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ACG 3100-Which of the following is NOT normally an objective

ACG 31001.Which of the following is NOT normally an objective of financial reporting?a. To provide information about an entity’s assets and claims against those assetsb. To provide information that is useful in assessing an entity’s sources and uses of cashc. To provide information that is useful in lending and investing decisionsd. To provide information about an entity’s liquidation value2.As independent (or external) auditors, CPAs are primarily responsible fora. preparing financial statements in conformity with GAAP.b. certifying the accuracy of financial statements.c. expressing an opinion as to the fairness of financial statements.d. filing financial statements with the SEC.3.The assumed continuation of a business entity in the absence of evidence to the contrary is an exampleof the accounting concept ofa. accrual.b. consistency.c. comparability.d. going concern.4.According to the FASB’s conceptual framework, the process of reporting an item in the financialstatements of an entity isa. realization.b. recognition.c. matching.d. allocation.5.Generally accepted accounting principlesa. are accounting adaptations based on the laws of economic science.b. derive their credibility and authority from legal rulings and court precedents.c. derive their credibility and authority from the federal government through the financialreporting section of the SEC.d. derive their credibility and authority from general recognition and acceptance by theaccounting profession.6.On June 30, a company paid $3,600 for insurance premiums for the current year and debited theamount to Prepaid Insurance. At December 31, the bookkeeper forgot to record the amountexpired. The omission has the following effect on the financial statements prepared December 31:a. overstates owners’ equity.b. overstates assets.c. understates net income.d. overstates both owners’ equity and assets.7.Which of the following criteria must be met before an event should be recorded for accountingpurposes?a. The event must be an arm’s-length transaction.b. The event must be repeatable in a future period.c. The event must be measurable in financial terms.d. The event must be disclosed in the reported footnotes.8.Adjusting entries normally involvea. real accounts only.b. nominal accounts only.c. real and nominal accounts.d. liability accounts only.9.If an inventory account is understated at year end, the effect will be to overstate thea. net purchases.b. gross margin.c. cost of goods available for sale.d. cost of goods sold.10.Beginning and ending Accounts Receivable balances were $28,000 and $24,000, respectively. Ifcollections from clients during the period were $80,000, then total services rendered on accountwere apparentlya. $76,000.b. $84,000.c. $104,000.d. $108,000.11.The following balances have been excerpted from Edwards’ balance sheets:Prepaid Insurance …………Interest Receivable ……….Salaries Payable ………….December 31, 2013$ 6,0003,70061,500December 31, 2014: 2024 – Essay Writing Service. Custom Essay Services Cheap$ 7,50014,50053,000Edwards Company paid or collected during 2013 the following items:Insurance premiums paid ……Interest collected ………..Salaries paid …………….$ 41,500123,500481,000The interest revenue on the income statement for 2013 wasa. $90,500.b. $112,700.c. $117,500.d. $156,500.12.Comet Corporation’s liability account balances at June 30, 2013, included a 10 percent note payable.The note is dated October 1, 2011, and carried an original principal amount of $600,000. The noteis payable in three equal annual payments of $200,000 plus interest. The first interest andprincipal payment was made on October 1, 2014: 2024 – Essay Writing Service. Custom Essay Services Cheap. In Comet’s June 30, 2013, balance sheet, whatamount should be reported as Interest Payable for this note?a. $10,000b. $15,000c. $30,000d. $45,00013.The correct order to present current assets isa. cash, inventories, prepaid items, accounts receivable.b. cash, inventories, accounts receivable, prepaid items.c. cash, accounts receivable, prepaid items, inventories.d. cash, accounts receivable, inventories, prepaid items.14.Unearned rent would normally appear on the balance sheet as aa. plant asset.b. current liability.c. long-term liability.d. current asset.15.Which of the following is NOT a long-term investment?a. Stock held to exert influence on another companyb. Land held for speculationc. Trademarksd. Cash surrender value of life insurance16.The operating cyclea. measures the time elapsed between cash disbursement for inventory and cash collection ofthe sales price.b. refers to the seasonal variations experienced by business enterprises.c. should be used to classify assets and liabilities as current if it is less than one year.d. cannot exceed one year.17.Wolfe Co. was incorporated on July 1, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay, with $200,000 from the issuance of stock and borrowedfunds of $30,000. During the first year