ACC 545 ACC545 Week 6 Final Exam Answers (PHOENIX)
ACC 545 Week 6 Final Exam (PHOENIX)
1) A company changes from percentage-of-completion to completed-contract, which is the method used for tax purposes. The entry to record this change should include a
2) Which of the following is accounted for as a change in accounting principle?
3) A company changes from straight-line to an accelerated method of calculating depreciation, which will be similar to the method used for tax purposes. The entry to record this change should include a
4) Presenting consolidated financial statements this year when statements of individual companies were presented last year is5) During 2008, a construction company changed from the completed-contract method to the percentage-of-completion method for accounting purposes but not for tax purposes. The following lists include gross profit figures under both methods for the past 3 years:
Assuming an income tax rate of 40% for all years, the affect of this accounting change on prior periods should be reported by a credit of what?
6) On January 1, 2005, Baden Co. purchased a machine, which was its only depreciable asset, for $300,000. The machine has a 5-year life, and no salvage value. Sum-of-the-years'-digits depreciation has been used for financial statement reporting and the elective straight-line method for income tax reporting. Effective January 1, 2008, for financial statement reporting, Baden decided to change to the straight-line method for depreciation of the machine. Assume that Baden can justify the change.
Baden's income before depreciation, before income taxes, and before the cumulative effect of the accounting change, if any, for the year ended December 31, 2008, is $250,000. The income tax rate for 2008, and for 2005 through 2007, is 30%. What amount should Baden report as net income for the year ended December 31, 2008?
7) The deferred tax expense is the
8) A company records an unrealized loss on short-term securities. This might result in what type of difference and in what type of deferred income tax?
9) A company uses the equity method to account for an investment. This would result in what type of difference and in what type of deferred income tax?
10) Nottingham Corporation had accounts receivable of $100,000 on January 1st The only transactions affecting accounts receivable were sales of $900,000 and cash collections of $850,000. What is the accounts receivable turnover?
11) If a petty cash fund is established in the amount of $250, and contains $150 in cash and $95 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to which of the following accounts?
12) If the month-end bank statement shows a balance of $36,000, outstanding checks are $12,000, a deposit of $4,000 was in transit at month end, and a check for $500 was erroneously charged by the bank against the account, what is the correct balance in the bank account at month end?
13) If a short-term obligation is excluded from current liabilities because of refinancing, the footnote to the financial statements describing this event should include all of the following information EXCEPT
14) Stock dividends distributable should be classified on the
15) Which of the following items is a current liability
16) A company borrows $10,000 and signs a 90-day nontrade note payable. In preparing a statement of cash flows (indirect method), this event would be reflected as
17) An increase in inventory balance would be reported in a statement of cash flows using the indirect method (reconciliation method) as
18) The primary purpose of the statement of cash flows is to provide information
19) Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in inventory, but did not record the transaction. What would be the effect of this on its financial statements for January 31?
20) Cross Co. accepted delivery of merchandise that it purchased on account. As of December 31, Cross had recorded the transaction, but did not include the merchandise in its inventory. What would be the effect of this on its financial statements for December 31?
21) The failure to record a purchase of merchandise on account even though the goods are properly included in the physical inventory results in
22) Fences and parking lots are reported on the balance sheet as
23) Which of these is not a major characteristic of a plant asset?
24) The debit for a sales tax properly levied and paid on the purchase of machinery preferably would be a charge to
25) On November 1, 2007, Little Company purchased 600 of the $1,000 face value, 9% bonds of Player, Incorporated, for $632,000, which includes accrued interest of $9,000. The bonds, which mature on January 1, 2012, pay interest semiannually on March 1 and September 1. Assuming that Little uses the straight-line method of amortization and that the bonds are appropriately classified as available-for-sale, what would the net carrying value of the bonds be shown as on Little's December 31, 2007, balance sheet?
26) On October 1, 2007, Lyman Co. purchased to hold to maturity, 200 of the $1,000 face value, 9% bonds for $208,000. An additional $6,000 was paid for accrued interest. Interest is paid semiannually on December 1 and June 1 and the bonds mature on December 1, 2011. Lyman uses straight-line amortization. Ignoring income taxes, what was the amount reported in Lyman's 2007 income statement from this investment?
27) On October 1, 2007, Porter Co. purchased to hold to maturity 1,000 of the $1,000 face value, 9% bonds for $990,000 which includes $15,000 accrued interest. The bonds, which mature on February 1, 2016, pay interest semiannually on February 1 and August 1. Porter uses the straight-line method of amortization. The bonds should be reported in the December 31, 2007 balance sheet at a carrying what value?
28) Although only certain leases are currently accounted for as a sale or purchase, there is theoretic justification for considering all leases to be sales or purchases. The principal reason that supports this idea is that
29) An essential element of a lease conveyance is that the
30) Which of the following is a correct statement of one of the capitalization criteria?
31) Discount on notes payable is charged to interest expense
32) The generally accepted method of accounting for gains or losses from the early extinguishment of debt treats any gain or loss as
33) A corporation borrowed money from a bank to build a building. The long-term note signed by the corporation is secured by a mortgage that pledges title to the building as security for the loan. The corporation is to pay the bank $80,000 each year for 10 years to repay the loan. Which of the following relationships can you expect to apply to the situation
34) Benton Company issues $10,000,000 of 10-year, 9% bonds on March 1, 2007, at 97 plus accrued interest. The bonds are dated January 1, 2007, and pay interest on June 30 and December 31. What is the total cash received on the issue date?
35) Limeway Company issues $5,000,000, 6%, 5-year bonds dated January 1, 2007, on January 1, 2007. The bonds pay interest semiannually on June 30 and December 31. The bonds are issued to yield 5%. What are the proceeds from the bond issue?
36) A company issues $20,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2007. Interest is paid on June 30 and December 31. The proceeds from the bonds are $19,604,145. Using effective-interest amortization, how much interest expense will be recognized in 2007?
37) Which of the following is not a characteristic of a defined-contribution pension plan?
38) In accounting for a defined-benefit pension plan
39) The interest on the projected benefit obligation component of pension expense
40) Windsor Company has outstanding both common stock and nonparticipating, noncumulative preferred stock. The liquidation value of the preferred is equal to its par value. The book value per share of the common stock is unaffected by
41) Dividends are not paid on
42) Assume common stock is the only class of stock outstanding in the B-Bar-B Corporation. Total stockholders' equity divided by the number of common stock shares outstanding is called
43) Preparation of consolidated financial statements when a parent-subsidiary relationship exists is an example of the
44) In presenting segment information, which of the following items must be reconciled to the entity's consolidated financial statements?
45) Presenting consolidated financial statements this year when statements of individual companies were presented last year is
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