ACCT 310 Intermediate Accounting I Quiz 1- Spring 2016

ACCT 310 Intermediate Accounting I Quiz 1- Spring 2016

Microsoft Divers paid $2,000 interest on short-term notes payable, $10,000 interest on long-term bonds, and $6,000 in dividends on its common stock. Microsoft would report cash outflows from activities, as follows:

A.  Operating, $2,000; financing, $16,000.

B.  Operating, $0; financing, $18,000.

C.  Operating, $12,000; financing, $6,000.

D.  Operating, $18,000; financing, $0.

2. The accountant for Brooks Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available:

Retained earnings balance at the beginning of the year                        $156,000

Cash dividends declared for the year                                       $ 46,000

Proceeds from the sale of equipment                                       $ 81,000

Gain on the sale of equipment                                                             $ 7,000

Cash dividends payable at the beginning of the year               $ 18,000

Cash dividends payable at the end of the year                                     $ 40,000

Net income for the year                                                                       $ 92,000

What is the ending balance for retained earnings?

A. $276,000.

B. $202,000.

C. $254,000.

D. $248,000.

E. $174,000.

Use the following data for Questions 3-5:

For 2014, ABC Company estimates bad debt expense at 1% of credit sales. The company reported accounts receivable and an allowance for uncollectible accounts of $86,500 and $2,100, respectively, at December 31, 2013. During 2014, ABC's credit sales and collections were $404,000 and $408,000, respectively, and $2,340 in accounts receivable were written off.

3. ABC's accounts receivable at December 31, 2014, are:

A.  $90,500.

B.  $88,160.

C.  $82,500.

D.  $80,160.

4. ABC's 2014 bad debt expense is:

A.  $2,100.

B.  $2,340.

C.  $4,080.

D.  None of the above is correct.

5. ABC's adjusted allowance for uncollectible accounts at December 31, 2014, is:

A.  $4,340.

B. $4,100.

C. $3,800.

D. $4,040.

6. The following information pertains to Joe's Inc. accounts receivable at December 31, 2014:

Days outstanding         Amount           Estimated % Uncollectible

            0-30                 $420,000                     2%

            31-60               140,000                       5%

            61-120             100,000                       10%

            Over 120         120,000                       20%

During 2014, Joe wrote off $18,000 in receivables and recovered $6,000 that had been written off in prior years. Joe's December 31, 2013, allowance for uncollectible accounts was $40,000. Under the aging method, what amount of allowance for uncollectible accounts should Joe report at December 31, 2014?

A.  $28,000.

B.  $31,400.

C.  $55,400.

D.  $49,400.

7. Use the following information and the indirect method to calculate the net cash provided or used by operating activities for 2015:

Net income                                                      $12,300

Depreciation expense                                      12,000

Payment on mortgage payable (due 2020)       15,000

Gain on sale of land                                        7,500

Increase in merchandise inventory                  2,050

Increase in accounts payable                           6,150

Proceeds from sale of land                              8,000

A. $12,700.

B. $13,900.

C. $20,900.

D. $28,400.

E. $35,900.

8. The primary focus for financial accounting information is to provide information useful for:

                        Investing decisions      Credit decisions

a.                                 Yes                              Yes

b.                                 Yes                              No

c.                                 No                               Yes

d.                                 No                               No

9. Land was acquired in 2013 for a future building site at a cost of $40,000. The assessed valuation for tax purposes is $27,000, a qualified appraiser placed its value at $48,000, and a recent firm offer for the land was for a cash payment of $46,000. The land should be reported in the financial statements at:

A.  $40,000.

B. $27,000.

C. $46,000.

D. $48,000.

10. Disclosure notes to a company's financial statements:

A. Are relatively unimportant facts that don't belong in the basic financial statements.

B. Document the source of financial statement facts, like literary footnotes.

C. Are an integral part of a company's financial statements.

D. Are irrelevant facts that are immaterial in amount.

11. Constraints on qualitative characteristics of accounting information include:

A. Timeliness.
B. Going concern.
C. Neutrality.
D. Materiality.

12. Troy Company recognizes revenue in the period in which it records an asset for the related account receivable, rather than in the period in which the account receivable is collected in cash. Troy's practice is an example of:

