ACCT101 Final Exam Maraged 2021-2022 PDF

ACCT101 final | 1st semester 2021-2022 Multiple Choice Question 1- Which of the following accounts is found on the income statement? A. unearned revenue B. common stock C. retained earnings D. salaries expense Answer: D 2- If liabilities are SR50,000 and assets are SR100,00...

ACCT101 final | 1st semester 2021-2022 Multiple Choice Question 1- Which of the following accounts is found on the income statement? A. unearned revenue B. common stock C. retained earnings D. salaries expense Answer: D 2- If liabilities are SR50,000 and assets are SR100,000 then equity equals: A. 0.5 B. 50,000 C. 150,000 D. 2 Answer: B 3- A debit is used to record: A. An increase in a revenue account B. An increase in an asset account C. An increase in an accounts payable account D. An increase to retained earnings Answer: B pg. 1  ACCT101 final | 1st semester 2021-2022 4- The right side of a T-account is a(n): A. debit B. increase C. decrease D. credit Answer: D 5- During the process of closing entries, revenues are initially closed to the: A. Retained Earnings account B. Adjusted trial balance C. journal D. Income summary account Answer: D 6- The inventory valuation method that tends to smooth out erratic changes in costs is: A. FIFO B. weighted average C. LIFO D. specific identification Answer: B 7- Adjusting entries are normally done: A. At the end of the period pg. 2  ACCT101 final | 1st semester 2021-2022 B. At the beginning of the period C. When liabilities are higher than assets D. When assets are higher than liabilities Answer: A 8- The cost value of a particular product is SR45,000 and market value is SR50,000. Following Lower-of-Cost-or-Market Value rule, the final invents clue will be: A. 45,000 B. 50,000 C. 5,000 D. 95,000 Answer: A 9- On June 5th ABC Inc. purchased SR35,000 of merchandise inventory on Account subject to credit terms 3/14,n/30. They paid the amount by 17th June, their cash payment will be: A. 35,000 B. 33,950 C. 1050 D. 0 Answer: B 10- Sales less sales discounts less sales returns and allowances equals: A. net sales B. gross profit pg. 3  ACCT101 final | 1st semester 2021-2022 C. net income D. net purchases Answer: A 11- The entry that is necessary to establish a petty cash fund should include which of the following: A. A debit to Cash and a credit to Petty Cash B. A debit to Cash and a credit to Petty Cash Over and Short C. A debit to Petty Cash and a credit to Accounts Receivable D. A debit to Petty Cash and a credit to Cash Answer: D 12- ABC Co. estimates from past experience that about 2.5% of credit sales become uncollectible. If credit sales are SR500.000 and accounts receivables are SR720,000 then bad debt expenses would be A. 12,500 B. 18,000 C. 14,700 D. 13,400 Answer: A 13- An equipment was purchased for SR500,000 and is expected to have a useful life of 9 years and salvage value of SR50,000. The depreciation expense using straight-line method for one year will be: A. 50,000 B. 61,111 pg. 4  ACCT101 final | 1st semester 2021-2022 C. 450,000 D. No depreciation expense Answer: A 14- The most common method used to prepare statement of cash flow is: A. direct method B. single step method C. indirect method D. multiple step method Answer: C 15- A company purchased a building for SR450,000 and paid SR50,000 to a lawyer to obtain the required papers. Also, they paid 5012.000 for brokerage fees. Then, the cost of the building is: A. 450,000 B. 500,000 C. 512,000 D. 462,000 Answer: C 16- To pay cash dividends, a company must have A. Sufficient balance in retained earnings B. Liabilities more than equity C. Positive investing activities D. Preferred stocks pg. 5  ACCT101 final | 1st semester 2021-2022 Answer: A 17- If the book value of the disposed asset is less than the cash received, the company will record: A. loss B. gain C. nothing D. expense Answer: A 18- The statement of cash flows reports: A. Assets, liabilities and equity B. Revenues, gains, expenses and losses. C. Equity, net income and dividends. D. Cash inflows and outflows for an accounting period. Answer: D 19- A corporation issues 1,000 shares of SR5 par value common stock for SR12 cash per share, the entry to record this transaction includes A. A credit to common stock for SR 12,000. B. A credit to paid-In capital for SR 5,000 C. A debit to cash for 5R12,000. D. A debit to Cash for 5,000 Answer: C pg. 6  ACCT101 final | 1st semester 2021-2022 20- The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is: A. Operating activities. B. Financing activities C. Investing activities. D. Schedule of noncash investing or financing activity. Answer: B 21- The appropriate section in the statement of cash flows for reporting the purchase of equipment is: A. Operating activities. B. Financing activities C. Investing activities. D. Schedule of noncash investing or financing activity. Answer: C 22- The accounting equation is: A. Sales=Cost of goods sold B. Net income=Retained earnings C. Assets=Liabilities+Equity D. Revenue=Expenses+Dividends Answer: C 23- The advantages of allowing customers to use credit cards include: A. Sales increase by providing purchase options to the customer. pg. 7  ACCT101 final | 1st semester 2021-2022 B. Having bad debts C. Losing customers D. Cash collections are slower Answer: A 24- The useful life of a plant asset is: A. Its productive life, but not to exceed one year B. Fixed for all assets C. Never related to its physical life D. The length of time it is used productively in a company's operations Answer: D 25- A trial balance prepared before any adjustments have been recorded is: A. An adjusted trial balance B. An unadjusted trial balance C. Used to prepare financial statements D. Correct with respect to proper balance sheet and income statement amounts Answer: B pg. 8  ACCT101 final | 1st semester 2021-2022 Essay Questions | short answers 1- List the four financial statements: 1- Income statement: An income statement is a report that shows how much revenue a company earned over a specific time period. Also shows the costs and expenses associated with earning that revenue. It is prepared by listing all revenues, then listing all expenses, and deducting the two to get net income or net loss. 2- Statement of retained earnings: Most income statements include a calculation of earnings per share or EPS. This calculation tells you how much money shareholders would receive for each share of stock they own if the company distributed all of its net income for the period. To calculate Retained earnings, we start with the beginning balance, we add to that the net income and then we subtract the dividends, to get the ending balance of Retained Earnings. This account is them transferred to the balance sheet. 3- Balance sheet: provides detailed information about a company’s assets, liabilities and shareholders’ equity. To prepare it, we list all the assets, current and noncurrent, and find the total for those assets, then we list all the liabilities, and all the equity, starting with common stock and entering the balance of Retained Earnings underneath, then find the total of liabilities and equity, in which they should be equal to the assets total. 4- Statement of cash flows: Cash flow statements report a company’s inflows and outflows of cash. This is important because a company needs to have enough cash on hand to pay its expenses and purchase assets. While an income statement can tell you whether a company made a profit, a cash flow statement can tell you whether the company generated cash. 2- When a company wants to determine whether the measures of the financial statements information indicates good or bad performance, there are standards of the comparison, mention two of these standards. Answer: pg. 9  ACCT101 final | 1st semester 2021-2022 When interpreting measures, we need to decide whether the measures indicate good, bad, or average performance. We can use the following to make that judgment: 3- Company receives a 10%, 90-day note for SR 1,500. What is the total interest due upon the maturity date? (Assuming 360 Days in a Year). Answer: Interest on notes = amount on note * interest rate * time on note\360 = 1,500 * 10% * 90\360 = 37.5 4- What is the definition of accounting? Answer: Accounting is a system that Communicates information that is Relevant Reliable Comparable about an organization’s business activities. 5- A company maintains a petty cash fund of 500, what is the amount required if the remaining is 230? Answer: Beginning balance – ending balance = amount required to replenish petty cash fund 500 – 230 = 270 So the remaining is 270 pg. 10  ACCT101 final | 1st semester 2021-2022 Essay Questions | long answers 1- List and describe the four inventory valuation methods. Answer: 1) FIFO: stands for First-In, First-Out a method that assumes costs flow in the order incurred. In this, merchandise that is bought first, will be sold first. 2) LIFO: stands for Last-In, First-Out Assumes costs flow in the reverse order incurred. So merchandise bought last, will be sold first. 3) Weighted Average this method assumes costs flow at an average of the costs available. In this method, we calculate the average cost, and use that amount. This method tends to smooth out price changes. 4) Specific identification: in this method, management decides which of each merchandise is to be sold, at what quantity and at which price. 