ACCT 304 Intermediate Accounting I Course

ACCT 304 ( Intermediate Accounting I ) Entire Course
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ACCT 304 ( Intermediate Accounting I ) Entire Course
week 1
Development of Accounting Standards (graded)
Hello Class,Welcome to week 1 Discussion Topic 1.
Generally Accepted Accounting Principles (GAAP) are guidelines for companies to follow as they prepare and issue
financial statements.
Let’s startby getting an understanding ofwhy the guidelines were developed in the first place?
1. a) Who relies on the financial statements (external users) and why, what are they using the statements for?
b) What happens if an External User relies on financial statements that are inaccurate? (what could happen
to the corporaton)
c) What negative consequences can arise from relying on inaccurate financial statements? (what could
happen to the externaluser)
Remember,these discussion threads are supposed to be stimulating conversation,a back and forth discussion
among students and teacher.
After the firstperson responds,he or she can respond to the firstitem, the next person can add a pointthat maybe
the previous discussions failed to pointout or answer the second item..
I don’twant to see everybody repeating the same answer.You wouldn’tdo that if you were in class and I asked a
question.
You need to respond to each of the two separate discussion topics byWednesday the latest.And, including
Wednesday,you need to respond to each of the 2 discussion threads on 3 differentdays. For example,you could
come in as late as Wednesdayand respond to topic one and two. Then do the same for both topics on Thursdayand
Sunday.
They need to be of quality responses.Not“I agree with what you said John.” or Not “Yes, John, you are correct in
saying that…..”
Prof. Marnell
Accounting Conceptual Framework (graded)
Hello Class,Welcome to week 1 Discussion Topic 2.
A sound foundation is necessaryfor success in anytask from building a house to putting on make-up.
In terms of U.S. Accounting Standards,it is also necessaryto have a sound foundation,referred to as the conceptual
framework.

a)What is the conceptual framework,and why is it important?
Once students have answered the above thoroughly,lets move on and…
1. b) discuss it step by step starting with the objective. What is the objective of accounting standards?
Remember,these discussion threads are supposed to be stimulating conversation,a back and forth discussion
among students and teacher.
After the firstperson responds,he or she can respond to the firstitem, the next person can add a pointthat maybe
the previous discussions failed to pointout or answer the s econd item..
I don’twant to see everybody repeating the same answer.You wouldn’tdo that if you were in class and I asked a
question.
You need to respond to each of the two separate discussion topics byWednesdaythe latest.And, including
Wednesday,you need to respond to each of the 2 discussion threads on 3 differentdays. For example,you could
come in as late as Wednesdayand respond to topic one and two. Then do the same for both topics on Thursdayand
Sunday.
They need to be of quality responses.Not“I agree with what you said John.” or Not “Yes, John, you are correct in
saying that…..”
Prof. Marnellweek 2
Balance Sheet: Purpose and Uses (graded)
Hello class;
The balance sheetis one of the first financial statements Iturn to when reviewing a company. You can learn a lot
abouta companyby looking at its balance sheet.
The balance sheet is also called the statement of financial position. Why is this? What is the purpose of the
balance sheet?
Hello Class;
Disclosures are required to elaborate on certain items that are presented in summarized form in the financial
statements.There are specific disclosure notes thatare required to be presentin all financial statements,while others
may be unique to the disclosure needs ofa particular company.
Let’s startby discussing the three required disclosures. Please pick one and explain what information is to be
included in the note:
1. a) Summaryof SignificantAccounting Policies
2. b) SubsequentEvents
3. c) Third Party Transactions
ACCT 304 week 4
Revenue Recognition (graded)
Hello Class;
When a companysells a productfor cash,it generallyrecognizes the revenue. However, there are situations when it
is not always clear when a company should recognize the revenue.

