Financial Accounting

financial_accounting_last.docx

Home >Business & Finance homework help >Accounting homework help >Financial Accounting

BS 352 FINALEXAM PART II

NAME: __________________________

I promise I worked on this exam alone and didn’t seek or accept help. I worked independently of my classmates and co-workers and family. Signed___________________________________________________

All of the following are operating activities except which one?

A.	Collection of cash from a customer on account.
B.	Selling equipment.
C.	Payment of advertising expenses.
D.	Payment of salaries to employees.

On October 28, Sierra Corporation employees had earned and were paid salaries of $4,000. How is this recorded on Sierra’s books?

		DEBIT	CREDIT
A.	Salaries expense	4,000
	Cash		4,000
B.	Salaries payable	4,000
	Cash		4,000
C.	Salaries expense	4,000
	Salaries payable		4,000
D.	Salaries payable	4,000
	Salaries expense		4,000

On December 1, 2011, stockholders invest $20,000 into McGladrey Corporation in exchange for stock. What entry does McGladrey makes?

		DEBIT	CREDIT
A.	Cash	20,000
	Common stock		20,000
B.	Common stock	20,000
	Cash		20,000
C	Cash	20,000
	Due to stockholders		20,000
D.	Due to stockholders	20,000
	Cash		20,000

SAMS COMPANY sold merchandise to HOME COMPANY for $5,000. The merchandise sold had a cost of $3,000. What entry should SAMS make on the day the merchandise is sold to HOME COMPANY?

		DEBIT	CREDIT
A.	Cost of goods sold	3,000
	Merchandise inventory		3,000
B.	Accounts receivable	4,900
	Sales		4,900
	Cost of goods sold	3,000
	Merchandise inventory		3,000
C.	Accounts receivable	5,000
	Sales		5,000
D.	Accounts receivable	5,000
	Sales		5,000
	Cost of goods sold	3,000
	Merchandise inventory		3,000

When SONIC CORPORATION prepared their financial statements for this year, there are no personal transactions of the company’s officers, managers or employees reported. This BEST reflects which of the following assumptions in financial reporting?

A.	Monetary Unit
B.	Economic Entity
C.	Periodicity (Time period)
D.	Going concern

Mrs. Smith worked as a cash manager for ARRCO INC. for 20 years without taking a vacation. ARRCO just found out that she has been embezzling money for nearly that whole time. She should have been required to take vacations every year. Hint: Who makes you take vacation every year? An internal control feature that would have addressed this situation would be:

A.	Physical, mechanical, & electronic control devices
B.	Establishment of responsibility
C.	Segregation of duties
D.	Human resource controls
E.	Documentation procedures

DAVID SCOTCH is getting ready to start a small business. DAVID met with his accountant today to review some of the procedures that should be implemented, His accountant suggested that the following procedures be put in place:

	PROCEDURE:
1.	A background check should be conducted on all employees.
2.	Approved purchase orders should be submitted before payment is made to a supplier.
3.	A cash register should be used which only opens when a sale is made.

In the order of 1, 2 and 3, which of the following correctly describes the nature of the internal control procedures suggested by the accountant?

	PROCEDURE 1	PROCEDURE 2	PROCEDURE 3
A.	Segregation of duties	Physical, mechanical, & electronic control devices	Physical, mechanical, & electronic control devices
B.	Human resource controls	Segregation of duties	Physical, mechanical, & electronic control devices
C.	Documentation procedures	Establish responsibility	Documentation procedures.
D.	Human resource controls	Documentation procedures	Physical, mechanical, & electronic control devices

The person who is authorized to sign checks approves purchase orders for payments. Which internal control principle best fits the problem described?

A.	Physical, mechanical, & electronic control devices
B.	Establishment of responsibility
C.	Segregation of duties
D.	Other controls
E.	Documentation procedures

The three points of the FRAUD TRIANGLE are:

A.	Financial pressure, opportunity, and rationalization.
B.	Opportunity, low pay, and bad company policies.
C.	Rationalization, financial pressure, and some type of addiction.
D.	Bad company policies, some type of addition, and prior criminal history.

10.

Some cash payments are not recorded because checks are not prenumbered. Which internal control principle best fits the problem described?

A.	Physical, mechanical, & electronic control devices
B.	Establishment of responsibility
C.	Segregation of duties
D.	Human resource controls
E.	Documentation procedures

11.

A clothing store is experiencing a high level of inventory shortages because customers try on clothing and walk out of the store without paying for the merchandise. Which internal control principle best fits the problem described?

A.	Physical, mechanical, & electronic control devices
B.	Establishment of responsibility
C.	Segregation of duties
D.	Human resource controls
E.	Documentation procedures

12.

Two persons handle cash sales from the same cash register drawer. Which internal control principle best fits the problem described?

A.	Documentation procedures
B.	Physical, mechanical, & electronic control devices
C.	Establishment of responsibility
D.	Segregation of duties
E.	Independent internal verification

13.

