BS 352 FINALEXAM PART II
NAME: __________________________
I promise I worked on this exam alone and didn’t seek or accept help. I
worked independently of my classmates and co-workers and family.
Signed___________________________________________________
1.
All of the following are operating activities except which one?
A.
B.
C.
D.
2.
Collection of cash from a customer on account.
Selling equipment.
Payment of advertising expenses.
Payment of salaries to employees.
On October 28, Sierra Corporation employees had earned and were paid salaries of $4,000.
How is this recorded on Sierra’s books?
A.
B.
C.
D.
DEBIT
4,000
Salaries expense
Cash
CREDIT
4,000
Salaries payable
Cash
4,000
Salaries expense
Salaries payable
4,000
Salaries payable
Salaries expense
4,000
4,000
4,000
4,000
1
3.
On December 1, 2011, stockholders invest $20,000 into McGladrey Corporation in exchange for
stock. What entry does McGladrey makes?
DEBIT
A.
B.
C
D.
4.
Cash
Common stock
20,000
Common stock
Cash
20,000
Cash
Due to stockholders
20,000
Due to stockholders
Cash
20,000
CREDIT
20,000
20,000
20,000
20,000
SAMS COMPANY sold merchandise to HOME COMPANY for $5,000. The merchandise sold
had a cost of $3,000. What entry should SAMS make on the day the merchandise is sold to
HOME COMPANY?
A.
B.
C.
D.
DEBIT
3,000
Cost of goods sold
Merchandise inventory
CREDIT
3,000
Accounts receivable
Sales
Cost of goods sold
Merchandise inventory
4,900
Accounts receivable
Sales
5,000
Accounts receivable
Sales
Cost of goods sold
Merchandise inventory
5,000
4,900
3,000
3,000
5,000
5,000
3,000
3,000
2
5.
When SONIC CORPORATION prepared their financial statements for this year, there are no
personal transactions of the company’s officers, managers or employees reported. This BEST
reflects which of the following assumptions in financial reporting?
A.
B.
C.
D.
6.
7.
Monetary Unit
Economic Entity
Periodicity (Time period)
Going concern
Mrs. Smith worked as a cash manager for ARRCO INC. for 20 years without taking a vacation.
ARRCO just found out that she has been embezzling money for nearly that whole time. She
should have been required to take vacations every year. Hint: Who makes you take vacation
every year? An internal control feature that would have addressed this situation would be:
A.
Physical, mechanical, & electronic control devices
B.
Establishment of responsibility
C.
Segregation of duties
D.
Human resource controls
E.
Documentation procedures
DAVID SCOTCH is getting ready to start a small business. DAVID met with his accountant
today to review some of the procedures that should be implemented, His accountant suggested
that the following procedures be put in place:
1.
2.
3.
PROCEDURE:
A background check should be conducted on all employees.
Approved purchase orders should be submitted before payment is made to
a supplier.
A cash register should be used which only opens when a sale is made.
In the order of 1, 2 and 3, which of the following correctly describes the nature of the internal
control procedures suggested by the accountant?
PROCEDURE 1
Segregation of
duties
PROCEDURE 2
Physical, mechanical,
& electronic control
devices
PROCEDURE 3
Physical, mechanical,
& electronic control
devices
B.
Human resource
controls
Segregation of
duties
Physical, mechanical,
& electronic control
devices
C.
Documentation
procedures
Establish responsibility
Documentation
procedures.
D.
Human resource
controls
Documentation
procedures
Physical, mechanical,
& electronic control
devices
A.
3
8.
The person who is authorized to sign checks approves purchase orders for payments. Which
internal control principle best fits the problem described?
A.
B.
C.
D.
E.
9.
The three points of the FRAUD TRIANGLE are:
A.
B.
C.
D.
10.
Physical, mechanical, & electronic control devices
Establishment of responsibility
Segregation of duties
Human resource controls
Documentation procedures
A clothing store is experiencing a high level of inventory shortages because customers try on
clothing and walk out of the store without paying for the merchandise. Which internal control
principle best fits the problem described?
A.
B.
C.
D.
E.
12.
Financial pressure, opportunity, and rationalization.
Opportunity, low pay, and bad company policies.
Rationalization, financial pressure, and some type of addiction.
Bad company policies, some type of addition, and prior criminal history.
Some cash payments are not recorded because checks are not prenumbered. Which internal
control principle best fits the problem described?
A.
B.
C.
D.
E.
11.
Physical, mechanical, & electronic control devices
Establishment of responsibility
Segregation of duties
Other controls
Documentation procedures
Physical, mechanical, & electronic control devices
Establishment of responsibility
Segregation of duties
Human resource controls
Documentation procedures
Two persons handle cash sales from the same cash register drawer. Which internal control
principle best fits the problem described?
A.
B.
C.
D.
E.
Documentation procedures
Physical, mechanical, & electronic control devices
Establishment of responsibility
Segregation of duties
Independent internal verification
4
13.
Sierra Corporation had the following transactions during 2011:
1.
2.
3.
4.
5.
