1. Corresponds to CLO 1(a)
All of the following are considered primary user of financial reports, except: (Points : 6)
Employees
investors
creditors
all of these are primary users.
2. Corresponds to CLO 1(b)
The due process system used by the FASB (Points : 6)
identifies the most important accounting issues
requires that all accountants must receive a copy of the financial standards
enables interested parties to express their views on issues under consideration
is an efficient system for collecting dues from members.
3. Corresponds to CLO 1(c)
Which of the following best describes generally accepted accounting principles? (Points : 6)
standards and principles based on federal statutes
a common set of standards and principles
acceptance requires an affirmative vote of Certified Public Accountants
practices that have been accepted for at least a year by all industry members
4. Corresponds to CLO 1(d)
Which of the following is a major challenge facing the accounting profession? (Points : 6)
Timeless
Forward-looking data
Nonfinancial measurements
All of the above
5. Corresponds to CLO 2(a)
Accounting information that is capable of making a difference in a decision has the fundamental qualitative characteristic of (Points : 6)
Faithful representation
Completeness
Relevance
Neutrality
6. Corresponds to CLO 2(b)
In the financial statements, under what qualitative characteristic of accounting information should a change in inventory valuation method be reported? (Points : 6)
Verifiability
Consistency
Neutrality
Timeliness
7. Corresponds to CLO 2(c)
Accountants produce financial statements at arbitrary points in time during the lifetime of an entity in accordance with which basic accounting concept? (Points : 6)
Going concern assumption
Historical cost assumption
Periodicity assumption
Monetary unit assumption
8. Corresponds to CLO 2(d)
Generally, product costs are recognized as expenses (Points : 6)
In the period when the related revenue is recognized
In the period when the vendor invoice is recieved.
In the period when the expenses are paid.
In the period when the expenses are incurred.
9. Corresponds to CLO 3(a)
Jot Construction Company uses the percentage-of-completion method of accounting. In 2013, Jot began work on a contract it had received which provided for a contract price of $6,000,000. Additional information related to the project includes: costs incurred during the year were $2,100,000; estimated costs to complete as of December 31, 2013 were $1,400,000. What amount should Jot recognize as gross profit for the project in 2013? (Points : 6)
$700,000
$1,000,000
$1,500,000
$2,500,000
10. Corresponds to CLO 3(b)
Swift Builders, Inc. uses the completed-contract method of accounting for a $450,000 contract that it expects will take two years to complete. At December 31, 2013collections to date were $300,000. What amount should Swift recognize as gross profit or loss for 2013? (Points : 6)
$ -0-
a $20,000 loss
a $40,000 loss
a $110,000 loss
11. Corresponds to CLO 3(c)
Miller Company appropriately uses the installment method of accounting to recognize income in its financial statements. Pertinent data relating to this method of accounting includes:
$60,000
$120,000
$140,000
$200,000
12. Corresponds to CLO 3(d)
In consignment sales, the consignee (Points : 6)
records the merchandise as an asset on its books.
recognizes revenue when it ships merchandise to the consignor.
upon sale of the merchandise, has a liability for the net amount due the consignor.
records a liability for the merchandise held on consignment.
13. Corresponds to CLO 4(a)
If Collier Costumes, Inc. has the following items at year-end, how much should it report as cash on the balance sheet?
