ACC6901 Final Exam

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Author:
honestkyle
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239051
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ACC6901 Final Exam
Updated:
2013-10-06 21:43:45
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ACC6901
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Combination of two practice tests for Financial Accounting and Decision Making in preparation for the final exam.
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  1. Liabilities are generally classified  on a balance sheet as:
    a - small liabilities and large liabilities.
    b - present liabilities and future liabilities.
    c - tangible liabilities and intangible liabilities.
    d - current liabilities and long-term liabilities.
  2. On the Balance Sheet, where does Accumulated Depreciation belong?
  3. On the Balance Sheet, where does Retained Earnings belong?
    Stockholders'/Owner's Equity
  4. On the Balance Sheet, where does Interest Expense belong?
    Not on the Balance Sheet
  5. On the Balance Sheet, where does Income Tax Payable belong?
  6. On the Balance Sheet, where do Dividends belong?
    Not on the Balance Sheet
  7. On the Balance Sheet, where does Merchandise Inventory belong?
    Current Assets
  8. On the Balance Sheet, where does Patent belong?
    Intangible Assets
  9. On the Balance Sheet, where does Prepaid Insurance belong?
    Current Assets
  10. On the Balance Sheet where does Mortgage Payable belong?
  11. On the Balance Sheet, where does Investment in long-term bonds belong?
    Long-Term Investments
  12. What is the primary equation of an Income Statement?
    Revenues - Expenses = Net Income (Loss)
  13. On the Income Statement, what are examples of Revenue?
    • Sales
    • Interest revenue
  14. On the Income Statement, what are examples of Expenses?
    • Cost of goods sold (COGS)
    • Rent expense
    • Depreciation expense
    • Interest expense
    • Miscellaneous expense
    • Wages expense
  15. What is the time period of an Income Statement?
    • Span of time
    • Example: For the year ended or For the month ended
  16. What is the primary equation for the Balance Sheet?
    Assets = Liabilities + Stockholders' Equity
  17. Cash, Inventory, Prepaid Rent, A/R, Trucks, N/R, Unexpired Insurance, and Property and Equipment are all examples of what?
    Assets
  18. A/P, Dividends Payable, N/P, Long-term debt and other are all examples of what?
    Liabilities
  19. Common Stock, Retained Earnings, and Paid-in Capital are examples of what?
    Stockholders' Equity
  20. What is the layout for the Statement of Retained Earnings?
    • R/E (Beginning)
    • + Net Income (Loss)
    • = Subtotal
    • - Dividends
    • R/E (Ending)
  21. What are the 3 main sections on the Statement of Cash Flows?
    • Operating
    • Investing
    • Financial
  22. What are characteristics of the Direct method for the Statement of Cash Flows?
    • GAAP recommended
    • Cash-in (receipts)
    • Cash-out (disbursements)
    • Can be calculated from financial statements
  23. What are characteristics of the Indirect Method for the Statement of Cash Flows?
    • Accrual net income
    • + Depreciation
    • +-Current assets/Current liabilities
    • +-Gains/Losses
  24. On the Statement of Cash Flows, Property, Plant, and Equipment, Capital expenditures, and Proceeds from dispositions are examples of what?
    Investing activities
  25. On the Statement of Cash Flows, Net Income, Depreciation, A/R, Inventories, A/P, and Int/P are examples of what?
    Operating activities
  26. On the Statement of Cash Flows, Issuance of debt, Payment of dividends, Loans, borrowing, paying back, selling stock, and buying it back are examples of what?
    Financial activities
  27. Does the Balance Sheet report a span of time or a specific date?
    • Specific date
    • Example: Dec 31, 2012
  28. Does the Statement of Stockholders' Equity cover a span of time or a specific date?
    • Span of time
    • Example: For the month ended Nov 30, 2012
  29. On the Classified Balance Sheet, what are characteristics of Current Assets?
    • Cash
    • Will become cash
    • Will be consumed within 1 year or operating cycle (whichever is longer)
