财务会计复习题.doc

《财务会计》复习题Circle the letter of the best response.1．Which of the following statements is false?A．Accounting is the information system that measures business activities, processes that information into reports, and communicates the results to decision makers.B．F inancial statements report financial information about a business entity to decision makers.C．O wners of a corporation are personally liable for the debts of the corporation.D．The purpose of financial accounting is to provide information to people outside of the entity, such as investors and creditors.2．Wilbur owns and operates a fishing tackle shop. Wilbur needs to borrow money to expand;therefore, he prepared financial statements to present to his banker. Wilbur obtained appraisals of all the assets of the business to ensure that the balance sheet would reflect the most current value of the assets. Wilbur has violated which of the following principles or concepts?A．Reliability principleB．C ost principleC．G oing-concern principleD．Stable-monetary-unit concept3．Which of the following is true?A．Owners' Equity －Assets ＝LiabilitiesB．A ssets －Owners' Equity ＝LiabilitiesC．A ssets ＋Liabilities ＝Owners' EquityD．Liabilities ＝Owners' Equity ＋Assets4．G. Harrison Inc experienced a decrease in total assets of $2,000 during the current year.During the same year, total liabilities decreased $6,000. If dividends for the year were $10,000 and the owners made no additional investment, how much was net income?A．$14,000B．$ 6,000C．$18,000D．$ 2,0005．Which of the following statements is true?A．The income statement reports all changes in assets, liabilities, and stockholders' equity of the business during the period.B．R evenues and expenses are reported only on the balance sheet.C．T he statement of cash flows reports cash flows from three types of business activities——cash receipts, cash payments, and investing.D．On the statement of retained earnings, the net income for the period is added to the beginning balance of retained earnings.6．Which of the following statements is not true?A．Investing activities relate to the investment by owners into the business.B．P aying dividends is an example of a financing activity.C．O perating activities are the most important type of business activity.D．Managers must make decisions about operating, investing, and financing activities. 7．On which financial statement can the ending balance in retained earnings be found?A．Balance sheetB．I ncome statementC．S tatement of retained earningsD．Both A and C8．Which of these is an example of an asset account?A．Service RevenueB．D ividendsC．S uppliesD．All of the above are assets9．Dobson Company paid $1,200 on account. The effect of this transaction on Dobson's accounting equation is to：A．decrease liabilities and increase stockholders’ equity.B．d ecrease assets and decrease liabilities.C．h ave no effect on total assets.D．decrease assets and decrease stockholders' equity.10．W hich of these statements is false?A．Decreases in liabilities and increases in revenues are recorded with a credit.B．D ecreases in assets and increases in stockholders' equity are recorded with a credit.C．I ncreases in both assets and expenses are recorded with a debit.D．Increases in assets and decreases in liabilities are recorded with a debit.11．N ote Payable has a normal beginning balance of $40,200. During the period, new borrowings total $100,000 and payments on loans total $20,600. Determine the correct ending balance in Note Payable.A．$39,200, debitB．$119,600, creditC．$39,200, creditD．$160,800, credit12．W hich of these statements is correct?A．The account is a basic summary device used in accounting.B．A business transaction is recorded first in the journal and then posted to the ledger.C．I n the journal entry, all accounts that are increased are listed first and then all accounts that are decreased are listed next.D．Both A and B are correct.13．W hich of these accounts has a normal debit balance?A．Salary ExpenseB．A ccounts PayableC．S ervice RevenueD．Both A and B14．T he May 31 trial balance reports a credit balance of $5,000 for Service Revenue. During the month, one entry for $10 had been posted in error as a debit to Service Revenue. What is the correct balance of Service Revenue at May 31 ?A．$4,980B．$4,990C．$5,020D．$5,01015．T he beginning Cash account balance is $38,700. During the period, cash disbursements totaled $144,600. If ending Cash is $51,200, then cash receipts must have been：A．$105,900B．$234,500C．$132,100D．$157,10016．U se the following selected information for the Perriman Company to calculate the correct credit column total for a trial balance：Accounts receivable $ 27,200Accounts payable 15,900Building 359,600Cash 55,600Common stock 155,000Dividends 4,800Insurance expense 1,800Retained earnings 133,800Salary expense 52,500Salary payable 3,600Service revenue 193,200A．