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ACCT 550 DeVry Midterm Exam

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ACCT 550 DeVry Midterm Exam

ACCT 550 Midterm 100% Correct

(TCO A) Financial information demonstrates consistency when

(TCO A) The cash method of accounting

(TCO A) Changing the method of inventory valuation should be reported in the financial statements under what qualitative characteristic of accounting information?

(TCO A) The characteristic that is demonstrated when a high degree of consensus can be secured among independent measurers using the same measurement methods is

(TCO A) Which of the following is not a basic element of financial statements?

(TCO A) Issuance of common stock for cash affects which basic element of financial statements?

(TCO A) Faithful representation has as an enhancing quality for which of the following?

(TCO D) Which of the following is a limitation of the balance sheet?

(TCO D) The amount of time that is expected to elapse until an asset is realized or otherwise converted into cash is referred to as

(TCO A) The quality of information that gives assurance that is reasonably free of error and bias and is complete is

(TCO D) The correct order to present current assets is

(TCO A) Why are some of the major differences between iGAAP and U.S. GAAP? Explain in detail.

(TCO C) Blue Corp. reports operating expenses in two categories: (1) selling and (2) general and administrative. The adjusted trial balance at December 31, 201X, included the following expense accounts.

Accounting and legal fees    $150,000

Advertising    $125,000

Freight-out    $65,000

Interest    $80,000

Loss on sale of long-term    $35,000

Investments

Officers’ salaries    $200,000

Rent for office space    $160,000

Sales salaries and commissions    $110,000

One half of the rented premises are occupied by the sales department. How much of the expenses listed above should be included in Perry’s selling expenses for 201X?

(TCO C) For the year ended December 31, 201X, King Inc. reported the following.

Net income    $60,000

Preferred dividends declared    $10,000

Common dividend declared    $2,000

Unrealized holding loss, net of tax    $1,000

Retained earnings, beginning    $80,000

Balance

Common stock sold during the year    $80,000

Retained earnings, beginning

Balance

Common stock    $40,000

Accumulated Other Comprehensive    $5,000 Income, Beginning Balance

What would Transformers report as the ending balance of retained earnings?

(TCO C) Ivy Co. had the following account balances.

Sales            120,000

Cost of goods sold    70,000

Salary expense        15,000

Depreciation expense    20,000

Dividend revenue    5,000

Utilities expense    6,000

Rental revenue        30,000

Interest expense        10,000

Advertising expense     15,000

What would Ivy report as total expenses in a single-step income    statement?

(TCO B) Unearned rent at 1/1/1X was $7,300 and at 12/31/1X was $8,100. The records indicate cash receipts from rental sources during 201X amounted to $40,000, all of which was credited to the Unearned

Rent Account. You are to prepare the missing adjusting entry. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the

Adjustment.

(TCO B) Unearned rent at 1/1/1X was $5,500 and at 12/31/1X was $10,000. The records indicate cash receipts from rental sources during 201X amounted to $40,000, all of which was credited to the Unearned

Rent Account. You are to prepare the missing adjusting entry. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the

Adjustment.

(TCO B) Allowance for doubtful accounts on 1/1/1X was $50,000. The balance in the allowance account on 12/31/1X after making the annual adjusting entry was $65,000, and during 201X, bad debts written off

Amounted to $40,000. You are to provide the missing adjusting entry. Please indicate DR (debit) or CR (credit) to the left of the account title,and place a comma between the account title and the amount of the

Adjustment.

(TCO D) Which of the following should be reported for capital stock?

(TCO D) Which item below is not a current liability?

(TCO A) Financial information exhibits the characteristic of consistency when

(TCO D) Hall Corp.’s trial balance reflected the following account balances at December 31, 201X. Accounts receivable (net)

(TCO A) Which of the following statements is not an objective of financial reporting?

(TCO A) The cash method of accounting

(TCO A) Changing the method of inventory valuation should be reported in the financial statements under what qualitative characteristic of accounting information?

(TCO A) The two fundamental qualities for accounting information are

(TCO A) The elements of financial statements include investments by owners. These are increases in an entity’s net assets resulting from owners’

(TCO A) Issuance of common stock for cash affects which basic element of financial statements?

(TCO A) Which basic assumption may not be followed when a firm in bankruptcy reports financial results?

(TCO D) Balance sheet information is useful for all of the following except to

(TCO D) The balance sheet contributes to financial reporting by providing a basis for all of the following except

(TCO A) The quality of information that gives assurance that is reasonably free of error and bias and is complete is

(TCO D) The basis for classifying assets as current or noncurrent is conversion to cash within

(TCO A) What is FASB Codification? Explain in detail.

(TCO C) At Red Company, events and transactions during 20X2 included the following. The tax rate for all items is 30%.

(1) Depreciation for 20X1 was found to be understated by $40,000.

(2) A strike by the employees of a supplier resulted in a loss of $35,000.

(3) The inventory at December 31, 20X1 was overstated by $50,000.

(4) A flood destroyed a building that had a book value of $500,000. Floods are very uncommon in that area.

What would the effect of these events and transactions on 20X2 income from continuing operations net of tax be?

(TCO C) An income statement shows “income before income taxes and extraordinary items” in the amount of $3,000,000. The income taxes payable for the year are $1,500,000, including $260,000 that is applicable to an extraordinary gain. Thus, what is the “income before extraordinary items”?

(TCO C) Dolly Company reported the following information for 201X.

(TCO B) Prepaid rent at 1/1/1X was $70,000. During 201X, rent payments of $120,000 were made and charged to “rent expense.”

The 201X income statement shows as a general expense the item “rent expense” in the amount of $126,000. You are to prepare the missing adjusting entry that must have been made, assuming reversing entries are not made. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment.

(TCO B) Unearned rent at 1/1/1X was $6,000 and at 12/31/1X was $15,000. The records indicate cash receipts from rental sources during 201X amounted to $40,000, all of which was credited to the Unearned Rent Account. You are to prepare the missing adjusting entry. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment.

(TCO B) Prepaid rent at 1/1/1X was $25,000. During 201X, rent payments of $123,000 were made and charged to “rent expense.” The 201X income statement shows as a general expense the item “rent expense” in the amount of $122,000. You are to prepare the missing adjusting entry that must have been made, assuming reversing entries are not made. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment.

(TCO B) Prepaid rent at 1/1/1X was $40,000. During 201X, rent payments of $115,000 were made and charged to “rent expense.” The 201X income statement shows as a general expense the item “rent expense” in the amount of $125,000. You are to prepare the missing adjusting entry that must have been made, assuming reversing entries are not made. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment

(TCO D) Which of the following is not an acceptable major asset classification?

(TCO D) An example of an item that is not an element of working capital is

(TCO A) Which of the following is not a basic assumption underlying the financial accounting structure?

(TCO D) The current assets section of the balance sheet should include

TCO D) Ahnen Company owns the following investments.

Trading securities (fair value) $70,000

Available-for-sale securities (fair value) 40,000

Held-to-maturity securities (amortized cost) 47,000

What will Ahnen report investments in its current assets section?