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ACC 280 Final Exam - $25.00

ACC 280 Final Exam

Which of the following is an income statement account?

A.   Revenue    B.   Salaries payable    C.   Cash    D.   Accounts payable   

Which of the following is a balance sheet account?

A.   Sales revenue    B.   Salaries payable    C.   Salaries expense    D.   Service revenue   

In order to close the dividends account, the

A.   income summary account should be debited    B.   income summary account should be credited    C.   retained earnings account should be credited    D.   retained earnings account should be debited   

In preparing closing entries,

A.   each revenue account will be credited    B.   each expense account will be credited    C.   the retained earnings account will be debited if there is net income for the period    D.   the dividends account will be debited   

Profit margin is a measure of

A.   liquidity    B.   profitability    C.   solvency    D.   risk   

Working capital is

A.   net income divided by sales    B.   current assets minus current liabilities    C.   current assets divided by current liabilities    D.   total debt divided by total assets   

Internal control is defined, in part, as a plan that safeguards

A.   all balance sheet accounts    B.   assets    C.   liabilities    D.   capital stock   

Having one person post entries to accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of

A.   inadequate internal control    B.   duplication of effort    C.   external verification    D.   segregation of duties   

Certified Public Accounting firms that audit public companies are reviewed by

A.   The Securities and Exchange Commission    B.   The American Institute of Certified Public Auditors    C.   The Public Company Accounting Oversight Board    D.   The Financial Auditing Standards Board   

The entity responsible for setting International Accounting Standards is

A.   The Financial Accounting Standards Board    B.   The International Monetary Fund    C.   The International Accounting Standards Board    D.   The Financial Accounting Foundation

On June 1, 2008, Leno Inc. buys a copier machine for its business and finances this purchase with cash and a note. When journalizing this transaction, the company's accountant will

A.   use two journal entries    B.   make a compound entry    C.   make a simple entry    D.   list the credit entries first, which is proper form for this type of transaction   

Posting of journal entries should be done in

A.   account number order    B.   alphabetical order    C.   chronological order    D.   dollar amount order   

Bank errors

A.   occur because of time lags    B.   must be corrected by debits    C.   are infrequent in occurrence    D.   are corrected by making an adjusting entry on the depositor's books   




Can financial statements be prepared directly from the adjusted trial balance?

A.   No, they cannot. The general ledger must be used.    B.   Yes, adjusting entries have been recorded in the general journal and posted to the ledger accounts.    C.   No, the adjusted trial balance merely proves the equality of the total debit and total credit balances in the ledger after adjustments are posted. It has no other purpose.
D.   Yes, they can because that is the only reason that an adjusted trial balance is prepared.   

The information for preparing a trial balance on a worksheet is obtained from

A.   financial statements    B.   general ledger accounts    C.   general journal entries    D.   business documents   

If the total debit column exceeds the total credit column of the income statement columns on a worksheet, then the company has

A.   earned net income for the period    B.   an error because debits do not equal credits    C.   suffered a net loss for the period    D.   to make an adjusting entry   

After all of the account balances have been extended to the income statement columns of the work sheet, the totals of the debit and credit columns are $50,000 and $40,000, respectively. What is the amount of net income or net loss for the period?

A.   $10,000 net income    B.   $10,000 net loss    C.   $50,000 net income    D.   $90,000 net income   

The income summary account

A.   is a permanent account    B.   appears on the balance sheet    C.   appears on the income statement    D.   is a temporary account

The accounting process is correctly sequenced as

A.   identification, communication, recording    B.   recording, communication, identification    C.   identification, recording, communication    D.   communication, recording, identification   

Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process?

A.   Identification    B.   Communication    C.   Recording    D.   Analysis   

Generally accepted accounting principles are

A.   income tax regulations of the Internal Revenue Service    B.   standards that indicate how to report economic events    C.   theories that are based on physical laws of the universe    D.   principles that have been proven correct by academic researchers   

The private sector organization involved in developing accounting principles is the

A.   Feasible Accounting Standards Body    B.   Financial Accounting Studies Board    C.   Financial Accounting Standards Board    D.   Financial Auditors' Standards Body   

GAAP stands for

A.   Generally Accepted Auditing Procedures    B.   Generally Accepted Accounting Principles    C.   Generally Accepted Auditing Principles    D.   Generally Accepted Accounting Procedures   

The four primary financial statements are

A.   the general ledger, the working trial balance, the general journal and the balance sheet    B.   the balance sheet, the working trial balance, the income statement and the statement of cash flows    C.   the cash account, the statement of stockholder’s equity, the year-end worksheet, and the balance sheet    D.   the balance sheet, the income statement, the statement of stockholder’s equity and the statement of cash flows   

Which of the following financial statements is a point in time report?

A.   Balance sheet    B.   Income statement    C.   Statement of stockholder's equity    D.   Statement of cash flows   

In recording an accounting transaction in a double-entry system,

A.   the number of debit accounts must equal the number of credit accounts    B.   there must always be entries made on both sides of the accounting equation    C.   the amount of the debits must equal the amount of the credits    D.   there must only be two accounts affected by any transaction   

An account will have a credit balance if the

A.   credits exceed the debits    B.   first transaction entered was a credit    C.   debits exceed the credits    D.   last transaction entered was a credit   

Which of the following statements is true?

A.   Debits increase assets and increase liabilities.    B.   Credits decrease assets and decrease liabilities.    C.   Credits decrease assets and increase liabilities.    D.   Debits decrease liabilities and decrease assets.

Which of the following would not be considered an internal user of accounting data for the XYZ Company?
a.     President of the company
b.     Production manager
c.     Merchandise inventory clerk
d.     President of the employees' labor union

Which of the following would not be considered an external user of accounting data for the XYZ Company?
a.     Internal Revenue Service Agent
b.     Management
c.     Creditors
d.     Customers

Generally accepted accounting principles are
a.     income tax regulations of the Internal Revenue Service.
b.     standards that indicate how to report economic events.
c.     theories that are based on physical laws of the universe.
d.     principles that have been proven correct by academic researchers.

The basic accounting equation may be expressed as
a.     Assets = Equities.
b.     Assets – Liabilities = Stockholders’ Equity.
c.     Assets = Liabilities + Stockholders’ Equity.
d.     all of these.

Liabilities
a.     are future economic benefits.
b.     are existing debts and obligations.
c.     possess service potential.
d.     are things of value used by the business in its operation.


The basic accounting equation cannot be restated as
a.     Assets – Liabilities = Stockholders' Equity.
b.     Assets – Stockholders' Equity = Liabilities.
c.     Stockholders' Equity + Liabilities = Assets.
d.     Assets + Liabilities = Stockholders' Equity.

The accounting equation for Goodboys Enterprises is as follows:
Assets          Liabilities     Stockholders' Equity
$120,000     =     $60,000     +     $60,000
If Goodboys purchases office equipment on account for $12,000, the accounting equation will change to
Assets     Liabilities     Stockholders' Equity
a.     $120,000 = $60,000   +     $60,000
b.     $132,000 = $60,000   +     $72,000
c.     $132,000 = $66,000   +     $66,000
d.     $132,000 = $72,000   +     $60,000

As of June 30, 2008, Houston Company has assets of $100,000 and stockholders' equity of $5,000. What are the liabilities for Houston Company as of June 30, 2008?
a.     $85,000
b.     $90,000
c.     $95,000
d.     $100,000


Credits
a.     decrease both assets and liabilities.
b.     decrease assets and increase liabilities.
c.     increase both assets and liabilities.
d.     increase assets and decrease liabilities.

A debit to an asset account indicates
a.     an error.
b.     a credit was made to a liability account.
c.     a decrease in the asset.
d.     an increase in the asset.

An accountant has debited an asset account for $1,000 and credited a liability account for $500. What can be done to complete the recording of the transaction?
a.     Nothing further must be done.
b.     Debit an stockholders’ equity account for $500.
c.     Debit another asset account for $500.
d.     Credit a different asset account for $500.

A complete journal entry does not show
a.     the date of the transaction.
b.     the new balance in the accounts affected by the transaction.
c.     a brief explanation of the transaction.
d.     the accounts and amounts to be debited and credited.

The entire group of accounts maintained by a company is called the
a.     balance sheet.
b.     general journal.
c.     general ledger.
d.     trial balance.

Anderson Company purchased equipment for $1,800 cash. As a result of this event,
a.     stockholders' equity decreased by $1,800.
b.     total assets increased by $1,800.
c.     total assets remained unchanged.
d.     Both a and b.

A trial balance is a listing of
a.     transactions in a journal.
b.     the chart of accounts.
c.     general ledger accounts and balances.
d.     the totals from the journal pages.

Which of the following are in accordance with generally accepted accounting principles?
a.     Accrual basis accounting
b.     Cash basis accounting
c.     Both accrual basis and cash basis accounting
d.     Neither accrual basis nor cash basis accounting

The revenue recognition principle dictates that revenue should be recognized in the accounting records
a.     when cash is received.
b.     when it is earned.
c.     at the end of the month.
d.     in the period that income taxes are paid.

The following is selected information from J Corporation for the fiscal year ending October 31, 2008.
Cash received from customers     $300,000
Revenue earned     350,000
Cash paid for expenses     170,000
Cash paid for computers on November 1, 2007 that will be used
for 3 years (annual depreciation is $16,000)     48,000
Expenses incurred, not including any depreciation     200,000
Proceeds from a bank loan, part of which was used to pay for
the computers     100,000
Based on the accrual basis of accounting, what is J Corporation’s net income for the year ending October 31, 2008?
a.     $114,000
b.     $134,000
c.     $82,000
d.     $150,000

Depreciation is the process of
a.     valuing an asset at its fair market value.
b.     increasing the value of an asset over its useful life in a rational and systematic manner.
c.     allocating the cost of an asset to expense over its useful life in a rational and systematic manner.
d.     writing down an asset to its real value each accounting period.

Southeastern Louisiana University sold season tickets for the 2008 football season for $160,000. A total of 8 games will be played during September, October and November. Assuming all the games are played, the Unearned Revenue balance that will be reported on the December 31 balance sheet will be
a.     $0.
b.     $60,000.
c.     $100,000.
d.     $160,000.

Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause
a.     net income to be understated.
b.     an overstatement of assets and an overstatement of liabilities.
c.     an understatement of expenses and an understatement of liabilities.
d.     an overstatement of expenses and an overstatement of liabilities.

Can financial statements be prepared directly from the adjusted trial balance?
a.     They cannot. The general ledger must be used.
b.     Yes, adjusting entries have been recorded in the general journal and posted to the ledger accounts.
c.     No, the adjusted trial balance merely proves the equality of the total debit and total credit balances in the ledger after adjustments are posted. It has no other purpose.
d.     They can because that is the only reason that an adjusted trial balance is prepared.

The adjusted trial balance is prepared
a.     after financial statements are prepared.
b.     before the trial balance.
c.     to prove the equality of total assets and total liabilities.
d.     after adjusting entries have been journalized and posted.

An expense is recorded under the cash basis only when
a.     services are performed.
b.     it is earned.
c.     cash is paid.
d.     it is incurred.

Assuming that there is a net loss for the period, debits equal credits in all but which section of the worksheet?
a.     Income statement columns
b.     Adjustments columns
c.     Trial balance columns
d.     Adjusted trial balance columns

Use the following information for questions 54–55.

The income statement and balance sheet columns of Pine Company's worksheet reflects the following totals:

Income Statement                 Balance Sheet     
&nb sp; Dr.               Cr.               Dr.               Cr.     
Totals     $58,000     $48,000     $34,000     $44,000

54. The net income (or loss) for the period is
a.     $48,000 income.
b.     $10,000 income.
c.     $10,000 loss.
d.     not determinable.

55. To enter the net income (or loss) for the period into the above worksheet requires an entry to the
a.     income statement debit column and the balance sheet credit column.
b.     income statement credit column and the balance sheet debit column.
c.     income statement debit column and the income statement credit column.
d.     balance sheet debit column and the balance sheet credit column.

A post-closing trial balance should be prepared
a.     before closing entries are posted to the ledger accounts.
b.     after closing entries are posted to the ledger accounts.
c.     before adjusting entries are posted to the ledger accounts.
d.     only if an error in the accounts is detected.

All of the following are property, plant, and equipment except
a.     supplies.
b.     machinery.
c.     land.
d.     buildings.

A current asset is
a.     the last asset purchased by a business.
b.     an asset which is currently being used to produce a product or service.
c.     usually found as a separate classification in the income statement.
d.     an asset that a company expects to convert to cash or use up within one year.

The relationship between current assets and current liabilities is important in evaluating a company's
a.     profitability.
b.     liquidity.
c.     market value.
d.     accounting cycle.

The most important information needed to determine if companies can pay their current obligations is the
a.     net income for this year.
b.     projected net income for next year.
c.     relationship between current assets and current liabilities.
d.     relationship between short-term and long-term liabilities.

The sub-classifications on the company’s classified balance sheet would include all of the following except:
a.     Current Assets.
b.     Property, Plant, and Equipment.
c.     Current liabilities.
d.     Long-term Assets.

The standards and rules that are recognized as a general guide for financial reporting are called
a.     generally accepted accounting standards.
b.     generally accepted accounting principles.
c.     operating guidelines.
d.     standards of financial reporting.

FASB has had the responsibility for developing accounting principles since the early
a.     1900s.
b.     1920s.
c.     1940s.
d.     1970s.

The economic entity assumption states that
a.     the economic life of a business can be divided into artificial time periods.
b.     economic events can be identified with a particular entity.
c.     the accounting period should not exceed one year.
d.     it is assumed that the business will operate indefinitely.

The going concern assumption assumes that the business
a.     will be liquidated in the near future.
b.     will be purchased by another business.
c.     is in a growth industry.
d.     will continue in operation long enough to carry out its existing objectives and commitments.

