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Accounting Practice Final

89 Questions  I  By Mackenzie_Roman
Accounting practice final

  
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1.  Ryan, Inc., uses straight-line depreciation for all of its depreciable assets. Ryan sold a used piece of machinery on December 31, 2012, that it purchased on January, 2011, for $10,000. The asset had a five-year life, zero risidual value, and $2,000 accumulated depreciation as of december 31, 2011. If the sales price of the used machine was $6,500, the resulting gain or loss upon the sale was which of the following amounts? 
A.
B.
C.
D.
E.
2.  Sandy Co. filed suit against Zenith, Inc., seeking damages for patent infringement. Zenith's legal counsel believes it is probable that Zenith will settle the lawsuit for an estimated amount in the range of $100,000 to $250,000, and that $150,000 is the amount that most likely will be accepted by Sandy Co. How should Western report the suit filed by Sandy Co.?
A.
B.
C.
D.
3.  A company wishes to report the highest earnings possible for financial reporting purposes. Therefore, when calculating depreciation, 
A.
B.
C.
D.
4.  Which of the following factors causes a lease to be treated as a capital lease rather than an operating lease?
A.
B.
C.
D.
E.
5.  Amigo company and porter company both bought a new delivery truck on January 1, 2008. Both companies paid exactly the same cost, $30,000, for their respective vehicles. As of December 31, 2011, the net book value of Amigo's truck was less than Porter company's net book value for the same vehicle. Which of the following is an acceptable explanation for the difference in net book value?
A.
B.
C.
D.
6.  A company is facing a class-action lawsuit in the upcoming year. It is reasonably possible, but not probable, that the company will have to pay a settlement of approximately $2,000,000. How would this fact be reported in the financial statements to be issued at the end of the current month?
A.
B.
C.
D.
7.  Jacobs company borrowed 100,000 at 8% interest for 3 months. How much interest does the company owe at the end of 3 months?
A.
B.
C.
D.
8.  Company x borrowed $100,000 from the bank to be repaid with interest at the market rate over the next 5 years, with payments beginning next month. Which of the following best describes the presentation of this debt in the balance sheet as of today(the date of borrowing)?
A.
B.
C.
D.
9.  Which of the following is correct for smith company when smith issues 10,000 shares of $10 par value common stock and pays $20,000 cash in exchange for a building? The market price of the smith stock on the exchange date was $35 per share. The building's book value on the books of the seller was $200,000.
A.
B.
C.
D.
10.  Which of the following describes the effect of recording depreciation expense at year end?
A.
B.
C.
D.
11.  On march 1, Wright company purchased new equipment with a total cost of $50,000. The seller agreed to finance the equipment at 10% for 3 months. Wright paid cash of $10,000 upon delivery and must pay the balance ($40,000) in 3 months. Other costs associated with the equipment were: transportation costs, $1,000; sales tax paid $3,000; and installation cost, $2,500. Wright paid the balance due plus interest of $1,000 3 months later. At what amount will the equipment be recorded at on a balance sheet?
A.
B.
C.
D.
E.
12.  Lemon delivery purchased a fleet of trucks on Feb. 1, 2011 requiring the following payment schedule: $90,000 on Feb. 1, 2011 $20,000 on Feb. 1, 2012 $80,000 on Feb. 1, 2013 The seller normally charges an interest rate of 9%. What is the present value of the payments needed to record the purchase of the trucks?
A.
B.
C.
D.
13.  Flyer Company has provided the following information:
  • Cash Sales, $150,000
  • Credit Sales, $450,000
  • Selling and administrative expenses, $110,000
  • Sales returns and allowances, $30,000
  • Gross profit, $490,000
  • Accounts Receivable, $110,000
  • Sales Discounts, $14,000
  • Allowance for Doubtful Accounts Credit Balance, $1,200
How much is bad debt expense assuming that 5% of accounts receivable is estimated to be uncollectible?
A.
B.
C.
D.
14.  Flyer Company has provided the following information:
  • Cash Sales, $150,000
  • Credit Sales, $450,000
  • Selling and administrative expenses, $110,000
  • Sales returns and allowances, $30,000
  • Gross profit, $490,000
  • Accounts Receivable, $110,000
  • Sales Discounts, $14,000
  • Allowance for Doubtful Accounts Credit Balance, $1,200
Flyer estimates bad debt expense assuming that 5% of accounts receivable is estimated to be uncollectibel. What is the balance in the allowance for doubtful accounts after bad debt expense is recorded?
A.
B.
C.
D.
15.  Which of the following journal entries correctly records bad debt expense?
A.
