ACC 280 Final Exam.
1. Which of the following would not be considered an internal user of accounting data for the XYZ Company?
a. President of the company
b. Production manager
c. Merchandise inventory clerk
d. President of the employees' labor union
2. Which of the following would not be considered an external user of accounting data for the XYZ Company?
a. Internal Revenue Service Agent
3. Generally accepted accounting principles are
a. income tax regulations of the Internal Revenue Service.
b. standards that indicate how to report economic events.
c. theories that are based on physical laws of the universe.
d. principles that have been proven correct by academic researchers.
4. The basic accounting equation may be expressed as
a. Assets = Equities.
b. Assets – Liabilities = Stockholders’ Equity.
c. Assets = Liabilities + Stockholders’ Equity.
d. all of these.
a. are future economic benefits.
b. are existing debts and obligations.
c. possess service potential.
d. are things of value used by the business in its operation.
6. The basic accounting equation cannot be restated as
a. Assets – Liabilities = Stockholders' Equity.
b. Assets – Stockholders' Equity = Liabilities.
c. Stockholders' Equity + Liabilities = Assets.
d. Assets + Liabilities = Stockholders' Equity.
7. The accounting equation for Goodboys Enterprises is as follows:
Assets Liabilities Stockholders' Equity
$120,000 = $60,000 + $60,000
If Goodboys purchases office equipment on account for $12,000, the accounting equation will change to
Assets Liabilities Stockholders' Equity
a. $120,000 = $60,000 + $60,000
b. $132,000 = $60,000 + $72,000
c. $132,000 = $66,000 + $66,000
d. $132,000 = $72,000 + $60,000
8. As of June 30, 2008, Houston Company has assets of $100,000 and stockholders' equity of $5,000. What are the liabilities for Houston Company as of June 30, 2008?
a. decrease both assets and liabilities.
b. decrease assets and increase liabilities.
c. increase both assets and liabilities.
d. increase assets and decrease liabilities.
10. A debit to an asset account indicates
a. an error.
b. a credit was made to a liability account.
c. a decrease in the asset.
d. an increase in the asset.
11. An accountant has debited an asset account for $1,000 and credited a liability account for $500. What can be done to complete the recording of the transaction?
a. Nothing further must be done.
b. Debit an stockholders’ equity account for $500.
c. Debit another asset account for $500.
d. Credit a different asset account for $500.
12. A complete journal entry does not show
a. the date of the transaction.
b. the new balance in the accounts affected by the transaction.
c. a brief explanation of the transaction.
d. the accounts and amounts to be debited and credited.
13. The entire group of accounts maintained by a company is called the
a. balance sheet.
b. general journal.
c. general ledger.
d. trial balance.
14. Anderson Company purchased equipment for $1,800 cash. As a result of this event,
a. stockholders' equity decreased by $1,800.
b. total assets increased by $1,800.
c. total assets remained unchanged.
d. Both a and b.
15. A trial balance is a listing of
a. transactions in a journal.
b. the chart of accounts.
c. general ledger accounts and balances.
d. the totals from the journal pages.
16. Which of the following are in accordance with generally accepted accounting principles?
a. Accrual basis accounting
b. Cash basis accounting
c. Both accrual basis and cash basis accounting
d. Neither accrual basis nor cash basis accounting
17. The revenue recognition principle dictates that revenue should be recognized in the accounting records
a. when cash is received.
b. when it is earned.
c. at the end of the month.
d. in the period that income taxes are paid.
18. The following is selected information from J Corporation for the fiscal year ending October 31, 2008.
Cash received from customers $300,000
Revenue earned 350,000
Cash paid for expenses 170,000
Cash paid for computers on November 1, 2007 that will be used
for 3 years (annual depreciation is $16,000) 48,000
Expenses incurred, not including any depreciation 200,000
Proceeds from a bank loan, part of which was used to pay for
the computers 100,000
Based on the accrual basis of accounting, what is J Corporation’s net income for the year ending October 31, 2008?
19. Depreciation is the process of
a. valuing an asset at its fair market value.
b. increasing the value of an asset over its useful life in a rational and systematic manner.
c. allocating the cost of an asset to expense over its useful life in a rational and systematic manner.
d. writing down an asset to its real value each accounting period.
20. Southeastern Louisiana University sold season tickets for the 2008 football season for $160,000. A total of 8 games will be played during September, October and November. Assuming all the games are played, the Unearned Revenue balance that will be reported on the December 31 balance sheet will be
21. Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause
a. net income to be understated.
b. an overstatement of assets and an overstatement of liabilities.
c. an understatement of expenses and an understatement of liabilities.
d. an overstatement of expenses and an overstatement of liabilities.
22. Can financial statements be prepared directly from the adjusted trial balance?
a. They cannot. The general ledger must be used.
b. Yes, adjusting entries have been recorded in the general journal and posted to the ledger accounts.
c. No, the adjusted trial balance merely proves the equality of the total debit and total credit balances in the ledger after adjustments are posted. It has no other purpose.
d. They can because that is the only reason that an adjusted trial balance is prepared.
23. The adjusted trial balance is prepared
a. after financial statements are prepared.
b. before the trial balance.
c. to prove the equality of total assets and total liabilities.
d. after adjusting entries have been journalized and posted.
24. An expense is recorded under the cash basis only when
a. services are performed.
b. it is earned.
c. cash is paid.
d. it is incurred.
25. Assuming that there is a net loss for the period, debits equal credits in all but which section of the worksheet?
a. Income statement columns
b. Adjustments columns
c. Trial balance columns
d. Adjusted trial balance columns
Use the following information for questions 54–55.
The income statement and balance sheet columns of Pine Company's worksheet reflects the following totals:
Income Statement Balance Sheet
&nb sp; Dr. Cr. Dr. Cr.
Totals $58,000 $48,000 $34,000 $44,000
26. The net income (or loss) for the period is
a. $48,000 income.
b. $10,000 income.
c. $10,000 loss.
d. not determinable.
27. To enter the net income (or loss) for the period into the above worksheet requires an entry to the
a. income statement debit column and the balance sheet credit column.
b. income statement credit column and the balance sheet debit column.
c. income statement debit column and the income statement credit column.
d. balance sheet debit column and the balance sheet credit column.
28. A post-closing trial balance should be prepared
a. before closing entries are posted to the ledger accounts.
b. after closing entries are posted to the ledger accounts.
c. before adjusting entries are posted to the ledger accounts.
d. only if an error in the accounts is detected.
29. All of the following are property, plant, and equipment except
30. A current asset is
a. the last asset purchased by a business.
b. an asset which is currently being used to produce a product or service.
c. usually found as a separate classification in the income statement.
d. an asset that a company expects to convert to cash or use up within one year.
31. The relationship between current assets and current liabilities is important in evaluating a company's
c. market value.
d. accounting cycle.
32. The most important information needed to determine if companies can pay their current obligations is the
a. net income for this year.
b. projected net income for next year.
c. relationship between current assets and current liabilities.
d. relationship between short-term and long-term liabilities.
33. The sub-classifications on the company’s classified balance sheet would include all of the following except:
a. Current Assets.
b. Property, Plant, and Equipment.
c. Current liabilities.
d. Long-term Assets.
34. The standards and rules that are recognized as a general guide for financial reporting are called
a. generally accepted accounting standards.
b. generally accepted accounting principles.
c. operating guidelines.
d. standards of financial reporting.
35. FASB has had the responsibility for developing accounting principles since the early