ACC 422 Final Exam Guide All 3 Sets Click Here to Buy the Tutorial http://www.uophelp.com/ACC-422-/product-17291-ACC-422-Final-Exam-Guide-All-3Sets For more course tutorials visit www.uophelp.com Details of All 180 Questions Given Below SET 1 1. Kraft Enterprises owns the following assets at December 31, 2012. Cash in bankâ&#x20AC;&#x201C;savings account 67,516 Checking account balance 26,445 Cash on hand 9,478 Postdated checks 753 Cash refund due from IRS 40,324 Certificates of deposit (180-day) 94,754 What amount should be reported as cash? Question 2 Presented below is information related to Rembrandt Inc.â&#x20AC;&#x2122;s inventory. (per unit) Skis Boots Parkas Historical Cost 273.79 152.75 76.37 Selling Price 312.70 208.95 106.27 Cost to distribute 27.38 11.53 3.60 Current replacement cost 292.52 151.31 73.49 Normal profit margin 46.11 41.79 30.62 Determine the following: Question 3 Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 67 units that cost \$40 each. During June, the company purchased 202 units at \$40 each, returned 8 units for credit, and sold 168 units at \$67 each. Journalize the June transactions. Question 4 Amsterdam Company uses a periodic inventory system. For April, when the company sold 700 units, the following information is available. Compute the April 30 inventory and the April cost of goods sold using the average cost method. Question 5

Amsterdam Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available. Compute the April 30 inventory and the April cost of goods sold using the FIFO method. Question 6 (FIFO, LIFO, Average Cost Inventory) Esplanade Company was formed on December 1, 2011. The following information is available from Esplanadeâ&#x20AC;&#x2122;s inventory records for Product BAP. Purchases Units Unit Cost January 1, 2012(beginning inventory) 762 8.00 January 5, 2012 1,524 9.00 January 25, 2012 1,651 10.00 February 16, 2012 1,061 11.00 March 26, 2012 762 12.00 A physical inventory on March 31, 2012, shows 2,032 units on hand. Prepare schedules to compute the ending inventory at March 31, 2012, under each of the following inventory methods. Assume Esplanade Company uses the periodic inventory method. Question 7 Floyd Corporation has the following four items in its ending inventory. Determine the final lower of cost or market inventory value for each item. Question 8 Kumar Inc. uses a perpetual inventory system. At January 1, 2013, inventory was \$320,786 at both cost and market value. At December 31, 2013, the inventory was \$428,714 at cost and \$403,231 at market value. Prepare the necessary December 31 entry under: Question 9 Boyne Inc. had beginning inventory of \$15,000 at cost and \$25,000 at retail. Net purchases were \$150,000 at cost and \$212,500 at retail. Net markups were \$12,500; net markdowns were \$8,750; and sales were \$196,250. Compute ending inventory at cost using the conventional retail method. Question 10 (Gross Profit Method) Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May. Question 11 Previn Brothers Inc. purchased land at a price of \$30,400. Closing costs were \$1,820. An old building was removed at a cost of \$14,850. What amount should be recorded as the cost of the land?

Question 12 Garcia Corporation purchased a truck by issuing an \$108,000, 4-year, zero-interestbearing note to Equinox Inc. The market rate of interest for obligations of this nature is 10%. Prepare the journal entry to record the purchase of this truck. Question 13 Mohave Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of \$352,800. The estimated fair values of the assets are land \$67,200, building \$246,400, and equipment \$89,600. At what amounts should each of the three assets be recorded? Question 14 Fielder Company obtained land by issuing 2,000 shares of its \$12 par value common stock. The land was recently appraised at \$103,700. The common stock is actively traded at \$50 per share. Prepare the journal entry to record the acquisition of the land. Question 15 Navajo Corporation traded a used truck (cost \$23,600, accumulated depreciation \$21,240) for a small computer worth \$4,366. Navajo also paid \$1,180 in the transaction. Prepare the journal entry to record the exchange. Question 16 Mehta Company traded a used welding machine (cost \$10,080, accumulated depreciation \$3,360) for office equipment with an estimated fair value of \$5,600. Mehta also paid \$3,360 cash in the transaction. Prepare the journal entry to record the exchange. Question 17 Depreciation is normally computed on the basis of the nearest A). full month and to the nearest dollar. B). day and to the nearest cent. C). day and to the nearest dollar. D). full month and to the nearest cent. Question 18 Fernandez Corporation purchased a truck at the beginning of 2012 for \$54,180. The truck is estimated to have a salvage value of \$2,580 and a useful life of 206,400 miles. It was driven 29,670 miles in 2012 and 39,990 miles in 2013. Compute depreciation expense for 2012 and 2013. Question 19 Lockhard Company purchased machinery on January 1, 2012, for \$79,200. The machinery is estimated to have a salvage value of \$7,920 after a useful life of 8 years.

