Acct 3110 Qualifying Exam

The primary objective of financial reporting is to provide financial information about the reporting company that is useful:

To existing and potential investors, lenders, and other creditors in making decisions about providing resources to the company.

Generally Accepted Accounting Principles (GAAP) are established by:

The Financial Accounting Standards Board

Changes in stockholders' equity that result from the company's primary and usual business operations are:

Revenues and expenses

Which of the following terms describe probable future economic benefits obtained or controlled by a particular company as a result of past transactions or events?

Asset

ABC Corporation issues 1,000 shares of $10 par value common stock at $12 per share. In recording the transaction, credits are made to:

Common Stock $10,000 and Paid-in Excess of Par Value $2,000

The financial effect of a business transaction is initially recorded with:

A journal entry

Which of the following descriptions about accrual basis accounting is INCORRECT?

Under accrual basis accounting, revenue is recognized when cash is received.

After transactions are recorded in the general journal, the usual next step in the accounting cycle is to:

post transactions to the general ledger where an unadjusted trial balance can be prepared.

The usual final step in the accounting cycle is to:

Prepare a post-closing trial balance for the next accounting period.

Arnold Company provided services to its customers on credit for $25,000. For Arnold Company, this transaction:

Increased assets.

Douglas Corporation paid its landlord $6,000 for this month's rental on its warehouse. This transaction:

Increased expenses.

Abacus Corporation purchased equipment costing $40,000. It paid $10,000 in cash and signed a note payable for $30,000. This transaction:

Increased assets and liabilities each by $30,000.

Atlas Corporation sold a used machine for less than its carrying value. This transaction:

Generated loss on sale of fixed assets.

Which of the following is not an adjusting entry?

Dr Cash

Cr Unearned Rent Revenue

When a prepaid expense was initially recorded as a debit to an asset account, the subsequent required adjusting entry includes:

A debit to an expense

On July 1, Edmond Office Equipment borrowed $10,000 at an annual interest rate of 10 percent. Principal and interest are due on December 31. The company's fiscal year ends on October 31. What adjusting entry should be made on October 31?

Interest Expense 333

CR Interest Payable 333

Which of the following accounts normally is NOT considered a permanent account?

Rent Expense

Which of the following income statement elements is an economic inflow that occurs from sale of goods or services?

Revenue

Which of the following is a current asset?

United States treasury bill maturing in 2 months

Which of the following is classified as an operating activity on a statement of cash flows?

Purchase of inventory

In a bank reconciliation, deposits in transit are:

Added to the bank balance.

If sales revenues are $400, cost of goods sold is $310, and operating expenses are $60, what is the gross profit?

$90

Which statement is INCORRECT concerning the adjusted trial balance?

The adjusted trial balance lists the account balances segregated by assets and liabilities.

A trial balance may prove that debits and credits are equal, but:

An amount could be entered in the wrong account

A transaction could have been entered twice

A transaction could have been omitted.

Posting is the process of:

Transferring the debit and credit information from the journal to individual accounts in the general ledger.

A trial balance can best be explained as a list of:

All accounts and their balances at a particular date.

The unadjusted balance in the Allowance for Uncollectible Accounts before adjustment is $1,000. The company estimates future uncollectible accounts to be $5,000. At what amount will bad debt expense be reported on the income statement?

$4,000

On April 28th, Muggle Company sells goods to Potter Company for $10,000 with terms of 2/10, net 30. On May 5th, Potter Company will pay Muggle Company:

$9,800

The entry to record a write-off of accounts receivable will include:

A debit to allowance for uncollectible accounts.

On January 1, 2016, Keano Supply borrows $10,000 from Shark Company by signing a 9% note due in eight months. What is the amount of interest revenue Shark Company should record on September 1, 2016?

$600

On January 1, 2016, Keano Supply borrows $10,000 from Shark Company by signing a 9% note due on January 1 2018. What is the amount of interest revenue Shark Company should report in the income statement for the year ended December 31, 2016?

$900

At the beginning of the year, Super Company has inventory of $4,500. During the year, the company purchased additional inventory of $12,000. An inventory count at the end of the year indicated ending inventory of $3,100. What amount will Super Company report as Cost of Goods Sold?

$13,400

Bat Company began the year with 4,000 units of inventory purchased for $4.00 per unit. On March 1, Bat Company purchased another 10,000 units for $5.00 per unit. Bat purchased another 6,000 units for 7 $5.50 per unit on September 15. During the year Bat Company sold 15,000 units. Assuming Bat Company uses the LIFO inventory flow assumption, what was Bat Company's ending inventory?

$21,000

Bat Company began the year with 4,000 units of inventory purchased for $4.00 per unit. On March 1, Bat Company purchased another 10,000 units for $5.00 per unit. Bat purchased another 6,000 units for $5.50 per unit on September 15. During the year Bat Company sold 15,000 units. Assuming Bat Company uses the FIFO inventory flow assumption, what was Bat Company's ending inventory?

$27,500

Goods in transit which are shipped f.o.b. shipping point should be:

Included in the inventory of the buyer

Diaz Corporation purchased a computer system for $20,000. The company paid $5,000 cash and issued a $15,000 note payable for the entire balance. The journal entry to record this transaction includes:

A debit to Equipment for $20,000

For creditors who provide loans to a company, their information needs are primarily concerned with:

The amount, timing and risks of future cash flows.

On September 1, 2016, Pizza Planet buys a delivery vehicle for $12,000. It has an estimated life of ten 8 years and no expected salvage value. How much depreciation expense will be recorded for calendar year 2016 if Pizza Planet uses partial year straight-line depreciation based on the number of months in service?

$400

On January 1st, Tobin Inc. purchased a big truck and estimates that it will last five years and has an estimated salvage value of $5,000. The truck's sticker price was $45,000, but the company was able to purchase it for $35,000. What would the depreciation expense be in the truck's third year using the straight-line method?

$6,000

On January 1st, Dot Pinkerton Inc. purchased a building for $300,000 and estimates that it will last thirty years with no expected salvage value. What would the accumulated depreciation be at the end of the third year using the straight-line method?

$30,000

Which of the following is most likely to be true?

A gain is recognized when a long-term fixed asset is sold and the proceeds received are more than its carrying value.

We normally record a long-term asset at the:

Cost of the asset plus all costs necessary to get the asset ready for use.

Which of the following accounts is a permanent account?

Patents

The income statement presents:

Net earnings of a company for a period of time.

Olympic Equipment borrowed $100,000 on November 1. The note matures in one year and the annual interest rate is 9%. What amount of interest expense will be accrued on December 31?

$1,500

Lemon Corporation issued 20,000 share of $10 Par Value Common Stock for $ 16 per share. The entry to record this issuance would include:

A debit to Cash $320,000

Which of the following statements is false?

The par value of a share to stock is usually equal to its market value

Jenner Corporation paid its annual dividend. This transaction represents a(n):

Distribution to stockholders

Peach Corporation began the year with Retained Earnings of $45,000. During the year Peach had Net Income of $15,000. Also, during the year Peach issued 4,000 share of $10 par value Common Stock for $12 per share. At the end of the year, Peach declared cash dividends of $8,000. What is the year-end balance of Retained Earnings?

$52,000