$80,000
$28,000
$26,320
$620
14. Corresponds to CLO 4(b)
At December 31, 2013, Vega Vaccum Corporation has cash in bank of 104,000, restricted cash in a separate account of $19,000, and a bank overdraft at another bank of $500. How much should it report as cash on the balance sheet? (Points : 6)
$123,000
$122,500
$104,500
$104,000
15. Corresponds to CLO 4(c)
Which of the following is not classified as cash on the balance sheet? (Points : 6)
Postage stamps
Post-dated checks
Cash restricted for plant expansion
All of the above
16. Corresponds to CLO 4(d)
The month-end bank statement for Guthrie Motors shows a balance of $125,000 and a bank service charge of $40. Outstanding checks are $35,000, a deposit of against the account. The correct balance in the bank account at month end is (Points : 6)
$101,500
$ 101,460
$98,500
$98,460
17. Corresponds to CLO 5(a)
As of December 31, Gammelguard Corporation has outstanding accounts receivable of $1.5 million. Sales on credit during the year were $9 million. The allowance for doubtful accounts has a credit balance of $20,000. If the company estimates that 9% of its outstanding receivables will be uncollectible, what will be the amount of bad debt expense recognized for the year? (Points : 6)
$115,000
$135,000
$155,000
$810,000
18. Corresponds to CLO 5(b)
As of December 31, William Corporation has outstanding accounts receivable of $5.8 million. Sales on credit during the year were $18.5 million. The allowance for doubtful accounts has a credit balance of $94,000. If the company estimates that 2% of its net credit sales will be uncollectible, what will be the amount of bad debt expense recognized for the year? (Points : 6)
$464,000
$370,000
$276,000
$116,000
19. Corresponds to CLO 5(c)
Kandris Corporation had a balance in accounts receivable of $600,000 and a balance in allowance for doubtful accounts of $55,000, when management decided the account receivable from Dunn Corporation of $2,000 had become uncollectible. What journal entry should Kandris Corporation make to write-off the uncollectible account? (Points : 6)
20. Corresponds to CLO 5(d)
At December 31, Norman Industrial Inc. had account balances before year-end adjusting entries for accounts receivable and the related allowance for doubtful accounts of $920,000 and $79,000 respectively. An aging of accounts receivable indicated that $100,000 of the December 31, receivables are expected to be uncollectible. The net realizable value of accounts receivable after adjustment is (Points : 6)
$1,020,000
$820,000
$841,000
$999,000
21. Corresponds to CLO 6(a)
The following is a record of Axis Corporation's inventory transactions for the current month:
Axis uses the periodic inventory system. Using the FIFO method, what is the amount of cost of goods sold for the month?
$61,700
$60,300
$58,500
$31,100
22. Corresponds to CLO 6(b)
The following is a record of Meyer Corporation's inventory transactions for the current month:
Meyer uses the periodic inventory system. Using the LIFO method, what is the amount of ending inventory on October 31?
(Points : 6)
$18,300
$20,200
$18,000
$29,300
23. Corresponds to CLO 6(c)
The following is a record of Tiller Corporation's inventory transactions for the current month:
Tiller uses the periodic inventory system. Using the weighted-average inventory method, what is the cost of goods sold for the month of January?
(Points : 6)
$14,004
$9,775
$4,085
$4,025
24. Corresponds to CLO 6(d)
The following is a record of Caulder Corporation's inventory transactions for the current month:
Caulder uses the perpetual inventory system. Using the LIFO method, what is the ending inventory on March 31?
(Points : 6)
$22,900
$22,100
$22,600
$23,400
25. Corresponds to CLO 7(a)
In the context of dollar-value LIFO, when inventory in base year dollars decreases, (Points : 6)
26. Corresponds to CLO 7(b)
Hemmer Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2011. Its inventory at that date was 460,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows:
What is the ending inventory at December 31, 2012 under dollar-value LIFO?
(Points : 6)
$464,000
$485,680
$481,400
$464,280
27. Corresponds to CLO 7(c)
Inventories are primarily accounted for at cost on the balance sheet. In a departure from the cost basis, inventory is accounted for at market when (Points : 6)
There is any decrease in the future utility
28. Corresponds to CLO 7(d)
If the historical cost of product X is $55, the selling price of product X is $90, the costs to sell product X are $14, the replacement cost for product X is $50, lower-of-cost-or-market comparison? (Points : 6)
$50
$49
$76
$55
29. Corresponds to CLO 8(a)
Energy Solutions Corporation estimates the cost of its physical inventory at November 30 for use in an interim financial statement. Management uses a gross profit rate on sales of 30%. The following information is available:
The estimated cost of inventory at November 30 is
(Points : 6)
$270,000
$630,000
$650,000
$520,000
30. Corresponds to CLO 8(b)
How is the gross profit method used as it relates to inventory valuation? (Points : 6)
Arrow Corporation uses the conventional retail inventory method to value its merchandise inventory. The following information is available for the current year:
Cost Retail
What is the cost to retail ratio?
(Points : 6)
60.16%
59.65%
58.60% (Not sure 100%)
57.84%
32. Corresponds to CLO 8(d)
Capital City Corporation uses the conventional retail inventory method to determine its ending inventory at cost. The following information is available for the current year:
Capital City determines that the cost-to-retail ratio is 70%. What is the ending inventory at cost?
