ACCT 304 Week 8 Final Exam New
1. (TCO 1) The SEC issues accounting standards in the form of (Points : 6)
2. (TCO 1) When a registrant company submits its annual filing to the SEC, it uses (Points : 6)
3 TCO 2) SFAC No.5 focuses on:
4. (TCO 2) Enhancing qualitative characteristics of accounting information include each of the following, except (Points : 6)
5. (TCO 3) Incurring an expense for advertising on an account would be recorded by: (Points : 6)
6. (TCO 3) Accruals occur when cash flows: (Points : 6)
7. (TCO 4) Which of the following accounts is not a current asset account? (Points : 6)
8. (TCO 4) Notes payable: (Points : 5)
9. (TCO 5) The distinction between operating and nonoperating income relates to: (Points : 6)
10. (TCO 5) On May 1, Foxtrot Co. agreed to sell the assets of its Footwear Division to Albanese Inc. for $80 million. The sale was completed on December 31, 2011. The following additional facts pertain to the transaction:
The Footwear Division qualifies as a component of the entity according to GAAP regarding discontinued operations.
The book value of Footwear’s assets totaled $48 million on the date of the sale.
Footwear’s operating income was a pre-tax loss of $10 million in 2011.
Foxtrot’s income tax rate is 40%.
In the 2011 income statement for Foxtrot Co., it would report:
11. (TCO 5) The statement of cash flows reports cash flows from the activities of: (Points : 6)
12. (TCO 5) Cash flows from investing activities do not include: (Points : 5)
13. (TCO 5) For a typical manufacturing company, the most common critical point for recognizing revenue is the date an
14. (TCO 5) Todd Sweeney is an artist who sells his work under consignment (he displays his work in local barbershops, and customers buy the work there). Sweeney recently transferred a painting to a local barbershop. The rationale for adoption of the percentage-of-completion method is that: (Points : 6)
15. (TCO 6) A series of equal periodic payments in which the first payment is made one compounding period after the date of the contract is: (Points : 6)
16. (TCO 6) Yamaha Inc. hires a new chief financial officer and promises to pay him a lump-sum bonus four years after he joins the company. The new CFO insists that the company invest an amount of money at the beginning of each year in a 7% fixed rate investment fund to insure the bonus will be available. To determine the amount that must be invested each year, a computation must be made using the formula for: (Points : 6)
17. (TCO 7) Cash equivalents do not include: (Points : 6)
18. (TCO 7) Oswego Clay Pipe Company sold $46,000 of pipe to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. Oswego uses the gross method of accounting for cash discounts. What entry would Oswego make on June 10, assuming the customer made the correct payment on that date?
19. (TCO 8) In a perpetual inventory system, the cost of inventory sold is: (Points: 5) Debited to accounts receivable. Credited to cost of goods sold. Debited to cost of goods sold. Not recorded at the time
20. (TCO 8) During periods when costs are rising and inventory quantities are stable, ending inventory will be: (Points : 6)
21. (TCO 8) When using the gross profit method to estimate ending inventory, it is not necessary to know: (Points : 6)
22. (TCO 8) In calculating the cost-to-retail percentage for the retail method, the retail column will not include: (Points : 6)
1. (TCO 8) Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition):
40 units at $100;
70 units at $80; and
170 units at $60.
Sales for the year totaled 270 units, leaving 10 units on hand at the end of the year. What is the ending inventory using the LIFO method? (Points : 15)
2. (TCO 5) What is an accrued liability? Please provide two examples. (Points : 28)
3. (TCO 7) Briefly compare and contrast the two allowance approaches to estimating bad debt expense. In your answer, indicate which approach, if either, is superior. (Points : 25)
2. (TCO 4) You are the independent accountant assigned to the audit of Neophyte Company. The company’s accountant, a graduate of Rival State University, has prepared financial statements that contained the following questionable items:
a. The balance sheet reports land at $100,000. Included in this amount is a piece of property held for speculation at a cost of $30,000.
b. Current liabilities include $50,000 for long-term debt that comes due in three months. The company has received a suitable firm commitment to refinance the debt for five years and intends to do so.
c. Investments in marketable securities include $20,000 in short-term, high-grade commercial paper which is a cash equivalent.
Please discuss how the above items should be classified and accounted for