MBA 500 Final EXAM

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MBA 500 Final EXAM
2013-05-04 22:27:58
accounting mba 500 final exam

Accounting final exam
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  1. During the month, the supplies (asset) account was debited $1700 for supplies purchased. The cost of supplies used during the month was $1050. Record the adjustment for supplies used.
    • Assets    Liabilities OE        Net Income
    • Supplies -1050            Supplies Expense -1050
    • Journal Entry
    • Dr. Supplies Expense      1050
    •     Cr. Supplies                      1050
  2. Consider the following interest payable T-account.
               Interest Payable                           
                            ⌈  Feb 1 balance      $1,220
    Feb transactions  ⌈  Feb 28 adjustment     ?  
                            ⌈  Feb 28 balance     $2,170
    • $1,200 + ? - $1,590 = $2,170
    • Thus Feb 28 adjustment = $2,540
  3. _______a listing of the organization’s assets, liabilities, and owners’ equity
    at a point in time.
    Balance sheet
  4. The Balance sheet is sometimes called the_______  because it summarizes the entity’s resources (assets), obligations (liabilities), and owners’ claims (owners’ equity).
    statement of financial position
  5. _____are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events.
  6. ______ are probable future sacrifices of
    economic benefits arising from present obligations of a particular entity to
    transfer assets or provide services to other amounts owed to other entities.
  7. ______ is the ownership right of the owners
    of the entity in the assets that remain after deducting the liabilities.
    Owners' Equity
  8. Indicate the category or each item, and the financial statement on which the item can usually be found..
    -Accumulated depreciation
    -Long-term debt
    -Loss on sale of short-term investments
    -Net income
    -Merchandise inventory
    -Other accrued liabilities
    -Dividends paid
    -Cost of goods sold
    -Additional paid-in capital
    -Interest income
    -Selling expenses
    • -Accumulated depreciation- Asset, Balance sheet
    • -Long-term debt-Liabilities, Balance Sheet
    • -Equipment-Assets, Balance Sheet
    • -Loss on sale of short-term investments-Loss, Income Statement
    • -Net income-Owners' equity, Income Statment
    • -Merchandise inventory-Asset, Balance Sheet
    • -Other accrued liabilities-Liability, Balance Sheet
    • -Dividends paid-Owners' Equity, Neither
    • -Cost of goods sold-Expense, Income Statement
    • -Additional paid-in capital-Owners' Equity, Balance Sheet
    • -Interest income-Revenue, Income Statement
    • -Selling expenses-Expense, Income Statement
  9. ______ reflect the cumulative earnings of the corporation that have been retained for use in the business rather than disbursed to the stockholders as dividends.
    Retained Earnings
  10. Which of the following would not affect total retained earnings? Assume that it is the end
    of the fiscal year and that the books have been closed?
    A. Cash dividends
    B. Stock dividends
    C. Stock splits
    D. Net income
    e. Al of the above would affect total retainedearnings
    C. stock splits
    (this multiple choice question has been scrambled)
  11. Which of the following would not affect total retained earnings? Assume that it is the end
    of the fiscal year and that the books have been closed?
    A. Cash dividends
    B. Net income
    C. Stock dividends
    D. Stock splits
    e. Al of the above would affect total retainedearnings
    D. stock splits
    (this multiple choice question has been scrambled)
  12. At the beginning of the current fiscal year, the balance sheet of Hughey, Inc. showed owners' equity of $520,000. During the year, liabilities increased by $21,000 to $234,000; paid-in capital increased by $40,000 to $175,000; and assets increased by $260,000. Dividends declared and paid during the year were $55,000. Calculate net income or loss for the year.
    Answer in note book.
  13. Work problem pg 293 Ex 8.3.
  14. Work problem pg 63 Ex 2.5.
  15. Work problem on page 105 Ex 4.9
  16. ___________ are outflows or other using up of assets or incurring a liability during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity’s major operations.
  17. _____ are decreases in net assets from incidental transactions that are not expenses or distributions to owners.
  18. _______ are entries usually made during the process of closing the books that results
    in more accurate financial statements.
  19. Adjustments involve ____ and _______.
    Accruals and reclassifications
  20. ________ are part of accrual accounting, and they are required to achieve a matching of revenue and expense so that the financial statements reflect accurately the financial position and results of operations of the entity.
  21. Work problem on Pg 107 Ex 4.15.
  22. Work problem on Pg 293 Ex 8.3
  23. Work problem on Pg 63 Ex 2.7
  24. A record of a transaction involving a posting to the left side of an account is
    called a _____.
    Debit entry
  25. An account that has a balance on its right is said to have a _______.
    credit balance
  26. When does Debit increase on left side:
    • Debit
    • Expense
    • Assets
    • Dividends
  27. _______ provide that financial information should be useful to investor and creditor concerns about the cash flows of the enterprise, the resources and obligations of the enterprise, and the profit of the enterprise.
    Objectives of financial reporting
  28. The objectives of financial reporting for nonbusiness enterprises are the same as
    business enterprises except that resource providers, rather than investors, are
    concerned about ______, rather than profit.
    Performance results
  29. If costs are increasing, the items acquired first were cheaper. This decreases the cost of goods sold (COGS) under ___ and increases profit. The income tax is larger. Value of unsold inventory is also higher.
  30. ________ is the process of bringing into agreement the balance in the Cash account in the entity’s ledger and the balance reported by the bank on the bank statement.
    Bank reconciliation
  31. ______ are cash and those assets that are likely to be converted to cash or used to benefit the entity within one year of the balance sheet date.
    Current assets
  32. What are some examples of current assets?
    • Examples:
    • Cash and Cash equivalents,
    • Marketable (or short term) securities,
    • Accounts and Notes Receivable,
    • Inventories,
    • Prepaid Expenses or Other Current Assets, Deferred Tax Assets
  33. Write a journal entry for used equipment sold for cash.
    • Dr. Cash…………………………………………..$1200
    • Dr. Accumulated Depreciation……… $5100
    •    Cr.Equipment…………………………              $6000
    •    Cr. Gain on sale of Equipment Sold…     $300
  34. Why are adjustments made?
    Adjusting entries are required in order to achieve a better matching of revenues and expenses on the income statement
  35. Reconciliation procedures for adjustments to the bank balance
    • + deposit in transit
    • - outstanding checks
    • + - Bank errors
  36. Reconciliation procedures for adjustments to the book balance.
    • + Notes
    • collected by the bank
    • - NSF (bounced) checks
    • - Check printing or other service charges
    • +- Company errors
  37. Effect of a “write-off” of an AR due to uncollectible.
    Dr.Allowance for Bad Debts……..xx

