ACCT 504 Midterm Exam 1 ANSWERS
Question :
(TCO A, B, C) External users want answers to all of the following questions except:
Points Received:
3 of 3
2.
Question :
(TCO C) Borrowing money is an example of a(n):
Points Received:
3 of 3
3.
Question :
(TCO C) Buying and selling products are examples of:
Points Received:
3 of 3
4.
Question :
(TCO A) Resources owned by a business are referred to as:
Points Received:
3 of 3
5.
Question :
(TCO C) Jamie Company recorded the following cash transactions for the year:
Paid $70,000 for salaries.
Paid $20,000 to purchase office equipment.
Paid $6,000 for utilities.
Paid $7,000 in dividends.
Collected $130,000 from customers.
What was Jamies net cash provided by operating activities?
Points Received:
3 of 3
6.
Question :
(TCO A) In a classified balance sheet, assets are usually classified as:
Points Received:
3 of 3
7.
Question :
(TCO A) An intangible asset:
Points Received:
3 of 3
8.
Question :
(TCO A) These are selected account balances on December 31, 2010.
-Land (location of the corporations office building) $50,000
-Land (held for future use) 75,000
-Corporate Office Building 300,000
-Inventory 100,000
-Equipment 225,000
-Office Furniture 50,000
-Accumulated Depreciation 150,000
What is the total NET amount of property, plant, and equipment that will appear on the balance sheet?
Points Received:
3 of 3
9.
Question :
(TCO B) For 2010, Ford Corporation reported net income of $15,000; net sales $200,000; and average share outstanding 6,000. There were no preferred stock dividends. What was the 2010 earnings per share?
Points Received:
3 of 3
10.
Question :
(TCO B) Morten Corporation had beginning retained earnings of $764,000 and ending retained earnings of $833,000. During the year they issued common stock totaling $47,000. There were no dividends issued. What was their net income for the year?
Points Received:
3 of 3
11.
Question :
(TCO D) Is the purchase of equipment treated as an expense at the time of purchase? Why or why not?
Points Received:
3 of 3
12.
Question :
(TCO D) The left side of an account is:
Points Received:
3 of 3
13.
Question :
(TCO D) A credit is not the normal balance for which account listed below?
Points Received:
3 of 3
14.
Question :
(TCO D) A debit is not the normal balance for which account listed below?
Points Received:
3 of 3
15.
Question :
(TCO D) Which pair of accounts follows the rules of debit and credit in relation to increases and decreases in the same manner?
Points Received:
3 of 3
Page:
1.
Question :
(TCO E) The time period assumption states that:
Points Received:
3 of 3
2.
Question :
(TCO E) The matching principle matches:
Points Received:
3 of 3
3.
Question :
(TCO E) Expenses sometimes make their contribution to revenue in a different period than when the expense is paid. When wages are incurred in one period and paid in the next period, this often leads to which account appearing on the balance sheet at the end of the first period?
Points Received:
3 of 3
4.
Question :
(TCO E) The following is selected information from J Corporation for the fiscal year ending October 31, 2010.
Cash received from customers $75,000
Revenue earned 87,500
Cash paid for expenses 42,500
Expenses incurred 50,000
Based on the accrual basis of accounting, what is J Corporations net income for the year ending October 31, 2007?
Points Received:
3 of 3
5.
Question :
(TCO E) The general term employed to indicate an expense that has not been paid or revenue that has not been received and has not yet been recognized in the accounts is:
Points Received:
3 of 3
6.
Question :
(TCO A, B) Which of the following expressions is incorrect?
Points Received:
3 of 3
7.
Question :
(TCO B) Hunter Company purchased merchandise inventory with an invoice price of $6,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Hunter Company pays within the discount period?
Points Received:
3 of 3
8.
Question :
(TCO A, B) Jakes Market recorded the following events involving a recent purchase of merchandise:
Received goods for $20,000, terms 2/10, n/30.
Returned $400 of the shipment for credit.
Paid $100 freight on the shipment.
Paid the invoice within the discount period.
As a result of these events, the companys merchandise inventory:
Points Received:
3 of 3
9.
Question :
(TCO A) The Freight-in account:
Points Received:
3 of 3
10.
Question :
(TCO A) Barnes Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count?
Points Received:
3 of 3
11.
Question :
(TCO A) Of the following companies, which one would not likely employ the specific identification method for inventory costing?
Points Received:
3 of 3
12.
Question :
(TCO A) Which of the following statements is correct with respect to inventories?
Points Received:
3 of 3
13.
Question :
(TCO A) In a period of declining prices, which of the following inventory methods generally results in the lowest balance sheet figure for inventory?
Points Received:
3 of 3
14.
Question :
(TCO B) Which of the following is a true statement about inventory systems?
Points Received:
3 of 3
15.
Question :
(TCO B) Two categories of expenses in merchandising companies are:
Points Received:
3 of 3
Page:
1.
Question :
(TCO D) A classmate is considering dropping his accounting class because he cannot understand the rules of debits and credits.
Explain the rules of debits and credits in a way that will help him understand them. Cite examples for each of the major sections of the balance sheet (assets, liabilities and stockholders equity) and the income statement (revenues and expenses).
Points Received:
24 of 25
Ok
2.
Question :
(TCOs B & E) The Caltor Company gathered the following condensed data for the year ended December 31, 2010:
Cost of goods sold $ 710,000
Net sales 1,279,000
Administrative expenses 239,000
Interest expense 68,000
Dividends paid 38,000
Selling expenses 45,000
Instructions:
Prepare a multiple-step income statement for the year ended December 31, 2010. Compute the profit margin ratio and gross profit rate. Caltor Company s assets at the beginning of the year were $770,000 and were $830,000 at the end of the year. To qualify for full credit, you must state the formula you are using, show your computations and explain your findings.
Points Received:
35 of 35