ACCT 2000 FINAL EXAM BRIGGS NEWEST UPDATE WITH COMPLETE QUESTIONS AND ANSWERS/ALREADY GR, Exams of Nursing

Download ACCT 2000 FINAL EXAM BRIGGS NEWEST UPDATE WITH COMPLETE QUESTIONS AND ANSWERS/ALREADY GR and more Exams Nursing in PDF only on Docsity! ACCT 2000 FINAL EXAM BRIGGS NEWEST UPDATE WITH COMPLETE QUESTIONS AND ANSWERS/ALREADY GRADED A+ Forms of Business - ANSWER ->1) Sole proprietorship 2) Partnership 3) Corporation Sole proprietorship - ANSWER ->Advantages-Simple, control, tax advantages Disadvantages- personal liability Partnership - ANSWER ->Advantages- Easy to set up, broader skill set between two people, tax advantages Disadvantages- personal liability Corporation - ANSWER ->Advantages-easy to sell, raise capital, no liability Disadvantages-double taxation Internal Users - ANSWER ->Managers, Chief Financial Officer, stockholders Questions internal users might ask - ANSWER ->-Which product line is more favorable? -Is cash sufficient to pay dividends? -What selling price for our product will maximize net income? External users - ANSWER ->Auditors, IRS, Lenders, Regulatory authorities Who may perform audits? - ANSWER ->CPA An unqualified opinion - ANSWER ->When the auditor is satisfied that the financial statements provide a fair representation of the company's financial position and results of operation in accordance with generally accepted accounting principles, the auditor will express 3 Types of Activities Business do - ANSWER ->Investing, Financing, and Operating Investing Activities - ANSWER ->Buying land, buildings, equipment Financing Activities - ANSWER ->Issuance of common stock and bonds payable, preferred stock, treasury stock Operating Activities - ANSWER ->Buying materials, paying for labor, selling product 4 financial statements - ANSWER ->1) Income statement 2) Retained Earnings Statement 3) Balance sheet 4) Statement of cash flow scandals. Top management must certify the financial statements for their company. Trademark - ANSWER ->What would not be considered a current asset on a classified balance sheet? Land - ANSWER ->What could be considered property, plant and equipment on a classified balance sheet? Stockholder's equity=Common stock + Retained Earnings $50,000 + $70,000 = $120,000 - ANSWER ->What could be considered property, plant and equipment on a classified balance sheet? Salaries Payable - ANSWER ->Which of the following is considered a current liability on a classified balance sheet? a. Bonds Payable b. Pension Liability c. Mortgage Payable d. Salaries Payable FASB - ANSWER ->Financial Accounting Standards Board Primary accounting standard setting body in the U.S. Relevant - ANSWER ->Information that makes a difference in a decision Has predictive value and confirmatory value Faithful representation - ANSWER ->Disclose what really happened accurately Be complete, neutral and free from error Comparability - ANSWER ->Results when different companies use the same accounting principles Consistency - ANSWER ->Results when a company uses the same principles and methods from year to year Verifiability - ANSWER ->Information that can be proved that it is free from error Timeliness - ANSWER ->Information that is available to decision makers before it loses capacity to influence decision makers Understandability - ANSWER ->Information has this quality if it is presented in a clear and concise fashion Assumptions in financial reporting - ANSWER ->Monetary Unit, Economic Entity, Periodicity, Going Concern, Accrual, Full Disclosure, Cost principle Monetary Unit - ANSWER ->Assumption requires that only things that can be expressed in money are included in the accounting records Economic Entitiy - ANSWER ->Assumption states that every economic entities can be separated and accounted for Periodicity - ANSWER ->Assumption states that the life of a business can be divided into time periods Going Concern - ANSWER ->Assumption states that the business will remain in operation for the foreseeable future Accrual Accounting - ANSWER ->Means transactions that change a company's financial statements are recorded in the period in which the events occur Full Disclosure - ANSWER ->Principle indicates that companies disclose all circumstances and events that would make a difference to financial statement users Pending lawsuits, results from operations, significant