CSUF ACCT 201A (HOFFMAN) FINAL
EXAM ALL QUESTIONS AND CORRECT
ANSWERS (DETAILED EXPLANATIONS) |
ALREADY GRADED A+ | LATEST EXAM |
VERIFIED ANSWERS | JUST RELEASED
1. Generally accepted accounting principles are:
Correct Answer: A set of standards and rules that are
recognized as a general guide for financial reporting.
Rationale: Generally accepted accounting principles (GAAP)
provide the framework accountants use to prepare consistent,
comparable, and reliable financial statements. They establish
principles and standards for recognizing, measuring,
presenting, and disclosing financial information.
2. Which is an advantage of corporations relative to
partnerships and sole proprietorships?
Correct Answer: Reduced legal liability for investors.
,Rationale: A major advantage of the corporate form of
business is limited liability. Generally, shareholders are
financially responsible only up to the amount they have
invested in the corporation, while the corporation itself is a
separate legal entity responsible for its obligations.
3. Kam Company has the following units and costs:
• Inventory, January 1: 8,000 units at $11
• Purchase, June 19: 13,000 units at $12
• Purchase, November 8: 5,000 units at $13
If 9,000 units are on hand at December 31, what is the cost of
ending inventory under FIFO?
Correct Answer: $113,000
Rationale: Under FIFO (first-in, first-out), the oldest
inventory costs are assumed to be sold first. Therefore, the
9,000 units remaining consist of the newest 9,000 units: 5,000
units at $13 and 4,000 units at $12. The calculation is (5,000 ×
$13) + (4,000 × $12) = $65,000 + $48,000 = $113,000.
,4. To record the sale of goods for cash in a perpetual
inventory system:
Correct Answer: 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.
Rationale: A perpetual inventory system continuously
updates inventory records. Therefore, a cash sale requires one
entry to recognize the sale and cash received and a second
entry to recognize cost of goods sold and remove the
merchandise cost from Inventory.
5. Which is not one of the three primary business
activities?
Correct Answer: Advertising.
Rationale: The three primary business activities are
financing, investing, and operating. Advertising is an
operating expense or activity, but it is not itself one of the
three broad categories of business activities.
, 6. A trial balance:
Correct Answer: Will not balance if a correct journal entry is
posted twice.
Rationale: This statement requires careful interpretation. If an
entire correct journal entry is posted twice, both debit and
credit totals increase by the same amount, so the trial balance
will still balance, although the accounts will be overstated.
Therefore, the supplied answer appears to be incorrect. A trial
balance detects unequal debits and credits, not every posting
error.
7. Which accounts normally have debit balances?
Correct Answer: Assets, dividends, and expenses.
Rationale: Assets, expenses, and dividends normally carry
debit balances. Debits increase these accounts, while credits
decrease them. Conversely, liabilities, common stock, retained
earnings, and revenues normally have credit balances.
EXAM ALL QUESTIONS AND CORRECT
ANSWERS (DETAILED EXPLANATIONS) |
ALREADY GRADED A+ | LATEST EXAM |
VERIFIED ANSWERS | JUST RELEASED
1. Generally accepted accounting principles are:
Correct Answer: A set of standards and rules that are
recognized as a general guide for financial reporting.
Rationale: Generally accepted accounting principles (GAAP)
provide the framework accountants use to prepare consistent,
comparable, and reliable financial statements. They establish
principles and standards for recognizing, measuring,
presenting, and disclosing financial information.
2. Which is an advantage of corporations relative to
partnerships and sole proprietorships?
Correct Answer: Reduced legal liability for investors.
,Rationale: A major advantage of the corporate form of
business is limited liability. Generally, shareholders are
financially responsible only up to the amount they have
invested in the corporation, while the corporation itself is a
separate legal entity responsible for its obligations.
3. Kam Company has the following units and costs:
• Inventory, January 1: 8,000 units at $11
• Purchase, June 19: 13,000 units at $12
• Purchase, November 8: 5,000 units at $13
If 9,000 units are on hand at December 31, what is the cost of
ending inventory under FIFO?
Correct Answer: $113,000
Rationale: Under FIFO (first-in, first-out), the oldest
inventory costs are assumed to be sold first. Therefore, the
9,000 units remaining consist of the newest 9,000 units: 5,000
units at $13 and 4,000 units at $12. The calculation is (5,000 ×
$13) + (4,000 × $12) = $65,000 + $48,000 = $113,000.
,4. To record the sale of goods for cash in a perpetual
inventory system:
Correct Answer: 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.
Rationale: A perpetual inventory system continuously
updates inventory records. Therefore, a cash sale requires one
entry to recognize the sale and cash received and a second
entry to recognize cost of goods sold and remove the
merchandise cost from Inventory.
5. Which is not one of the three primary business
activities?
Correct Answer: Advertising.
Rationale: The three primary business activities are
financing, investing, and operating. Advertising is an
operating expense or activity, but it is not itself one of the
three broad categories of business activities.
, 6. A trial balance:
Correct Answer: Will not balance if a correct journal entry is
posted twice.
Rationale: This statement requires careful interpretation. If an
entire correct journal entry is posted twice, both debit and
credit totals increase by the same amount, so the trial balance
will still balance, although the accounts will be overstated.
Therefore, the supplied answer appears to be incorrect. A trial
balance detects unequal debits and credits, not every posting
error.
7. Which accounts normally have debit balances?
Correct Answer: Assets, dividends, and expenses.
Rationale: Assets, expenses, and dividends normally carry
debit balances. Debits increase these accounts, while credits
decrease them. Conversely, liabilities, common stock, retained
earnings, and revenues normally have credit balances.
