ACC 497 Final Exams

ACC
497 Final Exams
1) The uniform law, issued in 1984 by the Committee
on Corporate Laws of the American Bar Association, that regulates the
formation, operation, and termination of corporations is
2) Which of the following statements is true?
3) Which of the following statements is true?
4) What effect would a decrease in interest rates by
the Federal Reserve most likely have in the nation’s manufacturing sector, all
other factors remaining constant?
5) A table that shows the relationship between the
price of a good and the quantity demanded of that good is called
6) If policymakers increase aggregate demand, the
price level
7) Which table would show the largest factor for an
interest rate of 8% for five periods?
8) Financial service
9) As the interest rate increases for any given
period, the future value interest factor will
10) The specific cost of each source of long-term
financing is based on ________ and ________ costs.
11) At the operating break-even point, ________
equals zero.
Section 4: Information Technology (IT) Implications
in the Business Environment
12) Justifying expenditures for new technologies is
especially difficult because
13) The hardware of a computer system includes the
computer itself and other devices that help the computer perform its tasks.
These other devices are commonly also called
14) Software that enables businesses and government
agencies to transmit and manipulate financial data on an organization-wide
basis best describes
15) A simple diagram that shows estimated completion
times versus actual completion times for the various activities in a systems
implementation project
16) What would be the best explanation for the
absence of complete information on computer crime?
17) Which of the following processes would be
accounted for using a job order cost system?
18) In traditional costing systems, overhead is
generally applied based on
19) If standard costs are incorporated into the
accounting system 20) Generally accepted accounting principles are
20) Generally accepted accounting principles are
21) Luca Company over applied manufacturing overhead
during 2006. Which one of the following is part of the year end entry to
dispose of the over applied amount assuming the amount is material?
22) The cost to produce Part A was $10 per unit in
2005. During 2006, it has increased to $11 per unit. In 2006, Supplier Company
has offered to supply Part A for $9 per unit. For the make-or-buy decision,
23) Disney’s variable costs are 30% of sales. The
company is contemplating an advertising campaign that will cost $22,000. If
sales are expected to increase $40,000, by how much will the company’s net
income increase?
24) Kershaw Bookstore had 600 units on hand at
January 1, costing $18 each. Purchases and sales during the month of January
were as follows: Kershaw does not maintain perpetual inventory records.
According to a physical count, 450 units were on hand at January 31. The cost
of the inventory at January 31, under the LIFO method is:
25) The process of formally recording or
incorporating an item in the financial statements of an entity is
26) The primary purpose of the statement of cash
flows is to provide information
27) Which of the following is considered cash?
28) A company offers a cash rebate of $1 on each $4
package of batteries sold during 2007. Historically, 10% of customers mail in
the rebate form. During 2007, 6,000,000 packages of batteries are sold, and
210,000 $1 rebates are mailed to customers. Assuming there is no beginning
liability balance, what is the rebate expense and liability, respectively,
shown on the 2007 financial statements dated December 31?
29) Which of the following is a debt security?
30) The balance in Newsprint Corp.’s foreign exchange
loss account was $10,000 on December 31, 2008, before any necessary year-end
adjustment relating to the following:
31) Costs incurred internally to create intangibles
are
32) The amount to be recorded as the cost of an
asset under capital lease is equal to the
33) In
computations of weighted average of shares outstanding, when a stock dividend
or stock split occurs, the additional shares are
34) Debt securities that are accounted for at
amortized cost, NOT fair value, are
35) Elvis Company purchases inventory for $70,000 on
March 19, 2008, and sells it to Graceland Corporation for $95,000 on May 14,
2008. Graceland still holds the inventory on December 31, 2008, and determines
that its market value (replacement cost) is $82,000 at that time. Graceland
writes the inventory down from $95,000 to its lower market value of $82,000 at
the end of the year. Elvis owns 75% of Graceland. Based on this information,
what amount of inventory should be eliminated in the consolidation work paper
for 2008?
36) Which of the following objectives is considered
the cornerstone of financial reporting by a governmental entity?