1) How do you handle a car dealership thatsells a warrantycontract to its customers for $650 that will cover the next
5 years?
Time Value of Money Concepts (graded)
Hello Class;
You mightthink of the “time value of money” to be a topic for Finance class,but accountants need an understanding
of this topic as well.
Let’s discuss where/whyan accountant may need to use these skills/calculations.
ACCT 304 week 3
Income Statement (graded)
Hello Class;
Students often refer to an income statementas the statementthatshows how much moneya companyhas made.
Money, by definition,is something thatis generallyaccepted as a medium ofexchange or means or payment.
Keeping that definition in mind,an income statementis nota measure ofmoney,but rather it is a measure ofnet
income (or loss) also known as profit(or loss).
Select a publicly held company like Apple, Microsoft, IBM, HewlettPackard, Home Depot (Note: do not select a
company already chosen by your classmate).Go to their website and selectInvestor Relations and there you will
find the company’s annual report.
Provide the link to that annual report and based on what you have read about income statements in this
chapter and in the Becker materials,tell us what you have learned about the company from reviewing its
income statement.
Prof. Marnell
Cash-Flow Statement (graded)
Hello Class;
The Statementof Cash Flows has historicallygiven students a lotof heartburn,but it really isn’tthat scary. A cash -
flow statement,simplystated, reports the uses (where the cash was spent) and the sources (where the cash came
from) of cash during a period.Let’s start with a very simplistic setoffacts. I run a CPA firm, and I billed my clients
$50K during the month of February. To earn that $50K, I incurred $20K of wage expense and another $10K of
overhead (rent, utilities,insurance,etc.). So I made $20K profit, right? So I am sitting pretty? Not necessarily.What if
I now tell you that $40K of my billings have yet to be collected? And my E&O insurance carrier increased mypremium
and I had to pre-pay $10K of premiums this month.
1. a) How does my cashflow differ from my profit?
2. b) Will these transactions appear on my income statement?
3. c) My cash-flow statement?
Prof. Marnell

ACCT 304 week 5
Cash (graded)
Hello Class;
Cash is listed firston the balance sheetbecause itis the assetmostreadilyavailable to pay off debt or use in
operations.Cash is also one ofthe assets thatmostoften “grows legs” and walks away.Therefore, it is importantthat
any business protectits cash;it does so through Internal Control Procedures.
1. a) Please start by defining Internal Control,
2. b) then discuss specific procedures related to cash.
Receivables (graded)
Hello Class;
When a business extends creditto its customers,we call this Accounts Receivable.Often a business will grantits
customers a discount.
a)What are the two types of discounts, and
1. b) how does the journal entry to record the sale change when there is a discount granted?
ACCT 304 week 7
Inventories—LCM (graded)
Hello Class;
The lower-of-cost-or-market(LCM) approach was developed to avoid reporting inventory at an amountgreater than
the benefits it can provide. The LCM approach records losses in the period the value of the inventory drops below its
costinstead of later in the period that the goods are ultimatelysold.
Is this a conservative or an aggressive approach? What does GAAP say about LCM?
Inventory Errors (graded)
Hello Class;
It is discovered in 2013 that ending inventory from 2011 is understated.
What accounts will be affectedby this understatement, and how will they be affected?
This is a situation thatreally happens.Start with the 2011 inventory being understated,and track the changes
through the inventory account to 2013.
ACCT 304 week 6

Inventory Classification and Systems (graded)
Hello Class;
Merchandise Inventory is assets held for sale in the ordinary course of business ofwholesale and retail companies.
Manufacturing inventories are raw materials or WIP (Work In Process) thatwill be used or consumed in the
production of finished goods to be sold.
 iscussion topic #1
1. explain how inventory is presented on the balance sheet,and
2. what further information you found in the footnote disclosures aboutthe inventory method and “Impairmentof
Inventory”, if any.
Inventoriable Costs/Cost-Flow Assumptions (graded)
Hello Class;
We read aboutthe Perpetual and the Periodic Inventory System.Regardless ofwhich system is used, under both,we
need to assign dollar amounts to the Ending Inventory and Costof Goods Sold so that we can trace how costs flow
through the system.
1) Start by identifying what is included in inventory and then
2) discuss how each item might be treated differently in the Perpetual vs. the Periodic Inventory System.
quizesQuestion 1. Question : (TCO 1) Which of the following has the authority to set accounting standards in the
United States?
FASB
IRS
SEC
AICPA
: 1
Question 2. Question : (TCO 2) SFAC No.5 focuses on:
objectives of financial reporting.
qualitative characteristics ofaccounting information.
Recognition and measurementconcepts in accounting,including assumptions and principles.
elements offinancial statements.
: 1
5 of 5
Question 3. Question : (TCO 3) Mary Parker Co. invested $15,000 in ABC Corporation and received capital stock in
exchange. Mary Parker Co.’s journal entry to record this transaction would include a:
debitto investments.
credit to retained earnings.