Earnings per share is
a.     net income divided by the number of common shares outstanding.
b.     the market price of the stock divided by the number of shares outstanding.
c.     gross profit divided by the number of common shares outstanding
d.     reported on the balance sheet.

Working capital is
a.     Net income divided by sales.
b.     Current assets minus current liabilities.
c.     Current assets divided by current liabilities.
d.     Total debt divided by total assets.

Internal controls are concerned with
a.     only manual systems of accounting.
b.     the extent of government regulations.
c.     safeguarding assets.
d.     preparing income tax returns.

Having one person post entries to accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of
a.     inadequate internal control.
b.     duplication of effort.
c.     external verification.
d.     segregation of duties.

From an internal control standpoint, the asset most susceptible to improper diversion and use is
a.     prepaid insurance.
b.     cash.
c.     buildings.
d.     land.

A bank statement
a.     lets a depositor know the financial position of the bank as of a certain date.
b.     is a credit reference letter written by the depositor's bank.
c.     is a bill from the bank for services rendered.
d.     shows the activity which increased or decreased the depositor's account balance.

Cash equivalents include each of the following except
a.     bank certificates of deposit.
b.     money market funds.
c.     petty cash.
d.     U.S. Treasury bills.

An example of poor internal control is
a.     The accountant should not have physical custody of the asset nor access to it.
b.     The custodian of an asset should not maintain or have access to the accounting records.
c.     One person should be responsible for handling related transactions.
d.     A salesperson makes the sale, and a different person ships the goods.

Comparisons of financial data made within a company are called
a.     intracompany comparisons.
b.     interior comparisons.
c.     intercompany comparisons.
d.     intramural comparisons.

Vertical analysis is a technique which expresses each item within a financial statement
a.     in dollars and cents.
b.     in terms of a percentage of the item in the previous year.
c.     in terms of a percent of a base amount.
d.     starting with the highest value down to the lowest value.

The current ratio is
a.     calculated by dividing current liabilities by current assets.
b.     used to evaluate a company's liquidity and short-term debt paying ability.
c.     used to evaluate a company's solvency and long-term debt paying ability.
d.     calculated by subtracting current liabilities from current assets.

The debt to total assets ratio measures
a.     the company's profitability.
b.     whether interest can be paid on debt in the current year.
c.     the proportion of interest paid relative to dividends paid.
d.     the percentage of the total assets provided by creditors.

Ratios are used as tools in financial analysis
a.     instead of horizontal and vertical analyses.
b.     because they may provide information that is not apparent from inspection of the individual components of the ratio.
c.     because even single ratios by themselves are quite meaningful.
d.     because they are prescribed by GAAP

Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process?
A.     Analysis
B.     Identification
C.     Communication
D.     Recording


Which list below best describes the major services performed by public accountants?
A.     Cost accounting, production scheduling, recruiting
B.     Bookkeeping, mergers, budgets
C.     Employee training, auditing, bookkeeping
D.     Auditing, taxation, management consulting


Which of the following is an external user of accounting information?
A.     Managers
B.     Labor unions
C.     Finance directors
D.     Company officers

The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles. It is true that
A.     the SEC and FASB rarely cooperate in developing accounting standards.
B.     they are both governmental agencies.
C.     the SEC is a private organization of accountants.
D.     the SEC often mandates guidelines when no accounting principles exist.




The private sector organization involved in developing accounting principles is the
A.     Financial Auditors' Standards Body.
B.     Feasible Accounting Standards Body.
C.     Financial Accounting Studies Board.
D.     Financial Accounting Standards Board.


All of the financial statements are for a period of time except the
A.     retained earnings.
B.     balance sheet.
C.     income statement.
D.     statement of cash flows.


After a business transaction has been analyzed and entered in the book of original entry, the next step in the recording process is to transfer the information to
A.     stockholders’ equity.
B.     ledger accounts.
C.     the company's bank.
D.     financial statements.


Auditing is
A.     a part of accounting that involves only recording of economic events.
B.     an area of accounting that involves such activities as cost accounting, budgeting, and accounting information systems.
C.     the examination of financial statements by a CPA in order to express an opinion on their fairness.
D.     conducted by the Securities and Exchange Commission to ensure that registered financial statements are presented fairly.


Posting
A.     accumulates the effects of journalized transactions in the individual accounts.
B.     involves transferring all debits and credits on a journal page to the trial balance.
C.     should be performed in account number order.
D.     is accomplished by examining ledger accounts and seeing which ones need updating.


The dividends account
A.     must show transactions every accounting period.
B.     is increased with debits and decreased with credits.
C.     appears on the income statement along with the expenses of the business.
D.     is not a proper subdivision of stockholders' equity.


An account will have a credit balance if the
A.     first transaction entered was a credit.
B.     debits exceed the credits.
C.     credits exceed the debits.
D.     last transaction entered was a credit.


On June 1, 2008 Leno Inc. buys a copier machine for its business and finances this purchase with cash and a note. When journalizing this transaction, the company's accountant will
A.     make a compound entry.
B.     make a simple entry.
C.     use two journal entries.
D.     list the credit entries first, which is proper form for this type of transaction.


After journal entries are posted, the reference column
A.     of the general ledger will show journal page numbers.
B.     of the general journal will show "Dr" or "Cr".
C.     of the general journal will be blank.
D.     of the general ledger will show account numbers.


On August 13, 2008, Dudbury Enterprises purchased office equipment for $1,000 and office supplies of $200 on account. Which of the following journal entries is recorded correctly and in the standard format?
A)     Office Equipment             1,000        
Account Payable                      1,200
Office Supplies             200        
B)     Office Equipment                      1,000
Office Supplies             200        
Account Payable             1,200        
C)     Accounts Payable             1,200        
Office Equipment                      1,000
Office Supplies                      200
D)     Office Equipment             1,000        
Office Supplies             200        
Accounts Payable                      1,200

A.     D
B.     C
C.     B
D.     A


An adjusting entry
A.     is always a compound entry.
B.     affects a balance sheet account and an income statement account.
C.     affects two income statement accounts.
D.     affects two balance sheet accounts.


Adjusting entries are required
A.     every time financial statements are prepared.
B.     monthly.
C.     quarterly.
D.     yearly.


An adjusted trial balance
A.     cannot be used to prepare financial statements.
B.     is a required financial statement under generally accepted accounting principles.
C.     proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made.
D.     is prepared after the financial statements are completed.


If unearned revenues are initially recorded in revenue accounts and have not all been earned at the end of the accounting period, then failure to make an adjusting entry will cause
A.     revenues to be understated.
B.     revenues to be overstated.
C.     accounts receivable to be overstated.
D.     liabilities to be overstated.


Financial statements are prepared directly from the
A.     ledger.
B.     trial balance.
C.     adjusted trial balance.
D.     general journal.


If the total debit column exceeds the total credit column of the income statement columns on a worksheet, then the company has
A.     an error because debits do not equal credits.
B.     suffered a net loss for the period.
C.     to make an adjusting entry.
D.     earned net income for the period.


A worksheet is a multiple column form that facilitates the
A.     measurement process.
B.     preparation of financial statements.
C.     analysis process.
D.     identification of events.


Preparing a worksheet involves
A.     three steps.
B.     four steps.
C.     five steps.
D.     two steps.


The net income (or loss) for the period
A.     cannot be found on the worksheet.
B.     is found by computing the difference between the income statement columns of the worksheet.
C.     is found by computing the difference between the trial balance totals and the adjusted trial balance totals.
D.     is found by computing the difference between the income statement credit column and the balance sheet credit column on the worksheet.


Closing entries are made
A.     so that all assets, liabilities, and Stockholders' equity accounts will have zero balances when the next accounting period starts.
B.     in order to transfer net income (or loss) and dividends to the retained earnings account.
C.     so that financial statements can be prepared.
D.     in order to terminate the business as an operating entity.


The worksheet does not show
A.     the ending balance in the retained earnings account.
B.     the trial balance before adjustments.
C.     revenue and expense account balances.
D.     net income or loss for the period.


Closing entries
A.     cause the revenue and expense accounts to have zero balances.
B.     summarize the activity in every account.
C.     reduce the number of permanent accounts.
D.     are prepared before the financial statements.


In preparing closing entries
A.     the retained earnings account will be debited if there is net income for the period.
B.     the dividends account will be debited.
C.     each expense account will be credited.
D.     each revenue account will be credited.


Which of the following is a true statement about closing the books of a corporation?
A.     Revenues and expenses are closed to the Income Summary account.
B.     Revenues, expenses, and the dividends account are closed to the Income Summary account.
C.     Only revenues are closed to the Income Summary account.
D.     Expenses are closed to the Expense Summary account.

Vertical analysis is also known as
A.     perpendicular analysis.
B.     common size analysis.
C.     trend analysis.
D.     straight-line analysis.


Which one of the following is not a tool in financial statement analysis?
A.     Horizontal analysis
B.     Circular analysis
C.     Vertical analysis
D.     Ratio analysis


Horizontal analysis is also called
A.     linear analysis.
B.     vertical analysis.
C.     trend analysis.
D.     common size analysis.

Internal controls are not designed to safeguard assets from
A.     natural disasters.
B.     employee theft.
C.     robbery.
D.     unauthorized use.


Internal control is defined, in part, as a plan that safeguards
A.     all balance sheet accounts.
B.     assets.
C.     liabilities.
D.     capital stock.



Companies that are subject to, but fail to comply with, the Sarbanes-Oxley Act of 2002
A.     may do so legally by obtaining an exemption.
B.     will be automatically dissolved.
C.     may be subject to fines and officer imprisonment.
D.     may be forced to sell their foreign subsidiaries.


Certified Public Accounting firms which audit public companies are reviewed by:
A.     The Public Company Accounting Oversight Board
B.     The American Institute of Certified Public Auditors
C.     The Securities and Exchange Commission
D.     The Financial Auditing Standards Board


The importance of a good system of internal controls was recognized with the passage of
A.     the Blue Sky Laws.
B.     the Securities and Exchange Act of 1994.
C.     the Securities and Exchange Act of 1933.
D.     the Sarbanes-Oxley Act of 2002.


The principles of internal control include all of the following except
A.     physical, mechanical, and electronic controls.
B.     combining of duties.
C.     establishment of responsibility.
D.     independent internal verification.


An employee authorized to sign checks should not record
A.     cash disbursement transactions.
B.     mail receipts.
C.     owner cash contributions.
D.     sales transactions.


Joe is warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates
A.     segregation of duties is violated.
B.     independent internal verification is violated.
C.     documentation procedures are violated.
D.     establishment of responsibility is violated.

Use the following to answer questions 1-7:

The following information pertains to Soho Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.

1.     What is the current ratio for this company?
A)     1.42
B)     .80
C)     1.16
D)     .60


2.     What is the receivables turnover for this company?
A)     2.8 times
B)     2 times
C)     3.4 times
D)     3 times


3.     What is the inventory turnover for this company?
A)     2 times
B)     2.25 times
C)     1 time
D)     .44 times


4.     What is the return on assets for this company?
A)     6.8%
B)     10.5%
C)     11.7%
D)     26.7%


5.     What is the profit margin for this company?
A)     42.86%
B)     18.75%
C)     23.5%
D)     15.0%


6.     What is the return on common stockholders' equity for this company?
A)     13.3%
B)     5%
C)     23.3%
D)     53.3%


7.     What is the price-earnings ratio for this company?
A)     6 times
B)     2.5 times
C)     8 times
D)     4 times

Use the following to answer questions 15-19:

The following items are taken from the financial statements of Cerner Company for the year ending December 31, 2008:
Accounts payable     $ 18,000
Accounts receivable     11,000
Accumulated depreciation – equipment     28,000
Advertising expense     21,000
Cash     15,000
Retained Earnings (1/1/08)     80,000
Common Stock     22,000
Dividends     14,000
Depreciation expense     12,000
Insurance expense     3,000
Note payable, due 6/30/10     70,000
Prepaid insurance (12-month policy)     6,000
Rent expense     17,000
Salaries expense     32,000
Service revenue     133,000
Supplies     4,000
Supplies expense     6,000
Equipment     210,000


15.     What is the company's net income for the year ending December 31, 2008?
A)     $133,000
B)     $42,000
C)     $28,000
D)     $12,000


16.     What is the total that would be reported for stockholders' equity at December 31, 2008?
A)     $102,000
B)     $130,000
C)     $144,000
D)     $158,000


17.     What are total current assets at December 31, 2008?
A)     $26,000
B)     $32,000
C)     $36,000
D)     $218,000


18.     What are total current liabilities at December 31, 2008?
A)     $18,000
B)     $70,000
C)     $88,000
D)     $0


19.     What is total liabilities and stockholders' equity at December 31, 2008?
A)     $176,000
B)     $190,000
C)     $218,000
D)     $232,000

Communication of economic events is the part of the accounting process that involves
A)     identifying economic events.
B)     quantifying transactions into dollars and cents.
C)     preparing accounting reports.
D)     recording and classifying information.

Revenues would not result from
A)     sale of merchandise.
B)     issuance of common stock.
C)     performance of services.
D)     rental of property.

The usual sequence of steps in the transaction recording process is:
A)     journal ? analyze ? ledger.
B)     analyze ? journal ? ledger.
C)     journal ? ledger ? analyze.
D)     ledger ? journal ? analyze.

At September 1, 2008, Foli Co. reported retained earnings of $136,000. During the month, Foli generated revenues of $20,000, incurred expenses of $12,000, purchased equipment for $5,000 and paid dividends of $2,000. What is the amount of retained earnings at September 30, 2008?
A)     $136,000
B)     $8,000
C)     $137,000
D)     $142,000

Which of the following statements is false?
A)     Revenues increase stockholders' equity.
B)     Revenues have normal credit balances.
C)     Revenues are a positive factor in the computation of net income.
D)     Revenues are increased by debits.

