ACCT 304 final Exam (2) complete A rated solutions/with instructors rationales; score -231 / 250 (92.4%)

ACCT 304 Final Exam Sunday, February 10:05 AM Page: 1 2 3 Question 1. Question : (TCO 1) The FASB's standard-setting process includes, in the correct order, Question 2. Question : (TCO 1) When a registrant company submits its annual filing to the SEC, it uses Question 3. Question : (TCO 2) SFAC No. 5 focuses on Question 4. Question : (TCO 2) Net income equals Question 5. Question : (TCO 3) A sale on account would be recorded by debiting revenue. crediting assets. crediting liabilities. debiting assets. Question 6. Question : (TCO 3) Prepayments occur when cash flow precedes expense recognition. sales are delayed pending credit approval. customers are unable to pay the full amount due when goods are delivered. manufactured goods await quality control inspections. Instructor Explanation: See Chapter 2 Points Received: 6 of 6 Comments: Question 7. Question : (TCO 4) Current assets include cash and all other assets expected to become cash or be consumed within 1 year. within 1 operating cycle. within 1 year or 1 operating cycle, whichever is shorter. within 1 year or 1 operating cycle, whichever is longer. Instructor Explanation: See Chapter 3 Points Received: 6 of 6 Comments: Question 8. Question : (TCO 4) Rent collected in advance is an asset account in the balance sheet. a liability account in the balance sheet. a shareholders' equity account in the balance sheet. a temporary account that is not in the balance sheet at all. Instructor Explanation: See Chapter 3 Points Received: 6 of 6 Comments: Question 9. Question : (TCO 5) The distinction between operating and nonoperating income relates to continuity of income. principal activities of the reporting entity. consistency of income stream. reliability of measurements. Instructor Explanation: See Chapter 3 Points Received: 6 of 6 Comments: Question 10. Question : (TCO 5) On May 1, Foxtrot Co. agreed to sell the assets of its Footwear Division to Albanese Inc. for $80 million. The sale was completed on December 31, 2012. The following additional facts pertain to the transaction: • The Footwear Division qualifies as a component of the entity, according to GAAP, regarding discontinued operations. • The book value of Footwear's assets totaled $48 million on the date of the sale. • Footwear's operating income was a pre-tax loss of $10 million in 2012. • Foxtrot's income tax rate is 40%. In the 2012 income statement for Foxtrot Co., it would report income (loss) on its total operations for the year without separation. income (loss) on its continuing operation only. income (loss) from its continuing and discontinued operations separately. income and gains separately from losses. Instructor Explanation: See Chapter 4 Points Received: 6 of 6 Comments: Question 11. Question : (TCO 8) In applying LCM, market cannot be less than net realizable value. greater than the normal profit. less than the normal profit margin. greater than net realizable value. Instructor Explanation: See Chapter 9 Points Received: 6 of 6 Comments: Page: 1 2 3 Grading Summary These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. Date Taken: 2/24/2017 Time Spent: 2 h , 26 min , 10 secs Points Received: 231 / 250 (92.4%) Question Type: # Of Questions: # Correct: Multiple Choice 22 20 Short 1 N/A Essay 4 N/A Grade Details - All Questions Page: 1 2 3 Question 1. Question : (TCO 5) The FASB's stated preference for reporting operating cash flows is the indirect method. direct method. working capital method. all financial resources method. Instructor Explanation: See Chapter 4 Points Received: 6 of 6 Comments: Question 2. Question : (TCO 5) For a typical manufacturing company, the most common critical point for recognizing revenue is the date an order is received. production is completed. the product is delivered. payment is received. Instructor Explanation: See Chapter 5 Points Received: 6 of 6 Comments: Question 3. Question : (TCO 5) Todd Sweeney is an artist who sells his work under consignment. (He displays his work in local barbershops, and customers buy the work there.) Sweeney recently transferred a painting to a local barbershop. The rationale for adoption of the percentage-of-completion method is that results are more conservative. it provides a measure of periodic accomplishment. it is a better match with legal ownership. it results in a lower income tax. Instructor Explanation: See Chapter 5 Points Received: 6 of 6 Comments: Question 4. Question : (TCO 6) LeAnn wishes to know how much money she should set aside now at 7% interest in order to accumulate a sum of $5,000 in four years. She should use a table for the present value of 1. future value of 1. present value of an ordinary