Acc111 final exam

1 of 50

Suppose King Manufacturing
signs a $600,000 note payable to purchase land. King also pays $40,000 in back
property taxes, $10,000 in transfer taxes, $25,000 to remove an old building,
and a $3,000 survey fee. In addition, King had a ground breaking ceremony to
start construction of a new building that costs $1,200. What is the cost of the
land?

$678,000

$679,200

$650,000

$600,000

Question

2 of 50

__________ is the ongoing process of evaluating the internal control

Risk assessment

Monitoring

Control activities

Control environment

Question

3 of 50

Case 10.2

Whirlpool sells $2,120,000 of products in January 2009 on credit. It
is estimated that 3% of the products will be returned for warranty work. At the
end of January, $30,300 of warranty work has been done.

A)

Warranty Expense

30,300

Estimated Warranty Payable

30,300

B)

Estimated Warranty Payable

63,600

Cash

63,600

C)

Warranty Expense

63,600

Estimated Warranty Payable

63,600

D)

Estimated Warranty Payable

30,300

Cash

30,300

Refer to Case 10.2. The journal entry for the warranty work would
be:

A)

B)

C)

D)

Question

4 of 50

Which inventory method uses the average cost for the period for
ending inventory and cost of goods sold?

FIFO

Specific Identification

LIFO

Weighted average

Question

5 of 50

In a company with good internal controls, which department should be
responsible for preparing employee earnings records?

Payroll

Accounting

Human resources

Finance

Question

6 of 50

If it is probable a company will lose a lawsuit and the amount of
loss can be estimated, the company should report the contingency by:

ignoring it and disclose nothing related to the lawsuit.

describing the situation in the footnotes to the financial
statements.

recording an expense
and liability based on estimated amounts.

recording a loss on the balance sheet.

Question

7 of 50

Case 7.10

Jade Co Killian Co

Cash

$10,000 $25,000

Short-term investments

5,000 15,000

Net Receivables

45,000 55,000

Current liabilities

$45,000 $100,000

Refer to Case 7.10. Calculate the Quick ratio for Jade Company.

1.5

1.25

1.0

1.33

Question

8 of 50

Case 9.2

Axel Logistics purchased the
following long term assets with market values:

Asset

Market Value

Equipment

$200,000

Land

$250,000

Furniture

$150,000

Building

$400,000

Refer to Case 9.2. If Axel pays $800,000 for all of the long term
assets in a basket purchase, what amount would be the recorded as the cost of
the land?

$180,000

$200,000

$250,000

$100,000

Question

9 of 50

Notes receivable that are for
longer than one year are considered:

revenues.

current assets.

long term assets.

expenses.

Question

10 of 50

Under the allowance method of
accounting for bad debts, the journal entry for writing off a customers
accounts is:

A)

Allowance for doubtful
accounts

XXXX

Bad Debts Expense

XXXX

B)

Bad Debts Expense

XXXX

Allowance for doubtful
accounts

XXXX

C)

Allowance for doubtful
accounts

XXXX

Cash

XXXX

D)

Accounts Receivable

XXXX

Allowance for doubtful accounts

XXXX

A)

B)

C)

D)

Question

11 of 50

Case 9.2

Axel Logistics purchased the
following long term assets with market values:

Asset

Market Value

Equipment

$200,000

Land

$250,000

Furniture

$150,000

Building

$400,000

Refer to Case 9.2. If Axel pays $800,000 for all of the long term
assets in a basket purchase, what amount would be the recorded as the cost of
the building?

$400,000

$320,000

$600,000

$530,000

Question

12 of 50

Net realizable value of
accounts receivable refers to the:

estimated amount of bad debts.

amount of cash deposited in a bank.

amount customers owe.

amount expected to be
collected from customers.

Question

13 of 50

Which of the following are
purposes of internal control?

One of the purposes of internal control is to encourage employees to
follow company policy.

One of the purposes of internal control is to safeguard the
company’s assets.

One of the purposes of
internal control is to ensure accurate, reliable accounting records.

All of the statements
above are true.

