Exam with Multiple Choice Questions - Accounting and Accountancy II | ACCY 202, Exams of Accounting

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1. Norton Corporation has purchased raw materials from a vendor and was offered terms of 2/10, n/30. Which of the following reflects these terms? A. 10% purchase discount if paid within 2-30 days. B. 2% trade discount if paid within 10 days or the full list price owed within 30 days. C. 10% trade discount if paid within 28 days. D. 2% purchase discount if paid within 10 days or the balance due within 30 days. E. None of the above
2. Which of the following best explains the difference between a purchase order and a purchase requisition? A. Purchase orders contain quantities of merchandise to order; purchase requisitions do not. B. Several purchase requisitions might be consolidated in to a single purchase order. C. Purchase requisitions do not require approval but purchase orders do. D. Purchase requisitions should only be generated by the appropriate individuals in the centralized purchasing department. E. Both B and D are true
3. As you may remember from the Comprehensive Problem Set, on December 21, Carlos Vega (owner of the Park Cinema) ordered a new industry compliant digital projector system and screen for the theater. Carlos received an email on Thursday, December 30 informing him that the projector had been shipped (on Dec.
   30. by the vendor, Digital Projection. Assume that the projector system was delivered to the Park Cinema on Monday, January 3rd and that the invoice was paid on January 17. Assuming proper accounting was made for the purchase, which of the following is a possibility for the journal entry date (to record the purchase) and shipping terms? A. Purchase entry recorded December 21; Shipping Terms: FOB Shipping Point B. Purchase entry recorded December 30; Shipping Terms: FOB Destination C. Purchase entry recorded January 3; Shipping Terms: FOB Shipping Point D. Purchase entry recorded December 30; Shipping Terms: FOB Shipping Point E. Purchase entry recorded January 17; Shipping Terms: FOB Destination
4. Cook & Campbell is a construction firm for residential homes. At the end of their first year of operations the controller was surprised to discover that they had one more vacant lot on their balance sheet than they actually owned. Upon closer examination he determined that during the year they had constructed a home on one of their vacant lots and sold it. The sale took place while he was on vacation and the sale entry was accordingly booked by a new staff member who inadvertently left out the following piece of the entry: Cost of Goods Sold $85, Lot Inventory $85, Please consider the above scenario and your Dunn readings dealing with risk identification. Choose the best classification below. A. error; information process risk B. irregularity; information process risk C. error; business process risk D. irregularity; business process risk E. error; environmental enterprise risk

10. The entry to record a purchase of office supplies on account would include a: A. Credit to cash B. Debit to Merchandise Inventory. C. Credit to office supplies D. Credit to accounts payable E. None of the above.
11. Closing entries are necessary to update the: A. Retained earnings account B. Cash account C. Income summary account D. Net income E. Closing entries are not necessary and are optional.
12. On which financial statement would unearned revenue be reported and as what classification (financial statement element)? A. Balance sheet; Revenue B. Income statement; Deferred Revenue C. Balance sheet; Liability D. Balance sheet; Deferred Asset E. Income statement; Revenue
13. Which of the following transactions/events will be capitalized in December? A. 12/2/2010: Paid for merchandise previously purchased on account B. 1/2/2011: Received December's utility bill in the mail but did not pay it C. 1/4/2011: The new copy machine purchased for the office was delivered (shipped (FOB Destination) on 12/28). D. 12/28/2010: Paid rent for the next three months (January-March 2011). E. Both C & D would be capitalized
14. Iowa Corporation had a beginning balance of $8,600 in their Utilities Payable account at the start of the year and during the year they accrued $10,000 of utilities expense and paid the utility provider $14,000. What ending balance will Iowa report for Utilities Payable? A. $12, B. $4, C. $15, D. $4, E. None of the above

15. On May 1, Ace Bonding Company purchased inventory costing $2,000 on account with terms 2/10, n/30. On May 8, Ace pays for this inventory and records which of the following entries? A. B. C. D.
16. The matching principle is the principle that states: A. All costs that are incurred to generate revenue are recorded in the period the revenue is recognized. B. Both revenue and expenses are recorded at the current exchange price. C. The timing of financial reports should be matched with the needs of external decision makers. D. The business will continue to operate indefinitely unless there is evidence to the contrary. E. A, B and C.
17. The following events pertain to Jasper Corporation: Using cash-basis accounting, on which date should Jasper record supplies expense? A. May 1. B. May 5. C. May 8. D. May 9.
18. When a company makes an end-of-period adjusting entry which includes a credit to Prepaid Rent, the debit is usually made to: A. Cash. B. Rent Expense. C. Rent Payable. D. Rent Receivable. E. Rental Income

