ACC 497 Week 5 Final Exam

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ACC 497 Week 5 Final Exam | Assignment Help | University Of Phoenix

University of Phoenix / ACC 497
25 Oct 2019
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ACC 497 Week 5 Final Exam | Assignment Help | University Of Phoenix

Which of the following are major factors in the rapidly changing financial reporting environment in Canada?

· Financial forecasting and planning for business.

· Globalization and the use of computer networks.

· Increased demand for accountants and the impact of technology.

· The growing number of institutional investors and the knowledge based economy.

Under the existing GAAP hierarchy for state and local government financial reporting, the GASB Implementation guides are:

· More authoritative than the AICPA state and local government audit guide.

· Less authoritative than GASB Technical Bulletins.

· More authoritative than GASB Statements.

· Equally authoritative to AICPA Practice Bulletins.

Which of the following are government-wide financial statements required by GASB standards?

· Statement of activities and statement of cash flows.

· Statement of net position and statement of cash flows.

· Statement of net position and statement of activities.

· Statement of net position, statement of activities, and statement of cash flows.

For each of the following fund types, indicate the fund category by selecting either Governmental funds, Proprietary funds, or Fiduciary funds for each item.

5. All of the following reports are included in the reporting package resulting from the single audit except:

· Financial statements and schedule of expenditures of federal awards.

· Report on efficiency and effectiveness.

· Summary schedule of prior audit findings.

· Corrective action plan.

Refer to the following selected financial information from McCormik, LLC. Compute the company's accounts receivable turnover for Year 2.

Year 2 Year 1

Cash $ 38,200 $ 32,950

Short-term investments 97,000 63,500

Accounts receivable, net 89,000 83,000

Merchandise inventory 124,500 128,500

Prepaid expenses 12,800 10,400

Plant assets 391,500 341,500

Accounts payable 109,900 111,300

Net sales 714,500 679,500

Cost of goods sold 393,500 378,500

· 8.31.

· 8.61.

· 5.74.

· 7.37.

· 8.03.

During the coming years, we should expect the ACSB to:

· All of these choices are correct.

· harmonize Canadian GAAP to international standards.

· extend differential reporting options available to private companies.

· continue to provide accounting standards for private companies.

Juanita, a Texas resident (5th Circuit), is researching a tax question and finds a 5th Circuit case ruling that is favorable and a 9th Circuit case that is unfavorable. Which circuit case has more “authoritative weight”?

· 5th Circuit.

· 9th Circuit.

· 6th Circuit.

· 11th Circuit.

Refer to the following selected financial information from McCormik, LLC. Compute the company's working capital for Year 2.

Year 2 Year 1

Cash $ 39,200 $ 33,950

Short-term investments 107,000 68,500

Accounts receivable, net 94,000 88,000

Merchandise inventory 129,500 133,500

Prepaid expenses 13,800 11,400

Plant assets 396,500 346,500

Accounts payable 104,900 116,300

Net sales 719,500 684,500

Cost of goods sold 398,500 383,500

· $278,600.

· $184,600.

· $171,600.

· $149,100.

· $264,800.

10.

As part of your audit firm’s quality control policies, it maintains a record of continuing profession education (CPE) taken by professional staff members. Following is information on some of the classes, sessions, workshops, and conferences that the auditors of your firm have attended in the past year.

Required

Determine whether the classes, sessions, workshops, and conferences attended by the auditors could be used to meet the GAGAS requirement that auditors earn 24 hours of CPE in government-related areas every two years. Access the GAO guide entitled Government Auditing Standards: Guidance on GAGAS Requirements for Continuing Professional Education at the GAO Web site to perform research. For each of the following item, indicate whether its qualifies or Does not qualify.

11.

Which of the following statements regarding cash flows is not accurate?

· Before the present cash flow statement standard became effective, companies had a choice of whether to report cash flow from operating activities or working capital from operating activities.