Question

14 of 50

Which inventory costing
method would use the actual cost of each individual unit or product?

FIFO

LIFO

Weighted average

Specific
Identification

Question

15 of 50

Of the following assets which
one would be listed first on the balance sheet?

Prepaid Expenses

Land

Cash

Accounts Receivable

Question

16 of 50

Take home pay is the same as:

net pay.

taxable pay.

average pay.

gross pay.

Question

17 of 50

Case 10.4

Lisa Lay manages the women’s clothing department of Fashion
Department Store. She earns a base monthly salary of $1,000 plus a 6%
commission on her personal sales. Through payroll deductions, Lay donates $35
per month to a charitable organization, and she authorizes Fashion to deduct
$40 monthly for her health insurance. Tax rates on Lay’s earnings are 10% for
income tax and 8% of the first $90,000 for FICA. During the first 11 months of
the year, she earned $81,000.

Refer to Case 10.4. Compute Lay’s net pay for December assuming
$80,000 in sales for December.

$4,681

$1,000

$4,500

$3,615

Question

18 of 50

The allocation of the cost of
a natural resource to expense over its useful life is called:

amortization.

depletion.

depreciation.

production.

Question

19 of 50

Case 9.7

Suppose General Electric
Company (GE) pays $400,000 to acquire a patent on January 1, 2008. GE believes
this patent’s useful life is five years.

Refer to Case 9.7. What is the journal on January 1 to acquire the patent?

A)

Amortization Expense

400,000

Patent

400,000

B)

Amortization Expense

80,000

Accumulated Amortization

80,000

C)

Patent

80,000

Cash

80,000

D)

Patent

400,000

Cash

400,000

A)

B)

C)

D)

Question

20 of 50

Case 9.3

Leah, Inc. has machinery with a cost of $100,000. The machinery has
an estimated useful life of 10 years, and an estimated salvage value of
$10,000. The machinery is expected to be able to produce a total of 1,000,000
units during its estimated life.

Refer to Case 9.3 The amount of deprecation expense in the first
year under double declining balance depreciation would be:

$20,000.

$15,000.

$10,000.

$18,000.

Question

21 of 50

Maggie Moo’s Ice Cream Shop
had a gross pay of $19,000 and a net pay of $13,200 for the latest payroll. The
journal entry to pay the payroll would be:

A)

Salaries Expense

13,200

Cash

13,200

B)

Salaries Payable

19,000

Cash

19,000

C)

Salaries Expense

13,200

Salaries Payable

13,200

D)

Salaries Payable

13,200

Cash

13,200

A)

B)

C)

D)

Question

22 of 50

Case 6.1

Horner Consulting has the following related to its cash account:

Cash account balance

$3,100

Bank statement balance

$3,200

Deposits in transit

$250

Outstanding Checks:

#1001

$50

#1003

$340

#1006

$225

Bank Service charge

$25

NSF check – Customer Gilkey

$240

Refer to Case 6.1. What is the journal entry for the NSF check?

A)

Miscellaneous Expense

240

Cash

240

B)

Cash

240

Accounts Receivable – Gilkey

240

C)

Accounts Receivable – Gilkey

240

Cash

240

D)

Cash

240

Miscellaneous Expense

240

A)

B)

C)

D)

Question

23 of 50

Case 9.5

TD Industries has a piece of
equipment that has a cost of $200,000. The equipment has accumulated
depreciation of $75,000.

Refer to Case 9.5. If the equipment is sold for $120,000, TD will:

debit a loss for $15,000.

debit accumulated
depreciation for $75,000.

credit cash for $120,000.

credit a gain for $5,000.

Question

24 of 50

A signature card is used by banks to help protect against:

inappropriate deposits.

check forgery.

petty cash being stolen.

errors in a bank reconciliation.

Question

25 of 50

Case 9.6

TD Industries has a piece of equipment that has a cost of $400,000.
The equipment has accumulated depreciation of $305,000.

Refer to Case 9.6. If the equipment is sold for $95,000, TD will:

credit a loss for $5,000.

credit equipment for
$400,000.

debit a gain for $5,000.

credit cash for $95,000.