2- Prepare multi-step income statement for ABC Co. for end of year 2020 using the following information Net sales 1,000,000 advertising expense 50,000 Cost Of Goods Sold 300,000 utilities expense 10,000 Salaries expense 50,000 Answer: ABC Co. Income statement End of year 2020 Net sales 1,000,000 Less: COGS 300,000 = Gross profit 700,000 Less: operating expenses Advertising expense 50,000 Utilities expense 10,000 Salaries expense 50,000 Total operating expense 110,000 Net income 590,000 pg. 11  ACCT101 final | 1st semester 2021-2022 3- Calculate net cash provided by operating activities, and prepare partial statement of cash flows for operating activities using the following information: Net income 100,000 Increase in accounts payable 3,000 Depreciation expense 30,000 Decrease in accounts receivables 9,000 Answer: Net cash = net income + losses – gains + depreciation expense +\- change in current assets and liabilities Net cash = 100,000 + 30,000 +9,000 + 3,000 = 142,000 Partial statement of cash flows flows Cash flows from operating activities Net income 100,000 Add: depreciation expense 30,000 Decrease in A\R 9,000 Increase in A\P 3,000 Total adjustments 42,000 Net cash from operating activities 142,000 Note: the answers to the essay questions are a mix of copied text from the slides and personal effort. You do not have to type it the same way it is or type the entirety of it. Wording for some of the essay questions may differ Best of luck. ~Lowercase intended~ Made and solved by Bonnie Fouzou Reviewed by Bonnie F, Abdulrahman, A.K.W. and ‘ pg. 12 Multiple choice type Questions. From the following chose the correct Answer 1. An Asset is: (a) only acquired with cash (b) something the company owns (c) only contributed by stockholders (d) a company’s obligation to pay 2. Which of the following elements are found on the Balance Sheet? (a) Service Revenue (b) Net Income (c) Utilities Expense (d) Retained Earnings 3. During the month of February, Hoffer Company had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the January 31 beginning cash balance? (a) $700 (b) $1,100 (c) $2,900 (d) $0 Feedback: X + $7,500 - $8,600 = $1,800 4. Stride Rite has total assets of $425 million. Its total liabilities are $110 million. Its equity is $315 million. Calculate the debt ratio. A. 38.6% B. 13.4% C. 34.9% D. 25.9% Feedback: $110/$425 = 25.9% 5. The difference between the cost of an asset and the accumulated depreciation for that asset is called (a) Depreciation Expense (b) Unearned Depreciation (c) Book Value (d) Depreciation Value 6. A merchandising company: (a) Earns net income by buying and selling merchandise (b) Receives fees only in exchange for services (c) Earns profit from commissions only (d) Earns profit from fares only 1 7. A company had sales of $695,000 and its cost of goods sold of $278,000. Its gross margin equals: (a) $417,000 (b) $695,000 (c) $278,000 (d) $417,000 Feedback: $695,000 - $278,000 = $417,000 8. Merchandise inventory includes: (a) All goods owned by a company and held for sale (b) All goods in transit (c) All goods on consignment (d) Only damaged goods 9. The inventory valuation method that tends to smooth out erratic changes in costs is: (a) FIFO (b) Weighted average (c) LIFO (d) Specific identification 10. Mattel had net sales of $4,235 million and ending accounts receivable of $775 million its days' sales uncollected is equal to: (a) 298 days (b) 66.8 days (c) 19.4 days (d) 81.8 days Feedback: ($775/$4,235) x 365 = 66.8 days 11. Cash equivalents: (a) Include savings accounts (b) Include checking accounts (c) Are short-term investments sufficiently close to their maturity date that their value is not sensitive to interest rate changes (d) Include time deposits 12. The person who signs a note receivable and promises to pay the principal and interest is the: (a) Maker (b) Payee (c) Holder (d) Receiver 13. The interest accrued on $3,600 at 7% for 60 days is: (a) $36 (b) $42 (c) $252 2 (d) $180 Feedback: $3,600 x 0.07 x 60/360 = $42 14. A company has net sales of $870,000 and average accounts receivable of $174,000. What is its accounts receivable turnover for the period? (a) 0.20 (b) 5.00 (c) 20.0 (d) 73.0 Feedback: $870,000/$174,000 = 5 15. The useful life of a plant asset is: (a) The length of time it is used productively in a company's operations (b) Never related to its physical life (c) Its productive life, but not to exceed one year (d) Determined by the FASB 16. Total asset turnover is calculated by dividing: (a) Gross profit by average total assets (b) Average total assets by gross profit (c) Net sales by average total assets (d) Average total assets by net sales 17. Obligations due to be paid within one year or within the company's operating cycle, whichever is longer, are: (a) Current assets (b) Current liabilities (c) Earned revenues (d) Operating cycle liabilities 18. The difference between the amount received from issuing a note payable and the amount repaid is referred to as: (a) Interest (b) Principle (c) Face Value (d) Cash 19. A company must repay the bank $10,000 cash in 3 years for a loan. The loan agreement specifies 8% interest compounded annually. The present value factor for 3 years at 8% is 0.7938. The present value of the loan is: (a) $10,000 (b) $12,400 (c) $7,938 (d) $9,200 Feedback: $10,000 x 0.7938 = $7,938 3 20. What is the debt to equity ratio for a company who has $700,000 in total liabilities and $3,500,000 in total equity? (a) 20% (b) 5 (c) $2,100,000 (d) 2% Feedback: $700,000/$3,500,000 =.20 21. A company has net income of $850,000. It also has 125,000 weighted-average common shares outstanding and a market value per share of $115. The company's price-earnings ratio is equal to: (a) 16.9 (b) 14.7 (c) 92.0 (d) 13.5 Feedback: $115/($850,000/125,000 shares) = 16.9 22. A company paid $0.48 in cash dividends per share. It has an earnings per share of $4.20 and a market price per share of $30.00. Its dividend yield equals: (a) 1.60% (b) 6.25% (c) 8.75% (d) 11.40% Feedback: $0.48/$30 = 1.6 23. Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as: (a) Financing activities (b) Investing activities (c) Operating activities (d) Direct activities 24. The cash flow on total assets ratio is calculated by: (a) Dividing cash flows from operations by average total assets (b) Dividing total cash flows by average total assets (c) Dividing average total assets by cash flows from investing activities (d) Dividing average total assets by total cash flows 25. External users of financial information: (a) Are those individuals involved in managing and operating the company (b) Include internal auditors and consultants (c) Are not directly involved in operating the company (d) Make strategic decisions for a company 4  Short Essay Questions. Q1.Identify the users and uses of accounting information. Answer: There are two general types of users of accounting information. (1) Internal users are managers and officers of the business. They require information about business activities in order to make decisions about planning, monitoring and control. (2) External users rely on financial statements to make business decisions. These users include lenders and shareholders. Lenders need information for measuring the risk and return of loans. Shareholders need information for assessing the risk and return for owning shares. Q2.Reebok's net income was $180,000; its total assets were $1,050,000; and its net sales were $3,500,000. Calculate the company's profit margin ratio. Answer: $180,000/$3,500,000 = 5.1% Q3.At the end of the current period, a company reported $475,000 in net credit sales and $75,000 in ending accounts receivable. Calculate this company's days' sales uncollected at the end of the current period. Answer: ($75,000/$475,000) x 365 = 57.6 days Q4.Crystal Products allows customers to use bank credit cards to charge purchases. The bank used by Crystal Products processes all bank credit cards in exchange for a 3% processing fee. All credit card receipts deposited are credited to the company account on the day of deposit. Assume that on January 18, Crystal Products sold and deposited $19,000 worth of bank credit card receipts. Prepare the general journal entry to record this transaction. Answer: Jan. 18 Cash 18,430 Credit Card Expense 570 Sales 19,000 Feedback: $19,000 x.03 = $570 Credit Card expense Q5.A company purchased mining property containing 7,350,000 tons of ore for $1,837,500. In 2009 it mined and sold 857,000 tons of ore and in 2010 it mined and sold 943,000 tons of ore. Calculate the depletion expense for 2009 and 2010. What was the book value of the property at the end of 2010? Answer: $1,837,500/7,350,000 tons = $0.25 per ton 2009: 857,000 tons x $0.25 per ton = $214,250 2010: 943,000 tons x $0.25 per ton = $235,750 5 Acquisition cost of ore $1,837,500 Accumulated depletion ($214,250 - $235,750) 450,000 Book value of ore 1,387,500 Long Essay questions Q1.Prepare a November 30 balance sheet in proper form for Green Bay Delivery Service from the following alphabetical list of the accounts at November 30: Accounts receivable $10,000 Accounts payable 18,000 Building 28,000 Common stock 30,000 Cash 8,000 Notes payable 45,000 Office equipment 12,000 Retained earnings ? Trucks 55,000 Answer: GREEN BAY DELIVERY SERVICE Balance Sheet November 30 Assets Liabilities Cash $8,000 Accounts payable $18,000 Accounts receivable 10,000 Notes payable 45,000 Office equipment 12,000 Total liabilities 63,000 Building 28,000 Trucks 55,000 Common stock 30,000 Retained earnings 20,000 Total equity 50,000 Total assets $113,000 Total liabilities and Equity $113,000. Q2:The following information is from Omega Corporation’s balance sheets as of December 31, 2013 and 2014 and its income statement for 2014: 2014 2013 Assets: Cash $ 18,000 $ 22,000 Marketable securities 25,000 0 Accounts receivable 38,000 42,000 Inventory 61,000 52,000 Prepaid insurance 6,000 9,000 Long-term investments 49,000 20,000 Plant assets, net 218,000 225,000 Total assets $415,000 $370,000 6 Net income $ 62,250 Sales (all on credit) 305,000 Cost of goods sold 123,000 Interest expense 15,600 Income tax expense 27,000 From the above information, calculate the following ratios for 2014: (a) Inventory turnover. (b) Accounts receivable turnover. (c) Return on total assets. (d) Times interest earned. (e) Total asset turnover. Answer: (a) Inventory turnover: $123,000/[($61,000+$52,000)/2] = 2.2 times (b) Accounts receivable turnover: $305,000/[($38,000+$42,000)/2] = 7.6 times (c) Return on total assets: $62,250/[($415,000+$370,000)/2] = 15.9% (d) Times interest earned: ($62,250 + $15,600 + $27,000)/$15,600 = 6.7 times (e) Total asset turnover: $305,000/[($415,000+$370,000)/2] = 0.78 times 7 8 ACCT 101 – FINAL EXAM MAY 2020 1. A company's sales in 2010 were SR250,000 and in 2011 were SR287,500. Using 2010 as the base year, the sales trend percent for 2011 is: A. 100% B. 15% C. 87% D. 115% 2. The comparison of a company's financial condition and performance to a base amount is known as: A. Financial reporting B. Vertical analysis C. Horizontal ratios D. Investment analysis 3. The three most common tools of financial analysis are: A. Ratio analysis, horizontal analysis, financial reporting B. Horizontal analysis, vertical analysis, ratio analysis C. Trend analysis, financial reporting, ratio analysis D. Financial reporting, ratio analysis, vertical analysis 1 ACCT 101 – FINAL EXAM MAY 2020 4. The dollar change for a financial statement item is calculated by: A. Subtracting the base period amount from the analysis period amount, dividing the result by the base period amount, then multiplying that amount by 100 B. Subtracting the base period amount from the analysis period amount C. Subtracting the analysis period amount from the base period amount D. Subtracting the analysis period amount from the base period amount, dividing the result by the base period amount, then multiplying