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Accounting Test 2

Pregunta 1 de 25

1

If a company reported the following items on its income statement...

Cost of goods sold: $6,000
income tax expense: $2,000
interest expense: $500
operating expenses: $3,500
sales revenue: $14,000

what amount would be reported for the subtotal "income from operations"?

Selecciona una de las siguientes respuestas posibles:

  • $8,000

  • $2,000

  • $4,500

  • $4,000

Explicación

Pregunta 2 de 25

1

Which of the following is not a normal function of a financial analyst?

Selecciona una de las siguientes respuestas posibles:

  • Issue earnings forecasts.

  • Examine the records underlying the financial statements to certify their conformance with GAAP.

  • Make buy, hold, and sell recommendations on companies' stock.

  • Advise institutional investors on their securities holdings.

Explicación

Pregunta 3 de 25

1

The classified balance sheet format allows one to ascertain quickly which of the following?

Selecciona una de las siguientes respuestas posibles:

  • The most valuable asset of the company.

  • The specific due date for all liabilities of the company.

  • What liabilities must be paid within the upcoming year.

  • None of the above.

Explicación

Pregunta 4 de 25

1

When a company issues stock with a par value, what columns are typically presented in the statement of stockholders' equity?

Selecciona una de las siguientes respuestas posibles:

  • Common Stock
    Additional Paid-In Capital
    Property, Plant and Equipment

  • Cash
    Property, Plant and Equipment

  • Common Stock
    Additional Paid-In Capital
    Retained Earnings

  • Common Stock
    Additional Paid-In Capital
    Cash

Explicación

Pregunta 5 de 25

1

When a company using the allowance method writes off a specific customer's $100,000 account receivable from the accounting system, which of the following statements are true?

1. Total stockholders' equity remains the same.
2. Total assets remain the same.
3. Total expenses remain the same.

Selecciona una de las siguientes respuestas posibles:

  • 2

  • 1 and 3

  • 1 and 2

  • 1, 2 and 3

Explicación

Pregunta 6 de 25

1

When using the allowance method, as bad debt expense is recorded,

Selecciona una de las siguientes respuestas posibles:

  • Total assets remain the same and stockholders' equity remains the same.

  • Total assets decrease and stockholders' equity decreases.

  • Total assets increase and stockholders' equity decreases.

  • Total liabilities increase and stockholders' equity decreases.

Explicación

Pregunta 7 de 25

1

The inventory costing method selected by a company will affect

Selecciona una de las siguientes respuestas posibles:

  • The balance sheet.

  • The income statement.

  • The statement of retained earnings.

  • All of the above.

Explicación

Pregunta 8 de 25

1

Which of the following is not a component of the cost of inventory.

Selecciona una de las siguientes respuestas posibles:

  • Administrative overhead

  • direct labor

  • raw materials

  • factory overhead

Explicación

Pregunta 9 de 25

1

An increasing inventory turnover ration

Selecciona una de las siguientes respuestas posibles:

  • Indicates a longer time span between the ordering and receiving of inventory.

  • Indicates a shorter time span between the ordering and receiving of inventory.

  • Indicates a shorter time span between the purchase and sale of inventory.

  • Indicates a longer time span between the purchase and sale of inventory.

Explicación

Pregunta 10 de 25

1

Which of the following regarding the lower of cost or market rule for inventory are true?

1. The lower of cost or market rule is an example of the historical cost principle.
2. When the replacement cost of inventory drops below the cost shown in the financial records, net income is reduced.
3. When the replacement cost of inventory drops below the cost shown in the financial records, total assets are reduced.

Selecciona una de las siguientes respuestas posibles:

  • 1

  • 2

  • 2 and 3

  • all three

Explicación

Pregunta 11 de 25

1

Which inventory method provides a better matching of current costs with sales revenue on the income statement and outdates values for inventory on the balance sheet?

Selecciona una de las siguientes respuestas posibles:

  • FIFO

  • Average cost

  • LIFO

  • Specific identification

Explicación

Pregunta 12 de 25

1

Which of the following is false regarding a perpetual inventory system?

Selecciona una de las siguientes respuestas posibles:

  • Physical counts are not needed since records are maintained on a transaction-by-transaction basis.

  • The balance in the inventory account is updated with each inventory purchase and sale transaction.

  • Cost of goods sold is increased as sales are recorded.

  • The account Purchases is not used as inventory is acquired.

Explicación

Pregunta 13 de 25

1

Under what method(s) of depreciation is an asset's net book value the depreciable base (the amount to be depreciated)?

