Devry ACCt504 midterm exam 2017
Subject: Business / Accounting
Grade Details – All Questions
Question 1. Question : (TCO A) Which of the following accounts is recorded as part of stockholders’ equity on the Balance Sheet?
Question 2. Question : (TCO B) For 2014, CAP Corporation reported net income of $96,000; net sales $1,440,000; and weighted average shares outstanding of 9,600. There were no preferred dividends. What was the 2014 earnings per share?
Question 3. Question : (TCO C) Purchasing inventory is an example of a(n)
noncash investing and financing activity.
Question 4. Question : (TCO D) Dividends declared are reported on which of the following statements?
Statement of Retained Earnings
Statement of Financial Position
Question 5. Question : (TCO E) Which of the following describes the normal balance and classification of the Unearned Revenue account?
Debit, stockholders’ equity
Credit, stockholders’ equity
Question 6. Question : (TCO F) The accrual accounting term used to indicate recording an expense before paying cash for the item is
Question 7. Question : (TCO A) XYZ Company recorded the following events involving a recent merchandise purchase.
– Received goods for $50,000, terms 2/10, n/30.
– Returned $1,000 of the shipment for credit due to damaged goods.
– Paid $1,500 for freight-in.
– Paid the invoice within the discount period.
As a result of these events, the company’s merchandise inventory
increased by $50,500.
increased by 49,500.
increased by $49,470.
increased by $49,520.
Question 8. Question : (TCO B) In periods of rising prices, which of the following inventory methods results in the highest gross profit figure?
Average cost method
Cannot be determined based on the information given
Question 9. Question : (TCO A) Which of the following is not a current liability?
Question 10. Question : (TCO E) Which of the following is an internal control procedure?
Comparisons and compliance monitoring
Promote operational efficiency
Encourage employees to follow company policies
11. (TCOs A and E) Your friend, Ellen, has hired you to evaluate the following internal control procedures.
Explain to your friend whether each of the numbered items below is an internal control strength or weakness. You must also state which internal control procedure relates to each of the internal controls.
For the weaknesses, you also need to state a recommendation for improvement.
(1) The cashier counts the total receipts and reconciles the receipts with the cash register total.
(2) Electronic documents are password-protected.
(3) The accountant is completely independent of the sales department.
(4) Invoices are not numbered.
(5) Large purchase orders must be approved by a manager.
Question 12. (TCOs B and D) Please prepare the following journal entries. Indicate which account should be debited and which account should be credited, along with the dollar amount of the debit and credit.
(1) Investors invest $300,000 in exchange for 30,000 shares of common stock.
(2) Company made payment on account for $500.
(3) Employees work Monday through Friday and are paid on Friday. Salary expense is $20,000 per day, and December 31 falls on a Tuesday.
(4) Company purchased Supplies for $2,000.
(5) The company needs to record Supplies used for $500.
Question 13. Question : (TCOs B and D) The following items are taken from the financial statements of Ashe Company for 2012:
Accounts Receivable 12,000
Accounts Payable 9,000
Cost of Goods Sold 72,000
Utilities Expense 11,000
Depreciation Expense 17,000
Insurance Expense 9,000
Common Stock 200,000
Rent Expense 3,000
Note Payable (due 2014) 40,000
Advertising Expense 14,000
Prepaid Insurance 17,000
Retained Earnings (beginning) 44,000
Accumulated Depreciation 50,000
Salaries Expense 60,000
Salaries Payable 3,500
Net sales 205,000
Supplies Expense 5,000
(a) Calculate the net income. (18 points)
(b) Calculate the balance of Retained Earnings that would appear on a balance sheet at December 31, 2012. (7 points)
(c) Calculate the gross profit percentage. (5 points)
Question 14. Question : (TCO D) The following items are taken from the financial statements of BGS Company for 2012:
Accounts Receivable 200,000
Accounts Payable 147,300
Unearned Service Revenue 18,000
Equipment, net of accumulated depreciation 212,000
Common Stock 500,000
Retained Earnings 12/31/2011 78,300
Long-term debt 142,400
Service revenue 240,000
Cost of Goods Sold 72,000
Rent expense 36,000
Supplies expense 12,000
Insurance expense 24,000
(a) Please create a classified balance sheet in good form for the year ended 2012. (25 points)
(b) Please calculate the current ratio. (5 points)