A.  Cash basis accounting.

B.  Accrual accounting.

C.  The matching principle.

D.  Economic entity.

13. In a recent annual report, IBM Computer reported the following in one of its disclosure notes: "Warranty Expense: IBM provides currently for the estimated cost for product warranties at the time the related revenue is recognized." This note exemplifies IBM's use of:

A. Conservatism
B. The matching principle

C. Realization principle

D. Economic entity

14. GAAP is an abbreviation for:

A.  Generally authorized accounting procedures.

B.  Generally applied accounting procedures.

C.  Generally accepted auditing practices.

D.  Generally accepted accounting principles.

15. The FASB issues accounting standards in the form of

A.  Accounting Research Bulletins.

B. Accounting Standards Updates.

C. Financial Accounting Standards.

D. Financial Technical Bulletins.

16. The FASB's standard-setting process includes, in the correct order:

A.  Exposure draft, research, discussion paper, Accounting Standards Update.

B. Research, exposure draft, discussion paper, Accounting Standards Update.

C. Research, discussion paper, exposure draft, Accounting Standards Update.

D. Discussion paper, research, exposure draft, Accounting Standards Update.

17. Which of the following has the statutory authority to set accounting standards in the United States?

A.  FASB.

B.  IRS.

C.  SEC.

D.  AICPA.

18. When a registrant company submits its annual filing to the SEC, it uses:

A.  Form 10-A.

B.  Form 10-K.

C.  Form 10-Q.

D.  Form S-1.

19. The primary professional organization for those accountants working in the industry is the:

A.   AAA.

B.   AICPA.

C.   IIA.

D.   IMA.

20. The FASB's conceptual framework's qualitative characteristics of accounting information include:

A.   Full disclosure.

B.   Relevance.

C.   Going concern.

D.   Historical cost.  

INSTRUCTIONS FOR PART 2

ACCT310 Spring 2016 Quiz 1

1. The following pretax amounts pertain to the XYZ Company for the year ended December 31, 2015.

Sales	$ 510,000
Operating expenses	79,000
Extraordinary gain	32,000
Interest expense	5,000
Cost of goods sold	260,000
Gain on sale of equipment	14,000
Prior period adjustment( before tax)	(16,000)
Gain on disposal of business component	40,000
Retained earnings, January 1, 2015	1,800,000

The corporate tax rate is 40 percent. The company had 10,000 shares of common stock outstanding for the entire year.

Prepare a multiple-step income statement and statement of retained earnings, in good form, for the year ended December 31, 2015, including EPS.

2. The December 31, 2015, post-closing trial balance ($ in thousands) for UMUC Company is presented below:

Debits              Credits

Cash                                                                            22,500

Investments (long-term)                                              55,000

Accounts receivable                                                    30,000

Allowance for uncollectible accounts                                                 7,500

Prepaid insurance                                                        4,500

Inventories                                                                  100,000

Land                                                                            45,000

Buildings                                                                     140,000

Accumulated depreciation - Buildings                                               50,000

Equipment                                                                   132,500

Accumulated depreciation- Equipment                                              30,000

Patents                                                                        5,000

Accounts payable                                                                                37,500

Notes payable, due 2016                                                                    65,000

Interest payable                                                                                   10,000

Bonds payable, due 2024                                                                   120,000

Common stock, no par, 20,000 shares

authorized, issued, and outstanding                                                   150,000

Retained earrings -                                                                              64,500

Totals                                                                          534,500           534,500

Required:

Prepare a classified balance sheet for UMUC Company at December 31, 2015.

TUTORIAL PREVIEW

UMUC Company
Classified Balance sheet
For the year ended 2015
Current Assets
Cash		22,500
Accounts Receivable	30,000

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