Under accrual-basis accounting
A)     cash must be received before revenue is recognized.
B)     net income is calculated by matching cash outflows against cash inflows.
C)     events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.
D)     the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles.

The matching principle states that expenses should be matched with revenues. Another way of stating the principle is to say that
A)     assets should be matched with liabilities.
B)     efforts should be matched with accomplishments.
C)     dividends to stockholders should be matched with stockholders' investments.
D)     cash payments should be matched with cash receipts.

Which statement is correct?
A)     As long as a company consistently uses the cash basis of accounting, generally accepted accounting principles allow its use.
B)     The use of the cash basis of accounting violates both the revenue recognition and matching principles.
C)     The cash basis of accounting is objective because no one can be certain of the amount of revenue until the cash is received.
D)     As long as management is ethical, there are no problems with using the cash basis of accounting.

Expenses incurred but not yet paid or recorded are called
A)     prepaid expenses.
B)     accrued expenses.
C)     interim expenses.
D)     unearned expenses.

Unearned revenues are
A)     received and recorded as liabilities before they are earned.
B)     earned and recorded as liabilities before they are received.
C)     earned but not yet received or recorded.
D)     earned and already received and recorded.

Younger Corporation purchased a one-year insurance policy in January 2008 for $48,000. The insurance policy is in effect from May 2008 through April 2009. If the company neglects to make the proper year-end adjustment for the expired insurance
A)     Net income and assets will be understated by $32,000.
B)     Net income and assets will be overstated by $32,000.
C)     Net income and assets will be understated by $16,000.
D)     Net income and assets will be overstated by $16,000.


Which of the following steps in the accounting cycle may be performed more frequently than annually?
A)     Prepare a post-closing trial balance
B)     Journalize closing entries
C)     Post closing entries
D)     Prepare a trial balance

Closing entries are necessary for
A)     permanent accounts only.
B)     temporary accounts only.
C)     both permanent and temporary accounts.
D)     permanent or real accounts only.

The principle that requires circumstances and events that make a difference to financial statement users be reported is the
A)     cost principle.
B)     full disclosure principle.
C)     matching principle.
D)     revenue recognition principle.

Constraints in accounting include each of the following except
A)     conservatism.
B)     matching.
C)     materiality.
D)     All of these are constraints.

Which one of the following is not an objective of financial reporting according to the conceptual framework?
A)     To provide information that will increase the value of the company
B)     To provide information in assessing future cash flows
C)     To provide information that is useful for making investment and credit decisions
D)     To provide information that identifies economic resources, the claims to those resources, and the changes in those resources and claims

The time period assumption recognizes that
A)     revenue should be recognized in the accounting period in which it is earned.
B)     the economic life of a business can be divided into artificial time periods.
C)     expenses should be recognized in the period of their association with earned revenue.
D)     economic events can be identified with a particular unit of accountability.

Profit margin is a measure of
A)     liquidity.
B)     profitability.
C)     solvency.
D)     risk.

Zendejas Company purchased a ruler for $2.00. The ruler is expected to last for ten years. Tony, the accountant, expensed the cost of the ruler in the year of the purchase. Which constraint has Tony taken into account when making his accounting decision?
A)     Conservatism
B)     Faithful Representation
C)     Neutrality
D)     Materiality

Allowing only designated personnel to handle cash receipts is an example of
A)     establishment of responsibility.
B)     segregation of duties.
C)     documentation procedures.
D)     independent internal verification.

An application of good internal control over cash disbursements is
A)     following payment, the approved invoice should be stamped PAID.
B)     blank checks should be stored in the treasurer's desk.
C)     each check should be compared with the approved invoice after the check is issued.
D)     check signers should record the cash disbursements.

Horizontal analysis evaluates a series of financial statement data over a period of time
A)     that has been arranged from the highest number to the lowest number.
B)     that has been arranged from the lowest number to the highest number.
C)     to determine which items are in error.
D)     to determine the amount and/or percentage increase or decrease that has taken place.

Which one of the following is primarily interested in the liquidity of a company?
A)     Federal government
B)     Stockholders
C)     Long-term creditors
D)     Short-term creditors

Stockholders are most interested in evaluating
A)     liquidity and solvency.
B)     profitability and solvency.
C)     liquidity and profitability.
D)     marketability and solvency.

A general rule to use in assessing the average collection period is that
A)     it should not exceed 30 days.
B)     it can be any length as long as the customer continues to buy merchandise.
C)     it should not greatly exceed the discount period.
D)     it should not greatly exceed the credit term period


Accountants refer to an economic event as a
a. purchase.
b. sale.
c. transaction.
d. change in ownership.

The process of recording transactions has become more efficient because
a. fewer events can be quantified in financial terms.
b. computers are used in processing business events.
c. more people have been hired to record business transactions.
d. business events are recorded only at the end of the year.

Which of the following events cannot be quantified into dollars and cents and recorded as an accounting transaction?
a. The appointment of a new CPA firm to perform an audit.
b. The purchase of a new computer.
c. The sale of store equipment.
d. Payment of income taxes.

The use of computers in recording business events
a. has made the recording process more efficient.
b. does not use the same principles as manual accounting systems.
c. has greatly impacted the identification stage of the accounting process.
d. is economical only for large businesses.

Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process?
a. Identification
b. Communication
c. Recording
d. Analysis

An account consists of
a. one part.
b. two parts.
c. three parts.
d. four parts.

An account is a part of the financial information system and is described by all except which one of the following?
a. An account has a debit and credit side.
b. An account is a source document.
c. An account may be part of a manual or a computerized accounting system.
d. An account has a title.

Accounting information is used only by external users with a financial interest in a business enterprise.
A.) True
B.) False

The dividends account is a subdivision of the returned earnings account and appears as an expense on the income statement.
A.) True
B.) False

Information is relevant if it provides a basis for predicting future earnings.
A.) True
B.) False

The safeguarding of assets is an objective of a company's system of internal control.
A.) True
B.) False

The ledger is merely a bookkeeping device and therefore does not provide much useful data for management.
A.) True
B.) False

The basic accounting equation is in balance when the creditor and ownership claims against the business equal the assets.
A.) True
B.) False

Comparisons of company data with industry averages can provide some insight into the company's relative position in the industry.
A.) True
B.) False

The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique.
A.) True
B.) False

Adjusting entries are an optional bookkeeping procedure.
A.) True
B.) False

Internal control consists of the plan of organization and all of the related methods and measures adopted within a business to
(a) safeguard its assets, and (b) enhance the accuracy and reliability of its accounting records.
A.) True
B.) False

Generally accepted accounting principles are uniform throughout the world.
A.) True
B.) False

Current assets are listed in the order of liquidity.
A.) True
B.) False

A T-account is
a. a way of depicting the basic form of an account.
b. what the computer uses to organize bytes of information.
c. a special account used instead of a trial balance.
d. used for accounts that have both a debit and credit balance.

Which one of the following represents the expanded basic accounting equation?
a. Assets = Liabilities + Common Stock + Retained Earnings + Dividends – Revenue – Expenses.
b. Assets + Dividends + Expenses = Liabilities + Common Stock + Retained Earnings + Revenues.
c. Assets – Liabilities – Dividends = Common Stock + Retained Earnings + Revenues – Expenses.
d. Assets = Revenues + Expenses – Liabilities.

In recording an accounting transaction in a double-entry system
a. the number of debit accounts must equal the number of credit accounts.
b. there must always be entries made on both sides of the accounting equation.
c. the amount of the debits must equal the amount of the credits.
d. there must only be two accounts affected by any transaction.

An account will have a credit balance if the
a. credits exceed the debits.
b. first transaction entered was a credit.
c. debits exceed the credits.
d. last transaction entered was a credit.

The dividends account
a. appears on the income statement along with the expenses of the business.
b. must show transactions every accounting period.
c. is increased with debits and decreased with credits.
d. is not a proper subdivision of stockholders' equity.

Monthly and quarterly time periods are called
a. calender periods.
b. fiscal periods.
c. interim periods.
d. quarterly periods.

An accounting time period that is one year in length, but does not begin on January 1, is referred to as
a. a fiscal year.
b. an interim period.
c. the time period assumption.
d. a reporting period.

In general, the shorter the time period, the difficulty of making the proper adjustments to accounts
a. is increased.
b. is decreased.
c. is unaffected.
d. depends on if there is a profit or loss.

Which of the following are in accordance with generally accepted accounting principles?
a. Accrual basis accounting
b. Cash basis accounting
c. Both accrual basis and cash basis accounting
d. Neither accrual basis nor cash basis accounting

The matching principle matches
a. customers with businesses.
b. expenses with revenues.
c. assets with liabilities.
d. creditors with businesses.

Ken's Tune-up Shop follows the revenue recognition principle. Ken services a car on July 31. The customer picks up the vehicle on August 1 and mails the payment to Ken on August 5. Ken receives the check in the mail on August 6. When should Ken show that the revenue was earned?
a. July 31
b. August 1
c. August 5
d. August 6

Adjusting entries are required
a. yearly.
b. quarterly.
c. monthly.
d. every time financial statements are prepared.

The adjustments entered in the adjustments columns of a worksheet are
a. not journalized.
b. posted to the ledger but not journalized.
c. not journalized until after the financial statements are prepared.
d. journalized before the worksheet is completed.

If the total debit column exceeds the total credit column of the income statement columns on a worksheet, then the company has
a. earned net income for the period.
b. an error because debits do not equal credits.
c. suffered a net loss for the period.
d. to make an adjusting entry.

When using a worksheet, adjusting entries are journalized
a. after the worksheet is completed and before financial statements are prepared.
b. before the adjustments are entered on to the worksheet.
c. after the worksheet is completed and after financial statements have been prepared.
d. before the adjusted trial balance is extended to the proper financial statement columns.

Adjusting entries are prepared from
a. source documents.
b. the adjustments columns of the worksheet.
c. the general ledger.
d. last year's worksheet.

Closing entries are necessary for
a. permanent accounts only.
b. temporary accounts only.
c. both permanent and temporary accounts.
d. permanent or real accounts only.

The income summary account
a. is a permanent account.
b. appears on the balance sheet.
c. appears on the income statement.
d. is a temporary account.

Closing entries are journalized and posted
a. before the financial statements are prepared.
b. after the financial statements are prepared.
c. at management's discretion.
d. at the end of each interim accounting period.

The standards and rules that are recognized as a general guide for financial reporting are called
a. generally accepted accounting standards.
b. generally accepted accounting principles.
c. operating guidelines.
d. standards of financial reporting.

All of the following are objectives of financial reporting except
a. provide information that is helpful in making investment decisions.
b. provide information that is helpful is assessing future cash flows.
c. provide information that identifies economic resources.
d. maximize social welfare.

Qualitative characteristics include all of the following except
a. profitability.
b. relevance.
c. comparability.
d. reliability.

Which one of the following is not a qualitative characteristic of useful accounting information?
a. Relevance
b. Reliability
c. Conservatism
d. Comparability

Accounting information should be verifiable in order to enhance
a. comparability.
b. reliability.
c. consistency.
d. feedback value.

Which one of the following is not an objective of a system of internal controls?
a. Safeguard company assets
b. Overstate liabilities in order to be conservative
c. Enhance the accuracy and reliability of accounting records
d. Reduce the risks of errors

Internal control is defined, in part, as a plan that safeguards
a. all balance sheet accounts.
b. assets.
c. liabilities.
d. capital stock.

Having one person post entries to accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of
a. inadequate internal control.
b. duplication of effort.
c. external verification.
d. segregation of duties.

Which one of the following is primarily interested in the liquidity of a company?
a. Federal government
b. Stockholders
c. Long-term creditors
d. Short-term creditors

Which one of the following is not a characteristic generally evaluated in analyzing financial statements?
a. Liquidity
b. Profitability
c. Marketability
d. Solvency

Short-term creditors are usually most interested in evaluating
a. solvency.
b. liquidity.
c. marketability.
d. profitability.

Stockholders are most interested in evaluating
a. liquidity and solvency.
b. profitability and solvency.
c. liquidity and profitability.
d. marketability and solvency.




Which of the following is an external user of accounting information?
a.     Labor unions
b.     Finance directors
c.     Company officers
d.     Managers

The origins of accounting are generally attributed to the work of
a.     Christopher Columbus.
b.     Abner Doubleday.
c.     Luca Pacioli.
d.     Leonardo da Vinci.

Generally accepted accounting principles are
a.     income tax regulations of the Internal Revenue Service.
b.     standards that indicate how to report economic events.
c.     theories that are based on physical laws of the universe.
d.     principles that have been proven correct by academic researchers.


Which one of the following is not a part of an account?
a.     Credit side
b.     Trial balance
c.     Debit side
d.     Title

Credits
a.     decrease both assets and liabilities.
b.     decrease assets and increase liabilities.
c.     increase both assets and liabilities.
d.     increase assets and decrease liabilities.

A debit to an asset account indicates
a.     an error.
b.     a credit was made to a liability account.
c.     a decrease in the asset.
d.     an increase in the asset.

The normal balance of any account is the
a.     left side.
b.     right side.
c.     side which increases that account.
d.     side which decreases that account.

The double-entry system requires that each transaction must be recorded
a.     in at least two different accounts.
b.     in two sets of books.
c.     in a journal and in a ledger.
d.     first as a revenue and then as an expense.

An accounting time period that is one year in length, but does not begin on January 1, is referred to as
a.     a fiscal year.
b.     an interim period.
c.     the time period assumption.
d.     a reporting period.

