ACTG 210 Exam 2 Practice - Fall 2024 PDF

Which of the following is an example of "Rationalization" from the Fraud Triangle? a. Everyone is going to cheat on the exam, so it's OK if I cheat, too. b. I need to pass this class to keep my scholarship. c. The teacher leaves the room during the exam. d. I can see the exam of the person s...

Which of the following is an example of "Rationalization" from the Fraud Triangle? a. Everyone is going to cheat on the exam, so it's OK if I cheat, too. b. I need to pass this class to keep my scholarship. c. The teacher leaves the room during the exam. d. I can see the exam of the person sitting next to me, and she always gets A's. XYZ Corporation purchases 5,000 units of inventory.  The supplier charges \$12.00 per unit.  XYZ also pays sales tax of 8 percent of the purchase price; shipping costs are \$3,600 for the full order.  What is the capitalized acquisition cost **per unit**? e. \$13.68 f. \$13.74 g. \$12.00 h. 412.96 The cost of an acquired (purchased) intangible asset with a finite-life \... i. Should be depreciated j. Should be expensed when purchased k. Should be amortized over the useful life l. Remains on the balance sheet indefinitely Which of the following statements about Research and Development is true? m. R&D should be amortized over the useful life. n. R&D is an asset whose value derives from rights and privileges rather than physical existence. o. R&D is the cost to develop intangible assets internally and is expensed immediately. p. R&D should be capitalized at cost and depreciated over useful life. On January 1, 2022, XYZ Company purchased a patent for \$24,000 and a trademark for \$15,000. The patent has an expected useful life of 12 years from the purchase date. The trademark has an indefinite life. How much amortization expense should XYZ recognize for these intangible assets in calendar year 2022? q. \$1,200 r. \$1,250 s. \$2,000 t. \$3,250 On, Jan. 1, 2020, ABC Corporation purchases a machine, paying \$130,000 to the seller, \$8,200 in sales tax, \$4,300 for shipping and installation, and \$600 for a 12-month insurance policy. What is the capitalized acquisition cost of this machine? u. \$143,100 v. \$142,500 w. \$138,200 x. \$130,000 On January 1, ABC Corporation invests \$60,000 in a 9-month Certificate of Deposit (CD) that pays an annual interest rate of 3 percent. The company prepares **quarterly** financial statements, using the calendar year. What journal entry will ABC's record on March 31? y. Interest Expense 450 Interest Payable 450 z. Interest Receivable 450 Interest Income 450 a. Interest Income 150 Interest Receivable 150 b. Interest Expense 150 Interest Payable 150 On January 1, ABC Corporation invests \$60,000 in a 9-month Certificate of Deposit (CD) that pays an annual interest rate of 3 percent. The company prepares quarterly financial statements, using the calendar year. What is the CD's maturity payment? c. \$60,000 d. \$60,450 e. \$61,350 f. \$61,800 On June 30, a company has currency of \$537, a checking account with \$34,877 on deposit, and a 1-month CD with principal of \$15,000. What will the company show as the total of Cash and Cash Equivalents on its June 30 balance sheet? g. \$537 h. \$13,414 i. \$50,414 j. \$15,537 At the end of a reporting period, XYZ does the following analysis: Inventory Item Units on hand Total historical cost Total market value ---------------- --------------- ----------------------- -------------------- Widgets 3,100 50,500.25 85,750.75 Gadgets 4,250 102,575.38 94,546.00 Based on the information above and using Lower of Cost or Market method, XYZ should: k. Write up the value of Widgets to \$85,750.75 l. Write down the value of Gadgets to \$94,546.00 m. Both a and b n. Neither a nor b 11. XYZ purchased 500 backpacks in February with a total capitalized cost of \$5,850. 