ACC290 FINAL EXAM

ACC290 FINAL EXAM

ACC290 FINAL EXAM all answers are correct!

Multiple choice question

The best definition of assets is the

• Resources belonging to a company that have future benefit to the company.
• Collections of resources belonging to the company and the claims on these resources
• Owners’ investment in the business
• Cash owned by the company.
Multiple choice question

Which of the following is not a liability?

• Unearned service revenue
• Account payable
• Accounts receivable
• Interest payable
Multiple choice question

Which of the following financial statements is divided into major categories of operating, investing, and financing activities?

• The retained earnings statement.
• The statement of cash flows
• The balance sheet.
• The income statement.
Multiple choice question

• Ending retained earnings for a period is equal to beginning
• Retained earnings – net income + dividends.
• Retained earnings + net income + dividends
• Retained earnings – net income – dividends.
• Retained earnings + net income – dividends.



Multiple choice question

Which of the following is not an advantage of the corporate form of business organization?

• Easy to transfer ownership
• Easy to raise funds.
• Favorable tax treatment.
• No personal liability.



Multiple choice question

An advantage of the corporate form of business is that

• Its owner’s personal resources are at stake.
• It has limited life.
• Its ownership is easily transferable via the sale of shares of stock.
• It is simple to establish



Multiple choice question

A small neighborhood barber shop that is operated by its owner would likely be organized as a

• Partnership.
• Corporation.
• Joint venture.
• Proprietorship.



Multiple choice question

If services are rendered for cash, then

• Liabilities will decrease.
• Liabilities will increase
• Assets will increase.
• Stockholders’ equity will decrease.



Multiple choice question

A revenue generally

• Increases assets and decreases stockholders’ equity.
• Increases assets and liabilities
• Leaves total assets unchanged
• Increases assets and stockholders’ equity.



Multiple choice question

A revenue account

• Is increased by debits.
• Is decreased by credits.
• Has a normal balance of a debit
• Is increased by credits.



Multiple choice question

Which accounts normally have debit balances?

• Assets, expense, and retained earnings
• Assets, liabilities, and dividends
• Assets, expenses, and dividends
• Assets, expenses, and revenues



Multiple choice question

In recording an accounting transaction in a double-entry system

• The number of debit accounts must equal the number of credit accounts.
• The amount of the debits must equal the amount of the credits.
• There must only be two accounts affected by any transaction.
• There must always be entries made on both sides of the accounting equation.
Multiple choice question

The usual sequence of steps in the transaction recording process is

• Journalize, analyze, post to the ledger.
• Analyze, journalize, post to the ledger.
• Journalize, post to the ledger, analyze
• Post to the ledger, journalize, analyze
Multiple choice question

Under the expense recognition principle expenses are recognized when

• They are billed by the supplier.
• They are paid
• The invoice is received.
• They contribute to the production of revenue
Multiple choice question

The revenue recognition principle dictates that revenue should be recognized in the accounting records:

• When cash is received.
• When the performance obligation is satisfied.
• At the end of the month.
• In the period that income taxes are paid.
Multiple choice question

Merchandising companies that sell to retailers are known as

• Wholesalers.
• Service firms.
• Brokers.
• Corporations.
Multiple choice question

Gross profit equals the difference between

• Sales revenue and cost of goods sold.
• Sales revenue and operating expenses.
• Sales revenue and cost of goods sold plus operating expenses.
• Net income and operating expenses.
Multiple choice question

Net income will result if gross profit exceeds

• Cost of goods sold.
• Purchases.
• Cost of goods sold plus operating expenses
• Operating expenses



Multiple choice question

Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account?

• Inventory
• Freight-in
• Freight-out
• Freight expense
Multiple choice question

Financial information is presented below:

Operating expenses
$ 44000
Sales revenue
229000
Cost of goods sold
159000
The profit margin ratio would be

• 0.69.
• 0.31.
• 0.11.
• 0.89
Multiple choice question

Financial information is presented below:

Operating expenses
$ 20000
Sales returns and allowances
9000
Sales discounts
4000
Sales revenue
190000
Cost of goods sold
91000

The gross profit rate would be

• 0.54
• 0.53.
• 0.49.
• 0.45.



Multiple choice question

Financial information is presented below:

Operating expenses
$ 57000
Sales returns and allowances
3000
Sales discounts
6000
Sales revenue
142000
Cost of goods sold
110000

Gross profit would be

• $23000.
• $35000.
• $29000.
• $32000.



Multiple choice question

The lifo inventory method assumes that the cost of the latest units purchased are

• Not allocated to cost of goods sold or ending inventory.
• The first to be allocated to ending inventory.
• The last to be allocated to cost of goods sold.
• The first to be allocated to cost of goods sold



Multiple choice question

Which of the following statements is correct with respect to inventories?

• The fifo method assumes that the costs of the earliest goods acquired are the last to be sold.
• Under fifo, the ending inventory is based on the latest units purchased
• Fifo seldom coincides with the actual physical flow of inventory
• It is generally good business management to sell the most recently acquired goods first.
Multiple choice question

All of the following are examples of internal control procedures except

• Using prenumbered documents.
• Reconciling the bank statement.
• Insistence that employees take vacations.
• Customer satisfaction surveys.
Multiple choice question

Each of the following is a feature of internal control except

• Separation of duties.
• Recording of all transactions
• An extensive marketing plan
• Bonding of employees
Multiple choice question

For which of the following errors should the appropriate amount be subtracted from the balance per books on a bank reconciliation?

• Deposit of $500 recorded by the bank as $50.
• A returned $200 check recorded by the bank as $20.
• Check written for $59, but recorded by the company as $95.
• Check written for $53, but recorded by the company as $35.
Multiple choice question

A check written by the company for $117 is incorrectly recorded by a company as $171. On the bank reconciliation, the $54 error should be

• Added to the balance per books.
• Deducted from the balance per bank.
• Deducted from the balance per books.
• Added to the balance per bank.



Multiple choice question

The following information was available for kingbird, inc. At december 31, 2017: beginning inventory $70000; ending inventory $108000; cost of goods sold $644000; and sales $888000. Kingbird inventory turnover ratio (rounded) in 2017 was

• 6.0 times.
• 10.0 times.
• 9.2 times
• 7.2 times.



Multiple choice question

The following information was available for marigold corp. At december 31, 2017: beginning inventory $87000; ending inventory $122000; cost of goods sold $632000; and sales $872000. Marigold days in inventory (rounded) in 2017 was (round intermediate calculation to 1 decimal place, e.g. 1.2.)

• 44.0 days.
• 70.2 days.
• 50.0 days.
• 60.8 days.
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