Financial Accounting Exam 2
1)	The fundamental accounting equation is a reflection of the:
	Money measurement concept
	Conservatism concept
	Dual-aspect concept
	Historical cost concept
2)
	The historical cost concept reflects the fact that financial accounting practice favors:
	Reliability over relevance
	Management’s best guess over historical financial information
	Relevance over reliability
	Consensus market values over historical financial information
3)
	Jon Sports’ inventory account increased from $25,000 on December 31, 2003 to $30,000 on December 31, 2004. Which one of the following items would be included in the operating section of its 2004 indirect method statement of cash flows?
	Add increase in inventory $5,000
	Subtract increase in inventory ($5,000)
	Add inventory balance $20,000
	Subtract inventory balance ($20,000)
4)
	Turnkey Systems, Inc. began the month of June, 2004 with a prepaid expenses balance of $240,000. During the month, debits totaling $110,000 and credits totaling $80,000 were made to the prepaid expenses account. What was the June, 2004 ending balance of prepaid expenses?
	A debit balance of $210,000
	A credit balance of $210,000
	A debit balance of $270,000
	A credit balance of $270,000
5)
	Pentex and Marbro, small companies in the stationery business, each had a dollar gross margin of $20,000 during September 2004. Pentex’s September sales were twice that of Marbro’s. If Pentex’s gross margin as a percentage of sales for September was 10%, Marbro’s gross margin as a percentage of sales for the same period was:
	10%
	5%
	20%
	Cannot be calculated
6)
	When an entity recognizes revenue before it has received cash for the sale, it records an increase in a(n):
	Liability such as ‘Advances from customers’
	Accounts payable
	Accounts receivable
	Prepaid expense
7)
	Juan Foods pays off a long-term debt in full. Which one of the following statements describes the effect of the sale on Juan Foods?
	Current ratio increases; total debt to equity ratio decreases
	Current ratio decreases; total debt to equity ratio decreases
	Current ratio decreases; total debt to equity ratio increases
	Current ratio increases; total debt to equity ratio increases
8)	On January 1, 2005, Mansfield Company has a retained earnings balance of $256,000. During 2005, its net income is $44,000 and it announces and pays $12,000 in dividends. There is no other dividend-related activity during the year. Its December 31, 2005 retained earnings balance is:
	$212,000
	$288,000
	$300,000
	$224,000
9)
	Juan Foods makes a cash sale with a positive gross margin. Which one of the following statements describes the effect of the sale on Juan Foods?
	Current ratio increases
	Current ratio decreases
	No change to Juan Foods’ current ratio
	Insufficient information to judge effect on current ratio
10)
	Juan Foods pays off a long-term debt in full. Which one of the following statements best describes the appropriate book-keeping for this transaction?
	Debit cash; credit long-term debt
	Debit long-term debt; credit owners’ equity
	Debit owners’ equity; credit long-term debt
	Debit long-term debt; credit cash
11)
	On March 31, 2005, Cars, Inc. owes Preston Devices, one of its suppliers, $25,000 for previous purchases. During April 2005, Preston sells Cars devices with a sales price of $10,000 and a cost to Preston of $8,000. During April Cars pays Preston $12,000 against the amount owed to Preston. What is the effect of these April transactions on Preston’s balance sheet?
	Cash increased by $12,000; accounts receivable decreased by $2,000; inventory decreased by $8,000; retained earnings increased by $2,000.
	Accounts receivable increased by $2,000; inventory decreased by $8,000; cash increased by $12,000; retained earnings increased by $12,000.
	Cash increased by $12,000; retained earnings decreased by $2,000; inventory decreased by $10,000; accounts receivable decreased by $12,000.
	Cash increased by $2,000; accounts receivable decreased by $2,000; inventory decreased by $8,000; retained earnings decreased by $12,000.
12)
	Consider the same scenario as in the previous question: On March 31, 2005, Cars, Inc. owes Preston Devices, one of its suppliers, $25,000 for previous purchases. During April 2005, Preston sells Cars devices with a sales price of $10,000 and a cost to Preston of $8,000. During April Cars pays Preston $12,000 against the amount owed to Preston. If Preston had no other sales and records no other collections from customers during the month of April, the operating section of Preston’s indirect method statement of cash flows for April will show the following de-accrual adjustments to net income:
	Subtract change in accounts receivable; add change in inventory.
	Add change in accounts receivable; subtract change in inventory
