(ACCT2010)[2012](f)quiz~hzhongaa^_49127

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Exam 11.Which of the following is NOT a typical source of monetary resources for a business enterprise?

a. Investors b. Creditorsc. Business earningsd. Employees

2.Which of the following financial statements reports the excess of a company's revenues over itsexpenses?a. Balance sheet

b. Income statementc. Statement of retained earningsd. Statement of cash flows

3. Which of the following financial statements reports the amount of cash collected and paid out by a company?a. Balance sheet

b. Income statementc. Statement of retained earningsd. Statement of cash flows

4. Which of the following is NOT an external user of financial information?a. Competitors

b. Employeesc. Managementd. Suppliers

5.In 2008, the SEC began toa. Allow U.S. companies trading on the U.S. stock exchange to issue their financial reports

using IASB standards b. Require U.S. companies trading on the U.S. stock exchange to issue their financial reports

using IASB standardsc. Require non-U.S. companies trading on the U.S. stock exchange to issue their financial

reports using IASB standardsd. Allow non-U.S. companies trading on the U.S. stock exchange to issue their financial

reports using IASB standards



6. Ethics are especially important in accounting becausea. Independent accountants represent the public interest

b. Accountants can steal money more easily than other employeesc. Accountants have historically committed more company thefts than other employeesd. The accounting profession does not have a code of professional conduct

7. Which of the following is NOT one of the ways that technology has changed the wayaccounting is done?a. Technology easily allows companies to collect large amounts of data about transactions

b. Technology allows greater access to a company's financial statements and other financial

informationc. Technology is able to perform the mechanics of accounting therefore, people are not

required to understand the mechanicsd. Technology allows for large amounts of data to be compiled quickly and accurately

8. Which of the following is a reason that you may need to understand accounting information inthe future?a. To evaluate an employer's short and long-term potential

b. To perform a personal budgetc. To perform responsibilities in future employmentd. All of these are reasons to study accounting

9.If a corporation has total assets of $350,000, total liabilities of $150,000, and retained earnings of$100,000, what is the amount of capital stock?a. $150,000

b. $0c. $100,000d. $250,000



10.The following information was taken from the records of Hart Corporation for the month endedDecember 31, 2013:

Advertising expense $20,625Income tax expense 13,095Accounts payable 13,450Dividends paid 14,125Retained earnings (12/1/13) 57,860Consulting fees revenue 97,875Rent expense 11,728Supplies expense 16,917

Given the above information, retained earnings as of December 31, 2013 isa. $79,045

b. $79,245c. $55,795d. $33,895

11.In 2012, Rodney Corporation's balance sheet had the following balances: cash, $306,500;accounts receivable, $471,400; and accounts payable, $390,800. During 2013, Rodney had anet increase in cash of $68,600 and net income of $47,800. Given this information, what isthe cash balance that will be reported on Rodney's 2013 balance sheet?a. $375,100

b. $237,900c. $354,300d. $258,700

12.The transactions carried out by Blue Waters Corporation during the year caused an increase intotal assets of $25,650 and a decrease in total liabilities of $12,250. If no additional stock wasissued during the year and dividends of $7,850 were paid, what was the net income for theyear?a. $53,600

b. $45,750c. $29,100d. $13,400



13.Which of the following is NOT one of the four general types of financial statement notes?a. Summary of significant accounting policies

b. Additional information about the summary totals found in the financial statementsc. Disclosure of important information that is not recognized in the financial statementsd. Supplementary information required by the Internal Revenue Service

14.Which of the following is an example of additional information about summary totals that would be explained in the notes to the financial statements?a. The description of all the individual items that comprise notes payable

b. The disclosure of quarterly financial information

c. The method used to estimate depreciation on a piece of equipmentd. The disclosure of the uncertain, potential outcome of a lawsuit

15. Which of the following are the two economic factors that enable us to trust an independentauditor despite the fact that the auditor was hired by the company being audited?a. Reputation of auditor and government policy

b. Risk of lawsuits and integrity of auditorc. Reputation of auditor and risk of lawsuitsd. Integrity of auditor and government policy

16. The idea that the activities of the entity are to be separated from those of the individual owneris thea. Separate entity concept

b. Arm's-length transaction assumptionc. Money measurement concept

d. Going concern assumption

17.Which of the following is NOT an advantage of a computerized accounting system over a manualaccounting system?a. A computerized system is faster.

b. A computerized system is more accurate once the data is correctly entered.c. Data can be managed more easily in a computerized system.



d. A computerized system can analyze the information for decision making.