credit to capital stock.
debitto expense.
: 2
5 of 5
Question 4. Question : (TCO 3) The adjusting entry required to record accrued expenses includes:
a credit to cash.
a debitto an asset.
a credit to an asset.
a credit to liability.
: 2
5 of 5
Question 5. Question : (TCO 3) Temporary accounts would notinclude:
salaries payable.
depreciation expense.
supplies expense.
costof goods sold.
: 2
5 of 5
Question 6. Question : (TCO 4) Notes payable:
is a current liabilityaccount.
usuallyhas a debit balance.
is a non-currentliabilityaccount.
cannotdetermine its classification withoutadditional information.
: 2
5 of 5
Question 7. Question : (TCO 4) The current ratio is given by:
current assets divided bynon-currentassets.
current assets divided bytotal assets.
current assets divided bycurrent liabilities.
current assets divided bytotal liabilities.
: 3
5 of 5
Question 8. Question : (TCO 5) The distinction between operating and non-operating income relates to:
continuity of income.
principal activities of the reporting entity.
consistencyofincome stream.
reliabilityof measurements.
: 4
5 of 5

Question 9. Question : (TCO 5) A voluntary change in accounting principle is accounted for by:
a cumulative effect on income in the year of the change.
a retrospective reporting of all comparative financial statements shown.
a prior period adjustment.
a separate line componentofincome.
: 4
5 of 5
Question 10. Question : (TCO 5) Cash flows from investing activities do not include:
proceeds from issuing bonds.
paymentfor the purchase ofequipment.
proceeds from the sale of marketable securities.
cash outflows from acquiring land.
: 4
5 of 5
Question 11. Question : (TCO 5) The Maytag Corporation’s income statementincludes income from continuing
operations,a loss from discontinued operations,and extraordinaryitems.Earnings per share information would be
provided for:
net income only.
income from continuing operations and netincome only.
income from continuing operations,loss from discontinued operations,and netincome only.
income from continuing operations,loss from discontinued operations,extraordinaryitems,and net income.
: 4
5 of 5
Question 12. Question : (TCO 5) In a statementof cash flows prepared under International Financial Reporting
Standards,each of the following items is typicallyclassified as a financing cash flow except:
interestpaid.
dividends paid.
proceeds from the issuance oflong-term debt.
dividends received.
: 4
5 of 5
Question 13. Question : (TCO 4) Which is a shareholders’ equityaccountin the balance sheet?
Accumulated depreciation
Paid-in capital
Dividends payable
Marketable securities
: 3
5 of 5

Question 14. Question : (TCO 4) Which of the following groups is notamong the external users for whom financial
statements are prepared?
Customers
Suppliers
Employees
All of the above are external users offinancial statements.
(TCO 5) Misty Companyreported the following before-taxitems during the current year:
Misty’s effective tax rate is 40% and there were 1,000 shares ofcommon stock outstanding.
What would be Misty’s income before extraordinary item(s)?
Question 2. Question : (TCO 4) Listed below are account balances (in $millions) taken from the records of Symphony
Stores.All of these are permanentaccounts,exceptthe lasttwo that have yet to be closed.The installment
receivables are current. Symphony uses a perpetual inventory system.
What would Symphony report as total assets? Hint:Don’tforgetto deduct the contra assets.
(TCO 4) Explain how management’s discussion and analysis ofits operations and liquiditymay be helpful to
investors.
Question 2. Question : (TCO 2) What are the key provisions ofthe Public CompanyAccounting Reform and
Investor Protection (Sarbanes-Oxley) Act of 2002?
Question 3. Question : (TCO 5) Give an example of a non-cash financing and investing activity and explain when
and how it would be reported in the financial statements.
Question 4. Question : (TCO 3) What is the purpose of the closing process?
(TCO 1) The SEC issues accounting standards in the form of
accounting research bulletins.
financial reporting releases.
financial accounting standards.
financial technical bulletins.
:
Question 2. Question :
(TCO 2) Enhancing qualitative characteristics of accounting information include each ofthe following,except
timeliness.
materiality.
comparability.
verifiability.
Comments:
(TCO 3) Hughes Aircraft sold a four-passenger airplane for $380,000,receiving a $50,000 down payment and a 12%
note for the balance.The journal entry to record this sale would include a
credit to cash.
debitto cash discount.
debitto note receivable.
credit to note receivable.
Comments:

