ACC 303 Week 11 Quiz

ACC 303 Week 11  Quiz | Assignment Help | Strayer University 

Question 1

What is the relationship between the Securities and Exchange Commission and accounting standard setting in the United States?

o   The SEC coordinates with the AICPA in establishing accounting standards.

o   The SEC has a mandate to establish accounting standards for enterprises under its jurisdiction.

o   The SEC reviews financial statements for compliance.

o   The SEC requires all companies listed on an exchange to submit their financial statements to the SEC.

Question 2

Each of the following are true of the Securities and Exchange Commission except that

o   The SEC’s involvement in the development of accounting standards varies.

o   The FASB relies on the SEC to develop accounting standards.

o   The SEC requires registrants to adhere to GAAP.

o   It is a federal agency.

Question 3

Which of the following will be of interest to investors in decision-making?

o   Assessing the company’s ability to generate net cash inflows.

o   Assessing management’s ability to protect and enhance the capital providers’ investments.

o   Assessing the company’s ability to collect debts.

o   Both assessing the company’s ability to generate net cash inflows and assessing management’s ability to protect and enhance the capital provider’s investments.

Question 4

The American Institute of Certified Public Accountants (AICPA) continues to be involved in all of the following except

o   Developing auditing standards for public companies.

o   Providing professional education programs.

o   Grading the CPA exam.

o   Developing and enforcing professional ethics.

Question 5

 Which of the following is related to an effective capital allocation?

o   Encouraging innovation.

o   Promoting productivity.

o   All of these answer choices are correct.

o   Providing an efficient market for buying and selling securities.

Question 6

What is not a reason that accounting standards may differ across countries?

o   Language

o   Culture

o   Governments

o   Past practice

Question 7

Members of the Financial Accounting Standards Board are

o   Part-time employees

o   Independent of any other organization.

o   Employed by the American Institute of Certified Public Accountants (AICPA).

o   Required to hold a CPA certificate.

Question 8

 What is the objective of financial reporting?

o   Provide information that excludes claims to the resources.

o   Provide information that is useful to management in making decisions.

o   Provide information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors.

o   Provide information that clearly portrays nonfinancial transactions.

Question 9

 Which of the following is a fundamental quality of useful accounting information?

o   Relevance

o   Comparability

o   Neutrality

o   Materiality

Question 10

 Recognition of amortization of an intangible asset illustrates which principle of accounting?

o   Revenue recognition

o   Historical cost

o   Full disclosure

o   Expense recognition

Question 11

Under SFAC No.6, interrelated elements of financial statements that are directly related to measuring the performance and status of an enterprise include

Operating Income     Investments by Owners

o   Yes     No

o   No       No

o   Yes     Yes

o   No       Yes

Question 12

 The accounting principle of expense recognition is best demonstrated by

o   Matching effort (expense) with accomplishment (revenue).

o   Recognizing prepaid rent received as revenue.

o   Establishing an Appropriation for Contingencies account.

o   Not recognizing any expense unless some revenue is realized.

Question 13

According to Statement of Financial Accounting Concepts No. 8, materiality is an ingredient of the fundamental quality(ies) of:

Relevance      Faithful Representation

o   No       No

o   Yes     Yes

o   Yes     No

o   No       Yes

Question 14

 What is the quality of information that is capable of making a difference in a decision?

o   Relevance

o   Faithful representation

o   Materiality

o   Timeliness

Question 15

 The cost constraint is also referred to as the

o   Materiality quality.

o   Monetary unit assumption.

o   Cost-benefit relationship.

o   Measurement principle.

Question 16

 Which of the following is a nominal (temporary) account?

o   Salaries and Wages Expense

o   Unearned Service Revenue

o   Retained Earnings

o   Inventory

Question 17

 Stockholders’ equity is not affected by all

o   Expenses.

o   Cash receipts.

o   Dividends.

o   Revenues.

Question 18

710,000 is correct. Current assets are calculated as follows:

Cash               185,000         

Accounts receivable, net                725,000         

Reclassification of receivable                   (200,000)       Portion that is noncurrent

     Total current assets                     710,000         

The following trial balance of JB Company at December 31, 2017, has been adjusted except for income taxes. The income tax rate is 30%.

                        DR                  CR

Accounts receivable, net                $725,000                  

Accounts payable                                        250,000

Accumulated depreciation                                     125,000

Cash               185,000                     

Contributed capital                                      650,000

Expenses                   3,750,000                 

Goodwill                    140,000                     

Prepaid taxes                        225,000                     

Property, plant, and equipment                  850,000                     

Retained earnings, 1/1/2017                                              350,000

Revenues                                           4,500,000

                        5,875,000                  5,875,000

During 2017, estimated tax payments of $225,000 were paid and debited to prepaid taxes. There were no differences between financial statement and taxable income for 2017.