	Add change in accounts receivable; add change in inventory.
	Subtract change in accounts receivable; subtract change in inventory.
13)
	Planet Music buys all of its inventory on credit. During 2005, Planet Music’s inventory account increased by $10,000. Which of the following statements must be true for Planet Music during 2005?
	It made payments of less than $10,000 to suppliers.
	It made cash payments of $10,000 to suppliers.
	It made more cash payments to its suppliers than it recorded as cost of goods sold.
	It paid less cash to suppliers than it recorded as cost of goods sold.
14)	On December 31, 2005, Juan Foods purchases a van for $12,000. How does the purchase of the van affect Juan Foods’ 2005 income statement?
	Decreases sales by $12,000
	Increases operating expenses by $12,000
	No material effect
	Increases cost of goods sold by $12,000
15)
	To be recorded as a liability, an item must meet three specific conditions. Two of them are: it must involve probable future sacrifice of economic resources by the entity, and it must be a present obligation that arose as a result of a past transaction. Which one of the following is the third condition?
	The item must reduce the market value of the recording entity
	It must involve a transfer of resources to another entity
	It must involve the expenditure of cash now or in the future
	It must not cause total liabilities to exceed total assets
16)	The next 9 questions are based on Patnode Inc.’s balance sheets at year end 2004 and 2005.
	During 2005, Patnode announced and paid dividends of $1,000, the only dividend-related activity during the year. What was its 2005 net income?
	$5,600
	$3,600
	$4,600
	Cannot be estimated
17)
	During 2005, Patnode had a cash outflow of $15,000 for investing activities and a cash inflow of $7,000 from financing activities. Its 2005 cash flow from operations was:
	Outflow of $15,000
	Inflow of $15,000
	Outflow of $8,000
	Inflow of $8,000
18)
	Patnode’s 2005 statement of cash flows contains four items in the financing section. Three of them are: Short-term debt issued, $15,000; Short-term debt paid, ($10,000) and Dividends paid, ($1,000). What is the fourth item in the financing section?
	Retained earnings, $4,600
	Common stock issued, $3,000
	Long-term debt paid, ($3,000)
	Cash from financing, $3,000
19)
	How much total depreciation and amortization expense did Patnode record during 2005?
	$10,000
	$6,000
	$3,000
	$5,000
20)
	During 2005, Patnode recorded sales of $17,000. How much cash did it collect from its customers?
	$17,000
	$14,000
	$3,000
	Cannot be estimated
21)
	Which one of the following items will not appear in the operating section of Patnode’s 2005 indirect method cash flow statement?
	Deduct: increase in accounts receivable $3,000
	Add: decrease in accounts payable $1,000
	Add: increase in taxes payable $2,400
	Add: decrease inventories $6,000
22)
	What is Patnode’s current ratio at the end of 2004?
	2.46
	0.41
	1.12
	0.89
23)
	What is Patnode’s total debt to equity ratio at the end of 2004 (rounded to two decimal places)?
	5.3
	0.19
	0.25
	4.04
24)
	Patnode recorded a 2005 tax expense of $3,000. What amount did it pay to the tax authorities during 2005?
	$2,400
	$7,000
	$600
	$5,400
25)
	Kirby, Inc. records a sale with a gross margin of $1,400. Which one of the following statements correctly describes the effect of such a sale on its balance sheet?
	Common stock increases by $1,400
	The sales revenue account increases by $1,400
	The gross margin account increases by $1,400
	The retained earnings account increases by $1,400
26)
	Sandy Robbins is the sole owner of a hair salon. He often takes small amounts of “lunch money” from the cash register, figuring that “it is my business anyway.” His accountant, however, insists that Sandy make a note of the cash he takes, and at the end of the each accounting period, she debits owners’ equity and credits the cash account for the total amount that Sandy has taken during the period.
	In recording the cash withdrawals even though Sandy is sole proprietor, the accountant is correctly applying the:
	Matching concept
	Entity concept
	Materiality concept
	Conservatism concept
27)
	Anderson Electronics’ 2005 return on sales percentage is 20%. Its 2005 net income is $40,000. What is its 2005 sales?
	$400,000
	$80,000
	$200,000
	$100,000
28)
	Anderson Electronics’ 2005 return on sales percentage is 20%. Its 2005 net income is $40,000. What is its 2005 sales?
	$400,000
	$80,000
	$200,000
	$100,000
29)
	During June 2005, Bextra Inc. recorded sales of $55,000 but only $20,000 was collected in cash from customers. Cost of goods sold of $38,000. What was the effect of these sales on Bextra’s current ratio?
	Current ratio increases
	Current ratio decreases
	Current ratio remains unchanged
	Insufficient information provided to judge effect on current ratio