transactions, financial position - ANSWER ->What are some circumstances and events that investors would want disclosed? Cost Principle - ANSWER ->Measurement principle that dictates that companies record assets at their cost Fair Value Principle - ANSWER ->It indicates that assets and liabilities be recorded at their fair value Accounting Equation - ANSWER ->Assets = Liabilities + Stockholders' Equity Ledger - ANSWER ->The entire group of accounts maintained by a company is referred to collectively as the Prove the mathematical equality of debits and credits after posting - ANSWER ->The primary purpose of a trial balance is to: Chart of accounts - ANSWER ->list of all possible accounts Ensure that Debits = Credits - ANSWER ->Purpose of Trial Balance Adjusting Entries - ANSWER ->(know entries for each type) 1) Accruals - ANSWER ->a. Accrued revenue b. Accrued expenses 2) Deferred - ANSWER ->a. Prepaid b. Unearned Adjusted Trial Balance - ANSWER ->used to prepare financial statements Closing - ANSWER ->close temporary accounts Revenue and expense into income summary Income summary and dividends into Retained Earnings Summary of accounting cycle Companies record revenue only when they receive cash, and record expense only when they pay out cash (This is Cash-Basis Accounting) - ANSWER ->Which one of these statements about the accrual basis of accounting is false? a. Companies record events that change their financial statements in the period in which events occur, even if cash was not exchanged. b. Companies recognize revenue in the period in which it is earned. c. This basis is in accord with generally accepted accounting principles. d. Companies record revenue only when they receive cash, and record expense only when they pay out cash. Earned Expenses - ANSWER ->Each of the following is a major type (or category) of adjusting entry except: a. Prepaid expenses b. Accrued revenues c. Accrued expenses d. Earned expenses Debit Salaries and Wages expense $600 and Credit Salaries and wages Payable $600 - ANSWER ->Colleen Mooney earned a salary of $600 for the last week of September. She will be paid on October 1. The adjusting entry for Colleen's employer at September 30 is: Service Revenue - ANSWER ->Which account will have a zero balance after a company has journalized and posted closing entries? a. Service Revenue b. Supplies c. Prepaid Insurance d. Accumulated Depreciation Adjustments for unearned revenues: - ANSWER ->Decrease liabilities and increase revenues Reversing Entries - ANSWER ->All of the following are required steps in the accounting cycle except: a. Journalizing and posting closing entries. b. Preparing an adjusted trial balance c. Preparing a post-closing trial balance d. Reversing entries. Merchandiser - ANSWER ->Sales - COGS = Gross Profit -Oper Exp = NI Beg Inv + Purchases = Goods Avail - End Inv = COGS Perpetual Method - ANSWER ->Purchaser - journal entries Seller - journal entries ( 2 part sales entry) Accounts receivable and COGS - ANSWER ->Which accounts will the *seller* credit when merchandise is returned by a customer? Sales Returns and Allowances - ANSWER ->Which account will the *seller* debit for defective merchandise returned by a customer Debit - ANSWER ->Sales Discounts and Sales Returns and Allowances normally have a ______________ balance Discounted price for paying in full within 10 days- $700 x .02=$14, $700-$14=$686 $686 would be the amount they would pay in full - ANSWER ->A company makes a credit sale of $750 on June 13, terms 2/10, n/30, on which it grants a return of $50 on June 16. What amount is received as payment in full on June 23? Cost of Goods Sold=Beginning inventory + Goods Purchased - Ending Inventory Cost of Goods Sold= $60,000 + $380,000 - $50,000 = $390,000 - ANSWER ->If beginning inventory is $60,000, cost of goods purchased is $380,000, and ending inventory is $50,000, what is cost of goods sold under a periodic system? All of these are present - ANSWER ->The multiple-step income statement for a merchandising company shows each of these features except: a. Gross profit b. Costs of goods sold c. A sales revenue section d. All of these are present Seller - ANSWER ->If goods are shipped FOB destination, then which party would include in its inventory of goods while they are in transit? [50 x $6.00] + [300 x $7.00] = $2,400 - ANSWER ->Date Units Unit Cost Total Cost Feb 5 200 $2.00 $400 Mar 6 500 4.00 2,000 Apr 9 400 6.00 2,400 Jun 7 300 7.00 2,100 1,400 $6,900 On June 30th, there are 350 units in ending inventory What is the value of ending inventory using first-in, first-out (FIFO)? [150 x $4.00] + [200 x $2.00] = $1,000 - ANSWER ->Date Units Unit Cost Total Cost Feb 5 200 $2.00 $400 Mar 6 500 4.00 2,000 Apr 9 400 6.00 2,400 Jun 7 300 7.00 2,100 1,400 $6,900 On June 30th, there are 350 units in ending inventory What is the value of ending inventory using last-in, first-out (LIFO)? 