Management usually desires ________ financial statements and the IRS requires all businesses to file _________ tax returns.
a.     annual, annual
b.     monthly, annual
c.     quarterly, monthly
d.     monthly, monthly

Which of the following time periods would not be referred to as an interim period?
a.     Monthly
b.     Quarterly
c.     Semi-annually
d.     Annually

Which of the following are in accordance with generally accepted accounting principles?
a.     Accrual basis accounting
b.     Cash basis accounting
c.     Both accrual basis and cash basis accounting
d.     Neither accrual basis nor cash basis accounting

The matching principle states that expenses should be matched with revenues. Another way of stating the principle is to say that
a.     assets should be matched with liabilities.
b.     efforts should be matched with accomplishments.
c.     dividends to stockholders should be matched with stockholders' investments.
d.     cash payments should be matched with cash receipts.

The information for preparing a trial balance on a worksheet is obtained from
a.     financial statements.
b.     general ledger accounts.
c.     general journal entries.
d.     business documents.

Closing entries are necessary for
a.     permanent accounts only.
b.     temporary accounts only.
c.     both permanent and temporary accounts.
d.     permanent or real accounts only.

A post-closing trial balance will show
a.     only permanent account balances.
b.     only temporary account balances.
c.     zero balances for all accounts.
d.     the amount of net income (or loss) for the period.

The step in the accounting cycle that is performed on a periodic basis (i.e., monthly, quarterly) is
a.     analyzing transactions.
b.     journalizing and posting adjusting entries.
c.     preparing a post-closing trial balance.
d.     posting to ledger accounts.

A current asset is
a.     the last asset purchased by a business.
b.     an asset which is currently being used to produce a product or service.
c.     usually found as a separate classification in the income statement.
d.     an asset that a company expects to convert to cash or use up within one year.

The standards and rules that are recognized as a general guide for financial reporting are called
a.     generally accepted accounting standards.
b.     generally accepted accounting principles.
c.     operating guidelines.
d.     standards of financial reporting.


"Generally accepted" in the phrase generally accepted accounting principles means that the principles
a.     are proven theories of accounting.
b.     have substantial authoritative support.
c.     have been approved by the Internal Revenue Service.
d.     have been approved for use by the managements of business firms.

The conceptual framework developed by the Financial Accounting Standards Board
a.     was approved by a vote of all accountants.
b.     are rules that all accountants must follow.
c.     is viewed as providing a constitution for setting accounting standards for financial reporting.
d.     is legally binding on all accountants.

Accounting principles must be
a.     proven and tested.
b.     hypothesized and theorized.
c.     developed or decreed.
d.     universally accepted.

FASB has had the responsibility for developing accounting principles since the early
a.     1900s.
b.     1920s.
c.     1940s.
d.     1970s.

Which one of the following is primarily interested in the liquidity of a company?
a.     Federal government
b.     Stockholders
c.     Long-term creditors
d.     Short-term creditors

Which one of the following is not a characteristic generally evaluated in analyzing financial statements?
a.     Liquidity
b.     Profitability
c.     Marketability
d.     Solvency

In analyzing the financial statements of a company, a single item on the financial statements
a.     should be reported in bold-face type.
b.     is more meaningful if compared to other financial information.
c.     is significant only if it is large.
d.     should be accompanied by a footnote.

Short-term creditors are usually most interested in evaluating
a.     solvency.
b.     liquidity.
c.     marketability.
d.     profitability.

Long-term creditors are usually most interested in evaluating
a.     liquidity and solvency.
b.     solvency and marketability.
c.     liquidity and profitability.
d.     profitability and solvency.

The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles. It is true that
A.    the SEC is a private organization of accountants.
B.    the SEC often mandates guidelines when no accounting principles exist.
C.    the SEC and FASB rarely cooperate in developing accounting standards.
D.    they are both governmental agencies.


Auditing is
A.    a part of accounting that involves only recording of economic events.
B.    an area of accounting that involves such activities as cost accounting, budgeting, and accounting information systems.
C.    conducted by the Securities and Exchange Commission to ensure that registered financial statements are presented fairly.
D.    the examination of financial statements by a CPA in order to express an opinion on their fairness.

All of the financial statements are for a period of time except the
A.    retained earnings.
B.    balance sheet.
C.    statement of cash flows.
D.    income statement.


Which of the following statements is not true?
A.    Expenses have normal debit balances.
B.    Expenses decrease stockholders' equity.
C.    Expenses are a negative factor in the computation of net income.
D.    Expenses increase stockholders' equity.


An account will have a credit balance if the
A.    first transaction entered was a credit.
B.    debits exceed the credits.
C.    last transaction entered was a credit.
D.    credits exceed the debits.


The first step in the recording process is to
A. prepare a trial balance.
B. post to a journal.
C. analyze each transaction for its effect on the accounts.
D. prepare financial statements.

If a company has overdrawn its bank balance, then
A. the cash account debits will exceed the cash account credits.
B. its cash account will show a credit balance.
C.it cannot be detected by observing the balance of the cash account.
D. its cash account will show a debit balance.

Posting
A. involves transferring all debits and credits on a journal page to the trial balance.
B. accumulates the effects of journalized transactions in the individual accounts.
C.is accomplished by examining ledger accounts and seeing which ones need updating.
D. should be performed in account number order.

The dividends account
A.is increased with debits and decreased with credits.
B. must show transactions every accounting period.
C.is not a proper subdivision of stockholders' equity.
D. appears on the income statement along with the expenses of the business.

After journal entries are posted, the reference column
A. of the general journal will show "Dr" or "Cr".
B. of the general ledger will show journal page numbers.
C. of the general ledger will show account numbers.
D. of the general journal will be blank.

The procedure of transferring journal entries to the ledger accounts is called
A. reporting.
B. analyzing.
C. posting.
D. journalizing.

Posting of journal entries should be done in
A. chronological order.
B. alphabetical order.
C. dollar amount order.
D. account number order.

The following items are taken from the financial statements of Cerner Company for the year ending December 31, 2008:
Accounts payable     $ 18,000
Accounts receivable     11,000
Accumulated depreciation – equipment     28,000
Advertising expense     21,000
Cash     15,000
Retained Earnings (1/1/08)     80,000
Common Stock     22,000
Dividends     14,000
Depreciation expense     12,000
Insurance expense     3,000
Note payable, due 6/30/09     70,000
Prepaid insurance (12-month policy)     6,000
Rent expense     17,000
Salaries expense     32,000
Service revenue     133,000
Supplies     4,000
Supplies expense     6,000
Equipment     210,000
12.     What is the company’s net income for the year ending December 31, 2008?
a.     $133,000
b.     $42,000
c.     $28,000
d.     $12,000

13.     What is the total that would be reported for stockholders' equity at December 31, 2008?
a.     $102,000
b.     $130,000
c.     $144,000
d.     $158,000

The formula for horizontal analysis of changes since the base period is the current year amount
a.     divided by the base year amount.
b.     minus the base year amount divided by the base year amount.
c.     minus the base year amount divided by the current year amount.
d.     plus the base year amount divided by the base year amount.

Zendejas Company purchased a ruler for $2.00. The ruler is expected to last for ten years. Tony, the accountant, expensed the cost of the ruler in the year of the purchase. Which constraint has Tony taken into account when making his accounting decision?
a.    Conservatism
b.     Faithful Representation
c.     Neutrality
d.     Materiality


Demaet Cruise Lines purchased a five-year insurance policy for its ships on April 1, 2008 for $100,000. Assuming that April 1 is the effective date of the policy, the adjusting entry on December 31, 2008 is
a.     Prepaid Insurance          15,000
Insurance Expense               15,000
b.     Insurance Expense          15,000
Prepaid Insurance               15,000
c.     Insurance Expense          20,000
Prepaid Insurance               20,000
d.     Insurance Expense          5,000
Prepaid Insurance               5,000

If a check correctly written and paid by the bank for $428 is incorrectly recorded on the company's books for $482, the appropriate treatment on the bank reconciliation would be to
a.     add $54 to the bank's balance.
b.     add $54 to the book's balance.
c.     deduct $54 from the bank's balance.
d.     deduct $428 from the book's balance.

Luthor Corporation had net income of $160,000 and paid dividends to common stockholders of       $40,000 in 2008. The weighted average number of shares outstanding in 2008 was 50,000 shares. Luthor Corporation's common stock is selling for $50 per share on the New York Stock Exchange.
Luthor Corporation's price-earnings ratio is
a.     3.2 times.
b.     15.6 times.
c.     10 times.
d.     5 times.

A trial balance will not balance if
a.     a journal entry is posted twice.
b.     a wrong amount is used in journalizing.
c.     incorrect account titles are used in journalizing.
d.     a journal entry is only partially posted.


The going concern assumption assumes that the business
a.     will be liquidated in the near future.
b.     will be purchased by another business.
c.     is in a growth industry.
d.     will continue in operation long enough to carry out its existing objectives and commitments.

At September 1, 2008, Foli Co. reported retained earnings of $136,000. During the month, Foli generated revenues of $20,000, incurred expenses of $12,000, purchased equipment for $5,000 and paid dividends of $2,000. What is the amount of retained earnings at September 30, 2008?
a.     $136,000
b.     $8,000
c.     $137,000
d.     $142,000

The accounting equation for Goodboys Enterprises is as follows:
Assets          Liabilities     Stockholders' Equity
$120,000     =     $60,000     +     $60,000
If Goodboys purchases office equipment on account for $12,000, the accounting equation will change to
Assets     Liabilities     Stockholders' Equity
a.     $120,000 = $60,000   +     $60,000
b.     $132,000 = $60,000   +     $72,000
c.     $132,000 = $66,000   +     $66,000
d.     $132,000 = $72,000   +     $60,000

Having one person post entries to accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of
a.     inadequate internal control.
b.     duplication of effort.
c.     external verification.
d.     segregation of duties.


Use the following information for questions 24:

Moon Beam, Inc. has the following income statement (in millions):
MOON BEAM, INC.
Income Statement
For the Year Ended December 31, 2008
Net Sales     $180
Cost of Goods Sold        120
Gross Profit      60
Operating Expenses         33
Net Income     $ 27

24.     Using vertical analysis, what percentage is assigned to Cost of Goods Sold?
a.     67%
b.     33%
c.     100%
d.     None of the above

25.      Each of the following is an example of an unexpired cost except
a.     merchandise inventory.
b.     plant assets.
c.     prepaid expenses.
d.     repairs.

26.          The net income (or loss) for the period
a.     is found by computing the difference between the income statement credit column and the balance sheet credit column on the worksheet.
b.     cannot be found on the worksheet.
c.     is found by computing the difference between the income statement columns of the worksheet.
d.     is found by computing the difference between the trial balance totals and the adjusted trial balance totals.

The accounting process is correctly sequenced as
a.     identification, communication, recording.
b.     recording, communication, identification.
c.     identification, recording, communication.
d.     communication, recording, identification.

Sue Smiley has performed $500 of CPA services for a client but has not billed the client as of the end of the accounting period. What adjusting entry must Sue make?
a.     Debit Cash and credit Unearned Revenue
b.     Debit Accounts Receivable and credit Unearned Revenue
c.     Debit Accounts Receivable and credit Service Revenue
d.     Debit Unearned Revenue and credit Service Revenue


James Company purchases $600 of equipment from Mundelein Inc. for cash. The effect on the components of the basic accounting equation of James Company is
a.     an increase in assets and liabilities.
b.     a decrease in assets and liabilities.
c.     no change in total assets.
d.     an increase in assets and a decrease in liabilities.

Problem # 1.
The adjusted trial balance of Pool Financial Planners appears below. Using the information from the adjusted trial balance, you are to prepare for the month ending December 31:
1.     an income statement.
2.     a retained earnings statement.
3.     a balance sheet.

POOL FINANCIAL PLANNERS
Adjusted Trial Balance
December 31, 2008
———————————————————————————————————————————
Debit           Credit     
Cash          $ 5,400
Accounts Receivable          2,200
Office Supplies          1,800
Office Equipment          15,000
Accumulated Depreciation—Office Equipment               $ 4,000
Accounts Payable               3,300
Unearned Revenue               6,000
Common Stock                10,000
Retained Earnings (Jan. 1)               4,400
Dividends          2,500
Service Revenue               4,200
Office Supplies Expense          600
Depreciation Expense          2,500
Rent Expense              1,900          
$31,900     $31,900


POOL FINANCIAL PLANNERS
Income Statement
For the Month Ending December 31, 2008

Revenues                   
Service revenue……………………………………                 $  4,200
Expenses                   
Office supplies expense……………………………...        $600        
Depreciation expense……………………………….                2,500        
Rent expense…………………………………                1,900        
Total expenses……………………                     5,000
Net income………………………………………………                 $  -800












POOL FINANCIAL PLANNERS
Retained Earnings Statement
For the Month Ending December 31, 2008

Retained earnings……………………………………………………………………        $4,400
Add: Net income…………………………………………………………………………………        -800
3,600
Less: Dividends……………………………………………………………………………………        2,500
Retained earnings, August 31……………………………………………………………..        $1,100





POOL FINANCIAL PLANNERS
Balance Sheet
December 31, 2008

Assets
Cash…………………………………………...........................                $5,400
Accounts receivable…………………………………………..                2,200
Office Supplies…………………………………………………..                1,800
Office equipment………………………………………………                15,000
Less: Accum. Depreciation – office equip………….        4,000       
Total assets……………………………………………………                $24,400

Liabilities and Stockholders' Equity
Liabilities               
Accounts payable……………………………………………                $3,300
Unearned Service Revenue..………………………….                6,000
Total liabilities……………………………………………                9,300
Stockholders' equity               
Common stock……………………………………………….        $10,000        
Retained earnings………………………………………….        4,400       
Total stockholders' equity………………………….                14,400
Total liabilities and stockholders' equity…….                $23,700