37) Expenditures should be budgeted by character. An
example of a character classification is
38) Which of the following funds is accounted for on
the modified accrual basis of accounting?
39) Several years ago, Durham City issued $1 million
in zero coupon bonds due and payable in 2010. The bonds were sold at an amount
to yield investors 6% over the life of the bonds. During the current year, how
much interest expenditures would Durham City recognize related to these bonds?
40) As used in governmental accounting, inter period
equity refers to a concept of
41) The state has a legally separate State Building
Authority, which has a board appointed by the Governor. The authority issues
debt in its name, holds title to buildings in its name, and leases its building
exclusively to the state. The authority would be considered a(n)
42) Revenues of a not-for-profit organization should
be reported as
43) Financial statements for a church-supported
college should be prepared according to standards set by the
44) For a not-for-profit hospital, which of the
following financial statements is required?
45) What agency has the ultimate authority in
defining independence for publicly traded companies?
46) A report on internal control effectiveness by
management of public companies is required by which of the following:
47) Once sufficient predication has been
established, what is the first step a fraud examiner following the fraud theory
approach should take?
48) Which of the following best describes the
objective of a fraud examination?
49) Damages intended to punish a defendant and deter
the defendant and others from engaging in the same tortious conduct in the
future are called
50) Where a contract calls for action that violates
a statute, in a breach of contract case the court will
51) Ted’s Gifts and Sweets enters into a written
contract with Bannon Candies to supply Ted’s with 60 boxes containing a dozen
coconut clusters each month for sale to the public. The agreement contained an
integration clause. Before the first delivery under the contract, Ted and his
warehouse manager called Debbie, the Bannon’s account representative, to
request that the candies be delivered in special Valentine’s Day boxes. Debbie
told Ted, “Don’t worry, I’ll tell the shipping department to take care of
that.” When the candies were delivered, they were in standard cardboard boxes.
Ted called Bannon and threatened to sue for breach of contract. Will Ted
prevail in his suit?
52) Jane and Bill are married. They purchase a house
and lot as tenants by the entirety. Then Jane is killed in a car accident. Her
will leaves everything to her sister, Ruth. What will happen to Jane’s interest
in the property?
53) Which of the following is a correct statement of
the requirements for a bona fide occupational qualification?
54) Which of the following statements accurately
describes the workers’ compensation rules?
55) When a company holds between 20% and 50% of the
outstanding stock of an investee, which of the following statements applies?
56) On December 31, 2008, Kean Company changed its
method of accounting for inventory from weighted-average cost method to the
FIFO method. This change caused the 2008 beginning inventory to increase by
$420,000. The cumulative effect of this accounting change to be reported for
the year ended December 31, 2008, assuming a 40% tax rate, is
57) Which of the following serves as the highest
authority for tax research, planning, and compliance activities?
58) The retail inventory method is based on the
assumption that the
59) When an item of expense is paid and recorded in
advance, it is normally called
60) Antonio owns land held for investment with a
basis of $28,000. The city of Lafayette exercises the right of eminent domain
and Antonio receives a payment of $48,000. What is Antonio’s realized gain?
61) In April 2009 of this year, Emma acquired a
machine for $50,000 for use in her business. The machine is classified as
7-year property. Emma elects out of bonus depreciation and does not expense the
asset under Sec. 179. Emma’s depreciation on the machine this year is
62) During the current year, a corporation sells
equipment for $300,000 that it had purchased and placed in service in 2007. The
equipment cost $270,000, and $60,000 of depreciation deductions was allowed.
The results of the sale are
63) Susie owns a ranch in Wyoming, which Pat offers
to purchase. Susie is not willing to sell the ranch but is willing to exchange
the ranch for an apartment complex in Louisiana. The complex is available for
sale. Pat purchases the apartment complex in Louisiana from Jody and transfers
it to Susie in exchange for Susie’s ranch. The ranch and the complex each have
a $1,000,000 fair market value. Which of the following is true?
