CSUF ACCT 201A
(HOFFMAN) FINAL EXAM
✓ Generally accepted accounting principles are: - CORRECT ANSWER -a 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? - CORRECT ANSWER -Reduced 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? - CORRECT 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: - 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.
✓ Which is not one of the three primary business activities? - CORRECT ANSWER -
Advertising.
✓ A trial balance: - CORRECT ANSWER -will not balance if a correct journal entry is
posted twice.
✓ Which accounts normally have debit balances? - CORRECT ANSWER -Assets,
dividends, and expenses.
,✓ Which account will have a zero balance after a company has journalized and posted
closing entries? - CORRECT ANSWER -Service Revenue.
✓ Adjustments for prepaid expenses: - CORRECT ANSWER -decrease 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: -
CORRECT ANSWER -Depreciation Expense dr 1,000. Accumulated Depreciation-
Equipment cr 1,000
✓ A ledger: - CORRECT ANSWER -is a record of all accounts maintained by a company
and their amounts.
✓ Net income will result during a time period when: - CORRECT ANSWER -revenues
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: - CORRECT 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: - CORRECT ANSWER -notes to the financial statements.
✓ Gross profit will result if: - CORRECT ANSWER -net 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. - CORRECT 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: - CORRECT ANSWER -the conservatism convention.
✓ All of the following are required steps in the accounting cycle except: - CORRECT
ANSWER -prepare financial statements from the unadjusted trial balance.
✓ Which statement presents information as of a specific point in time? - CORRECT
ANSWER -Balance 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: - CORRECT ANSWER -higher liquidity and
lower solvency, but profitability cannot be compared based on information provided.
✓ In a perpetual inventory system: - CORRECT ANSWER -FIFO cost of goods sold will
be the same as in a periodic inventory system.
✓ What is the periodicity assumption? - CORRECT ANSWER -The economic life of a
business can be divided into artificial time periods.
(HOFFMAN) FINAL EXAM
✓ Generally accepted accounting principles are: - CORRECT ANSWER -a 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? - CORRECT ANSWER -Reduced 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? - CORRECT 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: - 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.
✓ Which is not one of the three primary business activities? - CORRECT ANSWER -
Advertising.
✓ A trial balance: - CORRECT ANSWER -will not balance if a correct journal entry is
posted twice.
✓ Which accounts normally have debit balances? - CORRECT ANSWER -Assets,
dividends, and expenses.
,✓ Which account will have a zero balance after a company has journalized and posted
closing entries? - CORRECT ANSWER -Service Revenue.
✓ Adjustments for prepaid expenses: - CORRECT ANSWER -decrease 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: -
CORRECT ANSWER -Depreciation Expense dr 1,000. Accumulated Depreciation-
Equipment cr 1,000
✓ A ledger: - CORRECT ANSWER -is a record of all accounts maintained by a company
and their amounts.
✓ Net income will result during a time period when: - CORRECT ANSWER -revenues
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: - CORRECT 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: - CORRECT ANSWER -notes to the financial statements.
✓ Gross profit will result if: - CORRECT ANSWER -net 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. - CORRECT 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: - CORRECT ANSWER -the conservatism convention.
✓ All of the following are required steps in the accounting cycle except: - CORRECT
ANSWER -prepare financial statements from the unadjusted trial balance.
✓ Which statement presents information as of a specific point in time? - CORRECT
ANSWER -Balance 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: - CORRECT ANSWER -higher liquidity and
lower solvency, but profitability cannot be compared based on information provided.
✓ In a perpetual inventory system: - CORRECT ANSWER -FIFO cost of goods sold will
be the same as in a periodic inventory system.
✓ What is the periodicity assumption? - CORRECT ANSWER -The economic life of a
business can be divided into artificial time periods.