The standards and rules that are recognized as a general guide for financial reporting are called __________.
A. standards of financial reporting
B. generally accepted accounting principles
C. operating guidelines
D. generally accepted accounting standards

Sam's Used Cars uses the specific identification method of costing inventory. During March, Sam purchased three cars for $6,000, $7,500, and $9,750, respectively. During March, two cars are sold for $9,000 each. Sam determines that at March 31, the $9,750 car is still on hand. What is Sam’s gross profit for March?
A. $8,250
B. $4,500
C. $750
D. $5,250  ((9,000X2) – (6,000+7,500))

Which one of the following items is not generally used in preparing a statement of cash flows?
A. Additional information
B. Comparative balance sheets
C. Current income statement
D. Adjusted trial balance

The cost principle requires that when assets are acquired, they be recorded at __________.
A. list price
B. exchange price paid
C. selling price
D. appraisal value

What is the preparation of reports for each level of responsibility in the company’s organization chart called?
A. Master budgeting analysis
B. Responsibility reporting
C. Exception reporting
D. Static reporting

The cost principle is the basis for preparing financial statements because it is __________.
A. the most accurate measure of purchasing power
B. an international accounting standard
C. relevant and objectively measured, and verifiable
D. a conservative value

Which list below best describes the major services performed by public accountants?
A. Cost accounting, production scheduling, recruiting
B. Auditing, taxation, management consulting
C. Employee training, auditing, bookkeeping
D. Bookkeeping, mergers, budgets

A well-designed activity-based costing system starts with __________.
A. analyzing the activities performed to manufacture a product
B. assigning manufacturing overhead costs for each activity cost pool to products
C. computing the activity-based overhead rate
D. identifying the activity-cost pools

The income statement and balance sheet columns of Pine Company's worksheet reflects the following totals: Income Statement Balance Sheet Dr. Cr. Dr. Cr. Totals $58,000 $48,000 $34,000 $44,000 Closing entries are necessary for __________.
A. permanent or real accounts only
B. both permanent and temporary accounts
C. temporary accounts only
D. permanent accounts only

What exists when budgeted costs exceed actual results?
A. An excess profit
B. An unfavorable difference
C. A favorable difference
D. A budgeting error

Multinational corporations __________.
A. are U.S. companies that trade their securities on the exchanges in other countries
B. are firms that conduct their operations in more than one country through subsidiaries, divisions, or branches in foreign countries
C. are U.S. companies that sell goods and services in other countries
D. are required to use international accounting standards

The major reporting standard for management accounts is __________.
A. generally accepted accounting principles
B. relevance to decisions
C. the Sarbanes-Oxley Act of 2002
D. the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management

The primary purpose of the statement of cash flows is to __________.
A. facilitate banking relationships
B. provide information about the investing and financing activities during a period
C. prove that revenues exceed expenses if there is a net income
D. provide information about the cash receipts and cash payments during a period

As Plant Controller, you are trying to determine which costs over which you have the most control on a day to day basis. Your goal is to achieve better profitability. The Plant Operations Manager suggests that overhead is the easiest area to directly reduce costs. Which of the following items would be classified as manufacturing overhead?
A. The western division’s vice president’s salary
B. Factory janitor
C. General corporate liability insurance
D. Cost of landscaping the corporate office

Assuming that there is a net loss for the period, debits equal credits in all but which section of the worksheet?
A. Income statement columns
B. Adjustments columns
C. Trial balance columns
D. Adjusted trial balance columns

Each of the following accounts is closed to Income Summary except
A. Revenues.
B. Dividends.
C. All of these are closed to Income Summary.
D. Expenses.

Closing entries may be prepared from all but which one of the following sources?
A. Balance sheet
B. Income statement and balance sheet columns of the worksheet
C. Income and Stockholders' equity statements
D. Adjusted balances in the ledger

In preparing closing entries
A. the retained earnings account will be debited if there is net income for the period.
B. each expense account will be credited.
C. the dividends account will be debited.
D. each revenue account will be credited.

Which of the following is a true statement about closing the books of a corporation?
A. Revenues and expenses are closed to the Income Summary account.
B. Only revenues are closed to the Income Summary account.
C. Revenues, expenses, and the dividends account are closed to the Income Summary account.
D. Expenses are closed to the Expense Summary account.

The importance of a good system of internal controls was recognized with the passage of
A. the Securities and Exchange Act of 1933.
B. the Blue Sky Laws.
C. the Securities and Exchange Act of 1994.
D. the Sarbanes-Oxley Act of 2002.


A technique for evaluating financial statements that expresses the relationship among selected items of financial statement data is
A. ratio analysis.
B. horizontal analysis.
C. vertical analysis.
D. common size analysis.

Horizontal analysis is also called
A. trend analysis.
B. vertical analysis.
C. common size analysis.
D. linear analysis.

Vertical analysis is also known as
A. trend analysis.
B. common size analysis.
C. straight-line analysis.
D. perpendicular analysis.

Internal controls are not designed to safeguard assets from
A. robbery.
B. employee theft.
C. unauthorized use.
D. natural disasters.

Having one person post entries to accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of
A. inadequate internal control.
B. external verification.
C. duplication of effort.
D. segregation of duties.

Which one of the following is not an objective of a system of internal controls?
A. Safeguard company assets
B. Enhance the accuracy and reliability of accounting records
C. Overstate liabilities in order to be conservative
D. Reduce the risks of errors

The Sarbanes-Oxley Act of 2002 requires that all U.S. corporations under the jurisdiction of the Securities and Exchange Commission
A. have at least one foreign subsidiary.
B. maintain an adequate system of internal control.
C. maintain accounting records of foreign branches and subsidiaries in the local foreign currency.
D. must file reports with the National Commission on Fraudulent Financial Reporting.

Companies that are subject to, but fail to comply with, the Sarbanes-Oxley Act of 2002
A. may do so legally by obtaining an exemption.
B. may be subject to fines and officer imprisonment.
C. will be automatically dissolved.
D. may be forced to sell their foreign subsidiaries.


The importance of a good system of internal controls was recognized with the passage of
A. the Securities and Exchange Act of 1933.
B. the Blue Sky Laws.
C. the Securities and Exchange Act of 1994.
D. the Sarbanes-Oxley Act of 2002.

Joe is warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates
A. documentation procedures are violated.
B. segregation of duties is violated.
C. independent internal verification is violated.
D. establishment of responsibility is violated.

Allowing only the treasurer to sign checks is an example of
A. documentation procedures.
B. other controls.
C. segregation of duties.
D. establishment of responsibility

The ACE Company has five plants nationwide that cost $100 million. The current market value of the plants is $500 million. The plants will be recorded and reported as assets at
a. $100 million.
b. $600 million.
c. $400 million.
d. $500 million. _____

A basic assumption of accounting that requires activities of an entity be kept separate from the activities of its owner is referred to as the
a. stand alone concept.
b. monetary unit assumption.
c. corporate form of ownership.
d. economic entity assumption. _____

A net loss will result during a time period when
a. liabilities exceed assets.
b. dividends exceed revenues.
c. expenses exceed revenues.
d. revenues exceed expenses. _____

As of December 31, 2008, Anders Company has assets of $35,000 and stockholders' equity of $20,000. What are the liabilities for Anders Company as of December 31, 2008?
a. $15,000
b. $10,000
c. $25,000
d. $20,000 _____

A credit is not the normal balance for which account listed below?
a. Common stock account
b. Revenue account
c. Liability account
d. Dividend account _____

An accountant has debited an asset account for $1,000 and credited a liability account for $500. What can be done to complete the recording of the transaction?
a. Nothing further must be done.
b. Debit an stockholders' equity account for $500.
c. Debit another asset account for $500.
d. Credit a different asset account for $500. _____


Which of the following is not true of the terms debit and credit?
a. They can be abbreviated as Dr. and Cr.
b. They can be interpreted to mean increase and decrease.
c. They can be used to describe the balance of an account.
d. They can be interpreted to mean left and right. _____

In the first month of operations, the total of the debit entries to the cash account amounted to $900 and the total of the credit entries to the cash account amounted to $500. The cash account has a(n)
a. $500 credit balance.
b. $800 debit balance.
c. $400 debit balance.
d. $400 credit balance. _____

On January 14, Franco Industries purchased supplies of $500 on account. The entry to record the purchase will include
a. a debit to Supplies and a credit to Accounts Payable.
b. a debit to Supplies Expense and a credit to Accounts Receivable.
c. a debit to Supplies and a credit to Cash.
d. a debit to Accounts Receivable and a credit to Supplies. _____

Management could determine the amounts due from customers by examining which ledger account?
a. Service Revenue
b. Accounts Payable
c. Accounts Receivable
d. Supplies _____

A list of accounts and their balances at a given time is called a(n)
a. journal.
b. posting.
c. trial balance.
d. income statement. _____

Management usually desires ________ financial statements and the IRS requires all businesses to file _________ tax returns.
a. annual, annual
b. monthly, annual
c. quarterly, monthly
d. monthly, monthly _____

In a service-type business, revenue is considered earned
a. at the end of the month.
b. at the end of the year.
c. when the service is performed.
d. when cash is received. _____

Ken's Tune-up Shop follows the revenue recognition principle. Ken services a car on July 31. The customer picks up the vehicle on August 1 and mails the payment to Ken on August 5. Ken receives the check in the mail on August 6. When should Ken show that the revenue was earned?
a. July 31
b. August 1
c. August 5
d. August 6 _____

A furniture factory's employees work overtime to finish an order that is sold on February 28. The office sends a statement to the customer in early March and payment is received by mid-March. The overtime wages should be expensed in
a. February.
b. March.
c. the period when the workers receive their checks.
d. either in February or March depending on when the pay period ends. _____

A small company may be able to justify using a cash basis of accounting if they have
a. sales under $1,000,000.
b. no accountants on staff.
c. few receivables and payables.
d. all sales and purchases on account. _____

Which one of the following is not a justification for adjusting entries?
a. Adjusting entries are necessary to ensure that revenue recognition principles are followed.
b. Adjusting entries are necessary to ensure that the matching principle is followed.
c. Adjusting entries are necessary to enable financial statements to be in conformity with GAAP.
d. Adjusting entries are necessary to bring the general ledger accounts in line with the budget. _____

If a resource has been consumed but a bill has not been received at the end of the accounting period, then
a. an expense should be recorded when the bill is received.
b. an expense should be recorded when the cash is paid out.
c. an adjusting entry should be made recognizing the expense.
d. it is optional whether to record the expense before the bill is received. _____

Quirk Company purchased office supplies costing $6,000 and debited Office Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $2,400 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be
a. Debit Office Supplies Expense, $2,400; Credit Office Supplies, $2,400.
b. Debit Office Supplies, $3,600; Credit Office Supplies Expense, $3,600.
c. Debit Office Supplies Expense, $3,600; Credit Office Supplies, $3,600.
d. Debit Office Supplies, $2,400; Credit Office Supplies Expense, $2,400. _____

Closing entries are made
a. in order to terminate the business as an operating entity.
b. so that all assets, liabilities, and Stockholders' equity accounts will have zero balances when the next accounting period starts.
c. in order to transfer net income (or loss) and dividends to the retained earnings account.
d. so that financial statements can be prepared. _____

The relationship between current assets and current liabilities is important in evaluating a company's
a. profitability.
b. liquidity.
c. market value.
d. accounting cycle. _____

An objective of financial reporting is to provide information that is mainly useful to
a. governmental taxing bodies.
b. employees and labor unions.
c. investors and creditors.
d. internal and external auditors. _____

Which of the following statements is not true?
a. Comparability means using the same accounting principles from year to year within a company.
b. Reliability is the quality of information that gives assurance that it is free of error or bias.
c. Relevant accounting information must be capable of making a difference in the decision.
d. The FASB concluded that the overriding criterion by which accounting choices can be judged is decision usefulness. _____

The going concern assumption assumes that the business
a. will be liquidated in the near future.
b. will be purchased by another business.
c. is in a growth industry.
d. will continue in operation long enough to carry out its existing commitments. _____

The revenue recognition principle
a. states that revenue should be recognized in the period when received.
b. states that expense recognition is tied to revenue recognition.
c. requires that revenue be recognized in the accounting period when it is earned.
d. requires that events making a difference to financial statement users be clearly disclosed. _____

Which of the following is not a characteristic of the cost principle?
a. Reliability
b. Subjectivity
c. Objectivity
d. Verifiability _____

The adjusted trial balance is prepared
A. after financial statements are prepared.
B. before the trial balance.
C. after adjusting entries have been journalized and posted.
D. to prove the equality of total assets and total liabilities.

Financial statements are prepared directly from the
A. general journal.
B. ledger.
C. adjusted trial balance.
D. trial balance.

An adjusted trial balance
A. is prepared after the financial statements are completed.
B. proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made.
C. cannot be used to prepare financial statements.
D. is a required financial statement under generally accepted accounting principles.

A company just starting in business purchased three merchandise
inventory items at the following prices. First purchase $80; Second
purchase $95; Third purchase $85. If the company sold two units for
a total of $250 and used FIFO costing, the gross profit for the
period would be
a. $75.
b. $85.
c. $70.
d. $60.
------------------------------
A company just starting business made the following four inventory
purchases in June:
June 1 150 units $ 770
June 10 200 units 1,180
June 15 200 units 1,260
June 28 150 units 990
&nbs p; ——————
&nbs p; $4,200
&nbs p;

A physical count of merchandise inventory on June 30 reveals that
there are 200 units on hand.

Using the LIFO inventory method, the value of the ending inventory
on June 30 is
a. $1,065.
b. $1,305.
c. $2,895.
d. $3,135.