B.
C.
D.
16.  Which of the following journal entries correctly records the write-off of an uncollectible account receivable assuming that the allowance method is used?
A.
B.
C.
D.
17.  When a depositor receives a bank statement indicating that there was a “NSF check”, the depositor should do which of the following?
A.
B.
C.
D.
18.  Laurer Corporation uses the periodic inventory system and has provided the following information about one of their laptop computers: Date Transaction Number of Units Cost per Unit Jan 1 Beginning Inventory 100 $800 May 5 Purchase 200 $900 Aug 10 Purchase 300 $1,000 Oct 15 Purchase 200 $1,050   During the year, 750 laptop computers were sold. What was the ending inventory using the FIFO cost flow assumption?
A.
B.
C.
D.
19.  Lauer Corporation uses the periodic inventory system and has provided the following information about one of their laptop computers: Date Transaction Number of Units Cost per Unit Jan 1 Beginning Inventory 100 $800 May 5 Purchase 200 $900 Aug 10 Purchase 300 $1,000 Oct 15 Purchase 200 $1,050   During the year, 750 laptop computers were sold. What was the cost of goods sold using the FIFO cost flow assumption?
A.
B.
C.
D.
20.  Lauer Corporation uses the periodic inventory system and has provided the following information about one of their laptop computers: Date Transaction Number of Units Cost per Unit Jan 1 Beginning Inventory 100 $800 May 5 Purchase 200 $900 Aug 10 Purchase 300 $1,000 Oct 15 Purchase 200 $1,050   During the year, 750 laptop computers were sold. What was the cost of goods sold using the LIFO cost flow assumption?
A.
B.
C.
D.
21.  Lauer Corporation uses the periodic inventory system and has provided the following information about one of their laptop computers: Date Transaction Number of Units Cost per Unit Jan 1 Beginning Inventory 100 $800 May 5 Purchase 200 $900 Aug 10 Purchase 300 $1,000 Oct 15 Purchase 200 $1,050   During the year, 750 laptop computers were sold. What was the ending inventory using the LIFO cost flow assumption?
A.
B.
C.
D.
22.  Under the first-in, first out (FIFO) cost flow assumption during a period of inflation, which of the following is false?
A.
B.
C.
D.
23.  Iris Company has provided the following information regarding its inventory at year-end: Inventory Item Number of Units Unit Cost Replacement Cost A 100 $20 $18 B 50 $50 $55 C 60 $30 $38 D 40 $40 $35   What is the total reported cost of ending inventory using lower of cost or market on an item-by-item basis?
A.
B.
C.
D.
24.  Which of the following correctly describes the effects of accruing income tax expense at year-end?
A.
B.
C.
D.
25.  On Jnue 1, 2011, Allen company signed a $100,000, one year, 9% note payable. The principal and interest will be paid on May 30, 2012. How much interst expense should be reported on the income statement for the year ended December 31, 2011?
A.
B.
C.
D.
26.  On october 1, 2010, Adams company paid $4,000 for a two year insurance policy with the insurance coverage beginning on that date. As of december 31, 2010, which of the following account balances are correct after adjusting entries have been made?
A.
B.
C.
D.
27.  Which of the following best descibes the difference between an unadjusted trial balance and an adjusted trail balance?
A.
B.
C.
D.
28.  Which of the following correctly describes the following journal entry? Debit         Depreciation expense Credit                  Accumulated depreciation
A.
B.
C.
D.
29.  Which of the following transactions results in a decrease in both total assets and net income?
A.
B.
C.
D.
30.  On january 1, 2011, the general ledger of global corp. included supplies inventory of $1,000. During 2011, supplies purchases amounted to $5,000. A physical count of inventory on hand at december 31,2011 determined that the supplies inventory was $1,200. How much is the 2011 supplies expense?
A.
B.
C.
D.
31.  What is the effect on the financial statements when a company fails to accrue interest expense at year end?
A.
B.
C.
D.
32.  Which of the following statements is false?
A.
B.
C.
D.
33.  Which of the following would most lifkely increase the net profit margin ratio?
A.
B.
C.
D.
34.  On december 31, 2011, Krug company reported total liabilities of $110,000 prior to the following adjusting entries:
  • Depreciation expense was $31,000
  • Accrued service revenues totaled $29,000
  • Accrued expenses totaled $12,000
  • Expired insurance that was prepaid totaled $9,000
  • Rent revenue earned was $7,000; the rent was prepaid by the tenant and credited to unearned rent revenue
How much are Krug's total liabilities after adjusting entries?
A.
B.
C.
D.
