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UMUC ACC310 quiz 1

Question 1

Your answer is correct.
Which of the following will be of interest to investors in
decision-making?

Assessing the company’s ability to collect debts.

Assessing management’s ability to protect and enhance the
capital providers’ investments.

Both assessing the company’s ability to generate net cash
inflows and assessing management’s ability to protect and enhance the capital
provider’s investments.

Assessing the company’s ability to generate net cash
inflows.

Question 2

Your answer is correct.
What is the relationship between the Securities and Exchange
Commission and accounting standard setting in the United States?

The SEC has a mandate to establish accounting standards for
enterprises under its jurisdiction.

The SEC requires all companies listed on an exchange to
submit their financial statements to the SEC.

The SEC coordinates with the AICPA in establishing
accounting standards.

The SEC reviews financial statements for compliance.

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Question 3

Your answer is correct.
Characteristics of generally accepted accounting principles
include all of the following except

standards are considered useful by the profession.

each principle is approved by the SEC.

authoritative accounting that the rule-making body has
established as a principle of reporting.

practice has become universally accepted over time.
Question 4

Your answer is correct.
The role of the Securities and Exchange Commission in the
formulation of accounting principles can be best described as

consistently secondary.

sometimes primary and sometimes secondary.

non-existent.

consistently primary.

Question 5

Your answer is correct.
FASB Technical Bulletins

are similar to FASB Interpretations in that they establish
enforceable standards under the AICPA’s Code of Professional Ethics.

are issued monthly by the FASB to deal with current topics.

are not expected to have a significant impact on financial
reporting in general and provide guidance when it does not conflict with any
broad fundamental accounting principle.

were recently discontinued by the FASB because they dealt
with specialized topics having little impact on financial reporting in general.

Question 6

Your answer is correct.
The following are part of the “due process” system
used by the FASB in the evolution of a typical FASB Accounting Standards
Updates:

1. Exposure Draft
2. FASB Accounting Standards Updates
3. Preliminary Views

The chronological order in which these items are released is
as follows:

1, 2, 3.

1, 3, 2.

2, 3, 1.

3, 1, 2.

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Question 7

Your answer is correct.
Accounting research studies issued by the AICPA

Statements of financial standards issued by the FASB

APB Opinions

Accounting interpretations issued by the FASB

Question 8

Your answer is correct.Which of the following publications does not qualify as a statement of generally accepted accounting principles?
Which of the following is not considered a component of
generally accepted accounting principles?

Articles published in CPA journals.

Widely recognized industry practices.

AICPA Accounting Interpretations.

FASB Implementation Guides.

Question 9

Your answer is correct.
Significant accounting publications are listed below. Match
the publications with their sources or sponsors.
Publications Sources/Sponsors
1. Accounting
Research Bulletins (1953-1959)

2. Accounting
Standards Updates

3. Statements
of Position (SOPs)

4. Statements
of Financial Accounting Concepts

5. Opinions
(1962-1973)

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Question 10

Your answer is correct.
The underlying theme of the conceptual framework is

decision usefulness.

comparability.

understandability.

faithful representation.

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Question 11

Your answer is correct.
If the LIFO inventory method was used last period, it should
be used for the current and following periods because of

comparability.

timeliness.

materiality.

verifiability.

Question 12

Your answer is correct.
What is the following is a characteristic describing the
primary quality of relevance?

Predictive value.

Verifiability.

Understandability.

Materiality.

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Question 13

Your answer is correct.
Which of the following is a primary quality of useful
accounting information?

Consistency

Conservatism

Faithful representation

Comparability

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Question 14

Your answer is correct.
Which of the following is an ingredient of faithful
representation?

Confirmatory value.

Predictive value.

Materiality.

Neutrality.

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Question 15

Your answer is correct.
Accounting information is considered to be relevant when it

is capable of making a difference in a decision.

can be depended on to represent the economic conditions and
events that it is intended to represent.

is understandable by reasonably informed users of accounting
information.

is verifiable and neutral.

