ACCT 2101 Midterm: Exam 1 Study Guide

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burgundyhound215

7 Feb 2019

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Why do we use it: items on balance sheet, describe the transaction, and how it affects the accounting equation, (only calculation question of the multiple choice portion). Section 2 3 free response: 9 journal entries (20 pts, 4 adjusting entries (20 pts, account balance, find the closing entry (10 pts) Section 1 20 multiple choice questions (2. 5 each: knowledge of the items on the income statement and balance sheet, income statement, revenues, sales revenue, rent revenue. Expenses: cost of goods sold (cogs, utility expense, wages expense, depreciation expense, gains/losses, net income or loss, balance sheet: Asset: cash, accounts receivable (a/r, inventory, land, buildings, equipment, copyrights, investments. Why do we use it: items on balance sheet, cash, a/r, inventory, land, buildings, equipment, copyrights, investments, a/p, N/p, w/p, capital stock, preferred stock, re: describe the transaction, and how it affects the accounting equation, (only calculation question of the multiple choice portion).

Related Questions

14. What is the purpose of using analytical reviews during the planning stage of an audit?

MULTIPLE CHOICE

a. To test controls

b. to insure duties are segregated.

c. to identify unusual items for further investigation.

d. to insure the audit evidence supports the auditorâs conclusions regarding the financial statements.

33. Which of the following is not considered a limitation of internal control?

MULTIPLE CHOICE

a. Misunderstanding instructions.

b. Not having an internal audit function.

c. Mistakes of judgment.

d. Carelessness, distraction and/or fatigue.

35. Which of the following is correct concerning evidence provided by specialists on audits?

MULTIPLE CHOICE

		a. The use of a specialist is most likely to be appropriate when the auditor's independence is questioned.
		b. The auditor must obtain an understanding of the methods used by the specialist to determine whether the findings are suitable to serve as corroborating evidence.
		c. The specialist must be independent in fact and appearance.
		d. A specialist should not be used to determine the market valuation of inventory.

51. Auditors are primarily concerned with internal controls that relate to:

MULTIPLE CHOICE

a. Financial statement assertions made by management.

b. Compliance with laws and regulations.

c. Generally accepted auditing standards.

d. Balance sheet accounts.

