KU Accounting 200 Final Exam Questions and Answers Already Passed
Fundamental Accounting Equation - Answers Assets = Liabilities + Owners' Equity
What are the two components of stockholder's equity? - Answers Common Stock and Retained Earnings
Current Ratio - Answers Current Asset / Current Liabilities
Quick Ratio - Answers (Cash+Short Term Investment + Net Rec)/Current Liabilities
Debt Ratio - Answers Total Liabilities/Total Assets
Working Capital - Answers Current Assets - Current Liabilities
What does the current ratio show? - Answers If the company has assets to cover near-term liabilities
What does quick ratio show? - Answers How fast a company can pay off debts
What does working capital show? - Answers How much extra resources a company has
What does debt ratio measure? - Answers The long-term capability of the company
What is the group that creates accounting standards? - Answers Financial Accounting Standards Board
What gives the board of directors the right to change a company's CEO? - Answers The stockholders
elect the B of D and give the board the right to hire and fire executives
What 3 things do you need to recognize revenue according to the revenue recognition concept? -
Answers Implicit or explicit agreement, known price, substantial effort to complete transaction
What is the purpose of adjusting entries? - Answers To assign revenue and expenses to their correct
period. (There is no trigger event). Classified as whether to precede or follow the flow of cash
Accrual - Answers revenue or expense precedes the cash flow
Deferral - Answers revenue or expense follows the cash flow
What is the revenue concept? - Answers When and how much to record (implicit or explicit agreement,
known price, substantial effort to complete requirements to sell)
What is the matching concept? - Answers Expenses recorded in the same period that any revenue
associated with teh expenses is generated
When to recognize revenues and expenses under cash accounting? - Answers When there is an
exchange of cash
When to recognize revenues and expenses under accrual accounting - Answers When earned (economic
performance)
,When can you use reversing entries? - Answers When in the course of the adjusting process you
increase an asset or liability account
Where do we close dividends - Answers Retained Earnings
What is double taxation? - Answers Double taxation occurs only in corporations.
Corporation pays tax on its net income. Then, when it pays dividends, the shareholders are taxed on the
dividend income they receive. Therefore, the same money has been taxed twice, by the corporation and
the shareholder
How do you compute gross margin? - Answers Sales - COGS = GM
What type of account is COGS? - Answers Expense account
What is COGS? - Answers Cost of goods sold represents the price you paid for the goods that you sold. It
is an expense account and closed to income summary.
At the end of October, XYZ's bank statement arrives. When preparing the bank
reconciliation, it is discovered that there were deposits in transit of $2,000, an NSF check for
$200, outstanding checks for $1,400, and a bank service charge of $15.
If the ledger account
cash balance on 10/31 was $9,800, what should be the correct cash balance after reconciling
the cash account?
a. $9,800
b. $9,585
c. $10,400
d. $12,015
e. None of the above are correct. - Answers b) 9,585
, The deposits in transit ($2000) and outstanding checks ($1400) were represented on the company's
books but not the bank's. The NSF check ($200) and the service fee ($15) were
Which of the following descriptions accurately describes the concept of reliability?
a. A number can be objectively determined using a consistent technique.
b. Two different accountants using the same approach would determine different values
for the same asset.
c. Estimating ending inventory for quarterly reporting emphasizes reliability
over timeliness.
d. All numbers on financial statements are subjective. - Answers a) A number can be accurately
determined using a consistent technique
Which of the following accurately describes the concept of relevance?
a. A sole-proprietor's purchase of a car for personal use should be recorded on the
financial statements of the sole proprietor's business.
b. Accountants only record information that is useful for decision making and
determining the economic performance of the company.
c. A number can be objectively determined using a consistent technique.
d. All assets should be recorded at their historical cost. - Answers b) accountants only record information
that is useful for decision making and determining the economic performance of the company
Warehouse grants a 90-day warranty on all stereos. Historically, approximately 2.5%of all
sales prove to be defective. Sales in July are $100,600. In August, $2,900 of defective units
are returned for replacement. What entry must Jake's Warehouse make at the end of July
to record the warranty expense?