18. The basic accounting equation isa. Assets = Liabilities + Owners' Equity

b. Assets + Owners' Equity = Liabilitiesc. Assets + Liabilities = Owners' Equityd. Liabilities Owner's Equity = Assets

19.Assuming that capital stock increased $5,000, net income was $100,000, and dividends were

$120,000, if total assets increased by $25,000, what was the change in liabilities?a. Liabilities increased $40,000

b. There was no change in liabilitiesc. Liabilities decreased $10,000d. The answer cannot be determined from the data given

20.On June 30, the balances in the General Ledger accounts of Pancho Company resulted in thefollowing totals:

Assets $517,600Liabilities 323,400Owners' equity 200,500 Total assets do not equal total liabilities plus owners' equity because the following errors weremade:

Supplies of $500 were on hand but were not included in assets because all purchases

were debited to Supplies Expense. Credit sales of $15,700 were posted to the Sales Revenue account as $17,500. The

Accounts Receivable account was posted correctly. Equipment purchased on credit for $51,600 was incorrectly posted to Notes Payable as

$56,100. No error was made in the Equipment account.

The correct balances in the asset, liability, and owners' equity accounts, respectively, should be

Assets Liabilities Owners' Equitya. $518,100; $318,900; $199,200



b. $517,850; $327,900; $189,950c. $517,350; $327,900; $189,450d. $517,850; $318,900; $198,950

21.Solo Company borrowed $4,000 from National City Bank on June 1. On August 31, SoloCompany paid off the loan plus $100 interest. The correct entry to record the August 31

payment of the loan plus interest isa. Cash 4, 000

I nt er est Expense 100Not es Payabl e 4, 100

b. Not es Payabl e 4, 000I nt er est Expense 100Cash 3, 900

c. Cash 4, 000Not es Payabl e 100

I nt er est Expense 4, 100

d. Not es Payabl e 4, 000I nt er est Expense 100

Cash 4, 100

22.On July 24, Barkdull Inc. purchased $4,000 of inventory on account. On August 3, Barkdull, sold$2,000 of inventory for $1,000 cash and $2,000 on credit. The correct entry by Barkdull Inc.to record the sale of inventory or August 3 isa. Cash 3, 000

Sal es Revenue 3, 000Cost of Goods Sol d 2, 000

I nvent or y 2, 000

b. Cash 1, 000Account s Recei vabl e 2, 000

Sal es Revenue 3, 000Cost of Goods Sol d 2, 000

I nvent or y 2, 000

c. Cost of Goods Sol d 3, 000Sal es Revenue 3, 000

Account s Recei vabl e 2, 000I nvent or y 2, 000

d. Cash 1, 000Account s Recei vabl e 2, 000

I nvent or y 3, 000Cost of Goods Sol d 2, 000



Sal es Revenue 2, 000

23.During July 2013, Hasan Corporation incurred but did NOT pay a $500 utility expense. Thistransaction would be posted asa. Account s Payabl e Ut i l i t y Expense

| |500 | | 500

b. Ut i l i t y Expense Cash| || 500 500 |

c. Ut i l i t y Expense Cash| |

500 | 500 |d. Account s Payabl e Ut i l i t y Expense

| || 500 500 |

24. When Jim was preparing the trial balance, he accidentally recorded a $300 debit as a creditinstead. By how much will this cause the trial balance columns to differ?a. $0

b. $150c. $300d. $600

25.Under accrual-basis accounting, revenue is recognizeda. When cash is received without regard to when the services are rendered

b. When the services are rendered without regard to when cash is received

c. When cash is received before the time services are renderedd. If cash is received after the services are rendered

26.During 2013, Rumbo Corporation had cash and credit sales of $21,760 and $15,225, respectively.The company also collected accounts receivable of $9,765 and incurred operating expenses of$27,700, 80 percent of which were paid during the year. In addition, Rumbo paid $4,500 foran 18-month advertising campaign that began on September 30. Rumbo's accrual-basis netincome (loss) for 2009 wasa. $9,285



b. $8,535c. $14,075d. $(775)

27.Garcia Company has received advance payment for services yet to be performed. This prepayment is an example of a(n)a. Unrecorded liability

b. Unrecorded receivablec. Prepaid expensed. Unearned revenue

28.On June 1, 2013, Marino Corporation received $1,800 as advance payment for 12 months'advertising. The receipt was recorded as a credit to Unearned Fees. What adjusting entry isrequired at December 31, 2013?a. Unear ned Fees 1, 050

Adver t i si ng Revenue 1, 050

b. Adver t i si ng Revenue 1, 050Unear ned Fees 1, 050

c. Cash 750Adver t i si ng Revenue 750

d. Unear ned Fees 750Adver t i si ng Revenue 750

29.Prior to making any adjusting entries, Terra Corporation had net income of $155,100. Thefollowing adjusting entries were made: salaries payable, $1,574; interest earned on short-terminvestments but not yet recorded or collected, $7,268; adjustment to prepaid insurance for$5,538 for an insurance policy that expired during the period; and fees of $586 collected in

advance that have now been earned. After recording these adjustments, net income would bea. $170,084

b. 158,008c. 155,842d. 155,836

Exhibit 4-1



The following are a selection of account balances taken from the Adjusted Trial Balance ofCajon Corporation for December 31, 2012:

