ACCT 2301 F18 Exam 2 practice questions PDF

Title ACCT 2301 F18 Exam 2 practice questions
Author Medhavi Rana
Course PRINCIPLES OF ACCOUNTING I
Institution The University of Texas at Arlington
Pages 13
File Size 313.8 KB
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Download ACCT 2301 F18 Exam 2 practice questions PDF


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ACCT 2301 Exam 2 Practice Questions PLEASE READ: THIS IS NOT A STUDY GUIDE. The purpose of these practice questions is to give you the opportunity to practice applying what you’ve learned by reading the chapters, attending class, doing the pre-quizzes and homework, and studying to a multiple choice format. These practice questions are randomly selected. The questions on the exam and the material covered by the exam will be different. I recommend that you prepare for the exam as follows: 1. 2. 3. 4. 5. 6.

Re-read the chapters and go back through your class notes. Look back over the pre-quizzes and homework, making sure that you understand why the correct answers are correct. Attend exam prep sessions at the IDEAS Center. Make sure that you get your questions answered. Work additional problems. Possible sources for additional problems are from the back of the textbook chapters, the DSM modules in MyAccountingLab, the extra Pre- and Post-Tests in MyAccountingLab, etc. Print out these practice questions after you believe that you have prepared appropriately for the exam and work through them as if you are in an exam setting (i.e., just have your calculator and pencil out and do not look at the answers until you’ve completed the problems). This gives you a chance to practice what you will have to do for the exam. Use your results to evaluate how well prepared you are and spend more time studying or getting questions answered, as needed.

ACCT 2301 Exam 2 Practice Questions Name___________________________________

MULTIPLECHOICE.  Choosetheonealternativethatbestcompletesthestatementoranswersthequestion.  1) Deliveryexpenseisa(n)________.   A) administrativeexpense   B) operatingexpense   C) overheadexpense   D) partofCostofGoodsSold    2) Thecost‐of‐goods‐sold  modelis:  A) beginning  inventory,lesspurchases,lessendinginventoryequalscostofgoodssold.  B) beginning  inventory,pluspurchases,lessendinginventoryequalscostofgoodssold.  C) beginning  inventory,pluspurchases,plusendinginventoryequalscostofgoodssold.  D) beginning  inventory,lesspurchases,plusendinginventoryequalscostofgoodssold.   3) IfendinginventoryisunderstatedforYear1,theninYear2:   A) costof  goodssoldwillbeunderstatedandgrossprofitwillbeoverstated.  B) costofgoodssoldandgross  profitwillbothbeunderstated.  C) costofgoodssoldandgross  profitwillbothbeoverstated.  D) costofgoodssoldwillbe  overstatedandgrossprofitwillbeunderstated.   4) On  August1,SavageCompanypurchased  $2200ofinventoryonaccountwithcredittermsof  4/10,net 30.SavageCompanyusestheperpetualinventorysystem.OnAugust15,SavageCompanypaidthe amountdue.WhatjournalentrydidtheyprepareonAugust15?  A) debitAccountsPayablefor   $2200andcreditCashfor  $2200  B) debitAccountsPayablefor   $2200,creditPurchaseDiscountsfor  $88andcreditCashfor  $2112  C) debitInventoryfor   $2200andcreditAccountsPayablefor  $2200  D) debitAccountsPayablefor   $2112andcreditCashfor  $2112   5) Thestatementof  retainedearningsreportsacompanyʹsnetincomeornetlossforaperiodoftime.Whatis thesourceoftheamountofnetincomeornetloss?  A) BalanceSheet   B) IncomeStatement   C) Cash  DividendStatement  D) TrialBalanceWorksheet    6) WhencomparingtheFIFOandLIFO  inventorymethods:  A) FIFOresultsinthemostrealisticnetincomefigure.   B) FIFOmatchesoldinventorycostsagainstrevenue.   C) LIFOreports  themostup‐to‐dateinventorycostonthebalancesheet.  D) LIFOreportsinventoryatnetrealizablevalue.   