Sierra Corporation had the following transactions during 2011:

1.	Sales to customers
2.	Dividends to shareholders
3.	Purchases of equipment
4.	Repayment of loans
5.	Collections from customers on account
6.	Payment of rent.
7.	Stock issued to investors
8.	Salaries paid to employees

2011 operating activities include which of the above events?

A.	2, 3, 7, 8
B.	2, 3, 4, 7
C.	1, 5, 6, 8
D.	5, 6, 7, 8
E.	3, 4, 5, 6

14.

On January 10, Sierra Corporation purchased equipment from a supplier on account for $15,000. How is this recorded on Sierra’s books?

		DEBIT	CREDIT
A.	Equipment	15,000
	Cash		15,000
B.	Equipment	15,000
	Accounts payable		15,000
C.	Cash	15,000
	Accounts payable		15,000
D.	Accounts payable	15,000
	Cash		15,000

15.

An accountant DEBITED an asset account for $900 and CREDITED a liability account for $500. What can be done to complete the recording of the transaction so that the accounting equation is in balance?

A.	DEBIT a stockholders’ equity account for $400.
B.	DEBIT another asset account for $400.
C.	CREDIT a different asset account for $400.
D.	Nothing further must be done.

16.

Which of the following activities illustrates “FINANCING ACTIVITIES” for a business?

A.	The company purchases new machinery and equipment for $50,000.
B.	The company borrows $50,000 from the bank.
C.	The company provides $50,000 in services to customers.
D.	The company pays $50,000 in advertising for a new marketing campaign.

17.

On October 1, 2007, CARR COMPANY places a new asset into service. The cost of the asset is $30,000 with an estimated 5-year life. CARR COMPANY depreciates equipment on the basis of the actual months held during the year. What is the depreciation expense for 2007 if CARR COMPANY uses the straight-line method of depreciation?

A.	$1,500
B.	$2,000
C.	$4,000
D.	$8,000

18.

A truck that cost $18,000 and on which $10,000 of accumulated depreciation has been recorded was disposed of for $9,000 cash. The entry to record this event would be:

		DEBIT	CREDIT
A.	Cash	9,000
	Loss on sale of truck	9,000
	Truck		18,000
B.	Cash	9,000
	Accumulated depreciation	10,000
	Truck		18,000
	Gain on sale of truck		1,000
C.	Cash	9,000
	Truck	18,000
	Accumulated depreciation		10,000
	Gain on sale of Truck		17,000
D.	Cash	9,000
	Loss on sale	9,000
	Truck		18,000

19.

Which of the following activities reflects investing activities?

A.	Purchasing advertising for the business.
B.	Borrowing money from the bank.
C.	Purchasing inventory to sell to customers.
D.	Buying a competitor’s plant.

20.

Which of the following is not properly classified as property, plant, and equipment?

A.	Building used as a factory
B.	Land used in ordinary business operations
C.	A truck held for resale by an automobile dealership
D.	Land improvement, such as parking lots and fences

21.

AT H&T GROCERS, the shift supervisor counts the cash in the cash drawer of each cashier clerk when the clerk finishes their shift at the checkout counter. Which internal control principle best fits the procedure described?

A.	Independent internal verification
B.	Establishment of responsibility
C.	Segregation of duties
D.	Human resource controls
E.	Documentation procedures

22.

A check written for $167 is incorrectly recorded by JONES CORPORATION’S bookkeeper as $176 in the company books. On the bank reconciliation, the $9 error should be:

A.	Added to the balance per books.
B.	Deducted from the balance per books.
C.	Added to the balance per bank.
D.	Deducted from the balance per bank.

23.

Which of the following would be DEDUCTED from the BALANCE PER BANK on a bank reconciliation?

A.	$35 in monthly service charges
B.	$175 in outstanding checks
C.	$500 deposit in transit
D.	$1,250 note collected by the bank

24.

Which of the following would be DEDUCTED from the BALANCE PER BOOKS on a bank reconciliation?

A.	$35 in monthly service charges
B.	$175 in outstanding checks
C.	$500 deposit in transit
D.	$1,250 note collected by the bank

25.

Noreen Williams reconciles the bank statement every month for her company, BREWER ENTERPRISES. One of the items which Noreen had to handle was a NSF check of $250 written by a BREWER customer. What should Noreen do with the $250 NSF check on the monthly bank reconciliation?

A.	Addition of $250 to the balance per books
B.	Deduction of $250 from the balance per bank
C.	Addition of $250 to the balance per bank
D.	Deduction of $250 from the balance per books

26.

Depreciation is the process of allocating the cost of a plant asset over its useful life in a(n):

A.	Equal and equitable manner.
B.	Accelerated and accurate manner.
C.	Systematic and rational manner.
D.	Conservative market-based manner.

27. Label each account as asset, liability, owner’s equity, revenue, or expense. And the list the normal balance, debit or credit, for each.

Cash

Accounts Payable

Accounts Receivable

Interest Expense

Rent Expense

Notes Payable

Accounts Receivable

Inventory

Furniture and Fixture

Capital

Withdrawals

Property, Plant, and Equipment