that amount by 100 5. Industry standards for financial statement analysis: A. Are set by the financial performance and condition of the company's industry B. Are based on rules of thumb C. Are set by the government D. Are based on a company's prior performance 6. The ability to generate future revenues and meet long-term obligations is referred to as: A. Liquidity and efficiency B. Solvency C. Profitability D. Market prospects 2 ACCT 101 – FINAL EXAM MAY 2020 7. The ability to meet short-term obligations and to efficiently generate revenues is called: A. Profitability B. Market prospects C. Solvency D. Liquidity and efficiency 8. Secured bonds: A. Are subordinated to those of other unsecured liabilities B. Are also referred to as debentures C. Have specific assets of the issuing company pledged as collateral D. Are backed by the issuer's bank 9. A bond traded at 102 ½ means that: A. The bond pays 2.5% interest B. The market rate of interest is 2.5% C. The bonds were retired at SR1,025 each D. The bond traded at SR1,025 per SR1,000 bond 10. Goods in transit are included in a purchaser's inventory: A. If the goods are shipped FOB destination B. When the purchaser is responsible for paying freight charges C. At any time during transit D. After the half-way point between the buyer and seller 3 ACCT 101 – FINAL EXAM MAY 2020 11. Which of the following accounts types would be increased by a debit A. Assets and expense B. Liabilities and expense C. Equity and revenues D. Assets and equity 12. The basic sequence in the accounting process can best be described as: A. Source document, transaction, journal entry, trial balance, ledger account B. Transaction, source document, journal entry, ledger account, trial balance C. Transaction, journal entry, source document, ledger account, trial balance D. Transaction, source document, journal entry, trial balance, ledger account 13. Unearned revenue is reported on the financial statements as: A. A revenue on the balance sheet B. A liability on the balance sheet C. An unearned revenue on the income statement D. An asset on the balance sheet 14. Which equation best represents gross profit? A. gross sales less inventory B. net sales less cost of goods sold C. revenues less expenses D. assets less liabilities 4 ACCT 101 – FINAL EXAM MAY 2020 15. “An adjusting entry is required to record interest expense incurred to date”. Such adjusting entry is done at: A. Maturity date B. Note date C. End of period D. Beginning of period 16. What are intangible assets? A. items that have a useful life of more than 5 years B. items that can be depreciated, such as equipment C. items of value that don’t have a physical form, such as copyrights D. items that are permanent, such as land and buildings 17. A machine with a cost of Sr130,000 and accumulated depreciation of SR85,000 is sold for SR50,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is: A. 5,000 B. 45,000 C. 50,000 D. Zero. This is an operating activity 5 ACCT 101 – FINAL EXAM MAY 2020 18. The most common method used to prepare statement of cash flow is A. Indirect method B. Direct method C. Single step method D. Multiple step method 19. Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as: A. Direct activities B. Operating activities C. Investing activities D. Financing activities 20. The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is: A. Financing activities B. Operating activities C. Investing activities D. Schedule of noncash investing or financing activity 6 ACCT 101 – FINAL EXAM MAY 2020 21. The statement of cash flows reports: A. Revenues, gains, expenses and losses B. Assets, liabilities and equity C. Equity, net income and dividends D. Cash inflows and outflows for an accounting period 22. A company issues 9%, 20-year bonds with a par value of SR750,000. The current market rate is 9%. The amount of interest owed to the bondholders for each semiannual interest payment is. A. 33,750 B. 67,500 C. 0 D. 750,000 23. A bond sells at a discount when the: A. Bond has a short-term life B. Contract rate is above the market rate C. Contract rate is equal to the market rate D. Contract rate is below the market rate 24. When a bond sells at a premium: A. The contract rate is equal to the market rate B. It means that the bond is a zero coupon bond C. The contract rate is below the market rate D. The contract rate is above the market rate 7 ACCT 101 – FINAL EXAM MAY 2020 25. A method that allocates an equal portion of the total depreciable cost for a plant asset to each unit produced is called: A. Straight-line depreciation B. Accelerated depreciation C. Declining-balance depreciation D. Units-of-production depreciation 26. The formula for computing annual straight-line depreciation is: A. Cost plus salvage value divided by the useful life in years B. Cost divided by useful life in years C. Cost less salvage value divided by the useful life in years D. Depreciable cost divided by useful life in units 27. A company purchased property for SR100,000. The property included a building, a parking lot and land. The building was appraised at SR62,000; the land at SR45,000 and the parking lot at SR18,000. The value of the land that will be included in the accounting record is: A. 45,000 B. 36,000 C. 0 D. 42,000 8 ACCT 101 – FINAL EXAM MAY 2020 28. A company's annual accounting period ends on September 30. During the current year a depreciable asset which cost SR16,000 was purchased on January 1. The asset has a SR2,000 estimated salvage value. The company uses straight-line depreciation and expects the asset to have a 4-year life. What is the A. 4,000 B. 2,625 C. 3,500 29. The advantages of allowing customers to use credit cards include: A. Sales increase by providing purchase options to the customer. B. Having bad debts C. Losing customers D. Cash collections are slower 30. A company discarded a display case that it had originally purchased for SAR8,000. The case had SAR7,200 worth of accumulated depreciation. The company should recognize a(n): A. 0 B. 800 Gain C. 8,000 Loss D. 800 Loss 9 ACCT 101 – FINAL EXAM MAY 2020 31. A company had a beginning balance in retained earnings of SR43,000. It had net income of SR6,000 and paid out cash dividends of SR5,625 in the current period. The ending balance in retained earnings account is equal to: A. 12.625 B. 43.375 C. 108.625 D. 11.375 32. A dividend preference for preferred stock means that: A. Preferred stockholders receive their dividends before common shareholders B. Dividends are paid quarterly C. Preferred stockholders prefer dividends more than common stockholders D. Preferred shareholders are guaranteed dividend 33. Owners of preferred stock often do not have: A. The right to sell their stock on the open market B. Voting rights C. Ownership rights to assets of the corporation D. Preference to dividends 10 ACCT 101 – FINAL EXAM MAY 2020 34. Stockholders' equity consists of: A. Contributed capital and par value B. Long-term assets C. Contributed capital and retained earnings D. Retained earnings and cash 35. ……………. reveals information about the stock market’s expectations for a company’s future growth in earning dividends and opportunities. A. Dividend yield B. Book value per common share C. Price earning ratio D. Basic earnings per share 36. when a company sells product on credit, that would result in: A. Debit to the Sales account B. Credit to the Accounts Payable account C. A debit to the Accounts Receivable account D. A credit to the Accounts Receivable account 37. A good system of internal control: A. maintains adequate records B. Urges adherence to global regulations C. Eliminates the need for an audit D. Insures profitable operations 11 ACCT 101 – FINAL EXAM MAY 2020 38. An analysis that explains any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement is a (n): A. Bank reconciliation B. Internal audit C. Bank audit D. Trial reconciliation 39. When replenishing the petty cash fund: A. Cash is credited B. Appropriate expense accounts are credited C. Petty Cash is credited D. Petty Cash is debited 40. A set of procedures and approvals that is designed to control cash disbursements and the acceptance of obligations is referred to as a(n): A. Voucher system B. Internal cash system C. Petty cash system 12 ACCT 101 – FINAL EXAM MAY 2020 41. The income statement includes one of the followings: A. Accounts Receivable B. Unearned Revenue C. Prepaid Expense D. Cost of Goods Sold 42. A trial balance prepared before any adjustments have been recorded is: A. An unadjusted trial balance B. Correct with respect to proper balance sheet and income statement amounts C. Used to prepare financial statements D. An adjusted trial balance 43. A contingent liability: A. Is an obligation not requiring future payment B. Is an obligation arising from the purchase of goods C. Is always of a specific amount D. Is a potential obligation that depends on a future event arising out of a past transaction or event 44. ABC, Inc. pays a cash dividend of SR6,000, what is the journal entry to record this transaction: A. Debit Dividends, Credit Cash B. Debit Cash, Credit Common Stock C. Debit Cash, Credit Retained Earnings D. Debit Common Stock, Credit Cash 13 ACCT 101 – FINAL EXAM MAY 2020 45. Yazeed Co. received its telephone bill in the amount of SR500 and immediately paid it. the general journal entry to record this transaction will include a A. Credit to Accounts Payable for SR500 B. Debit to Cash for SR500 C. Debit to Telephone Expense for SR500 D. Credit to Telephone Expense for SR500 46. Prepaid expenses, depreciation, accrued expenses, unearned revenues and accrued revenues are all examples of: A. Income statement accounts B. Items that require contra accounts C. Items that require adjusting entries D. Asset and equity 47. Which of the following statements is incorrect? A. The normal balance of accounts receivable is a debit B. The normal balance of unearned revenues is a credit C. The normal balance of an expense account is a debit D. The normal balance of dividends is a credit 14 ACCT 101 – FINAL EXAM MAY 2020 48. ABC borrowed SR75,000 cash from XYZ by signing a promissory note. ABC's entry to record the transaction should include a: A. Debit to Accounts Receivable for 75,000 B. Credit to Notes Receivable for 75,000 C. Debit to Notes Receivable for 75,000 D. Credit to Notes Payable for 75,000 49. Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as: A. Financing activities B. Direct activities C. Operating activities D. Investing activities 50. A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and their length of time past due is the: A. Aging of investments method B. Percentage of sales method C. Aging of accounts receivable method D. Direct write-off method 15 ACCT 101 – FINAL EXAM MAY 2020 51. When all of the authorized shares have the same rights and characteristics, the stock is called: A. Common stock B. Par value stock C. Stated value stock D. Preferred stock 52. A company had a beginning balance in retained earnings of SR43,000. It had net income of SR6,000 and paid out cash dividends of SR5,625 in the current period. The ending balance in retained earnings account is equal to: A. 11,375 B. 108,625 C. (12,625) D. 43,375 53. Why is it a matter of good internal control to deposit all cash receipts daily and make all payments for goods and services by check? A. These actions control the access to cash and create an independent record of all cash activities B. These procedures result in a more extensive testing of a company's records C. These procedures allow management to determine if projected cash receipts and disbursements came in over or under budgeted amounts D. When no paper documents are required there is increased convenience and lower cost 16 ACCT 101 – FINAL EXAM MAY 2020 54. Which accounting assumption assumes that all accounting information is reported monthly or yearly? A. Business entity assumption B. Monetary unit assumption C. Cost assumption D. Time period assumption 55. the Balance Sheet includes one of the followings: A. Retained Earnings B. Salaries Expense C. Operating Activities D. Net Income 56. Sales less sales discounts less sales returns and allowances equals: A. Net purchases B. Net Sales C. Net income D. Gross profit 17 ACCT 101 – FINAL EXAM MAY 2020 57. Internal users of accounting information include A. Government regulators B. Customers C. Shareholders D. Line Supervisor 58. The area of accounting aimed at providing financial reports to external users is: A. Financial accounting B. Managerial accounting C. External auditing D. Governmental accounting 59. A company sold SR12,000 worth of trampolines with an extended warranty. It estimates that 2% of these sales will result in warranty work. The company should: A. Consider the warranty expense a remote liability since the rate is only 2% B. Recognize warranty expense and liability in the year of the sale C. Consider the warranty expense a contingent liability D. Recognize warranty expense at the time the warranty work is performed 18 ACCT 101 – FINAL EXAM MAY 2020 60. Which of the following statements is true? A. Dividends to stockholders are tax deductible B. Interest on bonds is not tax deductible C. Bonds don not have to be repaid D. Interest on bonds is tax deductible 61. Bonds that have an option exercisable by the issuer to retire them at a stated dollar amount prior to maturity are known as: A. Convertible bonds B. Callable bonds C. Serial bonds D. Sinking fund bonds 62. Which of the following accounts types would be increased by a debit A. Liabilities and expense B. Assets and equity C. Assets and expense D. Equity and revenue 19 ACCT 101 – FINAL EXAM MAY 2020 63. Current liabilities: A. Expected to come due beyond the accounting period B. Intangible in Nature C. Expected to come due within the accounting period D. Actively used in Operations 64. Recording the items on the financial statements in riyals is: A. Going-concern principle B. Objectively principle C. Cost principle D. Monetary until principle 65. Recording goods purchases at actual cost is in line with: A. Consideration principle B. Monetary unity principle C. Cost principle D. Revenue recognition principle 20 ACCT 101 – FINAL EXAM MAY 2020 66. Resources owned or controlled by a company that are expected to yield benefits are: A. Stockholder’s Equity B. Revenues C. Assets D. Liabilities 67. Prepaid expenses are: A. Decreases in retained earnings B. Promises of payments by customers C. Classified as liabilities on the balance sheet D. Assets that represent prepayments of future expenses 68. Short-term note payable: A. Is the written promise to pay a specified amount on definite future date within on year or the company’s operating cycle, whichever is longer B. Is the contingent liability C. Is an estimated liability D. Is not a liability until the due date 21 ACCT 101 – FINAL EXAM MAY 2020 69. The inventory valuation method that results in the lowest taxable income in a period of inflation is: A. FIFO method B. LIFO method C. Specific identification method D. Weighted-average cost method 70. ABC Corporation uses a LIFO perpetual inventory system. August 2, 25 units were purchased at SR12 per unit. August 5, 10 units were purchased at SR13 per unit August 15, 12 units were sold at SR25 per unit. August 18, 15 units were purchased at SR14 per unit. What was the amount of the Cost of Goods Sold? A. 184.53 B. 163.00 C. 154.00 D. 174.43 22 ACCT 101 – FINAL EXAM MAY 2020 71. XYZ Corporation uses a FIFO perpetual inventory system. August 2, 25 units were purchased at SR12 per unit. August 5, 10 units were purchased at SR13 per unit August 15, 12 units were sold at SR25 per unit. August 18, 15 units were purchased at SR14 per unit. What was the amount of the ending inventory for the month of August? A. 300.00 B. 492.57 C. 496.00 D. 486.00 72. On May 10, Albert Inc. purchased 10,000 of merchandise inventory on Account subject to credit terms 2/10,n/30. He pays the amount by 18th May, his cash payment will be A. 1.000 B. 2.000 C. 200 D. 9.800 23 ACCT 101 – FINAL EXAM MAY 2020 73. XYZ company pays 3.5% service fee to a credit card company, and the cash is deposited immediately to the company's account. If XYZ has SR2,000 in credit card sales, which of the following statements are true? A. XYZ credit Sales SR 1.930 B. XYZ debit Cash SR2.000 C. XYZ debit service fee expense SR70 D. XYZ debits Accounts Receivable – Credit Card Co SR2.000 74. The maturity date of a note receivable: A. Is the day of the credit sale B. Is the day the note is due to be paid C. Is the last day of the month D. Is the day the note was signed 75. The amount of bad debt expense can be estimated by: A. The percent of sales method B. We cannot estimate the bad debt amount since the future is always uncertain C. The percent of accounts payable method D. The aging of sales method 24 ACCT 101 – FINAL EXAM MAY 2020 76. Which of the following is the most serious limitation of internal controls? A. Cybercrime B. Human fraud or human error C. Cost-benefit principle D. Computer error 77. Why is it a matter of good internal control to deposit all cash receipts daily and make all payments for goods and services by check? A. These procedures result in a more extensive testing of a company's records. B. These actions control the access to cash and create an independent record of all cash activities. C. These procedures allow management to determine if projected cash receipts and disbursements came in over or under budgeted amounts. D. When no paper documents are required there is increased convenience and lower cost. 78. The total amount of stock that a corporation's charter allows it to issue is referred to as: A. Common stock B. Preferred stock C. Issued stock D. Authorized Stock 25 ACCT 101 – FINAL EXAM MAY 2020 79. Stockholders' equity consists of: A. Contributed capital and par value B. Long-term assets C. Contributed capital and retained earnings D. Retained earnings and cash 80. A set of procedures and approvals that is designed to control cash disbursements and the acceptance of obligations is referred to as a(n): A. Voucher system B. Petty cash system C. Internal cash system 81. Important Dates related to the payment of dividend A. Date of Declaration B. Date of Record C. Date of Payment D. Date of Declaration Record, Payment 26 ACCT 101 – FINAL EXAM MAY 2020 82. Once the estimated depreciation expense for an asset is calculated: A. It cannot be changed due to the historical cost principle B. It may be revised based on new information C. Any changes are accumulated and recognized when the asset is sold D. The estimate itself cannot be changed, however, new information should be disclosed in financial statement footnotes 83. The useful life of a plant asset is: A. Its productive life, but not to exceed one year B. Fixed for all assets C. Never related to its physical life D. The length of time it is used productively in a company's operations 84. The inventory valuation method that tends to smooth out erratic changes in costs is: A. Weighted average B. FIFO C. LIFO D. Specific identification 85. Merchandise inventory includes: A. All goods owned by a company and held for sale B. All goods in transit C. All goods on consignment D. Only damaged goods 27 ACCT 101 – FINAL EXAM MAY 2020 86. When replenishing the petty cash fund: A. Petty Cash is credited B. Petty Cash is debited C. Appropriate expense accounts are credited D. Cash is credited 87. Advance ticket sales totaling SR6,000,000 cash would be recognized as follows: A. Debit Unearned Revenue, credit Cash B. Debit Unearned Revenue, credit Sales C. Debit Sales, credit Unearned Revenue D. Debit Cash, credit Unearned Revenue 88. Prepaid expenses, depreciation, accrued expenses, unearned revenues and accrued revenues are all examples of: A. Income statement accounts B. Items that require contra accounts C. Items that require adjusting entries D. Asset and equity 28 ACCT 101 – FINAL EXAM MAY 2020 89. A change in an accounting estimate is: A. A change in a calculated amount that is part of financial statements that results from new information or subsequent developments and from better insight or improved judgment B. Retected in future financial statements and also requires modification of past statements C. Retected in past financial statements D. Not allowed under content accounting rules 90. Revenue is properly recognized: A. When the customer's order is received B. At the end of the accounting period C. Upon completion of the sale or when services have been performed and the business obtain them D. to collect the sale price 91. A credit is used to record: A. An increase in an expense account B. An increase in an asset account C. An increase in an accounts payable account D. A decrease to retained earnings 29  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 Essay Question Sales transactions The following transactions are related with HT Ltd. for the month of June, 2018 in reference to account receivable. Prepare necessary journal entries to record the transactions if you know that the company uses perpetual system. Credit sale of $2,500, COGS is $800. Collection of $1,000 on account. Increase in allowance for doubtful accounts in the amount of $250 for estimated Bad-Debts. Write-off of uncollectible account