Additional Practice For ACCT 2010 Final Exam Professor Shih-Jen Kathy Ho Fall 2016 Matching (1 Point Each)

(ACCT2010)[2016](f)final~=kmo3j7^_50954.pdf downloaded by twbfung from http://petergao.net/ustpastpaper/down.php?course=ACCT2010&id=6 at 2017-12-05 02:29:46. Academic use within HKUST only.
Additional Practice for ACCT 2010 Final Exam

Professor Shih-Jen Kathy Ho
Fall 2016
Matching (1 point each)
Several accounts from the financial records of Wynn Linders, Inc. are listed. Indicate its normal balance
and the debit/credit rules for increasing the account. (Choices may be used more than once.)
a. Debit
b. Credit
____ 1. Income Tax Expense
____ 2. Accounts Payable
____ 3. Retained Earnings
____ 4. Service Revenues
From the list of accounts, determine whether the account is a temporary or permanent account. (Choices
may be used more than once.)
a. temporary account
b. permanent account
____ 5. Rent Revenue
____ 6. Depreciation Expense
____ 7. Prepaid Insurance
____ 8. Salaries Payable
Use the following codes to indicate how, if at all, each transaction or event would be reported on a
statement of cash flows prepared using the indirect method.
a. Operating activity--add to net income
b. Operating activity--deduct from net income
c. Inflow from investing activity
d. Outflow from investing activity
e. Inflow from financing activity
f. Outflow from financing activity
____ 9. Purchased equipment for cash.
____ 10. Issued long-term bonds.
Multiple Choice
____ 1. Which of the following terms best describes a distribution of the net income of a corporation to its
owners?
a. Retained Earnings
b. Dividends
c. Liquidation of assets
d. Monetary Unit
Peck Company
The Peck Company reported the following items on its financial statements for the year ending December
31, 2010.
Sales $1,560 Cost of Goods Sold $1,400

Payroll Expense 40 Other Expenses 30
Dividends 10 Income Tax Expense 25
____ 2. Refer to Peck Company. How much will be reported as Retained Earnings on its Balance Sheet at
December 31, 2010, if this is the first year (beginning R/E = 0) of operations?
a. $45
b. $55
c. $85
d. $160
____ 3. Which one of the following financial statements reports an entity's financial position at a specific date?
a. Balance Sheet
b. Statement of Retained Earnings
c. Income Statement
d. Both the Income Statement and the Balance Sheet
____ 4. "Matching Principle" is best described as:
a. The principle that a revenue should be recorded when a resource has been earned.
b. An increase in resources resulting from the sale of goods or the provision of services.
c. The principle that expenses should be recorded in the period resources are used to generate
revenues.
d. An increase in the financing activities.
____ 5. A list of all active accounts and their balances at a particular date, which is used to prove the equality of
debits and credits, is a
a. Chart of accounts
b. General ledger
c. Journal
d. Trial Balance
____ 6. A credit means
a. the event had a favorable impact on the entity's financial statements.
b. the event had an unfavorable impact on the entity's financial statements.
c. the event had an effect on the right side of the T-account.
d. the event had the effect of increasing the account balance.
____ 7. Which of the following accounts is decreased by a debit entry?

a. Unearned Revenue
b. Prepaid Insurance
c. Cash
d. Insurance Expense
The following information on Hesson Properties, Inc. relates to questions 8-13.
Hesson Properties, Inc.

Transactions for Hesson Properties are provided below.
Nov. 1 Hesson purchases two new maintenance carts on credit at $375 each. The carts
are added to Hesson's property, plant, and equipment records. Payment is due
in 30 days.
Nov. 8 Hesson accepts $75 of advance payments from customers for services to be
provided in December.
Nov. 15 Hesson receives the utility bill for $150. Payment is due in 30 days.
Nov. 20 Customers are billed $750 by Hesson for property services.

Payment is due from the customers in 30 days.
Nov. 30 Hesson received $500 from customers who were billed on November 20th.
____ 8. Refer to the transactions that occurred at Hesson Properties. The journal entry to record the November 1st
transaction is
a. Equipment 750
Accounts Payable 750
b. Equipment 750
Cash 750
c. Cash 750
Equipment 750
d. Accounts Payable 750
Equipment 750
____ 9. Refer to the transactions that occurred at Hesson Properties. Based on these transactions, what is the
journal entry to record the November 8th transaction?
a. Cash 75
Service Revenue 75
b. Accounts Receivable 75
Service Revenue 75
c. Cash 75
Unearned Revenue 75
d. Unearned Revenue 75
Accounts Receivable 75
___ 10. Refer to the transactions that occurred at Hesson Properties. Based on these transactions, what is the
a. Utilities Expense 150

