ACCT 212 FINAL EXAM

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1. When total expenses exceed total revenues, the result is a:
(Points : 6)
net profit.
dividend.
net earnings.
net loss.

Question 2. 2. The balance sheet lists: (Points : 6)

revenues and expenses.
assets, liabilities, revenues and expenses.
assets, liabilities and stockholders' equity.
the changes in retained earnings.

Question 3. 3. Which of the following is a limitation of

internal control? (Points : 6)
Safeguarding company assets
Operational efficiency
Employee collusion
Accurate and reliable accounting records

Question 4. 4. In a bank reconciliation, outstanding checks

would be added to the book balance. (Points : 6)
True
False

Question 5. 5. When preparing a bank reconciliation, which

of the following items should be subtracted from the bank

balance? (Points : 6)
Outstanding checks
Bank service charges
Deposits in transit
EFT cash receipts

Question 6. 6. Which account shows the amount of accounts

receivable that the business does NOT expect to collect?
(Points : 6)
Unearned Accounts Receivable
Allowance for Uncollectible Accounts
Sales Returns and Allowances
Uncollectible Accounts Expense

Question 7. 7. Net accounts receivable is calculated as:

(Points : 6)
accounts receivable plus allowance for uncollectible
accounts.
accounts receivable less allowance for uncollectible
accounts.
sales less sales returns and allowances.
accounts payable plus allowance for uncollectible
accounts.

Question 8. 8. Under the allowance method, the entry to

reinstate an account previously written off: (Points : 6)
decreases net income and increases total assets.
increases net income and increases total assets.
has no effect on net income or total assets.
increases total assets.

Question 9. 9. Under the aging-of-accounts-receivable

method, the balance in: (Points : 6)
Allowance for Uncollectible Accounts prior to
adjustment must be considered.

Accounts Receivable prior to adjustment must be

considered.
Allowance for Uncollectible Accounts prior to
adjustment is ignored.
Uncollectible-Account Expense prior to adjustment
must be considered.

Question 10. 10. The cost of inventory includes the: (Points :

6)
purchase price, delivery costs and sales
commissions.
purchases price, freight-in and sales taxes paid on
the purchase.
purchase price, advertising costs and insurance
while in transit.
purchase price, advertising costs and sales
commissions.

Question 11. 11. The choice of an inventory costing method

will affect: (Points : 6)
none of these.
the ending inventory and cost of goods sold.
the ending inventory.
the cost of goods sold.

Question 12. 12. The inventory costing method by which the

first costs into inventory are the first costs out to cost of
goods sold is the: (Points : 6)
average-cost method.
LIFO method.
FIFO method.
specific-identification method.

Question 13. 13. The economic resources of a business that

are expected to produce a benefit in the future are: (Points : 6)
liabilities.

owners' equity.
assets.
expenses.

Question 14. 14. Payables are classified as: (Points : 6)

increases in earnings.
liabilities.
assets.
decreases in earnings.

Question 15. 15. Revenues are: (Points : 6)

increases in liabilities resulting from delivering
goods or services to customers.
increases in retained earnings resulting from
delivering goods or services to customers.
decreases in retained earnings resulting from
delivering goods or services to customers.
decreases in assets resulting from delivering goods
or services to customers.

Question 16. 16. When cash is received by mail: (Points : 6)

the mailroom compares the deposit to the journal
entry made.
all of these occur.
the mailroom sends all customer checks to the
treasurer, who has the cashier deposit the money in the
bank.
the journal entries are made by the controller.

Question 17. 17. All of the following are intangible assets

EXCEPT: (Points : 6)
goodwill.
natural gas.
trademarks.
copyrights.

Question 18. 18. Allowance for Uncollectible Accounts is

classified as a(n): (Points : 6)
contra-expense account
expense account
contra-asset account
contra-revenue account

Question 19. 19. Payables are classified as: (Points : 6)

liabilities
increases in earnings
decreases in earnings
assets

Question 20. 20. The cost of the inventory that the business
has sold to customers is called: (Points : 6)
Gross Profit.
Purchases.
Cost of Goods Sold.
Inventory.

