Practice Final 5 - Sheet 1 PDF

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A100 Final Exam Fall 1, 2017 - First Eight Weeks

Exam Version 01 Fill in the information below. Write clearly: Name (print): IU User Name: Class Day & Time: Course Section #:

There are 34 multiple-choice questions on this exam. Be sure your exam is complete. You have two hours to finish the exam. For each question, select the best answer from among the alternatives provided. In ordet ot receive credit for your answers, you must use pencil on the machine-readable answer sheet provided. Answers on the exam itself will not be considered in grading the exam. Fill in (and bubble) the following sections on the left side of the Scantron: Name (Last, first, middle initial) User name Version (01, 02, 03, or 04) Section number (The proctor will provide this to you) You may not have notes, scrap paper, or calculators other than Sharp EL-233S (or EL-233SB) with you while taking this exam. No pencil boxes or cases are allowed. Phones and smart watches must be put away and kept out of sight during the exam. You may have with you during the exam only your ID, pencils and an eraser, and the A100-approved calculator. When you complete the exam, place your answer sheet behind your exam and turn both the exam and the answer sheet in to the exam proctor as you leave the room. NO EXAM MATERIALS MAY LEAVE THIS ROOM. Failure to turn in all exam materials or having other materials while taking the test is a violation of the Honor Code. Your signature below indicates you have read and will follow the above instructions:

Signature: 1 a b c d e

What is the main purpose of a financial audit? To give the public confidence that the financial statements are fairly stated. As a guarantee that fraud did not occur. To guarantee that the numbers on the financial statements are accurate. To give stockholders a monthly update on how the company is doing. To keep within a company for management purposes only.

a b c d e

Which of the following is true of Sarbanes-Oxley? It requires that a company change external auditors every year. It requires that the government prepare the audits of all publicly-traded companies. It allows only the internal auditor to prepare the audit of the year. Requires the audit be reviewed by another audit partner before being published. All audit records of the external auditor must now be retained indefinitely.

a b c d e

Which of the following is the best audit opinion? Modifed Exceptional Unmodified Excellent Advantaged

2

3

4

BTCN Inc. has taxable income of $76,000. During the year BTCN also had total entertainment expenses of $6,000, penalties of $2,000, federal income tax of $11,000, and exclusions of $1,000. What was BTCN's net income? c $58,000 d $56,000 a $61,000 b $59,000

5 a b c d e

Which of the following best describes your "marginal tax rate"? The highest tax rate you are currently paying. The tax rate you will pay if you earn one more dollar of taxable income. The average tax rate you pay. Your expected average tax rate. The tax rate established by the US government for the year.

e None of the above

6 a b c d e

Which of the following is true regarding S Corporations? Tax is paid at the corporate level on the company's taxable income. There is no limit on the maximum number of stockholders. An election to be taxed as an S Corporation is available to any business that is incorporated. It is considered to be a "flow-through entity" similar to a partnership and LLC. When a corporation elects to be an S Corporation, it gives up the protection of the corporate shield.

Use the following tax table to answer questions 7 and 8: If Taxable Income is: Over:

7

The Tax is:

But not over:

this %:

Of the amount over:

$50,000

$0

15%

$0

$50,000

$75,000

$7,500

25%

$50,000

$75,000

$100,000

$13,750

34%

$75,000

$100,000

$335,000

$22,250

39%

$100,000

Phish Inc. had the following information on its annual financial statements:

Net income How much is Phish's net income? a $18,350 b $19,550

9

Plus

Amount:

$0

Sales Cost of goods sold Gross profit Advertising Salaries Penalties Entertainment Federal income tax

8

This

$68,000 -$16,000 $52,000 -$8,000 -$14,000 -$3,000 -$4,000 ? ?

c $18,800

d $16,800

e None of the above

$16,700

During the year Hack Inc. had exclusions of $4,000, credit of $2,000, and deductions of $48,000. Hack's gross income realized was $126,000. What is Hack's income tax expense for the year? a $13,250 b $11,500 c $14,090 d $16,500

e None of the above

$13,540

Which of the following is true of a tax credit? a It reduces your tax expense by the same amount as a deduction would.

b c d e

10

11

12

13

Desta Corporation is considering buying a piece of equipment for $26,000. Desta expects the equipment will last 10 years and then be worthless. Desta believes the equipment will earn $10,000 in net income before taxes per year, and the company is in the 25% tax bracket. What is Desta's expected annual after tax cash flow on this asset? d $10,100 a $8,150 b $5,100 c $7,500

e None of the above

When Bezzle produces 10,000 units, its total variable cost is $22,000 and its total fixed cost is $30,000. The sales price per unit is $9. How much does Bezzle need in total sales dollars to earn $2 net income per unit sold? b $56,250 c $74,286 d $68,114 a $64,286

e None of the above

Briber, Inc. produces a product which is sells for $16 per unit. The variable cost per unit is $4 and Briber broke even when it produced and sold 1,200 products. How many units does Briber need to sell to earn $10,000? a 2,033 b 1,625 c 1,825 d 1,710

e 1,400

Feiting Company buys compressors from Counter Company. Feiting bought a shipment on Jan. 24 on account and paid for them on Feb. 4. On Feb. 18, Feiter put the compressors into production when it built refrigerators. On Feb. 26, Feiter sold the finished refrigerator to Customer on account. Customer paid Feiter on March 12. On what day does Feiter show the compressor as an expense? a March 12 b Feb. 26 c Feb. 18 d Feb. 4

e Jan. 24

14 a b c d e

15

It is subtracted from "gross income realized" to arrive at "gross income recognized". It is subtracted to arrive at taxable income. It is the total of the business's general operating expenses. None of the above are true.

