Question 1. Corresponds to CLO 2(d)
Generally, product costs are recognized as expenses (Points
: 2)
In the period when the related revenue is recognized
In the period when the vendor invoice is recieved.
In the period when the expenses are paid.
In the period when the expenses are incurred
Question 2. Corresponds to CLO 1(b)
The due process system used by the FASB (Points : 2)
identifies the most important accounting issues
requires that all accountants must receive a copy of the
financial standards
enables interested parties to express their views on issues
under consideration
is an efficient system for collecting dues from members.
Question 3. Corresponds to CLO 1(c)
Which of the following best describes generally accepted
accounting principles? (Points : 2)
standards and principles based on federal statutes
a common set of standards and principles
acceptance requires an affirmative vote of Certified Public
Accountants
practices that have been accepted for at least a year by all
industry members
Question 4.Corresponds to CLO 1(d)
Which of the following is a major challenge facing the
accounting profession? (Points : 2)
Timeliness
Forward-looking data
Nonfinancial measurements
All of the above
Question 5. Corresponds to CLO 2(a)
Accounting information is made useful for decision making by
which two fundamental qualities? (Points : 2)
Faithful representation and comparability
Comparability and timeliness
Relevance and faithful representation
Materiality and neutrality
Question 6. Corresponds to CLO 2(b)
In the financial statements, under what qualitative
characteristic of accounting information should a change in inventory valuation
method be reported? (Points : 2)
Verifiability
Consistency
Neutrality
Timeliness
Question 7.Corresponds to CLO 2(c)
Accountants produce financial statements at arbitrary points
in time during the lifetime of an entity in accordance with which basic
accounting concept? (Points : 2)
Going concern assumption
Historical cost assumption
Periodicity assumption
Monetary unit assumption
Question 8. Corresponds to CLO 1(a)
All of the following are considered primary user of
financial reports, except: (Points : 2)
Employees
investors
creditors
all of these are primary users.
Question 9. Corresponds to CLO 3(a)
Jot Construction Company uses the percentage-of-completion
method of accounting. In 2013, Jot began work on a contract it had received
which provided for a contract price of $6,000,000. Additional information
related to the project includes: costs incurred during the year were
$2,100,000; estimated costs to complete as of December 31, 2013 were
$1,400,000; billings during the year were $3,600,000; collections during the
year totaled $3,000,000. What amount should Jot recognize as gross profit for
the project in 2013? (Points : 2)
$700,000
$1,000,000
$1,500,000
$2,500,000
Question 10. Corresponds to CLO 3(b)
Swift Builders, Inc. uses the completed-contract method of
accounting for a $450,000 contract that it expects will take two years to
complete. At December 31, 2013, the end of the first year of the contract,
additional information related to the project includes: costs incurred to date
were $290,000; estimated costs to complete were $180,000; billings to date were
$325,000; collections to date were $300,000. What amount should Swift recognize
as gross profit or loss for 2013? (Points : 2)
$ -0-
a $20,000 loss
a $40,000 loss
a $110,000 loss
Question 11. Corresponds to CLO 3(c)
Miller Company appropriately uses the installment method of
accounting to recognize income in its financial statements. Pertinent data
relating to this method of accounting includes:
installment sales totaled $400,000 for 2013 and $500,000 for
2014;
cost of sales were $260,000 for 2013 and $300,00 for 2014;
in 2013 Miller collected $280,000 from 2013 sales; in 2014
Miller collected $100,000 from 2013 sales and $300,000 from 2014 sales. What
amount should Miller report as realized gross profit on the 2014 income
statement? (Points : 2)
$155,000
$120,000
$98,000
$35,000
Question 12. Corresponds to CLO 3(d)
On June 1, 2013, Vision Corporation consigned 100 TVs,
costing $1,000 each, to Future Electronics. The cost of shipping the TVs
amounted to $2,500 and was paid by Vision Corporation. On December 31, 2013,
Future Electronics emailed a report to Vision, indicating that 72 of the TVs
had been sold for $1,800 each. Future also included remittance for the amount
due, after deducting a commission of 5%, advertising of $500, and installation
costs of $1,440. What amount should Vision Corporation include on its December
31, 2013 balance sheet for the consigned TVs? (Points : 2)
$-0-
$28,000
$28,700
$30,643
Question 13. Corresponds to CLO 4(a)
If Collier Costumes, Inc. has the following items at
year-end, how much should it report as cash on the balance sheet?
