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BS352 FINALEXAM PART II
NAME: __________________________
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I promise I worked on this exam alone and didn’t seek or accept help. I worked independently of my classmates and co-workers and family. Signed___________________________________________________ |
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1. |
All of the following are operating activities except which one? A. Collection of cash from a customer on account. B. Selling equipment. C. Payment of advertising expenses. D. Payment of salaries to employees. |
2.
On October 28, Sierra Corporation employees had earned and were paid salaries of $4,000. How is this recorded on Sierra’s books?
DEBIT
CREDIT
A.
Salaries expense
4,000
Cash
4,000
B.
Salaries payable
4,000
Cash
4,000
C.
Salaries expense
4,000
Salaries payable
4,000
D.
Salaries payable
4,000
Salaries expense
4,000
3.
On December 1, 2011, stockholders invest $20,000 into McGladrey Corporation in exchange for stock. What entry does McGladrey makes?
DEBIT
CREDIT
A.
Cash
20,000
Common stock
20,000
B.
Common stock
20,000
Cash
20,000
C
Cash
20,000
Due to stockholders
20,000
D.
Due to stockholders
20,000
Cash
20,000
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4. |
SAMS COMPANY sold merchandise to HOME COMPANY for $5,000. The merchandise sold had a cost of $3,000. What entry should SAMS make on the day the merchandise is sold to HOME COMPANY? DEBIT CREDIT A. Cost of goods sold 3,000 Merchandise inventory 3,000 B. Accounts receivable 4,900 Sales 4,900 Cost of goods sold 3,000 Merchandise inventory 3,000 C. Accounts receivable 5,000 Sales 5,000 D. Accounts receivable 5,000 Sales 5,000 Cost of goods sold 3,000 Merchandise inventory 3,000 |
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5. |
When SONIC CORPORATION prepared their financial statements for this year, there are no personal transactions of the company’s officers, managers or employees reported. This BEST reflects which of the following assumptions in financial reporting? A. Monetary Unit B. Economic Entity C. Periodicity (Time period) D. Going concern |
6.
Mrs. Smith worked as a cash manager for ARRCO INC. for 20 years without taking a vacation. ARRCO just found out that she has been embezzling money for nearly that whole time. She should have been required to take vacations every year. Hint: Who makes you take vacation every year? An internal control feature that would have addressed this situation would be:
A.
Physical, mechanical, & electronic control devices
B.
Establishment of responsibility
C.
Segregation of duties
D.
Human resource controls
E.
Documentation procedures
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DAVID SCOTCH is getting ready to start a small business. DAVID met with his accountant today to review some of the procedures that should be implemented, His accountant suggested that the following procedures be put in place:
PROCEDURE:
1.
A background check should be conducted on all employees.
2.
Approved purchase orders should be submitted before payment is made to a supplier.
3.
A cash register should be used which only opens when a sale is made.
In the order of 1, 2 and 3, which of the following correctly describes the nature of the internal control procedures suggested by the accountant?
PROCEDURE 1
PROCEDURE 2
PROCEDURE 3
A.
Segregation of
duties
Physical, mechanical, & electronic control devices
Physical, mechanical, & electronic control devices
B.
Human resource controls
Segregation of
duties
Physical, mechanical, & electronic control devices
C.
Documentation procedures
Establish responsibility
Documentation procedures.
D.
