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ACC 422 Week 1 CPA Practice Exam Click Here to Buy the Tutorial For more course tutorials visit

1. What amount should Herc report as inventory in its December 31, 2005, balance sheet? 2. What dollar-value LIFO inventory cost would be reported in Cobb's December 31, 2006, balance sheet? 3. Garson Co. recorded goods in transit purchased FOB shipping point at year-end as purchases. The goods were excluded from the ending inventory. What effect does the omission have on Garson's assets and retained earnings at year end? 4. In accordance with ASC Topic 255, the Consumer Price Index for All Urban Consumers is used to compute information on a 5. If current assets exceed current liabilities, payments to creditors made on the last day of the month will 6. At the end of its first year of operations, December 31, year 1, Wonder Company had a net realizable value of accounts receivable of $500,000. During year 1 Wonder recorded charges to bad debt expense of $80,000 and wrote off as uncollectible accounts receivable of $20,000. What should Wonder report on its balance sheet at December 31, year 1, as accounts receivable before the allowance for doubtful accounts? 7. A company is in its first year of operations and has never written off any accounts receivable as uncollectible. When the allowance method of recognizing bad debt expense is used, the entry to recognize that expense 8. When the allowance method of recognizing bad debt expense is used, the allowance for doubtful accounts would decrease when a(n) 9. In accordance with ASC Topic 860, Transfers and Servicing, all of the following would be disclosed except for

10. The premium on a 3-year insurance policy expiring on December 31, year 3, was paid in total on January 2, year 1. If the company has a 6-month operating cycle, then on December 31, year 1, the prepaid insurance reported as a current asset would be for 11. Foster Co. adjusted its allowance for uncollectible accounts at year-end. The general ledger balances for the accounts receivable and the related allowance account were $1,000,000 and $40,000, respectively. Foster uses the percentage-of-receivables method to estimate its allowance for uncollectible accounts. Accounts receivable were estimated to be 5% uncollectible. What amount should Foster record as an adjustment to its allowance for uncollectible accounts at year-end? 12. A retailer failed to record a purchase of inventory on credit near the end of the current year. The goods did arrive and were included in the inventory count. The purchase will be recorded next year, when the goods are paid for. As a result,

13. What is the current ratio as of December 31? 14. What was Brock's dollar-value LIFO inventory on December 31, 2004? 15. In its 2005 income statement, what amount should Kam report as the cost of goods sold? 16. When the accounts receivable of a company are sold outright to a company which normally buys accounts receivable of other companies without recourse, the accounts receivable have been Pledged.

17. What was the price index used to compute Bach's 2007 dollar-value LIFO inventory layer? 18. Drew Co. uses the average cost inventory method for internal reporting purposes and LIFO for financial statement and income tax reporting. 19. What adjusting entry should Drew record to adjust from average cost to LIFO on December 31, 2005? 20. When the FIFO inventory method is used during periods of rising prices, a perpetual inventory system results in an ending inventory cost that is 21. Nomar Co. shipped inventory on consignment to Seabright Co. that cost $20,000. Seabright paid $500 for advertising that was reimbursable from Nomar. At the end of the year, 70% of the inventory was sold for $30,000. The agreement states that a commission of 20% will be provided to Seabright for all sales. What amount of net inventory on consignment remains on the balance sheet for the first year for Nomar? 22. When an inventory overstatement in year one counterbalances in year two, this means:

23. If ending inventory for 20x5 is understated because certain items were missed in the count, then: 24. The following bank reconciliation is presented for the Kingston Company for the month of November year 1:

25. Data for the month of December year 1 per bank follows:

26. All items that were outstanding as of November 30, cleared through the bank in December, including the bank credit. In addition, $2,500 in checks were outstanding as of December 31, year 1. What is the balance of cash per books at December 31, year 1?

27. Lind Corp. declared a cash dividend of $50,000 on March 10, year 2, to stockholders of record March 25, year 2, payable on April 5, year 2. As a result of this cash dividend, working capital 28. The controller of Peabody, Inc. has been asked to present an analysis of accounts receivable collections at the upcoming staff meeting. The following information is used: 29. What is the receivables turnover ratio as of December 31, year 2? 30. All but one of the following are required before a transfer of receivables can be recorded as a sale. 31.Alfisol, Inc. offers sales discounts of 2% on all credit sales paid within 15 days. For year 1, gross credit sales totaled $150,000 and 75% of Alfisol’s customers took advantage of the discount. Under the net method

32. The following information is available from Timber Corp’s financial records for year 1:

33. How many times did Timber’s accounts receivable turn over in year 1?

Acc 422 week 1 cpa practice exam