DeVry ACCT 504 Midterm Exam 2

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1. (TCOs A, B, and C) Which type of corporate information is not available to
investors? (Points : 3)
Dividend history
Forecast of cash needs for the upcoming year
Cash provided by investing activities
Beginning cash balance

2. (TCO C) Debt securities sold to investors that must be repaid at a particular date
some years in the future are called(Points : 3)
accounts payable.
notes receivable.
taxes payable.
bonds payable.

3. (TCO C) Which activities involve putting the resources of the business into action
to generate a profit? (Points : 3)
Delivering
Financing
Investing
Operating

4. (TCO A) The cost of assets consumed or services used is also known as (Points :
3)
a revenue.
an expense.
a liability.
an asset.

5. (TCO C) Edwards Company recorded the following cash transactions for the
year.Paid $45,000 for salaries
Paid $20,000 to purchase office equipment
Paid $5,000 for utilities
Paid $2,000 in dividends
Collected $75,000 from customersWhat was Edwards net cash provided by
operating activities? (Points : 3)
$25,000
$5,000
$30,000
$23,000

6. (TCO A) A current asset is (Points : 3)

the last asset purchased by a business.
an asset which is currently being used to produce a product or service.
usually found as a separate classification in the income statement.
expected to be converted to cash or used in the business within a relatively short
period of time.

7. (TCO A) An intangible asset (Points : 3)

may have the capacity to earn revenue for its owner.
is worthless because it has no physical substance.
is converted into a tangible asset during the operating cycle.
cannot be reported on the balance sheet because it lacks physical substance.

8. (TCO A) The following are selected account balances on December 31, 2010.Land (location of the corporations office building): $50,000
-Land (held for future use): 75,000
-Corporate Office Building: 300,000
-Inventory: 100,000
-Equipment: 225,000
-Office Furniture: 50,000
-Accumulated Depreciation: 150,000What is the total NET amount of property,
plant, and equipment that will appear on the balance sheet? (Points : 3)
$650,000
$550,000
$475,000
$800,000

9. (TCO B) For 2010, Mossland Corporation reported net income of $28,000; net
sales $400,000; and average share outstanding 6,000. There were no preferred
stock dividends. What was the 2010 earnings per share? (Points : 3)
$4.67
$0.25
$66.67
$14.86

10. (TCO B) Morten Corporation had beginning retained earnings of $764,000 and
ending retained earnings of $833,000. During the year they issued common stock
totaling $47,000. There were no dividends issued. What was their net income for
the year? (Points : 3)
$69,000
$22,000
$116,000
$91,000

11. (TCO D) On March 1, 2010, Dillon Company hires a new employee who will start
the work on March 6. The employee will be paid on the last day of each month.
Should a journal entry be made on March 6? Why, or why not?(Points : 3)
Yes, the company is now obligated to pay the employee, thus that event must be
recorded on March 6.
No, hiring an employee is an important event; however, it is not an economic event
that should be recorded on March 6.
Yes, failure to record the event on March 6 would cause the financial statements to
be misleading.
No, the journal entry should be made on March 1, which is the date of hiring.

12. (TCO D) The left side of an account is (Points : 3)

blank.
a description of the account.
the debit side.
the balance of the account.

13. (TCO D) The classification and normal balance of the dividend account is
(Points : 3)
a revenue, with a credit balance.
an expense, with a debit balance.
a liability, with a credit balance.
under stockholders equity, with a debit balance.

14. (TCO D) A debit is not the normal balance for which account listed below?
(Points : 3)
Dividends
Cash
Accounts receivable
Service revenue

15. (TCO D) Which pair of accounts follows the rules of debit and credit in relation to
increases and decreases in the same manner? (Points : 3)
Dividends payable and rent expense
Repair expense and notes payable
Prepaid insurance and advertising expense
Service revenues and equipment

16. (TCO E) An accounting time period that is 1 year in length is called (Points : 3)
a fiscal year.
an interim period.
the time period assumption.
a reporting period.