of operations, net income was $10,000. On December 15,Wolfe paid an $800 cash dividend. No additional activities affected owners’ equity in 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay. AtDecember 31, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay, Wolfe’s liabilities had increased to $37,600. In Wolfe’s December 31, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay,balance sheet, total assets should be reported ata. $239,200.b. $240,000.c. $246,800.d. $276,800.18.Volta Electronics Inc. reported the following items on its December 31, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay, trial balance:Accounts Payable ………………………………….Advances to Employees ……………………………..Unearned Rent Revenue ……………………………..Estimated Liability Under Warranties ………………..Cash Surrender Value of Officers’ Life Insurance ……..Bonds Payable …………………………………….Discount on Bonds Payable ………………………….Trademarks ……………………………………….$108,9004,50028,80025,8007,500555,00022,5003,900The amount that should be recorded on Volta’s balance sheet as total liabilities isa. $696,000.b. $700,500.c. $703,500.d. $741,000.19.In contrast with a multiple-step income statement, a single-step income statement does not show theamount ofa. income taxes on continuing operations.b. cost of goods sold.c. gross profit.d. earnings per share.20.The term "comprehensive income" as defined by the FASBa. must be reported on the face of the income statement.b. includes all changes in equity during a period except those resulting from investments byand distributions to owners.c. is the net change in owners’ equity for the period.d. is synonymous with the term "net income."21.The following amounts are from Silverton Co.’s 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay income statement:Sales ………………………………………….Sales returns and allowances ……………………..Cost of goods sold ………………………………Utilities expense ……………………………….Interest revenue ………………………………..Income tax on operations …………………………Extraordinary loss due to earthquake, net of tax ……Interest expense ………………………………..Salaries expense ………………………………..Loss on sale of investments ………………………$340,0005,000132,00066,0001,00028,0005,0004,00046,0003,000What amount would Silverton show for income from continuing operations on a multiple-stepformat income statement?a. $52,000b. $68,000c. $57,000d. $96,00022.Saginaw Inc. decided on August 1, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay, to dispose of a component of its business. The componentwas sold on November 30, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay. Saginaw’s income for 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay included income of $250,000 fromoperating the discontinued segment from January 1 to the sale date. Saginaw incurred a loss onthe November 30 sale of $220,000. Ignoring income taxes, what amount should be reported in the2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay income statement as the net income or loss under "Discontinued Operations"?a. $220,000 lossb. $30,000 lossc. $30,000 incomed. $250,000 income23.The financial statements of Mannassass Corporation for 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay and 2015 – Research Paper Writing Help Service contained the followingerrors:2014: 2024 – Essay Writing Service | Write My Essay For Me Without DelayEnding InventoryRent Expense2015 – Research Paper Writing Help Service$14,000 overstated$4,800 understated$20,000 understated$6,600 overstatedAssuming that none of the errors were detected or corrected, by what amount will 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay operatingincome be overstated or understated?a. $9,200 overstatedb. $9,200 understatedc. $18,800 understatedd. $18,800 overstated24.In a statement of cash flows, receipts from sales of property, plant, and equipment would be classifiedas cash inflows froma. liquidating activities.b. operating activities.c. investing activities.d. financing activities.25.In a statement of cash flows (indirect method), depreciation is treated as an adjustment to reported netincome because depreciationa. is an inflow of cash to a reserve account for asset replacement.b. reduces the reported net income and involves an inflow of cash.c. reduces the reported net income but does not involve an outflow of cash.d. usually represents a significant portion of operating expenses.26.Which of the following statements regarding cash equivalents is correct?a. A one-year Treasury note could not qualify as a cash equivalent.b. All investments meeting the FASB’s criteria for cash equivalents must be reported as such.c. The date a security is purchased determines its "original maturity" for cash equivalentclassification purposes.d. Once established, management’s policy for classifying items as cash equivalents cannot bechanged.27.Which of the following would not be classified as an operating activity?a. Interest incomeb. Income tax expensec. Dividend incomed. Payment of dividends28.The amount reported as "Cash" on a company’s balance sheet normally should excludea. postdated checks that are