· Information about the balances of current liabilities, long-term debt and stockholders' equity can be found in the statement of cash flows.

· Studies have shown that a cash flows report is more relevant to investor decisions than a working capital report.

· The reported cash flow from operating activities has been found useful in evaluating a firm's ability to make interest payments and repay debt.

· Information about past cash flows is useful in predicting an entity's future cash flows.

12.

The role of the Accounting Standards Board (AcSB) in the formulation of accounting principles in Canada can be best described as:

· non-existent.

· sometimes primary and sometimes secondary.

· secondary.

· primary.

13.

Professional accountants need a wide range of knowledge and skills. Which of the following is not an example of such knowledge or skills?

An ability to communicate in a concise and understandable manner.

14.

Refer to the following selected financial information from Shakley's Incorporated. Compute the company's times interest earned for Year 2.

Year 2 Year 1

Net sales $ 480,500 $ 426,650

Cost of goods sold 276,700 250,520

Interest expense 10,100 11,100

Net income before tax 67,650 53,080

Net income after tax 46,450 40,300

Total assets 317,900 290,400

Total liabilities 179,400 167,700

Total equity 138,500 122,700

________________________________________

· 4.6.

· 6.7.

· 5.6.

· 13.7.

· 7.7.

14.

Refer to the following selected financial information from Shakley's Incorporated. Compute the company's times interest earned for Year 2.

Year 2 Year 1

Net sales $ 480,500 $ 426,650

Cost of goods sold 276,700 250,520

Interest expense 10,100 11,100

Net income before tax 67,650 53,080

Net income after tax 46,450 40,300

Total assets 317,900 290,400

Total liabilities 179,400 167,700

Total equity 138,500 122,700

________________________________________

· 4.6.

· 6.7.

· 5.6.

· 13.7.

· 7.7.

15.

Jones Corp. reported current assets of $200,000 and current liabilities of $141,500 on its most recent balance sheet. The current assets consisted of $60,200 Cash; $40,900 Accounts Receivable; and $98,900 of Inventory. The acid-test (quick) ratio is:

· 1.4:1.

· 1:1.

· 0.51:1.

· 0.71:1.

· 0.67:1.

16.

Eagle Company, a public company, had a computer failure and lost part of its financial data. As a result, the auditor was unable to obtain sufficient audit evidence relating to Eagle’s inventory account. Assuming the inventory account is at least material, the auditor would most likely choose either:

· a qualified opinion or an adverse opinion.

· a qualified opinion or a disclaimer of opinion.

· a qualified opinion with no explanatory paragraph or a qualified opinion with an explanatory paragraph.

· an unqualified opinion with no explanatory paragraph or an unqualified opinion with an explanatory paragraph.

17.

Generally accepted accounting principles currently are promulgated primarily by the:

· Canada Customs and Revenue Agency.

· Ontario Securities Commission (OSC).

· Canadian Academic Accounting Association (CAAA).

· Accounting Standards Board (AcSB).

18.

Which of the following statement(s) is(are) correct?

· Companies that use the disclosed basis of accounting are in effect using differential reporting.

· Both "companies that use the disclosed basis of accounting are NOT allowed to use differential reporting" and "when used, the disclosed basis of accounting must comply with GAAP" are correct.

· When used, the disclosed basis of accounting must comply with GAAP.

· Companies that use the disclosed basis of accounting are NOT allowed to use differential reporting.

· An ability to calculate and analyze data, and a facility with numbers.

· Skills derived from prior management experience.

· Knowledge of many disciplines such as finance, economics, management, marketing and statistics.

19.

Which of the following funds are proprietary funds?

· Enterprise funds and internal service funds.

· Proprietary funds are not used in governmental accounting.

· Internal service funds, special revenue funds, and enterprise funds.

· Enterprise funds, investment trust funds, pension trust funds, and the General Fund.

20.

Generally accepted accounting principles applicable to state and local governments require that

· Only those funds required by law and sound financial administration should be established.

· All categories of funds must be established.