The cost of goods available for sale is allocated between
a. beginning inventory and ending inventory.
b. beginning inventory and cost of goods on hand.
c. ending inventory and cost of goods sold.
d. beginning inventory and cost of goods purchased.


The managers of Tong Company receive performance bonuses based on
the net income of the firm. Which inventory costing method are they
likely to favor in periods of declining prices?
a. LIFO
b. Average Cost
c. FIFO
d. Physical inventory method

The accountant at Lloyd Company is figuring out the difference in
income taxes the company will pay depending on the choice of either
FIFO or LIFO as an inventory costing method. The tax rate is 30%
and the FIFO method will result in income before taxes of $5,244.
The LIFO method will result in income before taxes of $4,740. What
is the difference in tax that would be paid between the two
methods?
a. $504.
b. $353.
c. $151.
d. Cannot be determined from the information provided.

Which one of the following is not an objective of financial
reporting according to the conceptual framework?
a. To provide information that will increase the value of the
company
b. To provide information in assessing future cash flows
c. To provide information that is useful for making investment and
credit decisions
d. To provide information that identifies economic resources, the
claims to those resources, and the changes in those resources and
claims

Expenses are recognized when
a. cash is paid.
b. the work is performed.
c. the product is produced.
d. they make their contribution to revenue.

Internal controls are not designed to safeguard assets from
a. natural disasters.
b. employee theft.
c. robbery.
d. unauthorized use.

An accounts payable clerk also has access to the approved supplier
master file for purchases. The control principle of
a. establishment of responsibility is violated.
b. independent internal verification is violated.
c. documentation procedures is violated.
d. separation of duties is violated.

For accounting purposes, postdated checks (checks payable in the
future) are considered to be
a. money orders.
b. cash.
c. petty cash.
d. accounts receivable.

An employee authorized to sign checks should not record
a. owner cash contributions.
b. mail receipts.
c. cash disbursement transactions.
d. sales transactions.

Which one of the following would not cause a bank to debit a
depositor's account?
a. Bank service charge
b. Collection of a note receivable
c. Wiring of funds to other locations
d. Checks marked NSF

A company maintains the asset account, Cash in Bank, on its books,
while the bank maintains a reciprocal account which is
a. a contra-asset account.
b. a liability account.
c. also an asset account.
d. an owner's equity account.

Deposits in transit
a. have been recorded on the company's books but not yet by the
bank.
b. have been recorded by the bank but not yet by the company.
c. have not been recorded by the bank or the company.
d. are checks from customers which have not yet been received by the
company.

In preparing a bank reconciliation, outstanding checks are
a. added to the balance per bank.
b. deducted from the balance per books.
c. added to the balance per books.
d. deducted from the balance per bank.

Notification by the bank that a deposited customer check was
returned NSF requires that the company make the following adjusting
entry:
a. Accounts Receivable
Cash
b. Cash Accounts Receivable
c. Miscellaneous Expense Accounts Receivable
d. No adjusting entry is necessary.

Eaton Company had checks outstanding totaling $4,400 on its June
bank reconciliation. In July, Eaton Company issued checks totaling
$38,900. The July bank statement shows that $28,300 in checks
cleared the bank in July. A check from one of Eaton Company's
customers in the amount of $300 was also returned marked "NSF." The
amount of outstanding checks on Eaton Company's July bank
reconciliation should be
a. $10,600.
b. $15,000.
c. $14,700.
d. $6,200.

Gagne Company gathered the following reconciling information in
preparing its July bank reconciliation:
Cash balance per books, 7/31 $3,000
Deposits-in-transit &nb sp; 150
Notes receivable and interest collected by bank 850
Bank charge for check printing 20
Outstanding checks 2,000
NSF check ; ` 170

The adjusted cash balance per books on July 31 is
a. $3,660.
b. $3,510.
c. $1,810.
d. $1,960.

An adjusting entry is not required for
a. outstanding checks.
b. collection of a note by the bank.
c. NSF checks.
d. bank service charges.

Weber Company developed the following reconciling information in
preparing its September bank reconciliation:
Cash balance per bank, 9/30 $15,000
Note receivable collected by bank 6,000
Outstanding checks 9,000
Deposits-in-transit 4,500
Bank service charge 75
NSF check 1,200

Using the above information, determine the cash balance per books
(before adjustments) for the Weber Company.
a. $11,775.
b. $19,500.
c. $5,775.
d. $15,000.

A system of internal control
a. is infallible.
b. can be rendered ineffective by employee collusion.
c. invariably will have costs exceeding benefits.
d. is premised on the concept of absolute assurance.

Use the following information for questions 14-15.
The income statement and balance sheet columns of Pine Company's worksheet
reflects the following totals:
Income Statement Balance Sheet
Dr. Cr. Dr. Cr.
Totals $58,000 $48,000 $34,000 $44,000

14. The net income (or loss) for the period is
a. $48,000 income.
b. $10,000 income.
c. $10,000 loss.
d. not determinable.

15. To enter the net income (or loss) for the period into the above worksheet
requires an entry to the
a. income statement debit column and the balance sheet credit column.
b. income statement credit column and the balance sheet debit column.
c. income statement debit column and the income statement credit
column.
d. balance sheet debit column and the balance sheet credit column.

Under accrual-basis accounting
a. cash must be received before revenue is recognized.
b. net income is calculated by matching cash outflows against cash
inflows.
c. events that change a company's financial statements are recognized in
the period they occur rather than in the period in which cash is paid or
received.
d. the ledger accounts must be adjusted to reflect a cash basis of
accounting before financial statements are prepared under generally
accepted accounting principles.

An example of an expired cost is
a. inventory.
b. sales salaries.
c. prepaid expenses.
d. plant assets.

Companies that are subject to, but fail to comply with, the Sarbanes-Oxley
Act of 2002
a. may do so legally by obtaining an exemption.
b. will be automatically dissolved.
c. may be subject to fines and officer imprisonment.
d. may be forced to sell their foreign subsidiaries.

Which of the following correctly identifies normal balances of accounts?
a. Assets Debit
Liabilities Credit
Stockholders' Equity Credit
Revenues Debit
Expenses Credit
b. Assets Debit
Liabilities Credit
Stockholders' Equity Credit
Revenues Credit
Expenses Credit
c. Assets Credit
Liabilities Debit
Stockholders' Equity Debit
Revenues Credit
Expenses Debit
d. Assets Debit
Liabilities Credit
Stockholders' Equity Credit
Revenues Credit
Expenses Debit

Costs become expenses
a. when they are paid.
b. when they are charged against revenues.
c. when they are purchased.
d. at the end of the accounting period.

Which one of the following is primarily interested in the liquidity of a
company?
a. Federal government
b. Stockholders
c. Long-term creditors
d. Short-term creditors

The organization(s) primarily responsible for establishing generally accepted
accounting principles is(are) the
FASB SEC
a. no no
b. yes no
c. no yes
d. yes yes

Demaet Cruise Lines purchased a five-year insurance policy for its ships on
April 1, 2008 for $100,000. Assuming that April 1 is the effective date of
the policy, the adjusting entry on December 31, 2008 is
a. Prepaid Insurance........................................................ 15,000
Insurance Expense ............................................... 15,000
b. Insurance Expense ...................................................... 15,000
Prepaid Insurance................................................. 15,000
c. Insurance Expense ...................................................... 20,000
Prepaid Insurance................................................. 20,000
d. Insurance Expense ...................................................... 5,000
Prepaid Insurance................................................. 5,000

Barns Company developed the following reconciling information in preparing
its September bank reconciliation:
Cash balance per bank, 9/30 $15,400
Note receivable collected by bank 8,400
Outstanding checks 12,600
Deposits in transit 6,300
Bank service charge 105
NSF check 1,680
Using the above information, determine the cash balance per books
(before adjustments) for the Barns Company.
a. $13,685
b. $21,700
c. $2,485
d. $21,000

On September 23, Pitts Company received a $350 check from Mike Moluf for
services to be performed in the future. The bookkeeper for Pitts Company
incorrectly debited Cash for $350 and credited Accounts Receivable for
$350. The amounts have been posted to the ledger. To correct this entry,
the bookkeeper should
a. debit Cash $350 and credit Unearned Service Revenue $350.
b. debit Accounts Receivable $350 and credit Unearned Service
Revenue $350.
c. debit Accounts Receivable $350 and credit Cash $350.
d. debit Accounts Receivable $350 and credit Service Revenue $350.

On August 13, 2008, Dudbury Enterprises purchased office equipment for
$1,000 and office supplies of $200 on account. Which of the following
journal entries is recorded correctly and in the standard format?
a. Office Equipment ......................................................... 1,000
Account Payable .................................................... 1,200
Office Supplies............................................................. 200
b. Office Equipment. ........................................................ 1,000
Office Supplies............................................................. 200
Accounts Payable................................................... 1,200
c. Accounts Payable ........................................................ 1,200
Office Equipment .................................................... 1,000
Office Supplies ....................................................... 200
d. Office Equipment ..................................................1,000
Office Supplies............................................................. 200
Accounts Payable...................................................               1,200

Accounting information should be neutral in order to enhance
a. reliability.
b. predictive value.
c. feedback value.
d. relevancy.

Internal auditors
a. are hired by CPA firms to audit business firms.
b. are employees of the IRS who evaluate the internal controls of
companies filing tax returns.
c. evaluate the system of internal controls for the companies that employ
them.
d. cannot evaluate the system of internal controls of the company that
employs them because they are not independent.

Liabilities are generally classified on a balance sheet as
a. small liabilities and large liabilities.
b. present liabilities and future liabilities.
c. tangible liabilities and intangible liabilities.
d. current liabilities and long-term liabilities.

An expense is recorded under the cash basis only when
a. services are performed.
b. it is earned.
c. cash is paid.
d. it is incurred.

A bank reconciliation should be prepared
a. whenever the bank refuses to lend the company money.
b. when an employee is suspected of fraud.
c. to explain any difference between the depositor's balance per books
and the balance per bank.
d. by the person who is authorized to sign checks.

The current assets should be listed on Cerner's balance sheet in the
following order:
a. cash, accounts receivable, prepaid insurance, equipment.
b. cash, prepaid insurance, supplies, accounts receivable.
c. cash, accounts receivable, prepaid insurance, supplies.
d. equipment, supplies, prepaid insurance, accounts receivable, cash.

An extraordinary item is one that
a. occurs infrequently and is uncontrollable in nature.
b. occurs infrequently and is unusual in nature.
c. is material and is unusual in nature.
d. is material and is uncontrollable in nature.

Communication of economic events is the part of the accounting process that involves
A. preparing accounting reports.
B. identifying economic events.
C. quantifying transactions into dollars and cents.
D. recording and classifying information.

The private sector organization involved in developing accounting principles is the
A. Feasible Accounting Standards Body.
B. Financial Accounting Studies Board.
C. Financial Auditors' Standards Body.
D. Financial Accounting Standards Board.


The body of theory underlying accounting is not based on
A. physical laws of nature.
B. concepts.
C. definitions.
D. principles.

All of the financial statements are for a period of time except the
A. income statement.
B. retained earnings.
C. statement of cash flows.
D. balance sheet.


Auditing is
A. the examination of financial statements by a CPA in order to express an opinion on their fairness.
B. a part of accounting that involves only recording of economic events.
C. conducted by the Securities and Exchange Commission to ensure that registered financial statements are presented fairly.
D.an area of accounting that involves such activities as cost accounting, budgeting, and accounting information systems.


After a business transaction has been analyzed and entered in the book of original entry, the next step in the recording process is to transfer the information to
A. the company's bank.
B. stockholders' equity.
C. financial statements.
D. ledger accounts.


Posting
A. should be performed in account number order.
B. accumulates the effects of journalized transactions in the individual accounts.
C. is accomplished by examining ledger accounts and seeing which ones need updating.
D. involves transferring all debits and credits on a journal page to the trial balance.


Which of the following statements is true?
A. Credits decrease assets and increase liabilities.
B. Debits increase assets and increase liabilities.
C. Credits decrease assets and decrease liabilities.
D. Debits decrease liabilities and decrease assets.


An account will have a credit balance if the
A. debits exceed the credits.
B. credits exceed the debits.
C. first transaction entered was a credit.
D. last transaction entered was a credit.


On August 13, 2008, Dudbury Enterprises purchased office equipment for $1,000 and office supplies of $200 on account. Which of the following journal entries is recorded correctly and in the standard format?
A) Office Equipment 1,000
Account Payable 1,200
Office Supplies 200
B)     Office Equipment             1,000
Office Supplies             200
Account Payable             1,200
C) Accounts Payable 1,200
Office Equipment 1,000
Office Supplies 200
D) Office Equipment 1,000
Office Supplies 200
Accounts Payable 1,200

A. C
B. A
C. B
D. D


Posting of journal entries should be done in
A. chronological order.
B. account number order.
C. alphabetical order.
D. dollar amount order.


After journal entries are posted, the reference column
A. of the general journal will show "Dr" or "Cr".
B. of the general journal will be blank.
C. of the general ledger will show journal page numbers.
D. of the general ledger will show account numbers.

Which one of the following is not a justification for adjusting entries?
A. Adjusting entries are necessary to enable financial statements to be in conformity with GAAP.
B. Adjusting entries are necessary to ensure that revenue recognition principles are followed.
C. Adjusting entries are necessary to ensure that the matching principle is followed.
D. Adjusting entries are necessary to bring the general ledger accounts in line with the budget.


Accounts often need to be adjusted because
A. there are never enough accounts to record all the transactions.
B. many transactions affect more than one time period.
C. management can't decide what they want to report.
D. there are always errors made in recording transactions.


The preparation of adjusting entries is
A. straight forward because the accounts that need adjustment will be out of balance.
B. often an involved process requiring the skills of a professional.
C. optional when financial statements are prepared.
D. only required for accounts that do not have a normal balance.


