Acc 421 final exam

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This document contains ACC 421 Final Exam
1) When an item of expense is paid and recorded in advance,
it is normally called a(n)
2) If, during an accounting period, an expense item has been
incurred and consumed but not yet paid for or recorded,
then the end-of-period adjusting entry would involve
3) An accrued expense can best be described as an amount
4) Which of the following statements is not an objective of
financial reporting?
5) The two primary qualities that make accounting
information useful for decision making are
6) One objective of financial reporting is to provide
7) Companies that are listed on a stock exchange are
required to submit their financial statements to the
8) The body that has the power to prescribe the accounting
practices and standards to be employed by companies that
fall under its jurisdiction is the
9) The Financial Accounting Foundation
10) Limitations of the income statement include all of the
following except
11) Which of the following is not a generally practiced
method of presenting the income statement?
12) The income statement reveals
13) In selecting an accounting method for a newly contracted
long-term construction project, the principal factor to be
considered should be

2. 14) Which of the following is not an accurate representation
concerning revenue recognition?
15) Dot Point, Inc. is a retailer of washers and dryers and
offers a three-year service contract on each appliance sold.
Although Dot Point sells the appliances on an installment
basis, all service contracts are cash sales at the time of
purchase by the buyer. Collections received for service
contracts should be recorded as
16) One criticism not normally aimed at a balance sheet
prepared using current accounting and reporting standards is
17) The balance sheet contributes to financial reporting by
providing a basis for all of the following except
18) The basis for classifying assets as current or noncurrent is
conversion to cash within
19) The focus of APB Opinion No. 22 is on the disclosure of
accounting policies. This information is important to financial
statement readers in determining
20) If a business entity entered into certain related party
transactions, it would be required to disclose all of the
following information except the
21) Events that occur after the December 31, 2008 balance
sheet date (but before the balance sheet is issued) and
provide additional evidence about conditions that existed at
the balance sheet date and affect the realizability of accounts
receivable should be
22) Companies should disclose all of the following in interim
reports except
23) If the financial statements examined by an auditor lead
the auditor to issue an opinion that contains an exception
that is not of sufficient magnitude to invalidate the
statement as a whole, the opinion is said to be

3. 24) The MDA section of an enterprise's annual report is to
cover the following three items:
25) The payout ratio is calculated by dividing
26) Which of the following ratios measures long-term
solvency?
27) Theoretically, in computing the receivables turnover, the
numerator should include
28) To arrive at net cash provided by operating activities, it is
necessary to report revenues and expenses on a cash basis.
This is done by
29) The first step in the preparation of the statement of cash
flows requires the use of information included in which
comparative financial statements?
30) The primary purpose of the statement of cash flows is to
provide information
31) Riley Company reports its income from investments
under the equity method and recognized income of $25,000
from its investment in Wood Co. during the current year,
even though no dividends were declared or paid by Wood
during the year. On Riley's statement of cash flows (indirect
method), the $25,000 should
32) Which of the following would be classified as a financing
activity on a statement of cash flows?
33) In a statement of cash flows, the cash flows from
investing activities section should report
34) Which table would show the largest factor for an interest
rate of 8% for five periods?
35) Which table would you use to determine how much you
would need to have deposited three years ago at 10%
compounded annually in order to have $1,000 today?
36) Which of the following transactions would require the

4. use of the present value of an annuity due concept in order
to calculate the present value of the asset obtained or
liability owed at the date of incurrence?
Business - Accounting
1) An accrued expense can best be described as an amount
2) When an item of revenue is collected and recorded in
advance, it is normally called a(n) ___________ revenue. 3)
When an item of expense is paid and recorded in advance, it
is normally called a(n) 4) A common set of accounting
standards and procedures are called 5) One objective of
financial reporting is to provide 6) The information provided
by financial reporting pertains to 7) The Financial Accounting
Foundation 8) The major distinction between the Financial
Accounting Standards Board (FASB) and its predecessor, the
Accounting Principles Board (APB), is 9) The body that has
the power to prescribe the accounting practices and
standards to be employed by companies that fall under its
jurisdiction is the 10) Limitations of the income statement
include all of the following except 11) The income statement
reveals 12) Which of the following would represent the least
likely use of an income statement prepared for a business
enterprise? 13) The process of formally recording or
incorporating an item in the financial statements of an entity
is 14) Which of the following is not a reason why revenue is
recognized at time of sale? 15) Which of the following is not
an accurate representation concerning revenue recognition?
16) One criticism not normally aimed at a balance sheet
prepared using current accounting and reporting standards
is 17) The basis for classifying assets as current or
noncurrent is conversion to cash within 18) The correct

5. order to present current assets is 19) If a business entity
entered into certain related party transactions, it would be
required to disclose all of the following information except
the 20) Events that occur after the December 31, 2008
balance sheet date (but before the balance sheet is issued)
and provide additional evidence about conditions that
existed at the balance sheet date and affect the realizability
of accounts receivable should be 21) The full disclosure
principle, as adopted by the accounting profession, is best
described by which of the following? 22) The MDA section of
an enterprise's annual report is to cover the following three
items: 23) If the financial statements examined by an auditor
lead the auditor to issue an opinion that contains an
exception that is not of sufficient magnitude to invalidate the
statement as a whole, the opinion is said to be 24) Which of
the following best characte...
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