Cash 150
Utilities Expense 150
c. Utilities Expense 150
d. Cash 150
Utilities Expense 150
a. Cash 750
Service Revenue 750
c. Service Revenue 750
Cash 750
d. Service Revenue 750
a. Cash 500
Service Revenue 500
c. Accounts Payable 500
Cash 500
d. Service Revenue 500
Cash 500
____ 13. Refer to the transactions that occurred at Hesson Properties. Based on these transactions, how much is
still owed to Hesson from its customers at the end of November?
a. -0-
b. $250
c. $500
d. $700
Wing Company
Cash $234,000 Accounts Payable $ 97,000

Inventories 121,000 Long-Term Notes Payable 211,000
Accounts Receivable 46,000 Common Stock 93,000
____ 14. Refer to Wing Company. Calculate current assets.

a. $498,000
b. $401,000
c. $854,000
d. $709,000
____ 15. The independent auditor's report does which of the following?
a. describes which financial statements are covered by the audit
b. gives the auditor's opinion regarding the fairness of the financial statements
c. summarizes what the auditor did
d. states that the financial statements are truthful
____ 16. Which of the following statements is true regarding a corporation's purchase of treasury stock?
a. The cost of treasury stock is a reduction in stockholders' equity.
b. Dividends must still be paid on treasury stock because it is still issued.
c. Treasury stock is reported as an asset because it is considered an investment in the
corporation's own stock.
d. Treasury stock is no longer considered issued once it is back in the hands of the issuer.
____ 17. All of the following are normally found in a corporation's stockholders' equity section except
a. Common Stock
b. Additional Paid-In Capital
c. Discount on Bonds Payable
d. Retained Earnings
____ 18. Sharp Inc. purchased equipment at a cost of $500,000 in January, 2001. As of January 1, 2010,
depreciation of $225,000 had been recorded on this asset. Depreciation expense for 2010 is $25,000.
After the adjustments are recorded and posted at December 31, 2010, what are the balances for the
Equipment and Accumulated Depreciation?
Equipment Accumulated Depreciation

a. $500,000 $ 250,000
b. $500,000 $ 0
c. $275,000 $ 25,000
d. $250,000 $ 250,000
____ 19. The asset account, Supplies, has a balance of $10,000 on January 1. During January, $22,000 of supplies
were purchased on account and the liability was appropriately recorded. A count of supplies at the end of
January indicates a balance of $2,000. What adjusting entry is necessary at January 31?
a. Supplies Expense 22,000

Supplies 20,000
Accounts Payable 2,000
b. Supplies Expense 24,000
Supplies 24,000
c. Supplies Expense 30,000
Supplies 30,000
d. Supplies 22,000
Accounts Payable 22,000
____ 20. Suppose that a business purchases a 6-month general liability insurance policy for $24,000 on January 1.
To record this transaction, the company debits “Prepaid Insurance” for $24,000 and credits “Cash” for
$24,000. As of January 31, the company has consumed one month of insurance. What adjusting entry
is necessary at January 31?
a. Insurance Expense 24,000

Prepaid Insurance 24,000
b. Insurance Expense 4,000
Cash 4,000
c. Prepaid Insurance 24,000
Insurance Expense 24,000
d. Insurance Expense 4,000
Prepaid Insurance 4,000
____ 21. Which internal control activity is violated when the cashier at a cash register in a retail store also records
the daily receipts in a journal?
a. Segregation of duties
b. Adequate documentation
c. Independent verification
d. Physical security
____ 22. Upon review of Bert's Statement of Cash Flows, the following was noted:
Cash flows from operating activities $ 60,000

Cash flows from investing activities (125,000)
Cash flows from financing activities 115,000
From this information, the most likely explanation is that Bert is

