ACCT212 All Quizes Latest 2017 November (all correct answers)

Question 1

3 / 3 pts

(TCO 1) Accounting

measures business activities.

processes data into reports and communicates the data to decision makers.

is often called the language of business.

All of the above

Question 2

3 / 3 pts

(TCO 1) The _____ is elected by the stockholders and is responsible for setting policy and appointing officers.

board of directors

chief executive officer (CEO)

chief financial officer (CFO)

advisory council

Question 3

3 / 3 pts

(TCO 1) Which of the following is a correct statement about GAAP and IFRS?

IFRS prefers valuing assets at historical cost while GAAP prefers using fair value.

IFRS is more "rules-based" than GAAP.

The FASB and the IASB are working towards convergence of standards.

The SEC will require all companies to use IFRS beginning in 2013.

Question 4

3 / 3 pts

(TCO 1) Historical cost

is determined for each asset on a yearly basis.

is equal to the amount of cash paid less the dollar value of all non-cash consideration given in the exchange.

is a verifiable measure that is relatively free from bias.

is the amount that the business could sell the asset for.

Question 5

3 / 3 pts

(TCO 1) Liabilities are

a form of paid-in capital.

future economic benefits to which a company is entitled.

debts payable to outsiders called creditors.

the outflow of resources that decrease common stock.

Question 6

3 / 3 pts

(TCO 1) The owners' equity of any business is its

revenues minus expenses.

assets minus liabilities.

assets plus liabilities.

paid-in capital plus assets.

Question 7

3 / 3 pts

(TCO 1) When total expenses exceed total revenues, the result is

a net profit.

a net loss.

a dividend.

retained earnings.

Question 8

3 / 3 pts

(TCO 1) Which of the following would appear on the balance sheet?

Assets and operating cash flows

Dividends and liabilities

Assets and liabilities

Owners' equity and revenues

Question 9

3 / 3 pts

(TCO 1) A potential investor interested in evaluating a company's financial earning performance for the current period would probably examine which of the following financial statements?

balance Sheet only

Income Statement only

Statement of cash flows and income statement

Statement of retained earnings and balance sheet

Question 10

3 / 3 pts

(TCO 1) What is the proper order for the categories of the statement of cash flows?

Financing activities, investing activities, and operating activities

Operating activities, investing activities, and financing activities

Operating activities, financing activities, and investing activities

Investing activities, financing activities, and operating activities

Question 1

3 / 3 pts

(TCO 2) The debt created by a business when it makes a purchase on account is a(n)

revenue.

prepaid expense.

account receivable.

account payable.

Question 2

3 / 3 pts

(TCO 2) A company performed services for a customer for cash. This transaction increased assets and

decreased equity.

increased liabilities.

increased expenses.

increased revenues.

Question 3

3 / 3 pts

(TCO 2) A company performs services for a client on account. When the company receives the cash from the customer 1 month later

a revenue account is increased.

a liability account is decreased.

an asset account is increased.

an expense account is decreased.

Question 4

3 / 3 pts

(TCO 2) An important rule to remember when working with T-accounts is

when you debit an account, you are entering an amount of the right-hand side of the T-account.

an increase to accounts payable will be recorded as a debit.

to credit an account means to enter an amount on the right-hand side of the T-account.

the debit side of a T-account is on the right-hand side of the T-account for liabilities and revenues.

Question 5

3 / 3 pts

(TCO 2) An account is increased by a debit and has a debit balance. This account is

an expense account.

a liability account.

an asset account.

both an expense account and an asset account.

Question 6

3 / 3 pts

(TCO 2) The process of copying the information from the journal to the ledger is called

posting.

summarizing.

journalizing.

preparing the financial statements.

Question 7

3 / 3 pts

(TCO 3) Under accrual accounting, revenue is recorded

when the cash is collected, regardless of when the services are performed.

when the services are performed, regardless of when the cash is received.

either when the cash is received or the sale is made.

only if the cash is received at the same time the services are performed.

Question 8

3 / 3 pts

(TCO 3) The revenue principle requires that a business record revenue when the business

receives an order from a customer.

prepares the invoice for the customer.

delivers goods or services to a customer.

receives payment from a customer.

Question 9

3 / 3 pts

(TCO 3) In what order are financial statements generally prepared?

Balance sheet, income statement, and statement of retained earnings

Income statement, statement of retained earnings, and balance sheet

Income statement, balance sheet, and statement of retained earnings

Statement of retained earnings, balance sheet, and income statement

Question 10

3 / 3 pts

(TCO 3) Closing entries

are made at the beginning of each accounting period.

prepare the accounts for the next period's transaction.

cannot be done using a computer.

are the same as adjusting entries.