$365,600B．$304,700C．$501,500D．$506,30017．T he journal entry to record the performance of services on account for $1,200 is：A．Accounts Payable 1,200Service Revenue 1,200B．A ccounts Receivable 1,200Service Revenue 1,200C．C ash 1,200Service Revenue 1,200D．Service Revenue 1,200Accounts Payable 1,20018．T he Smallwood Corporation began operations on January 1, 20X8. During 20X1, Smallwood collected $92,000 for management services. $12,000 of the amount collected was from a contract to provide management services for one year beginning November 1,20X8. An additional $20,000 of management services had been earned but not collected by year end.The amount of revenue that should be reported for 20X8 under the cash-basis and accrual-basis is：Cash-Basis Accrual-BasisA．$92,000 $80,000B．$80,000 $100,000C．$100,000 $112,000D．$92,000 $102,00019．W hich of the following statements is false?A．The time-period concept requires companies to prepare financial statements at least quarterly.B．A ccording to the revenue principle, revenue should be recorded when a product or service has been delivered to the customer.C．W hen possible, expenses that can be linked to a specific revenue should be deducted from revenue in the same period that the revenue is recorded.D．The time-period concept, the revenue principle, and the matching principle all support the practice of preparing adjusting entries.20．T he Armstead Company usually purchases office supplies twice a year to take advantage of quantity discounts. Office Supplies would be consideredA．an unearned revenue.B．a prepaid expense.C．a n accrued revenue.D．an accrued expense.21．O n November 1 , 20X8 , the Jemigan Company paid $4,800 for a one-year insurance policy.On December 31 , 20X8, the adjusting entry would includeA．a debit to insurance Expense$4,800.B．a credit to insurance Payable, $800.C．a credit to Prepaid insurance, $800.D．a debit to Insurance Expense, $4,000.22．W hich of these could not be a closing entry?A．Salary Expense XXRetained Earnings XXB．R etained Earnings XXDividends XXC．S ervice Revenue XXRetained Earnings XXD．Retained Earnings XXRent Expense XX23．W hat type of account is Unearned Revenue (asset, liability, stockholders' equity, revenue, or expense) and what is its normal balance, respectively?A．asset, debitB．e xpense, debitC．l iability, creditD．revenue, credit24．W hich of the following transactions is considered an accrued expense?Ⅰ．Salaries that employees have earned but not receivedII．Management fees received in advanceⅢ．Newspaper advertising that has been purchased but has not yet appeared in the newspaper A．I onlyB．I I onlyC．ⅢonlyD．Both I and II25．W hich of the following accounts is not considered a current asset?A．Accounts ReceivableB．E quipmentC．I nventoryD．Prepaid Rent26．T he balance sheet for Arnold's Cleaners appears below：Arnold's CleanersBalance sheetDecember 31, 20X8Assets LiabilitiesCash $400 Accounts payable $300 Accounts receivable 460 Salary payable 20 Supplies 10 Unearned revenue 120 Prepaid insurance 60 Note payable (due in 5 years) 400 Equipment $400 Total liabilities 840 Less: Acc. depr. 40 360 Stockholders’ EquityLand 400 Common stock 370Retained earnings 480Total stockholders' equity 850Total assets $1,690 Total liabilities and stockholders' Equity $1,690 Arnold's current ratio for 20X8 isA．2.11B．2.09C．2D．1.5227．A n investment in debt securities may be classified as any of the following categories except：A．trading securitiesB．a vailable-for-saleC．h eld-to-maturityD．All of the above are categories for Debt securities28．T he Boulder Co. purchased the following securities in 20X8.The year-end balances of their trading and available-for-sale portfolios are given below：Trading portfolio: Cost Market ValueSecurity A $10,000 $12,000Security B 3,000 3,500Total $13,000 $15,500Available-for-sale portfolio:Security D $5,500 $3,000Security E 16,000 17,000Total $21,500 $20,000At what value should the trading securities and the available-for-sale securities be reported on thebalance sheet?Trading Securities Available-for-Sale SecuritiesA．$13,000 $21,500B．$13,000 $20,000C．$15,500 $21,500D．$15,500 $20,00029．N et accounts receivable is calculated as：A．Sales less sales discounts.B．A ccounts receivable plus the allowance for uncollectible accounts.C．A ccounts receivable less the allowance for uncollectible accounts.D．Accounts receivable less the bad debts expense..30．W hen the allowance method is used, the entry to write off a customer’s account A．increases bad debts expense.B．h as no effect on net accounts receivable.C．d ecreases net accounts receivable.D．Increases the balance of the allowance for uncollectible accounts.31．