of $180 Bond issuance On January 1st, a company issued 10-year, 9% bonds, with a par value of $500,000 when the market rate was 9.5%. The issuer received $484,087 in cash proceeds. The interest is payable semiannually (on June 30th and December 31st). Prepare the issuer's journal entry to record the issuance of the bonds and the first interest payment on June 30th. In year 2020, ABC company reported the following transactions. May 1st, Purchased 10,500 shares of its own stock at $20 cash per share. June 1st, Sold 3,000 shares of treasury stock for $25 per share. July 1st, Sold 2,500 shares of treasury stock for $18 per share. What are the journal entries required to record these transactions? Tawfiq Co. maintains a petty cash fund of SAR 500. The following summary information was taken from petty cash vouchers for Jan 2015 Travel Expenses SAR 89.30 Customer Business Lunches SAR 29 Express Mail Postage SAR 43.60 Miscellaneous Office Supplies SAR 35.89 Prepare the journal entry to replenish the petty cash fund if the balance on Jan 31 was 304.21. Bond description ACCT101 – FINAL TERM BLUE 72 pg. 1  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 What is a bond? Identify and discuss the three different types of bonds from the following. (Secured, unsecured, term, serial, registered, bearer, callable; and convertible) On August 1, 2018, Abdullah Inc. purchased equipment for SAR 68,000 cash. The equipment has an estimated useful life of 5 year and salvage value at the end of its life as SAR 8000. Record journal entries for: a) Purchase of the equipment. b) Depreciation expense for the year-ended December 31, 2018 using the straight line method. c) If Abdullah sells the equipment at December 31st, 2020 for $45,000. What is the journal entries to record the disposal? Journalizing Ali Accounting Services completed these transactions in March: a. Purchased office supplies on account, $400 b. Completed work for a client on credit, $600 c. Paid cash for the office supplies purchased i n (a) e. Received $300 cash for the work described in (b). f. Received $2,000 from a client for accounting servi ces to be performed in April. Prepare journal entries to record the above transactions. Horizontal analysis The following information was retrieved from RAMOS COMPANY books: RAMOS COMPANY Comparative Balance Sheet December 31, 2012 and 2011 2012 2011 Assets Current assets $ 440 $280 Plant assets 675 520 Total assets $1,115 $800 Liabilities and stockholders' equity Current liabilities $ 280 $120 Long-term debt 250 160 Common stock 325 320 ACCT101 – FINAL TERM BLUE 72 pg. 2  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 Retained earnings 260 200 Total liabilities and stockholders' equity $1,115 $800 Instructions: Using horizontal analysis, show the amount (Dollar) change for each balance sheet item using 2011 as a base year Cash flow statement On the table provided below an information that extracted from financial statements for K&M Inc. for 2020. Items Amounts in thousands of Saudi Riyal Net income 150 Depreciation expense 10 Increase in accounts receivable 30 Decrease in inventory 20 Increase in accounts payable 15 Proceeds from sale of land 50 Gain on sale of land 5 Payment of dividends 25 Purchase of equipment on account 80 Proceeds from issuance of common stock 40 Cash, January 1, 2018 100 Required: Prepare cash flow statement for K&M Inc. for 2020 using indirect method. What are they advantages and disadvantages of forming a corporation? The following information is available for ABC Company for its May 31st: Bank statement of $100,000. Cash account of $85,500. Additional information: 1. A $ 20,000 check mailed to the bank for deposit had not reached the bank at the statement date. 2. The bank returned a customer’s NSF check for $ 3,900. ACCT101 – FINAL TERM BLUE 72 pg. 3  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 3. Outstanding checks totaled $ 15,000. 4. A $ 12,500 collections made by the bank. 5. Check No. 1020 for utilities expense cleared the bank for $4,500 but was erroneously recorded in our books as $5,400. 6. A $10,000 deposit by ABC Company was erroneously credited to our account by the bank. Required: Prepare a bank reconciliation for ABC Company. A company that uses a perpetual inventory system made the following cash purchases and sales for the month of April 2021 date Inventory status # Units Cost of goods April 1st Beginning inventory 20 @ 10$ each April 5th Purchase 35 @ 12$ each April 10th Sale 45 @ 22$ each April 18th Purchase 25 @ 14$ each April 29th Sale 35 @ 25$ each Required: Calculate ending inventory and cost of goods sold after each transaction assuming the company uses LIFO inventory valuation method. _____________________________________________________________________________ Dividends On July 1st ABC company declared a SR 2 per share cash dividend on 15,000 shares of common stock outstanding. The dividend will be paid on September 1st to stockholders of record on August 1st. Write the journal entry for the following dates. 1. Date of declaration 2. Date of record 3. Date of payment ACCT101 – FINAL TERM BLUE 72 pg. 4  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 Multi-step income statement Use the following information from Khaled’s Co. to prepare the multiple-step Income Statement for the year ended December 31, 2020. Sales 650,000 Rental Expense 30,000 Advertisement Expense 5,000 Salaries Expense 80,000 Cost Of Goods Sold 250,000 Sales Returns 3,000 Sales Discounts 2,000 Insurance Expense 1,200 What are the various steps involved in accounting cycle? ______________________________________________________________________________ A machine costing $210,000 with 4 years life an estimated salvage value of $20,000 is installed in Calus Co.’s factory on January 1. The factory manager estimated the machine will produce the following units: Year 1: 121,400 units. Year 2: 122,400 units. Year 3: 119,600 units. Total = 363,400 Required: Compute depreciation expense for the first three years under the following methods: Straight-line. Units-of-production. Double-declining-balance. Closing entries The items that follow appeared in the Income Statement columns of the work sheet prepared for Armstrong Delivery Service at current year-end. In addition, Retained earnings had a credit balance of $117,000 and Dividends had a debit balance of $30,000 at year end. Prepare closing journal entries for this company. Income Statement Delivery Revenue $98,900 Office salaries expense $28,100 ACCT101 – FINAL TERM BLUE 72 pg. 5  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 Rent expense 14,400 Insurance expense 1,200 Office supplies expense 1,900 Depreciation expense Office equipment 6,000 Totals 51,600 Net income 47,300 All plant assets’ value ……………. Over time: a. Does not change. b. Decrease including land. c. Decrease, but land does not. d. Increase, but land does not. Which of the following statements is correct regarding LIFO: a. Uses serial numbers to differentiate products and their inventory cost specifically. b. Average the costs of inventory c. Sell the inventory first that they bought last. d. Sell the inventory first that they bought first. Treasury stock is classified as: a. An asset account b. A contra asset account c. A contra equity account d. An equity account Effect of cash dividend is: a. Reduces total assets and total equity b. Reduces cash c. All answers are correct d. Reduces retained earnings Received $5,000 cash for consultancy services. Which one of the following accounting equation is correct? a. Assets (+5000) = Liabilities + Equities (-5000 revenue) b. Assets (+5000) = Liabilities + Equities (+5000 revenue) c. Assets (-5000) = Liabilities + Equities (+5000 revenue) d. Assets (-5000) = Liabilities + Equities (-5000 revenue) The percent of fixed assets to total assets is an example of: ACCT101 – FINAL TERM BLUE 72 pg. 6  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 a. Solvency analysis b. Horizontal analysis c. Profitability analysis d. Vertical analysis Advance ticket sales totaling $6,000,000 cash would be recognized as follows: a. Debit Sales, credit Unearned Revenue b. Debit Cash, credit Unearned Revenue c. Debit Unearned Revenue, credit Sales d. Debit Unearned Revenue, credit Cash ………. tells us the annual amount of cash dividends distributed to common stockholders relative to the stock’s market price. a. Dividend yield b. Price earnings ratio c. Basic earnings per share d. Book value per common share The book value of an asset is: a. Cost less fair value b. Cost less salvage value c. Cost less accumulated depreciation d. Cost less market value A written promise of the issuers’ to pay an amount identified as the par value with interest on the specified future date is: a. Bond b. Share c. Dividend d. Check Goodwill is characterized as: a. Should be tested for impairment annually. b. Recognized upon purchasing. c. Having indefinite life. d. All answers are correct. A machine with a cost of SR 85,000 reported an accumulated depreciation of SR 5,000, is sold for SR 35,000 cash. The amount that should be reported under investing activities is: a. 45,000 ACCT101 – FINAL TERM BLUE 72 pg. 7  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 b. 30,000 c. 50,000 d. 35,000 Uncollectible amounts from current customers are known as: a. Accounts receivable b. Bad debts c. Good debts d. Impaired debts When shareholders have the priority in dividends distributions and residual assets in case of liquidity, the stock is called: a. Stated value stock. b. Common stock. c. Preferred stock. d. Par value stock. When preparing a Bank reconciliation, Nonsufficient Funds checks (NSF) are: a. Deducted from the book balance b. Added to the book balance c. Added to the bank statement balance d. Deducted from the bank statement balance If the book value of the disposed asset is less than the cash received, the company will record: a. Increase in assets b. Gain. c. Loss. d. Nothin The purchase of goods on credit should be recorded with: a. A debit to merchandise inventory and credit to cash. b. A debit to account receivable and credit to sales. c. A debit to merchandise inventory and a credit to Accounts Payable. d. No entry need to record the purchase. Owners of preferred stock often do not have: a. Ownership rights to assets of the corporation b. Preference to dividends c. The right to sell their stock on the open market. ACCT101 – FINAL TERM BLUE 72 pg. 8  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 d. Voting rights. The consistency principle: a. Is also called the full disclosure principle b. Requires that all companies in the same industry