ACC 290 Final Exam Answers

1. The best definition of assets is the a. Resources belonging to a company that have future benefit to the company. 2. Which of the following is not a liability? a. Accounts Receivable 3. Which of the following financial statements is divided into major categories of operating, investing, and financing activities? a. The statement of cash flows 4. Ending retained earnings for a period is equal to beginning a. Retained earnings + Net income – Dividends. 5. Which of the following is not an advantage of the corporate form of business organization? a. Favorable tax treatment 6. An advantage of the corporate form of business is that a. its ownership is easily transferable via the sale of shares of stock. 7. A small neighborhood barber shop that is operated by its owner would likely be organized as a a. proprietorship. 8. If services are rendered for cash, then a. assets will increase. 9. A revenue generally a. increases assets and stockholders’ equity. 10. A revenue account a. is increased by credits. 11. Which accounts normally have debit balances? a. Assets, expenses, and dividends 12. In recording an accounting transaction in a double-entry system a. the amount of the debits must equal the amount of the credits. 13. The usual sequence of steps in the transaction recording process is a. analyze, journalize, post to the ledger. 14. Under the expense recognition principle expenses are recognized when a. they contribute to the production of revenue. 15. The revenue recognition principle dictates that revenue should be recognized in the accounting records: a. when the performance obligation is satisfied. 16. Merchandising companies that sell to retailers are known as a. wholesalers. 17. Gross profit equals the difference between a. sales revenue and cost of goods sold. 18. Net income will result if gross profit exceeds a. operating expenses. 19. Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account? a. Inventory 20. Financial information is presented below: Operating Expenses - $31000, Sales Revenue - $, Cost of good sold - $: The profit margin ratio would be a. 0.16. 21. Financial information is presented below: Operating expense $24000, Sales returns and allowances $6000, Sales Discounts $4000, Sales revenue $, COGS $92000: The gross profit rate would be: a. 0.36. 22. Financial information is presented below: Operating expense $63000, Sales returns and allowances $4000, Sales Discounts $7000, Sales revenue $, COGS $88000: The gross profit would be: a. $91000. 23. The LIFO inventory method assumes that the cost of the latest units purchased are a. the first to be allocated to cost of goods sold. 24. Which of the following statements is correct with respect to inventories? a. Under FIFO, the ending inventory is based on the latest units purchased. 25. All of the following are examples of internal control procedures except a. customer satisfaction surveys. 26. Each of the following is a feature of internal control except a. an extensive marketing plan. 27. For which of the following errors should the appropriate amount be subtracted from the balance per books on a bank reconciliation? a. Check written for $93, but recorded by the company as $39. 28. A check written by the company for $117 is incorrectly recorded by a company as $171. On the bank reconciliation, the $54 error should be a. added to the balance per books. 29. The following information was available for Concord Corporation at December 31, 2017: beginning inventory $95000; ending inventory $; cost of goods sold $; and sales $. Concord inventory turnover ratio (rounded) in 2017 was a. 5.6 times. 30. The following information was available for Bramble Corp. at December 31, 2017: beginning inventory $91000; ending inventory $; cost of goods sold $; and sales $. Bramble days in inventory (rounded) in 2017 was (Round intermediate calculation to 1 decimal place, e.g. 1.2.) a. 64.0 days.