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Question 16

Your answer is correct.
According to Statement of Financial Accounting Concepts No. 2,
completeness is an ingredient of the fundamental quality of
Relevance Faithful
Representation

Yes Yes

Yes No

No Yes

No No

Question 17

Your answer is correct.
According to Statement of Financial Accounting Concepts No.
2, predictive value is an ingredient of the fundamental quality of
Relevance Faithful
Representation

Yes Yes

No No

No Yes

Yes No

Question 17

Your answer is correct.
According to Statement of Financial Accounting Concepts No.
2, predictive value is an ingredient of the fundamental quality of
Relevance Faithful
Representation

Yes Yes

No No

No Yes

Yes No

Question 18

Your answer is correct.
Information about different companies and about different
periods of the same company can be prepared and presented in a similar manner.
Comparability and consistency are related to which of these objectives?
Comparability Consistency

Periods Periods

Companies Companies

Companies Periods

Periods Companies

Question 19

Your answer is correct.
The calculation of comprehensive income includes which of
the following?
Operating Income Distributions
to Owners

No No

Yes Yes

Yes No

No Yes

Question 20

Your answer is correct.
According to the FASB conceptual framework, which of the
following elements describes transactions or events that affect a company
during a period of time?

Expenses.

Equity.

Liabilities.

Assets.

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Question 21

Your answer is correct.
Which basic element of financial statements arises from
peripheral or incidental transactions?

Assets.

Expenses.

Liabilities.

Gains.

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Question 22

Your answer is correct.
Which basic assumption may not be followed when a firm in
bankruptcy reports financial results?

Going concern assumption.

Periodicity assumption.

Monetary unit assumption.

Economic entity assumption.

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Question 23

Your answer is correct.
Which of the following basic accounting assumptions is
threatened by the existence of severe inflation in the economy?

Monetary unit assumption.

Economic entity assumption.

Periodicity assumption.

Going-concern assumption.
Question 24

Your answer is correct.
Preparation of consolidated financial statements when a
parent-subsidiary relationship exists is an example of the

relevance characteristic.

economic entity assumption.

comparability characteristic.

neutrality characteristic.

Question 25

Your answer is correct.
Proponents of historical cost ordinarily maintain that in
comparison with all other valuation alternatives for general purpose financial
reporting, statements prepared using historical costs are more

verifiable.

indicative of the entity’s purchasing power.

conservative.

relevant.

Question 26

Your answer is correct.
Product costs include each of the following except

labor.

material.

officer’s salaries.

overhead.

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Question 27

Your answer is correct.
Which of the following serves as the justification for the
periodic recording of depreciation expense?

Immediate recognition of an expense

Minimization of income tax liability

Association of efforts (expense) with accomplishments
(revenue)

Systematic and rational allocation of cost over the periods
benefited
Question 28

Your answer is correct.
State the accounting assumption, principle, information
characteristic, or constraint that is most applicable in the following cases.
1. All
payments less than $25 are expensed as incurred. (Do not use conservatism.)

2. The
company employs the same inventory valuation method from period to period.

3. A
patent is capitalized and amortized over the periods benefited.

4. Assuming
that dollars today will buy as much as ten years ago.

5. Rent
paid in advance is recorded as prepaid rent.

6. Financial
statements are prepared each year.

7. All
significant post-balance sheet events are reported.

8. Personal
transactions of the proprietor are distinguished from business transactions.

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Question 29

Your answer is correct.
In the first stage of creating conceptual framework, the
IASB and the FASB agreed on the objective of financial reporting and a common
set of desired _________.

characteristics of GAAP

quantitative characteristics

qualitative characteristics

rule-based characteristics

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Question 30

Your answer is correct.
Phase D of convergence project addresses the _______.

monetary unit assumption

reporting entity

elements and recognition

periodicity assumption

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Question 31

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Your answer is correct.

Using the accural basis revenue on the
income statement was $125,390. Accounts receivable were $3,460 on January 1 and
$3,500 on December 31. Unearned revenue was $1,020 on January 1 and $1,670 on
December 31.

Calculate the revenue for the year on a cash basis.

Question 32, Part 1
The
following trial balance was taken from the books of Fisk Corporation on
December 31, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay.

Account

Debit

Credit

Cash

$

8,800

Accounts Receivable

38,400

Notes Receivable

14,600

Allowance for Doubtful
Accounts

$

2,000

Inventory

44,400

Prepaid Insurance

4,900

Equipment

105,000

Accumulated
Depreciation–Equip.

15,000

Accounts Payable

12,000

Common Stock

40,000

Retained Earnings

60,910

Sales Revenue

272,300

Cost of Goods Sold

124,000

Salaries and Wages Expense

48,700

Rent Expense

13,410

Totals

$

402,210

$

402,210

At year end, the following items have not yet been recorded.

a.