annuity of 1. future value of an annuity due of 1. Instructor Explanation: See Chapter 6 Points Received: 6 of 6 Comments: Question 5. Question : (TCO 6) Yamaha Inc. hires a new chief financial officer and promises to pay him a lump-sum bonus four years after he joins the company. The new CFO insists that the company invest an amount of money at the beginning of each year in a 7% fixed rate investment fund to ensure that the bonus will be available. To determine the amount that must be invested each year, a computation must be made using the formula for the future value of a deferred annuity. the future value of an ordinary annuity. the future value of an annuity due. None of the above Instructor Explanation: See Chapter 6 Points Received: 6 of 6 Comments: Question 6. Question : (TCO 7) Cash may not include foreign currency. money orders. restricted cash. undeposited customer checks. Instructor Explanation: See Chapter 7 Points Received: 6 of 6 Comments: Question 7. Question : (TCO 7) Oswego Clay Pipe Company sold $46,000 of pipe to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. Oswego uses the gross method of accounting for cash discounts. What entry would Oswego make on June 10, assuming the customer made the correct payment on that date? Cash 46,460 Accounts receivable 45,540 Discounts receivable 460 Cash 46,000 Accounts receivable 45,540 Interest revenue 460 Cash 46,000 Accounts receivable 46,000 Cash 46,460 Accounts receivable 46,000 Interest revenue 460 Instructor Explanation: See Chapter 7 Points Received: 6 of 6 Comments: Question 8. Question : (TCO 8) In a perpetual inventory system, the cost of purchases is debited to purchases. cost of goods sold. inventory. accounts payable. Instructor Explanation: See Chapter 8 Points Received: 6 of 6 Comments: Question 9. Question : (TCO 5) The statement of cash flows reports cash flows from the activities of operating, purchasing, and investing. borrowing, paying, and investing. financing, investing, and operating. using, investing, and financing. Instructor Explanation: See Chapter 4 Points Received: 0 of 6 Comments: Question 10. Question : (TCO 8) Included in the computation of the cost-to-retail percentage for the LIFO retail method are net markups and net markdowns. neither net markups nor net markdowns. net markups but not net markdowns. net markdowns but not net markups. Instructor Explanation: See Chapter 9 Points Received: 6 of 6 Comments: Question 11. Question : (TCO 8) During periods when costs are rising and inventory quantities are stable, ending inventory will be higher under LIFO than FIFO. lower under average cost than LIFO. higher under average cost than FIFO. higher under FIFO than LIFO. Instructor Explanation: See Chapter 8 Points Received: 0 of 6 Comments: Page: 1 2 3 Grading Summary These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. Date Taken: Time Spent: Points Received: Question Type: # Of Questions: # Correct: Multiple Choice 22 20 Short 1 N/A Essay 4 N/A Grade Details - All Questions Page: 1 2 3 Question 1. Question : (TCO 8) Fulbright Corp. uses the periodic inventory system. During its first year of operation, Fulbright made the following purchases (listed in chronological order of acquisition): • 40 units at $100 • 70 units at $80 • 170 units at $60 Sales for the year totaled 270 units, leaving 10 units on hand at the end of the year. What is the ending inventory using the FIFO method? Instructor Explanation: Points Received: 10 of 15 Comments: Question 2. Question : (TCO 5) What is an accrued liability? Please provide two examples. Instructor Explanation: Points Received: 28 of 28 Comments: Question 3. Question : (TCO 7) A company's investment in receivables is affected by several related variables. Give an example of this interrelationship. Points Received: 25 of 25 Comments: Question 4. Question : (TCO 8) A company purchases inventory during the year in four batches, with unit and price amounts shown below: Batch 1 – 9,500 units @ $2.10 per unit Batch 2 – 4,300 units @ $2.08 per unit Batch 3 – 3,600 units @ $2.04 per unit Batch 4 – 7,200 units @ $2.01 per unit 10,800 units were sold after Batch 2 was purchased, while 3,400 units were sold after Batch 3 was purchased. Required: -1. Calculate cost of goods sold and ending inventory under the LIFO method, using the perpetual inventory system. -2. Calculate cost of goods sold and ending inventory under the LIFO method, using the periodic inventory system. Points Received: 23 of 25 Comments: Question 5. Question : (TCO 4) List the circumstances under which land would be classified under the following balance sheet classifications: a) current assets; b) investments (noncurrent); c) property, plant, and equipment; and d) other non-current assets. Page: 1 2 3