7) Operatingincomereflects:   A) earningsfromacompanyʹscorebusinessactivitieswhichincludesinterestincome.   B) incomefromacompany  ʹsmainandsecondarybusinessactivities.  C) animportant  measurethatinvestorstousetoevaluatetheliquidityofthebusiness.  D) earningsfromacompanyʹscorebusinessactivities.    8) Underthe  ________method,endinginventoryisbasedonthecostsofthemostrecentpurchases.  A) FIFO   B) specific‐identification   C) LIFO   D) average‐cost    9) OnMay1,SantelleCompanypurchased   $700ofinventoryonaccountwithcredittermsof  2/10,net30. Santelleusestheperpetualinventorysystem.OnMay2,thesellergaveSantellea  $100allowanceduetoa productdefect.WhatjournalentrydidSantelleCompanyprepareonMay2?  A) debitCashfor   $100andcreditAccountsPayablefor  $100  B) debitAccountsPayablefor   $100andcreditPurchaseDiscountsfor  $100  C) debitAccountsPayablefor   $100andcreditInventoryfor  $100  D) debitAccountsPayablefor   $100andcreditPurchaseReturnsandAllowancesfor  $100   10) Onamultistepincomestatement,a  commonsubtotalis:  A) IncomefromNonoperating  Activities.  B) InterestExpenseminusInterestIncome.   C) GrossProfit.   D) noneoftheabove.    11) KennelCompanyreportedthefollowing:   Costofgoodssold(estimatedfornextperiod)  $300,000 Endinginventory(estimatedfornextperiod)  $95,000 Beginninginventoryfortheperiod  $60,000  Basedonthisinformation,thepurchasesforthenextperiodshouldbe:  A) $265,000.   B) $360,000.   C) $395,000.   D) $335,000.    12) MariahCompanyhasinventoryatthe  endoftheyearwithahistoricalcostof  $95,000.MariahCompany usestheperpetualinventorysystem.UndertheLCMrule,thecurrentreplacementcostis  $75,600.Under U.S.GAAP,thejournalentrytorecordthewrite‐downtoLCMwill:   A) debitCostofGoodsSoldfor   $19,400andcreditPurchasesfor  $19,400.  B) debitCostofGoodsSoldfor   $19,400andcreditInventoryfor  $19,400.  C) debitPurchasesfor   $19,400andcreditCostofGoodsSoldfor  $19,400.  D) debitInventoryfor   $19,400andcreditCostofGoodsSoldfor  $19,400.   13) Wheninventorycostsaredecreasing,theLIFOcostingmethodwillgenerallyresultin:   A) alowergrossprofitthanunderFIFO.   B) ahighergross  profitthanunderFIFO.  C) alowerinventoryvalue  thanunderFIFO.  D) thesameinventoryvalueasFIFO.   

14) Acompanyhasthefollowingadjustedtrialbalance:   Account Debit Credit Cash  $700 AccountsReceivable  1200 Inventory  2000 Supplies  1700 PrepaidRent  400 Land  5700 Building  40,100 AccumulatedDepreciation   $8100 AccountsPayable  7100 UnearnedRevenue  4500 NotesPayable,due2020  2500 CommonStock  6900 RetainedEarnings  2800 Dividends  1000 ServiceRevenue  33,200 RentExpense  1400  SuppliesExpense  1400  SalariesExpense  6500 DepreciationExpense  1400 UtilitiesExpense 1600 Totals $65,100 $65,100  Whichclosingentryisneeded?  A) CreditIncomeSummaryfor   $1800anddebitCashfor  $1800  B) Debit  RentExpensefor  $1400andcreditIncomeSummaryfor  $1400  C) DebitDividendsfor   $1000andcreditIncomeSummaryfor  $1000  D) DebitService  Revenuefor  $33,200andcreditIncomeSummaryfor  $33,20

