CSUF ACCT 201A (Hoffman) Final
Exam QUESTIONS &
ANSWERS(RATED A+)
Generally accepted accounting principles are: - ANSWERa set of standards and
rules that are recognized as a general guide for financial reporting.
Which is an advantage of corporations relative to partnerships and sole
proprietorships? - ANSWERReduced legal liability for investors.
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? - ANSWER$113,000
(total 309,000 - ((8,000*11)+(remaining 9,000*12))
To record the sale of goods for cash in a perpetual inventory system: - ANSWERtwo
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.
Which is not one of the three primary business activities? - ANSWERAdvertising.
A trial balance: - ANSWERwill not balance if a correct journal entry is posted twice.
Which accounts normally have debit balances? - ANSWERAssets, dividends, and
expenses.
Which account will have a zero balance after a company has journalized and posted
closing entries? - ANSWERService Revenue.
Adjustments for prepaid expenses: - ANSWERdecrease assets and increase
expenses.
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: -
ANSWERDepreciation Expense dr 1,000. Accumulated Depreciation-Equipment cr
1,000
A ledger: - ANSWERis a record of all accounts maintained by a company and their
amounts.
Net income will result during a time period when: - ANSWERrevenues exceed
expenses.
, 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: - ANSWER$75,250
40,000+ 150,000+ 240,000 = 430,000
40,000 units
430,000/40,000 = 10.75
10.75 * 7,000
The element of a corporation's annual report that describes the corporation's
accounting methods is: - ANSWERnotes to the financial statements.
Gross profit will result if: - ANSWERnet sales are greater than cost of goods sold.
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. - ANSWER$215,000
(180,000+ 35,000)
The lower-of-cost-or-net realizable value rule for inventory is an example of the
application of: - ANSWERthe conservatism convention.
All of the following are required steps in the accounting cycle except: -
ANSWERprepare financial statements from the unadjusted trial balance.
Which statement presents information as of a specific point in time? -
ANSWERBalance sheet.
The following ratios are available for Reilly Inc. and O'Hare Inc.
Reily: Current Ratio 2:1 | Debt to Assets Ratio 75% | EPS $3.50
O'Hare: Curent Ratio 1.5:1 | Debt to Assets Ratio 40% | EPS $2.75
Compared to O'Hare Inc., Reilly Inc. has: - ANSWERhigher liquidity and lower
solvency, but profitability cannot be compared based on information provided.
In a perpetual inventory system: - ANSWERFIFO cost of goods sold will be the same
as in a periodic inventory system.
What is the periodicity assumption? - ANSWERThe economic life of a business can
be divided into artificial time periods.
As of December 31, 2022, Rockford Corporation has assets of $3,500 and
stockholders' equity of $1,500. What are the liabilities for Rockford as of December
31, 2022? - ANSWER$2,000
Exam QUESTIONS &
ANSWERS(RATED A+)
Generally accepted accounting principles are: - ANSWERa set of standards and
rules that are recognized as a general guide for financial reporting.
Which is an advantage of corporations relative to partnerships and sole
proprietorships? - ANSWERReduced legal liability for investors.
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? - ANSWER$113,000
(total 309,000 - ((8,000*11)+(remaining 9,000*12))
To record the sale of goods for cash in a perpetual inventory system: - ANSWERtwo
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.
Which is not one of the three primary business activities? - ANSWERAdvertising.
A trial balance: - ANSWERwill not balance if a correct journal entry is posted twice.
Which accounts normally have debit balances? - ANSWERAssets, dividends, and
expenses.
Which account will have a zero balance after a company has journalized and posted
closing entries? - ANSWERService Revenue.
Adjustments for prepaid expenses: - ANSWERdecrease assets and increase
expenses.
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: -
ANSWERDepreciation Expense dr 1,000. Accumulated Depreciation-Equipment cr
1,000
A ledger: - ANSWERis a record of all accounts maintained by a company and their
amounts.
Net income will result during a time period when: - ANSWERrevenues exceed
expenses.
, 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: - ANSWER$75,250
40,000+ 150,000+ 240,000 = 430,000
40,000 units
430,000/40,000 = 10.75
10.75 * 7,000
The element of a corporation's annual report that describes the corporation's
accounting methods is: - ANSWERnotes to the financial statements.
Gross profit will result if: - ANSWERnet sales are greater than cost of goods sold.
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. - ANSWER$215,000
(180,000+ 35,000)
The lower-of-cost-or-net realizable value rule for inventory is an example of the
application of: - ANSWERthe conservatism convention.
All of the following are required steps in the accounting cycle except: -
ANSWERprepare financial statements from the unadjusted trial balance.
Which statement presents information as of a specific point in time? -
ANSWERBalance sheet.
The following ratios are available for Reilly Inc. and O'Hare Inc.
Reily: Current Ratio 2:1 | Debt to Assets Ratio 75% | EPS $3.50
O'Hare: Curent Ratio 1.5:1 | Debt to Assets Ratio 40% | EPS $2.75
Compared to O'Hare Inc., Reilly Inc. has: - ANSWERhigher liquidity and lower
solvency, but profitability cannot be compared based on information provided.
In a perpetual inventory system: - ANSWERFIFO cost of goods sold will be the same
as in a periodic inventory system.
What is the periodicity assumption? - ANSWERThe economic life of a business can
be divided into artificial time periods.
As of December 31, 2022, Rockford Corporation has assets of $3,500 and
stockholders' equity of $1,500. What are the liabilities for Rockford as of December
31, 2022? - ANSWER$2,000