(TCO 3) When a tenant makes an end-of-period adjusting entrycreditto the prepaid rentaccount
he or she usuallydebits cash.
he or she usuallydebits an expense account.
he or she debits a liabilityaccount.
he or she does none ofthe above.
Comments:
(TCO 3) Permanentaccounts would notinclude
interestexpense.
wages payable.
prepaid rent.
unearned revenues.
(TCO 4) Cash equivalents would notinclude
cash not available for currentoperations.
moneymarketfunds.
United States Treasury bills.
bank drafts.
(TCO 4) Which is a shareholders’ equityaccountin the balance sheet?
Paid-in capital
Dividends payable
Instructor Explanation: See Chapter 3.
Points Received:4 of 4
Comments:
(TCO 4) Janson Corporation Co.’s trial balance included the following accountbalances atDecember 31,2011:
Investments consistoftreasury bills thatwere purchased in November and mature in January.Prepaid insurance is
for the next 2 years. What amountshould be included in the currentassetsection ofJanson’s December 31,2011
balance sheet?
$88.000
$85,000
$55,000
$135,000
(TCO 4) Which of the following would be disclosed in the summaryofsignificantaccounting policies disclosure note?
Option A
Option B
Option C

Option D
(TCO 4) Below is the partial balance sheet($ in thousands) for Paisano Seafood Inc.
The current ratio (rounded) is
1.98.
1.58.
1.17.
0.66.
quiz 3
<pstyle=”font-size:11.8181819915771px;”=””>TCO5) The distinction between operating and non-operating income
relates to
Comments:
(TCO 5) Major Co. reported a 2011 income of $300,000 from continuing operations before income taxes and a
before-tax extraordinary loss of$80,000.All income is subjectto a 30% tax rate. In the 2011 income statement,Major
Co. would show the following line-item amounts for income tax expense and net income.
$66,000 and $210,000
$90,000 and $154,000
$90,000 and $276,000
$66,000 and $220,000
Instructor Explanation:
Comments:
(TCO 5) The financial statementpresentation ofa change in depreciation method is mostsimilar to that of reporting
changes in accounting estimates.
prior period adjustments.
ion of errors.
extraordinary items.
Comments:
(TCO 5) Cash flows from investing activities do not include

Comments:
(TCO 5) Review Rowdy’s Restaurants cash flow (in millions):
Rowdy’s would reportnet cash inflows (outflows) from financing activities in the amountof
$1,100.
$(1,100).
$820.
$900.
Instructor Explanation:
Comments:
4
<pstyle=”font-size:11.8181819915771px;”=””>(TCO5) For a typical manufacturing company,the most common
critical point for recognizing revenue is the date
an order is received.
production is completed.
the productis delivered.
paymentis received.
(TCO 5) On December 15,2011,RigsbySales Co. sold a tract of land that cost $3,600,000 for $4,500,000.Rigsby
appropriatelyuses the installmentsale method ofaccounting for this transaction.Terms called for a down paymentof
$500,000 with the balance in two equal,annual installments,payable on December 15,2012 and December 1 5,
2013.Ignore interestcharges.Rigsbyhas a December 31 year-end.In 2011, Rigsbywould recognize the realized
gross profitof
$500,000.
$0.
$900,000.
$100,000.
(TCO 6) Presentand future value tables of $1 at 3% are presented below:
Carol wants to invest moneyin a 6% CD account that compounds semiannually.Carol would like the account to have
a balance of $50,000 5 years from now.How much mustCarol depositto accomplish her goal?
$35,069
$43,131
$37,205
$35,000
Comments:
(TCO 6) Sondra deposits $2,000 in an IRA accounton April 15, 2011.Assume the account will earn 3% annually.If
she repeats this for the next 9 years, how much will she have on depositon April 14, 2020?
$20,600
$20,928