(a) Compute 2012 depreciation expense using the double-declining balance method. (b) Compute 2012 depreciation expense using the double-declining balance method assuming the machinery was purchased on October 1, 2012. Question 20 Jurassic Company owns machinery that cost \$1,145,700 and has accumulated depreciation of \$458,280. The expected future net cash flows from the use of the asset are expected to be \$636,500. The fair value of the equipment is \$509,200. Prepare the journal entry, if any, to record the impairment loss. Question 21 Everly Corporation acquires a coal mine at a cost of \$501,600. Intangible development costs total \$125,400. After extraction has occurred, Everly must restore the property (estimated fair value of the obligation is \$100,320), after which it can be sold for \$200,640. Everly estimates that 5,016 tons of coal can be extracted. If 878 tons are extracted the first year, prepare the journal entry to record depletion. Question 22 Francis Corporation purchased an asset at a cost of \$58,200 on March 1, 2012. The asset has a useful life of 8 years and a salvage value of \$5,820. For tax purposes, the MACRS class life is 5 years. Compute tax depreciation for each year 2012â&#x20AC;&#x201C;2017. Question 23 Celine Dion Corporation purchases a patent from Salmon Company on January 1, 2012, for \$50,820. The patent has a remaining legal life of 16 years. Celine Dion feels the patent will be useful for 10 years. Prepare Celine Dionâ&#x20AC;&#x2122;s journal entries to record the purchase of the patent and 2012 amortization. Question 24 Karen Austin Corporation has capitalized software costs of \$768,500, and sales of this product the first year totaled \$390,630. Karen Austin anticipates earning \$911,470 in additional future revenues from this product, which is estimated to have an economic life of 4 years. Compute the amount of software cost amortization for the first year. (a) Compute the amount of software cost amortization for the first year using the percent of revenue approach. (b) Compute the amount of software cost amortization for the first year using the straightline approach. Question 25 Jeff Beck is a farmer who owns land which borders on the right-of-way of the Northern Railroad. On August 10, 2012, due to the admitted negligence of the Railroad, hay on the farm was set on fire and burned. Beck had had a dispute with the Railroad for several years concerning the ownership of a small parcel of land. The representative of the

Railroad has offered to assign any rights which the Railroad may have in the land to Beck in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Beck appears inclined to accept the Railroad’s offer. The Railroad’s 2012 financial statements should include the following related to the incident: A). recognition of a loss only. B). creation of a liability only. C). disclosure in note form only. D). recognition of a loss and creation of a liability for the value of the land. Question 26 Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. On July 1, Roley purchased \$66,000 of inventory, terms 2/10, n/30, FOB shipping point. Roley paid freight costs of \$1,210. On July 3, Roley returned damaged goods and received credit of \$6,600. On July 10, Roley paid for the goods. Prepare all necessary journal entries for Roley. Question 27 Takemoto Corporation borrowed \$93,000 on November 1, 2012, by signing a \$95,093, 3month, zero-interest-bearing note. Prepare Takemoto’s November 1, 2012, entry; the December 31, 2012, annual adjusting entry; and the February 1, 2013, entry. (For multiple debit/credit en tries, list amounts from largest to smallest, e.g. 10, 8, 6. Round all answers to 0 decimal places, e.g. 11,150.) Question 28 Whiteside Corporation issues \$629,000 of 9% bonds, due in 14 years, with interest payable semiannually. At the time of issue, the annual market rate for such bonds is 10%. Compute the issue price of the bonds.(Use the present value tables in the text. Question 29 Indiana Jones Company enters into a 6-year lease of equipment on January 1, 2012, which requires 6 annual payments of \$37,560 each, beginning January 1, 2012. In addition, the lessee guarantees a residual value of \$20,870 at lease-end. The equipment has a useful life of 6 years. Assume that for Lost Ark Company, the lessor, collectibility is reasonably predictable, there are no important uncertainties concerning costs, and the carrying amount of the machinery is \$191,722. Prepare Lost Ark’s January 1, 2012, journal entries. Question 30 On January 1, 2012, Irwin Animation sold a truck to Peete Finance for \$26,050 and immediately leased it back. The truck was carried on Irwin’s books at \$20,800. The term of the lease is 5 years, and title transfers to Irwin at lease-end. The lease requires five equal rental payments of \$7,048 at the end of each year. The appropriate rate of interest is