 15) Regardingincomestatementformats,whichof  thefollowingstatementsisINCORRECT?  A) Amultistepincomestatementreportsanumberofsubtotalstohighlightimportantrelationships  betweenrevenuesandexpenses.  B) Amultistepincome  statementistheonlyformatthatallowsuserstoevaluatetheprofitabilityofthe business.  C) Amulti‐stepincomestatementlistsincome  taxexpenseseparateofallotherexpenses.  D) Asingle‐stepincomestatementlistsalltherevenuestogetherunderaheadingsuchasRevenuesand  Gains.   16) UnderU.S.GAAP,inventoriesare  reportedonthebalancesheetat:  A) lower  ‐of‐cost‐or‐market.  B) historicalcost  only.  C) currentreplacementcostonly.   D) netrealizablevalue.    17) ForeverJewelersuses  theperpetualinventorysystem.OnApril2,Foreversoldmerchandisewithacostof $4,500for$7,000toacustomeronaccountwithtermsof2/15,n/30.Whichofthefollowingjournalentries correctlyrecordsthesalesrevenue?  A) AccountsReceivable 6,860         SalesRevenue  6,860  B)SalesRevenue 6,860         AccountsReceivable  6,860  C) SalesRevenue 6,860         CostofGoodsSold  6,860  D) AccountsReceivable 4,500         SalesRevenue  4,500   18) Allofthefollowingaccountsare  closedEXCEPTfor:  A) Cash.   B) ServiceRevenue.   C) Utilities  D) Dividends.   Expense.   19) Thenetincomeorlossis  calculatedonwhichfinancialstatement?  A) balancesheet   B) incomestatement   C) dividendsstatement   D) statementofretainedearnings    20) GroganCompanypurchasesinventoryon  accountwithacostof  $1300andaretailpriceof  $2600. GroganCompanyusestheperpetualinventorymethod.Whatjournalentryisrequiredonthedateof purchase?  A) debitInventoryfor   $1300andcreditAccountsPayablefor  $1300  B) debitPurchasesfor   $2600andcreditCashfor  $2600  C) debitAccountsReceivablefor    $2600andcreditPurchasesfor  $2600  D) debitPurchasesfor   $1300andcreditAccountsPayablefor  $1300  

21) Thefollowingdataarefor  SteveʹsCandyStoreforJanuary:  Beginninginventory  $191,000 Netsalesrevenue  $620,000 Netpurchases  $480,000Normalgrossprofitrate  30%  Whatisthecompanyʹsestimatedendinginventoryforthemonth?  A) $434,000   B) $186,000   C) $237,000   D) $485,000    22) TheSalesDiscountsForfeitedaccount________.   A) representsadditionalsalesrevenue   B) represents  thediscountlostwhenacustomerdoesnotpaywithinthediscountperiod  C) isacontraSalesRevenueaccount   D) isabalancesheetaccount    23) ThefollowingdataareforJesseeʹsCandyStoreforJanuary:   Beginninginventory  $205,000 Netsalesrevenue  $440,000 Netpurchases  $585,000Normalgrossprofitrate  40%  Whatisthecompanyʹsestimatedcostofgoodssoldforthemonth?  A) $145,000   B) $264,000   C) $235,000   D) $176,000   

 

24. Whichofthefollowingstatementsiscorrect? A.Balancesheetaccountsarepermanentaccountsanddonotretaintheirbalancesfromoneperiodtothe next. B.Balancesheetaccountsaretemporaryaccountsanddoretaintheirbalancesfromoneperiodtothenext. C.Incomestatementaccountsarepermanentaccountsanddoretaintheirbalancesfromoneperiodtothe next. D.Incomestatementaccountsaretemporaryaccountsanddonotretaintheirbalancesfromoneperiodto thenext.  25. Whichofthefollowingstatementsdoesnotcorrectlydescribetherelationshipbetweentheincome statementandtheendingretainedearningsbalance? A. Netincomeincreasestheendingbalanceofretainedearnings. B. Anetlossdecreasestheendingretainedearningsbalance. C. Anetlossdoesnotaffecttheendingretainedearningsbalance. D. Netincomeandnetlossbothaffecttheendingretainedearningsbalance.   