$23,616
$24,715
(TCO 6) Jose wants to cash in his winning lottery ticket. He can either receive five, $5,000 annual payments starting
today, or he can receive a lump-sum paymentnow based on a 3% annual interestrate.What is the presentvalue of
the installments ifhe opts for the lump sum payment?
$22,899
$21,565
$23,000
5
<pstyle=”font-size:11.8181819915771px;”=””>(TCO7) Cash maynot include
foreign currency.
moneyorders.
restricted cash.
undeposited customer checks.
(TCO 7) On November 10 of the current year, Flores Mills sold carpetto a customer for $8,000 with creditterm 2/10,
n/30. Flores uses the gross method ofaccounting for cash discounts.Whatis the correct entry for Flores on
November 17, assuming the correct paymentwas received on that date?
Option a
Option b
Option c
Option d
(TCO 7) Which of the following does notchange the balance in accounts receivable?
Returns on credit sales
Collections from customers
Bad debts expense adjusting entry
Write-offs
(TCO 7) Brockton Carpet Cleaning prepares a bank reconciliation atthe end of every month.At the end of July, the
balance in the general ledger checking accountwas $2,750,and the bank balance on the bank statementwas
$2,980.Outstanding checks totaled $680,and deposits in transitwere $400.The bank statementrevealed that a
check written for $120 was incorrectly recorded by Brockton as a $220 disbursement.The bank statementlisted
service charges and NSF check charges totaling $150.The corrected cash balance is
$2,270.
$2,550.
$2,470.
$2,700.
(TCO 7) Calistoga Produce estimates bad debtexpense at½% of credit sales.The companyreported accounts
receivable and allowance for uncollectible accounts of$471,000 and $1,650,respectively, at December 31,2010.
During 2011,Calistoga’s creditsales and collections were $315,000 and $319,000,respectively,and $1,720 in

accounts receivable were written off. Calistoga’s adjusted allowance for uncollectible accounts atDecember 31,2011
is
$1,575.
$1,505.
$1,650.
$1,720.
quiz 7
<pstyle=”font-size:11.8181819915771px;”=””>(TCO8) In applying LCM, marketcannotbe
less than netrealizable value minus a normal profitmargin.
net realizable value less reasonable completion and disposal costs.
greater than net realizable value reduced by an allowance for normal profitmargin.
less than cost.
(TCO 8) Montana Co. has determined its year-end inventory on a FIFO basis to be $600,000.Information pertaining
to that inventory is as follows:
What should be the carrying value of Montana’s inventory?
$600,000
$520,000
$590,000
$510,000
(TCO 8) Howard’s SupplyCo.suffered a fire loss on April 20, 2011.The company’s lastphysical inventory was taken
on January 30, 2011,at which time the inventory totaled $220,000.Sales from January 30 to April 20 were $600,000,
and purchases during thattime were $450,000.Howard’s consistentlyreports a 30% gross profit.The estimated
inventory loss is
$490,000.
$238,000.
$250,000.
None of the above
(TCO 8) When computing the cost-to-retail percentage for the conventional retail method,included in the
denominator are
net markups and netmarkdowns.
neither net markups nor netmarkdowns.
net markups,butnot net markdowns.
net markdowns,butnot net markups.
(TCO 8) Retrospective treatmentof prior years’ financial statements is required when there is a change from
average costto FIFO.
FIFO to average cost.
LIFO to average cost.
All of the above