30)
	Which one of the following statements is not true about statements of cash flows prepared according to U.S. GAAP?
	The operating section of the indirect method starts with the net income of the period
	In the indirect method statement, the period’s depreciation is added to net income because it is a source of cash
	Interest payments are included in the operating section of the direct method statement
	The investing section of the direct method statement for a period is identical to the investing section of the indirect method statement for the same period
31)
	A company raised $50,000 in cash by taking a one-year loan of $10,000 and a 5-year loan of $40,000. Which of the following is the correct journal entry to record this transaction?
	Debit short-term debt $40,000; debit retained earnings $10,000; credit cash $50,000
	Debit short-term debt $50,000; credit cash $50,000
	Debit cash $50,000; credit long-term debt $50,000
	Debit cash $50,000; credit short-term debt $10,000; credit long-term debt $40,000
32)
	Which one of the following statements describes the rules about posting transactions into T-accounts in the ledger?
	For assets, debits are entered on the left; for liabilities, credits are entered on the left
	For assets, credits are entered on the left; for liabilities, debits are entered on the left
	Debits on the left; credits on the right
	Credits on the left; debits on the right
33)
	Baxtra, Inc. pays $20,000 in cash as interest to its lenders during 2005. According to U.S. GAAP, in which section of the statement of cash flows would this payment be included?
	The operating section
	The financing section
	The investing section
	Depends on whether cash flow statement is direct or indirect method.
34)
	Taylor Company had a salaries payable balance of $18,000 on December 31, 2004. During 2005, it paid $50,000 in cash as salaries, and recorded a salary expense of $50,000. Its December 31, 2005 salaries payable balance is:
	$50,000
	$18,000
	$100,000
	Cannot be determined from the information provided
35)
	On April 30, 2005, Zono Electronics, Inc. made a payment of $3,500 to Imperial Distributors, a supplier. Choose the statement that best describes the recording of this financial transaction by Imperial Distributors.
	Debit cash $3,500; credit accounts payable $3,500
	Debit accounts receivable $3,500; credit cash $3,500
	Debit accounts payable $3,500; credit cash $3,500
	Debit cash $3,500; credit accounts receivable $3,50
36)
	Sardi Company estimates its 2005 tax expense to be $80,000. It makes a cash payment of $20,000 to the tax authorities on December 31, 2005. How should this transaction be recorded by Sardi?
	Debit tax expense $80,000; credit cash $60,000; credit taxes payable $20,000
	Debit tax expense $80,000; credit cash $20,000; credit taxes payable $60,000
	Debit tax expense $80,000; credit cash $20,000
	Debit tax expense $80,000; credit cash $20,000; credit accounts payable $60,000
37)
	On June 1, 2005, Planet Music has accounts payable of $45,000. During the month, debits of $3,000 and credits of $11,000 were made to the account. At the end of June 2005, what was the accounts payable balance?
	A credit balance of $53,000
	A debit balance of $42,000
	A credit balance of $56,000
	A debit balance of $53,000
38)
	Barnaby & Sons receives a large shipment of goods from its supplier. It pays $58,000 at the time of delivery and promises to pay the remaining $42,000 within the next two months. What is appropriate journal entry for this transaction?
	Debit cash $42,000; debit inventory $16,000; credit accounts payable $58,000;
	Debit inventory $100,000; credit cash $58,000; credit accounts payable $42,000
	Debit accounts payable $58,000; credit cash $42,000; credit inventory $16,000
	Debit accounts payable $58,000; debit cash $42,000; credit inventory $100,000
39)
	Annie’s Fitness sells a set of free weights to a customer for $1,000. The customer pays $600 in cash and puts the rest on her store credit account. Which one of the following statements describes the most appropriate accounting for the transaction?
	Debit cash $600; debit accounts receivable $400; credit cost of good sold $1000
	Debit cash $600; debit accounts receivable $400; credit revenues $1,000
	Debit revenues $1,000; credit cash $600; credit accounts receivable $400
	Debit cash $600; debit accounts receivable $400; credit inventory $1,000
40)
	Annie’s Fitness sells a set of free weights to a customer for which Annie’s had paid $750. Which one of the following statements describes the most appropriate accounting for the transaction?
	Debit cost of goods sold expense $750; credit cash $750
	Debit inventory $750; credit cost of goods sold expense $750
	Debit cost of goods sold expense $750; credit inventory $750
	Debit inventory $750; credit accounts payable $750