a. Debit Warranty Expense and credit Cash, $4,865
b. Debit Warranty Expense and credit Cash, $2,900
Fundamental Accounting Equation - Answers Assets = Liabilities + Owners' Equity
What are the two components of stockholder's equity? - Answers Common Stock and Retained Earnings
Current Ratio - Answers Current Asset / Current Liabilities
Quick Ratio - Answers (Cash+Short Term Investment + Net Rec)/Current Liabilities
Debt Ratio - Answers Total Liabilities/Total Assets
Working Capital - Answers Current Assets - Current Liabilities
What does the current ratio show? - Answers If the company has assets to cover near-term liabilities
What does quick ratio show? - Answers How fast a company can pay off debts
What does working capital show? - Answers How much extra resources a company has
What does debt ratio measure? - Answers The long-term capability of the company
What is the group that creates accounting standards? - Answers Financial Accounting Standards Board
What gives the board of directors the right to change a company's CEO? - Answers The stockholders
elect the B of D and give the board the right to hire and fire executives
What 3 things do you need to recognize revenue according to the revenue recognition concept? -
Answers Implicit or explicit agreement, known price, substantial effort to complete transaction
What is the purpose of adjusting entries? - Answers To assign revenue and expenses to their correct
period. (There is no trigger event). Classified as whether to precede or follow the flow of cash
Accrual - Answers revenue or expense precedes the cash flow
Deferral - Answers revenue or expense follows the cash flow
What is the revenue concept? - Answers When and how much to record (implicit or explicit agreement,
known price, substantial effort to complete requirements to sell)
What is the matching concept? - Answers Expenses recorded in the same period that any revenue
associated with teh expenses is generated
When to recognize revenues and expenses under cash accounting? - Answers When there is an
exchange of cash
When to recognize revenues and expenses under accrual accounting - Answers When earned (economic
performance)
,When can you use reversing entries? - Answers When in the course of the adjusting process you
increase an asset or liability account
Where do we close dividends - Answers Retained Earnings
What is double taxation? - Answers Double taxation occurs only in corporations.
Corporation pays tax on its net income. Then, when it pays dividends, the shareholders are taxed on the
dividend income they receive. Therefore, the same money has been taxed twice, by the corporation and
the shareholder
How do you compute gross margin? - Answers Sales - COGS = GM
What type of account is COGS? - Answers Expense account
What is COGS? - Answers Cost of goods sold represents the price you paid for the goods that you sold. It
is an expense account and closed to income summary.
At the end of October, XYZ's bank statement arrives. When preparing the bank
reconciliation, it is discovered that there were deposits in transit of $2,000, an NSF check for
$200, outstanding checks for $1,400, and a bank service charge of $15.
If the ledger account
cash balance on 10/31 was $9,800, what should be the correct cash balance after reconciling
the cash account?
a. $9,800
b. $9,585
c. $10,400
d. $12,015
e. None of the above are correct. - Answers b) 9,585
, The deposits in transit ($2000) and outstanding checks ($1400) were represented on the company's
books but not the bank's. The NSF check ($200) and the service fee ($15) were
Which of the following descriptions accurately describes the concept of reliability?
a. A number can be objectively determined using a consistent technique.
b. Two different accountants using the same approach would determine different values
for the same asset.
c. Estimating ending inventory for quarterly reporting emphasizes reliability
over timeliness.
d. All numbers on financial statements are subjective. - Answers a) A number can be accurately
determined using a consistent technique
Which of the following accurately describes the concept of relevance?
a. A sole-proprietor's purchase of a car for personal use should be recorded on the
financial statements of the sole proprietor's business.
b. Accountants only record information that is useful for decision making and
determining the economic performance of the company.
c. A number can be objectively determined using a consistent technique.
d. All assets should be recorded at their historical cost. - Answers b) accountants only record information
that is useful for decision making and determining the economic performance of the company
Warehouse grants a 90-day warranty on all stereos. Historically, approximately 2.5%of all
sales prove to be defective. Sales in July are $100,600. In August, $2,900 of defective units
are returned for replacement. What entry must Jake's Warehouse make at the end of July
to record the warranty expense?
a. Debit Warranty Expense and credit Cash, $4,865
b. Debit Warranty Expense and credit Cash, $2,900
