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CSUF ACCT 201A (Hoffman) Final Exam
Questions and Verified Answers
Q: Generally accepted accounting principles are:
ANS: a set of standards and rules that are recognized as a general guide for
financial reporting.
Q:
Which is an advantage of corporations relative to partnerships and sole proprietorships?
ANS: Reduced legal liability for investors.
Q:
Kam Company has the following units and costs.
Inventory, Jan. 1 8,000 $11
Purchase, Jun. 19 13,000 $12
Purchase, Nov. 8 5,000 $13
If 9,000 units are on hand at December 31, what is the cost of the ending inventory under
FIFO?
ANS: $113,000
(total 309,000 - ((8,000*11)+(remaining 9,000*12))
Q:
To record the sale of goods for cash in a perpetual inventory system:
ANS: two journal entries are necessary: one to record the receipt of cash and sales
revenue, and one to record the cost of goods sold and reduction of inventory.
Q:
Which is not one of the three primary business activities?
ANS: Advertising.
Q:
A trial balance:
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ANS: will not balance if a correct journal entry is posted twice.
Q:
Which accounts normally have debit balances?
ANS: Assets, dividends, and expenses.
Q:
Which account will have a zero balance after a company has journalized and posted
closing entries?
ANS: Service Revenue.
Q:
Adjustments for prepaid expenses:
ANS: decrease assets and increase expenses.
Q:
Queenan Company computes depreciation on delivery equipment at $1,000 for the
month of June. The adjusting entry to record this depreciation is as follows:
ANS: Depreciation Expense dr 1,000. Accumulated Depreciation-Equipment cr 1,000
Q:
A ledger:
ANS: is a record of all accounts maintained by a company and their amounts.
Q:
Net income will result during a time period when:
ANS: revenues exceed expenses.
Q:
Davidson Electronics has the following:
Inventory, Jan. 1 5,000 $8
Purchase, April 2 15,000 $10
Purchase, Aug. 28 20,000 $12
If Davidson has 7,000 units on hand at December 31, the cost of ending inventory under
the average-cost method is:
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ANS: $75,250
40,000+ 150,000+ 240,000 = 430,000
40,000 units
430,000/40,000 = 10.75
10.75 * 7,000
Q:
The element of a corporation's annual report that describes the corporation's accounting
methods is:
ANS: notes to the financial statements.
Q:
Gross profit will result if:
ANS: net sales are greater than cost of goods sold.
Q:
As a result of a thorough physical inventory, Railway Company determined that it had
inventory worth $180,000 at December 31, 2022. This count did not take into
consideration the following facts. Rogers Consignment Store currently has goods worth
$35,000 on its sales floor that belong to Railway but are being sold on consignment by
Rogers. The selling price of these goods is $50,000. Railway purchased $13,000 of goods
that were shipped on December 27, FOB destination, that will be received by Railway on
January 3. Determine the correct amount of inventory that Railway should report.
ANS: $215,000
(180,000+ 35,000)
Q:
The lower-of-cost-or-net realizable value rule for inventory is an example of the
application of:
ANS: the conservatism convention.
Q:
All of the following are required steps in the accounting cycle except:
ANS: prepare financial statements from the unadjusted trial balance.
CSUF ACCT 201A (Hoffman) Final Exam
Questions and Verified Answers
Q: Generally accepted accounting principles are:
ANS: a set of standards and rules that are recognized as a general guide for
financial reporting.
Q:
Which is an advantage of corporations relative to partnerships and sole proprietorships?
ANS: Reduced legal liability for investors.
Q:
Kam Company has the following units and costs.
Inventory, Jan. 1 8,000 $11
Purchase, Jun. 19 13,000 $12
Purchase, Nov. 8 5,000 $13
If 9,000 units are on hand at December 31, what is the cost of the ending inventory under
FIFO?
ANS: $113,000
(total 309,000 - ((8,000*11)+(remaining 9,000*12))
Q:
To record the sale of goods for cash in a perpetual inventory system:
ANS: two journal entries are necessary: one to record the receipt of cash and sales
revenue, and one to record the cost of goods sold and reduction of inventory.
Q:
Which is not one of the three primary business activities?
ANS: Advertising.
Q:
A trial balance:
, Page | 2
ANS: will not balance if a correct journal entry is posted twice.
Q:
Which accounts normally have debit balances?
ANS: Assets, dividends, and expenses.
Q:
Which account will have a zero balance after a company has journalized and posted
closing entries?
ANS: Service Revenue.
Q:
Adjustments for prepaid expenses:
ANS: decrease assets and increase expenses.
Q:
Queenan Company computes depreciation on delivery equipment at $1,000 for the
month of June. The adjusting entry to record this depreciation is as follows:
ANS: Depreciation Expense dr 1,000. Accumulated Depreciation-Equipment cr 1,000
Q:
A ledger:
ANS: is a record of all accounts maintained by a company and their amounts.
Q:
Net income will result during a time period when:
ANS: revenues exceed expenses.
Q:
Davidson Electronics has the following:
Inventory, Jan. 1 5,000 $8
Purchase, April 2 15,000 $10
Purchase, Aug. 28 20,000 $12
If Davidson has 7,000 units on hand at December 31, the cost of ending inventory under
the average-cost method is:
, Page | 3
ANS: $75,250
40,000+ 150,000+ 240,000 = 430,000
40,000 units
430,000/40,000 = 10.75
10.75 * 7,000
Q:
The element of a corporation's annual report that describes the corporation's accounting
methods is:
ANS: notes to the financial statements.
Q:
Gross profit will result if:
ANS: net sales are greater than cost of goods sold.
Q:
As a result of a thorough physical inventory, Railway Company determined that it had
inventory worth $180,000 at December 31, 2022. This count did not take into
consideration the following facts. Rogers Consignment Store currently has goods worth
$35,000 on its sales floor that belong to Railway but are being sold on consignment by
Rogers. The selling price of these goods is $50,000. Railway purchased $13,000 of goods
that were shipped on December 27, FOB destination, that will be received by Railway on
January 3. Determine the correct amount of inventory that Railway should report.
ANS: $215,000
(180,000+ 35,000)
Q:
The lower-of-cost-or-net realizable value rule for inventory is an example of the
application of:
ANS: the conservatism convention.
Q:
All of the following are required steps in the accounting cycle except:
ANS: prepare financial statements from the unadjusted trial balance.