Debit CreditCash $150Store Supplies 300Service Fees Revenue $600Retained Earnings (1/1/2012) 50Accounts Payable 70Dividends 200Unearned Service Fees Revenue 180Wage Expense 200Store Supplies Expense 50

30. Refer to Exhibit 4-1. Given the information above, Cajon Corporation had net income in 2012ofa. $150

b. $530c. $330d. $350

31.The December 31, 2012 closing entries for Smith Corp. are as follows:

Debit CreditSales Revenue 12,500Interest Revenue 1,250

Cost of Goods Sold 7,000 Wages Expense 2,250 Supplies Expense 1,575 Retained Earnings 2,925

Retained Earnings 1,000

Dividends 1,000 Smith Corp. had net income in 2012 ofa. $13,750

b. $1,925c. $12,750d. $2,925



32.On December 31, 2011, the balance in the Retained Earnings account is $18,500. On December

31, 2012, the balance of Retained Earnings is $17,100. During 2012, dividends of $4,200were declared and paid. Based on this information, net income for 2012 isa. $2,800

b. $7,000c. $2,100d. $4,200

33.If the total amount for Insurance Expense is inadvertently posted to Prepaid Insurance at the endof the year, what will be the effect on the year-end financial statements?a. Revenues will be overstated

b. Revenues will be understated

c. Owner's equity will be overstatedd. Owner's equity will be understated

34.Which of the following is an example of an adequate segregation of duties?a. Every year, Doug is required to take one full week of vacation time.

b. Greg is in charge of recording receipt of payments made to accounts receivable, whileSusan is in charge of making deposits to the bank.

c. Every evening, Shellie makes a back-up file of all transactions recorded in the computerthat day, burns the back-up file onto a CD and then locks the CD into a fire-proof vaultfor the night.

d. John, a clerk, is authorized to perform transactions as large as $5,000 but must maintainauthorization from Andrea to perform larger transactions.

35. Which of the following is an example of a physical control over assets and records?a. Every year, Doug is required to take one full week of vacation time.

b. Greg is in charge of recording receipt of payments made to accounts receivable, while

Susan is in charge of making deposits to the bank.c. Every evening, Shellie makes a back-up file of all transactions recorded in the computer

that day, burns the back-up file onto a CD and then locks the CD into a fire-proof vaultfor the night.

d. John, a clerk, is authorized to perform transactions as large as $5,000 but must maintainauthorization from Andrea to perform larger transactions.

36. Earnings management through deceptive accounting is best exemplified by



a. Changing the useful life of a depreciable asset and fully disclosing it in the notes. b. Timing transactions such that large one-time gains and losses occur in the same quarter.c. Changing the interest rate used in accounting for leases without describing the change in

the notes to the financial statements.d. Capitalizing as assets expenditures that have no future economic benefit.

37.The GAAP Oval best representsa. The fact that only one true earnings number exists.

b. The flexibility managers have within GAAP to report one earnings number from amongmany possibilities.

c. The philosophy that earnings management within limits is ethical.d. The fact that GAAP is not subject to interpretation.

38.The Public Company Accounting Oversight Boarda. Establishes requirements for entry into the CPA profession

b. Conducts inspections of accounting firmsc. Reviews tax returns of public companiesd. Enforces compliance with the Foreign Corrupt Practices Act

39.Which statement best describes the role of external auditors when auditing a large publiccompany?a. Examine the organization's accounting for a sample of business transactions to provide

reasonable assurance that the financial statements are presented fairly b. Examine the organization's accounting for a sample of business transactions to guarantee

that the financial statements are presented fairly

c. Examine the organization's accounting for every business transaction to providereasonable assurance that the financial statements are presented fairly

d. Examine the organization's accounting for every business transaction to guarantee that thefinancial statements are presented fairly

40. Which of the following is an incentive that influences auditors to remain independent and to provide fair and reliable financial information?a. Management would be taking a large legal risk if they interfere with the auditors.

b. External auditors are taking a large legal risk if they allow their independence and



integrity to be compromised.c. Auditors have a reputation to protect.d. All of these are correct.



1 D2

3 D

4 C

5 D

6 A

7 C

8 D

9 C10 B11 A12 B13 D14 A15 C16 A17 D18 A19 A20 A21 D22 B23 D24 D25 B26 B27 D28 A29 C30 D31 D32 A33 C

34 B35 C36 C37 B38 B39 A40 D

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