Question 21. 21. Land is purchased for $62,500. Back taxes

paid by the purchaser were $7,500; total costs to demolish an
existing building were $11,000; fencing costs were $12,500;
and lighting costs were $1,500. What is the cost of the land?
(Points : 6)
$95,000
$93,500
$81,000
$62,500

Question 22. 22. Which of the following would not be

included in the Machinery account? (Points : 6)
cost of transporting the machinery to its setup
location

cost of insurance while the machinery is in transit

cost of installing the machinery
cost of a maintenance insurance plan after the
machinery is up and running

Question 23. 23. The process of allocating a plant asset's cost

to expense over the period the asset is used is called: (Points :
6)
accumulation
depletion
amortization
depreciation

Question 24. 24. Philly-Delta Corporation issues 100 shares

of $1 par value common stock for $12 per share. This
transaction will include a: (Points : 6)
credit to Additional Paid-in Capital for $1,100
debit to Cash for $1,100
credit to Common Stock for $1,200
debit to Common Stock for $1,200

Question 25. 25. Whyte Clinic purchases land for $120,000

cash. The clinic assumes $1,500 in property taxes due on the
land. The title and attorney fees totaled $1,000. The clinic had
the land graded for $2,200. What amount does Whyte Clinic
record as the cost for the land? (Points : 6)
$120,000.
$122,500.
$122,200.
$124,700.

Question 26. 26. Burke Company purchases land for $85,000

cash. Burke assumes $2,500 in property taxes due on the land.
The title and attorney fees totaled $1,000. Burke has the land
graded for $2,200. They paid $10,000 for paving of a parking
lot. What amount does Burke record as the cost for the
land? (Points : 6)

$90,700.
$85,000.
$88,200.
$100,700.
1.

1. (TCO 1)To evaluate the financial operations and health of a business, ratio
anaylysis is used. 1) What do profitability ratios indicate about the company? (10
points) 2) Please provide 2 examples of profitability ratios and the related formula
and indicate how they can be used in the decision making process.

2. (TCO 4) Lindas Lampshades started business on Jan. 1, 20X1. They had

the following inventory transactions:
Journals - Jan. 20X1
Purchases
Supplier
Date Received
Quantity
Unit Cost
Amount
Donna
01/10/X1
110
12.00
1320.00
Thomas
01/15/X1
160
14.00
2240.00
Cindy
01/18/X1
150
15.00
2250.00
Sales
Customer
Date shipped Quantity
Sel. Price
Amount
Norilene
01/16/X1
200
25.00
5000.00
1.

1.
A.

Calculate the ending inventory, using the perpetual inventory method:

Using FIFO

B. Using LIFO
C. Using Average Cost
2. Prepare the following statement
Using
FIFO LIFO
Average Cost
Sales
Cost of Sales
Gross Profit
1.
3. (TCO 6) BagODonuts Company bought a used delivery truck on January 1,
2013, for $19,200. The van was expected to remain in service 4 years (30,000
miles). BagODonuts accountant estimated that the trucks residual value would be
$2,400 at the end of its useful life. The truck traveled 8,000 miles the first year,

8,500 miles the second year, 5,500 miles the third year, and 8,000 miles in the
fourth year.
1. Calculate depreciation expense for the truck for each year (2013-2016) using the:
a. Straight-line method.
b. Double-declining balance method.
c. Units of Production method.
(For units-of-production and double-declining balance, round to the nearest two
decimals after each step of the calculation.)
2. Which method best tracks the wear and tear on the van?
3. Which method would BagODonuts prefer to use for income tax purposes?
Explain in detail why BagODonuts prefers this method.

4. (TCO 7) ABC Inc. was incorporated on 1/15/16. Their corporate charter authorized
the following capital stock:
Preferred Stock: 7%, par value $100 per share, 100,000 shares.
Common Stock: $1 par value, 500,000 shares.
The following transactions occurred during the year:
1/19/16 Issued 100,000 shares of common stock for $17 cash per share.
1/31/16 Issued 3,000 shares of preferred stock for $115 cash per share.
11/1/16 Repurchased 30,000 shares of common stock for $22 cash per share.
12/1/16 Declared and paid a total dividend of $95,000.
Required:
1. Prepare the journal entry for each transaction listed above.
2. In your own words, explain the main differences between common and preferred
stock.