W hich of the following statements about the statement of cash flows is true?A．The purchase of a held-to-maturity security is considered an investing activity.B．C ollection of interest is an investing activity.C．S ales on account is the largest cash flow from operating activities.D．Loaning money to others is a financing activity.Table 1On December 31, 20X8, Troy Inc., had the following accounts and balances（before adjustment）on its books：Accounts Receivable $80,000Allowance for Uncollectible Accounts 2,000 （credit balance）Net Sales 500,00032．R efer to Table 1. Troy estimates that its Bad Debts Expense is 2% of Net Sales. The Bad Debts Expense for 20X8 should be:A．$10,000B．$12,000C．$8,000D．$1,60033．R efer to Table 1. Troy uses an aging schedule to estimate its uncollectible accounts. The aging schedule and the percentage of each category that is estimated to be uncollectible is given below：Current $40,000 2%1-30 days past due 30,000 10%Over 30 days past due 10,000 40%The balance in the Allowance for Uncollectible Accounts after adjusting should be：A．$2,000 B．$5,800C．$7,800 D．$9,80034．M artinez Co. paid Acme Co. for merchandise with a $2,000, 90-day, 8% note dated April 1.If Martinez pays off the note at maturity, what entry should Acme make on its books at thattime?A．Cash 2,160Notes Receivable 2,160B．Notes Payable 2,000Interest Expense 160Cash 2,160C．Cash 2,040Notes Receivable 2,000Interest Revenue 40D．Cash 2,160Notes Receivable 2,000Interest Revenue 16035．W hich accounts would be debited and credited in the entry to record accrued interest on a note receivable?Debit CreditA．Interest Revenue Interest ReceivableB．Interest Receivable Interest RevenueC．Cash Interest RevenueD．Interest Receivable Cash36．G iven the following information, compute the quick ratio.Salary Payable $4,000 Trading investments $10,000 Inventory 100,000 Equipment 96,000 Accounts Receivable 42,000 Cash 14,000 Supplies 8,000 Accounts Payable 62,000 A．1 B．2.5C．1.2 D．2.4537．T eresa Company began the period with 10 units in inventory, costing $5 each. During the period the company purchased 100 units at a cost of $5 each. At the end of the period there were 13 units left on hand. What is the correct amount that should appear on the income statement for the period and on the balance sheet at the end of the period?Income Statement Balance SheetA．Cost of goods sold, $500 Inventory, $550B．Inventory, $485 Cost of goods sold, $550C．Cost of goods sold, $65 Inventory, $485D．Cost of goods sold, $485 Inventory, $6538．S heridan Corp. has $10,000 of goods on hand at August 31, 20X8. Cost of goods sold averages 40% of sale revenue. Sales for the month of September are budgeted to be $143,000.If ending inventory at the end of September is budgeted to be $10,500, what amount of inventory will Sheridan’s managers need to purchase during September in order to meet this goal?A．$57,700B．$86,300C．$56,700D．Cannot be determined from the information given.Table 2Consider the following data for Reed Company for the current year:Units Unit Cost TotalBeginning inventory 55 $10 $550Purchase February 4 22 12 264Purchase May 15 20 13 260Purchase October 20 48 15 720Sales during the year, 84 units @ $30 each.39．R efer to Table 2. What is the weighted-average cost per unit?A．$12.33 B．$12.37C．$12.50 D．$12.4840．R efer to Table 2. What is the cost of ending inventory, assuming the LIFO method is used?A．$889 B．$905C．$622 D．$1,17241．R efer to Table 2. What is the cost of goods sold, assuming the FIFO method is used?A．$889 B．$905C．$622 D．$1,17242．R efer to Table 2. What is Reed Company’s gross profit percentage (rounded) for the year, assuming that ending inventory totaled $685?A．56% B．27%C．40% D．44%43．D uring a period of rising prices, the inventory method that yields the highest net income and the lowest inventory value, respectively, will be:A．LIFO and FIFO.B．W eighted-average and LIFO.C．L IFO and LIFO.D．FIFO and LIFO.44．P ittman Company management omitted $65,000 of inventory when calculating their 20X8 ending inventory. As a result of this error,A．20X9 total assets will be overstated.B．20X9 cost of goods sold will be understated.C．20X8 stockholders’ equity will be overstated.D．20X9 net income will be understated.45．W hich of these statements regarding GAAP as applied to inventories is true?A．The disclosure principle requires that a company disclose the inventories method(s) used.B．A ccording to the consistency principle, the inventory method can never be changed.C．T he lower-of-cost-or-market rule states that, in order to be conservative, declines in inventory prices should be recognized in the period in which the goods are actually sold.D．The materiality principle allows GAAP to be ignored when the result is material in amount.。