Question 1

3 / 3 pts

(TCO 5) The two most common types of fraud impacting financial statements are

fraudulent financial reporting and e-commerce fraud.

misappropriation of assets and embezzlement.

fraudulent financial reporting and misappropriation of assets.

cooking the books and fraudulent financial reporting.

Question 2

3 / 3 pts

(TCO 5) Fraud is the ultimate unethical act in business because

the perpetrators usually do so for their own short-term economic gain at the expense of others.

fraud is illegal.

fraud violates the rights of many for the temporary betterment of a few.

All of the above

Question 3

3 / 3 pts

(TCO 5) Internal control is a plan of organization and system of procedures implemented by company _____ and the _____ designed to accomplish five objectives.

internal auditors, employees

external auditors, management

management, board of directors

employees, board of directors

Question 4

3 / 3 pts

(TCO 5) A fidelity bond is a(n)

employment contract for a specified period of time.

insurance policy that reimburses a company for employee theft.

contract prohibiting former employees from working for a competitor.

promise by a company to safeguard customers' personal information.

Question 5

3 / 3 pts

(TCO 5) Hints of where fraud, mistakes, or financial harm can occur in a company is called

the control environment.

risk assessment.

control procedures.

the tone at the top.

Question 6

3 / 3 pts

(TCO 5) _____ rearranges messages by a mathematical formula making the message impossible to read by someone who does not know the code.

Encryption

Firewall

Security wall

Access device

Question 7

3 / 3 pts

(TCO 5) When preparing a bank reconciliation, which of the following items should be added to the book balance?

EFT receipts

Deposits in transit

Collection items

Both EFT receipts and collection items

Question 8

3 / 3 pts

(TCO 5) When a company receives cash by mail

all incoming mail containing cash receipts should be opened by the accounting department.

the mailroom sends all customer checks to the internal audit department.

the remittance advice goes to the accounting department for preparation of the journal entries.

the bank deposit is prepared by the mail room.

Question 9

0 / 3 pts

(TCO 5) Short-term investments

are reported after accounts receivable on the balance sheet.

are more liquid than cash.

are reported at historical cost on the balance sheet.

include trading securities.

Question 10

3 / 3 pts

(TCO 5) Which of the following is a true statement about sales?

Net revenue is gross revenue plus sales discounts less sales returns and allowances.

Sales discounts are offered to customers in order to speed up cash flow.

Sales returns and allowances increase a company's profit.

Retailers do not generally record sales returns and allowances in a separate account.

Question 1

20 / 20 pts

(TCO 1) The Accounting Equation is used to develop the organization's financial reports. (1) Describe what owners' equity values would be if Assets are $100,000 and Liabilities are $27,000 by showing the Accounting Equation (10 points) and (2) provide an explanation of what accounts could be found in owners' equity. (10 points)

Question 2

20 / 20 pts

(TCO 1) The financial statements present a company to the public in financial terms. (1) Which financial statement requires input from the Income Statement and Statement of Retained Earnings (10 points), and (2) explain what information this financial statement provides. (10 points)

(1) Which financial statement requires input from the Income Statement and Statement of Retained Earnings (10 points)

(2) explain what information this financial statement provides. (10 points )

Question 3

20 / 20 pts

(TCO 1) The accounting profession follows a set of guidelines for measurement and disclosure of financial information called the Generally Accepted Accounting Principles (GAAP). (1) Explain what the Going-concern Assumption is (10 points) and (2) provide an example of its application. (10 points)

Question 4

20 / 20 pts

(TCO 2) Transaction analysis results in the development of a journal entry. A building is purchased for $535,000. (1) Name the accounts impacted and how to use the format account name/debit or credit/dollar amount (10 points), and (2) explain how the Accounting Equation is impacted. (10 points)

Question 5

20 / 20 pts

(TCO 3) Adjusting Entries are required at the end of the period to ensure that accrual accounting principles are applied. The building that houses the business is depreciated at an annual rate of $14,000. Develop the adjusting entry for year end. (1) Name the accounts impacted and how to use the format account name/debit or credit/dollar amount (10 points), and (2) explain how the Accounting Equation is impacted. (10 points)

Adjusting entry will be:

Debit depreciation expense by 14000

Credit accumulated depreciation by 14000

The depreciation expense will lower the net income by 14000 and also the retained earnings will have to be reduced by the same amount

The assets will reduce by 14000 and the owners’ equity will also be reduced by 1400 due to the decrease in the net income

Question 6

25 / 25 pts

(TCO 5) E-commerce creates its own risks, and therefore special internal controls. (1) Identify and explain one pitfall and one security measure for an online business (10 points) and (2) provide examples of how your selected security measure will strengthen internal control. (15 points)

Question 7

25 / 25 pts

(TCO 5) The bank account as a control device helps to protect cash. One of the requirements is to conduct periodic bank statement reconciliations. Using the following data, complete the bank statement reconciliation for J & J Flooring, Inc. (Use the format shown on page 251 of your textbook.) (25 points)

• The bank statement indicated a service charge of $56.

