ACCT 504 Midterm Exam 2 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) Issuing shares of stock in exchange for cash is an example of a(n):
Points Received:
3 of 3
3.
Question :
(TCO C) Which activities involve putting the resources of the business into action to generate a profit?
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) On a classified balance sheet, prepaid insurance is classified as:
Points Received:
3 of 3
7.
Question :
(TCO A) Which of the following should not be classified as a current asset?
Points Received:
3 of 3
8.
Question :
(TCO A) These are selected account balances on December 31, 2007.
-Land (location of the corporations office building) $200,000
-Land (held for future use) 300,000
-Corporate Office Building 1,200,000
-Inventory 400,000
-Equipment 900,000
-Office Furniture 200,000
-Accumulated Depreciation 600,000
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, Mossland Corporation reported net income of $28,000; net sales $400,000; 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) At December 31, 2010, Shorts Company had retained earnings of $2,184,000. During 2010 they issued stock for $98,000, and paid dividends of $34,000. Net income for 2010 was $402,000. The retained earnings balance at the beginning of 2010 was:
Points Received:
3 of 3
11.
Question :
(TCO D) On March 1, 2010, Dillon Company hires a new employee who will start the work on March 6. The employee will be paid on the last day of each month. Should a journal entry be made on March 6? Why or why not?
Points Received:
3 of 3
12.
Question :
(TCO D) Which one of the following is not a part of an account?
Points Received:
3 of 3
13.
Question :
(TCO D) The classification and normal balance of the dividend account is:
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 of the following is not always true of the terms debit and credit?
Points Received:
3 of 3
Page:
Page:
1.
Question :
(TCO E) The time period assumption states that:
Points Received:
3 of 3
2.
Question :
(TCO E) In a service-type business, revenue is considered earned:
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 M Corporation for the fiscal year ending October 31, 2010:
Cash received from customers $300,000
Revenue earned 350,000
Cash paid for expenses 170,000
Expenses incurred 200,000
Based on the accrual basis of accounting, what is M Corporations net income for the year ending October 31, 2010?
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) Detailed records of movements in merchandise (each purchase and sale) are not maintained in the inventory account in a:
Points Received:
3 of 3
7.
Question :
(TCO B) Hunter Company purchased merchandise inventory with an invoice price of $12,000 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) Zachs Market recorded the following events involving a recent purchase of merchandise:
Received goods for $50,000, terms 2/10, n/30.
Returned $1,000 of the shipment for credit.
Paid $250 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) Which statement is false?
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 rising prices, which of the following inventory methods generally results in the lowest net income figure?
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) An account is an important accounting record where financial information is stored until needed. Briefly explain (1) the nature of an account, (2) the different types of accounts, and (3) the manner in which an account is increased and decreased, and the normal balance of each type of accounts.
Points Received:
24 of 25
2.
Question :
(TCOs B & E) The adjusted trial balance of Gertz Company included the following selected accounts:
Debit Credit
Sales $575,000
Sales Returns and Allowances $ 50,000
Sales Discounts 9,500
Cost of Goods Sold 347,000
Freight-out 2,000
Advertising Expense 15,000
Interest Expense 19,000
Store Salaries Expense 74,000
Utilities Expense 18,000
Depreciation Expense 3,500
Interest Revenue 25,000
Instructions:
Use the above information to prepare a multiple-step income statement for the year ended December 31, 2010. Calculate the profit margin ratio and gross profit rate. To qualify for full credit, you must state the formula you are using, show your computations, and explain your findings.
Points Received:
31.5 of 35