26. Atrialbalancepreparedaftertheclosingentrieshavebeenpostedwouldshowazerobalancein whichoneofthefollowingaccounts? A.Supplies. B.Accountsreceivable. C.Accumulateddepreciation. D.Incometaxexpense. 



27. Whichofthefollowingisapermanentaccount? A) MerchandiseInventory B) ServiceRevenue C) AccountsReceivable D) BothMerchandiseInventoryandAccountsReceivable  28.  Whichofthefollowingisatemporaryaccount? A) UnearnedServiceRevenue B) SalariesandWagesExpense C) Inventory D) RetainedEarnings 

29. Stockholders'equityisnotaffectedbyall A) cashreceipts. B) dividends. C) revenues. D) expenses.

30. Acompanypurchased$1,800ofmerchandiseonDecember5.OnDecember7,itreturned$200worthofthat merchandise.OnDecember8,itpaidthebalance,takinga2%discount.Theamountofthecashpaidon December8equals: a.  $200 b.  $1,568 c.  $1,564 d.  $1,800  31.  Acompanyhasnetsalesof$1,832,000,salescommissionsintheamountof$194,000,netincomewas $366,400,andthegrossprofitratiois60%,whatistheamountofcostofgoodssold? a.  $538,800 b.  $732,800 c.  $1,099,200 d.  $655,200   32.  Acompany’scostofgoodssoldwas$4,000.  Determinenetpurchasesandendinginventorygivengoods availableforsalewere$11,000andbeginninginventorywas$5,000. a. b. c. d. 

Netpurchases:$6,000;EndingInventory:$7,000   Netpurchases:$10,000;EndingInventory:$15,000  Netpurchases:$9,000;EndingInventory:$6,000  Netpurchases:$15,000;EndingInventory:$7,000

33.  TraneCompanypurchasedmerchandiseinventorywithaninvoicepriceof$4,000andcredittermsof2/10, n/30.WhatisthenetcostoftheinventoryifTraneCompanypayswithinthediscountperiod? a. b. c. d.

$4,000.  $3,920. $3,600. $3,680.

34.  OnJuly22,acompanypurchasedmerchandiseinventoryatacostof$5,250withcreditterms2/10,net30.  IfthecompanypaysforthepurchaseonAugust7,whatwouldbetheappropriatejournalentryonthe paymentdate? a. AccountsPayable 



5,250

5,250





5,250

5,145





5,145

5,250



     Cash

c. AccountsPayable 



     MerchandiseInventory

b. AccountsPayable 

5,250

     Cash

d. AccountsPayable 

     MerchandiseInventory



105



     Cash



5,145

35.   Duringaperiodofsteadilyrisingcosts,theinventoryvaluationmethodthatyieldsthelowestreported netincomeis: a. Specificidentificationmethod b. Weighted‐averagemethod c. FIFOmethod d. LIFOmethod  36.  Theinventoryvaluationmethodthattendstosmoothouterraticchangesincostsis: a. b. c. d.

FIFO Weightedaverage LIFO Specificidentification

 37.  Acompanyhadinventoryof5unitsatacostof$20eachonNovember1.OnNovember2,they purchased10unitsat$22each.OnNovember6,theypurchased6unitsat$25each.OnNovember8,they sold18unitsfor$54each.UsingtheLIFOperpetualinventorymethod,whatwasthecostofthe18units sold? a. b. c. d. 