Question

26 of 50

Which of the following would be considered a capital expenditure?

Putting a new heating
a cooling system on a building

Cleaning the carpet on a weekly basis

Regular maintenance of a building

Painting the restrooms of a building

Question

27 of 50

Case 10.3

Lisa Lay manages the women’s clothing department of Fashion
Department Store. She earns a base monthly salary of $1,000 plus a 5%
commission on her personal sales. Through payroll deductions, Lay donates $35
per month to a charitable organization, and she authorizes Fashion to deduct
$40 monthly for her health insurance. Tax rates on Lay’s earnings are 10% for
income tax and 8% of the first $90,000 for FICA. During the first 11 months of
the year, she earned $87,000.

Refer to Case 10.3. Compute Lay’s gross pay for December assuming
$70,000 in sales for December.

$70,000

$4,500

$1,000

$1,700

Question

28 of 50

Lanny Company’s cash account
shows an ending balance of $770. The bank statement shows a $20 service charge
and an NSF check for $100. A $250 deposit is in transit, and outstanding checks
total $400. What is Navarro’s adjusted cash balance?

$1,050

$650

$680

$530

Question

29 of 50

The source document behind a notes receivable is called a(n):

account.

promissory note.

journal entry.

subsidiary ledger.

Question

30 of 50

Inventory shrinkage decreases inventory and:

expenses.

net income.

liabilities.

dividends.

Question

31 of 50

The allocation of the cost of
a plant asset to expense over its useful life is called:

production.

depreciation.

amortization.

depletion.

Question

32 of 50

Case 8.2

Emerson Electronics had the
following information related to its September inventory.

Number of Units Cost

Sept. 1

Beginning Inventory 200 Units $10 6

Purchase 200 Units $12 16

Sold 250 Units 27

Purchase 200 Units $14 30

Sold 300 Units

Sales were made at $15 per unit and Emerson uses the perpetual
inventory system.

Refer to Case 8.2. The value
of cost of goods sold under FIFO would be:

$6,500.

$7,000.

$6,300.

$6,700.

Question

33 of 50

The percentage of sales
method of estimating bad debts is considered to be a(n):

retained earnings statement approach.

balance sheet approach.

cash flows statement approach.

income statement
approach.

Question

34 of 50

For good internal controls over
payroll, which functions should be separated?

Passing out paychecks or pay
stubs

Hiring and firing of employees

Payroll accounting

All of the functions
above should be separated

Question

35 of 50

ABC company signed a 1 year
term note payable on September 1, 2008. The note had an interest rate of 9%.
The journal entry at 12-31-08 would include a:

credit to cash for $900.

credit to account payable for $300.

credit to interest
payable for $300.

credit to notes payable for $900.

Question

36 of 50

Reducing expense to increase
operating profit is representative of:

safeguarding assets

following company policies

promoting operational
efficiency

ensuring accurate, reliable accounting records

Question

37 of 50

Accounts receivable are reported
on the balance sheet at:

estimated value.

net realizable value.

market value.

historical cost.

Question

38 of 50

Which of the following is considered to be a plant asset?

Land improvements

Land

Machinery

All of the above

Question

39 of 50

Case 7.7

Patriot Bank loans P+P
Company $200,000 on a 1 year promissory note on January 1, 2009. The interest
rate of this loan is 8.5%. The principle and interest are due on 12-31-2009.

Refer to Case 7.7. The journal entry to record the receipt of
interest and repayment of the loan on 12-31-09 is:

A)

Cash

200,000

Notes receivable

Interest revenue

183,000

17,000

B)

Cash

217,000

Notes receivable

Interest revenue

200,000

17,000

C)

Notes receivable

200,000

Cash

Interest Revenue

200,000

17,000

D)

Notes payable

200,000

Cash

200,000

A)

B)

C)

D)

Question

40 of 50

Case 8.1

Emerson Electronics had the following information related to its
September inventory.

