CLICK TO GET ANSWERS ACC 545 Final Exam 1) A company changes from percentage-of-completion to completed-contract, which is the method used for tax purposes. The entry to record this change should include a 2) Which of the following is accounted for as a change in accounting principle? 3) A company changes from straight-line to an accelerated method of calculating depreciation, which will be similar to the method used for tax purposes. The entry to record this change should include a 4) Presenting consolidated financial statements this year when statements of individual companies were presented last year is 13) If a short-term obligation is excluded from current liabilities because of refinancing, the footnote to the financial statements describing this event should include all of the following information EXCEPT: 14) Stock dividends distributable should be classified on the 15) Which of the following items is a current liability? 16) A company borrows $10,000 and signs a 90-day nontrade note payable. In preparing a statement of cash flows (indirect method), this event would be reflected as 17) An increase in inventory balance would be reported in a statement of cash flows using the indirect method (reconciliation method) as acc 545 final exam 18) The primary purpose of the statement of cash flows is to provide information 19) Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in inventory, but did not record the transaction. What would be the effect of this on its financial statements for January 31? 20) Cross Co. accepted delivery of merchandise that it purchased on account. As of December 31, Cross had recorded the transaction, but did not include the merchandise in its inventory. What would be the effect of this on its financial statements for December 31? 21) The failure to record a purchase of merchandise on account even though the goods are properly included in the physical inventory results in 22) Fences and parking lots are reported on the balance sheet as 23) Which of these is not a major characteristic of a plant asset? 24) The debit for a sales tax properly levied and paid on the purchase of machinery preferably would be a charge to 25) On November 1, 2007, acc 545 final exam Little Company purchased 600 of the $1,000 face value, 9% bonds of Player, Incorporated, for $632,000, which includes accrued interest of $9,000. The bonds, which mature on January 1, 2012, pay interest semiannually on March 1 and September 1. Assuming that Little uses the straight-line method of amortization and that the bonds are appropriately classified as available-for-sale, what would the net carrying value of the bonds be shown as on Little's December 31, 2007, balance sheet? 26) On October 1, 2007, Lyman Co. purchased to hold to maturity, 200 of the $1,000 face value, 9% bonds for $208,000. An additional $6,000 was paid for accrued interest. Interest is paid semiannually on December 1 and June 1 and the bonds mature on December 1, 2011. Lyman uses straight-line amortization. Ignoring income taxes, what was the amount reported in Lyman's 2007 income statement from this investment?
27) On October 1, 2007, Porter Co. purchased to hold to maturity 1,000 of the $1,000 face value, 9% bonds for $990,000 which includes $15,000 accrued interest. The bonds, which mature on February 1, 2016, pay interest semiannually on February 1 and August 1. Porter uses the straightline method of amortization. The bonds should be reported in the December 31, 2007 balance sheet at a carrying what value? 28) Although only certain leases are currently accounted for as a sale or purchase, there is theoretic justification for considering all leases to be sales or purchases. The principal reason that supports this idea is that 29) An essential element of a lease conveyance is that the 30) Which of the following is a correct statement of one of the capitalization criteria? 31) Discount on notes payable is charged to interest expense 32) The generally accepted method of accounting for gains or losses from the early extinguishment of debt treats any gain or loss as 33) A corporation borrowed money from a bank to build a building. Acc 545 final exam The long-term note signed by the corporation is secured by a mortgage that pledges title to the building as security for the loan. The corporation is to pay the bank $80,000 each year for 10 years to repay the loan. Which of the following relationships can you expect to apply to the situation? 34) Benton Company issues $10,000,000 of 10-year, 9% bonds on March 1, 2007, at 97 plus accrued interest. The bonds are dated January 1, 2007, and pay interest on June 30 and December 31. What is the total cash received on the issue date? 35) Limeway Company issues $5,000,000, 6%, 5-year bonds dated January 1, 2007, on January 1, 2007. The bonds pay interest semiannually on June 30 and December 31. The bonds are issued to yield 5%. What are the proceeds from the bond issue? 2.5% 3.0% 5.0% 6.0% Present value of a single sum for 5 periods .88385 .88261 .78353 .74726 Present value of a single sum for 10 periods .78120 .74409 .61391 .55839 Present value of an annuity for 5 periods 4.64583 4.57971 4.32948 4.21236 Present value of an annuity for 10 periods 8.75206 8.53020 7.72173 7.36009 36) A company issues $20,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2007. Interest is paid on June 30 and December 31. The proceeds from the bonds are $19,604,145. Using effective-interest amortization, how much interest expense will be recognized in 2007? 37) Which of the following is not a characteristic of a defined-contribution pension plan? 38) In accounting for a defined-benefit pension plan 39) The interest on the projected benefit obligation component of pension expense 40) Windsor Company has outstanding both common stock and nonparticipating, noncumulative preferred stock. The liquidation value of the preferred is equal to its par value. The book value per share of the common stock is unaffected by 41) Dividends are not paid on 42) Assume common stock is the only class of stock outstanding in the B-Bar-B Corporation. Total stockholders' equity divided by the number of common stock shares outstanding is called 43) Preparation of consolidated financial statements when a parent-subsidiary relationship exists is an example of the 44) In presenting segment information, which of the following items must be reconciled to the entity's consolidated financial statements? Operating Revenue Identifiable Profit (Loss) Assets
Option 1 Yes Yes Yes Option 2 No Yes Yes Option 3 Yes No Yes Option 4 Yes Yes No 45) Presenting consolidated financial statements this year when statements of individual companies were presented last year is