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1. Uop ACC 545 Final Exam Guide NEW
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1) A company changes from percentage-of-completion to
completed-contract, which is the method used for tax purposes.
The entry to record this change should include
2) Which of the following is accounted for as a change in
accounting principle?
3) A company changes from straight-line to an accelerated
method of calculating depreciation, which will be similar to the
method used for tax purposes. The entry to record this change
should include a
4) Presenting consolidated financial statements this year when
statements of individual companies were presented last year is
5) During 2008, a construction company changed from the
completed-contract method to the percentage-of-completion
method for accounting purposes but not for tax purposes. The
following lists include gross profit figures under both methods
for the past 3 years:
6) On January 1, 2005, Baden Co. purchased a machine, which
was its only depreciable asset, for $300,000. The machine has a
5-year life, and no salvage value. Sum-of-the-years'-digits

2. depreciation has been used for financial statement reporting
and the elective straight-line method for income tax reporting.
Effective January 1, 2008, for financial statement reporting,
Baden decided to change to the straight-line method for
depreciation of the machine. Assume that Baden can justify the
change.
7) The deferred tax expense is the
8) A company records an unrealized loss on short-term
securities. This might result in what type of difference and in
what type of deferred income tax?
9) A company uses the equity method to account for an
investment. This would result in what type of difference and in
what type of deferred income tax?
10) Nottingham Corporation had accounts receivable of
$100,000 on January 1st The only transactions affecting
accounts receivable were sales of $900,000 and cash collections
of $850,000. What is the accounts receivable turnover?
11) If a petty cash fund is established in the amount of $250,
and contains $150 in cash and $95 in receipts for
disbursements when it is replenished, the journal entry to
record replenishment should include credits to which of the
following accounts?
12) If the month-end bank statement shows a balance of
$36,000, outstanding checks are $12,000, a deposit of $4,000
was in transit at month end, and a check for $500 was
erroneously charged by the bank against the account, what is
the correct balance in the bank account at month end?

3. 13) If a short-term obligation is excluded from current
liabilities because of refinancing, the footnote to the financial
statements describing this event should include all of the
following information EXCEPT:
14) Stock dividends distributable should be classified on the
15) Which of the following items is a current liability?
16) A company borrows $10,000 and signs a 90-day nontrade
note payable. In preparing a statement of cash flows (indirect
method), this event would be reflected as
17) An increase in inventory balance would be reported in a
statement of cash flows using the indirect method
(reconciliation method) as
18) The primary purpose of the statement of cash flows is to
provide information
19) Eller Co. received merchandise on consignment. As of
January 31, Eller included the goods in inventory, but did not
record the transaction. What would be the effect of this on its
financial statements for January 31?
20) Cross Co. accepted delivery of merchandise that it
purchased on account. As of December 31, Cross had recorded
the transaction, but did not include the merchandise in its
inventory. What would be the effect of this on its financial
statements for December 31?
21) The failure to record a purchase of merchandise on account
even though the goods are properly included in the physical
inventory results in

4. 22) Fences and parking lots are reported on the balance sheet
as
23) Which of these is not a major characteristic of a plant asset?
24) The debit for a sales tax properly levied and paid on the
purchase of machinery preferably would be a charge to
25) On November 1, 2007, Little Company purchased 600 of the
$1,000 face value, 9% bonds of Player, Incorporated, for
$632,000, which includes accrued interest of $9,000. The
bonds, which mature on January 1, 2012, pay interest
semiannually on March 1 and September 1. Assuming that Little
uses the straight-line method of amortization and that the
bonds are appropriately classified as available-for-sale, what
would the net carrying value of the bonds be shown as on
Little's December 31, 2007, balance sheet?
26) On October 1, 2007, Lyman Co. purchased to hold to
maturity, 200 of the $1,000 face value, 9% bonds for $208,000.
An additional $6,000 was paid for accrued interest. Interest is
paid semiannually on December 1 and June 1 and the bonds
mature on December 1, 2011. Lyman uses straight-line
amortization. Ignoring income taxes, what was the amount
reported in Lyman's 2007 income statement from this
investment?
27) On October 1, 2007, Porter Co. purchased to hold to
maturity 1,000 of the $1,000 face value, 9% bonds for $990,000
which includes $15,000 accrued interest. The bonds, which
mature on February 1, 2016, pay interest semiannually on
February 1 and August 1. Porter uses the straight-line method
of amortization. The bonds should be reported in the December
31, 2007 balance sheet at a carrying what value?

5. 28) Although only certain leases are currently accounted for as
a sale or purchase, there is theoretic justification for
considering all leases to be sales or purchases. The principal
reason that supports this idea is that
29) An essential element of a lease conveyance is that the
30) Which of the following is a correct statement of one of the
capitalization criteria?
31) Discount on notes payable is charged to interest expense
32) The generally accepted method of accounting for gains or
losses from the early extinguishment of debt treats any gain or
loss as
33) A corporation borrowed money from a bank to build a
building. The long-term note signed by the corporation is
secured by a mortgage that pledges title to the building as
security for the loan. The corporation is to pay the bank
$80,000 each year for 10 years to repay the loan. Which of the
following relationships can you expect to apply to the situation?
34) Benton Company issues $10,000,000 of 10-year, 9% bonds
on March 1, 2007, at 97 plus accrued interest. The bonds are
dated January 1, 2007, and pay interest on June 30 and
December 31. What is the total cash received on the issue date?
35) Limeway Company issues $5,000,000, 6%, 5-year bonds
dated January 1, 2007, on January 1, 2007. The bonds pay
interest semiannually on June 30 and December 31. The bonds
are issued to yield 5%. What are the proceeds from the bond
issue?
36) A company issues $20,000,000, 7.8%, 20-year bonds to
yield 8% on January 1, 2007. Interest is paid on June 30 and

6. December 31. The proceeds from the bonds are $19,604,145.
Using effective-interest amortization, how much interest
expense will be recognized in 2007?
37) Which of the following is not a characteristic of a defined-
contribution pension plan?
38) In accounting for a defined-benefit pension plan
39) The interest on the projected benefit obligation component
of pension expense
40) Windsor Company has outstanding both common stock and
nonparticipating, noncumulative preferred stock. The
liquidation value of the preferred is equal to its par value. The
book value per share of the common stock is unaffected by
41) Dividends are not paid on
42) Assume common stock is the only class of stock outstanding
in the B-Bar-B Corporation. Total stockholders' equity divided
by the number of common stock shares outstanding is called
43) Preparation of consolidated financial statements when a
parent-subsidiary relationship exists is an example of the
44) In presenting segment information, which of the following
items must be reconciled to the entity's consolidated financial
statements?
45) Presenting consolidated financial statements this year
when statements of individual companies were presented last
year is