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 |
File Type | |
Total Downloads | 17 |
Total Views | 168 |
Download ACCT 2301 F18 Exam 2 practice questions PDF
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___________________________________
MULTIPLECHOICE. Choosetheonealternativethatbestcompletesthestatementoranswersthequestion. 1) Deliveryexpenseisa(n)________. A) administrativeexpense B) operatingexpense C) overheadexpense D) partofCostofGoodsSold 2) Thecost‐of‐goods‐sold modelis: A) beginning inventory,lesspurchases,lessendinginventoryequalscostofgoodssold. B) beginning inventory,pluspurchases,lessendinginventoryequalscostofgoodssold. C) beginning inventory,pluspurchases,plusendinginventoryequalscostofgoodssold. D) beginning inventory,lesspurchases,plusendinginventoryequalscostofgoodssold. 3) IfendinginventoryisunderstatedforYear1,theninYear2: A) costof goodssoldwillbeunderstatedandgrossprofitwillbeoverstated. B) costofgoodssoldandgross profitwillbothbeunderstated. C) costofgoodssoldandgross profitwillbothbeoverstated. D) costofgoodssoldwillbe overstatedandgrossprofitwillbeunderstated. 4) On August1,SavageCompanypurchased $2200ofinventoryonaccountwithcredittermsof 4/10,net 30.SavageCompanyusestheperpetualinventorysystem.OnAugust15,SavageCompanypaidthe amountdue.WhatjournalentrydidtheyprepareonAugust15? A) debitAccountsPayablefor $2200andcreditCashfor $2200 B) debitAccountsPayablefor $2200,creditPurchaseDiscountsfor $88andcreditCashfor $2112 C) debitInventoryfor $2200andcreditAccountsPayablefor $2200 D) debitAccountsPayablefor $2112andcreditCashfor $2112 5) Thestatementof retainedearningsreportsacompanyʹsnetincomeornetlossforaperiodoftime.Whatis thesourceoftheamountofnetincomeornetloss? A) BalanceSheet B) IncomeStatement C) Cash DividendStatement D) TrialBalanceWorksheet 6) WhencomparingtheFIFOandLIFO inventorymethods: A) FIFOresultsinthemostrealisticnetincomefigure. B) FIFOmatchesoldinventorycostsagainstrevenue. C) LIFOreports themostup‐to‐dateinventorycostonthebalancesheet. D) LIFOreportsinventoryatnetrealizablevalue.
7) Operatingincomereflects: A) earningsfromacompanyʹscorebusinessactivitieswhichincludesinterestincome. B) incomefromacompany ʹsmainandsecondarybusinessactivities. C) animportant measurethatinvestorstousetoevaluatetheliquidityofthebusiness. D) earningsfromacompanyʹscorebusinessactivities. 8) Underthe ________method,endinginventoryisbasedonthecostsofthemostrecentpurchases. A) FIFO B) specific‐identification C) LIFO D) average‐cost 9) OnMay1,SantelleCompanypurchased $700ofinventoryonaccountwithcredittermsof 2/10,net30. Santelleusestheperpetualinventorysystem.OnMay2,thesellergaveSantellea $100allowanceduetoa productdefect.WhatjournalentrydidSantelleCompanyprepareonMay2? A) debitCashfor $100andcreditAccountsPayablefor $100 B) debitAccountsPayablefor $100andcreditPurchaseDiscountsfor $100 C) debitAccountsPayablefor $100andcreditInventoryfor $100 D) debitAccountsPayablefor $100andcreditPurchaseReturnsandAllowancesfor $100 10) Onamultistepincomestatement,a commonsubtotalis: A) IncomefromNonoperating Activities. B) InterestExpenseminusInterestIncome. C) GrossProfit. D) noneoftheabove. 11) KennelCompanyreportedthefollowing: Costofgoodssold(estimatedfornextperiod) $300,000 Endinginventory(estimatedfornextperiod) $95,000 Beginninginventoryfortheperiod $60,000 Basedonthisinformation,thepurchasesforthenextperiodshouldbe: A) $265,000. B) $360,000. C) $395,000. D) $335,000. 12) MariahCompanyhasinventoryatthe endoftheyearwithahistoricalcostof $95,000.MariahCompany usestheperpetualinventorysystem.UndertheLCMrule,thecurrentreplacementcostis $75,600.Under U.S.GAAP,thejournalentrytorecordthewrite‐downtoLCMwill: A) debitCostofGoodsSoldfor $19,400andcreditPurchasesfor $19,400. B) debitCostofGoodsSoldfor $19,400andcreditInventoryfor $19,400. C) debitPurchasesfor $19,400andcreditCostofGoodsSoldfor $19,400. D) debitInventoryfor $19,400andcreditCostofGoodsSoldfor $19,400. 13) Wheninventorycostsaredecreasing,theLIFOcostingmethodwillgenerallyresultin: A) alowergrossprofitthanunderFIFO. B) ahighergross profitthanunderFIFO. C) alowerinventoryvalue thanunderFIFO. D) thesameinventoryvalueasFIFO.