Included in accounts receivable is $400,000 due from a loyal customer. Special terms were granted to this customer to make payments of $100,000 semi-annually every March 1 and September 1.

In JB Company's December 31, 2017 Balance Sheet, what amount should be reported as current assets?

o   935,000

o   910,000

o   1,135,000

o   710,000

Question 19

  Which of the following is an example of an accrued expense?

o   Depreciation expense

o   Property taxes incurred during the year, to be paid in the first quarter of the subsequent year

o   Rent recognized during the period, to be received at the end of the year

o   Office supplies purchased at the beginning of the year and debited to an expense account

Question 20

  The Supplies account had a balance at the beginning of year 3 of $7400 (before the reversing entry). Payments for purchases of supplies during year 3 amounted to $54600 and were recorded as expense. A physical count at the end of year 3 revealed supplies costing $14100 were on hand. Reversing entries are used by this company. The required adjusting entry at the end of year 3 will include a debit to:

o   Supplies for $14100.

o   Supplies Expense for $6700.

o   Supplies for $6700.

o   Supplies Expense for $47900.

Question 21

 An adjusted trial balance

o   Is a required financial statement under generally accepted accounting principles.

o   Cannot be used to prepare financial statements.

o   Is prepared after the financial statements are completed.

o   Proves the equality of the debit balances and credit balances of ledger accounts after all adjustments have been made.

Question 22

 Which of the following statements is true about the accrual basis of accounting?

o   Revenues are recognized in the period the performance obligation is satisfied, regardless of the time period the cash is received.

o   The timing of cash receipts and disbursements is emphasized.

o   A minimal amount of record keeping is required in accrual basis accounting compared to cash basis.

o   This method is used less frequently by businesses than the cash method of accounting.

Question 23

 Which of the following must be considered in estimating depreciation on an asset for an accounting period?

o   The original cost of the asset

o   Its useful life

o   The decline of its fair value

o   Both the original cost of the asset and its useful life

Question 24

Blossom Company has a tax rate of 30 percent and income before non-operating items of $1784000. It also has the following items (gross amounts).

Unusual gain $ 110000

Loss from discontinued operations           914000

Dividend revenue    29000

Income increasing prior     

   period adjustment 360000

What is the amount of income tax expense Blossom would report on its income statement?

o   $542400

o   $576900

o   $302700

o   $410700

Question 25

 Gains and losses identified as other comprehensive income have the same status as traditional gains and losses under

o   Both the one statement and two statement approaches.

o   Neither the one statement or two statement approaches.

o   The one statement approach.

o   The two statement approach.

Question 26

 What might a manager do during the last quarter of a fiscal year if she wanted to improve current annual net income?

o   Increase research and development activities.

o   Relax credit policies for customers.

o   Delay shipments to customers until after the end of the fiscal year.

o   Delay purchases from suppliers until after the end of the fiscal year.

Question 27

 Which one of the following types of losses is excluded from the determination of net income in income statements?

o   Material losses resulting from correction of errors related to prior periods.

o   Material losses resulting from the write-off of intangibles.

o   Material losses resulting from unusual sales of assets not acquired for resale.

o   Material losses resulting from transactions in the company's investments account.

Question 28

.Earnings per share is computed as net income, $500,000 less dividends on preferred stock, $60,000 divided by 100,000 weighted average common stock shares outstanding, or $4.40.

Reddaway Corporation reports the following information:

Net income    $500,000

Dividends on common stock          140,000

Dividends on preferred stock        60,000

Weighted average common shares outstanding  100,000

Reddaway should report earnings per share of

o   $3.60.

o   $4.40.

o   $5.00.

o   $3.00.

Question 29

 Which of the following is included in comprehensive income?

o   Changes in accounting principles.

o   Investments by owners.

o   Unrealized gains on available-for-sale securities.

o   Distributions to owners.

Question 30

 $253,000 is incorrect. This calculation includes the purchase discounts, which is incorrect. Total revenue is only the $250,000 in sales.

In Dart Co.'s year two single-step Income Statement, as prepared by Dart's controller, the section titled "Revenues" consisted of the following:

Sales               $250,000

Purchase discounts              3,000

Recovery of accounts written off              10,000

Total revenues                      $263,000

In its year two single-step Income Statement, what amount should Dart report as total revenues?

o   $263,000

o   $253,000

o   $260,000

o   $250,000