ACCOUNTING 102 FINAL EXAM
QUESTIONS WITH COMPLETE
ANSWERS
What is Treasury stock - ANSWER-Issued stock that has been bought back by the
corporation
Recording Treasury stock - ANSWER-Debit treasury stock (shares x per share) credit
cash
Recording the purchase of Treasury Stock - ANSWER-Debt cash, credit treasury (the
original price it was bought), credit Paid in capital
The sale of Treasury stock - ANSWER-Increase total assets and stockholder equity
Stock Split Results in - ANSWER-In the reduction of the Par and stated value, has no a
affect on PIC, RE, and stockholder equity
What's prior period Adjustments - ANSWER-correction of an error in a previously issued
Financial statement the correction is made directly to retained Earnings
Prior period adjustment entry - ANSWER-debt retained Earnings, credit the account
where the mistake was made
Stock dividend - ANSWER-pro rata distribution to stockh
Recording stock dividend declaration - ANSWER-debt stock dividend (issue shared x
par value), credit Common stock dividend distributed, and paid in capital
Stock dividend distribution entry - ANSWER-debt common stock dividend distribution,
credit common stock
Stock dividends change what - ANSWER-the composition of stockholders equity
Record Bonds at face value - ANSWER-Debt cash, credit bonds payable
Interest on bonds - ANSWER-(Price of bond x % / 2 ) debt interest exp, credit cash
Accrual of bond interest - ANSWER-Debt Interest exp, credit interest payable
Record Bonds at discount - ANSWER-debt cash and the discount, credit bonds payable
Interest on bond discount - ANSWER-(Face of bond x % interest rate/ 2 )
, Record bond at premium - ANSWER-Debt cash, credit premium and bond payable
What a statement of cash flow - ANSWER-Reports cash receipts, cash payment and
net changes resulting from operating investing and financial activities
Statements that are together - ANSWER-Income statement, statement of cash flow,
owners equity, balance sheet
Key to operating activity - ANSWER-Non-cash changes: Depreciation exp + Patent Amo
exp+ Depletion exp +
Gain/Loss: Loss on sale of plant asset + Gain on sale of plant assets _
change in current asset and liabilities: Increase in current asset -, decrease in current
liabilities +
What is Going concern - ANSWER-states that business should be treated keep
operating long enough accomplish their goal
Free cash flow - ANSWER-Cash provided by operating activities and is intended to
indicate the cash generating
Capability of a company
Free cash flow calculations - ANSWER-Cash flow = cash provided by operating
activities - capital expenditures - cash dividend
Average period of collection - ANSWER-Average receivable / 365
Current ratio - ANSWER-Current assets / current liabilities
Time interest earned - ANSWER-Income before taxes + interest expense/ interest
expense
Profit margin - ANSWER-Net income / net sales
Return on stockholders equity - ANSWER-Net income/ average common stockholder
equity
The general rule of AR turnover - ANSWER-The average collection period shouldn't
greatly exceed the credit term period
Intracompany - ANSWER-Comparison within a company
Intracompany - ANSWER-Comparison with another company
QUESTIONS WITH COMPLETE
ANSWERS
What is Treasury stock - ANSWER-Issued stock that has been bought back by the
corporation
Recording Treasury stock - ANSWER-Debit treasury stock (shares x per share) credit
cash
Recording the purchase of Treasury Stock - ANSWER-Debt cash, credit treasury (the
original price it was bought), credit Paid in capital
The sale of Treasury stock - ANSWER-Increase total assets and stockholder equity
Stock Split Results in - ANSWER-In the reduction of the Par and stated value, has no a
affect on PIC, RE, and stockholder equity
What's prior period Adjustments - ANSWER-correction of an error in a previously issued
Financial statement the correction is made directly to retained Earnings
Prior period adjustment entry - ANSWER-debt retained Earnings, credit the account
where the mistake was made
Stock dividend - ANSWER-pro rata distribution to stockh
Recording stock dividend declaration - ANSWER-debt stock dividend (issue shared x
par value), credit Common stock dividend distributed, and paid in capital
Stock dividend distribution entry - ANSWER-debt common stock dividend distribution,
credit common stock
Stock dividends change what - ANSWER-the composition of stockholders equity
Record Bonds at face value - ANSWER-Debt cash, credit bonds payable
Interest on bonds - ANSWER-(Price of bond x % / 2 ) debt interest exp, credit cash
Accrual of bond interest - ANSWER-Debt Interest exp, credit interest payable
Record Bonds at discount - ANSWER-debt cash and the discount, credit bonds payable
Interest on bond discount - ANSWER-(Face of bond x % interest rate/ 2 )
, Record bond at premium - ANSWER-Debt cash, credit premium and bond payable
What a statement of cash flow - ANSWER-Reports cash receipts, cash payment and
net changes resulting from operating investing and financial activities
Statements that are together - ANSWER-Income statement, statement of cash flow,
owners equity, balance sheet
Key to operating activity - ANSWER-Non-cash changes: Depreciation exp + Patent Amo
exp+ Depletion exp +
Gain/Loss: Loss on sale of plant asset + Gain on sale of plant assets _
change in current asset and liabilities: Increase in current asset -, decrease in current
liabilities +
What is Going concern - ANSWER-states that business should be treated keep
operating long enough accomplish their goal
Free cash flow - ANSWER-Cash provided by operating activities and is intended to
indicate the cash generating
Capability of a company
Free cash flow calculations - ANSWER-Cash flow = cash provided by operating
activities - capital expenditures - cash dividend
Average period of collection - ANSWER-Average receivable / 365
Current ratio - ANSWER-Current assets / current liabilities
Time interest earned - ANSWER-Income before taxes + interest expense/ interest
expense
Profit margin - ANSWER-Net income / net sales
Return on stockholders equity - ANSWER-Net income/ average common stockholder
equity
The general rule of AR turnover - ANSWER-The average collection period shouldn't
greatly exceed the credit term period
Intracompany - ANSWER-Comparison within a company
Intracompany - ANSWER-Comparison with another company