11%, and the truck has a useful life of 5 years with no salvage value. Prepare Irwinâ&#x20AC;&#x2122;s 2012 journal entries. SET 2 1) Which of the following is considered cash? 2) Bank overdrafts, if material, should be 3) Which of the following is NOT considered cash for financial reporting purposes? 4) If a company employs the gross method of recording accounts receivable from customers, then sales discounts taken should be reported as 5) Which of the following methods of determining annual bad debt expense best achieves the matching concept? 6) The advantage of relating a company's bad debt expense to its outstanding accounts receivable is that this approach 7) The failure to record a purchase of merÂŹchandise on account even though the goods are properly included in the physical invenÂŹtory results in 8) Belle Co. received merchandise on consignment. As of March 31, Belle had recorded the transaction as a purchase and included the goods in inventory. The effect of this on its financial statements for March 31 9) Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in inventory, but did NOT record the transaction. The effect of this on its financial statements for January 31 10) The use of a Purchase Discounts account implies that the recorded cost of a purchased inventory item is its 11) Which method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations? 12) When using the periodic inventory system, which of the following generally would NOT be separately accounted for in the computation of cost of goods sold? 13) An item of inventory purchased this period for \$15.00 has been incorrectly written down to its current replacement cost of \$10.00. It sells during the following period for \$30.00, its normal selling price, with disposal costs of \$3.00 and normal profit of \$12.00. Which of the following statements is NOT true? 14) Designated market value 15) In no case can "market" in the lower-of-cost-or-market rule be more than 16) A major advantage of the retail inventory method is that it 17) The gross profit method of inventory valuation is invalid when 18) The retail inventory method is based on the assumption that the 19) Which of the following is NOT a major characteristic of a plant asset? 20) Cotton Hotel Corporation recently purchased Holiday Hotel and the land on which it is located with the plan to tear down the Holiday Hotel and build a new luxury hotel on the site. The cost of the Holiday Hotel should be

21) If a corporation purchases a lot and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on 22) The period of time during which interest must be capitalized ends when 23) To be consistent with the historical cost principle, overhead costs incurred by an enterprise constructing its own building should be 24) When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to 25) The King-Kong Corporation exchanges one plant asset for a similar plant asset and gives cash in the exchange. The exchange is NOT expected to cause a material change in the future cash flows for either entity. If a gain on the disposal of the old asset is indicated, the gain will 26) When funds are borrowed to pay for construction of assets that qualify for capitalization of interest, the excess funds NOT needed to pay for construction may be temporarily invested in interest-bearing securities. Interest earned on these temporary investments should be 27) Which of the following is NOT a condition that must be satisfied before interest capitalization can begin on a qualifying asset? 28) Which of the following most accurately reflects the concept of depreciation as used in accounting? 29) Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues? 30) The major difference between the service life of an asset and its physical life is that 31) Starr Company purchased a depreciable asset for \$150,000. The estimated salvage value is \$10,000, and the estimated useful life is 8 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset? 32) Bigbie Company purchased a depreciable asset for \$600,000. The estimated salvage value is \$30,000, and the estimated useful life is 10,000 hours. Bigbie used the asset for 1,100 hours in the current year. The activity method will be used for depreciation. What is the depreciation expense on this asset? 33) Harrison Company purchased a depreciable asset for \$100,000. The estimated salvage value is \$10,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset? 34) Costs incurred internally to create intangibles are 35) The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be 36) Riser Corporation was granted a patent on a product on January 1, 1998. To protect its patent, the corporation purchased on January 1, 2007 a patent on a competing product which was originally issued on January 10, 2003. Because of its unique plant, Riser Corporation does NOT feel the competing patent can be used in producing a product. The cost of the competing patent should be