a. using cash from operations and selling long-term assets to pay back debt.
b. using cash from operations and borrowing to purchase long-term assets.
c. using its profits to expand growth.
d. using cash from investors to provide for operations.
____ 23. Which one of the following is an accurate description of the Allowance for Bad Debts?
a. Contra Account
b. Liability Account
c. Revenue Account
d. Expense Account
____ 24. Which one of the approaches for the allowance procedure emphasizes matching bad debts expense with
revenue on the income statement?
a. The percentage-of-receivables approach
b. The percentage-of-sales approach
c. The percentage of accounts written off approach
d. The direct write off method
Metal Company
Metal Co. sold merchandise to Steel Corp. on December 1, 2010, for $120,000, and accepted a
promissory note for payment in the same amount. The note has a term of three months and an annual
interest rate of 10%. Metal's accounting period ends on December 31.
____ 25. Refer to Metal Co. What amount should Metal recognize as interest revenue on December 31, 2010?
a. $ -0-
b. $ 1,000
c. $12,000
d. $11,000
The following information on Aggie, Inc. relates to questions 26-27.
Aggie, Inc.
Aggie, Inc. purchased a truck at a cost of $12,000. The truck has an estimated salvage value of $2,000 and
an estimated life of 5 years, or 100,000 hours of operation. The truck was purchased on January 1, 2009,
and was used 27,000 hours in 2009 and 26,000 hours in 2010.
____ 26. Refer to Aggie, Inc. If Aggie uses the units-of-activity method, what is the depreciation rate per hour for
the equipment?
a. $1.00
b. $1.10
c. $ .10
d. $ .12
____ 27. Refer to Aggie, Inc. If Aggie uses the double-declining-balance depreciation method, what amount is
the depreciation expense for 2010?
a. $4,800
b. $2,880
c. $1,728
d. $2,000
____ 28. Depreciation is
a. the process of systematically and rationally allocating the cost of a fixed asset over its
useful life.
b. an accumulation of funds to replace the related plant asset.
c. the difference between the original cost and salvage value of an asset.
d. the cash allocated each period to maintain a plant asset.
____ 29. Which of the following is an intangible asset?
a. Oil
b. Goodwill
c. Retained Earnings
d. Accounts Receivable
____ 30. Bonds with a face amount $1,000,000, are sold at 97. The entry to record the issuance is
a. Cash 1,000,000
Discount on Bonds Payable 30,000
Bonds Payable 1,030,000
b. Cash 970,000
c. Cash 1,030,000
d. Cash 970,000
Bonds Payable 970,000
____ 31. The stockholders' equity accounts of Jamison Corporation include $37,500 of common stock with a par
value of $0.50, and 5,000 shares of treasury stock with a total cost of $25,000. The total number of shares
outstanding for Jamison Corporation is
a. 32,500
b. 70,000
c. 75,000
d. 80,000
____ 32. The stockholders' equity section of the December 31, 2009, balance sheet for Inglenook Interiors, Inc.
before its recent stock dividend:
Common Stock, $5 par, 100,000 shares issued and outstanding $ 500,000

Additional Paid-In Capital 100,000
Retained Earnings 725,000
Total Stockholders' Equity $1,325,000
Inglenook declared a 10% stock dividend when the market price per share was $8.00. After the stock
dividend, the components of Inglenook's stockholders' equity section were:
Common Stock Paid-in Capital Retained Earnings

a. $580,000 $100,000 $645,000
b. $550,000 $100,000 $805,000
c. $580,000 $130,000 $805,000
d. $550,000 $130,000 $645,000
____ 33. The journal entry to issue 1,000,000 shares of $6 par common stock for $8.00 per share on January 2nd
would be:
a. Jan 2 Cash 8,000,000

Common Stock 6,000,000
Additional Paid-In Capital 2,000,000
b. Jan 2 Cash 6,000,000
c. Jan 2 Cash 6,000,000
Additional Paid-In Capital 2,000,000
d. Jan 2 Cash 1,000,000
Common Stock 1,000.000
____ 34. Which of the following is the appropriate general journal entry format to record the declaration of a cash
dividend?
a. Retained earnings
Cash
b. Cash Dividends payable
Cash
c. Paid-in capital
Cash Dividends payable
d. Retained Earnings
Dividends Payable
____ 35. Cash dividends paid on capital stock would be reported in the statement of cash flows in
a. the cash flows from financing activities section
b. the cash flows from investing activities section
c. a separate schedule
d. the cash flows from operating activities section
____ 36. The following information is available from the current period financial statements:
Net income $150,000

Depreciation expense 28,000
Increase in accounts receivable 16,000
Decrease in accounts payable 21,000
The net cash flow from operating activities using the indirect method is
a. $141,000
b. $173,000
c. $117,000
d. $215,000
____ 37. Which of the following generally indicates a positive change?
a. Earnings per share decreases
b. The debt-to-total assets ratio increases
c. The acid test ratio decreases
d. The return on equity increases
____ 38. Airport Gift Mart, Inc. reported the following amounts in its financial statements:
2010 2009
Average inventory $ 200,000 $ 120,000
Cost of goods sold 4,000,000 3,000,000
Inventory turnover 20 25
Days in inventory 18 14.4
From 2009 to 2010, the company's efficiency in managing inventory is

a. declining, because the inventory turnover ratio is decreasing.
b. improving, because the inventory turnover ratio is increasing.
c. declining, because the inventory turnover ratio is increasing.
d. improving, because the inventory turnover ratio is decreasing.
Problem 1
Times Corporation
The accountant for the Times Corporation pulled the following list from the company's accounting
records for the year ended December 31, 2010.
Unearned Revenue $ 37 Prepaid Expenses $ 50