35.  In which of the following classifications would cash dividend payments to stockholders be reported?
A.
B.
C.
D.
36.  Which of the following results in an increase in the return on assets ratio?
A.
B.
C.
D.
37.  The Callie company has provided the following information:
  • Operating expenses were $231,000
  • Cost of goods sold was $376,000
  • Net sales were $940,000
  • Interest expense was $32,000
  • Gain on sale of a building was $76,000
  • Income tax expense was $151,000
What was Callie's gross profit?
A.
B.
C.
D.
38.  Which of the following statements is false when a company sells inventory costing $900 for $1,500 cash?
A.
B.
C.
D.
39.  Based on the above facts, the present value of the future interest payments is:
A.
B.
C.
D.
E.
40.  Based on the above facts, the present value of the future principal payment:
A.
B.
C.
D.
E.
41.  San Antonio outdoor furniture issues bonds with a face value of $1,000,000 having an 8% coupon rate of interest. The market rate for similar bonds is 11%. The bonds were issued:
A.
B.
C.
D.
42.  DC waste uses the effective interest method to determine the interst expense on $3,350,000 of bonds issued with a coupon rate of 7%, when the market rate was 4%. The bonds mature in 10 years and pay interest every 6 months. If the premium at the time the bonds were issued was $821,752 what amount of interest expense is recognized by the company on the first interest payment?
A.
B.
C.
D.
43.  Which of the following describes the primary objective of the balance sheet?
A.
B.
C.
D.
44.  Which of the following equations is the balance sheet equation?
A.
B.
C.
D.
45.  Which financial statement would you use to determine a company’s earnings performance during an accounting period?
A.
B.
C.
D.
46.  Which of the following would be reported in the investing section of a cash flow statement?
A.
B.
C.
D.
47.  Which of the following correctly describes retained earnings?
A.
B.
C.
D.
48.  The duality (or duality of effects) concepts states that:
A.
B.
C.
D.
49.  Which of the following statements does NOT properly describe the current ratio?
A.
B.
C.
D.
50.  Which of the following is not reported as an operating expense on the income statement?
A.
B.
C.
D.
51.  The following information has been provided by Hable Company:
  • Advertising Expense: $9,900
  • Interest Expense: $3,700
  • Rent Expense: $ 12,000
  • Loss on Sale of Plant and Equipment: $5,700
  • Cost of goods sold: $21,300
  • Depreciation Expense: $7,100
How much were Hable’s operating expenses?
A.
B.
C.
D.
52.  Which of the following journal entries is correct when a company has incurred interest expense but has not yet paid the interest?
A.
B.
C.
D.
53.  Rodgers, Inc. has a complex capital structure. It has 1,000 shares of 5%, $100 par value cumulative preferred stock issued and outstnading. All preferred dividends have been paid in prior years. It orignially issued 230,000 shares of $.01 par value common stock at $28.00 per share. Rodgers currently has 30,000 shares of its common stock held as treasury stock with cost of $960,000. It had 200,000 shares of its common stock outstanding for all of 2011. During 2011, Rodgers reported net income of $1,680,000. What is the amount of earnings per share(EPS) for 2011?
A.
B.
C.
D.
54.  Hunt foods has the following stocks outstanding: 50,800 shares cumulative, 6% preferred stock, $20 par value, and 104,000 shares of $1 par, common stock. The company has not been able to pay dividends the last two years, however this year the company declared and paid a cash dividend of $209,000. How much were the common shareholders paid?
A.
B.
C.
D.
55.  Pinnacle sports, Inc. paid cash dividends of $.30 per share on sept. 25, 2011 to shareholders of record on august 19, 2011. The board of directors had declared the dividend when they met in May 2011. On sept. 25, 2011:
A.
B.
C.
D.
56.  When bonds with a face value of $6,320,000 having 8% stated rate of interest are issued at $5,960,000, the journal entry to record the transaction would be:
A.
B.
C.
D.
57.  Beatrice Manufacturing purchased 61,900 shares of its own $7 par stock on the open market when it had a price of $33.90 per share. If these shares of stock were sold for $21.00 per share, what would the journal entry be to record this transaction?
A.
B.
C.
D.
58.  Which of the following is correct about treasury stock transactions?
A.
B.
C.
D.
59.  River City Publications incorporated on February 1, 2011. The following information related to their common stock during the first month of the company’s operations: Feb-1 Shares Authorized 5,160,000 Feb-5 Shares Issued 1,580,000 Feb-16 Shares Issued 774,000 Feb-20 Treasury stock purchased 217,600 Feb-24 Shares Issued 312,800   How many shares of stock are outstanding at the end of February 2011?