23. After performing an inventory count, Data Corporation determined that it had $50,000 of inventory physically on hand as of the end of the year (12/31). Given the following items and costs, determine the total value of merchandise inventory that should be reported by Data as of the Dec. 31 balance sheet date:
    • $1,000 goods sold by Data to another company. As of 12/31, the goods are in transit and shipping terms are FOB destination.
    • $2,000 goods sold by another company to Data. As of 12/31, the goods are in transit and shipping terms are FOB destination. A. $50, B. $49, C. $51,000. D. $52,000. E. $53,
24. Please consider the following information from the narrative of the CPS: At the end of each evening, the cash in each of the three register drawers is counted and a daily cash count sheet is updated by the employee. Matt verifies the count and both he and the employee working the registers initial the report, which is scanned and emailed to Tracy, Carlos’ wife. Tracy accesses the register data reports from home (online) on a daily basis and uses the information to prepare a "payment summary sheet" which details the total sales by payment type (i.e. cash, debit card, credit card or loyalty card). For each date, Tracy compares the total cash counted in the register drawers to the register sales (per the register system) in order to determine by how much (if any) the register drawer was over or (short) in a particular day. Mistakes happen and minor differences are expected to occur but it is company policy that larger differences are taken out of the employees pay. Employees are aware of this policy, which Carlos believes contributes to the fact that large cash overages/shortages are rare. In class and in our assigned readings we have learned that control procedures can be categorized as (i) preventative, (ii) detective and/or (iii) corrective. Given this understanding, how would Tracy's comparison of the online register system data to the actual register drawer count be classified? A. Detective in nature and potentially preventative toward irregularities but not toward errors. B. Corrective in nature and potentially detective toward errors but not toward irregularities. C. Detective, preventative and corrective toward both errors and irregularities. D. Detective in nature and potentially preventative toward errors but not toward irregularities. E. Corrective in nature and potentially detective toward irregularities but not toward errors.

25. Please consider the following information from the CPS: Tracy accesses the cash register data reports from home (online) on a daily basis and uses the information to prepare a "payment summary sheet" which details the total sales by payment type (i.e. cash, debit card, credit card or loyalty card). The PSS for 12/1-12/11 and for 12/12-12/25 have been reproduced for you below. Assume the following 11/30 balances (both of which are considered "normal" balances): Cost of Loyalty Premiums $1,540. Loyalty Card Obligation $4,095. PAYMENT SUMMARY SHEET: 12/1-12/11/2010 Reported per Register System Cash Cash Debit Credit Loyalty Grand counted in Over or Cash Card Card Card Total drawer (Short) Box Office Ticket Sales $1,814.84 $2,441.62 $4,661.64 $181.90 $9,100. *Sale of Loyalty Cards $150.00 $350.00 $100.00 N/A $600. Concession Sales $1,457.19 $1,960.50 $3,742.97 $146.05 $7,306. **Sales Tax Collected $138.43 $186.25 $355.58 $13.88 $694. $3,560.46 $4,938.37 $8,860.19 $341.83 $17,700.85 $3,564.46 $4. PAYMENT SUMMARY SHEET: 12/ 12 - 12/ 25 /2010 Reported per Register System Cash Cash Debit Credit Loyalty Grand counted in Over or Cash Card Card Card Total drawer (Short) Box Office Ticket Sales $2,784.95 $3,630.73 $6,815.06 $283.76 $13,514. *Sale of Loyalty Cards $150.00 $250.00 $300.00 N/A $700. Concession Sales $2,236.11 $2,915.21 $5,471.90 $225.54 $10,848. **Sales Tax Collected $212.43 $276.95 $519.83 $21.43 $1,030. $5,383.49 $7,072.89 $13,106.79 $530.73 $26,093.90 $5,366.67 ($16.82)

• Each $50 loyalty card purchased was loaded with a $5 premium (not included above) which gives the patron $55 to actually spend. ** The Park collects the tax upfront from the customer at the time of sale (concession sales only) and is obligated to remit the proceeds to the state taxing authority. Given the above information, what is the unadjusted balance in the following two accounts at 12/ (rounded to the nearest dollar)? (i) Cost of Loyalty Premiums (ii) Loyalty Card Obligation Continued on next page!