The adjusted trial balance is prepared
A. after financial statements are prepared.
B. before the trial balance.
C. after adjusting entries have been journalized and posted.
D. to prove the equality of total assets and total liabilities.


If unearned revenues are initially recorded in revenue accounts and have not all been earned at the end of the accounting period, then failure to make an adjusting entry will cause
A. liabilities to be overstated.
B. revenues to be understated.
C. accounts receivable to be overstated.
D. revenues to be overstated.


If prepaid expenses are initially recorded in expense accounts and have not all been used at the end of the accounting period, then failure to make an adjusting entry will cause
A. assets to be understated.
B. assets to be overstated.
C. contra-expenses to be overstated.
D. expenses to be understated.

The adjustments entered in the adjustments columns of a worksheet are
A. not journalized until after the financial statements are prepared.
B. not journalized.
C. posted to the ledger but not journalized
D. journalized before the worksheet is completed.


If the total debit column exceeds the total credit column of the income statement columns on a worksheet, then the company has
A. suffered a net loss for the period.
B. earned net income for the period.
C. an error because debits do not equal credits.
D. to make an adjusting entry.


The information for preparing a trial balance on a worksheet is obtained from
A. general journal entries.
B. financial statements.
C. general ledger accounts.
D. business documents.


The income summary account
A. appears on the income statement.
B. is a permanent account.
C. appears on the balance sheet.
D. is a temporary account.


Each of the following accounts is closed to Income Summary except
A. Revenues.
B. Expenses.
C. Dividends.
D. All of these are closed to Income Summary.

The net income (or loss) for the period
A. is found by computing the difference between the income statement credit column and the balance sheet credit column on the worksheet.
B. is found by computing the difference between the trial balance totals and the adjusted trial balance totals.
C. is found by computing the difference between the income statement columns of the worksheet.
D.
cannot be found on the worksheet.

Closing entries are journalized and posted
A. before the financial statements are prepared.
B. at the end of each interim accounting period.
C. at management's discretion.
D. after the financial statements are prepared.


Which of the following is a true statement about closing the books of a corporation?
A. Expenses are closed to the Expense Summary account.
B. Revenues, expenses, and the dividends account are closed to the Income Summary account.
C. Revenues and expenses are closed to the Income Summary account.
D. Only revenues are closed to the Income Summary account.


Closing entries may be prepared from all but which one of the following sources?
A. Adjusted balances in the ledger
B. Income and Stockholders' equity statements
C. Balance sheet
D. Income statement and balance sheet columns of the worksheet

In analyzing financial statements, horizontal analysis is a
A. principle.
B. theory.
C. requirement.
D. tool.

Which one of the following is not a tool in financial statement analysis?
A. Vertical analysis
B. Ratio analysis
C. Horizontal analysis
D. Circular analysis

Horizontal analysis is also called
A. trend analysis.
B. common size analysis.
C. linear analysis.
D. vertical analysis.

The importance of a good system of internal controls was recognized with the passage of
A. the Blue Sky Laws.
B. the Sarbanes-Oxley Act of 2002.
C. the Securities and Exchange Act of 1933.
D. the Securities and Exchange Act of 1994.


Which one of the following is not an objective of a system of internal controls?
A. Enhance the accuracy and reliability of accounting records
B. Reduce the risks of errors
C. Safeguard company assets
D. Overstate liabilities in order to be conservative


Internal controls are not designed to safeguard assets from
A. robbery.
B. unauthorized use.
C. natural disasters.
D. employee theft.


Companies that are subject to, but fail to comply with, the Sarbanes-Oxley Act of 2002
A. may be forced to sell their foreign subsidiaries.
B. may be subject to fines and officer imprisonment.
C. may do so legally by obtaining an exemption.
D. will be automatically dissolved.


Certified Public Accounting firms which audit public companies are reviewed by:
A. The Financial Auditing Standards Board
B. The Public Company Accounting Oversight Board
C. The Securities and Exchange Commission
D. The American Institute of Certified Public Auditors


The primary body in the US that has responsibility for Generally Accepted Accounting Principles is:
A. The Government Accounting Office
B. The Internal Revenue Service
C. The Federal Financial Accounting Standards Board
D. The Securities and Exchange Commission


Allowing only the treasurer to sign checks is an example of
A. establishment of responsibility.
B. other controls.
C. documentation procedures.
D. segregation of duties.


Bank errors
A. are corrected by making an adjusting entry on the depositor's books.
B. are infrequent in occurrence.
C. occur because of time lags
D. must be corrected by debits.


If employees are bonded
A. it is impossible for them to steal from the company.
B. they have been insured against misappropriation of assets.
C. it means that they are not allowed to handle cash.
D. they have worked for the company for at least 10 years.

After the adjusting entries are journalized and posted to the accounts in the general ledger, the balance of each account should agree with the balance shown on the
a. adjusted trial balance.
b. post-closing trial balance.
c. the general journal.
d. adjustments columns of the worksheet.


FASB has had the responsibility for developing accounting principles since the early
a.     1900s.
b.     1920s.
c.     1940s.
d.     1970s.

The economic entity assumption states that
a.     the economic life of a business can be divided into artificial time periods.
b.     economic events can be identified with a particular entity.
c.     the accounting period should not exceed one year.
d.     it is assumed that the business will operate indefinitely.


The accounting process is correctly sequenced as
a. identification, communication, recording.
b. recording, communication, identification.
c. identification, recording, communication.
d. communication, recording, identification.

If total liabilities increased by $15,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period?
a. $20,000 decrease
b. $20,000 increase
c. $25,000 increase
d. $30,000 increase

Collection of a $500 Accounts Receivable
a. increases an asset $500; decreases an asset $500.
b. increases an asset $500; decreases a liability $500.
c. decreases a liability $500; increases stockholders' equity $500.
d. decreases an asset $500; decreases a liability $500.

If expenses are paid in cash, then
a. assets will increase.
b. liabilities will decrease.
c. stockholders' equity will increase.
d. assets will decrease.

Internal users of accounting information include all of the following except
a. company officers.
b. investors.
c. marketing managers.
d. production supervisors.


The left side of an account is
a. blank.
b. a description of the account.
c. the debit side.
d. the balance of the account.

A T-account is
a. a way of depicting the basic form of an account.
b. what the computer uses to organize bytes of information.
c. a special account used instead of a trial balance.
d. used for accounts that have both a debit and credit balance.

Which of the following correctly identifies normal balances of accounts?
a. Assets Debit
Liabilities Credit
Stockholders' Equity Credit
Revenues Debit
Expenses Credit
b. Assets Debit
Liabilities Credit
Stockholders' Equity Credit
Revenues Credit
Expenses Credit
c. Assets Credit
Liabilities Debit
Stockholders' Equity Debit
Revenues Credit
Expenses Debit
d. Assets Debit
Liabilities Credit
Stockholders' Equity Credit
Revenues Credit
Expenses Debit

Dawson’s Delivery Service purchased equipment for $2,500. The Company paid $500 in cash and signed a note for the balance. Dawson debited the Equipment account, credited Cash and
a. nothing further must be done.
b. debited the Dawson, Common stock account for $2,000.
c. credited another asset account for $500.
d. credited a liability account for $2,000.

On January 14, Franco Industries purchased supplies of $500 on account. The entry to record the purchase will include
a. a debit to Supplies and a credit to Accounts Payable.
b. a debit to Supplies Expense and a credit to Accounts Receivable.
c. a debit to Supplies and a credit to Cash.
d. a debit to Accounts Receivable and a credit to Supplies.

In the first month of operations for Pocket Industries, the total of the debit entries to the cash account amounted to $8,000 ($4,000 investment by the owner and revenues of $4,000). The total of the credit entries to the cash account amounted to $5,000 (purchase of equipment $2,000 and payment of expenses $3,000). At the end of the month, the cash account has a(n)
a. $2,000 credit balance.
b. $2,000 debit balance.
c. $3,000 debit balance.
d. $3,000 credit balance.

The usual sequence of steps in the transaction recording process is:
a. journal à analyze à ledger.
b. analyze à journal à ledger.
c. journal à ledger à analyze.
d. ledger à journal à analyze.

The matching principle states that expenses should be matched with revenues. Another way of stating the principle is to say that
a. assets should be matched with liabilities.
b. efforts should be matched with accomplishments.
c. dividends to stockholders should be matched with stockholders' investments.
d. cash payments should be matched with cash receipts.

Adjusting entries are required
a. yearly.
b. quarterly.
c. monthly.
d. every time financial statements are prepared.

Which statement is correct?
a. As long as a company consistently uses the cash basis of accounting, generally accepted accounting principles allow its use.
b. The use of the cash basis of accounting violates both the revenue recognition and matching principles.
c. The cash basis of accounting is objective because no one can be certain of the amount of revenue until the cash is received.
d. As long as management is ethical, there are no problems with using the cash basis of accounting.

Use the following information for questions 17–18.
Sheepskin Company had the following transactions during 2008.
Sales of $4,500 on account
Collected $2,000 for services to be performed in 2009
Paid $625 cash in salaries
Purchased airline tickets for $250 in December for a trip to take place in 2009

17. What is Sheepskin’s 2008 net income using accrual accounting?
a. $3,875
b. $5,875
c. $5,625
d. $3,625

18. What is Sheepskin’s 2008 net income using cash basis accounting?
a. $5,875
b. $1,375
c. $5,625
d. $1,125

If an adjusting entry is not made for an accrued revenue,
a. assets will be overstated.
b. expenses will be understated.
c. stockholders' equity will be understated.
d. revenues will be overstated.

Expenses incurred but not yet paid or recorded are called
a. prepaid expenses.
b. accrued expenses.
c. interim expenses.
d. unearned expenses.

Hardy Company purchased a computer for $4,800 on December 1. It is estimated that annual depreciation on the computer will be $960. If financial statements are to be prepared on December 31, the company should make the following adjusting entry:
a. Debit Depreciation Expense, $960; Credit Accumulated Depreciation, $960.
b. Debit Depreciation Expense, $80; Credit Accumulated Depreciation, $80.
c. Debit Depreciation Expense, $3,840; Credit Accumulated Depreciation, $3,840.
d. Debit Office Equipment, $4,800; Credit Accumulated Depreciation, $4,800.

At December 31, 2008, before any year-end adjustments, Karr Company's Insurance Expense account had a balance of $1,450 and its Prepaid Insurance account had a balance of $3,800. It was determined that $3,000 of the Prepaid Insurance had expired. The adjusted balance for Insurance Expense for the year would be
a. $3,000.
b. $1,450.
c. $4,450.
d. $2,250.

The adjustments entered in the adjustments columns of a worksheet are
a. not journalized.
b. posted to the ledger but not journalized.
c. not journalized until after the financial statements are prepared.
d. journalized before the worksheet is completed.

Closing entries are necessary for
a. permanent accounts only.
b. temporary accounts only.
c. both permanent and temporary accounts.
d. permanent or real accounts only.

If Income Summary has a credit balance after revenues and expenses have been closed into it, the closing entry for Income Summary will include a
a. debit to the retained earnings account.
b. debit to the owner’s dividends account.
c. credit to the retained earnings account.
d. credit to the owner’s dividends account.

An error has occurred in the closing entry process if
a. revenue and expense accounts have zero balances.
b. the retained earnings account is credited for the amount of net income.
c. the dividends account is closed to the retained earnings account.
d. the balance sheet accounts have zero balances.

Use the following information for questions 29–33.
The income statement for the month of June, 2008 of Delgado Enterprises contains the following information:
Revenues $7,000
Expenses:
Wages Expense $2,000
Rent Expense 1,000
Supplies Expense 300
Advertising Expense 200
Insurance Expense 100
Total expenses 3,600
Net income $3,400

29. The entry to close the revenue account includes a
a. debit to Income Summary for $3,400.
b. credit to Income Summary for $3,400.
c. debit to Income Summary for $7,000.
d. credit to Income Summary for $7,000.

30. The entry to close the expense accounts includes a
a. debit to Income Summary for $3,400.
b. credit to Rent Expense for $1,000,
c. credit to Income Summary for $3,600.
d. debit to Wages Expense for $2,000.

31. After the revenue and expense accounts have been closed, the balance in Income Summary will be
a. $0.
b. a debit balance of $3,400.
c. a credit balance of $3,400.
d. a credit balance of $7,000.

32. The entry to close Income Summary to Retained Earnings includes
a. a debit to Revenue for $7,000.
b. credits to Expenses totalling $3,600.
c. a credit to Income Summary for $3,400
d. a credit to Retained Earnings for $3,400.

33. At June 1, 2008, Delgado reported retained earnings of $35,000. The company had no dividends during June. At June 30, 2008, the company will report retained earnings of
a. $35,000.
b. $42,000.
c. $38,400.
d. $31,600.

The assumption that states that the activities of each company be kept separate from the activities of its owners and all other companies is the
a. economic entity assumption.
b. going concern assumption.
c. monetary unit assumption.
d. time period assumption.

The time period assumption states that the economic life of a business can be divided into
a. equal time periods.
b. cyclical time periods.
c. artificial time periods.
d. perpetual time periods.

Constraints in accounting include each of the following except
a. conservatism.
b. matching.
c. materiality.
d. All of these are constraints.

A classified income statement typically includes all of the following except:
a. sales revenue section.
b. cost of goods sold.
c. capital investments.
d. other revenues and gains.

ACC 280 All Individual Assignments - $20.00

Week 1
Financial Statements Paper
Prepare a 700-1,050-word paper in which you define the purpose of accounting and identify the four basic financial statements. Be sure to explain how they are interrelated with each other, any why they are useful to managers, investors, creditors, and employees.