Which of the following is included in inventory in a manufacturing company? Advertising expenses of the company The CEO's salary expense Insurance on the front office Sales commissions of the company's salesmen None of the above

Schemey, Inc. had a contract to produce 25 units of a product for a total of $24,000. Schemey's costs

16

were a total of $16,000, and this was 40% variable and 60% fixed. The customer now wants to add in 10 more units for a total of $30,000. What would be Schemey's net income if it decides to produce 35 units for a total of $30,000? (Hint: This changes the sales price per unit.) d $11,440 a $7,600 b $9,200 c $9,667

e None of the above

Racketer, Inc. had a contract to produce 40 units of a product for a total of $12,000. At this level of production, Racketer's costs were a total of $4,000 in variable costs and $3,000 in fixed costs. Now, Racketer's customer wants to only buy 36 units. What is Racketer's new cost per unit? c $183.33 d $175.00 a $194.44 b $157.50

e None of the above

17

Evader Company had the following information for the year: Sales price per unit $20 Variable cost per unit $4 Total fixed cost $36,000 Net income $14,000 How many units did Evader Company sell? a 4,000 b 3,600

18 a b c d e

Which of the following lists consists only of balance sheet accounts? Cash, salaries payable, accumulated depreciation, retained earnings Accounts payable, cost of goods sold, common stock, inventory Notes payable, equipment, gain on land sale, accounts receivable Land, retained earnings, revenue, prepaid insurance Advertising expense, accumulated depreciation, land, cost of goods sold

a b c d e

Which of the following is true of unearned revenue? It increases liabilities when received. It increases cash when earned. It increases revenue when received. It is an operating cash inflow when earned. It increases liabilities when earned.

19

20

c 3,125

d 2,200

Kiter Company went into business on January 1, 2017 when it issued 10 shares for a total of $10,000. During 2017 Kiter earned $14,000 in net income and paid $3,000 in dividends. At December 31, 2017 Kiter had only one liability, which was $5,500 in accounts payable. How much did Kiter have in total assets at December 31, 2017?

e None of the above

a $5,500

21

b $6,500

c $15,500

d $26,500

How much did total assets increase when Ponzi, Inc. sold $2,000 in inventory for $10,000, half on account and half in cash? b $8,000 c $10,000 d $5,000 a $3,000

e None of the above

e None of the above

Use the following information to answer questions 22 and 23: On April 1, 2016, Pyramid Inc. borrowed $20,000 from the bank. Pyramid will make no payments on this loan until April 1, 2020, and at that time, Pyramid will owe $24,000. 22

23

How much will Pyramid show as interest expense for the year 2018? a $1,000 b $2,750 c $1,250

d $3,000

e None of the above

How much will Pyramid show as interest payable at December 31, 2018? c $2,750 a $1,250 b $3,000

d $1,000

e None of the above

24 a b c d e

25

Which of the following is true about accumulated depreciation? It is a liability account that increases as the net carrying value decreases. It is a contra-asset account that reduces total assets. It is an investing cash outflow. It is shown on the income statement to reduce net income. It reduces cash as it is increased.

Impersonner, Inc. bought $62,000 of inventory during 2017. Its sales during the year were $167,000. The beginning inventory was $4,100, and the ending inventory was $8,600. What was Impersonner's gross profit for 2017? a $100,500 b $109,500 c $105,000 d $105,500

e None of the above

Use the following information to answer questions 26 through 34: (Answer each question independently. The balance sheets are as of the end of each year.) Cash Accounts receivable Inventory Prepaid insurance Equipment

2016 $2,400 $1,200 $4,100 $800 $14,000

2017 $2,800 $1,800 $4,700 $650 $14,000

Accounts payable Utilities payable Wages payable Notes payable Interest payable

2016 $2,200 $1,400 $4,000 $9,000 $600

2017 $3,100 $1,700 $4,600 $7,200 $500

Accum. depreciation Land

26

27

28

29

30

31

32

33

34

-$1,200 $2,600 $23,900

-$1,650 $2,500 $24,800

Common stock Retained earnings

How much was cost of goods sold if $89,000 was paid to suppliers during 2017? a $89,900 b $88,000 c $87,100

d $89,300

$4,000 $2,700 $23,900

$4,000 $3,700 $24,800

e None of the above

How much was paid for land during the year if a plot of land that had been purchased in a prior year for $600 for sold for a $400 gain during 2017? a $500 b $300 c $900 d $1,100

e $500

How much were total sales during 2017 if total cash collected was $176,000? a $175,400 b $175,600 c $176,600

e None of the above

d $176,400

How much were investing cash flows during 2017 if a new plot of land was purchased during 2017 for $1,500, and a plot that had been purchased in a prior year was sold for an $800 gain? a $900 b $2,400 c $100 d -$100

e None of the above

How much were financing cash flows if net income during 2017 was $25,000? a -$25,800 b -$1,800 c $23,200

d -$24,000

e None of the above

How much was paid for insurance during 2017 if insurance expense was $14,000? c $13,850 a $14,000 b $13,350

d $14,150

e None of the above

How much inventory was bought during 2017 if $41,000 was paid to suppliers? b $41,900 c $41,300 a $39,100

d $39,500

e None of the above

How much is the company's return on equity during 2017 if $3,000 was paid in dividends? a 97.00% b 55.60% c 38.10%

d 94.40%

e 12.20%

How much was the company's current ratio at December 31, 2017 if insurance was never paid more than one month in advance and the note and interest payable are due in 2020? a 1.09 b 1.21 c 1.16 d 1.06

e 1.01...