ACC 290

1) Which financial statement is used to determine cash generated from operations?
Income statement
Statement of operations
Statement of cash flows
Retained earnings statement
2) In terms of sequence, in what order must the four basic financial statements be prepared?
Balance sheet, income statement, statement of cash flows, and capital statement
Income statement, capital statement, statement of cash flows, and balance sheet
Balance sheet, capital statement, statement of cash flows, and income statement
Income statement, capital statement, balance sheet, and statement of cash flows
3) In classifying transactions, which of the following is true in regard to assets?
Normal balances and increases are debits.
Normal balances and decreases are credits.
Normal balances can either be debits or credits for assets.
Normal balances are debits and increases can be debits or credits.
4) An increase in an expense account must be
debited
credited
either debited or credited, depending on the circumstances
capitalized
5) ABC Corporation issues 100 shares of $1 par common stock at $5 per share, which of the following is the correct journal entry?
Cash                       $100
Common Stock     $100
Cash                       $500
Common Stock     $500
Cash                                                  $500
Paid-in Capital, Excess of Par    $400
Common Stock                               $100
Cash                                               $100
Paid-in Capital, Excess of Par   $400
Common Stock                             $500
6) In the first month of operations, the total of the debit entries to the cash account amounted to $1,400 and the total of the credit entries to the cash account amounted to $600. The cash account has a
$600 credit balance
$1,400 debit balance
$800 debit balance
$800 credit balance
7) Which ledger contains control accounts?
Accounts receivable subsidiary ledger
General ledger
Accounts payable subsidiary ledger
General revenue and expense ledger
8) Smith is a customer of ABC Corporation. Smith typically purchases merchandise from ABC on account. Which ledger would ABC use to keep track of the details of Smith’s account?
Accounts receivable subsidiary ledger
Accounts receivable control ledger
General ledger
Accounts payable subsidiary ledger
9) Under the cash basis of accounting,
revenue is recognized when services are performed
expenses are matched with the revenue that is produced
cash must be received before revenue is recognized
a promise to pay is sufficient to recognize revenue

10) Under the accrual basis of accounting,
cash must be received before revenue is recognized
net income is calculated by matching cash outflows against cash inflows
events that change a company’s financial statements are recognized in the period they occur rather than in the period in which the cash is paid or received
the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles

11) The Vintage Laundry Company purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $2,000 on hand. The adjusting entry that should be made by the company on June 30 is
debit Laundry Expense, $2,000; credit Laundry Expense $2,000
debit Laundry Expense, $4,500; credit Laundry Supplies Expense, $4,500
debit Laundry Supplies, $2,000; credit Laundry Supplies Expense, $2,000
debit Laundry Supplies Expense, $4,500; credit Laundry Supplies, $4,500
12) Greese Company purchased office supplies costing $4,000 and debited Office Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $1,100 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be
debit Office Supplies Expense, $1,100; credit Office Supplies, $1,100
debit Office Supplies, $2,900; credit Office Supplies Expense, $2,900
C.  debit Office Supplies Expense, $2,900; credit Office Supplies, $2,900
debit Office Supplies, $1,100; credit Office Supplies Expense, $1,100
13) Based on the account balance below, what is the total of the debit and credit columns of the adjusted trial balance?
Service revenue     $3,300 Equipment                   $6,400
Cash                        1,525   Prepaid insurance       1,225
Unearned revenue 5,320   Depreciation expense     640
Salary                      1,050   Accum. depreciation  1,280
Common stock       390       Retained earnings       550
$9,150
$10,840
$9,560
$10,430

14) An adjusted trial balance
is prepared after the financial statements are completed
proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made
is a required financial statement under generally accepted accounting principles
cannot be used to prepare financial statements