Week 2:
Assignments from the Readings
Prepare written answers to the following assignments from the text, Financial Accounting 6thed:
Chapter 1:
1)    Exercise E1-1
2)    Exercise E1-5
3)    Exercise E1-12
4)    Exercise E1-13
Chapter 2:
1)    Exercise E2-2
2)    Exercise E2-3
Chapter 7:
Exercise E7-3

Week 3:
Individual Assignments
Assignments from the Readings
Prepare written answers to the following assignments from Chapter 3 of the text, Financial Accounting 6th ed:
a.         Questions 2, 3, 4 and 8
b.         Exercise E3-7
c.         Exercise E3-8

Week 4
Individual Assignments
Assignments from the Readings
Prepare written answers to the following assignments from Chapter 4 of the text, Financial Accounting 6th ed:
a.         Exercise E4-2
b.         Exercise E4-3
c.         Exercise E4-4

Week 5:
Individual Assignments
Assignments from the Readings
Prepare written answers to the following assignments from the text, Financial Accounting 6th ed:
a. Chapter 7:
Questions 1 and 2
b.Chapter 8:
Exercise E8-5
c.Chapter 15:
1)         Exercise E15-1
2)         Exercise E15.2
3)         Exercise E15-11

ACC 280 All Team Assignments - $20.00

Learning Team Assignments


Resources: Internet or other resources; annual report for the company of your choice

Select a company for analysis by your team that has been (1) profitable for the last three fiscal years, (2) is not a bank/financial institution, and (3) is on a major U.S. Stock Exchange.

Attain instructor approval of the selected company.

Acquire a copy of the selected company’s most recent annual report by using the Internet or other resources.

Prepare a 1,050- to 1,400-word Executive Summary, using the information contained in the company’s balance sheet and income statement, answering the following questions, noting that annual reporting period and fiscal year mean year-end numbers

Learning Team Assignments
Assignments from the Readings
Prepare written answers to the following assignments from Chapter 3 of the text, Financial Accounting 6th ed:
a.         Exercise E3-2
b.         Problem P3-2A

Learning Team Assignments
Assignments from the Readings
Prepare written answers to the following assignments from Chapter 4 of the text, Financial Accounting 6th ed:
Problem P4-2A
Executive Summary Presentation
Create a 15- to 20-slide Microsoft® PowerPoint® presentation using and illustrating your research from the Executive Summary, and revising for facilitator feedback.
Include speaker’s notes with each slide.
Format APA citations on a slide titled References.

Learning Team Assignments
Assignments from the Readings
Prepare written answers to the following assignments from the text, Financial Accounting 6th ed:
Chapter 8:
BYP8-6 – Ethics Case
Chapter 15:
Problem P15-1
Problem P15-6
Be sure to show your calculations for each ratio using Excel (the details of the data used to calculate).

ACC 280 Entire Course - $30.00

ACC 280

Principles of Accounting

Week 1

Financial Statements Paper

Prepare a 700-1,050-word paper in which you define the purpose of accounting and identify the four basic financial statements. Be sure to explain how they are interrelated with each other, any why they are useful to managers, investors, creditors, and employees.

Week 2:

Assignments from the Readings

Prepare written answers to the following assignments from the text, Financial Accounting 6thed:

Chapter 1:

1)    Exercise E1-1

2)    Exercise E1-5

3)    Exercise E1-12

4)    Exercise E1-13

Chapter 2:

1)    Exercise E2-2

2)    Exercise E2-3

Chapter 7:

Exercise E7-3

Learning Team Assignments

Resources: Internet or other resources; annual report for the company of your choice

Select a company for analysis by your team that has been (1) profitable for the last three fiscal years, (2) is not a bank/financial institution, and (3) is on a major U.S. Stock Exchange.

Attain instructor approval of the selected company.

Acquire a copy of the selected company’s most recent annual report by using the Internet or other resources.

Prepare 1,050- to 1,400-word Executive Summary, using the information contained in the company’s balance sheet and income statement, answering the following questions, noting that annual reporting period and fiscal year mean year-end numbers

Week 3:

Individual Assignments

Assignments from the Readings

Prepare written answers to the following assignments from Chapter 3 of the text, Financial Accounting 6th ed:

a.         Questions 2, 3, 4 and 8

b.         Exercise E3-7

c.         Exercise E3-8

Learning Team Assignments

Assignments from the Readings

Prepare written answers to the following assignments from Chapter 3 of the text, Financial Accounting 6th ed:

a.         Exercise E3-2

b.         Problem P3-2A

Week 4

Individual Assignments

Assignments from the Readings

Prepare written answers to the following assignments from Chapter 4 of the text, Financial Accounting 6th ed:

a.         Exercise E4-2

b.         Exercise E4-3

c.         Exercise E4-4

Learning Team Assignments

Assignments from the Readings

Prepare written answers to the following assignments from Chapter 4 of the text, Financial Accounting 6th ed:

Problem P4-2A

Executive Summary Presentation

Create a 15- to 20-slide Microsoft® PowerPoint® presentation using and illustrating your research from the Executive Summary, and revising for facilitator feedback.

Include speaker’s notes with each slide.

Format APA citations on a slide titled References.

Week 5:

Individual Assignments

Assignments from the Readings

Prepare written answers to the following assignments from the text, Financial Accounting 6th ed:

a. Chapter 7:

Questions 1 and 2

b.Chapter 8:

Exercise E8-5

c.Chapter 15:

1)         Exercise E15-1

2)         Exercise E15.2

3)         Exercise E15-11

Learning Team Assignments

Assignments from the Readings

Prepare written answers to the following assignments from the text, Financial Accounting 6th ed:

Chapter 8:

BYP8-6 – Ethics Case

Chapter 15:

Problem P15-1

Problem P15-6

Be sure to show your calculations for each ratio using Excel (the details of the data used to calculate).

Discussion Questions:

Week 1:

What are the four basic financial statements? What do the different financial statements tell you about a company? Which financial statement is the most useful? Why? What types of information is provided to managers in your department and how do managers in your organization use information presented in financial statements?

What do you think of when you hear the word debit? What do you think of when you hear the word credit? Why does your bank statement show a credit for an increase in your cash balance? Is an increase to your bank statement a debit or a credit? What method would you use to summarize transactions and transfer to the ledger?

Who are the different users of accounting information? What are the differences between managerial and financial accounting? What is the role of the CPA and how does it differ from other accountants? What is the value of the accounting function in your organization, both internally and externally?

Week 2:

What are the four different adjusting entries?  What accounting assumptions necessitate the use of adjusting entries?  What accounts are subject to adjusting journal entries?  What are the advantages and disadvantages of using automated accounting systems to do adjusting entries?  What are your thoughts on making adjusting entries; are they really needed or is this just extra work by accountants?

Which basis of accounting do most companies use, cash or accrual?  Why?  Which method is approved by GAAP?  Why?  What are the positives and negatives of each?  Is it legal for an organization to keep two sets of accounting records; one for tax and one for book?  Why or why not?  What transactions might fall under a dual method?

When is the trial balance prepared?  What is the purpose of preparing a trial balance?  What does the trial balance tell you?  What does the trial balance not tell you?  Why not use the Trial Balance to report financial information internally and externally?  What limitations does it have over formal financial statements?

Week 3:

What are the steps in completing the accounting cycle? Discuss the relationship between the amounts on the adjusted trial balance for an account and its ledger? Discuss the relationship of the adjusted trial balance and the amount on the financial statements? What is the affect on the financial statements of missing a step when completing the accounting cycle?

What are the main financial statements? In order of importance, list the statements. Why did you rank the statements in the order you did? Why does GAAP require all statements? Why is it necessary to prepare the formal financial statements if all the data are on the adjusted trial balance

What are reversing entries? Why are reversing entries needed? What would be the affect if not made? What are the pros and cons of using reversing entries? What types of transactions may require reversing entries?

Week 4:

What are the differences between vertical and horizontal analysis?  Which method would external users most likely use?  How about internal users?  Discuss the uses of the two analysis methods and how you would use each to analyze a company’s performance?

What three ratios would you list as the most important? Why? Which ratios would external users be most interested in? Why? Which ratios would best help internal users manage the business? Why? Beyond the basic financial statements what other information would you want to fully analyze a company’s performance? Why?

Why is it important to report discontinued operations or extraordinary items separately from income from continuing operations? Is this method of reporting allowed? What concerns does this type of reporting create? Does the average investor understand the difference? In what way(s) might the information be presented to clarify meaning for investors?

Week 5:

Of the several regulatory bodies, which has the most affect on companies? Why? Do both public and nonpublic or not-for-profit organizations comply with the regulations of all regulatory bodies? Why or why not? Are there gray areas? How do companies assure compliance with regulations? How does your company comply? Any thoughts on how to streamline the regulatory process over accounting and finance?

What are some internal controls related to cash? Why is control over cash important? What are the pros and cons of segregation of duties over cash? Why is a bank reconciliation considered an internal control over cash? How does it provide control? What control violations might the bank reconciliation highlight?

What is an example of a potentially unethical accounting situation? Why is the situation unethical? What is meant by the statement, “You cannot teach ethics”? How do ethics affect the financial results of a company?

ACC 280 Week 1 - $9.79

Week 1

Financial Statements Paper

Prepare a 700-1,050-word paper in which you define the purpose of accounting and identify the four basic financial statements. Be sure to explain how they are interrelated with each other, any why they are useful to managers, investors, creditors, and employees.

Discussion Questions:

Week 1:

What are the four basic financial statements? What do the different financial statements tell you about a company? Which financial statement is the most useful? Why? What types of information is provided to managers in your department and how do managers in your organization use information presented in financial statements?

What do you think of when you hear the word debit? What do you think of when you hear the word credit? Why does your bank statement show a credit for an increase in your cash balance? Is an increase to your bank statement a debit or a credit? What method would you use to summarize transactions and transfer to the ledger?

Who are the different users of accounting information? What are the differences between managerial and financial accounting? What is the role of the CPA and how does it differ from other accountants? What is the value of the accounting function in your organization, both internally and externally?

ACC 280 Week 1 DQs - $5.00

Week 1:

What are the four basic financial statements? What do the different financial statements tell you about a company? Which financial statement is the most useful? Why? What types of information is provided to managers in your department and how do managers in your organization use information presented in financial statements?

 

What do you think of when you hear the word debit? What do you think of when you hear the word credit? Why does your bank statement show a credit for an increase in your cash balance? Is an increase to your bank statement a debit or a credit? What method would you use to summarize transactions and transfer to the ledger?

 

Who are the different users of accounting information? What are the differences between managerial and financial accounting? What is the role of the CPA and how does it differ from other accountants? What is the value of the accounting function in your organization, both internally and externally?

Prepare a 700-1,050-word paper in which you define the purpose of accounting and identify the four b - $5.29

Week 1

Financial Statements Paper

Prepare a 700-1,050-word paper in which you define the purpose of accounting and identify the four basic financial statements. Be sure to explain how they are interrelated with each other, any why they are useful to managers, investors, creditors, and employees.

ACC 280 Week 2 - $10.00

Week 2:

Assignments from the Readings

Prepare written answers to the following assignments from the text, Financial Accounting 6thed:

Chapter 1:

1)    Exercise E1-1

2)    Exercise E1-5

3)    Exercise E1-12

4)    Exercise E1-13

Chapter 2:

1)    Exercise E2-2

2)    Exercise E2-3

Chapter 7:

Exercise E7-3

Learning Team Assignments

Resources: Internet or other resources; annual report for the company of your choice

Select a company for analysis by your team that has been (1) profitable for the last three fiscal years, (2) is not a bank/financial institution, and (3) is on a major U.S. Stock Exchange.

Attain instructor approval of the selected company.

Acquire a copy of the selected company’s most recent annual report by using the Internet or other resources.

Prepare 1,050- to 1,400-word Executive Summary, using the information contained in the company’s balance sheet and income statement, answering the following questions, noting that annual reporting period and fiscal year mean year-end numbers

Discussion Questions:

Week 2:

What are the four different adjusting entries?  What accounting assumptions necessitate the use of adjusting entries?  What accounts are subject to adjusting journal entries?  What are the advantages and disadvantages of using automated accounting systems to do adjusting entries?  What are your thoughts on making adjusting entries; are they really needed or is this just extra work by accountants?

Which basis of accounting do most companies use, cash or accrual?  Why?  Which method is approved by GAAP?  Why?  What are the positives and negatives of each?  Is it legal for an organization to keep two sets of accounting records; one for tax and one for book?  Why or why not?  What transactions might fall under a dual method?

When is the trial balance prepared?  What is the purpose of preparing a trial balance?  What does the trial balance tell you?  What does the trial balance not tell you?  Why not use the Trial Balance to report financial information internally and externally?  What limitations does it have over formal financial statements?

Prepare written answers to the following assignments from the text, Financial Accounting 6thed: - $5.29

Week 2:

Assignments from the Readings

Prepare written answers to the following assignments from the text, Financial Accounting 6thed:

Chapter 1:

1)    Exercise E1-1

2)    Exercise E1-5

3)    Exercise E1-12

4)    Exercise E1-13

Chapter 2:

1)    Exercise E2-2

2)    Exercise E2-3

Chapter 7:

Exercise E7-3

Select a company for analysis by your team that has been (1) profitable for the last three fiscal ye - $5.29

Week 2:

Learning Team Assignments

Resources: Internet or other resources; annual report for the company of your choice

Select a company for analysis by your team that has been (1) profitable for the last three fiscal years, (2) is not a bank/financial institution, and (3) is on a major U.S. Stock Exchange.

Attain instructor approval of the selected company.

Acquire a copy of the selected company’s most recent annual report by using the Internet or other resources.

Prepare 1,050- to 1,400-word Executive Summary, using the information contained in the company’s balance sheet and income statement, answering the following questions, noting that annual reporting period and fiscal year mean year-end numbers