Devry ACCT504 Midterm Exam 2 ANSWERS

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 Jamie’s 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 corporation’s 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 Corporation’s
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) Zach’s 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 company’s 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