A.
B.
C.
D.
60.   Owing stock of a corporation has certain benefits. Which of the following is not one of those benefits?
A.
B.
C.
D.
61.  Dorris Outdoor Furniture issued 5 year bonds with a face value of $1,000,000 having a 9% coupon rate of interest, with interest payments made every six months. The market rate for similar bonds is 8%. What were the total proceeds for the bond issue?
A.
B.
C.
D.
62.  Dorris Outdoor Furniture issued 5 year bonds with a face value of $1,000,000 having a 9% coupon rate of interest, with interest payments made every six months. The market rate for similar bonds is 8%. What were the total proceeds for the bond issue?
A.
B.
C.
D.
63.  Lane County Transit District issued zero coupon bonds with a maturity value of $7,720,000 in 10 years. The bonds were sold at a price to yield 9% compounded annually. What were the total proceeds generated by this bond issue?
A.
B.
C.
D.
64.  A company purchased 6,250 shares of carol common stock at $26 per share. Pick the correct journal entry that applies
A.
B.
C.
D.
65.  Carol corporation declared and paid a cash dividend of $3 per share. pick the correct journal entry
A.
B.
C.
D.
66.  Carol corp. determined the current market price of carol stock to be $22 per share. Pick the correct journal entry
A.
B.
C.
D.
67.  Company X owns 40 percent of Company Y and exercises significant influence over the management of Company Y. Therefore, Company X uses what method of accounting for reporting its ownership of stock in Company Y?
A.
B.
C.
D.
68.  Company W purchases 10 percent of Company Z and Company W intends to hold the stock for at least five years. At the end of the current year, how would Company W's investment in Company Z be reported on Company W's December 31 (year-end) balance sheet?
A.
B.
C.
D.
69.  Dividends received from stock that is reported as a security available for sale in the long-term assets section of the balance sheet are reported as which of the following?
A.
B.
C.
D.
70.  Realized gains and losses are recorded on the income statement for which of the following transactions in trading securities and available-for-sale securities?
A.
B.
C.
D.
71.  When recording dividends received from a stock investment accounted for using the equity method, which of the following statements is true?
A.
B.
C.
D.
72.  When using the equity method of accounting, when is revenue recorded on the books of the investor company?
A.
B.
C.
D.
73.  Jan. 1 2010- purchased 2,000 shares of common stock of dear company at $40 per share to be held as securities available for sale. This purchase represented 1% of the shares outstanding. PIck the correct journal entry
A.
B.
C.
D.
74.  Dec. 31-Determined that the current market price of the Dear stock was $39. pick the correct journal entry
A.
B.
C.
D.
75.  Mar. 15-2011- Sold 2,000 shares of common stock of Dear company for $41 per share
A.
B.
C.
D.
76.  Which of the following are operating activities?
A.
B.
C.
D.
E.
F.
77.  Which of the following are investing activities? 
A.
B.
C.
D.
E.
78.  Which of the following are financing activities?
A.
B.
C.
D.
E.
F.
G.
79.  Pick if the activity is operating, investing, or financing 1. Received $46,202 in cash from initial public offering of common stock  2. Made cash deposits on equipment of $5,038 3. Sold stock to employees for $13 in cash 4. Income tax refund receivable decreased by $326 5. Accounts receivable increased by $881
80.  Read each scenario and pick if it follows: amortized cost, equity cost, purchase method and consolidation, fair value method 1. Less than 20 percent ownership               2. current fair value 3. more than 50% ownership 4. At least 20% but no more than 50% ownership 5. Bonds held to maturity 6. Orignal cost less any amortization of premium or discount with the purchase 7. Original cost plus proportionate part of the income of the affiliate less proportionate part of the dividends declared by the affiliate. 
81.  pick if the following scenarios are operating, investing, or financing 1. Proceeds from issuance of long-term debt 2. Collections from customers 3. Payment of interest on debt 4. Purchase of prop., plant, and equip. 5. Proceeds from disposal of investment securities
82.  Quality of income ratio:
A.
B.
C.
D.
83.  Free cash flow (how much cash is available):
A.
B.
C.
D.
84.  Increase in inventories
A.
B.
C.
D.
E.
85.  Proceeds from issuance of notes payable
A.
B.
C.
D.
E.
86.  Amortization expense
A.
B.
C.
D.
E.
87.  Decrease in accounts receivable
A.
B.
C.
D.
E.
F.
88.  Increase in accounts payable
A.
B.
C.
D.
E.
F.
89.  Increase in prepaid expenses
A.
B.
C.
D.
E.
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