$520,000
$399,000
$300,000
$570,000
All of the following are considered primary user of financial reports, except: (Points : 6)
Employees
investors
creditors
all of these are primary users.
2. Corresponds to CLO 1(b)
The due process system used by the FASB (Points : 6)
identifies the most important accounting issues
requires that all accountants must receive a copy of the financial standards
enables interested parties to express their views on issues under consideration
is an efficient system for collecting dues from members.
3. Corresponds to CLO 1(c)
Which of the following best describes generally accepted accounting principles? (Points : 6)
standards and principles based on federal statutes
a common set of standards and principles
acceptance requires an affirmative vote of Certified Public Accountants
practices that have been accepted for at least a year by all industry members
4. Corresponds to CLO 1(d)
Which of the following is a major challenge facing the accounting profession? (Points : 6)
Timeless
Forward-looking data
Nonfinancial measurements
All of the above
5. Corresponds to CLO 2(a)
Accounting information that is capable of making a difference in a decision has the fundamental qualitative characteristic of (Points : 6)
Faithful representation
Completeness
Relevance
Neutrality
6. Corresponds to CLO 2(b)
In the financial statements, under what qualitative characteristic of accounting information should a change in inventory valuation method be reported? (Points : 6)
Verifiability
Consistency
Neutrality
Timeliness
7. Corresponds to CLO 2(c)
Accountants produce financial statements at arbitrary points in time during the lifetime of an entity in accordance with which basic accounting concept? (Points : 6)
Going concern assumption
Historical cost assumption
Periodicity assumption
Monetary unit assumption
8. Corresponds to CLO 2(d)
Generally, product costs are recognized as expenses (Points : 6)
In the period when the related revenue is recognized
In the period when the vendor invoice is recieved.
In the period when the expenses are paid.
In the period when the expenses are incurred.
9. Corresponds to CLO 3(a)
Jot Construction Company uses the percentage-of-completion method of accounting. In 2013, Jot began work on a contract it had received which provided for a contract price of $6,000,000. Additional information related to the project includes: costs incurred during the year were $2,100,000; estimated costs to complete as of December 31, 2013 were $1,400,000. What amount should Jot recognize as gross profit for the project in 2013? (Points : 6)
$700,000
$1,000,000
$1,500,000
$2,500,000
10. Corresponds to CLO 3(b)
Swift Builders, Inc. uses the completed-contract method of accounting for a $450,000 contract that it expects will take two years to complete. At December 31, 2013collections to date were $300,000. What amount should Swift recognize as gross profit or loss for 2013? (Points : 6)
$ -0-
a $20,000 loss
a $40,000 loss
a $110,000 loss
11. Corresponds to CLO 3(c)
Miller Company appropriately uses the installment method of accounting to recognize income in its financial statements. Pertinent data relating to this method of accounting includes:
$60,000
$120,000
$140,000
$200,000
12. Corresponds to CLO 3(d)
In consignment sales, the consignee (Points : 6)
records the merchandise as an asset on its books.
recognizes revenue when it ships merchandise to the consignor.
upon sale of the merchandise, has a liability for the net amount due the consignor.
records a liability for the merchandise held on consignment.
13. Corresponds to CLO 4(a)
If Collier Costumes, Inc. has the following items at year-end, how much should it report as cash on the balance sheet?