Assignment Brief and Guidance

In two or three paragraphs, describe where you would “like to be” financially in 10 years.  Include things like your career preparation/opportunities, housing, transportation and (generic) family situation.  (The purpose is to have you give this issue thought, not to pry.)

After describing what you’d like, assess your probability of getting there?  Do you see any major barriers, or are you already on the right track?  Other than pursuing higher education (which, by the way, tends to be a very wise investment over the years), what changes/initiatives or steps do you intend to take in order to help make your plans a reality?

Submission Format

1. The length of your response is conditional on the question. Answer fully, but concisely.
2. Your submissions should be submitted via the assignment dropbox in .doc or .docx format, using 12 pt type and double spacing.
3. Late submissions will not be accepted, absent documented circumstances that made submission impossible.

____________________________________________________________________

 

While it is usually a frivolous (if fun) exercise to think too much about the lottery, it does illustrate the mechanics of an annuity (a form of insurance or investment entitling the investor to a series of annual sums.). To answer the following questions, visit the Powerball website (Powerball.com) for this week and use information in your book, and information available from the web.

1. What are the current jackpot (paid in 30 equal annual payments) and the cash payout value? (5 pts.)
2. Assuming you could invest the entire cash payout at a guaranteed, insured rate of 2% a year, what would your annual return total? (5 pts.)
3. Which option would you take?  Explain your choice. (10 pts.)

Submission Format

1. The length of your response is conditional on the question. Answer fully, but concisely.
2. Your submissions should be submitted via the assignment dropbox in .doc or .docx format, using 12 pt type and double spacing.
3. Late submissions will not be accepted, absent documented circumstances that made submission impossible.

______________________________________________

 

Assignment Brief and Guidance

Using the tax form, instructions and info attached, answer the following questions.

1. Assume you are a single person with no dependents who made $35,000.00  from your primary job and an additional $5,500.00 from a part time position.  You had a total of $7,700 dollars withheld in taxes (from both jobs combined) and will take the standard deduction.

Will you get a refund or will you have to pay more tax?  (5 pts.)

What is the amount of the refund/payment?  (5 pts.)

1. Using the tax tables on page 90 of the instructions, assume a single person has a taxable income of $382,000.00.

What will the single person’s total tax be?  (5 pts.)

What is the single person’s effective tax rate?  (5 pts.)

Submission Format

1. The length of your response is conditional on the question. Answer fully, but concisely.
2. Your submissions should be submitted via the assignment dropbox in .doc or .docx format, using 12 pt type and double spacing.
3. Late submissions will not be accepted, absent documented circumstances that made submission impossible.

