Sample Review Problems

       ACC 111
      Final Exam


     If you study, I see
        an “A” in your
            futu...
Page 2 of 13   ACC 111 Review problems for Final Exam—J. Stoudemire



FORMAT AND PROCEDURES
•   Exam consists of 60 multi...
Page 3 of 13   ACC 111 Review problems for Final Exam—J. Stoudemire




The collection of an account receivable
   a. Incr...
Page 4 of 13   ACC 111 Review problems for Final Exam—J. Stoudemire

The chart of accounts would be found at the beginning...
Page 5 of 13   ACC 111 Review problems for Final Exam—J. Stoudemire



The costs of goods and services used in the process...
Page 6 of 13   ACC 111 Review problems for Final Exam—J. Stoudemire



A machine was purchased on January 4, 20xx. It had ...
Page 7 of 13   ACC 111 Review problems for Final Exam—J. Stoudemire




Which of the following accounts is not closed duri...
Page 8 of 13   ACC 111 Review problems for Final Exam—J. Stoudemire




For each definition, write the letter that corresp...
Page 9 of 13   ACC 111 Review problems for Final Exam—J. Stoudemire




Under the perpetual inventory system, in addition ...
Page 10 of 13   ACC 111 Review problems for Final Exam—J. Stoudemire



From which journal would a posting be made at the ...
Page 11 of 13   ACC 111 Review problems for Final Exam—J. Stoudemire




Which of the following documents would be prepare...
Page 12 of 13   ACC 111 Review problems for Final Exam—J. Stoudemire




A company establishes a $100 petty cash fund. The...
Page 13 of 13   ACC 111 Review problems for Final Exam—J. Stoudemire

Under declining prices, which of the following inven...
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Sample Review Problems for the ACC 101 Final Exam

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Sample Review Problems for the ACC 101 Final Exam