$80,000
$28,000
$26,320
$620
14. Corresponds to CLO 4(b)
At December 31, 2013, Vega Vaccum Corporation has cash in bank of 104,000, restricted cash in a separate account of $19,000, and a bank overdraft at another bank of $500. How much should it report as cash on the balance sheet? (Points : 6)
$123,000
$122,500
$104,500
$104,000
15. Corresponds to CLO 4(c)
Which of the following is not classified as cash on the balance sheet? (Points : 6)
Postage stamps
Post-dated checks
Cash restricted for plant expansion
All of the above
16. Corresponds to CLO 4(d)
The month-end bank statement for Guthrie Motors shows a balance of $125,000 and a bank service charge of $40. Outstanding checks are $35,000, a deposit of against the account. The correct balance in the bank account at month end is (Points : 6)
$101,500
$ 101,460
$98,500
$98,460
17. Corresponds to CLO 5(a)
As of December 31, Gammelguard Corporation has outstanding accounts receivable of $1.5 million. Sales on credit during the year were $9 million. The allowance for doubtful accounts has a credit balance of $20,000. If the company estimates that 9% of its outstanding receivables will be uncollectible, what will be the amount of bad debt expense recognized for the year? (Points : 6)
$115,000
$135,000
$155,000
$810,000
18. Corresponds to CLO 5(b)
As of December 31, William Corporation has outstanding accounts receivable of $5.8 million. Sales on credit during the year were $18.5 million. The allowance for doubtful accounts has a credit balance of $94,000. If the company estimates that 2% of its net credit sales will be uncollectible, what will be the amount of bad debt expense recognized for the year? (Points : 6)
$464,000
$370,000
$276,000
$116,000
19. Corresponds to CLO 5(c)
Kandris Corporation had a balance in accounts receivable of $600,000 and a balance in allowance for doubtful accounts of $55,000, when management decided the account receivable from Dunn Corporation of $2,000 had become uncollectible. What journal entry should Kandris Corporation make to write-off the uncollectible account? (Points : 6)
20. Corresponds to CLO 5(d)
At December 31, Norman Industrial Inc. had account balances before year-end adjusting entries for accounts receivable and the related allowance for doubtful accounts of $920,000 and $79,000 respectively. An aging of accounts receivable indicated that $100,000 of the December 31, receivables are expected to be uncollectible. The net realizable value of accounts receivable after adjustment is (Points : 6)
$1,020,000
$820,000
$841,000
$999,000
21. Corresponds to CLO 6(a)
The following is a record of Axis Corporation's inventory transactions for the current month:
Axis uses the periodic inventory system. Using the FIFO method, what is the amount of cost of goods sold for the month?
$61,700
$60,300
$58,500
$31,100
22. Corresponds to CLO 6(b)
The following is a record of Meyer Corporation's inventory transactions for the current month:
Meyer uses the periodic inventory system. Using the LIFO method, what is the amount of ending inventory on October 31?
(Points : 6)
$18,300
$20,200
$18,000
$29,300
23. Corresponds to CLO 6(c)
The following is a record of Tiller Corporation's inventory transactions for the current month:
Tiller uses the periodic inventory system. Using the weighted-average inventory method, what is the cost of goods sold for the month of January?
(Points : 6)
$14,004
$9,775
$4,085
$4,025
24. Corresponds to CLO 6(d)
The following is a record of Caulder Corporation's inventory transactions for the current month:
Caulder uses the perpetual inventory system. Using the LIFO method, what is the ending inventory on March 31?
(Points : 6)
$22,900
$22,100
$22,600
$23,400
25. Corresponds to CLO 7(a)
In the context of dollar-value LIFO, when inventory in base year dollars decreases, (Points : 6)
26. Corresponds to CLO 7(b)
Hemmer Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2011. Its inventory at that date was 460,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows:
What is the ending inventory at December 31, 2012 under dollar-value LIFO?
(Points : 6)
$464,000
$485,680
$481,400
$464,280
27. Corresponds to CLO 7(c)
Inventories are primarily accounted for at cost on the balance sheet. In a departure from the cost basis, inventory is accounted for at market when (Points : 6)
There is any decrease in the future utility
28. Corresponds to CLO 7(d)
If the historical cost of product X is $55, the selling price of product X is $90, the costs to sell product X are $14, the replacement cost for product X is $50, lower-of-cost-or-market comparison? (Points : 6)
$50
$49
$76
$55
29. Corresponds to CLO 8(a)
Energy Solutions Corporation estimates the cost of its physical inventory at November 30 for use in an interim financial statement. Management uses a gross profit rate on sales of 30%. The following information is available:
The estimated cost of inventory at November 30 is
(Points : 6)
$270,000
$630,000
$650,000
$520,000
30. Corresponds to CLO 8(b)
How is the gross profit method used as it relates to inventory valuation? (Points : 6)
Arrow Corporation uses the conventional retail inventory method to value its merchandise inventory. The following information is available for the current year:
Cost Retail
What is the cost to retail ratio?
(Points : 6)
60.16%
59.65%
58.60% (Not sure 100%)
57.84%
32. Corresponds to CLO 8(d)
Capital City Corporation uses the conventional retail inventory method to determine its ending inventory at cost. The following information is available for the current year:
Capital City determines that the cost-to-retail ratio is 70%. What is the ending inventory at cost?
$520,000
$399,000
$300,000
$570,000