200 of the backpacks were sold in March for \$25 each. What is Gross Profit per backpack? o. \$ 1.70 p. \$ 4.25 q. \$11.70 r. \$13.30 12. XYZ purchased 500 backpacks in February with a total capitalized cost of \$5,850. 200 of the backpacks were sold in March for \$25 each. What journal entry or entries should be recorded in March? s. Cash (+A) 5,000 Sales Revenue (+OE) 5,000 t. Cost of Goods Sold (-OE) 2,340 u. Sales Revenue 5,000 Cost of Goods Sold 2,340 v. Both a. and b. 13. XYZ Company's inventory data are: Lot Date Acquired Units Cost per Unit Total Cost ----------- --------------- ------- --------------- ------------ Beg. Inv. May 12 30 10.50 315 Purchase May 25 60 10.75 645 Purchase June 1 50 11.00 550 Sale June 3 75 What amount of COGS should XYZ record for the June 3 sale if it uses the Perpetual Inventory System and the FIFO (first-in, first-out) method? w. \$787.50 x. \$798.75 y. \$818.75 z. \$825.00 14. During a period when inventory costs are steadily increasing, which of the following is true? a. Cost of goods sold will be higher under LIFO than under FIFO b. Income taxes will be lower under FIFO than under LIFO c. Ending inventory value will be lower under FIFO than under LIFO d. Net income will be higher under LIFO than under FIFO 15. All of the following are examples of internal control procedures **except** e. Using separate cash drawers for each salesclerk f. Independent comparison of company cash account to bank statements g. Employees from separate division doing regular reviews  h. Sending monthly customer satisfaction surveys 16. Given the following information, determine the cost of the inventory at June 30 using the LIFO perpetual inventory method. i. \$288 j. \$363 k. \$567 l. \$385 m. \$465 17. XYZ Corporation has the following inventory purchases and sales during the month of April: Date Activities Units Acquired Cost per unit Total Cost   Units Sold Price per Unit ----------- ------------ ---------------- --------------- ------------ --- ------------ ---------------- 4/1/2024 Beg. Inv 1000 \$1.50 \$1,500       4/5/2024 Purchase 900 \$1.60 \$1,440       4/20/2024 Sale         1600 \$5.00 4/25/2024 Purchase 750 \$1.70 \$1,275       a. Using **perpetual** LIFO (last-in, first-out), what is XYZ's COGS for the 1,600 units sold on 4/20? Record the journal entries for the sale. b. Using **periodic** LIFO (last-in, first-out), what is XYZ's COGS for the 1,600 units sold on 4/20? c. Using **periodic** LIFO**,** what is XYZ's Ending Inventory at the end of April? d. What was XYZ's average unit cost for the inventory purchased in April? Round to 3 decimal places. 18. On Jan. 1, 2023, XYZ Corporation placed into service a lift truck that had a capitalized acquisition cost of \$45,000, estimated useful life of 10 years, and estimated salvage value of \$3,000. XYZ depreciated the truck on a straight-line basis until December 31, 2027, then sold the used lift truck for \$26,200. a. Show the journal entry for the first year of depreciation recorded on December 31, 2023. Enter the appropriate information in the T-accounts below (Also, mark this answer with a. in the T-accounts). b. Update the T-accounts below up to the time of the sale (Also, mark this answer with b. in the T-accounts). c. Show the journal entry for the truck sale on 12/31/2027 and enter the appropriate information in the T-accounts below (Also, mark this answer with c. in the T-accounts). 19. On Jan. 1, 2017, XYZ Corporation put into service a machine that had a capitalized acquisition cost of \$26,000, a useful life of 12 years, and an estimated salvage value of \$2,000. This resulted in annual depreciation expense of \$2,000 on a straight-line basis. On Jan. 1, 2019, XYZ revised the total useful life estimate from 12 to 10 years. What is the machine's revised annual depreciation expense after the change in useful life? For questions 20 -- 24, refer to the excerpts of the Hormel Foods 2023 Annual Report printed at the end of this packet. 