  1. 1. Sample Review Problems ACC 111 Final Exam If you study, I see an “A” in your future!
  2. 2. Page 2 of 13 ACC 111 Review problems for Final Exam—J. Stoudemire FORMAT AND PROCEDURES • Exam consists of 60 multiple-choice questions • Exam is given within your CengageNow account – you must be able to log onto your CengageNow account in order to take the exam • Exam is closed-notes, closed-books – you may NOT reference any materials during this test CONTENT Note: Items with a “*” beside them indicate that they have more questions on the test than do some of the other items • Accounting concepts • Accounting cycle – journalizing (including use of the Chart of Accounts), posting, Trial Balance, Financial Statements • * Journal entries – identifying what account(s) to debit and what account(s) to credit • * Financial statements for service company and merchandiser – Income Statement, Statement of Owner’s Equity, Balance Sheet • * Adjusting entries – accruals and deferrals of both revenues and expense • Journalizing sales, cash receipt, purchase, and cash payment transactions using perpetual inventory – including those involving discounts • Closing entries for service company and merchandiser • Subsidiary ledgers and controlling accounts • Special journals – identifying in which journal a transaction is recorded • Internal controls • Petty cash – including establishing the fund, disbursing from the fund, reimbursing the fund, permanently changing the fund balance • Bank reconciliation – including journal entries • Perpetual inventory – understand how this system works and also determining cost of ending inventory and COMS using LIFO, FIFO • Gross profit method of estimating ending inventory
  3. 3. Page 3 of 13 ACC 111 Review problems for Final Exam—J. Stoudemire The collection of an account receivable a. Increases assets and increases owner’s equity. b. Increases assets and decreases assets. c. Decreases assets and decreases owner’s equity. d. Decreases assets and increases liabilities. Owner’s equity is affected by a. Collection of accounts receivable. b. Withdrawal by the owner of cash for personal expenses. c. Purchase of an asset for cash. d. Payment of a liability. The recognition issue concerns a. Where to record a business transaction. b. How to classify a business transaction. c. When to record a business transaction. d. Assigning a dollar amount to a business transaction. Which of the following accounts is an asset? a. Unearned Insurance Fees b. Insurance Payable c. Insurance Expense d. Prepaid Insurance Gropp Company accepts an advance fee of $200 for services to be provided next year. The entry to record this transaction would include a a. Credit to Cash. b. Debit to Accounts Receivable. c. Credit to Unearned Service Fees. d. Credit to Service Fees Earned. Which of the following is not true about a proper journal entry? a. The Posting Reference column is left blank until the entries are posted. b. A line is skipped between each debit and each credit. c. The name of the account to be debited is written next to the left margin of the first line. d. A brief explanation is written to explain and identify the transaction. Which of the following is not a proper step in preparing a trial balance? a. List each ledger account that has a balance, listing debit balances and credit balances in the left and right columns, respectively. b. List the accounts in alphabetical order. c. Add each column. d. Compare the totals of each column.
  4. 4. Page 4 of 13 ACC 111 Review problems for Final Exam—J. Stoudemire The chart of accounts would be found at the beginning of a a. Financial statement. b. Trial balance. c. Journal. d. Ledger. Use the following information to calculate on, or for the year ended, December 31, 20xx Total assets, Supplies, Net income and Capital at year-end Advertising Expense $ 2,500 Accounts Payable 1,000 Accounts Receivable 5,000 Cash 12,000 Fees Earned 19,000 Supplies ? Rent Expense 3,000 Rent Payable 1,000 A. Marcus, Capital, January 1, 20xx 11,000 A. Marcus, Capital, December 31, 20xx ? A. Marcus, Drawing 4,000 The difficulties of income measurement are caused by all of the following except the a. Accounting period issue. b. Recognition issue. c. Continuity issue. d. Matching issue. As time passes, the accumulated depreciation and the carrying value related to a plant asset a. Both decrease. b. Both increase. c. Increase and decrease, respectively. d. Decrease and increase, respectively. Which of the following is an example of an accrual? a. Commission earned but not yet recorded b. Commission collected but not yet earned c. Depreciation of an asset d. Recording a cash sale
  5. 5. Page 5 of 13 ACC 111 Review problems for Final Exam—J. Stoudemire The costs of goods and services used in the process of obtaining revenue are called a. Expenses. b. Assets. c. Profits. d. Liabilities. The order of preparing the financial statements from the adjusted trial balance is a. Balance sheet, statement of owner’s equity, income statement. b. Income statement, statement of owner’s equity, balance sheet. c. Statement of owner’s equity, income statement, balance sheet. d. Income statement, balance sheet, statement of owner’s equity. Equipment is depreciated because a. The value of the equipment has decreased. b. The usefulness of the equipment has decreased. c. The cost of the equipment must be matched with the revenue it produces over its useful life. d. Both a. and b Adjusting entries must be made at the end of the accounting period for all of the following situations except when a. There are unrecorded expenses. b. There are unrecorded revenues. c. Revenues have been recorded that must be apportioned between two or more accounting periods. d. There are errors to be corrected. Revenues of $2,000 are received and recorded on Monday of each week for day- care services to be provided Monday through Friday. If the year ends on Wednesday, what is the amount to be shown on the balance sheet in Unearned Revenues at the end of the year? A company began the year with $1,500 in supplies, purchased $1,000 in supplies during the year, and ended the year with $500 in supplies. How much is Supplies Expense for the period?