· Only governmental funds and proprietary funds should be established.

· Only those funds required by law, GASB standards, and sound financial administration should be established.

21.

Choose the type of fund that would most likely be reported in the examples given.

Example

Construction of public buildings.

Costs of a central purchasing and warehouse function.

Gifts in which the principal must be invested and preserved but the investment earnings must be used to provide scholarships to children of police officers who died in the line of duty.

Administrative expenses of the city manager’s office.

Assets held for external government participants in the government’s investment pool for the purpose of earning investment income.

Gifts in which the principal must be invested and preserved but the investment earnings can be used for public purposes.

Costs of operating a municipal swimming pool.

Taxes collected on behalf of another governmental unit.

Assets held in trust to provide retirement benefits for municipal workers.

Principal and interest payments on general long-term debt.

Grant revenues restricted for particular operating purposes.

22.

Which of the following is a primary objective of financial reporting by state and local governments?

· To provide information that can be used for capital allocation decisions made by external investors.

· To fulfill the government's statutory duty to report on cash received and cash disbursed.

· To report on the legal requirements imposed on the government by its elected officials.

· To provide information that can be used to assess a government's accountability.

23.

Balsam City's library board is appointed by the city council, which has agreed to subsidize the operating costs of the library at a material amount to be determined each year. In addition, the city is paying debt service on general obligation bonds issued to construct the library. Based on generally accepted accounting principles (GAAP) criteria for defining the reporting entity:

· The library is a component unit.

· The library is a joint venture.

· The library is a special purpose government.

· The library is a jointly governed organization.

24.

Which of the following factors would not indicate that a potential component unit (PCU) imposes a financial burden or provides a financial benefit to the primary government?

· The primary government is obligated for the PCU's debt.

· The primary government is entitled to its share of any dividends distributed by the PCU.

· The primary government is entitled to the PCU's resources.

· The primary government is obligated to provide financial support to the PCU.

25.

Rajan Company's most recent balance sheet reported total assets of $2.04 million, total liabilities of $0.73 million, and total equity of $1.31 million. Its Debt to equity ratio is:

· 0.64

· 0.36

· 1.00

· 0.56

· 1.80

26.

Use the following information to determine whether the Development Special Revenue and the Debt Service Funds should be reported as major funds based on asset amounts provided. Development Special Revenue Fund Assets $740,000 Debt Service Fund Assets $150,000 Total Governmental Fund Assets $7,500,000 Total Governmental Fund and Enterprise Fund Assets $8,750,000

· The Debt Service Fund should be reported as major.

· Neither the Development Special Revenue Fund nor the Debt Service Fund should be reported as major.

· The Development Special Revenue Fund should be reported as major.

· Both the Development Special Revenue Fund and the Debt Service Fund should be reported as major.

27.

Selected current year company information follows:

Net income $ 16,553

Net sales 718,855

Total liabilities, beginning-year 89,932

Total liabilities, end-of-year 109,201

Total stockholders' equity, beginning-year 204,935

Total stockholders' equity, end-of-year 130,851

The return on total assets is (Do not round intermediate calculations.):

· 2.69%.

· 6.19%.

· 2.44%.

· 2.30%.

· 2.99%.

28.

Which of the following funds would be used to account for an activity that provides centralized purchasing and sales of goods or services to other departments or agencies of the government on a cost-reimbursement basis?

· Internal service fund.

· Permanent fund.

· Enterprise fund.

· Fiduciary fund.

Q.29

Tech Company has disclosed an uncertainty due to pending litigation. The auditor’s decision to issue a qualified opinion on Tech’s financial statements would most likely result from:

· the entity’s lack of experience with such litigation.

· a lack of sufficient evidence.

· an inability to estimate the amount of loss.

· a lack of insurance coverage for possible losses from such litigation.

30.

General-purpose financial statements report financial information relevant to:

· creditors only.

· investors only.

· investors, creditors and government users.

· government users only.

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