$395 $410 $450 $510

38.  AcorporationusesaFIFOperpetualinventorysystem.   August2,25unitswerepurchasedat$12perunit.  August5,10unitswerepurchasedat$13perunit.  August15,12unitsweresoldat$25perunit.  August18,15unitswerepurchasedat$14perunit. WhatwasthedollaramountoftheendinginventoryforthemonthofAugust?  a. $496.00  b. $486.00 c. $300.00 d. $510.00 39. Attheendof2018,a$5,000understatementwasdiscoveredintheamountofthe2018ending inventory.Whatwerethe2018effectsofthe$5,000inventoryerroriftheerrorwasnotcorrected? a.Assetswereunderstatedby$5,000andnetincomewasunderstatedby$5,000. b.Assetswereunderstatedby$5,000andnetincomewasoverstatedby$5,000. c.Costofgoodssoldwasunderstatedby$5,000andnetincomewasunderstatedby$5,000. d.Costofgoodssoldwasoverstatedby$5,000andnetincomewasoverstatedby$5,000. 

40.  Ifthebeginninginventorybalanceisunderstated:  a. b. c. d.

Costofgoodssoldwillbeunderstatedandnetincomewillbeunderstated. Costofgoodssoldwillbeunderstatedandnetincomewillbeoverstated. Costofgoodssoldwillbeoverstatedandnetincomewillbeoverstated. Costofgoodssoldwillbeoverstatedandnetincomewillbecorrect.

41.ColemanCompanyhasprovidedthefollowinginformation:beginninginventory,$100,000;costof goodssold,$450,000;andendinginventory,$80,000.HowmuchwereColeman'sinventory purchases? A.$450,000. B.$410,000. C.$430,000. D.$420,000.   

42.Acompanythatusesaperpetualinventorysystempurchasedinventoryonaccountandlater returnedgoodsworth$800tothevendor.Whichofthefollowingwouldbethecorrectjournalentryto recordthesereturnsifthecompanyhasnotyetpaidthevendor?  A) PurchaseReturns 800  AccountsPayable 800   B) 

AccountsPayable PurchaseReturns

800 800

  C) 

MerchandiseInventory AccountsPayable

800

AccountsPayable MerchandiseInventory

800

800

 D)          

800

43.  Acompanythatusestheperpetualinventorysystempurchasedinventoryfor$950,000 onaccountwithtermsof 4/7,n/20.Whichofthefollowingcorrectlyrecordsthepayment made15daysafterthedateoftheinvoice?  950,000

A)

Cash AccountsPayable

950,000

B)

AccountsPayable MerchandiseInventory

950,000

C)

AccountsPayable Cash

AccountsPayable MerchandiseInventory Cash

950,000

950,000



  950,000



   950,000

  D) 

38,000 912,000

  44. MooreCompanypurchasedanitemforinventorythatcost$20perunitand waspricedtosellat$30.Itwasdeterminedthatthereplacementcostis$18 perunit.Usingthelowerofcostormarketrule,whatamountshouldbe reportedonthebalancesheetforinventory? A. $18. B. $20. C. $7. D. $5. 

45. IrisCompanyhasprovidedthefollowinginformationregardingtwoofitsitemsofinventoryatyear‐end: •Thereare100unitsofItemA,havingacostof$20perunitandareplacementcostof$18perunit. •Thereare50unitsofItemB,havingacostof$50perunitandareplacementcostof$55perunit. Howmuchistheendinginventoryusinglowerofcostormarketonanitem‐by‐itembasis?  A.$4,300. B.$4,500. C.$4,750. D.$4,550.

 

1) B   2) B   3) A   4)A  5) B   6) B   7) D   8) A   9) C   10) C   11) D   12) B   13) B   14) D  15)B  16) A   17) A   18)A  19) B   20) A   21) C   22) B   23) B  24) D 25) C 26) D 27) D 28) B 29) A 30) B 31) B 32) A 33) B 34) B 35) D 36) B 37) B 38) A 39) A 40) B 41) C 42) D 43) C 44) A 45) A...


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