use the same accounting methods of inventory valuation c. Requires a company to consistently use the same accounting method of inventory valuation unless a change will improve financial reporting d. Requires a company to use one method of inventory valuation exclusively Short-term highly liquid investments that mature within three months or less are termed as: a. Long term liabilities b. Unearned revenue c. Cash equivalents d. Depletion The statement of cash flows reports: a. Assets, liabilities and equity. b. Revenues, gains, expenses and losses. c. Cash inflows and outflows for an accounting period. d. Equity, net income and dividends. A corporation issues 1,000 shares of SR 5 par value common stock for SR 12 cash per share, the entry to record this transaction includes: a. A credit to common stock for SR 12,000. b. A credit to paid-In capital for SR 5,000. To calculate depreciation per unit: a. [cost + salvage value] / useful life. b. [cost – salvage value] / useful life. c. [ cost – salvage value] X total production. d. [ cost – salvage value] / total production. In the balance sheet, allowance for doubtful accounts would be: a. Added to accounts receivable b. Subtracted from accounts receivable c. Divided by accounts receivable d. Not reported in balance sheet ACCT101 – FINAL TERM BLUE 72 pg. 9  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 Current Liabilities are: a. Due within one year or operating cycle whichever is shorter. b. Due within one year or operating cycle whichever is longer. c. Due within five years d. Due in a period more than one year. Important Dates related to the payment of dividend: a. Date of Payment. b. Date of Declaration, Distribution, Recording. c. Date of Declaration, Record, Payment d. Date of Record, Payment, Authorization. On January 1, 2010, Lane issues $700,000 of 7%, 15-year bonds. The interest payments are made on June 30 and December 31. Lane year ending is on September 30. What the amount of interest on the December 31, 2010? a. $11,462 b. $22,925 c. $24,500 d. $12,250 To pay a cash dividend the corporation must have: a. High net income and less liabilities. b. More revenues than expenses. c. 25% of common stock d. A sufficient balance in retained earnings and the cash necessary to pay the dividend. At end of the day, the cash register's record shows $155, but the count of cash in the cash register is $150. The correct entry to record the cash sales for the day is: a. Cash (Dr.) 155; Sales (Cr.) 150, Cash over and short (Cr.) 5 b. Cash (Dr.) 155; Sales (Cr.) 155 c. Cash (Dr.) 150, Cash over and short (Dr.) 5; Sales (Cr.) 155 d. Cash (Dr.) 150; Sales (Cr.) 150 In which one of the following assumption, accounting information reflects a presumption that the business will continue operating.? a. Monetary Unit b. Going Concern c. Economic Entity d. Time period ACCT101 – FINAL TERM BLUE 72 pg. 10  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 Property, plants and equipment are described as: a. All answers are incorrect. b. Expected to benefit one accounting period. c. Acquired to be used in operations. d. Lack physical substance. Beginning inventory $150,000, Net purchase $450,000 and ending inventory $ 100,000. The cost of goods sold will be: a. 250,000 b. 500,000 c. 550,000 d. 700,000 The right side of a T-account is a(n): a. Increase b. Decrease c. Debit d. Credit Leasehold could be defined as: a. A lessee may pay for alterations or improvements to the leased property. b. The right granted by a company or the government to deliver a product or service under specified conditions. c. The exclusive right to publish and sell a musical, literary, or artistic work during the life of the creator plus 70 years. d. The lessee contract with the lessor for the right to use a property in exchange for a series of scheduled payments over the term of the lease. Stockholders' equity section in balance sheet consists of: a. Retained earnings and cash. b. Long-term assets c. Contributed capital and retained earnings. d. Contributed capital and par value. ____________ assumes costs flow in the order incurred: a. Last-In, First-Out. b. Weighted average. c. First-In, First-Out. d. Specific identification. ACCT101 – FINAL TERM BLUE 72 pg. 11  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 North, Inc. reports 150,000 net income for the year ended December 31, 2020. Accounts receivable increased by 10,500 during the year and accounts payable decreased by 15,000. During 2019, North reported 8,500 of depreciation expense. The company’s cash flow from the operating activities: a. 124,500 b. 154,000 c. 163,000 d. 133,000 What is salvage value: a. The amount used in the denominator to calculate depreciation. b. Is not amount that is essential for depreciation calculation. c. All answers are incorrect. d. The estimated resale value of an asset at the end of its useful life. What is the debt to equity ratio for a company who has $700,000 in total liabilities and $3,500,000 in total equity? a. 20% b. 2% c. 5 d. $2,800,000 On December 1, Martin Company signed a $5,000 3-month 6% note payable, with the principle plus interest due on March 1 of the following year. What amount of interest expense is accrued at December 31 on the note? a. $0 b. $25 c. $50 d. $75 Purpose of the Statement of Cash Flows: a. To calculate Assets turnover. b. To check if Assets equal Liabilities. c. To know where a company spends its cash. d. To calculate net income. The total amount of stock that a corporation is allowed to issue is referred to as: a. Preferred stock b. Issued stock ACCT101 – FINAL TERM BLUE 72 pg. 12  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 c. Authorized Stock d. Common stock Which of the following items is reported on the statement of cash flows under financing activities? a. Payment of employees’ salaries b. Payment of a stock dividend c. Payment for supplies purchase d. Payment of a cash dividend ________are written promises by customers to pay a sum of money on a specified future date. a. Notes Receivable b. Notes payable c. Accounts payable d. Accounts Receivable If assets are $550,000 and equity are $210,000 then liabilities equal: a. $210,000 b. $340,000 c. $760,000 d. $5500,000 To close revenue account, which one of the following journal entry will be prepared? a. Service revenue (Dr.); Retained earnings (Cr.) b. Income summary (Dr.); Retained earnings (Cr.) c. Income summary (Dr.); Service revenue (Cr.) d. Service revenue (Dr.); Income summary (Cr.) “Just Do It” is an example of: a. Copyright. b. Patent. c. Goodwill. d. Trade phrase. The inventory valuation method that tends to smooth out erratic changes in costs is: a. Specific identification b. LIFO c. Weighted average d. FIFO ACCT101 – FINAL TERM BLUE 72 pg. 13  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 On June 5th Smythe Inc. purchased $35,000 of merchandise inventory on Account subject to credit terms 3/14,n/30. They paid the amount by 17th June, their cash payment will be: a. 1,000 b. 33,950 c. 1,050 d. 35,000 Capital expenditure: a. All answers are incorrect. b. Would extend life beyond original estimate. c. Does not affect balance sheet. d. Considered revenue expenditure at any time. An equipment was purchased on April 1st for $600,000 cash. The equipment has a useful life of 5 years and is expected to have a salvage value of $30,000. Depreciation expense for the first year using straight-line method is: a. $120,000 b. $114,000 c. $126,000 d. $85,500 A company purchased a parking lot and a couple of trucks for $1,200,000 cash. If you know that the parking lot was appraised for $825,000 and the trucks for $275,000. How much of the purchasing price will be charged to the trucks? a. $275,000 b. $825,000 c. $900,000 d. $300,000 DD Company estimates from past experience that about 2.5% of credit sales become uncollectible. If net sales are $720,000; and credit sales are $500,000 in 2015 then bad debt expenses would be: a. 18,000 b. 12,500 c. 14,700 d. 13,400 A short-term note payable: a. Is a contingent liability ACCT101 – FINAL TERM BLUE 72 pg. 14  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 b. Is a written promise to pay a specified amount on a definite future date within one year or the company's operating cycle, whichever is longer c. Is an estimated liability d. Is not a liability until the due date The method that is used for depletion calculation is: a. Accelerated system. b. Units of production. c. Straight-line. d. Double-declining. Which of the following is NOT an example of intangible assets? a. Goodwill b. Copyrights c. Marketable securities d. Patent The entry that is necessary to establish a petty cash fund should include which of the following: a. A debit to Petty Cash and a credit to Accounts Receivable b. A debit to Cash and a credit to Petty Cash Over and Short c. A debit to Petty Cash and a credit to Cash d. A debit to Cash and a credit to Petty Cash A company maintains a petty cash fund of $450. What amount of cash will be required to replenish the petty cash fund, if the remaining amount on July 31 was $230.80? a. 219.20 b. 450.00 c. 230.80 d. 230.20 When a bond sells at a premium: a. The contract rate is above the market rate b. The contract rate is equal to the market rate c. The contract rate is below the market rate d. It means that the bond is a zero coupon bond Which of the following elements are found on the retained earnings statement? a. Common Stock ACCT101 – FINAL TERM BLUE 72 pg. 15  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 b. Dividends c. Cash d. Revenue The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is: a. Operating activities.. b. Schedule of noncash investing or financing activity. c. Financing activities. d. Investing activities A company had a fixed interest expense of $6,000, its income before interest expense and any income taxes was $18,000 and its net income was $8,400. The company's times interest earned ratio is equals to: a. 0.33 b. 3.00 c. 0.71 d. 1.40 Patents give the owner the exclusive rights for: a. Life of the innovator plus 70 years. b. 10 years or less. c. 20 years or more. d. 20 years or less. A company purchased a building for $450,000 and paid $50,000 to a lawyer to obtain the required papers. Also, they paid $12,000 for brokerage fees. Then, the cost of the building is: a. $500,000 b. $450,000 c. $462,000 d. $512,000 On October 1, a $30,000, 6%, 3-year note payable is issued by a company. The note requires that $10,000 of principal plus accrued interest be paid at the end of each year on September 30. The issuer's journal entry to record the second annual interest payment would include: a. A debit