37) Twilight Corporation acquired End-of-the-World Products on January 1, 2008 for \$2,000,000, and recorded goodwill of \$375,000 as a result of that purchase. At December 31, 2008, the End-of-the-World Products Division had a fair value of \$1,700,000. The net identifiable assets of the Division (excluding goodwill) had a fair value of \$1,450,000 at that time. What amount of loss on impairment of goodwill should Twilight record in 2008? 38) Fleming Corporation acquired Out-of-Sight Products on January 1, 2008 for \$4,000,000, and recorded goodwill of \$750,000 as a result of that purchase. At December 31, 2008, the Out-of-Sight Products Division had a fair value of \$3,400,000. The net identifiable assets of the Division (excluding goodwill) had a fair value of \$2,900,000 at that time. What amount of loss on impairment of goodwill should Fleming record in 2008? 39) Malrom Manufacturing Company acquired a patent on a manufacturing process on January 1, 2006 for \$10,000,000. It was expected to have a 10 year life and no residual value. Malrom uses straight-line amortization for patents. On December 31, 2007, the expected future cash flows expected from the patent were expected to be \$800,000 per year for the next eight years. The present value of these cash flows, discounted at Malromâ&#x20AC;&#x2122;s market interest rate, is \$4,800,000. At what amount should the patent be carried on the December 31, 2007 balance sheet? 40) Goodwill 41) Easton Company and Lofton Company were combined in a purchase transaction. Easton was able to acquire Lofton at a bargain price. The sum of the market or appraised values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Easton. After revaluing noncurrent assets to zero, there was still some "negative goodwill." Proper accounting treatment by Easton is to report the amount as 42) The reason goodwill is sometimes referred to as a master valuation account is because 43) Which of the following items is a current liability? 44) Which of the following statements is false? 45) Stock dividends distributable should be classified on the 46) Simson Company has 35 employees who work 8-hour days and are paid hourly. On January 1, 2006 the company began a program of granting its employees 10 days of paid vacation each year. Vacation days earned in 2006 may first be taken on January 1, 2007. Information relative to these employees is as follows: Year Hourly Wages Vacation Days Earned by Each Employee Vacation Dayse Used by Each Employee 2006 \$28.50 10 0 2007 \$27.00 10 8 2008 \$28.50 10 10 What is the amount of expense relative to compensated absences that should be reported on Simsonâ&#x20AC;&#x2122;s income statement for 2006? 47) A company buys an oil rig for \$1,000,000 on January 1, 2007. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is \$200,000

(present value at 10% is \$77,110). 10% is an appropriate interest rate for this company. What expense should be recorded for 2007 as a result of these events? 48) A company offers a cash rebate of \$1 on each \$4 package of batteries sold during 2007. Historically, 10% of customers mail in the rebate form. During 2007, 6,000,000 packages of batteries are sold, and 210,000 \$1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31? 49) A contingency can be accrued when 50) Which of the following sets of conditions would give rise to the accrual of a contingency under current generally accepted accounting principles? 51) Mark Ward is a farmer who owns land which borders on the right-of-way of the Northern Railroad. On August 10, 2007, due to the admitted negligence of the Railroad, hay on the farm was set on fire and burned. Ward had had a dispute with the Railroad for several years concerning the ownership of a small parcel of land. The representative of the Railroad has offered to assign any rights which the Railroad may have in the land to Ward in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Ward appears inclined to accept the Railroad's offer. The Railroad's 2007 financial statements should include the following related to the incident: 52) An example of an item which is NOT a liability is 53) The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the 54) Bonds for which the owners' names are NOT registered with the issuing corporation are called 55) Minimum lease payments may include a 56) What impact does a bargain purchase option have on the present value of the minimum lease payments computed by the lessee? 57) Which of the following is a correct statement of one of the capitalization criteria? 58) In order to properly record a direct-financing lease, the lessor needs to know how to calculate the lease receivable. The lease receivable in a direct-financing lease is best defined as 59) In the earlier years of a lease, from the lessee's perspective, the use of the 60) In a lease that is appropriately recorded as a direct-financing lease by the lessor, unearned income

SET 3 1) Which of the following is NOT considered cash for financial reporting purposes? 2) What is the preferable presentation of accounts receivable from officers, employees, or affiliated companies on a balance sheet? 3) Which of the following items should NOT be included in the Cash caption on the balance sheet?