ACCT 304 Week 6
Annual Report Analysis
Your annual reportanalysis is due atthe end of Week 6. Obtain an annual reportfrom a corporation that is interesting
to you. Using techniques thatyou have learned of in the previous weeks,respond to the following questions.
1. Who are the firm’s auditors? Do they provide a clean opinion on the financial statements?
2. Have there been any subsequentevents,errors and irregularities, illegal acts,or related-party transactions thathave
a material effect on the financial statements?
3. Describe the trend in total assets and total liabilities for the years presented.
4. What are the company’s three largestassets for the mostrecentyear presented?
5. What are the company’s three largestliabilities for the mostrecentyear presented?
6. What types of stock does the company have? How many outstanding shares are there for each type of stock for the
mostrecentyear presented?
7. Does the companyuse the single-step income statement,multiple-step income statement,or a variation of both?
8. Does the income statementcontain anyseparatelyreported items,including discontinued operations or extraordinary
items,in any year presented? If it does,describe the event that caused the item.(Hint: There should be a related
footnote.)
9. Describe the trend in net income over the years presented.
10. Does the companyhave other comprehensive income? Ifyes, what is the nature of the transaction(s)?
11. Does the companyuse the indirector direct method of the cash-flow statement?
12. What is the trend in cash from operations for the years presented?
13. What are the two largestitems included in cash from investing activities?
Please see grading rubric for guidelines.Please submitthe completed projectbySunday at the end of Week 6.
Submityour Course Projectto the Dropboxlocated on the silver tab at the top of this page. For instructions on how to
use the Dropbox, read these
midterm
<pstyle=”font-size:11.8181819915771px;”=””>Question 1.Question : (TCO 1) Which of the following has the
authority to setaccounting standards in the United States?
FASB
IRS
SEC
AICPA
: 1
Question 2. Question : (TCO 2) SFAC No.5 focuses on:
objectives of financial reporting.
qualitative characteristics ofaccounting information.
Recognition and measurementconcepts in accounting,including assumptions and principles.
elements offinancial statements.
: 1
5 of 5
Question 3. Question : (TCO 3) Mary Parker Co. invested $15,000 in ABC Corporation and received capital stock in
exchange. Mary Parker Co.’s journal entry to record this transaction would include a:
debitto investments.
credit to retained earnings.
credit to capital stock.
debitto expense.
: 2

5 of 5
Question 4. Question : (TCO 3) The adjusting entryrequired to record accrued expenses includes:
a credit to cash.
a debitto an asset.
a credit to an asset.
a credit to liability.
: 2
5 of 5
Question 5. Question : (TCO 3) Temporary accounts would notinclude:
salaries payable.
depreciation expense.
supplies expense.
costof goods sold.
: 2
5 of 5
Question 6. Question : (TCO 4) Notes payable:
is a current liabilityaccount.
usuallyhas a debit balance.
is a non-currentliabilityaccount.
cannotdetermine its classification withoutadditional information.
: 2
5 of 5
Question 7. Question : (TCO 4) The currentratio is given by:
current assets divided bynon-currentassets.
current assets divided bytotal assets.
current assets divided bycurrent liabilities.
current assets divided bytotal liabilities.
: 3
5 of 5
Question 8. Question : (TCO 5) The distinction between operating and non-operating income relates to:
: 4
5 of 5
Question 9. Question : (TCO 5) A voluntary change in accounting principle is accounted for by:
a cumulative effect on income in the year of the change.
a retrospective reporting of all comparative financial statements shown.
a prior period adjustment.
a separate line componentofincome.
: 4
5 of 5
Question 10.Question : (TCO 5) Cash flows from investing activities do not include:

: 4
5 of 5
Question 11.Question : (TCO 5) The Maytag Corporation’s income statementincludes income from continuing
operations,a loss from discontinued operations,and extraordinaryitems.Earnings per share information would be
provided for:
net income only.
income from continuing operations and netincome only.
income from continuing operations,loss from discontinued operations,and netincome only.
income from continuing operations,loss from discontinued operations,extraordinaryitems,and net income.
: 4
5 of 5
Question 12.Question : (TCO 5) In a statementofcash flows prepared under International Financial Reporting
Standards,each of the following items is typicallyclassified as a financing cash flow except:
interestpaid.
dividends paid.
proceeds from the issuance oflong-term debt.
dividends received.
: 4
5 of 5
Question 13.Question : (TCO 4) Which is a shareholders’ equityaccountin the balance sheet?
Paid-in capital
Dividends payable
: 3
5 of 5
Question 14.Question : (TCO 4) Which of the following groups is notamong the external users for whom financial
statements are prepared?
Customers
Suppliers
Employees
All of the above are external users offinancial statements.
(TCO 5) Misty Companyreported the following before-taxitems during the current year:
Misty’s effective tax rate is 40% and there were 1,000 shares ofcommon stock outstanding.
What would be Misty’s income before extraordinary item(s)?
Question 2. Question : (TCO 4) Listed below are account balances (in $millions) taken from the records of Symphony
Stores.All of these are permanentaccounts,exceptthe lasttwo that have yet to be closed.The installment
receivables are current. Symphony uses a perpetual inventory system.
What would Symphony report as total assets? Hint:Don’tforgetto deduct the contra assets.
(TCO 4) Explain how management’s discussion and analysis ofits operations and liquiditymay be helpful to
investors.
Question 2. Question : (TCO 2) What are the key provisions ofthe Public CompanyAccounting Reform and Investor
Protection (Sarbanes-Oxley) Act of 2002?
Question 3. Question : (TCO 5) Give an example of a non-cash financing and investing activity and explain when and
how it would be reported in the financial statements.
Question 4. Question : (TCO 3) What is the purpose ofthe closing process?
final
acct304 final exam

Question 1.1. (TCO 1) The SEC issues accounting standards in the form of (Points : 6)
accounting research bulletins.
financial reporting releases.
financial accounting standards.
financial technical bulletins.
Question 2.2. (TCO 1) When a registrantcompanysubmits its annual filing to the SEC, it uses (Points :6)
Form 10-A.
Form 10-K.
Form 10-Q.
Form S-1.
Question 3.3. (TCO 2) The conceptual framework’s qualitative characteristic ofrelevance includes (Points :6)
predictive value.
verifiability.
completeness.
neutrality.
Question 4.4. (TCO 2) Enhancing qualitative characteristics ofaccounting information include each ofthe following,
except (Points : 6)
timeliness.
materiality.
comparability.
verifiability.
Question 5.5. (TCO 3) A sale on accountwould be recorded by (Points : 6)
debiting revenue.
crediting assets.
crediting liabilities.
debiting assets.
Question 6.6. (TCO 3) Prepayments occur when (Points : 6)
cash flow precedes expense recognition.
sales are delayed pending creditapproval.
customers are unable to pay the full amountdue when goods are delivered.
manufactured goods awaitqualitycontrol inspections.
Question 7.7. (TCO 4) An assetthat is not expected to be converted to cash or consumed within 1 year or the
operating cycle is (Points : 6)
goodwill.
accounts receivable.
inventory.
supplies.
Question 8.8. (TCO 4) Which of the following is never a current liabilityaccount? (Points : 6)
Accrued payroll
Dividends payable
Prepaid rent
Subscriptions collected in advance
Question 9.9. (TCO 5) The distinction between operating and nonoperating income relates to (Points :6)