Selecciona una de las siguientes respuestas posibles:

  • straight-line method

  • declining-balance method

  • units-of-production method

  • all of the above

Explicación

Pregunta 14 de 25

1

A company wishes to report the highest earnings possible for financial reporting purposes. Therefore, when calculating depreciation,

Selecciona una de las siguientes respuestas posibles:

  • It will follow the MACRS depreciation tables prescribed by the IRS.

  • It will select the shortest lives possible for its assets.

  • It will select the lowest residual values for its assets.

  • It will estimate higher residual values for its assets.

Explicación

Pregunta 15 de 25

1

How many of the following statements regarding goodwill are true?

-Goodwill is not reported unless purchased in an exchange.
-Goodwill must be reviewed annually for possible impairment.
-Impairment of goodwill results in a decrease in net income.

Selecciona una de las siguientes respuestas posibles:

  • 3

  • 2

  • 1

  • none

Explicación

Pregunta 16 de 25

1

When recording depreciation, which of the following statements is true?

Selecciona una de las siguientes respuestas posibles:

  • Total assets increase and stockholders' equity increases.

  • Total assets decrease and total liabilities increase.

  • Total assets decrease and stockholders' equity increases.

  • None of the above are true.

Explicación

Pregunta 17 de 25

1

The proper treatment of outstanding checks on the bank reconciliation requires:

Selecciona una de las siguientes respuestas posibles:

  • adding them back to the book balance of cash.

  • adding them back to the bank balance of cash

  • deducting them from the book balance of cash.

  • deducting them from the bank balance of cash.

Explicación

Pregunta 18 de 25

1

The unadjusted debit balance of the Allowance for Doubtful Accounts account is $350. Uncollectible accounts are estimated to be $15,800, based on the percent of sales method. After recording the appropriate journal entry for the bad debts expense, what will be the balance of the Bad Debt Expense account?

Selecciona una de las siguientes respuestas posibles:

  • $15,800

  • $15,450

  • $16,150

  • $350

Explicación

Pregunta 19 de 25

1

The unadjusted credit balance of the Allowance for Doubtful Accounts account is $350. Uncollectible accounts are estimated to be $15,800, based on an analysis of a schedule of aging of accounts receivable. After recording the appropriate journal entry for the bad debts expense, what will be the balance of the Bad Debt Expense account?

Selecciona una de las siguientes respuestas posibles:

  • $15,800

  • $15,450

  • $16,150

  • $350

Explicación

Pregunta 20 de 25

1

During periods of rising prices, which of the following is true?

Selecciona una de las siguientes respuestas posibles:

  • The use of FIFO will result in smaller net income than LIFO.

  • The use of FIFO will result in a larger cost of goods sold than LIFO.

  • The use of LIFO will result in a smaller cost of goods sold than FIFO.

  • The use of FIFO will result in a higher ending inventory than LIFO.

Explicación

Pregunta 21 de 25

1

Consider the following:

ITEM A:
Units on hand = 2,000
Cost/Unit = $5.00
Market/Unit = $5.50

ITEM B:
Units on hand = 3,000
Cost/Unit = $4.50
Market/Unit = $3.00

Using the lower of cost or market rule applied on an item-to-item basis., what will be the value of the ending inventory reported on the balance sheet?

Selecciona una de las siguientes respuestas posibles:

  • $23,500

  • $20,000

  • $19,000

  • $24,500

Explicación

Pregunta 22 de 25

1

Inventory at the end of the current period was understated because one bin of inventory was not counted and its value not included in the ending inventory totals. Because of this error:

Selecciona una de las siguientes respuestas posibles:

  • net income for the period was overstated.

  • net income for the following period will be overstated.

  • the cost of goods sold for the current period was understated.

  • total equity for the current year is overstated.

Explicación

Pregunta 23 de 25

1

An asset with an estimated 5-year useful life and an estimated residual value of $5,000 was purchased for $22,000 cash plus a $500 delivery fee on the first day of the fiscal year. Using the straight-line method, determine the depreciation expense for the second fiscal year?

Selecciona una de las siguientes respuestas posibles:

  • $3,400

  • $3,500

  • $4,500

  • $4,800

Explicación

Pregunta 24 de 25

1

An asset with an estimated 10-year useful life and an estimated residual value of $5,000 was purchased for $28,000 cash on the first day of the fiscal year. Based on the declining balance method at twice the straight-line rate, what is the depreciation expense for the second fiscal year.

Selecciona una de las siguientes respuestas posibles:

  • $3,680

  • $5,600

  • $4,480

  • $4,000

Explicación

Pregunta 25 de 25

1

Goodwill as reported in a balance sheet:

Selecciona una de las siguientes respuestas posibles:

  • is a favorable reputation.

  • only occurs when one company purchases another company.

  • is the increase in sales caused by customers satisfaction.

  • is never reported on a balance sheet.

Explicación

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