Due DateFeb 18, 2018 11:59 PMAttachments2016 1040 Instructions.pdf (3.05 MB)2016 Form 1040.pdf (188.03 KB)Download All Files

________________________________________

Assignment 8Instructions

Assignment Brief and Guidance

A person’s credit score is becoming a very important part of their life, being used not only to evaluate lending capacity, but often used in decisions like hiring and renting/leasing housing.  Access your free credit score using this link:

https://www.ftc.gov/faq/consumer-protection/get-my-free-credit-report

Please DO NOT share your score, but write a 1 to 2 paragraph response stating if you are content with it and whether or not it accurately reflects your current status.  What could you do to improve it (if anything)?  Remember, this is a fluid measure that can change. (20 pts.)

Submission Format

1. The length of your response is conditional on the question. Answer fully, but concisely.
2. Your submissions should be submitted via the assignment dropbox in .doc or .docx format, using 12 pt type and double spacing.
3. Late submissions will not be accepted, absent documented circumstances that made submission impossible.

___________________________________________

Hide Submission Folder InformationSubmission FolderAssignment 9Instructions

Assignment Brief and Guidance

The big advantage to owning a home is that eventually (hopefully around retirement), you will no longer have a monthly payment for housing (although you will always have taxes and upkeep.)  That said, home ownership is not always the good move.

Do you own, or hope to own in the near future?  If not, what are your reasons for preferring to rent/lease?  (20 pts.)

Submission Format

1. The length of your response is conditional on the question. Answer fully, but concisely.
2. Your submissions should be submitted via the assignment dropbox in .doc or .docx format, using 12 pt type and double spacing.
3. Late submissions will not be accepted, absent documented circumstances that made submission impossible.

_____________________________________

Assignment 12Instructions

Assignment Brief and Guidance

Conduct an internet search on Risk Tolerance Quiz (or Questionnaire).  There are plenty to choose from, but you’re encouraged to use one from a name you are somewhat familiar with.  Take the quiz, then share your results in a paragraph or two.

What instrument did you use? (Copy and paste the url to the site into your response.)  How tolerant or adverse to risk are you?  Do you think that will always be your nature or is it a function of “where you are” in your life right now?  Do you exhibit the same type of tendencies in areas other than investing?  Do you follow your natural inclination, or do you try to approach risks logically?  (20 pts.)

Submission Format

1. The length of your response is conditional on the question. Answer fully, but concisely.
2. Your submissions should be submitted via the assignment dropbox in .doc or .docx format, using 12 pt type and double spacing.
3. Late submissions will not be accepted, absent documented circumstances that made submission impossible.

____________________________________

Hide Submission Folder InformationSubmission FolderAssignment 14Instructions

Assignment Brief and Guidance

Use the internet to find a site or video that explains how to read stock quotations.  Investopedia is one of the best, and there are several videos on YouTube.  While different publications use different formats, the basic info is the same.  After you have read the chapter and conducted your research, answer the following questions related to the stock quotation attached. (4 pts each)

Assume the quotations appeared in the Tuesday morning newspaper.

 What is the least you could have purchased one share of Aaron’s Inc. for in the past year?
What is the most one share of AAR CORP could have cost you in the past year?
What is the most one share of Abbot Lab traded for on Monday?
What was the closing price on Monday for AbbVie?
What will ABB ADR close at Tuesday?

Submission Format

1. The length of your response is conditional on the question. Answer fully, but concisely.
2. Your submissions should be submitted via the assignment dropbox in .doc or .docx format, using 12 pt type and double spacing.
3. Late submissions will not be accepted, absent documented circumstances that made submission impossible.

Due DateApr 15, 2018 11:59 PMAttachmentsStock Quotations.pdf (4.66 KB)Download All Files

_____________________________________________________

Assignment 15Instructions

Assignment Brief and Guidance

You’ve read about bonds, and should understand that they are basically agreements where you loan your money to a company (or other entity) who pays interest while it uses your money, then repays the principal.

If you were going to lend money to a company, which one would you choose and why?  Remember, the bigger and safer the company, the lower the return; but if a company is too risky, you might lose everything.  That said, what company out there do you think would be a good candidate to borrow money from you?

Submission Format

1. The length of your response is conditional on the question. Answer fully, but concisely.
2. Your submissions should be submitted via the assignment dropbox in .doc or .docx format, using 12 pt type and double spacing.
3. Late submissions will not be accepted, absent documented circumstances that made submission impossible.