17. (TCO E) In a service-type business, revenue is considered earned (Points : 3)

at the end of the month.
at the end of the year.
when the service is performed.
when cash is received.

18. (TCO E) Expenses sometimes make their contribution to revenue in a different

period than when the expense is paid. When wages are incurred in one period and
paid in the next period, this often leads to which account appearing on the balance
sheet at the end of the first period? (Points : 3)
Due from employees
Due to employer
Wages payable
Wages expense

19. (TCO E) The following is selected information from J Corporation for the fiscal
year ending October 31, 2010.-Cash received from customers: $75,000
-Revenue earned: 87,500
-Cash paid for expenses: 42,500

-Expenses incurred: 50,000Based on the accrual basis of accounting, what is J

Corporations net income for the year ending October 31, 2007?(Points : 3)
$28,500
$33,500
$20,500
$37,500

20. (TCO E) Adjusting entries are made to ensure that (Points : 3)

expenses are recognized in the period in which they are incurred.
revenues are recorded in the period in which they are earned.
balance sheet and income statement accounts have correct balances at the end of
an accounting period.
All of the above

21. (TCOs A and B) A perpetual inventory system would most likely be used by a(n)
(Points : 3)
automobile dealership.
hardware store.
drugstore.
convenience store.

22. (TCO B) Hunter Company purchased merchandise inventory with an invoice

price of $3,000 and credit terms of 2/10, n/30. What is the net cost of the goods if
Hunter Company pays within the discount period? (Points : 3)
$2,940
$2,760
$2,700
$3,000

23. (TCOs A and B) Jakes Market recorded the following events involving a recent
purchase of merchandise.-Received goods for $20,000, terms 2/10, n/30.
-Returned $400 of the shipment for credit.
-Paid $100 freight on the shipment.
-Paid the invoice within the discount period.As a result of these events, the
companys merchandise inventory (Points : 3)
increased by $19,208.
increased by $19,700.
increased by $19,306.
increased by $19,308.

24. (TCO A) If goods in transit are shipped FOB destination (Points : 3)

the seller has legal title to the goods until they are delivered.
the buyer has legal title to the goods until they are delivered.
the transportation company has legal title to the goods while the goods are in
transit.
no one has legal title to the goods until they are delivered.

25. (TCO A) When a perpetual inventory system is used, which of the following is a
purpose of taking a physical inventory? (Points : 3)
To check the accuracy of the perpetual inventory records
To determine cost of goods sold for the accounting period
To compute inventory ratios
All are a purpose of taking a physical inventory when a perpetual inventory system
is used.

26. (TCO A) Of the following companies, which one would not likely employ the
specific identification method for inventory costing? (Points : 3)
Music store specializing in piano sales
Custom jewelry store
Antique shop
Hardware store

27. (TCO A) Which of the following statements is true regarding inventory cost flow
assumptions? (Points : 3)
A company may use more than one cost-flow assumption concurrently for different
product lines.
A company must comply with the method specified by industry standards.
A company must use the same method for domestic and foreign operations.
A company may never change its inventory costing method once it has chosen a
method.

28. (TCO A) In a period of rising prices, which of the following inventory methods
generally results in the lowest net income figure? (Points : 3)
Average cost method
LIFO method
FIFO method
Need more information to answer

29. (TCO B) The figure for which of the following items is determined at a different
time under the perpetual inventory method than under the periodic method? (Points
: 3)
Sales
Cost of goods sold
Purchases
Accounts receivable

30. (TCO B) The primary source of revenue for a retailer is (Points : 3)

investment income.
service revenue.
the sale of merchandise.
the sale of plant assets the company owns.

(TCO D) Describe the process of preparing a trial balance. What is the purpose of
preparing a trial balance? If a trial balance does not balance, identify what might be
the reasons why it does not balance. If the trial balance does balance, does that
ensure that the ledger accounts are correct? Explain.

DeVry ACCT 504 Midterm Exam 2

Click on the link below for the solution:

https://devryfinalexams.com/products/acct-504midterm-exam-2/