to Interest Expense for $1,200 b. A debit to Interest Expense for $1,800 ACCT101 – FINAL TERM BLUE 72 pg. 16  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 c. A credit to Cash for $11,800 d. A credit to Cash for $10,000 A company issues at 9% bonds with a par value of $100,000 on January 1. If the company decided to pay interest semiannually and market rate is 9%, how much interest is due on June 30? a. $4,500 b. $750 c. $5,250 d. $1,500 During the process of closing entries, dividends are closed directly to the: a. Income summary account b. Retained Earnings account c. Adjusted trial balance d. Journal The process of allocating the cost of natural resources over useful life is: a. Capital expenditure. b. Depreciation. c. Depletion. d. Amortization. In assets’ disposal, accumulated depreciation is: a. Removed. b. Debited and removed. c. Debited. d. Credited. ABC, Inc. pays a cash dividend of SR6,000, what is the journal entry to record this transaction: a. Debit Cash, Credit Retained Earnings b. Debit Common Stock, Credit Cash c. Debit Cash, Credit Common Stock d. Debit Dividends payable, Credit Cash Which one of the system is related with providing a continuous record of Inventory and Cost of Goods Sold? a. Accrual system b. Perpetual system ACCT101 – FINAL TERM BLUE 72 pg. 17  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 c. Cash system d. Periodic system The appropriate section in the statement of cash flows for reporting the purchase of equipment is: a. Operating activities b. Financing activities c. Investing activities d. Schedule of noncash investing or financing activity If current liabilities are $79,000 and non-current liabilities are $33,000. Also, total assets equal to $350,000. Then, debt ratio is: a. 32 % b. 31.25 % c. 9.4 % d. 22.6 % In the direct write-off method, to account for bad debts, which account is credited: a. Allowance for doubtful accounts b. Accounts receivable c. Bad debts expenses d. Loss account On June 1, $800 of goods are sold with credit terms of 1/10, n/30. How much should the seller expect to receive if the buyer pays on June 8? a. $800 b. $792 c. $784 d. $720 Using the information below, prepare the income statement for 2020. Accounts payable $ 50,000 Wages expense $60,000 Insurance expense 5,000 Advertising expense 32,000 Accounts receivable 24,000 Cash 11,000 Retained earnings, 130,000 Common stock 20,000 Airplanes 150,000 Maintenance expense 49,000 Notes payable 47,000 Revenues 320,000 Office supplies 60,000 Dividends 70,000 Secured bonds: ACCT101 – FINAL TERM BLUE 72 pg. 18  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 a. Have specific assets of the issuing company pledged as collateral b. Are also referred to as debentures c. Are backed by the issuer's bank d. Are subordinated to those of other unsecured liabilities A company has sales of SAR 702,000 and its cost of goods sold is SAR 295,500. If the sales return was SAR 2,500, the gross margin should equal: a. SAR 417,000 b. SAR 404,000 c. SAR 402,500 d. SAR 502,500 A land was purchased for $500,000 and is expected to have a useful life of 9 years and salvage value of $50,000. The depreciation expense using straight-line method is: a. $61,111 b. $50,000 c. $55,555 d. No depreciation expense. If liabilities are $50,000 and assets are $210,000 then equity equals: a. $160,000 b. $260,000 c. $200,000 d. $210,000 …………. is one of the most widely cited items of accounting information. a. Basic earnings per share b. Price earnings ratio c. Net income. d. Book value per common share PPL Company receivable’s at year end were $100,000. The company estimates uncollectible accounts at 1% of receivables. PPL Co. allowance account had a $300 credit balance. What is PPL’s bad debts expense for the year? a. $1000 b. $700 c. $300 d. $1300 The process of allocating the cost of intangible assets over useful life is: ACCT101 – FINAL TERM BLUE 72 pg. 19  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 a. Impairment. b. Amortization. c. Depreciation. d. Depletion. Unearned revenues are: a. Revenues that have been earned but not yet collected in cash b. Recorded as an asset in the accounting records c. Revenues that have been earned and received in cash d. Liabilities created when a customer pays in advance for products or services before the revenue is earned. It is a liability. When preparing a Bank reconciliation, outstanding checks are: a. Deducted from the bank statement balance b. Added to the book balance c. Deducted from the book balance d. Added to the bank statement balance Owner's investments in the business record under: a. Revenue b. Expense c. Dividends d. Common Stock Revenues will have normal: a. Zero balance b. Equal balance c. Debit balance d. Credit balance A bank reconciliation explains: a. Any differences between the cash balance on company’s books and the balance reported on the bank statement. b. It is not necessary for businesses to reconcile their checking accounts since banks keep accurate records and provide internal control support for cash. c. All answers are incorrect d. Usually yields only an adjusted book balance. c. A debit to Cash for 7,000 d. A credit to common stock for SR 5,000. ACCT101 – FINAL TERM BLUE 72 pg. 20  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 A corporation reported cash of SR45,000 and total assets of SR220,000. Its common-size percent for cash equals: a. 20.46 % b. 15 % c. 25 % d. 4.8 % A company issues 9%, 20-year bonds with a par value of $750,000. The current market rate is 9%. The amount of interest owed to the bondholders for each semiannual interest payment is: a. $33,750 b. $0 c. $67,500 d. $750,000 If the double- declining- balance rate is 30% and a machine is purchased for $50,000 and has a salvage value of $10,000. Depreciation expense for the second year is: a. $12,000 b. $15,000 c. $8,400 d. $10,500 Which of the following elements are found on the income statement? a. Salaries Expense b. Cash c. Retained Earnings d. Common Stock Under which one of the following assumption, company keeps its activity separate from its owners and other business unit? a. Monetary Unit b. Business Entity c. Going Concern d. Time Period Which of the following statements is correct regarding inventory turnover ratio: a. Is used to analyze company’s profitability b. Is used to measure solvency. c. Is used to measures how quickly a company turns over its merchandise inventory ACCT101 – FINAL TERM BLUE 72 pg. 21  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 d. Validates the acid-test ratio. The cost value of a particular product is $45,000 and market value is $50,000. Following Lower-of- Cost-or-Market Value, the final inventory value will be: a. 95,000 b. 5,000 c. 45,000 d. 50,000 A company had a beginning balance in retained earnings of SR 60,000. It had net income of SR 12,000 if retained earnings at the end of the period is SR 65,500 the paid out cash dividends during the year should be: a. 72,000 b. 12,000 c. 5,500 d. 6,500 Current asset MINUS current liabilities is the: a. Current ratio b. Earnings per share c. Quick ratio d. Working capital A company purchased raw material worth $ 500,000 and found that raw material worth $ 50,000 is defective and useless in the production process. This will results into: a. Purchase discount of $ 50,000 b. Sales return of $ 50,000 c. Purchase return of $ 50,000 d. Sales discount of $ 50,000. Intangibles are: a. Not add any value to the company. b. All answers are incorrect. c. Held for speculation. d. Lack physical substance. The most common method used to prepare statement of cash flow is: a. Direct method. b. Single step method. c. Indirect method. d. Multiple step method. ACCT101 – FINAL TERM BLUE 72 pg. 22  ACCT101 – FINAL EXAM – SUMMER TERM – REVIEWED BY BLUE 72 Amounts received in advance from customers for future products or services: a. Increase income b. Are not allowed under GAAP c. Are revenues d. Are liabilities ACCT101 – FINAL TERM BLUE 72 pg. 23  ACCOUNTING101-FINAL EXAM-SECOND TERM 20-21 – REVIEWED BY BLUE 72 ABC, Inc. reports SR125,000 net income for the year ended December 31, 2020. Accounts receivable increased by 7,500 during the year and accounts payable increased by 10,000. During 2020, ABC reported 12,500 of depreciation expense. Calculate the operating Cash flow for 2020 using indirect method Answer: Define the following concepts 1- Current liabilities. Current Liabilities/ Obligations due to be paid or settled within one year or the operating cycle, whichever is longer. 2- Plant assets. plant assets \Tangible assets that are both long lived and used to produce or sell products or services. Examples include equipment, machinery, buildings, and land that are used to produce or sell products and services. 1|Page | Blue 72  ACCOUNTING101-FINAL EXAM-SECOND TERM 20-21 – REVIEWED BY BLUE 72 3- Retained earnings ABC company buys a piece of equipment for SR10,500. The equipment has an expected life of 10 years and a salvage value of SR500. A) what is the straight-line depreciation formula? B) Calculate the straight-line depreciation for the company. 2|Page | Blue 72  ACCOUNTING101-FINAL EXAM-SECOND TERM 20-21 – REVIEWED BY BLUE 72 On January 1st ABC company declared a SR0.50 per share cash dividend on 8,000 shares of common stock outstanding. The dividend will be paid on March 1st to stockholders of record on February 1st. Write the journal entry for the following dates. 1. Date of declaration 2. Date of record 3. Date of payment Answer : 3|Page | Blue 72  ACCOUNTING101-FINAL EXAM-SECOND TERM 20-21 – REVIEWED BY BLUE 72 Identify and describe the four basic financial statements Answer :The four basic financial statements are the balance sheet, income statement, statement of retained earnings and statement of cash flows. The balance sheet describes the company's financial position and lists the types and amounts of assets, liabilities and equity at a point in time. The income statement describes the company's revenues, expenses and net income over a period of time. The statement of retained earnings explains changes in retained earnings from net income or loss and dividends over a period of time. The statement of cash flows reports on cash flows for operating, investing and financing activities over a period of time. Record the journal entry for the following transactions for AXIOM Co. 1. Deci, the company purchased equipment for SR10,000 cash. 2. Dec5, the company received SR3000 cash to provide service on December 20. 