20. What is Hormel Foods' Gross Profit Percentage for the year ended October 29, 2023? n. 7% o. 17% p. 20% q. 83% 21. Which of the following statements about Hormel Foods' Inventory Turnover is correct? r. Inventory turned over 6.0 times during the year ended October 29, 2023. s. Inventory turnover is an indicator of how well a company controls inventory levels. t. Inventory turnover is used to calculate Day's Sales in Inventory. u. All of the above. 22. According to the notes to the financial statements, what inventory method does Hormel Foods use? v. First-in, first-out (FIFO) w. Last-in, first-out (LIFO) x. Average Cost y. It depends on which products are delivered to customers 23. The Property, Plant, and Equipment section of the balance sheet includes the following line: Less: Allowance for Depreciation (23,344,557) Which of the following statements about this amount is true? z. It is the expected value of PPE at the end of its useful life. a. It is the total depreciation taken over the life of the PPE. b. It is the market value of PPE on October 29, 2023. c. It is the expense recorded in 2023 for the use of PPE during the year. 24. Which of the following statements about Hormel's reporting and financial statements is true? d. The Financial Statements have been audited by the non-profit organization called FASB. e. SEC regulations for companies such as Hormel Foods are optional. f. The Financial Statements have been filed with the US Government Agency called CPA. g. The auditor's opinion is that the Financial Statements are in conformity with GAAP. A collage of a group of people eating Description automatically generated Report of Independent Registered Public Accounting Firm ======================================================= Opinion on the Financial Statements ----------------------------------- Basis for Opinion ----------------- Critical Audit Matter --------------------- ### Valuation of Alternative Investments --- Pension Assets ### Valuation of Alternative Investments --- Pension Assets Consolidated Statements of Operations ===================================== -- ------------------- --------------- --------------- **\$ 12,110,010** \$ 12,458,806 \$ 11,386,189 **10,110,169** 10,294,120 9,458,283 **1,999,841** 2,164,686 1,927,906 **942,167** 879,265 853,071 **42,754** 27,185 47,763 **28,383** --- --- **1,072,046** 1,312,607 1,122,599 **14,828** 28,012 46,878 **73,402** 62,515 43,307 **1,013,472** 1,278,103 1,126,170 **220,552** 277,877 217,029 **792,920** 1,000,226 909,140 **(653)** 239 301 **\$ 793,572** \$ 999,987 \$ 908,839 **\$ 1.45** \$ 1.84 \$ 1.68 **\$ 1.45** \$ 1.82 \$ 1.66 **546,421** 544,918 541,114 **548,982** 549,566 547,580 -- ------------------- --------------- --------------- Hormel Foods 2023 Annual Report Consolidated Statements of Financial Position ============================================= -- ------------------- --------------- **\$ 736,532** \$ 982,107 **16,664** 16,149 **817,391** 867,593 **1,680,406** 1,716,059 **7,242** 7,177 **39,014** 48,041 **3,297,249** 3,637,125 **4,928,464** 4,925,829 **1,757,171** 1,803,027 **204,697** 245,566 **725,121** 271,058 **370,252** 283,169 **74,626** 74,303 **1,458,354** 1,398,255 **2,781,730** 2,636,660 **195,665** 216,246 **(2,344,557)** (2,184,319) **2,165,818** 2,141,146 **\$ 13,448,772** \$ 13,306,919 **\$ 771,397** \$ 816,604 **51,679** 58,801 **87,452** 113,105 **263,330** 279,072 **172,178** 163,963 **15,212** 32,925 **950,529** 8,796 **2,311,776** 1,473,266 **2,358,719** 3,290,549 **349,268** 385,832 **498,106** 475,212 **191,917** 141,840 --- --- --- --- **8,007** 8,002 **506,179** 469,468 **(272,252)** (255,561) **7,492,952** 7,313,374 **7,734,885** 7,535,284 **4,100** 4,936 **7,738,985** 7,540,219 **\$ 13,448,772** \$ 13,306,919 -- ------------------- --------------- Hormel Foods 2023 Annual Report