4) The advantage of relating a company's bad debt expense to its outstanding accounts receivable is that this approach 5) Which of the following is a generally accepted method of determining the amount of the adjustment to bad debt expense? 6) Assuming that the ideal measure of short-term receivables in the balance sheet is the discounted value of the cash to be received in the future, failure to follow this practice usually does NOT make the balance sheet misleading because 7) Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in inventory, but did NOT record the transaction. The effect of this on its financial statements for January 31 would be 8) If the beginning inventory for 2006 is overstated, the effects of this error on cost of goods sold for 2006, net income for 2006, and assets at December 31, 2007, respectively, are 9) The accountant for the Orion Sales Company is preparing the income statement for 2007 and the balance sheet at December 31, 2007. Orion uses the periodic inventory system. The January 1, 2007 merchandise inventory balance will appear 10) The use of a Discounts Lost account implies that the recorded cost of a purchased inventory item is its 11) When using the periodic inventory system, which of the following generally would NOT be separately accounted for in the computation of cost of goods sold? 12) The use of a Purchase Discounts account implies that the recorded cost of a purchased inventory item is its 13) In no case can "market" in the lower-of-cost-or-market rule be more than 14) When the direct method is used to record inventory at market 15) Designated market value 16) The retail inventory method is based on the assumption that the 17) In 2006, Lucas Manufacturing signed a contract with a supplier to purchase raw materials in 2007 for \$700,000. Before the December 31, 2006 balance sheet date, the market price for these materials dropped to \$510,000. The journal entry to record this situation at December 31, 2006 will result in a credit that should be reported 18) The gross profit method of inventory valuation is invalid when 19) Which of the following is NOT a major characteristic of a plant asset? 20) The cost of land does NOT include 21) If a corporation purchases a lot and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on 22) To be consistent with the historical cost principle, overhead costs incurred by an enterprise constructing its own building should be 23) When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to 24) The period of time during which interest must be capitalized ends when

25) Construction of a qualifying asset is started on April 1 and finished on December 1. The fraction used to multiply an expenditure made on April 1 to find weighted-average accumulated expenditures is 26) When funds are borrowed to pay for construction of assets that qualify for capitalization of interest, the excess funds NOT needed to pay for construction may be temporarily invested in interest-bearing securities. Interest earned on these temporary investments should be 27) When a plant asset is acquired by issuance of common stock, the cost of the plant asset is properly measured by the 28) If an industrial firm uses the units-of-production method for computing depreciation on its only plant asset, factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will 29) The term "depreciable cost," or "depreciable base," as it is used in accounting, refers to 30) Which of the following most accurately reflects the concept of depreciation as used in accounting? 31) Prentice Company purchased a depreciable asset for \$200,000. The estimated salvage value is \$20,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset? 32) Pine Company purchased a depreciable asset for \$360,000. The estimated salvage value is \$24,000, and the estimated useful life is 8 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset? 33) Bigbie Company purchased a depreciable asset for \$600,000. The estimated salvage value is \$30,000, and the estimated useful life is 10,000 hours. Bigbie used the asset for 1,100 hours in the current year. The activity method will be used for depreciation. What is the depreciation expense on this asset? 34) The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be 35) Riser Corporation was granted a patent on a product on January 1, 1998. To protect its patent, the corporation purchased on January 1, 2007 a patent on a competing product which was originally issued on January 10, 2003. Because of its unique plant, Riser Corporation does NOT feel the competing patent can be used in producing a product. The cost of the competing patent should be 36) Which of the following methods of amortization is normally used for intangible assets? 37) General Products Company bought Special Products Division in 2006 and appropriately booked \$250,000 of goodwill related to the purchase. On December 31, 2007, the fair value of Special Products Division is \$2,000,000 and it is carried on General Productâ&#x20AC;&#x2122;s books for a total of \$1,700,000, including the goodwill. An analysis of Special Products Divisionâ&#x20AC;&#x2122;s assets indicates that goodwill of \$200,000 exists on December 31, 2007. What goodwill impairment should be recognized by General Products in 2007?