14) Acompanyhasthefollowingadjustedtrialbalance: Account Debit Credit Cash $700 AccountsReceivable 1200 Inventory 2000 Supplies 1700 PrepaidRent 400 Land 5700 Building 40,100 AccumulatedDepreciation $8100 AccountsPayable 7100 UnearnedRevenue 4500 NotesPayable,due2020 2500 CommonStock 6900 RetainedEarnings 2800 Dividends 1000 ServiceRevenue 33,200 RentExpense 1400 SuppliesExpense 1400 SalariesExpense 6500 DepreciationExpense 1400 UtilitiesExpense 1600 Totals $65,100 $65,100 Whichclosingentryisneeded? A) CreditIncomeSummaryfor $1800anddebitCashfor $1800 B) Debit RentExpensefor $1400andcreditIncomeSummaryfor $1400 C) DebitDividendsfor $1000andcreditIncomeSummaryfor $1000 D) DebitService Revenuefor $33,200andcreditIncomeSummaryfor $33,20
15) Regardingincomestatementformats,whichof thefollowingstatementsisINCORRECT? A) Amultistepincomestatementreportsanumberofsubtotalstohighlightimportantrelationships betweenrevenuesandexpenses. B) Amultistepincome statementistheonlyformatthatallowsuserstoevaluatetheprofitabilityofthe business. C) Amulti‐stepincomestatementlistsincome taxexpenseseparateofallotherexpenses. D) Asingle‐stepincomestatementlistsalltherevenuestogetherunderaheadingsuchasRevenuesand Gains. 16) UnderU.S.GAAP,inventoriesare reportedonthebalancesheetat: A) lower ‐of‐cost‐or‐market. B) historicalcost only. C) currentreplacementcostonly. D) netrealizablevalue. 17) ForeverJewelersuses theperpetualinventorysystem.OnApril2,Foreversoldmerchandisewithacostof $4,500for$7,000toacustomeronaccountwithtermsof2/15,n/30.Whichofthefollowingjournalentries correctlyrecordsthesalesrevenue? A) AccountsReceivable 6,860 SalesRevenue 6,860 B)SalesRevenue 6,860 AccountsReceivable 6,860 C) SalesRevenue 6,860 CostofGoodsSold 6,860 D) AccountsReceivable 4,500 SalesRevenue 4,500 18) Allofthefollowingaccountsare closedEXCEPTfor: A) Cash. B) ServiceRevenue. C) Utilities D) Dividends. Expense. 19) Thenetincomeorlossis calculatedonwhichfinancialstatement? A) balancesheet B) incomestatement C) dividendsstatement D) statementofretainedearnings 20) GroganCompanypurchasesinventoryon accountwithacostof $1300andaretailpriceof $2600. GroganCompanyusestheperpetualinventorymethod.Whatjournalentryisrequiredonthedateof purchase? A) debitInventoryfor $1300andcreditAccountsPayablefor $1300 B) debitPurchasesfor $2600andcreditCashfor $2600 C) debitAccountsReceivablefor $2600andcreditPurchasesfor $2600 D) debitPurchasesfor $1300andcreditAccountsPayablefor $1300
21) Thefollowingdataarefor SteveʹsCandyStoreforJanuary: Beginninginventory $191,000 Netsalesrevenue $620,000 Netpurchases $480,000Normalgrossprofitrate 30% Whatisthecompanyʹsestimatedendinginventoryforthemonth? A) $434,000 B) $186,000 C) $237,000 D) $485,000 22) TheSalesDiscountsForfeitedaccount________. A) representsadditionalsalesrevenue B) represents thediscountlostwhenacustomerdoesnotpaywithinthediscountperiod C) isacontraSalesRevenueaccount D) isabalancesheetaccount 23) ThefollowingdataareforJesseeʹsCandyStoreforJanuary: Beginninginventory $205,000 Netsalesrevenue $440,000 Netpurchases $585,000Normalgrossprofitrate 40% Whatisthecompanyʹsestimatedcostofgoodssoldforthemonth? A) $145,000 B) $264,000 C) $235,000 D) $176,000