Human resource controls
Documentation procedures
Physical, mechanical, & electronic control devices
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8. |
The person who is authorized to sign checks approves purchase orders for payments. Which internal control principle best fits the problem described? A. Physical, mechanical, & electronic control devices B. Establishment of responsibility C. Segregation of duties D. Other controls E. Documentation procedures |
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9. |
The three points of the FRAUD TRIANGLE are: A. Financial pressure, opportunity, and rationalization. B. Opportunity, low pay, and bad company policies. C. Rationalization, financial pressure, and some type of addiction. D. Bad company policies, some type of addition, and prior criminal history. |
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10. |
Some cash payments are not recorded because checks are not prenumbered. Which internal control principle best fits the problem described? A. Physical, mechanical, & electronic control devices B. Establishment of responsibility C. Segregation of duties D. Human resource controls E. Documentation procedures |
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11. |
A clothing store is experiencing a high level of inventory shortages because customers try on clothing and walk out of the store without paying for the merchandise. Which internal control principle best fits the problem described? A. Physical, mechanical, & electronic control devices B. Establishment of responsibility C. Segregation of duties D. Human resource controls E. Documentation procedures |
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12. |
Two persons handle cash sales from the same cash register drawer. Which internal control principle best fits the problem described? A. Documentation procedures B. Physical, mechanical, & electronic control devices C. Establishment of responsibility D. Segregation of duties E. Independent internal verification |
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13. |
7. |
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14. |
On January 10, Sierra Corporation purchased equipment from a supplier on account for $15,000. How is this recorded on Sierra’s books? DEBIT CREDIT A. Equipment 15,000 Cash 15,000 B. Equipment 15,000 Accounts payable 15,000 C. Cash 15,000 Accounts payable 15,000 D. Accounts payable 15,000 Cash 15,000 |
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15. |
An accountant DEBITED an asset account for $900 and CREDITED a liability account for $500. What can be done to complete the recording of the transaction so that the accounting equation is in balance? A. DEBIT a stockholders’ equity account for $400. B. DEBIT another asset account for $400. C. CREDIT a different asset account for $400. D. Nothing further must be done. |
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16. |
Which of the following activities illustrates “FINANCING ACTIVITIES” for a business? A. The company purchases new machinery and equipment for $50,000. B. The company borrows $50,000 from the bank. C. The company provides $50,000 in services to customers. D. The company pays $50,000 in advertising for a new marketing campaign. |
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17. |
On October 1, 2007, CARR COMPANY places a new asset into service. The cost of the asset is $30,000 with an estimated 5-year life. CARR COMPANY depreciates equipment on the basis of the actual months held during the year. What is the depreciation expense for 2007 if CARR COMPANY uses the straight-line method of depreciation? A. $1,500 B. $2,000 C. $4,000 D. $8,000 |
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18. |
A truck that cost $18,000 and on which $10,000 of accumulated depreciation has been recorded was disposed of for $9,000 cash. The entry to record this event would be: DEBIT CREDIT A. Cash 9,000 Loss on sale of truck 9,000 Truck 18,000 B. Cash 9,000 Accumulated depreciation 10,000 Truck 18,000 Gain on sale of truck 1,000 C. Cash 9,000 Truck 18,000 Accumulated depreciation 10,000 Gain on sale of Truck 17,000 D. Cash 9,000 Loss on sale 9,000 Truck 18,000 |
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19. |
Which of the following activities reflects investing activities? A. Purchasing advertising for the business. B. Borrowing money from the bank. C. Purchasing inventory to sell to customers. D. Buying a competitor’s plant. |
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20. |
Which of the following is not properly classified as property, plant, and equipment? A. Building used as a factory B. Land used in ordinary business operations C. A truck held for resale by an automobile dealership D. Land improvement, such as parking lots and fences |
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21. |
AT H&T GROCERS, the shift supervisor counts the cash in the cash drawer of each cashier clerk when the clerk finishes their shift at the checkout counter. Which internal control principle best fits the procedure described? A. Independent internal verification B. Establishment of responsibility C. Segregation of duties D. Human resource controls E. Documentation procedures |
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22. |
A check written for $167 is incorrectly recorded by JONES CORPORATION’S bookkeeper as $176 in the company books. On the bank reconciliation, the $9 error should be: A. Added to the balance per books. B. Deducted from the balance per books. C. Added to the balance per bank. D. Deducted from the balance per bank. |
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23. |
Which of the following would be DEDUCTED from the BALANCE PER BANK on a bank reconciliation? A. $35 in monthly service charges B. $175 in outstanding checks C. $500 deposit in transit D. $1,250 note collected by the bank |
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24. |
Which of the following would be DEDUCTED from the BALANCE PER BOOKS on a bank reconciliation? A. $35 in monthly service charges B. $175 in outstanding checks C. $500 deposit in transit D. $1,250 note collected by the bank |
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25. |
Noreen Williams reconciles the bank statement every month for her company, BREWER ENTERPRISES. One of the items which Noreen had to handle was a NSF check of $250 written by a BREWER customer. What should Noreen do with the $250 NSF check on the monthly bank reconciliation? A. Addition of $250 to the balance per books B. Deduction of $250 from the balance per bank C. Addition of $250 to the balance per bank D. Deduction of $250 from the balance per books |
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26. |
Depreciation is the process of allocating the cost of a plant asset over its useful life in a(n): A. Equal and equitable manner. B. Accelerated and accurate manner. C. Systematic and rational manner. D. Conservative market-based manner. |
27. Label each account as asset, liability, owner’s equity, revenue, or expense. And the list the normal balance, debit or credit, for each.
Cash
Accounts Payable
Accounts Receivable
Interest Expense
Rent Expense
Notes Payable
Accounts Receivable
Inventory
Furniture and Fixture
Capital
Withdrawals
Property, Plant, and Equipment
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