• J & J made a deposit on May 31, but this deposit did not appear on the bank statement, $1,451.

• A credit memo in the bank statement indicated a bank collection of a note for $1,300 with interest received of $16. This item was dated May 18.

• Also included in the bank statement was a debit memo for a NSF check for $314 from Barney Smythe.

• Checks #1406 for $1,342, #1610 for $1,609, and #1825 for $857 were written by J & J and sent to the respective companies, but these checks do not appear on the bank statement.

• The balance on the bank statement as of May 31 was $13,019.

• The Cash account on Janus’ books showed an amount of $9,716.

Question 1

3 / 3 pts

(TCO 4) The cost of the inventory that the business has sold to customers is called

inventory.

cost of goods sold.

purchases.

gross profit.

Question 2

3 / 3 pts

(TCO 4) Another term for gross profit is

gross income.

gross sales.

gross margin.

gross operating income.

Question 3

3 / 3 pts

(TCO 4) A small _____ would most likely use a perpetual inventory system.

automobile dealership

fabric store

restaurant

flower shop

Question 4

3 / 3 pts

(TCO 4) All of the following costs would be included in inventory except for

freight-in.

income taxes.

taxes paid on the purchase price.

insurance while in transit.

Question 5

3 / 3 pts

(TCO 4) If the cost to purchase a unit of inventory does not change, ending inventory

will be the highest under FIFO.

will be the highest under LIFO.

cannot be computed using the average-cost method.

will be the same under LIFO and FIFO.

Question 6

3 / 3 pts

(TCO 4) When inventory prices are increasing, the FIFO costing method will generally yield a cost of goods sold that is

higher than cost of goods sold under the LIFO method.

lower than cost of goods sold under the LIFO method.

equal to the gross profit under the LIFO method.

equal to cost of goods sold under the LIFO method.

Question 7

3 / 3 pts

(TCO 4) When comparing the results of LIFO and FIFO when inventory costs are decreasing

cost of goods sold will be the lowest using FIFO.

ending inventory will be the highest using FIFO.

cost of goods sold will be the highest using LIFO.

ending inventory will be the highest using LIFO.

Question 8

3 / 3 pts

(TCO 4) The disclosure principle states that a company should report _____ and _____ information about itself.

material, relevant

important, conservative

representational faithful, financial

relevant, representational faithful

Question 9

3 / 3 pts

(TCO 4) When applying the lower-of-cost-or-market rule, market value generally refers to

FIFO cost using the periodic method.

LIFO cost using the periodic method.

current sales price of the inventory.

current replacement cost of the inventory.

Question 10

3 / 3 pts

(TCO 4) A gross profit margin of 30% means that

for each dollar of sales, the company has a cost of goods sold of seventy cents.

for each dollar of sales, the company has a gross profit of thirty cents.

for each dollar of sales, the company has a cost of goods sold of thirty cents.

both A and B are true.

Question 1

3 / 3 pts

(TCO 6) Which of the following is a natural resource?

Patents

Timber

Gas reserves

both B and C

Question 2

3 / 3 pts

(TCO 6) Depreciation expense

allocates a portion of the cost of an asset against the revenue the asset helps earn each period.

is not required for plant assets according to GAAP.

is reported on the balance sheet.

is required for land according to GAAP.

Question 3

3 / 3 pts

(TCO 6) The portion of the cost of natural resources that is consumed in a particular period is called

depreciation expense.

amortization expense.

depletion expense.

resource expense.

Question 4

3 / 3 pts

(TCO 6) When an investor owns between 20% and 50% of the outstanding stock of another company, the _____ method is used to account for stock investments.

market value

equity

consolidated

historical cost.

Question 5

3 / 3 pts

(TCO 6) Which of the following is not necessary to know in computing the future value of an annuity?

Amount of the initial payment

Interest rate

Length of time between investment and payment

Year the payments begin

Question 6

3 / 3 pts

(TCO 6) All of the following are reported as current liabilities except

bonds payable.

sales tax payable.

accounts payable.

unearned revenues.

Question 7

3 / 3 pts

(TCO 6) Failure to record an accrued liability causes a company to

overstate income.

overstate assets.

understate liabilities.

understate owners' equity.

Question 8

3 / 3 pts

(TCO 6) If bonds are issued at a discount, it means that the

market interest rate is higher than the stated interest rate.

market interest rate is lower than the stated interest rate.

financial strength of the issuer is weak.

bond is convertible.