24. Whichofthefollowingstatementsiscorrect? A.Balancesheetaccountsarepermanentaccountsanddonotretaintheirbalancesfromoneperiodtothe next. B.Balancesheetaccountsaretemporaryaccountsanddoretaintheirbalancesfromoneperiodtothenext. C.Incomestatementaccountsarepermanentaccountsanddoretaintheirbalancesfromoneperiodtothe next. D.Incomestatementaccountsaretemporaryaccountsanddonotretaintheirbalancesfromoneperiodto thenext. 25. Whichofthefollowingstatementsdoesnotcorrectlydescribetherelationshipbetweentheincome statementandtheendingretainedearningsbalance? A. Netincomeincreasestheendingbalanceofretainedearnings. B. Anetlossdecreasestheendingretainedearningsbalance. C. Anetlossdoesnotaffecttheendingretainedearningsbalance. D. Netincomeandnetlossbothaffecttheendingretainedearningsbalance.
26. Atrialbalancepreparedaftertheclosingentrieshavebeenpostedwouldshowazerobalancein whichoneofthefollowingaccounts? A.Supplies. B.Accountsreceivable. C.Accumulateddepreciation. D.Incometaxexpense.
27. Whichofthefollowingisapermanentaccount? A) MerchandiseInventory B) ServiceRevenue C) AccountsReceivable D) BothMerchandiseInventoryandAccountsReceivable 28. Whichofthefollowingisatemporaryaccount? A) UnearnedServiceRevenue B) SalariesandWagesExpense C) Inventory D) RetainedEarnings
29. Stockholders'equityisnotaffectedbyall A) cashreceipts. B) dividends. C) revenues. D) expenses.
30. Acompanypurchased$1,800ofmerchandiseonDecember5.OnDecember7,itreturned$200worthofthat merchandise.OnDecember8,itpaidthebalance,takinga2%discount.Theamountofthecashpaidon December8equals: a. $200 b. $1,568 c. $1,564 d. $1,800 31. Acompanyhasnetsalesof$1,832,000,salescommissionsintheamountof$194,000,netincomewas $366,400,andthegrossprofitratiois60%,whatistheamountofcostofgoodssold? a. $538,800 b. $732,800 c. $1,099,200 d. $655,200 32. Acompany’scostofgoodssoldwas$4,000. Determinenetpurchasesandendinginventorygivengoods availableforsalewere$11,000andbeginninginventorywas$5,000. a. b. c. d.
Netpurchases:$6,000;EndingInventory:$7,000 Netpurchases:$10,000;EndingInventory:$15,000 Netpurchases:$9,000;EndingInventory:$6,000 Netpurchases:$15,000;EndingInventory:$7,000
33. TraneCompanypurchasedmerchandiseinventorywithaninvoicepriceof$4,000andcredittermsof2/10, n/30.WhatisthenetcostoftheinventoryifTraneCompanypayswithinthediscountperiod? a. b. c. d.
$4,000. $3,920. $3,600. $3,680.
34. OnJuly22,acompanypurchasedmerchandiseinventoryatacostof$5,250withcreditterms2/10,net30. IfthecompanypaysforthepurchaseonAugust7,whatwouldbetheappropriatejournalentryonthe paymentdate? a. AccountsPayable
5,250
5,250
5,250
5,145
5,145
5,250
Cash
c. AccountsPayable
MerchandiseInventory
b. AccountsPayable
5,250
Cash
d. AccountsPayable
MerchandiseInventory
105
Cash
5,145
35. Duringaperiodofsteadilyrisingcosts,theinventoryvaluationmethodthatyieldsthelowestreported netincomeis: a. Specificidentificationmethod b. Weighted‐averagemethod c. FIFOmethod d. LIFOmethod 36. Theinventoryvaluationmethodthattendstosmoothouterraticchangesincostsis: a. b. c. d.