Question 10.10.(TCO 5) On May 1, Foxtrot Co. agreed to sell the assets ofits Footwear Division to Albanese Inc. for
$80 million.The sale was completed on December 31,2012.The following additional facts pertain to the transaction:
The Footwear Division qualifies as a componentofthe 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 2012.
Foxtrot’s income tax rate is 40%.
In the 2012 income statementfor Foxtrot Co., it would report
(Points : 6)
income (loss) on its total operations for the year without separation.
income (loss) on its continuing operation only.
income (loss) from its continuing and discontinued operations separately.
income and gains separatelyfrom losses.
Question 11.11.(TCO 5) Operating cash outflows would include (Points :6)
purchase ofinvestments.
purchase ofequipment.
paymentof cash dividends.
purchases ofinventory.
Question 12.12.(TCO 5) The FASB’s stated preference for reporting operating cash flows is the (Points : 6)
indirectmethod.
direct method.
working capital method.
all financial resources method.
Question 13.13.(TCO 5) Merchandise sold FOB shipping pointindicates that(Points : 6)
the seller pays the freight.
the buyer holds title after the merchandise leaves the seller’s location.
the common carrier holds title until the merchandise is delivered.
the sale is notconsummated until the merchandise reaches the pointto which it is being shipped.
Question 14.14.(TCO 5) Todd Sweeney is an artistwho sells his work under consignment.(He displays his work in
local barbershops,and customers buythe work there.) Sweeney recently transferred a painting to a local barbershop.
After Sweeneyhas transferred a painting to a barbershop,the painting (Points :6)
should be counted in Sweeney’s inventory until the barbershop sells it.
should be counted in the barbershop’s inventory,as they now possess it.
should be counted in either Sweeney’s or the barbershop’s inventory,depending on which incurred the costof
preparing the painting for display.
None of the above
Question 15.15.(TCO 6) Reba wishes to know how much moneywould be in her savings accountif she deposits a
given sum in an account and leaves it there at 6% interestfor 5 years. She should use a table for the (Points : 6)
future value of an ordinary annuity of 1.
future value of 1.
future value of an annuity of 1.
presentvalue of an annuity due of 1.
Question 16.16.(TCO 6) Loan A has the same original principal,interestrate,and payment amountas Loan B.
However, Loan A is structured as an annuity due, while Loan B is structured as an ordinary annuity. The maturity
date of Loan A will be (Points : 6)
earlier than Loan B.
later than Loan B.
the same as Loan B.
indeterminate with respectto Loan B.

Question 17.17.(TCO 7) Compensating balances represent(Points :6)
funds in a bank accountthat cannotbe spent.
balances in a payroll checking account.
accounts that are subjectto bank service charges.
accounts on which banks pay interest,such as NOW accounts.
Question 18.18.(TCO 7) Oswego Clay Pipe Companysold $46,000 ofpipe to SoutheastWater District#45 on April
12 of the current year with terms 1/15, n/60. Oswego uses the gross method ofaccounting for cash discounts.What
entry would Oswego make on April 23, assuming the customer made the correctpaymenton that date?
(Points : 6)
Option a
Option b
Option c
Option d
Question 19.19.(TCO 8) In a periodic inventory system,the cost of purchases is debited to (Points : 6)
purchases.
costof goods sold.
inventory.
accounts payable.
Question 20.20.(TCO 8) During periods when costs are rising and inventory quantities are stable,costof goods sold
will be (Points : 6)
higher under FIFO than LIFO.
higher under FIFO than average cost.
lower under average costthan LIFO.
lower under LIFO than FIFO.
Question 21.21.(TCO 8) In applying LCM, marketcannot be (Points : 6)
less than netrealizable value.
greater than the normal profit.
less than the normal profitmargin.
greater than net realizable value.
Question 22.22.(TCO 8) In calculating the cost-to-retail percentage for the retail method,the retail column will not
include (Points : 6)
purchases.
purchase returns.
abnormal shortages.
freight-in.
Question 1. 1. (TCO 8) FulbrightCorp. uses the periodic inventory system.During its firstyear of operation,Fu lbright
made the following purchases (listed in chronological order ofacquisition):
 40 units at $100
 70 units at $80
 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 average costmethod (rounded)? (Points :15)
Question 2. 2. (TCO 5) Describe whatis meantby unearned revenues,and give two examples.(Points :28)
Question 3. 3. (TCO 7) Briefly compare and contrastthe two allowance estimation approaches to estimating bad debt
expense.In your answer,indicate which approach,ifeither, is superior and explain your reasoning.(Points :25)
1. (TCO 8) Briefly explain when there would be a tax benefit from electing LIFO rather than FIFO. (Points : 25)

Question 2. 2. (TCO 4) You are the independentaccountantassigned to the audit of Neophyte Company.The
company’s accountant,a graduate of Rival State University, has prepared financial statements thatcontained the
following questionable items:
1. The balance sheetreports land at$100,000.Included in this amountis a piece of property held for speculation ata
costof $30,000.
2. Currentliabilities include $50,000 for long-term debtthat comes due in 3 months.The company has received a
suitable firm commitmentto refinance the debt for 5 years and intends to do so.
3. Long-term Investments (non-current) in marketable securities include $20,000 in short-term,high-grade commercial
paper.
Please discuss how the above items should be correctlyclassified and accounted for.(Points : 25)

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