6.
7.
8.
Sales to customers
Dividends to shareholders
Purchases of equipment
Repayment of loans
Collections from customers on account
Payment of rent.
Stock issued to investors
Salaries paid to employees
2011 operating activities include which of the above events?
A.
B.
C.
D.
E.
14.
On January 10, Sierra Corporation purchased equipment from a supplier on account for
$15,000. How is this recorded on Sierra’s books?
A.
B.
C.
D.
15.
DEBIT
15,000
Equipment
Cash
CREDIT
15,000
Equipment
Accounts payable
15,000
Cash
Accounts payable
15,000
Accounts payable
Cash
15,000
15,000
15,000
15,000
An accountant DEBITED an asset account for $900 and CREDITED a liability account
for $500. What can be done to complete the recording of the transaction so that the
accounting equation is in balance?
A.
B.
C.
D.
16.
2, 3, 7, 8
2, 3, 4, 7
1, 5, 6, 8
5, 6, 7, 8
3, 4, 5, 6
DEBIT a stockholders’ equity account for $400.
DEBIT another asset account for $400.
CREDIT a different asset account for $400.
Nothing further must be done.
Which of the following activities illustrates “FINANCING ACTIVITIES” for a business?
A.
B.
C.
D.
The company purchases new machinery and equipment for $50,000.
The company borrows $50,000 from the bank.
The company provides $50,000 in services to customers.
The company pays $50,000 in advertising for a new marketing campaign.
5
17.
18.
On October 1, 2007, CARR COMPANY places a new asset into service. The cost of the asset is
$30,000 with an estimated 5-year life. CARR COMPANY depreciates equipment on the basis of
the actual months held during the year. What is the depreciation expense for 2007 if CARR
COMPANY uses the straight-line method of depreciation?
A. $1,500
B. $2,000
C. $4,000
D. $8,000
A truck that cost $18,000 and on which $10,000 of accumulated depreciation has been recorded
was disposed of for $9,000 cash. The entry to record this event would be:
A.
B.
C.
D.
19.
CREDIT
18,000
Cash
Accumulated depreciation
Truck
Gain on sale of truck
9,000
10,000
Cash
Truck
Accumulated depreciation
Gain on sale of Truck
9,000
18,000
18,000
1,000
10,000
17,000
Cash
Loss on sale
Truck
9,000
9,000
18,000
Which of the following activities reflects investing activities?
A.
B.
C.
D.
20.
DEBIT
9,000
9,000
Cash
Loss on sale of truck
Truck
Purchasing advertising for the business.
Borrowing money from the bank.
Purchasing inventory to sell to customers.
Buying a competitor’s plant.
Which of the following is not properly classified as property, plant, and equipment?
A.
B.
C.
D.
Building used as a factory
Land used in ordinary business operations
A truck held for resale by an automobile dealership
Land improvement, such as parking lots and fences
6
21.
AT H&T GROCERS, the shift supervisor counts the cash in the cash drawer of each cashier
clerk when the clerk finishes their shift at the checkout counter. Which internal control principle
best fits the procedure described?
A.
B.
C.
D.
E.
22.
A check written for $167 is incorrectly recorded by JONES CORPORATION’S bookkeeper as
$176 in the company books. On the bank reconciliation, the $9 error should be:
A.
B.
C.
D.
23.
$35 in monthly service charges
$175 in outstanding checks
$500 deposit in transit
$1,250 note collected by the bank
Which of the following would be DEDUCTED from the BALANCE PER BOOKS on a bank
reconciliation?
A.
B.
C.
D.
25.
Added to the balance per books.
Deducted from the balance per books.
Added to the balance per bank.
Deducted from the balance per bank.
Which of the following would be DEDUCTED from the BALANCE PER BANK on a bank
reconciliation?
A.
B.
C.
D.
24.
Independent internal verification
Establishment of responsibility
Segregation of duties
Human resource controls
Documentation procedures
$35 in monthly service charges
$175 in outstanding checks
$500 deposit in transit
$1,250 note collected by the bank
Noreen Williams reconciles the bank statement every month for her company, BREWER
ENTERPRISES. One of the items which Noreen had to handle was a NSF check of $250
written by a BREWER customer. What should Noreen do with the $250 NSF check on the
monthly bank reconciliation?
A.
B.
C.
D.
Addition of $250 to the balance per books
Deduction of $250 from the balance per bank
Addition of $250 to the balance per bank
Deduction of $250 from the balance per books
7
26.
Depreciation is the process of allocating the cost of a plant asset over its useful life in a(n):
A.
B.
C.
D.
Equal and equitable manner.
Accelerated and accurate manner.
Systematic and rational manner.
Conservative market-based manner.
Label each account as asset, liability, owner’s equity, revenue, or expense. And the list the
normal balance, debit or credit, for each.
27.
Cash
Accounts Payable
Accounts Receivable
Interest Expense
Rent Expense
Notes Payable
Accounts Receivable
Inventory
Furniture and Fixture
Capital
Withdrawals
Property, Plant, and Equipment
8