goldworm901

1. Which statement is normally prepared first? (Points : 3) Income statement Balance sheet Statement of cash flows Retained earnings statement2. When a business borrows money, it incurs a(n) (Points : 3) tax. liability. cash payment. all of these.3. More than 70% of businesses are organized as what type of business? (Points : 3) Not-for-profit Corporation Partnership Sole proprietorship4. Brennan, Inc. had revenues of $234,000, expenses of $175,000, and dividends of $40,000 during 2009. Which of the following statements is correct? (Points : 3) Net income for 2009 totaled $19,000. Net income for 2009 totaled $59,000. Total retained earnings increased by $59,000 during 2009. Total retained earnings decreased by $40,000 during 2009.5. The statement of cash flows is integrated with the balance sheet because (Points : 3) the cash at the beginning of the period plus or minus the cash flows from operating, investing, and financing activities equals the end of period cash reported on the balance sheet. the cash at the beginning of the period plus or minus the net income equals the end of period cash reported on the balance sheet. the cash at the beginning of the period plus or minus assets and liabilities equals the end of period cash reported on the balance sheet. the cash at the beginning of the period plus or minus the cash flows from operating activities equals the end of period cash reported on the balance sheet.6. The basic financial statements do NOT include the (Points : 3) income statement. tax return balance sheet. statement of cash flows.7. A __________ is an economic event that under generally accepted accounting principles affects an element of the financial statements and must be recorded. (Points : 3) framework control set of rules transaction8. The payment of a liability (Points : 3) decreases assets and stockholders' equity. increases assets and decreases liabilities. decreases assets and increases liabilities. decreases assets and decreases liabilities. 9. Co. received $1,000 from Newbie as rent for the use of a building owned by UNI. How does this transaction affect UNI's accounts if UNI recognizes a liability? (Points : 3) Cash is increased and revenue is increased. Cash is increased and revenue is decreased. Cash is increased and unearned revenue is increased. It is not recorded.10. Depreciation Expense and Accumulated Depreciation are classified, respectively, as (Points : 3) expense and contra asset. asset and contra liability. revenue and asset. contra asset and expense.11. Deferred expenses (prepaid expenses) are items initially recorded as assets but are expected to become __________ over time. (Points : 3) Liabilities Assets stockholders%u2019 equity Expenses12. A&M Co. provided services of $1,000,000 to clients on account. How does this transaction affect A&M%u2019s accounts? (Points : 3) Increase accounts receivable and cash by $1,000,000 each Increase accounts receivable and revenues by $1,000,000 each Increase accounts receivable and unearned revenues by $1,000,000 each No effect at this time13. Multiple-step income statements show: (Points : 3) gross profit but not income from operations. neither gross profit nor income from operations. both gross profit and income from operations. income from operations but not gross profit.14. Since merchandise inventory is normally sold within a year, how is it reported on the balance sheet? (Points : 3) As a revenue As the cost of merchandise sold It does not appear on the Balance Sheet As a current asset15. The credit terms of a sale are normally indicated on a(n) (Points : 3) purchase order. invoice. bill of lading. account receivable.16. Inventory shortage is recorded when (Points : 3) merchandise is returned by a buyer. merchandise purchased from a seller is incomplete or short. merchandise is returned to a seller. there is a difference between a physical count of inventory and inventory records. 17. The bank reconciliation (Points : 3) should be prepared by an employee who records cash transactions. is part of the internal control system. is for information purposes only. is sent to the bank for verification.18. A special cash fund used to make small payments that occur frequently is called a(n) (Points : 3) operating expenses fund. change fund. market fund. petty cash fund.19. The objectives of internal control are to (Points : 3) control the internal organization of the accounting department personnel and equipment. provide reasonable assurance that assets are safeguarded, information is processed accurately, and laws and regulations are complied with. prevent fraud and promote the social interest of the company. provide control over %u201Cinternal-use only%u201D reports and employee internal conduct.20. When a firm uses internal auditors, it is adhering to which of the following internal control elements? (Points : 3) Risk assessment Proofs and security measures Monitoring Separating responsibilities for related operations21. What type of account is Allowance for Doubtful Accounts? (Points : 3) Contra asset Asset Revenue Expense22. Merchandise inventory is reported on the balance sheet in the section entitled (Points : 3) current assets. fixed assets. current liabilities. stockholders' equity.23. Receivables are usually a significant portion of (Points : 3) total current liabilities. total liabilities. total current assets. total assets.24. The inventory data for an item for November are: Nov.1 Inventory 25 units at $20 10 Purchased 30 units at $21 30 Purchased 10 units at $22 Sold 35 unitsUsing the first-in, first-out method, what is the cost of the merchandise inventory of 30 units on November 30? (Points : 3) $640 $605 $623 $66025. All amounts paid to get an asset in place and ready for use are referred to as (Points : 3) capital expenditures. revenue expenditures. residual value. cost of an asset.26. Fixed assets are ordinarily presented in the balance sheet (Points : 3) at current market values. at replacement costs. at cost less accumulated depreciation. in a separate section along with intangible assets.27. Goodwill is (Points : 3) amortized similar to other intangibles. only written down if an impairment in value occurs. charged to expense immediately. amortized over 40 years or its economic life, whichever is shorter.28. If a capital expenditure is treated as a revenue expenditure, then (Points : 3) expenses are overstated and owners' equity is understated. expenses are overstated and assets are overstated. expenses are understated and owners' equity is overstated. net income is overstated and owners' equity is understated.29. A bond indenture is (Points : 3) a contract between the corporation issuing the bonds and the underwriters selling the bonds. the amount due at the maturity date of the bonds. a contract between the corporation issuing the bonds and the bondholders. the amount for which the corporation can buy back the bonds prior to the maturity date.30. Gross earnings for a payroll period less payroll deductions are referred to as (Points : 3) overtime pay. bonus pay. gross pay. net pay.31. How is treasury stock shown on the balance sheet? (Points : 3) As an asset As a decrease in stockholders' equity As an increase in stockholders' equity Treasury stock is not shown on the balance sheet.32. Current liabilities are (Points : 3) due but not receivable for more than one year. due but not payable for more than one year. due and receivable within one year. due and payable within one year.33. The total earnings of an employee for a payroll period are referred to as (Points : 3) take-home pay. pay net of taxes. net pay. gross pay.34. Where is interest expense listed on the income statement? (Points : 3) Other expense section Cost of merchandise sold Operating expenses Interest expense is on the balance sheet, not the income statement.35. A corporation has 50,000 shares of $100 par value stock outstanding. If the corporation issues a 4-for-1 stock split, the number of shares outstanding after the split will be (Points : 3) 200,000 shares. 50,000 shares. 250,000 shares. 12,500 shares.

sangriaporpoise636

1/ The multiple-step format of the income statement reports aseries of intermediate subtotals such as gross profit, operatingincome, and income before taxes. TRUE OR FALSE

2/ An option for a customer to purchase additional goods at adiscount from list price is only a performance obligation if thediscount is a material right that the customer would not receiveotherwise. TRUE OR FALSE

3/ From a financial accounting perspective, the main purposes ofa system of internal control are to improve the accuracy andreliability of accounting information and to safeguard assets. TRUEOR FALSE

4/ In a good system of internal control, the person whoinitiates a transaction should be allowed to effectively controlthe processing of the transaction through its final inclusion inthe accounting records. TRUE OR FALSE

5/ The income statement approach to calculating bad debt expenseshould not be used if it results in a carrying value of accountsreceivable that is materially different from what would be obtainedunder a balance sheet approach. TRUE OR FALSE

ACCT 2101 Midterm: Exam 1 Study Guide

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