ACC-422-final-exam-set-1.docxACC-422-final-exam-set-1.docx

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1) Which of the following is NOT considered cash for financial reporting purposes?

A. Coin, currency, and available funds

B. Money orders, certified checks, and personal checks

C. Petty cash funds and change funds

D. Postdated checks and I.O.U.'s

2) What is the preferable presentation of accounts receivable from officers, employees, or

affiliated companies on a balance sheet?

A. As assets but separately from other receivables.

B. By means of footnotes only.

C. As offsets to capital.

D. As trade notes and accounts receivable if they otherwise qualify as current assets.

3) Which of the following items should NOT be included in the Cash caption on the balance

sheet?

A. Amounts on deposit in checking account at the bank

B. Checks from other parties presently in the cash register

C. Coins and currency in the cash register

D. Postage stamps on hand

4) Which of the following is a generally accepted method of determining the amount of the

adjustment to bad debt expense?

A. A percentage of accounts receivable NOT adjusted for the balance in the allowance

B. A percentage of sales NOT adjusted for the balance in the allowance

C. A percentage of sales adjusted for the balance in the allowance

D. An amount derived from aging accounts receivable and NOT adjusted for the balance

in the allowance

5) Assuming that the ideal measure of short-term receivables in the balance sheet is the

discounted value of the cash to be received in the future, failure to follow this practice usually

does NOT make the balance sheet misleading because

A. the amount of the discount is NOT material.

B. the allowance for uncollectible accounts includes a discount element.

C. most short-term receivables are NOT interest-bearing.

D. most receivables can be sold to a bank or factor.

6) Which of the following methods of determining bad debt expense does NOT properly match

expense and revenue?

A. Charging bad debts with an amount derived from aging accounts receivable under the

allowance method.

B. Charging bad debts with an amount derived from a percentage of accounts receivable

under the allowance method.

C. Charging bad debts with a percentage of sales under the allowance method.

D. Charging bad debts as accounts are written off as uncollectible.

7) The accountant for the Orion Sales Company is preparing the income statement for 2007 and

the balance sheet at December 31, 2007. Orion uses the periodic inventory system. The January

1, 2007 merchandise inventory balance will appear

A. as a deduction in the cost of goods sold section of the income statement and as a

current asset on the balance sheet.

B. only as an asset on the balance sheet.

C. only in the cost of goods sold section of the income statement.

D. as an addition in the cost of goods sold section of the income statement and as a

current asset on the balance sheet.

8) Belle Co. received merchandise on consignment. As of March 31, Belle had recorded the

transaction as a purchase and included the goods in inventory. The effect of this on its financial

statements for March 31 would be

A. net income was correct and current assets and current liabilities were overstated.

B. net income and current liabilities were overstated.

C. no effect.

D. net income, current assets, and current liabilities were overstated.

9) The failure to record a purchase of merchandise on account even though the goods are

properly included in the physical inven¬tory results in

A. an understatement of assets and net income.

B. an understatement of liabilities and an overstatement of owners' equity.

C. an overstatement of assets and net income.

D. an understatement of cost of goods sold and liabilities and an overstatement of assets.

10) The use of a Purchase Discounts account implies that the recorded cost of a purchased

inventory item is its

A. invoice price plus any purchase discount lost.

B. invoice price less the purchase discount allowable whether taken or not.

C. invoice price.

D. invoice price less the purchase discount taken.

11) All of the following costs should be charged against revenue in the period in which costs are

incurred EXCEPT for

A. costs which will NOT benefit any future period.

B. costs of normal shrinkage and scrap incurred for the manufacture of a product

in ending inventory.

C. manufacturing overhead costs for a product manufactured and sold in the same

accounting period.

D. costs from idle manufacturing capacity resulting from an unexpected plant shutdown.

12) Which method of inventory pricing best approximates specific identification of the actual

flow of costs and units in most manufacturing situations?

A. First-in, first-out

B. Base stock

C. Average cost

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1) Which of the following is NOT considered cash for financial reporting purposes? A. Coin, currency, and available funds B. Money orders, certified checks, and personal checks C. Petty cash funds and change funds D. Postdated checks and I.O.U.'s 2) What is the preferable presentation of accounts receivable from officers, employees, or affiliated companies on a balance sheet? A. As assets but separately from other receivables. B. By means of footnotes only. C. As offsets to capital. D. As trade notes and accounts receivable if they otherwise qualify as current assets. 3) Which of the following items should NOT be included in the Cash caption on the balance sheet? A. Amounts on deposit in checking account at the bank B. Checks from other parties presently in the cash register C. Coins and currency in the cash register D. Postage stamps on hand 4) Which of the following is a generally accepted method of determining the amount of the adjustment to bad debt expense? A. A percentage of accounts receivable NOT adjusted for the balance in the allowance B. A percentage of sales NOT adjusted for the balance in the allowance C. A percentage of sales adjusted for the balance in the allowance D. An amount derived from aging accounts receivable and NOT adjusted for the balance ...
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