Question 9

3 / 3 pts

(TCO 6) Bonds that mature at a single specified future date are called

term bonds.

coupon bonds.

serial bonds.

debentures.

Question 10

3 / 3 pts

(TCO 6) The financing option that creates no liabilities or interest expense is financing by

issuing notes payable.

debt.

issuing stock.

issuing bonds payable

Question 1

3 / 3 pts

(TCO 7) The chairperson of the board of directors has the title of

chief financial officer (CFO).

president.

chief executive officer (CEO).

chief operating officer (COO).

Question 2

3 / 3 pts

(TCO 7) If a corporation has only one class of stock, it is understood to be

preferred stock.

common stock.

contributory stock.

equity stock.

Question 3

3 / 3 pts

(TCO 7) When a company issues common stock greater than its par value, the excess should be credited to

retained earnings.

common stock.

paid-in capital in excess of par.

capital.

Question 4

3 / 3 pts

(TCO 7) Stock that a corporation purchases from shareholders is called

treasury stock.

authorized stock.

issued stock.

outstanding stock.

Question 5

3 / 3 pts

(TCO 7) The date when a cash dividend becomes a legal obligation is on the

date of record.

declaration date.

last day of the corporate year.

payment date.

Question 6

3 / 3 pts

(TCO 7) Book value per share of common stock is computed by dividing

total paid-in capital by the number of common shares of stock issued.

total paid-in capital by the number of common shares of stock outstanding.

total stockholders' equity by the number of common shares of stock issued.

total stockholders' equity by the number of common shares of stock outstanding.

Question 7

3 / 3 pts

(TCO 1) The main purpose of the statement of cash flows is to

provide information about the cash receipts and cash payments during a period.

provide information about the investing and financing activities during a period.

prove that revenues exceed expenses if there is a net income.

assist banking relationships.

Question 8

3 / 3 pts

(TCO 1) Creditors analyze the statement of cash flows to determine

total interest earned during the period.

the quality of the company's earnings.

whether or not the company can pay interest on debt.

if management was overpaid.

Question 9

3 / 3 pts

(TCO 1) The three types of activities reported on the statement of cash flows are

operating, investments, and financing.

operating, investing, and free flow.

operating, investing, and financing.

operating, indirect, and direct.

Question 10

3 / 3 pts

(TCO 1) Usually, the most important category on the statement of cash flows is cash flows from

operating activities.

investing activities.

financing activities.

noncash activities.

Question 1

3 / 3 pts

(TCO 1) Horizontal analysis is most closely related to

trend analysis.

economic value added analysis.

vertical analysis.

benchmarking.

Question 2

3 / 3 pts

(TCO 1) Horizontal analysis is performed on

only the income statement.

only the balance sheet.

only the statement of retained earnings

the income statement, the balance sheet, and the statement of retained earnings.

Question 3

3 / 3 pts

(TCO 1) A vertical analysis is primarily concerned with

the dollar amount of the change in various financial statement amounts from year to year.

individual financial statement items expressed as a percentage of a base (which represents 100%).

percentage changes in the balances shown in comparative financial statements.

the change in key financial statement ratios over a specified period of time.

Question 4

3 / 3 pts

(TCO 1) A financial statement item expressed as a percentage of a base amount is a result of

horizontal analysis.

ratio analysis.

vertical analysis.

comparative analysis.

Question 5

3 / 3 pts

(TCO 1) On a common-size balance sheet each item is expressed as a percentage of

current assets.

operating income.

total assets.

net income.

Question 6

3 / 3 pts

(TCO 1) Benchmarking financial statements represents a form of

horizontal analysis.

vertical analysis.

gross profit analysis.

trend analysis.

Question 7

3 / 3 pts

(TCO 1) Analyzing the statement of cash flows may help analysts determine the financial health of a company. Which of the following signs below is a not indicator of a financially healthy company?

The company's operations are a major source (not a use) of cash.

The company's operations are a major use (not a source) of cash.

The company's investing activities include more purchases than sales of long-term assets.

The company's financing activities are not dominated by borrowing.

Question 8

3 / 3 pts

(TCO 1) On a statement of cash flows, which is considered an operating activity?

Sale of securities

Purchase of fixed assets

Purchase of securities

Depreciation

Question 9

3 / 3 pts

(TCO 1) The ratio that provides an estimate of the number of days, on average, that it takes for customers to pay their account is the

days' sales in receivables

current ratio.

accounts receivable turnover.

acid-test ratio.

Question 10

3 / 3 pts

(TCO 1) Which of the following combines the concepts of accounting income and corporate finance to measure whether the company's operations have increased stockholder wealth?

Gross profit margin

Earnings per share

Economic value added

Price/earnings ratio