13. (TCO 5) Merchandise sold FOB shipping point
indicates that (Points : 6)

the seller
pays the freight.

the buyer
holds title after the merchandise leaves the seller’s location.

the common
carrier holds title until the merchandise is delivered.

the sale is
not consummated until the merchandise reaches the point to which it is being
shipped.

Question 14.14. (TCO 5) Todd Sweeney is an artist who sells
his work under consignment. (He displays his work in local barbershops, and
customers buy the work there.) Sweeney recently transferred a painting to a
local barbershop. After Sweeney has transferred a painting to a barbershop, the
painting (Points : 6)

should be
counted in Sweeney’s inventory until the barbershop sells it.

should be
counted in the barbershop’s inventory, as they now possess it.

should be
counted in either Sweeney’s or the barbershop’s inventory, depending on which
incurred the cost of preparing the painting for display.

None of the
above

Question 15.15. (TCO 6) Reba wishes to know how much money
would be in her savings account if she deposits a given sum in an account and
leaves it there at 6% interest for 5 years. She should use a table for the
(Points : 6)

future value
of an ordinary annuity of 1.

future value
of 1.

future value
of an annuity of 1.

present value
of an annuity due of 1.

Question 16.16. (TCO 6) Loan A has the same original
principal, interest rate, and payment amount as Loan B. However, Loan A is
structured as an annuity due, while Loan B is structured as an ordinary
annuity. The maturity date of Loan A will be (Points : 6)

earlier than
Loan B.

later than
Loan B.

the same as
Loan B.

indeterminate
with respect to Loan B.

Question 17.17. (TCO 7) Compensating balances represent
(Points : 6)

funds in a
bank account that cannot be spent.

balances in a
payroll checking account.

accounts that
are subject to bank service charges.

accounts on
which banks pay interest, such as NOW accounts.

Question 18.18. (TCO 7) Oswego Clay Pipe Company sold
$46,000 of pipe to Southeast Water District #45 on April 12 of the current year
with terms 1/15, n/60. Oswego uses the gross method of accounting for cash
discounts. What entry would Oswego make on April 23, assuming the customer made
the correct payment on that date?

(Points : 6)

Option a

Option b

Option c

Option d

Question 19.19. (TCO 8) In a periodic inventory system, the
cost of purchases is debited to (Points : 6)

purchases.

cost of goods
sold.

inventory.

accounts
payable.

Question 20.20. (TCO 8) During periods when costs are rising
and inventory quantities are stable, cost of goods sold will be (Points : 6)

higher under
FIFO than LIFO.

higher under
FIFO than average cost.

lower under
average cost than LIFO.

lower under
LIFO than FIFO.

Question 21.21. (TCO 8) In applying LCM, market cannot be
(Points : 6)

less than net
realizable value.

greater than
the normal profit.

less than the
normal profit margin.

greater than
net realizable value.

Question 22.22. (TCO 8) In calculating the cost-to-retail
percentage for the retail method, the retail column will not include (Points :
6)

purchases.

purchase
returns.

abnormal shortages.

freight-in.

Question 1. 1. (TCO 8) Fulbright Corp. uses the periodic
inventory system. During its first year of operation, Fulbright made the
following purchases (listed in chronological order of acquisition):

• 40 units at $100

• 70 units at $80

• 170 units at $60

Sales for the year totaled 270 units, leaving 10 units on
hand at the end of the year. What is the ending inventory using the average
cost method (rounded)? (Points : 15)

Question 2. 2. (TCO 5) Describe what is meant by unearned
revenues, and give two examples. (Points : 28)

Question 3. 3. (TCO 7) Briefly compare and contrast the two
allowance estimation approaches to estimating bad debt expense. In your answer,
indicate which approach, if either, is superior and explain your
reasoning. (Points : 25)

1. (TCO 8)
Briefly explain when there would be a tax benefit from electing LIFO rather
than FIFO. (Points : 25)

Question 2. 2. (TCO 4) You are the independent accountant
assigned to the audit of Neophyte Company. The company’s accountant, a graduate
of Rival State University, has prepared financial statements that contained the
following questionable items:

a. The balance sheet reports land at $100,000. Included in
this amount is a piece of property held for speculation at a cost of $30,000.

b. Current liabilities include $50,000 for long-term debt
that comes due in 3 months. The company has received a suitable firm commitment
to refinance the debt for 5 years and intends to do so.

c. Long-term Investments (non-current) in marketable
securities include $20,000 in short-term, high-grade commercial paper.

Please discuss how the above items should be correctly
classified and accounted for. (Points : 25)

Explanation & Answer

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