Cash 77 Common Stock 400
Accounts Payable 50 Accounts Receivable 170
Sales Revenue 955 Interest Income 50
Cost of Goods Sold 700 Salary Expense 140
Land 750 Income Tax Expense 20
Notes Payable 450 Selling Expense 45
Inventory 200 Salaries Payable 40
1. In the space provided below, prepare an Income Statement for Times Corporation. (5 points).
Times Corporation
Income Statement
Problem 2
Austin Incorporated has credit sales of $120,000 during 2010 and estimates at the end of 2010 that 1% of
these credit sales will default. Austin's accounts receivable and allowance for bad debts balances before
the 2010 year-end adjusting entries were $50,000 and $700 (credit) respectively.
A) In the space provided below, prepare the adjusting journal entry to record the bad debt
expense on December 31, 2010. (3 points).
Date Account Debit Credit
B) What is the net realizable value of the accounts receivable balance at the end of 2010? It might
not be a bad idea to use T-accounts to show your work here. (2 points).
Problem 3
The following data are available for one item of merchandise sold by Addison Knitwear, which uses a
PERPETUAL inventory system.
March 1 On hand, 100 units at $12 each

8 Sold, 60 units for $30 each
14 Purchased, 30 units at $13 each
25 Sold, 24 units for $30 each
If Addison uses the FIFO method, determine the following amounts:
A) Ending inventory on March 31th. (2 points).
B) Cost of Goods sold for the month of March. (1 point).
If Addison uses the LIFO method, determine the following amount:
C) Cost of Goods sold for the month of March. (2 points).

Problem 4
Kudlow Inc. purchased a truck on January 1, 2009, for $50,000. The truck had an estimated life of five
years and an estimated salvage value of $5,000. Kudlow uses the straight-line method to depreciate the
asset. On July 1, 2010, the truck was sold for $40,000 cash.
A) Prepare the adjusting journal entry to record the depreciation expense on the truck for 2009. (3
points).
B) Prepare the journal entry to record the sale of the truck, including the recognition of any gain or
loss on the sale, on July 1, 2010. (2 points).

Problem 5
On January 1, 2010, Lead Inc. issues five-year, $10,000,000, 8% notes at 101 ($10,100,000). Interest is
paid semiannually on June 30, and December 31.
A) Provide the journal entry to record the issuance of the bonds on January 1, 2010. (2 points).
B) Provide the journal entry for the June 30, 2010 interest payment using the straight-line method
of amortization. (2 points).
C) Give the journal entry to record the retirement of the bonds on December 31, 2014. (1 point).
Formulas for FINAL Exam

Additional Practice For ACCT 2010 Final Exam Professor Shih-Jen Kathy Ho Fall 2016 Matching (1 Point Each)

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(ACCT2010)[2016](f)final~=kmo3j7^_50954.pdf downloaded by twbfung from http://petergao.net/ustpastpaper/down.php?course=ACCT2010&id=6 at 2017-12-05 02:29:46. Academic use within HKUST only.

Additional Practice for ACCT 2010 Final Exam

Matching (1 point each)

Sales $1,560 Cost of Goods Sold $1,400

____ 7. Which of the following accounts is decreased by a debit entry?

The following information on Hesson Properties, Inc. relates to questions 8-13.

Hesson Properties, Inc.

Nov. 20 Customers are billed $750 by Hesson for property services.

a. Utilities Expense 150

Cash $234,000 Accounts Payable $ 97,000

____ 14. Refer to Wing Company. Calculate current assets.

Equipment Accumulated Depreciation

a. Supplies Expense 22,000

a. Insurance Expense 24,000

Cash flows from operating activities $ 60,000

From this information, the most likely explanation is that Bert is

The following information on Aggie, Inc. relates to questions 26-27.

Common Stock, $5 par, 100,000 shares issued and outstanding $ 500,000

Common Stock Paid-in Capital Retained Earnings

a. Jan 2 Cash 8,000,000

Net income $150,000

From 2009 to 2010, the company's efficiency in managing inventory is

Unearned Revenue $ 37 Prepaid Expenses $ 50

Date Account Debit Credit

March 1 On hand, 100 units at $12 each

If Addison uses the FIFO method, determine the following amounts:

A) Ending inventory on March 31th. (2 points).

B) Cost of Goods sold for the month of March. (1 point).

If Addison uses the LIFO method, determine the following amount:

C) Cost of Goods sold for the month of March. (2 points).

Date Account Debit Credit

Date Account Debit Credit

Date Account Debit Credit

Date Account Debit Credit

Date Account Debit Credit

Formulas for FINAL Exam

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