64) A married person who files a separate return can
claim a personal exemption for his or her spouse if the spouse is not the
dependent of another and has
65) Ricky has rented a house from Sarah since last
year. The rent is usually $800 per month, but Sarah reduced the monthly rent
down to $600 for all 12 months this year in exchange for Ricky constructing an
addition to the house. The addition has a fair market value of $3,500. How much
total rental income must Sarah report this year?
66) Alex is a calendar-year sole proprietor. He
began business on December 1 of this year. He uses the accrual method of
accounting. Alex had the following collections in the same month: He collected
$7,000 in December from clients who paid cash for services to be performed next
year. He collected $5,000 in December for services performed during December,
which he deposited in an operating account on December 31 of this year. He
collected $9,000 in December on accounts receivable for services performed in
December, which he deposited in an operating account on January 2 of next year.
What is the amount Alex must include in his income for December?
67) Bianca is beneficiary of an $80,000 insurance
policy on her father’s life. Upon his death, she may elect to receive the
proceeds in 5 yearly installments of $17,500 or may take the $80,000 lump sum.
She elects to take the lump sum payment. What are the tax consequences in year
one?
68) Non-refundable tax credits
69) Paul makes the following property transfers in
the current year: $22,000 cash to his wife, $34,000 cash to a qualified
charity, $120,000 house to his son, and $3,000 computer to an unrelated friend.
The total of Paul’s taxable gifts, assuming he does not elect gift splitting
with his spouse, subject to the unified transfer tax, is
70) Which of the following best describes the weight
of a revenue ruling?
71) Which of the following statements is true?
72) One consequence of a property distribution by a
corporation to a shareholder is
73) Joshua owns 100% of Steeler Corporation’s stock.
Joshua’s basis in the stock is $8,000. Steeler Corporation has E&P of
$40,000. If Steeler Corporation redeems 60% of Joshua’s stock for $50,000,
Joshua must report dividend income of
74) In computing the ordinary income of a
partnership, a deduction is allowed for
75) Which of the following would terminate a
Subchapter S election?
76) The function of auditing is
77) Auditing is based on the assumption that
financial data are verifiable. Data are verifiable when two or more qualified
individuals,
78) Statement on Quality Control Standards No. 2
identifies certain quality control elements that should be considered when
performing which types of services?
79) Internal auditors are primarily involved with
80) The statement that the reviewer “is not aware of
any material modifications that should be made to the statements in order for
them to be in conformity with GAAP” is known as
81) The assessment of inherent risk requires
considering matters that have a pervasive effect on assertions for all or many
accounts and matters that may pertain only to assertions for specific accounts.
Which of the following is an example of a pervasive effects matter?
82) Specific audit objectives are normally
83) The Committee of Sponsoring Organizations (COSO)
report identified five interrelated components of internal control. Since then,
a sixth category has been identified, which is
84) Which of the following necessary controls would
address a potential misstatement arising from a voucher being paid twice?
85) An effective accounting system should identify
and record only the valid transaction of the entity that occurred in the
current period, which relates to the
86) One of the six steps involved in performing
analytical procedures includes the following:
87) In a normal audit, the relationship between the
level of materiality used to plan the engagement and the level of materiality
used to evaluate evidence is that
88) Use of auditor judgment or of a risk matrix is
necessary in revising planned detection risk whenever
89) In the audit risk model, audit sampling applies
to
90) Audit sampling is involved whenever an auditor
91) How can long-term assets best be tested for
ownership?
92) How can long-term assets best be tested for
current present value?
93) Because of the effects of circulation, some
audit evidence is more reliable than other evidence. Which of the following is
generally considered to be most reliable?
94) Which of the following accounts in a
merchandising company is affected by both the revenue cycle and another cycle?
95) The auditor’s strategy in performing test counts
during the inventory observation is to
96) Which one of the following analytical procedures
may indicate possible inventory obsolescence problems when ratios are large?
97) The control of all funds during the count of
cash on hand is meant primarily to prevent
98) Whether the entity maintains effective controls
to provide reasonable assurance that private customer information obtained
because of e-commerce is protected is defined as
99) A lawyer’s refusal to respond to a letter of
audit inquiry normally requires the auditor to
100) which of the following is a tort?