payable to the company.b. cash in a payroll account.c. undelivered checks written and signed by the company.d. petty cash.29.When a specific customer’s account is written off by a company using the allowance method, theeffect on net income and the net realizable value of the accounts receivable isa.b.c.d.Net IncomeIncreaseDecreaseNoneDecreaseNet Realizable Valueof Accounts ReceivableIncreaseDecreaseNoneNone30.The following information is from the records of Sumter, Inc. for the year ended December 31, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay.Allowance for Doubtful Accounts, January 1, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay ..Sales, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay …………………………………Sales Returns and Allowances, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay …………….$6,0002,920,00032,000(cr)If the basis for estimating bad debts is 1 percent of net sales, the correct amount of doubtfulaccounts expense for 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay isa.b.c.d.$22,800.$23,200.$28,880.$34,880.31.In preparing the bank reconciliation of Yardley Company for the month of July, the followinginformation is available:Balance per bank statement, 7/31 …………………Deposits in transit, 7/31 ……………………….Outstanding checks, 7/31 ………………………..Deposit erroneously recorded by bank to Yardley’saccount, 7/18 ………………………………..Bank service charges for July ……………………$60,0759,3758,62537575What is the correct cash balance at July 31?a. $52,875b. $54,375c. $54,825d. $60,45032.Lawson Corporation’s checkbook balance on December 31, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay, was $8,000. In addition, Lawsonheld the following items in its safe on December 31:Check payable to Lawson Corporation, dated January 2,2015 – Research Paper Writing Help Service, not included in December 31 checkbook balance..Check payable to Lawson Corporation, deposited December20, and included in December 31 checkbook balance, butreturned by bank on December 30, stamped "NSF." The checkwas redeposited January 2, 2015 – Research Paper Writing Help Service, and cleared January 7 ..Post-dated checks …………………………………Check drawn on Lawson Corporation’s account, payable to avendor, dated and recorded December 31, but not maileduntil January 15, 2015 – Research Paper Writing Help Service …………………………….$2,0004001501,000The proper amount to be shown as cash on Lawson’s balance sheet at December 31, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay, isa. $7,600.b. $8,000.c. $8,600.d. $9,750.33.Which of the following would be considered part of the category "trade receivables"?a. Advances to employeesb. Amounts due from customersc. Dividends receivabled. Income tax refunds receivable34.The installment method of recognizing revenuea. should be used only in cases in which no reasonable basis exists for estimating thecollectibility of receivables.b. is not a generally accepted accounting principle under any circumstances.c. should be used for book purposes only if it is used for tax purposes.d. is an acceptable alternative accounting principle for a firm that makes installment sales.35.The cost recovery method isa. used only when circumstances surrounding a sale are so uncertain that earlier recognitionis impossible.b. the most common method of accounting for real estate sales.c. similar to percentage-of-completion accounting.d. never acceptable under generally accepted accounting principles.36.Goods on consignment should be included in the inventory ofa. the consignor but not the consignee.b. both the consignor and the consignee.c. the consignee but not the consignor.d. neither the consignor nor the consignee.37.Gunner Construction, Inc. has consistently used the percentage-of-completion method of recognizingrevenue. During 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay, Gunner started work on a $2,500,000 fixed-price construction contract.The accounting records disclosed the following data for the year ended December 31, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay:Costs incurred ………………………………….Estimated cost to complete ……………………….Progress billings ……………………………….Collections …………………………………….$465,0002,085,000550,000350,000How much loss should Gunner have recognized in 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay?a. $15,000b. $35,000c. $50,000d. $315,00038.Commodity L sells for $12.00; selling expenses are $2.40; normal profit is $3.00. If the cost ofCommodity L is $7.80 and the replacement cost is $6.00, the lower of cost or market isa. $5.40.b. $6.60.c. $6.00.d. $7.80.39.Montana Company is a wholesale electronics distributor. On December 31, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay, it prepared thefollowing partial income statement:Gross sales ………………………….Sales discounts ………………………Net sales ……………………………Cost of goods sold:Beginning inventory …………………Net purchases ………………………$800,400400$800,000$300,000300,000Given this information, if Montana Company’s gross margin is 30 percent of net sales, what is thecorrect ending inventory