Devry ACCT504 Midterm Exam 1 ANSWERS

ACCT 504
Midterm Exam 1 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) Borrowing money is an example of a(n):
Points Received:
3 of 3
3.
Question :
(TCO C) Buying and selling products are examples of:
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) In a classified balance sheet, assets are usually
classified as:
Points Received:
3 of 3
7.
Question :
(TCO A) An intangible asset:
Points Received:
3 of 3
8.
Question :
(TCO A) These are selected account balances on December 31, 2010.
-Land (location of the corporation’s office building) $50,000
-Land (held for future use) 75,000
-Corporate Office Building 300,000
-Inventory 100,000
-Equipment 225,000
-Office Furniture 50,000
-Accumulated Depreciation 150,000
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, Ford Corporation reported net income of $15,000;
net sales $200,000; 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) Morten Corporation had beginning retained earnings of
$764,000 and ending retained earnings of $833,000. During the year they issued
common stock totaling $47,000. There were no dividends issued. What was their
net income for the year?
Points Received:
3 of 3
11.
Question :
(TCO D) Is the purchase of equipment treated as an expense at the
time of purchase? Why or why not?
Points Received:
3 of 3
12.
Question :
(TCO D) The left side of an account is:
Points Received:
3 of 3
13.
Question :
(TCO D) A credit is not the normal balance for which account
listed below?
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 pair of accounts follows the rules of debit and
credit in relation to increases and decreases in the same manner?
Points Received:
3 of 3
Page:
1.
Question :
(TCO E) The time period assumption states that:
Points Received:
3 of 3
2.
Question :
(TCO E) The matching principle matches:
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 J Corporation
for the fiscal year ending October 31, 2010.
Cash received from customers $75,000
Revenue earned 87,500
Cash paid for expenses 42,500
Expenses incurred 50,000
Based on the accrual basis of accounting, what is J Corporation’s
net income for the year ending October 31, 2007?
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) Which of the following expressions is incorrect?
Points Received:
3 of 3
7.
Question :
(TCO B) Hunter Company purchased merchandise inventory with an
invoice price of $6,000 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) Jake’s Market recorded the following events involving a
recent purchase of merchandise:
Received goods for $20,000, terms 2/10, n/30.
Returned $400 of the shipment for credit.
Paid $100 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) Barnes Company is taking a physical inventory on March 31,
the last day of its fiscal year. Which of the following must be included in
this inventory count?
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 declining prices, which of the following
inventory methods generally results in the lowest balance sheet figure for
inventory?
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) A classmate is considering dropping his accounting class
because he cannot understand the rules of debits and credits.
Explain the rules of debits and credits in a way that will help him understand
them. Cite examples for each of the major sections of the balance sheet
(assets, liabilities and stockholders’ equity) and the income statement (revenues
and expenses).
Points Received:
24 of 25
Ok
2.
Question :
(TCOs B & E) The Caltor Company gathered the following
condensed data for the year ended December 31, 2010:
Cost of goods sold $ 710,000
Net sales 1,279,000
Administrative expenses 239,000
Interest expense 68,000
Dividends paid 38,000
Selling expenses 45,000
Instructions:
Prepare a multiple-step income statement for the year ended
December 31, 2010. Compute the profit margin ratio and gross profit rate.
Caltor Company s assets at the beginning of the year were $770,000 and were
$830,000 at the end of the year. To qualify for full credit, you must state the
formula you are using, show your computations and explain your findings.
Points Received:
35 of 35