ACC 311 Final Exam Questions With
100% Solved Answers!!!
Which of the following best describe financing activities as they relate to the Statement
of Cash Flows? CORRECT ANSWERS They result primarily from securing money by
bank loans or selling stock to investors.
Which of the following statements does not correctly describe an adjustment to net
income when determining cash flows from operating activities using the indirect
method?
A. An increase in accounts receivable will be subtracted from net income.
B. Depreciation expense on a depreciable asset will be added to net income.
C. An increase in accrued liabilities will be subtracted from net income.
D. An increase in accounts payable will be added to net income CORRECT ANSWERS
An increase in accrued liabilities will be subtracted from net income
The primary difference in accounting for available-for-sale securities and accounting for
trading securities is: CORRECT ANSWERS Determining where the unrealized holding
gain or loss on investments is reported in the financial statements; in current net income
or in comprehensive income.
Which of the following will not be found in the bond indenture?
A. The coupon rate of interest
B. The face value of the bonds
C. The term of the bonds
D. The market rate of interest
E. Any covenants that govern the bond issue during its life. CORRECT ANSWERS The
market rate of interest
Which of the following statements is correct?
A. Any unrealized holding gain or loss on investments in trading securities is reported
on the income statement.
B. Any unrealized holding gain or loss on investments in available-for-sale securities is
reported on the income statement.
C. All unrealized gains and losses are reported on the income statement regardless of
the method used to account for the investment.
D. All unrealized holding gain and losses are reported on the balance sheet regardless
of the method used to account for the investment. CORRECT ANSWERS Any
unrealized holding gain or loss on investments in trading securities is reported on the
income statement.
Which of the following statements is not correct?
, A. The bond principal is the amount due at the maturity date of the bond.
B. The stated interest rate is used to determine the cash interest payments.
C. The bond principal is used to determine the cash interest payments.
D. The market interest rate is used to determine the cash interest payments. CORRECT
ANSWERS The market interest rate is used to determine the cash interest payments.
The market price of a bond issued at a discount is the present value of its principal
amount at the market (effective) rate of interest CORRECT ANSWERS Plus the present
value of all future interest payments at the market (effective) rate of interest.
Investment in the common stock of another company is held in an available for sale
portfolio. The market value has increased since the date of purchase. The entry to
reflect this change in value will: CORRECT ANSWERS Increase assets and increase
shareholder's equity
The appropriate entry when a company repurchases its stock will: CORRECT
ANSWERS decrease shareholder's equity and decrease cash
A firm reissues Treasury Stock for $20/share that was previously purchased for
$25/share. The entry to record the re-issuance will CORRECT ANSWERS increase
shareholder's equity and increase cash
A firm reissues bonds at premium. When it records the journal entry for the first interest
payment, CORRECT ANSWERS Interest expense will be LESS than the cash payment
CORRECT ANSWERS Cost of goods sold will be LOWER than under FIFO.
Which of the following statements is correct?
a. FIFO reports lower income amounts than LIFO when prices are rising.
b. LIFO reports a higher income amount than FIFO when prices are rising.
c. LIFO reports a higher income amount than FIFO when prices are decreasing.
d. LIFO reports the same amount of income as FIFO when prices are rising. CORRECT
ANSWERS LIFO reports a higher income amount than FIFO when prices are
decreasing.
Failure to record amortization expense on a patent during the current year CORRECT
ANSWERS would cause both net income for the year and total assets to be overstated
Which of the following errors would most likely lead to an understatement of income in
the current year?
a. Recording revenue next period when the cash is collected although it is earned in the
current year
b. Paying for an expense this year when the expense will be incurred and recorded next
year
c. Failure to adjust the deferred rent revenue account for the portion of rent earned this
year CORRECT ANSWERS a & c only (Recording revenue next period when the cash
100% Solved Answers!!!
Which of the following best describe financing activities as they relate to the Statement
of Cash Flows? CORRECT ANSWERS They result primarily from securing money by
bank loans or selling stock to investors.
Which of the following statements does not correctly describe an adjustment to net
income when determining cash flows from operating activities using the indirect
method?
A. An increase in accounts receivable will be subtracted from net income.
B. Depreciation expense on a depreciable asset will be added to net income.
C. An increase in accrued liabilities will be subtracted from net income.
D. An increase in accounts payable will be added to net income CORRECT ANSWERS
An increase in accrued liabilities will be subtracted from net income
The primary difference in accounting for available-for-sale securities and accounting for
trading securities is: CORRECT ANSWERS Determining where the unrealized holding
gain or loss on investments is reported in the financial statements; in current net income
or in comprehensive income.
Which of the following will not be found in the bond indenture?
A. The coupon rate of interest
B. The face value of the bonds
C. The term of the bonds
D. The market rate of interest
E. Any covenants that govern the bond issue during its life. CORRECT ANSWERS The
market rate of interest
Which of the following statements is correct?
A. Any unrealized holding gain or loss on investments in trading securities is reported
on the income statement.
B. Any unrealized holding gain or loss on investments in available-for-sale securities is
reported on the income statement.
C. All unrealized gains and losses are reported on the income statement regardless of
the method used to account for the investment.
D. All unrealized holding gain and losses are reported on the balance sheet regardless
of the method used to account for the investment. CORRECT ANSWERS Any
unrealized holding gain or loss on investments in trading securities is reported on the
income statement.
Which of the following statements is not correct?
, A. The bond principal is the amount due at the maturity date of the bond.
B. The stated interest rate is used to determine the cash interest payments.
C. The bond principal is used to determine the cash interest payments.
D. The market interest rate is used to determine the cash interest payments. CORRECT
ANSWERS The market interest rate is used to determine the cash interest payments.
The market price of a bond issued at a discount is the present value of its principal
amount at the market (effective) rate of interest CORRECT ANSWERS Plus the present
value of all future interest payments at the market (effective) rate of interest.
Investment in the common stock of another company is held in an available for sale
portfolio. The market value has increased since the date of purchase. The entry to
reflect this change in value will: CORRECT ANSWERS Increase assets and increase
shareholder's equity
The appropriate entry when a company repurchases its stock will: CORRECT
ANSWERS decrease shareholder's equity and decrease cash
A firm reissues Treasury Stock for $20/share that was previously purchased for
$25/share. The entry to record the re-issuance will CORRECT ANSWERS increase
shareholder's equity and increase cash
A firm reissues bonds at premium. When it records the journal entry for the first interest
payment, CORRECT ANSWERS Interest expense will be LESS than the cash payment
CORRECT ANSWERS Cost of goods sold will be LOWER than under FIFO.
Which of the following statements is correct?
a. FIFO reports lower income amounts than LIFO when prices are rising.
b. LIFO reports a higher income amount than FIFO when prices are rising.
c. LIFO reports a higher income amount than FIFO when prices are decreasing.
d. LIFO reports the same amount of income as FIFO when prices are rising. CORRECT
ANSWERS LIFO reports a higher income amount than FIFO when prices are
decreasing.
Failure to record amortization expense on a patent during the current year CORRECT
ANSWERS would cause both net income for the year and total assets to be overstated
Which of the following errors would most likely lead to an understatement of income in
the current year?
a. Recording revenue next period when the cash is collected although it is earned in the
current year
b. Paying for an expense this year when the expense will be incurred and recorded next
year
c. Failure to adjust the deferred rent revenue account for the portion of rent earned this
year CORRECT ANSWERS a & c only (Recording revenue next period when the cash