balance?a. $40,000b. $240,000c. $360,000d. $600,00040.Which of the following statements is true?a. A company must use the FIFO cost flow assumption for taxes as well as for financialaccounting and reporting.b. A company may use FIFO for inventory valuation purposes on the balance sheet providedthat LIFO cost of goods sold is reported on the income statement.c. Application of LIFO for financial reporting purposes must strictly follow IRS regulationsrelating to LIFO.d. LIFO is the only inventory method that must be used for financial reporting purposes ifused for tax purposes.41.A company using a periodic inventory system neglected to record a purchase of merchandise onaccount at year-end. This merchandise was omitted from the year-end physical count. How willthese errors affect inventory at year-end and cost of goods sold for the year?Inventorya.b.c.d.Cost ofGoods SoldNo effectUnderstateUnderstateNo effectUnderstateNo effectUnderstateOverstate42.If goods shipped FOB destination are in transit at the end of the year, they should be included in theinventory balance of thea. seller.b. common carrier.c. buyer.d. bank.43.Digipro Inc. is a wholesaler of photography equipment. The activity for the VTC camerasduring July is shown below:DateBalance/TransactionUnitsCostJuly 1712212229InventoryPurchaseSalesPurchaseSalesPurchase2,0003,0003,6005,0003,8001,600$36.0037.0037.8838.11If Digipro Inc. uses the average cost method to account for inventory, the ending inventory ofVTC cameras at July 31 is reported asa. $153,400.b. $156,912.c. $158,736.d. $159,464.44.An asset is being constructed for an enterprise’s own use. The asset has been financed with a specificnew borrowing. The interest cost incurred during the construction period as a result ofexpenditures for the asset isa. a part of the historical cost of acquiring the asset to be written off over the estimated usefullife of the asset.b. interest expense in the construction period.c. recorded as a deferred charge and amortized over the term of the borrowing.d. a part of the historical cost of acquiring the asset to be written off over the term of theborrowing used to finance the construction of the asset.45.Which of the following research and development related costs should be capitalized and amortizedover current and future periods?a. Labor and material costs incurred in building a prototype model.b. Cost of testing equipment that will also be used in another separate research anddevelopment project scheduled to begin next year.c. Administrative salaries allocated to research and development.d. Research findings purchased from another company to aid a particular research projectcurrently in process.46.An improvement made to a machine increased its fair market value and its production capacity by 25percent without extending the machine’s useful life. The cost of the improvement should bea. expensed.b. debited to Accumulated Depreciation.c. capitalized in the machine account.d. allocated between Accumulated Depreciation and the machine account.47.On February 12, Oceans Company purchased a tract of land as a factory site for $190,000. Anexisting building on the property was razed and construction was begun on a new factory buildingin March of the same year. Additional data are available as follows:Cost of razing old building ……………………..Title insurance and legal fees to purchase land ……Architect’s fees ……………………………….New building construction cost …………………..$ 55,0007,50052,500975,000The recorded cost of the completed factory building should bea. $1,165,000b. $1,220,000c. $1,027,500d. $1,082,50048. The Morris Corporation acquired land, buildings, and equipment from a bankrupt company at alump-sum price of $180,000. At the time of acquisition, Morris paid $12,000 to have the assetsappraised. The appraisal disclosed the following values:Land …………………………………………..Buildings ………………………………………$120,00080,000Equipment ………………………………………40,000What cost should be assigned to the land, buildings, and equipment, respectively?a. $64,000, $64,000, and $64,000b. $90,000, $60,000, and $30,000c. $96,000, $64,000, and $32,000d. $120,000, $80,000, and $40,00049.Stanley Company purchased a machine that was installed and placed in service on January 2, 2013, ata total cost of $680,000. Residual value was estimated at $70,000. The machine is beingdepreciated over ten years by the double-declining-balance method. For the year 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay, Stanleyshould record depreciation expense ofa. $108,800b. $97,600c. $68,000d. $61,00050.The Chisholm Company purchased a machine on November 1, 2005, for $148,000. At the time ofacquisition, the machine was estimated to have a useful life of ten years and an estimated salvagevalue of $4,000. Chisholm has recorded monthly depreciation using the straight-line method. OnJuly 1, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay, the machine was sold for $13,000. What should be the loss recognized from the saleof the machine?a. $4,000b. $5,000c. $10,200d. $13,000

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