    • Example: Cash, A/R, N/R, Inventory, Prepaid Rent
  30. What is the layout of the Assets on a Classified Balance Sheet?
    • Current Assets
    • Property, Plant, and Equipment
    • Intangible Assets
    • Noncurrent Assets
  31. On the Classified Balance Sheet, what are examples of Intangible Assets?
    • Trademarks
    • Copyrights
    • Goodwill
  32. On the Classified Balance Sheet, what is a Current Liability?
    • A liability that is due within 1 year
    • Example: A/P
  33. What is the layout of the Liabilities on the Classified Balance Sheet?
    • Current Liabilities
    • Long-term Liabilities
  34. On the Statement of Cash Flows, an increase in A/R means what in terms of cash?
    Decrease in Cash
  35. On the Statement of Cash Flows, an increase in Prepaid Insurance means what in terms of Cash?
    Decrease in Cash
  36. On the Statement of Cash Flows, an increase in A/P means what in terms of Cash?
    Increase in Cash
  37. On the Statement of Cash Flows, anywhere the word "Sale" is used typically means what in terms of Cash?
    Increase in Cash
  38. On the Statement of Cash Flows, the words "payment" or "purchase" typically mean what in terms of Cash?
    Decrease in Cash
  39. On the Statement of Cash Flows, what appears at the bottom after Operation, Investing, and Financial Activities?
    • Beginning Cash
    • Ending Cash
  40. On the Statement of Cash Flows, what appears after the Beginning and Ending Cash lines?
    • Supplemental Schedule Non-cash Investing and Financial Accounts
    • Example: Exchange of Common Stock for Equipment
  41. What account is Allowance For Uncollectable Accounts?
    Contra-Asset
  42. What is the A/R Turnover Ratio?
  43. What is the equation for Average A/R?
  44. What is the equation for the Average Collection Period?
    Days in Fiscal Year / A/R Turnover
  45. Interpret these sales discount terms:
    • 2% discount, if paid in 10 days
    • Net owe in 30 days
  46. How would you write the journal entry for a $10,000 purchase with sales discount terms 2/10?
    • Cash                 9,800
    • Sales Discounts  200
    •         A/R                     10,000
  47. What is the journal entry for when someone can't pay their bill for some reason?
    • Bad Debt Expense        XX
    •         Allowance for Uncollectable Accounts  XX
  48. How does an accountant figure out how much cash to allocate the Allowance for Uncollectable Accounts?
    A % of credit sales based on history.
  49. How are Perpetual Inventory changes recorded?
    Real-time basis
  50. What is the journal entry for Perpetual Inventory sales?
    • Costs of Goods Sold    XX
    •         Inventory                XX
  51. What do most businesses use to record inventory sales?
    The Periodic method.
  52. What is GAAS?
    Generally-Accepted Auditing Standards
  53. What is the extended Inventory equation?
    • Sales
    • - COGS
    • = Gross Profit
    • - Operating Expenses
    • = Net Income
  54. What is the Specific Identification Method regarding Inventory?
    Figuring out remaining inventory based on identity codes.
  55. What is LIFO?
    • Last In First Out
    • Remaining inventory will be the oldest items
  56. What is FIFO?
    • First In First Out
    • Remaining items will be the newest
  57. What is the equation for Cost of Goods Sold?
    • Beginning Inventory
    • +Purchases
    • =Cost of Goods Available for Sale
    • -Ending Inventory
    • =Cost of Goods Sold
  58. Why is there more cash flow with LIFO?
    Lower Net Income -> Lower Taxes -> More Cash Flow
  59. Why is there less cash flow with FIFO?
    Higher Net Income -> Higher Taxes -> Less Cash Flow
  60. What is the Weighted Average method of ending Inventory?
    Get the average cost and multiply by the ending inventory amount.
  61. What is F.O.B.?
    Freight on Board
  62. What is F.O.B. Destination mean?
    The seller pays for shipping.
  63. What does F.O.B. Shipping Point mean?
    The buyer pays for shipping.
  64. What are Long-Term Assets?
    • Whatever it takes to get the Asset ready for use.
    • Installation
    • Sales Tax
    • Tear building down on land you bought.
  65. What is the concept behind Basket Purchases?
    Purchasing a number of items at once and then pricing them according to Fair Market Value (FMV) of those items.
  66. A factory + land was purchased for $200,000. FMV of factory is $250,000 and land is $100,000. What are the allocated prices of the factor and land purchased?
    • Total FMV = $250,000 + $100,000
    • Total FMV = $350,000
    • Factory FMV = $200 x $250/$350 = $142,857
    • Land FMV = $200 x $100/$350 = $58,000
  67. What account type is Capital Expenditure?
    • Asset
    • Example: Carpeting, New Roof
  68. What account type is Revenue Expenditure?
    • Expense
    • Example: Patching parking lot, Fix stitching, Repair something

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