  6. 6. Page 6 of 13 ACC 111 Review problems for Final Exam—J. Stoudemire A machine was purchased on January 4, 20xx. It had a cost of $100,000 and an estimated useful life of five years, after which time it will be worthless. Its depreciation is $20,000 per year. What is the machine’s carrying value after four years’ use? Revenue of $40,000 was earned, of which $25,000 has already been collected. Expenses of $10,000 have been incurred, but only $5,000 has been paid. What is the reported net income? For each definition, write the letter that corresponds to the correct term in the blank provided on the right. Use each letter only once. a. Accounting e. Footing i. Post-closing trial balance b. Accounting cycle f. Income statement c. Closing entries g. Income Summary k. Working papers d. Crossfooting h. Net income l. Work sheet 1. The sequence of steps followed in the accounting system, from analyzing transactions to preparing financial statements and closing the accounts. 2. Journal entries made at the end of the accounting period that set the stage for the next accounting period by clearing the temporary accounts’ balances. 3. A temporary account used during the closing process in which all revenues and expenses are summarized before the net income or loss is transferred to the Owner’s Capital account. 4. A type of working paper that is used as a preliminary step and tool in the preparation of financial statements.
  7. 7. Page 7 of 13 ACC 111 Review problems for Final Exam—J. Stoudemire Which of the following accounts is not closed during the closing procedure? a. B. Bailey, Capital b. Income Summary c. Rent Expense d. Interest Income Which of the following is not true about the preparation of financial statements? a. They do not need to be prepared separately if a work sheet is used. b. Their numbers may come from the work sheet. c. They are prepared before the post-closing trial balance is prepared. d. The column totals on the work sheet are different from the totals on the actual statements. The post-closing trial balance includes which of the following? a. Nominal accounts only b. Real accounts only c. All accounts listed in the chart of accounts d. Both a. and b. Closing entries a. Are optional. b. Bring all permanent (real) accounts to a zero balance. c. Transfer net income or loss into the Owner’s Capital account. d. Are prepared at the beginning of the new accounting period. The steps in the accounting cycle that could be completed with the aid of the work sheet are a. Analyze, record, post. b. Appropriate, enter, record. c. Allocate, close, reverse. d. Adjust, prepare, close.
  8. 8. Page 8 of 13 ACC 111 Review problems for Final Exam—J. Stoudemire For each definition, write the letter that corresponds to the correct term in the blank provided on the right. Use each letter only once. a. Cost of merchandise sold f. Gross sales k. Physical inventory b. FOB destination g. Merchandise inventory l. Purchases c. FOB shipping point h. Net sales m. Operating budget d. Freight in i. Operating expenses n. Sales discounts e. Goods available for sale j. Perpetual inventory system o. Trade discount 1. Those expenses, other than the cost of goods sold, that are incurred in running a business. 2. The amount paid for the goods sold during an accounting period. 3. Discounts given to customers for early payment for sales made on credit; a contra-revenue account. 4. Term relating to transportation charges meaning that the buyer bears the transportation costs from the point of origin. 5. Detailed listings of projected selling and general and administrative expenses. 6. An actual count of all merchandise on hand at the end of an accounting period. 7. Determination of cost of goods sold by keeping continuous records of the physical inventory as goods are bought and sold. 8. The total goods that could have been sold to customers during the year; beginning merchandise inventory plus net cost of purchases. 9. A balance sheet account; goods available for sale to customers. 10. An account used under the periodic inventory system in which the cost of all merchandise bought for resale is accumulated for that accounting period. A company sold goods for $1,000 with a 10 percent trade discount, terms 2/10, n/30. How much would be received if the account were paid within the discount period? a. $1,000 b. $882 c. $980 d. $900
  9. 9. Page 9 of 13 ACC 111 Review problems for Final Exam—J. Stoudemire Under the perpetual inventory system, in addition to making the entry to record a sale, a company would a. Debit Merchandise Inventory and credit cost of Goods. Sold. b. Debit cost of Goods sold and credit Purchases. c. Debit Cost of Goods sold and credit Merchandise Inventory. d. Make no additional entry until the end of the period. The account Freight Out (delivery expense) is shown on the income statement as a a. Component of the cost of goods sold. b. Deduction from sales. c. Selling expense. d. General and administrative expense. Which of the following is deducted from goods available for sale to determine cost of goods sold? a. Purchases b. Freight in c. Beginning merchandise inventory d. Ending merchandise inventory A company purchased goods for $600 and was given credit terms of 1/10, n/60. Its entry upon payment fifteen days later would include a credit to a. Cash for $594. b. Purchases Discounts for $6. c. Cash for $600. d. Accounts Payable for $600. Using the following information, calculate Net sales, Ending merchandise inventory, Cost of goods sold, Selling expenses. Beginning Merchandise Inventory $5,000 Freight In 100 General and Administrative Expenses 1,000 Gross Margin 4,100 Net Income 1,100 Purchases 10,000 Purchases Returns and Allowances 300 Sales 12,000 Sales Returns and Allowances 100