Number of Units Cost

Sept. 1

Beginning Inventory 100 Units $10 5

Purchase
200 Units $11 15

Sold
150 Units
26

Purchase
100 Units $12 30

Sold 200 Units

Sales were made at $20 per
unit and Emerson uses the perpetual inventory system.

Refer to Case 8.1. The value
of ending inventory under LIFO would be:

$700.

$500.

$600.

$550.

Question

41 of 50

Fraudulent financial
reporting schemes occur when management:

records assets that do not exist.

overstates the value of equipment, buildings, and other long-term
assets.

records revenues prematurely or fictitiously.

acts in any of the
above ways.

Question

42 of 50

Bank service charges would be:

subtracted from the bank balance of a bank reconciliation.

subtracted from the
book balance of a bank reconciliation.

added to the book balance of a bank reconciliation.

added to the bank balaadded to the bank balance of a bank
reconciliation.nce of a bank reconciliation.

Question

43 of 50

Case 10.5

Chip King works as a cook for Damon’s Grill. His straight-time pay
is $10 per hour, with time and a half for hours in excess of 40 per week.
King’s payroll deductions include withheld income tax of 7% of total earnings,
FICA tax of 8% of total earnings, and a weekly deduction of $10 for a
charitable contribution to United Fund.

Refer Case 10.5. Assuming King worked 50 hours during the week,
compute his gross pay for the week.

$600

$550

$400

$500

Question

44 of 50

In accounting, how is goodwill defined?

The excess of the cost to purchase another company over the market
value of its net liabilities

The excess of the cost to purchase another company over the book
value of its net assets

The excess of the
cost to purchase another company over the market value of its net assets

The excess of the cost to purchase another company over the market
value of its cash accounts

Question

45 of 50

Case 9.4

J + J construction has trucks
with a cost of $300,000. The trucks have an estimated useful life of 5 years,
and an estimated salvage value of $20,000. The trucks are estimated to run
200,000 miles during their estimated life.

Refer to Case 9.4. The amount of deprecation expense in the second
year under double declining balance depreciation would be:

$75,200.

$66,000.

$65,000.

$72,000.

Question

46 of 50

Case 8.1

Emerson Electronics had the
following information related to its September inventory.

Number of Units Cost

Sept. 1

Beginning Inventory 100
Units $10 5

Purchase 200
Units $11 15

Sold 150 Units
26

Purchase 100
Units $12 30

Sold 200 Units

Sales were made at $20 per unit and Emerson uses the perpetual
inventory system.

Refer to Case 8.1. The average cost per unit after the September 5
purchase would be:

$11.00.

$10.00.

$10.67.

$9.75.

Question

47 of 50

Ordinary repairs are recorded by:

debiting an expense
account.

crediting an asset account.

crediting an expense account.

debiting an asset account.

Question

48 of 50

Gilkey, Inc. uses the allowance method to account for uncollectible
receivables. At the beginning of the year, Allowance for Doubtful Accounts had
a credit balance of $1,100. During the year you recorded Bad Debt Expense of
$2,000 and wrote off bad receivables of $2,100. What is your year-end balance
in Allowance for Doubtful Accounts?

$2,000

$3,100

$1,000

$3,200

Question

49 of 50

Case 8.2

Emerson Electronics had the
following information related to its September inventory.

Number of Units Cost

Sept. 1

Beginning Inventory 200
Units $10 6

Purchase 200
Units $12 16

Sold 250 Units 27

Purchase 200
Units $14 30

Sold 300 Units

Sales were made at $15 per unit and Emerson uses the perpetual
inventory system.

Refer to Case 8.2. The average cost per unit after the September 27
purchase would be:

$11.

$12.50.

$13.31.

$12.71.

Question

50 of 50

Which of the following is the
correct journal entry for sales of merchandise of $1,000 in cash? The sales tax
rate is 6%.

A)

Cash

1,000

Sales revenue

1,000

B)

Cash

1,060

Sales Revenue

Sales tax payable

1, 000

60

C)

Cash

1,000

Sales Revenue

Sales tax payable

940

60

D)

A/R

1,000

Sales Revenue

1,000

A)

B)

C)

D)