Insurance expired during
the year, $ 1,820 .

b.

Estimated bad debts, 1 % of
gross sales.

c.

Depreciation on equipment,
10% per year on original cost.

d.

Interest at 5 % is
receivable on the note for one full year.

e.

Rent paid in advance at
December 31, $ 5,250 (originally charged to expense).

f.

Accrued salaries and wages
at December 31, $ 6,050 .

(a)

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Prepare the necessary adjusting entries.(Credit
account titles are automatically indented when the amount is entered. Do
not indent manually.)

Question 32, Part 2
The
following trial balance was taken from the books of Fisk Corporation on
December 31, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay.

Account

Debit

Credit

Cash

$

8,800

Accounts Receivable

38,400

Notes Receivable

14,600

Allowance for Doubtful
Accounts

$

2,000

Inventory

44,400

Prepaid Insurance

4,900

Equipment

105,000

Accumulated
Depreciation–Equip.

15,000

Accounts Payable

12,000

Common Stock

40,000

Retained Earnings

60,910

Sales Revenue

272,300

Cost of Goods Sold

124,000

Salaries and Wages
Expense

48,700

Rent Expense

13,410

Totals

$

402,210

$

402,210

At year end, the following items have not yet been recorded.

a.

Insurance expired during
the year, $ 1,820 .

b.

Estimated bad debts, 1 %
of gross sales.

c.

Depreciation on
equipment, 10% per year on original cost.

d.

Interest at 5 % is
receivable on the note for one full year.

e.

Rent paid in advance at
December 31, $ 5,250 (originally charged to expense).

f.

Accrued salaries and
wages at December 31, $ 6,050 .

Prepare the necessary
closing entries.(Credit account titles are automatically indented when the
amount is entered. Do not indent manually.)

Question 33

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Your answer is correct.

The following information is available for Renn
Corporation’s first year of operations:

Payment for merchandise purchases

$354,800

Ending merchandise inventory

130,400

Accounts payable (balance at end of
year)

63,100

Collections from customers

275,800

The balance in accounts payable relates only to merchandise purchases. All
merchandise items were marked to sell at 35% above cost. What should be the
ending balance in accounts receivable, assuming all accounts are deemed
collectible?

Question 34, Part 1
Yates Company’s records provide the
following information concerning certain account balances and changes in
these account balances during the current year. Transaction information is
missing from each item below.

Prepare the entry to record the missing information for each account.
(Consider each independently.)

(a)

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Your answer is correct.

Accounts Receivable: Jan. 1, balance
$38,090, Dec. 31, balance $52,770, uncollectible accounts written off during
the year, $6,720; accounts receivable collected during the year, $141,560.
Prepare the entry to record sales revenue.(Credit account titles are automatically indented when the amount
is entered. Do not indent manually.)

Question 35

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Your answer is incorrect.

Presented below are changes in the account balances
of Wenn Company during the year, except for retained earnings.

Increase
(Decrease)

Increase
(Decrease)

Cash

$

28,380

Accounts payable

$

35,740

Accounts receivable (net)

(17,650

)

Bonds payable

(21,660

)

Inventory

52,410

Common stock

60,750

Plant assets (net)

46,860

Paid-in capital

15,650

The only entries in Retained Earnings were for net income and a dividend
declaration of $17,000.

Question 37, Part 1
Porter Corporation’s capital structure consists of
50,000 shares of common stock. At December 31, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay an analysis of the accounts
and discussions with company officials revealed the following information:

Sales revenue

$1,217,780

Earthquake loss (net of tax)
(extraordinary item)

58,940

Selling expenses

125,840

Cash

59,040

Accounts receivable

88,290

Common stock

200,000

Cost of goods sold

702,200

Accumulated depreciation-machinery

181,244

Dividend revenue

8,060

Unearned service revenue

4,660

Interest payable

1,160

Land

369,300

Patents

102,790

Retained earnings, January 1, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay

266,507

Interest expense

19,730

Administrative expenses

166,740

Dividends declared

24,640

Allowance for doubtful accounts

5,470

Notes payable (maturity 7/1/17)

208,120

Machinery

453,110

Materials

42,200

Accounts payable

56,420

The amount of income taxes applicable to ordinary income was $63,399, excluding
the tax effect of the earthquake loss which amounted to $25,260.

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