          Cr. Accounts Receivable……….    Xx
  38. What is depreciation?
    Depreciation is the accounting process of recognizing the cost of an asset that is used up over its useful life to the entity.
  39. Computation of cash discount (e.g. 2/10, n/30) and net payment. What does this mean?
    2/10 refers to the discount terms of 2% discount if paid within 10 days and n/30 refers to full amount is due within 30 days. Net sales amount is cash discounts on sales subtracted from sales
  40. _______ is another contra asset, and the balance in this account is the cumulative total of all the depreciation expense that has been recorded over the life of the asset up to the balance sheet date.
    Accumulated depreciation
  41. _______ is preferred stock, common stock, and additional paid-in capital. This represents amounts invested in the corporation by stockholders and are sometimes referred to as contributed capital
    Paid in capital
  42. Computation of wages expense
    • problem Pg
    • 287 ex 7.23
  43. Compute depreciation expense using the double declining balance depreciation method
    Pg 234 ex 6.7
  44. Because the full principal amount is not available to the borrower, the _______ on a discount basis is much higher than the rate used in the lending agreement to calculate the interest.
    effective interest rate (APR)
  45. . Compute cash available to use from a loan on a discount basis
    Pg 280 ex 7.1
  46. _______ is the principal payments on long-term debt that are scheduled to be paid within one year of the balance sheet date.
    Current maturities of long-term debt
  47. ______ are reported in the current liability section but separately from short-term debt because the liability arose from a long-term borrowing transaction.
    Current maturities of long-term debt
  48. Payroll expense journal entries (recording gross pay, net pay and withholdings)
    • Dr. Payroll Tax Expense. . . . . .xx
    •    Cr. Payroll Taxes Payable
    • (or Accrued Payroll Taxes). .  . .   .xx
  49. The effect of recording a Warranty liability.
    Pg 281 ex 7.5

    • Fiscal
    • period in which product is sold: +estimate warranty liability; - warranty
    • expense

    • Dr. Warranty expense…………         xx
    •    Cr. Estimated Warranty Liability..  xx

    • Fiscal
    • period in which warranty is honored: - cash; - estimated warranty liability

    • Dr.Estimated Warranty Liability……xx
    •   Cr. Cash……………………………………………xx
  50. Identify owner’s equity account given a list of accountsOwners’ equity
    • 1)  Paid-in capital:
    •    a.      Preferred stock
    •    b.      Common stock
    •    c.      Additional paid-in capital
    • 2)  Retained Earnings
    • 3)  Accumulated other comprehensive income (loss)
    • 4)  Less: Treasury stock
    • 5)  Noncontrolling interest
  51. These are characteristics of what?
    • Dividend may be skipped, even though it usually must be caught up before dividends can be paid on the common stock.
    • No maturity date
    • Dividends are not an expense and are not deductible for income tax purposes.
    preferred stock
  52. These are characteristics of what?
    • Interest must be paid or firm faces legal action, possibly leading to bankruptcy
    • Principal must be paid at maturity
    • Interest is an expense and is deductible for income tax purposes.
    Bonds payable
  53. _______ represent the maximum number of shares that the corporation is legally approved to issue
    Authorized shares
  54. ________is the number of shares of stock that have actually been transferred from the corporation to shareholders
    Issued shares
  55. ________ is the number of shares still held by stockholders (shares issued less treasury shares)
    Outstanding shares
  56. ______ is the number of issued shares that have been repurchased by the corporation
    Treasury stock
  57. _________ is the right of a stockholder to purchase shares from any additional sales of shares in proportion to the stockholder’s present percentage of ownership
    Preemptive right
  58. Declaration of a cash dividend affects which accounts?
    • Declaration Date:
    • Assets= Liabilities       +       owner’s equity
    •     + dividends payable    - retained earnings

    • Dr. Retained earnings……..xx
    •       Cr. Dividends Payable… xx
  59. Activities included in management accounting include
    • 1) Strategic, Operational, and Financial (Planning)
    • 2) Executing operational activities (Managing)
    • 3) Performance analysis: Plans vs actual results (Controlling)
  60. Characteristic of management accounting
    • - Used internally to managers,
    • - focused on the present and future,
    • - breadth of focus is Micro
    • - Individual units of organization,
    • - relevance more important than reliability,
    • - No reporting standards
  61. Computation of accrued interest payable of a note
    problem on final exam study guide
  62. Contribution margin format income statement
    • Revenues              100,000
    • Variable Expenses    60,000
    • Contribution margin  40,000
    • Fixed expenses        30,000
    • Operating income     10,000