The main purpose of the statement of equity is to report

reasons for changes in the equity accounts

Neptune gets a 4 month 6%, $3,000 note receivable on Mar 1. On Mar 31 the adjusting entry needs

a credit to Interest Revenue for $15.00

If the adjusting entry to accrue interest on a note receivable is omitted, then

assets, net income, and equity are understated

The purchase of treasury stock

decreases total assets and decreases assets

On a trial balance, which of the following would indicate that an error has been made?

Service Revenue has a debit balance

On the stmt. cash flows, the exchange of stock for land would be reported as of the following?

Noncash investing and financing activities

An overstatement of ending inventory in one period results in

an understatement of net income of the next period

The primary objective of financial reporting is to provide information

useful for making investment and credit decisions

Which is the correct sequence for recording transactions and preparing financial statements?

Journal, Ledger, Trial balance, Fina Statements

Other comprehensive income

includes unrealized gains/losses on for sale investments

Amortizing the discount on bonds payable

increases the recorded amount of interest expense

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Final Review Acct 2010

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Accounting 2010 Final

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Questions 34

Answers

1
The denominator for computing the rate of return on equity is
average common equity
average total assets
net sales
net income
2
Sales discounts should appear in the financial statements
as a deduction from sales
as an operating expense
as an addition to inventory
as an addition to sales
3
Which item is not needed to compute DDB method depreciation for the first year?
Original cost
Expected useful life in years
Estimated residual value
All the above are needed
4
Before paying an invoice for goods received on account, the controller should ensure that
all of the above
the company is paying for the goods it ordered
the company is paying for the goods it actually received
the company has already paid this invoice
5
The main purpose of the statement of equity is to report
comprehensive income
financial positions
results of operations
reasons for changes in the equity accounts
6
Stock dividends
has no effect on total equity
are distributions of cash to stockholders
increases the corporation's total liabilities
reduces the total assets of the company
7
Paying off bonds payable is reported on the statement of cash flows under
financing activites
investing activities
noncash investing and financing activies
Operating activities
8
Neptune gets a 4 month 6%, $3,000 note receivable on Mar 1. On Mar 31 the adjusting entry needs
A debit to Interest Receivable for $60
a credit to Interest Revenue for $15.00
a debit to Cash for $180
a debit to Interest Receivable for $180
9
On the Statement of Cash flows, activities that create long-term liabilities are usually
financing activities
investing activities
operating activities
noncash investing and financing activities
10
If the adjusting entry to accrue interest on a note receivable is omitted, then
Assets, net income, and equity are overstated
assets, net income, and equity are understated
Assets are overstated, net income and equity is understated
Liabilities are understated, net income&equity is overstated
11
The purchase of treasury stock
decreases total assets and increases total equity
decreases total assets and decreases assets
has no effect on total assets, total liabilities, or equity
increases one asset and decreases another asset
12
If the credit to record the payment of an account payable is not posted,
cash will be understated
liabilities will be understated
expenses will be understated
cash will be overstated
13
Bonds carrying value equals Bonds Payable
Both a and b
minus Premium on Bonds Payable
Plus Premium on Bonds Payable
minus Discount on Bonds Payable
14
A contingent liability should be recorded in the accounts
both a and c
if the related future event will probably occur
if the amount can be reasonable estimated
if the amount is due in cash within one year
15
All of the following are internal control procedures except
internal and external audits
SOX reforms
adequate records
assignment of responsibilities
16
On a trial balance, which of the following would indicate that an error has been made?
All of the above indicate errors
Salary Expense has a debit balance
Service Revenue has a debit balance
Accumulated Depreciation has a credit balance
17
When applying the LCM rule to Inventory, "market" generally means
resale value
original cost
Current replacement cost
original cost, less physical deterioration
18
On the stmt. cash flows, the exchange of stock for land would be reported as of the following?
financing activities
Noncash investing and financing activities
Investment activities
Exchanges are not reported on the stmt. cash flows
19
An overstatement of ending inventory in one period results in
non effect on net income of the next period
an understatement of net income of the next period
an overstatement of net income of the next period
an understatement of the beg. inventory of the next period
20
Which account types normally have a credit balance?
Liabiliites
Expenses
Revenues
Both B and C
21
The primary objective of financial reporting is to provide information
about the profitability of the enterprise
useful for making investment and credit decisions
to the federal government
on the cash flows of the company
22
Which is the correct sequence for recording transactions and preparing financial statements?
Ledger, Trial balance, journal, Fina Statements
Journal, Ledger, Trial balance, Fina Statements
Fina Statments, Trial Balance, Ledger, journal
Ledger, journal, trial balance, Fina Statements
23
Is the payment of the face amount of a bond on its maturity date regarded as
All of the above
Operating Activity
Financing Activity
Investing Activity
24
Other comprehensive income
includes unrealized gains/losses on for sale investments
affects earnings per share
has no effect on income tax
includes extraordinary gains and losses
25
Each of the following is an example of a control procedure, except
Separation of duties
sound personnel procedures
limited access to assets
a sound marketing plan
26
An end-of-period adjusting entry that debits Unearned Revenue most likely will credit
an expense
a revenue
a liability
an asset
27
Which of the following Statements is not true about a 3 for 1 stock split?
The Market price of each share of stock will decrease
Retained Earnings remains the same
Total equity increases
Par value is reduced to one-third of what it was before
28
The account Unearned Revenue is a(n):
liability
asset
revenue
expense
29
Which of the following accounts would not be included in the closing entries?
Service Revenue
Accumulated Depreciation
Depreciation Expense
Retained Earnings
30
Cash paid to purchase a building appears on the statement of cash flows among the
Stockholders' Equity
Operating Activities
Financing activities
Investing Activities
31
Amortizing the discount on bonds payable
reduces the semiannual cash payment for interes
necessary if the bonds were issued at more than face value
increases the recorded amount of interest expense
reduces the carrying value of the bond liability
32
Preferred stock is least likely to have which of the following charateristics
The right of the holder to convert to common stock
Preferences as to voting
Preference as to dividends
Preference as to assets on liquidation of the corporation
33
When treasury stock is sold for less than its cost, the entry should include a debit to
Paid-in Capital in Excess of Par
Retained Earnings
Loss on sale of Treasury Stock
Gain on Sale of treasury Stock
34
The valuation of assets on the balance sheet is generally based on
historical cost
Selling price
current fair market value as set by independent appraisers
what it would cost to replace the asset

Final Review Acct 2010 Flashcards | StudBud