Cash in bank $42,600
Cash on hand $580
Post-dated checks $1,420
Certificates of deposit $90,000
$42,600
$43,180
$44,600
$133,180
Question 14. Corresponds to CLO 4(b)
At December 31, 2013, Vega Vaccum Corporation has cash in
bank of 104,000, restricted cash in a separate account of $19,000, and a bank
overdraft at another bank of $500. How much should it report as cash on the
balance sheet? (Points : 2)
$123,000
$122,500
$104,500
$104,000
Question 15. Corresponds to CLO 4(c)
Only the cash in bank should be reported as cash on the
balance sheet. Which of the following are classified as cash on the balance
sheet? (Points : 2)
Postage stamps
Checks from other parties presently in the cash register
Post-dated checks
Cash restricted for plant expansion
Question 16. Corresponds to CLO 4(d)
The month-end bank statement for Guthrie Motors shows a
balance of $152,000 and a bank service charge of $40. Outstanding checks are
$35,000, a deposit of $10,000 was in transit at month end, and a check for
$1,500 was erroneously charged by the bank against the account. The correct
balance in the bank account at month end is (Points : 2)
$125,000
$125,460
$128,500
$128,460
Question 17. Corresponds to CLO 5(a)
As of December 31, Gammelguard Corporation has outstanding
accounts receivable of $1.5 million. Sales on credit during the year were $9
million. The allowance for doubtful accounts has a credit balance of $20,000.
If the company estimates that 9% of its outstanding receivables will be
uncollectible, what will be the amount of bad debt expense recognized for the
year? (Points : 2)
$115,000
$135,000
$155,000
$810,000
Question 18. Corresponds to CLO 5(b)
As of December 31, Wiliams Corporation has outstanding
accounts receivable of $3.6 million. Sales on credit during the year were $12.5
million. The allowance for doubtful accounts has a credit balance of $62,000.
If the company estimates that 1% of its net credit sales will be uncollectible,
what will be the amount of bad debt expense recognized for the year? (Points :
2)
$63,000
$125,000
$187,000
$360,000
Question 19. Corresponds to CLO 5(c)
Kandris Corporation had a balance in accounts receivable of
$600,000 and a balance in allowance for doubtful accounts of $55,000, when
management decided the account receivable from Dunn Corporation of $2,000 had
become uncollectible. What journal entry should Kandris Corporation make to
write-off the uncollectible account? (Points : 2)
Debit Bad Debt Expense, credit Allowance for Doubtful
Accounts, $2,000
Debit Accounts Receivable, credit Allowance for Doubtful
Accounts, $2,000
Debit Allowance for Doubtful Accounts, credit Accounts
Receivable, $2,000
Debit Allowance for Doubtful Accounts, credit Bad Debt
Expense, $2,000
Question 20. Corresponds to CLO 5(d)
At December 31, Norman Industrial Inc. had account balances
before year-end adjusting entries for accounts receivable and the related
allowance for doubtful accounts of $920,000 and $79,000 respectively. An aging
of accounts receivable indicated that $100,000 of the December 31, receivables
are expected to be uncollectible. The net realizable value of accounts
receivable after adjustment is (Points : 2)
$1,020,000
$820,000
$841,000
$999,000
Question 21.Corresponds to CLO 6(a)
The following is a record of Axis Corporation's inventory
transactions for the current month:
June 1 Balance, 400 units @ $65 each
June 16 Sale, 500 units @ $90
June 14 Purchase 900 units @ $68 each
June 20 Sale, 300 units @ $90
June 25 Purchase 250 units @ $70 each
Axis uses the periodic inventory system. Using the FIFO
method, what is the amount of cost of goods sold for the month? (Points : 2)
$51,500
$52,000
$53,200
$54,900
Question 22. Corresponds to CLO 6(b)
The following is a record of Meyer Corporation's inventory
transactions for the current month:
October 1 Balance, 600 units @ $24 each
October 9 Sale, 600 units @ $51
October 12 Purchase 550 units @ $26 each
October 19 Sale, 500 units @ $51
October 25 Purchase 700 units @ $27 each
Meyer uses the periodic inventory system. Using the LIFO
method, what is the amount of ending inventory for the month? (Points : 2)
$18,300
$20,200
$18,000
$29,300
Question 23.Corresponds to CLO 6(c)
The following is a record of Tiller Corporation's inventory
