ACC 442 Final Exam

July 2013 Update

1) Which of the following is NOT considered cash for financial
reporting purposes?
2) What is the preferable presentation of accounts receivable from
officers, employees, or affiliated companies on a balance sheet?
3) Which of the following is considered cash?
4) If a company employs the gross method of recording accounts receivable from customers, then sales discounts taken should be reported as

5) Assuming that the ideal measure of short-term receivables in the
balance sheet is the discounted value of the cash to be received in the future,
failure to follow this practice usually does NOT make the balance sheet
misleading because

6) Which of the following methods of determining annual bad debt expense best achieves the matching concept?

7) The accountant for the Orion Sales Company is preparing the income statement for 2007 and the balance sheet at December 31, 2007. Orion uses the periodic inventory system. The January 1, 2007 merchandise inventory balance will appear

8) Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in inventory, but did NOT record the transaction. The effect of this on its financial statements for January 31 would be

9. If the beginning inventory for 2006 is overstated, the effects of this error on cost of goods sold for 2006, net income for 2006, and assets at December 31, 2007, respectively, are

10) Assuming no beginning inventory, what can be said about the trend of inventory prices if cost of goods sold computed when inventory is valued using the FIFO method exceeds cost of goods sold when inventory is valued using the LIFO method?

11) Which method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations?

12) All of the following costs should be charged against revenue in the period in which costs are incurred EXCEPT for

13) In no case can market in the lower-of-cost-or-market rule be more than

14) When the direct method is used to record inventory at market

15) An item of inventory purchased this period for $15.00 has been incorrectly written down to its current replacement cost of $10.00. It sells during the following period for $30.00, its normal selling price, with disposal costs of $3.00 and normal profit of $12.00. Which of the following statements is NOT true?

16) The retail inventory method is based on the assumption that the

17) A major advantage of the retail inventory method is that it

18) In 2006, Lucas Manufacturing signed a contract with a supplier to purchase raw materials in 2007 for $700,000. Before the December 31, 2006 balance sheet date, the market price for these materials dropped to $510,000. The journal entry to record this situation at December 31, 2006 will result in a credit that should be reported

19) The cost of land typically includes the purchase price and all of the following costs EXCEPT

20) Cotton Hotel Corporation recently purchased Holiday Hotel and the land on which it is located with the plan to tear down the Holiday Hotel and build a new luxury hotel on the site. The cost of the Holiday Hotel should be

21) If a corporation purchases a lot and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on

22) The period of time during which interest must be capitalized ends when

23) Which of the following assets do NOT qualify for capitalization
of interest costs incurred during construction of the

24) When computing the amount of interest cost to be capitalized,
the concept of avoidable interest refers to

25) The King-Kong Corporation exchanges one plant asset for a
similar plant asset and gives cash in the exchange. The exchange is NOT expected
to cause a material change in the future cash flows for either entity. If a gain
on the disposal of the old asset is indicated, the gain

26) When a plant asset is acquired by issuance of common stock, the
cost of the plant asset is properly measured by the

27) The cost of a nonmonetary asset acquired in exchange for
another nonmonetary asset and the exchange has commercial substance is usually
recorded at

28) Which of the following principles best describes the conceptual
rationale for the methods of matching depreciation expense with

29) If an industrial firm uses the units-of-production method for
computing depreciation on its only plant asset, factory machinery, the credit to
accumulated depreciation from period to period during the life of the firm

30) Which of the following most accurately reflects the concept of
depreciation as used in accounting?

31) Prentice Company purchased a depreciable asset for $200,000.
The estimated salvage ACC 422 Final Exam value is $20,000, and the estimated useful life is 10
years. The straight-line method will be used for depreciation. What is the
depreciation base of this asset?