15) Given the following adjusted trial balance, net income for the year is:
Debit                                      Credit
Cash                                       $781
Accounts receivable            1,049
Inventory                               1,562
Prepaid rent                          43
Property, plant & equipment          150
Accumulated depreciation 26
Accounts payable                41
Unearned revenue               61
Common stock                     103
Retained earnings                3,305
Service revenue                   134
Interest revenue                   28
Salary expense                     80
Travel expense                     33
Total                                       $3,698              $3,698
$248
$135
$162
D.  $49
16) Given the following adjusted trial balance, what will be the totals for the debit and credit columns of the post-closing trial balance?
Debit                                       Credit
Cash                                        $1,562
Accounts receivable             2,098
Inventory                                3,124
Prepaid rent                           86
Property, plant, & equipment         300
Accumulated depreciation  $52
Accounts payable                 82
Unearned revenue                172
Common stock                      206
Retained earnings                 6,610
Service revenue                    218
Interest revenue                    56
Salary expense                      160
Travel expense                      66
Totals                                      $7,396               $7,396
$7,396
$7,118
$7,334
D.  $7,170
17) Given the following adjusted trial balance:
Debit                                      Credit
Cash                                       $781
Accounts receivable            1,049
Inventory                               1,562
Prepaid rent                          43
Property, plant & equipment          150
Accumulated depreciation $26
Accounts payable                41
Unearned revenue               61
Common stock                     103
Retained earnings                3,305
Service revenue                   134
Interest revenue                   28
Salary expense                     80
Travel expense                     33
Total                                       $3,698              $3,698
After closing entries have been posted, the balance in retained earnings will be
$3,256
$3,170
$3,440
$3,354
18) Net income is recorded on the work sheet under the
debit column of the adjusted trial balance and the credit column of retained earnings
debit column of the income statement and the credit column of the balance sheet
credit column of the adjusted trial balance and the debit column of retained earnings
credit column of the income statement and the debit column of the balance sheet
19) At the beginning of the year, Uptown Athletic had an inventory of $400,000. During the year, the company purchased goods costing $1,500,000. If Uptown Athletic reported ending inventory of $600,000 and sales of $2,000,000, their cost of goods sold and gross profit rate would be
$900,000 and 65%
$1,300,000 and 35%
$900,000 and 35%
$1,300,000 and 65%
20) During the year, Sarah’s Pet Shop’s merchandise inventory decreased by $30,000. If the company’s cost of goods sold for the year was $450,000, purchases would have been
$480,000
$420,000
$390,000
Insufficient data to determine
21) At the beginning of the year, Wildcat Athletic had an inventory of $200,000. During the year, the company purchased goods costing $700,000. If Wildcat Athletic reported ending inventory of $300,000 and sales of $1,000,000, their cost of goods sold and gross profit rate would be
$400,000 and 60%
$600,000 and 40%
$400,000 and 40%
$600,000 and 60%
22) The entry to record of sale of $900 with terms of 2/10, n/30 will include a
debit to Sales Discount for $18
debit to Sales Revenue for $882
credit to Accounts Receivable for $900
credit to Sales Revenue for $900
23) Dobler Company uses a periodic inventory system. Details for the inventory account for the
Units       Per unit price   Total
Balance, 1/1/2012   200   $5.00     $1,000
Purchase, 1/15/2012         100        5.3          530
Purchase, 1/28/2012         100        5.5          550
An end of the month (1/31/2012), inventory showed that 140 units were on hand. If the company uses LIFO, what is the value of the ending inventory?
$737
$700
$762
$1,380

24) The difference between ending inventory using LIFO and ending inventory using FIFO is referred to as
FIFO reserve
inventory reserve
LIFO reserve
periodic reserve

25) A consistent application of an inventory costing method enhances
conservatism
accuracy
comparability
Efficiency

26) The accountant at Patton Company has determined that income before income taxes amounted to $11,000 using the FIFO costing assumption. If the income tax rate is 30% and the amount of income taxes paid would be $300 greater if the LIFO assumption were used, what would be the amount of income before taxes under the LIFO assumption?
$11,300
$12,000
$10,000
$10,700
27) A very small company would have the most difficulty in implementing which of the following internal control activities?
Separation of duties
Limited access to assets
Periodic independent verification
Sound personnel procedures
28) A system of internal control
is infallible
can be rendered ineffective by employee collusion
invariably will have costs exceeding benefits
is premised on the concept of absolute assurance
29) The custodian of a company asset should
have access to the accounting record for that asset
be someone outside the company
not have access to the accounting record for that asset
be an accountant
30) The Sarbanes Oxley Act (2002) applies to
U.S. companies but not international companies
international companies but not U.S. companies
U.S. and Canadian companies but not other international companies
U.S. and international companies