transactions for the current month:
January 1 Balance, 500 units @ $10 each
January 5 Sale, 290 units @ $25
January 11 Purchase 300 units @ $12 each
January 13 Sale, 250 units @ $25
January 23 Purchase 400 units @ $13 each
January 27 Sale, 310 units @ $25
Tiller uses the periodic inventory system. Using the
weighted-average inventory method, what is the amount of ending inventory for
the month?(Points : 2)
$14,004
$9,775
$4,085
$4,025
Question 24. Corresponds to CLO 6(d)
The following is a record of Caulder Corporation's inventory
transactions for the current month:
March 1 Balance, 500 units @ $40 each
March 12 Sale, 200 units @ $85
March 16 Purchase, 300 units @ $42 each
March 22 Sale, 350 units @ $85
March 28 Purchase, 300 units @ $43 each
Caulder uses the perpetual inventory system. Using the LIFO
method, what is the ending inventory at March 31? (Points : 2)
$22,900
$22,100
$22,600
$23,400
Question 25. Corresponds to CLO 7(a)
In the context of dollar-value LIFO, when inventory in base
year dollars increases, (Points : 2)
The LIFO reserve decreases
The LIFO price index increases
A LIFO layer is created
A LIFO layer is liquidated
Question 26. Corresponds to CLO 7(b)
Hemmer Corporation adopted the dollar-value LIFO method of
inventory valuation on December 31, 2011. Its inventory at that date was
460,000 and the relevant price index was 100. Information regarding inventory
for subsequent years is as follows:
Date Inventory at Current Prices Current Price Index
December 31, 2012 $513,600 107
December 31, 2013 $580,000 125
December 31, 2014 $650,000 130
What is the cost of ending inventory at December 31, 2013
under dollar-value LIFO?
(Points : 2)
$460,000
$485,680
$481,400
$464,280
Question 27. Corresponds to CLO 7(c)
Inventories are primarily accounted for at cost on the
balance sheet. In a departure from the cost basis, inventory is accounted for
at market when (Points : 2)
There is any decrease in the future utility
Mangement wants to decrease the value of ending inventory
There is a decrease in the future utility below the original
cost
Management wants to defer profits to a future period
Question 28.Corresponds to CLO 7(d)
If the historical cost of product X is $55, the selling
price of product X is $90, the costs to sell product X are $14, the replacement
cost for product X is $50, and the normal profit margin is 30% of sales price,
what si the lower-of-cost-or-market inventory value for product X? (Points : 2)
$50
$49
$76
$55
Question 29. Corresponds to CLO 8(a)
Energy Solutions Corporation estimates the cost of its
physical inventory at November 30 for use in an interim financial statement.
Management uses a gross profit rate on sales of 30%. The following information
is available:
Inventory, November 1 $500,000
Purchases during November $650,000
Sales during November $900,000
The estimated cost of inventory at November 30 is (Points :
2)
$270,000
$630,000
$650,000
$520,000
Question 30. Corresponds to CLO 8(b)
Big Equipment Corporation estimates the cost of its physical
inventory at November 30 for use in an interim financial statement. Management
uses a rate of markup on cost of 25%. The following information is available:
Inventory, November 1 $3,000,000
Purchases during November $2,800,000
Sales during November $6,000,000
The estimated cost of inventory at November 30 is (Points :
2)
$5,800,000
$4,800,000
$1,200,000
$1,000,000
Question 31. Corresponds to CLO 8(c)
Arrow Corporation uses the conventional retail inventory
method to value its merchandise inventory. The following information is
available for the current year:
Cost Retail
Beginning Inventory $30,000 $50,000
Purchases $160,000 $270,000
Freight-In $2,500
Net Markups $8,500
Net Markdowns $10,000
Employee Discounts $1,000
Sales $205,000
What is the cost to retail ratio? (Points : 2)
60.16%
59.65%
58.60%
57.84%
Question 32. Corresponds to CLO 8(d)
Capital City Corporation uses the conventional retail
inventory method to determine its ending inventory at cost. The following
information is available for the current year:
Cost Retail
Beginning Inventory $300,000 $420,000
Purchases $1,450,000 $2,000,000
Net Markups $80,000
Net Markdowns $30,000
Sales $1,900,000
What is the ending inventory at cost? (Points : 2)
$520,000
$399,000
$300,000
$570,000