FIFO Weightedaverage LIFO Specificidentification
37. Acompanyhadinventoryof5unitsatacostof$20eachonNovember1.OnNovember2,they purchased10unitsat$22each.OnNovember6,theypurchased6unitsat$25each.OnNovember8,they sold18unitsfor$54each.UsingtheLIFOperpetualinventorymethod,whatwasthecostofthe18units sold? a. b. c. d.
$395 $410 $450 $510
38. AcorporationusesaFIFOperpetualinventorysystem. August2,25unitswerepurchasedat$12perunit. August5,10unitswerepurchasedat$13perunit. August15,12unitsweresoldat$25perunit. August18,15unitswerepurchasedat$14perunit. WhatwasthedollaramountoftheendinginventoryforthemonthofAugust? a. $496.00 b. $486.00 c. $300.00 d. $510.00 39. Attheendof2018,a$5,000understatementwasdiscoveredintheamountofthe2018ending inventory.Whatwerethe2018effectsofthe$5,000inventoryerroriftheerrorwasnotcorrected? a.Assetswereunderstatedby$5,000andnetincomewasunderstatedby$5,000. b.Assetswereunderstatedby$5,000andnetincomewasoverstatedby$5,000. c.Costofgoodssoldwasunderstatedby$5,000andnetincomewasunderstatedby$5,000. d.Costofgoodssoldwasoverstatedby$5,000andnetincomewasoverstatedby$5,000.
40. Ifthebeginninginventorybalanceisunderstated: a. b. c. d.
Costofgoodssoldwillbeunderstatedandnetincomewillbeunderstated. Costofgoodssoldwillbeunderstatedandnetincomewillbeoverstated. Costofgoodssoldwillbeoverstatedandnetincomewillbeoverstated. Costofgoodssoldwillbeoverstatedandnetincomewillbecorrect.
41.ColemanCompanyhasprovidedthefollowinginformation:beginninginventory,$100,000;costof goodssold,$450,000;andendinginventory,$80,000.HowmuchwereColeman'sinventory purchases? A.$450,000. B.$410,000. C.$430,000. D.$420,000.
42.Acompanythatusesaperpetualinventorysystempurchasedinventoryonaccountandlater returnedgoodsworth$800tothevendor.Whichofthefollowingwouldbethecorrectjournalentryto recordthesereturnsifthecompanyhasnotyetpaidthevendor? A) PurchaseReturns 800 AccountsPayable 800 B)
AccountsPayable PurchaseReturns
800 800
C)
MerchandiseInventory AccountsPayable
800
AccountsPayable MerchandiseInventory
800
800
D)
800
43. Acompanythatusestheperpetualinventorysystempurchasedinventoryfor$950,000 onaccountwithtermsof 4/7,n/20.Whichofthefollowingcorrectlyrecordsthepayment made15daysafterthedateoftheinvoice? 950,000
A)
Cash AccountsPayable
950,000
B)
AccountsPayable MerchandiseInventory
950,000
C)
AccountsPayable Cash
AccountsPayable MerchandiseInventory Cash
950,000
950,000
950,000
950,000
D)
38,000 912,000
44. MooreCompanypurchasedanitemforinventorythatcost$20perunitand waspricedtosellat$30.Itwasdeterminedthatthereplacementcostis$18 perunit.Usingthelowerofcostormarketrule,whatamountshouldbe reportedonthebalancesheetforinventory? A. $18. B. $20. C. $7. D. $5.
45. IrisCompanyhasprovidedthefollowinginformationregardingtwoofitsitemsofinventoryatyear‐end: •Thereare100unitsofItemA,havingacostof$20perunitandareplacementcostof$18perunit. •Thereare50unitsofItemB,havingacostof$50perunitandareplacementcostof$55perunit. Howmuchistheendinginventoryusinglowerofcostormarketonanitem‐by‐itembasis? 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...