DeVry ACCT 504 Midterm Exam 3

Click on the link below for the solution:

https://devryfinalexams.com/products/acct-504midterm-exam-3/

1.

Question :
Student Answer:

2. Question :
Student Answer:

3. Question :
Student Answer:

4. Question :

(TCO A, B, C) Which of the following statements

concerning users of accounting information is incorrect?
Management is considered an internal user.
Present and prospective creditors are considered external
users.
Regulatory authorities such as the SEC are considered
internal users.

(TCO C) Issuing shares of stock in exchange for cash is an

example of a(n):
delivering activity.
investing activity.
financing activity.
operating activity.

(TCO C) Which activities involve putting the resources of

the business into action to generate a profit?
Delivering
Financing
Investing
Operating

(TCO A) The cost of assets consumed or services used is

also known as:

Student Answer:

5. Question :

Student Answer:

6. Question :
Student Answer:

7. Question :
Student Answer:

8. Question :

a revenue.
an expense.
a liability.
an asset.

(TCO C) Edwards Company recorded the following cash

transactions for the year:
Paid $45,000 for salaries.
Paid $20,000 to purchase office equipment.
Paid $5,000 for utilities.
Paid $2,000 in dividends.
Collected $75,000 from customers.
What was Edwards net cash provided by operating
activities?
$25,000
$5,000
$30,000
$23,000

(TCO A) On a classified balance sheet, prepaid insurance

is classified as:
an intangible asset.
property, plant, and equipment.
a current asset.
a long-term investment.

(TCO A) An intangible asset:

may have the capacity to earn revenue for its owner.
is worthless because it has no physical substance.
is converted into a tangible asset during the operating
cycle.
cannot be reported on the balance sheet because it lacks
physical substance.

(TCO A) These are selected account balances on

December 31, 2007.
-Land (location of the corporations office building)
$200,000

-Land (held for future use) 300,000

-Corporate Office Building 1,200,000
-Inventory 400,000
-Equipment 900,000
-Office Furniture 200,000
-Accumulated Depreciation 600,000
What is the total NET amount of property, plant, and
equipment that will appear on the balance sheet?
Student Answer:

9. Question :

Student Answer:

10. Question :

Student Answer:

11. Question :

Student Answer:

$1,900,000
$2,600,000
$2,200,000

(TCO B) For 2010, Landford Corporation reported net

income of $30,000; net sales $400,000; and average
share outstanding 6,000. There were no preferred stock
dividends. What was the 2010 earnings per share?
$4.66
$0.20
$66.67
$5.00

(TCO B) Liondale Corporation had beginning retained

earnings of $2,292,000 and ending retained earnings of
$2,499,000. During the year, they issued common stock
totaling $141,000. There were no dividends issued. What
was their net income for the year?
$207,000
$ 66,000
$348,000
$273,000

(TCO D) On March 1, 2010, Dillon Company hires a new

employee who will start the work on March 6. The
employee will be paid on the last day of each month.
Should a journal entry be made on March 6? Why or why
not?
Yes, the company is now obligated to pay the employee,
thus that event must be recorded on March 6.
No, hiring an employee is an important event; however, it
is not an economic event that should be recorded on
March 6.

Yes, failure to record the event on March 6 would cause

the financial statements to be misleading.
No, the journal entry should be made on March 1 which is
the date of hiring.

12. Question :
Student Answer:

13. Question :
Student Answer:

14. Question :
Student Answer:

(TCO D) Which one of the following is not a part of an

account?
Credit side
Trial balance
Debit side
Title

(TCO D) Which of the following describes the classification

and normal balance of the retained earnings account?
Asset, debit
Stockholders equity, credit
Revenues, credit
Expense, debit

(TCO D) A debit is the normal balance for which account

listed below?
Furniture
Accounts payable
Rent revenue
Capital stock issued

(TCO E) An accounting time period that is one year in length is ca

2.

3.

4.

Student Answer:

a fiscal year.
an interim period.
the time period assumption.
a reporting period.

Question :

(TCO E) In a merchandising business, revenue may be considered

when:

Student Answer:

cash is received from the customers

a product is delivered to a customer.
an order is received from a customer
a customer shows interest in a product

Question :

(TCO E) On April 1, 2010, M Corporation paid $48,000 cash for eq

that will be used in business operations. The equipment will be us
four years and will have no residual value. M records depreciation
of $9,000 for the calendar year ending December 31, 2010. Whic
accounting principle has been violated?