  10. 10. Page 10 of 13 ACC 111 Review problems for Final Exam—J. Stoudemire From which journal would a posting be made at the end of the day to the subsidiary ledger for each transaction entered that day? a. Cash payments journal b. Cash receipts journal c. Purchases journal d. None of the above Which of the following statements is true about the cash receipts journal? a. It probably will contain a credit column for Sales Discounts. b. It probably will have some postings to the accounts payable ledger. c. It probably will have an end-of-month posting to the Accounts Receivable controlling account. d. Its Posting Reference column could have the reference “CR1”. Which of the following accounts could be a controlling account? a. Sales b. Accounts Payable c. Purchases d. All of the above The direct source for the preparation of a schedule of accounts receivable is the a. Adjusted trial balance. b. Accounts receivable subsidiary ledger. c. Accounts Receivable controlling account. d. Cash receipts journal. For each of the following transactions, indicate the journal that should be used by placing the appropriate abbreviation in the space provided. S= sales journal, P= multicolumn purchases journal, CR= cash receipts journal, CP= cash payments journal, J= general journal. Purchased merchandise on credit. Paid a utility bill. Sold merchandise on credit. Returned merchandise purchased on credit. Purchased merchandise for cash. Paid a creditor for merchandise previously purchased on account. Sold merchandise for cash. Closed Income Summary to the Owner’s Capital account.
  11. 11. Page 11 of 13 ACC 111 Review problems for Final Exam—J. Stoudemire Which of the following documents would be prepared by the treasurer, after verifying all underlying documentation, and sent to the supplier? a. Check b. Check Authorization c. Invoice d. Receiving report A company issues a check for $175 but records it as $157. On the bank reconciliation, the $18 error should be a. Deducted from the balance per books. b. Added to the balance per books. c. Deducted from the balance per bank. d. Added to the balance per bank. A very small company would have the most difficulty in fulfilling which of the following attributes of internal control? a. Reliable personnel b. Sound personnel policies c. Sound accounting system d. Separation of duties The petty cash fund always should be replenished a. At varying intervals. b. At the end of the accounting period. c. When half the dollar amount has been used. d. When the custodian of the fund deems it necessary. Which of the following bank reconciliation items would result in an adjusting entry on the company’s books? a. Deposit in transit b. NSF check c. Outstanding checks d. Bank error
  12. 12. Page 12 of 13 ACC 111 Review problems for Final Exam—J. Stoudemire A company establishes a $100 petty cash fund. The fund is replenished in the amount of $95, after petty cash vouchers of $50 for postage, $20 for donations, and $22 for meals had accumulated. (a) Was there a cash shortage, overage, or neither? (b) State the amount of the overage or shortage, if any. On March 31, cash on the bank statement amounted to $950. In addition, outstanding checks totaled $400, a note collected by the bank totaled $200, there was a customer’s NSF check for $50, deposits in transit totaled $350, and bank service charges were $10. What was the March 31 adjusted balance on the bank reconciliation? Assuming the same facts as in above, what was the March 31 balance per books before adjustment? Use the following inventory information for the month of May to answer questions 13 through 16. May 1 Beginning Inventory 50 units @ $20 7 Purchases 40 units @ $25 18 Sales 60 units 22 Purchases 10 units @ $30 29 Sales 25 units Assuming that a perpetual inventory system is used, what is the cost of goods sold on a FIFO basis? a. $300 b. $1,875 c. $425 d. $ 2,000 Assuming that a perpetual inventory system is used, what is the ending inventory on a LIFO basis? a. $300 b. $425 c. $1,875 d. $1,900
  13. 13. Page 13 of 13 ACC 111 Review problems for Final Exam—J. Stoudemire Under declining prices, which of the following inventory methods probably will result in the lowest ending inventory? a. Average-cost b. Specific identification c. First-in, first-out d. Last-in, first-out If the estimated rate of gross profit is 40%, what is the estimated cost of the merchandise inventory on June 30, based on the following data? June 1 Merchandise inventory $ 75,000 June 1-30 Purchases (net) 150,000 June 1-30 Sales (net) 135,000 a. $144,000 b. $140,000 c. $ 81,000 d. $ 54,500 On the basis of the following data, what is the estimated cost of the merchandise inventory on October 31 by the retail method? Cost Retail Oct. 1 Merchandise Inventory $225,000 $324,500 Oct. 1-31 Purchases (net) 335,000 475,500 Oct. 1-31 Sales (net) 700,000 a. $372,000 b. $140,000 c. $100,000 d. $ 70,000 Using the lower of cost or market 9item –by-item), what should the total inventory value be for the following items: Item Quantity Unit cost Unit Total cost Total price market price market price price A 200 $4 $4.50 $800 $900 B 100 $3 $3.10 300 $310 C 50 $9 $7.00 $450 $350 a. $1,450 b. $1,550 c. $1,560 d. $1,570

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