1. 1,400 units - 350 units =1,050 units sold 2. Average cost per unit = Total cost divided by units $6,900/1,400= $4.93 per unit 3. 1,050 units x $4.93 = $5,177 - ANSWER ->Date Units Unit Cost Total Cost Feb 5 200 $2.00 $400 Mar 6 500 4.00 2,000 Apr 9 400 6.00 2,400 Jun 7 300 7.00 2,100 1,400 $6,900 On June 30th, there are 350 units in ending inventory What is Cost of Goods Sold using Average Cost? Bank reconciliation - ANSWER ->Deposits in transit Outstanding checks Bank Memoranda Errors Adjustments to the bank balance - ANSWER ->Add: Deposits in Transit Less: Outstanding Checks Add/Less: Bank Errors Adjustments to the book balance - ANSWER ->Add: Notes collected by bank Less: NSF checks Less: Printing charges Add/Less: Book Errors Deducted from the bank balance - ANSWER ->In a bank reconciliation, outstanding checks are: Added to the bank balance - ANSWER ->In a bank reconciliation, deposits in transit are: CVP Analysis - ANSWER ->The study of the effects of changes in costs and volumes on a company's profits Variable costs (VC) - ANSWER ->-remains the same per unit at every level of activity -vary in total directly and proportionately with changes in the activity level and include direct materials and direct labor for a manufacturer Fixed costs (FC) - ANSWER ->costs that remain the same per unit regardless of changes in the activity level remain the same in total, but as activity declines, the costs per unit increases. Mixed Costs (MC) - ANSWER ->change in total but not proportionately with changes in the activity level Consist of a variable part and fixed part Contribution Margin (CMPU) - ANSWER ->= Unit Selling Price (USP) - Variable Costs Contribution Margin ratio - ANSWER ->= CMPU/USP Break-even - ANSWER ->Sales = VC add FC add NI ($0) Break Even in units - ANSWER ->Fixed Costs divided by Contribution Margin Per Unit Break Even in Dollars - ANSWER ->Fixed Costs divided by Contribution Margin Ratio Target net income - ANSWER ->just add NI to FC Variable Costs - ANSWER ->Costs that vary in total directly and proportionately with changes in the activity level are: Variable costs as a percentage decrease - ANSWER ->The contribution margin ratio increases when: Units x Unit Selling Price x Contribution Margin 400,000 x $1.50 x .20= $120,00 - ANSWER ->Dolce Company is planning to sell 400,000 hammers for $1.50 per unit. The contribution margin ratio is 20%. If Dolce will break even at this level of sales, what are the fixed costs? Equal to the contribution margin - ANSWER ->At the break-even point, fixed costs are: Break-even point in dollars=Fixed Costs divided by Contribution Margin Ratio Fixed costs of $60,000 divided by .30 = $200,000 - ANSWER ->Livingston Co. has fixed costs of $60,000 and a contribution margin ratio of 30%. How much in dollar sales does Livingston Co. need to have to break- even? Budgets - ANSWER ->what is it and how is it put together Principles of effective budgeting - ANSWER ->- Requires all levels of management to plan ahead and formalize goals on a recurring basis. - Provides definitive objectives for evaluating performance at each level of responsibility. - Creates an early warning system for potential problems. - Facilitates coordination of activities within the business. - Results in greater management awareness of the entity's overall operations and the impact of external factors. Lower level of management - ANSWER ->For better management acceptance, the flow of input data for budgeting should begin with the: 1 year to 5 years - ANSWER ->Normal Budget periods Budgets vs. long term planning - ANSWER -> Budget process - ANSWER -> Sales Budget - ANSWER ->The starting point in preparing the master budget is the Master budget - ANSWER ->A set of interrelated budgets that constitutes a plan of action for a specified time period