Student Answer:

Revenue recognition principle

No principle has been violated because M has correctly matched
expense for using the equipment to the period during which it ge
revenue.
Matching principle because the cash was paid in 2007 and should
expensed in 2007.
Cost principle

Question :

(TCO E) The following is selected information from M Corporation

fiscal year ending October 31, 2010:
Cash received from customers $300,000
Revenue earned 350,000
Cash paid for expenses 170,000
Expenses incurred 200,000
Based on the accrual basis of accounting, what is M Corporations
income for the year ending October 31, 2010?

Student Answer:

$140,000
$114,000
$82,000
$150,000

5.

6.

7.

8.

9.

Question :

(TCO E) Adjusting entries are made to ensure that:

Student Answer:

expense are recognized in the period in which they are incurred.

revenues are recorded in the period in which they are earned.
balance sheet and income statement accounts have correct balan
the end of an accounting period.
All of the above

Question :

(TCO A, B) Which of the following expressions is incorrect?

Student Answer:

Gross profit operating expenses = net income

Sales cost of goods sold operating expenses = net income
Net income + operating expenses = gross profit
Operating expenses cost of goods sold = gross profit

Question :

(TCO B) Hunter Company purchased merchandise inventory with

price of $3,000 and credit terms of 2/10, n/30. What is the net co
goods if Hunter Company pays within the discount period?

Student Answer:

$2,940
$2,760
$2,700
$3,000

Question :

(TCO A, B) Jakes Market recorded the following events involving a

purchase of merchandise:
Received goods for $20,000, terms 2/10, n/30.
Returned $400 of the shipment for credit.
Paid $100 freight on the shipment.
Paid the invoice within the discount period.
As a result of these events, the companys merchandise inventor

Student Answer:

increased
increased
increased
increased

Question :

(TCO A) The factor which determines whether or not goods should

included in a physical count of inventory is:

Student Answer:

physical possession.
legal title.

by
by
by
by

$19,208.
$19,700.
$19,306.
$19,308.

managements judgment.
whether or not the purchase price has been paid.

10. Question :

Student Answer:

11. Question :
Student Answer:

12. Question :
Student Answer:

13. Question :

Student Answer:

(TCO A) Barnes Company is taking a physical inventory on March

last day of its fiscal year. Which of the following must be included
inventory count?

Goods in transit to Barnes, FOB destination

Goods that Barnes is holding on consignment for Parker Company
Goods in transit that Barnes has sold to Smith Company, FOB ship
point
Goods that Barnes is holding in inventory on March 31 for which t
Accounts Payable is 15 days past due

(TCO A) A problem with the specific identification method is that:

inventories can be reported at actual costs.
management can manipulate income.
matching is not achieved.
the lower of cost or market basis cannot be applied

(TCO A) Which of the following statements is true regarding inven

flow assumptions?

A company may use more than one cost-flow assumption concurr

different product lines.
A company must comply with the method specified by industry st
A company must use the same method for domestic and foreign
operations.
A company may never change its inventory costing method once
chosen a method.

(TCO A) In periods of rising prices, the inventory method which re

the inventory value on the balance sheet that is closest to curren
the:
FIFO method.
LIFO method.
average cost method.
tax method.

14. Question :
Student Answer:

15. Question :
Student Answer:

(TCO B) Which of the following is a true statement about inventor

systems?

Periodic inventory systems require more detailed inventory record

Perpetual inventory systems require more detailed inventory reco
A periodic system requires cost of goods sold be determined afte
sale.
A perpetual system determines cost of goods sold only at the end
accounting period.

(TCO B) A merchandiser that sells directly to consumers is:

a
a
a
a

retailer.
wholesaler.
broker.
service enterprise.

(TCO D) A classmate is considering dropping his accounting class because he cannot

understand the rules of debits and credits.
Explain the rules of debits and credits in a way that will help him understand them. Cite
examples for each of the major sections of the balance sheet (assets, liabilities and
stockholders equity) and the income statement (revenues and expenses).
2. Question :

(TCOs B & E) The Caltor Company gathered the following

condensed data for the year ended December 31, 2010:
Cost of goods sold $ 710,000
Net sales 1,279,000
Administrative expenses 239,000
Interest expense 68,000
Dividends paid 38,000
Selling expenses 45,000
Instructions:
Prepare an income statement for the year ended December 31,
2010.
Compute the profit margin ratio and gross profit rate. Caltor
Company s assets at the beginning of the year were $770,000
and were $830,000 at the end of the year. To qualify for full
credit, you must state the formula you are using, show your
computations and explain your findings.

DeVry ACCT 504 Midterm Exam 3

Click on the link below for the solution:

https://devryfinalexams.com/products/acct-504midterm-exam-3/