3. Dec15, the company paid salaries of SR5,000 to its employee Answer : 1. Dec1, equipment DR $10,000 cash CR $10'000 2. Dec5, Cash DR $3000 Unearned Revenue CR $3000 3. Dec15, salaries expanse DR $5000 cash CR $5000 4|Page | Blue 72  ACCOUNTING101-FINAL EXAM-SECOND TERM 20-21 – REVIEWED BY BLUE 72 A bond sells at a discount when the: 1. Contract rate is below the market rate 2. Bond has a short-term life 3. Contract rate is above the market rate 4. Contract rate is equal to the market rate A company issues 9%, 20-year bonds with a par value of SR750,000. The current market rate is 9%. The amount of interest owed to the bondholders for each semiannual interest payment is. 1. 67,500 2. 0 3. 33,750 4. 750,000 When all of the authorized shares have the same rights and characteristics, the stock is called: 1. Preferred stock 2. Stated value stock 3. Par value stock 4. Common stock A method that allocates an equal portion of the total depreciable cost for a plant asset to each unit produced is called: 1. Straight-line depreciation 2. Accelerated depreciation 3. Units-of-production depreciation 4. Declining-balance depreciation 5|Page | Blue 72  ACCOUNTING101-FINAL EXAM-SECOND TERM 20-21 – REVIEWED BY BLUE 72 Stockholders' equity consists of: 1. Long-term assets 2. Retained earnings and cash 3. Contributed capital and retained earnings 4. Contributed capital and par value Owners of preferred stock often do not have: 1. Preference to dividends 2. Ownership rights to assets of the corporation 3. The right to sell their stock on the open market 4. Voting rights The statement of cash flows reports: 1. Cash inflows and outflows for an accounting period 2. Equity, net income and dividends 3. Assets, liabilities and equity 4. Revenues, gains, expenses and losses The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is: 1. Financing activities 2. Operating activities 3. Investing activities 4. Schedule of noncash investing or financing activity 6|Page | Blue 72  ACCOUNTING101-FINAL EXAM-SECOND TERM 20-21 – REVIEWED BY BLUE 72 The most common method used to prepare statement of cash flow is 1. Direct method 2. Indirect method 3. Single step method 4. Multiple step method The ability to meet short-term obligations and to efficiently generate revenues is called: 1. Profitability 2. Liquidity and efficiency 3. Market prospects 4. Solvency If a company records prepayment of expenses in an asset account, the adjusting entry would: 1. Result in a debit to an expense and a credit to an asset account 2. Cause an adjustment to prior expense to be overstated and assets to be understated 3. Result in a debit to a liability and a credit to an asset account 4. Cause an accrued liability account to exist The ability to generate future revenues and meet long-term obligations is referred to as: 1. Liquidity and efficiency 2. Profitability 3. Market prospects 4. Solvency 7|Page | Blue 72  ACCOUNTING101-FINAL EXAM-SECOND TERM 20-21 – REVIEWED BY BLUE 72 ABC, Inc. reports SR125,000 net income for the year ended December 31, 2020. Accounts receivable increased by 7,500 during the year and accounts payable increased by 10,000. During 2020, ABC reported 12,500 of depreciation expense. Calculate the operating Cash flow for 2020 using indirect method The inventory valuation method that results in the lowest taxable income in a period of inflation is: 1. Weighted-average cost method 2. LIFO method 3. FIFO method 4. Specific identification method XYZ company pays 3.5% service fee to a credit card company, and the cash is deposited immediately to the company's account. If XYZ has SR2,000 in credit card sales, which of the following statements are true? 1. XYZ debits Cash SR2,000 2. XYZ debits service fee expense SR70 3. XYZ debits Accounts Receivable - Credit Card Co SR2,000 4. XYZ credits Sales SR1,930 Advance ticket sales totaling SR6,000,000 cash would be recognized as follows: 1. Debit Sales, credit Unearned Revenue 2. Debit Unearned Revenue, credit Cash 3. Debit Cash, credit Unearned Revenue 4. Debit Unearned Revenue, credit Sales A company sold SR12,000 worth of trampolines with an extended warranty. It estimates that 2% of these sales will result in warranty work. The company should: 1. Recognize warranty expense and liability in the year of the sale 2. Consider the warranty expense a remote liability since the rate is only 2% 3. Recognize warranty expense at the time the warranty work is performed 8|Page | Blue 72  ACCOUNTING101-FINAL EXAM-SECOND TERM 20-21 – REVIEWED BY BLUE 72 4. Consider the warranty expense a contingent liability The total amount of stock that a corporation's charter allows it to issue is referred to as: 1. Authorized Stock 2. Common stock 3. Preferred stock 4. Issued stock Land and equipment accounts are classified as 1. Payments on income statement 2. Assets on balance sheet 3. Liabilities on balance sheet 4. Earnings on income statement ABC Co, purchases a building for SR1,000,000 on credit. The appropriate journal entry will include 1. Debit to cash and credit to building 2. Debit to building and credit to cash 3. Debit to accounts payable and credit to building 4. Debit to building and credit to accounts payable Important Dates related to the payment of dividend 1. Date of Declaration 2. Date of Record 3. Date of Payment 4. Date of Declaration, Record, Payment 9|Page | Blue 72  ACCOUNTING101-FINAL EXAM-SECOND TERM 20-21 – REVIEWED BY BLUE 72 A company discarded a display case that it had originally purchased for SAR8,000. The case had SAR7,200 worth of accumulated depreciation. The company should recognize a(n): 1. 8,000 Loss 2. 800 Gain 3. 800 Loss 4. 0 Industry standards for financial statement analysis: 1. Are set by the financial performance and condition of the company's industry 2. Are based on rules of thumb 3. Are based on a company's prior performance 4. Are set by the government To pay a cash dividend the corporation must have: 1. 25% of common stock 2. Current liability. 3. More revenues than expenses. 4. A sufficient balance in retained earnings and the cash necessary to pay the dividend. The interest accrued on 3,600 at 7% for 60 days is: 1. 36 2. 42 3. 180 4. 252 10 | P a g e | B l u e 7 2  ACCOUNTING101-FINAL EXAM-SECOND TERM 20-21 – REVIEWED BY BLUE 72 The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is: 1. Operating activities 2. Investing activities 3. Financing activities 4. Schedule of noncash investing or financing activity The maturity date of a note receivable: 1. Is the day of the credit sale 2. Is the day the note is due to be paid 3. Is the date of the first payment 4. Is the day the note was signed Which of the following are revenues? 1. payroll, taxes, and insurance 2. sales, interest earned 3. depreciation, rent and utilities 4. supplies, advertising, and salaries Bad Debt is an amount that 1. Not paid to the Accounts Payable 2. Not received from Accounts Receivable 3. Received from accounts receivable 4. Paid to accounts payable 11 | P a g e | B l u e 7 2  ACCOUNTING101-FINAL EXAM-SECOND TERM 20-21 – REVIEWED BY BLUE 72 “An adjusting entry is required to record interest expense incurred to date”. Such adjusting entry is done at 1. Beginning of period 2. Maturity date 3. End of period 4. Note date XYZ Co. maintains a petty cash fund of 400. What amount of cash will be required to replenish the petty cash fund, if the on July 31 was 137.80? 1. 262.20 2. 139.80 3. 137.80 4. 260.20 Purpose of the Statement of Cash Flows: 1. To calculate net income 2. To check if Assets equal Liabilities 3. To calculate Assets turnover 4. To know where a company spends its cash when preparing a Bank reconciliation outstanding checks are: 1. deducted from the bank statement balance 2. added to the bank statement balance 3. added to the book balance 4. deducted from the book balance 12 | P a g e | B l u e 7 2  ACCOUNTING101-FINAL EXAM-SECOND TERM 20-21 – REVIEWED BY BLUE 72 The consistency principle: 1. Is also called the full disclosure principle 2. Requires that all companies in the same industry use the same accounting methods of inventory valuation 3. Requires a company to use one method of inventory valuation exclusively 4. Requires a company to consistently use the same accounting method of inventory valuation unless a change will improve financial reporting What are intangible assets? 1. items that are permanent, such as land and buildings 2. items that can be depreciated, such as equipment 3. items of value that don’t have a physical form, such as copyrights 4. items that have a useful life of more than 5 years The interest accrued on 3,600 at 7% for 60 days is: 1. 180 2. 42 3. 36 4. 252 The maturity date of a note receivable: 1. Is the day of the credit sale 2. Is the day the note is due to be paid 3. Is the date of the first payment 4. Is the day the note was signed 13 | P a g e | B l u e 7 2  ACCOUNTING101-FINAL EXAM-SECOND TERM 20-21 – REVIEWED BY BLUE 72 Unearned revenue is reported on the financial statements as: 1. A revenue on the balance sheet 2. A liability on the balance sheet 3. An unearned revenue on the income statement 4. An asset on the balance sheet Sales taxes payable: 1. Is a current liability for retailers 2. Is an estimated liability 3. Is a current asset 4. Is a business expense Human Fraud is: 1. Intent to defeat internal controls for personal gain 2. Financial information 3. Misjudgment 4. Good behavior If equity is 250,000SR and liabilities are 180,000SR then assets equal: 1. 100,000 2. 430,000 3. 70,000 4. 400,000 ABC, Inc. purchases equipment for SR6,000 cash, what is the journal entry to record this transaction: 1. Debit Common Stock, Credit Cash 2. Debit Cash, Credit Common Stock 3. Debit Cash, Credit Equipment 14 | P a g e | B l u e 7 2  ACCOUNTING101-FINAL EXAM-SECOND TERM 20-21 – REVIEWED BY BLUE 72 4. Debit Equipment, Credit Cash To pay a cash divided the corporation must have: a. 25% of common stock. b. More revenues than expenses. C. A sufficient balance in retained earnings and the cash necessary to pay the dividend. d. Current liability. Stockholders' equity consists of: a. Long-term assets b. Contributed capital and par value C. Contributed capital and retained earnings d. Retained earnings and cash The maturity date of a note receivable: a. Is the day the note was signed b. Is the date of the first payment C. Is the day the note is due to be paid d. Is the day of the credit sale Which of the following are revenues? a. depreciation, rent and utilities b. payroll, taxes, and insurance C. supplies, advertising, and salaries d. sales, interest earned 15 | P a g e | B l u e 7 2  ACCOUNTING101-FINAL EXAM-SECOND TERM 20-21 – REVIEWED BY BLUE 72 A company failed to post a SR50 debit to the cash account. The effect of this error will be that a. The cash account balance will be overstated b. The error will overstate