ACCT 550 Midterm Exam Solution


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ACCT 550 Midterm Exam Solution

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ACCT 550 Midterm Exam Solution

 

 

Question 1. (TCO A) The Financial Accounting Standards Board employs a “due process” system, which?

 

Question 2. (TCO A) The cash method of accounting:

 

Question 3. (TCO A) Which of the following is an ingredient of relevance?

 

Question 4. (TCO A) Information is neutral if it.

 

Question 5. (TCO A) Which of the following is not a basic element of financial statements?

 

Question 6. (TCO A) Issuance of common stock for cash affects which basic element of financial statements?

 

Question 7. (TCO A) What is the quality of information that enables users to better forecast future operations?

 

Question 8. (TCO D) Balance sheet information is useful for all of the following except to:

 

Question 9. (TCO D) The balance sheet contributes to financial reporting by providing a basis for all of the following except;

 

Question 10. (TCO A) The quality of information that gives assurance that is reasonably free of error and bias and is complete is?

 

Question 1. (TCO D) The net assets of a business are equal to?

 

Question 2. (TCO A) Why are some of the major differences between iGAAP and U.S. GAAP? Explain in detail.
Question 3. (TCO C) (TCO C) Blue Corp. reports operating expenses in two categories: (1) selling and (2) general and administrative. The adjusted trial balance at December 31, 201X, included the following expense accounts.
Accounting and legal fees $150,000
Advertising $125,000
Freight-out $65,000
Interest $80,000
Loss on sale of long-term investments $35,000
Officers’ salaries $200,000
Rent for office space $160,000
Sales salaries and commissions $110,000
One half of the rented premises are occupied by the sales department.
How much of the expenses listed above should be included in Perry’s general and administrative expenses for 201X?
Question 4. (TCO C) An income statement shows “income before income taxes and extraordinary items” in the amount of $3,000,000. The income taxes payable for the year are $1,500,000, including $260,000 that is applicable to an extraordinary gain. Thus, what is the “income before extraordinary items”?
Question 5. (TCO C) Ivy Co. had the following account balances.
Sales $ 120,000
Cost of goods sold 70,000
Salary expense 15,000
Depreciation expense 20,000
Dividend revenue 5,000
Utilities expense 6,000
Rental revenue 30,000
Interest expense 10,000
Advertising expense 15,000
What would Ivy report as total expenses in a single-step income statement?
Question 6. (TCO B) Prepaid rent at 1/1/1X was $25,000. During 201X, rent payments of $123,000 were made and charged to “rent expense.” The 201X income statement shows as a general expense the item “rent expense” in the amount of $122,000. You are to prepare the missing adjusting entry that must have been made, assuming reversing entries are not made. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment.
Question 7. (TCO B) Retained earnings at 1/1/1X was $150,000 and at 12/31/1X it was $200,000. During 2010, cash dividends of $50,000 were paid and a stock dividend of $30,000 was issued. Both dividends were properly charged to retained earnings. You are to provide the missing closing entry. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment.
Question 8. (TCO B) Retained earnings at 1/1/1X was $90,000 and at 12/31/1X it was $210,000. During 201X, cash dividends of $50,000 were paid and a stock dividend of $40,000 was issued. Both dividends were properly charged to retained earnings. You are to provide the missing closing entry. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment.
Question 9. (TCO B) Unearned rent at 1/1/1X was $6,000 and at 12/31/1X was $15,000. The records indicate cash receipts from rental sources during 201X amounted to $40,000, all of which was credited to the Unearned Rent Account. You are to prepare the missing adjusting entry. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment.
Question 10. (TCO D) Which of the following is not an acceptable major asset classification?
Question 11. (TCO D) An example of an item that is not an element of working capital is?
Question 12. (TCO A) Which of the following is true with regard to the element “comprehensive income”?
Question 13. (TCO D) The current assets section of the balance sheet should include;
Question 14. (TCO D) Hall Corp.’s trial balance reflected the following account balances at December 31, 201X.
Accounts receivable (net)
Accounts receivable (net) $24,000
Trading securities 6,000
Accumulated depreciation on equipment and furniture 15,000
Cash 11,000
Inventory 30,000
Equipment 25,000
Patent 4,000
Prepaid expenses 2,000
Land held for future business site 18,000
In Hall’s December 31, 201x balance sheet, what are the current assets total?

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