Conquer Accounting Quizzes: Expert Tips for High Scores

Published: 9 months ago

Conquer Accounting Quizzes: Expert Tips for High Scores

38. Gibson Energy Ltd.'s general ledger account for Cash in Bank showed the following at December 31,...

39. What are some reasons why a company might want to understate its earnings?

Some people are tempted to make their fi nances look worse to get fi nancial aid. Companies sometimes also manage their fi nancial numbers in order to accomplish certain goals. Earnings management is the planned timing of revenues, expenses, gains, and losses to smooth out bumps in net income. In managing earnings, companies’ actions vary from being within the range of ethical activity, to being both unethical and illegal attempts to mislead investors and creditors.

Instructions

Provide responses for each of the following questions.

(a) Discuss whether you think each of the following actions (adapted from www.fi naid.org/fafsa/ maximize.phtml) to increase the chances of receiving fi nancial aid is ethical.

(i) Spend down the student’s assets and income fi rst, before spending parents’ assets and income.

(ii) Accelerate necessary expenses to reduce available cash. For example, if you need a new car, buy it before applying for fi nancial aid.

(iii) State that a truly fi nancially dependent child is independent.

(iv) Have a parent take an unpaid leave of absence for long enough to get below the “threshold” level of income.

(b) What are some reasons why a company might want to overstate its earnings?

(c) What are some reasons why a company might want to understate its earnings?

(d) Under what circumstances might an otherwise ethical person decide to illegally overstate or understate earnings?

40. Which of the following actions would be likely to reduce conflicts of interest between stockholders...

Which of the following actions would be likely to reduce conflicts of interest between stockholders and managers

a. Congress passes a law that severely restricts hostile takeovers.

b. A firm's compensation system is changed so that managers receive larger cash salaries but fewer long-term options to buy stock.

c. The company changes the way executive stock options are handled, with all options vesting after 2 years rather than having 20% of the options awarded vest every 2 years over a 10-year period.

d. The company’s outside auditing firm is given a lucrative year-by-year consulting contract with the company.

e. The composition of the board of directors is changed from all inside directors to all outside directors, and the directors are compensated with stock rather than cash.

41. 142.Journalize the following entries on the books of the borrower and creditor. Label accordingly...

142.Journalize the following entries on the books of the borrower and creditor.  Label accordingly. (Assume a 360-dayyear is used for interest calculations.)

Jun.1Regis Co. purchased merchandise on account from Winthrop Co., $60,000, terms n/30.

Jun.  30Regis Co. issued a 60-day, 5% note for $60,000 on account.

Aug. 29Regis Co. paid the amount due.

143.On October 1, Ramos Co. signed a $90,000, 60-day discounted note at the bank.  The discount rate was 6%, andthe note was paid on November 30. (Assume a 360-day year is used for interest calculations.)

(a)Journalize the entries for October 1 and November 30.

(b)Assume that Ramos Co. signed a 6% note.  Journalize the entries for October 1 andNovember 30.

144.Journalize the following entries on the books of Winston Co. for August 1, September 1, and November 30.(Assume a 360-day year is used for interest calculations.)

Aug.   1Winston Co. purchased merchandise for $75,000 on account from Bagley Co., terms n/30.Sept.   1              Winston Co. issued a 90-day, 6% note for $75,000 on account.

Nov. 30Winston Co. paid the amount due.

145.A borrower has two alternatives for a loan: (a) issue a $480,000, 60-day, 8% note or (2) issue a $480,000, 60-daynote that the creditor discounts at 8%. (Assume a 360-day year is used for interest calculations.)

(a)Calculate the amount of the interest expense for each option.

(b)Determine the proceeds received by the borrower in each situation.

146.Baker Green’s weekly gross earnings for the week ending December 7 were $2,500, and her federal income taxwithholding was $525.  Prior to this week Green had earned $98,000 for the year.  Assuming the social securityrate is 6% and Medicare is 1.5%, what is Green’s net pay?

42. Which of the following is not true relating to intangibles?

A. Which of the following accounts would not be classified as an intangible?

1. Goodwill

2. Patent

3. Accounts Receivable

4. Trademarks

5. Franchises

B. Which of the following is not true relating to intangibles?

1. Research and development usually represents a significant intangible on the financial statements.

2. Goodwill arises from the acquisition of a business for a sum greater than the physical asset value.

3. Purchased goodwill is not amortized but is subject to annual impairment reviews.

4. The global treatment of goodwill varies significantly.

5. Intangibles are usually amortized over their useful lives or legal lives, whichever is shorter.

43. 1) A ________ is a group of numbers, text, dates, or time periods that come in succession. A) chain.

1) A ________ is a group of numbers, text, dates, or time periods that come in succession.

A) chain

B) sequence

C) series

D) succession

2) The Excel feature used to automatically adjust column width to the longest column entry is ________.

A) AutoFit

B) AutoComplete

C) AutoAdjust

D) AutoFill

3) The displayed value of a cell is replaced with a series of # symbols when ________.

A) there is an error in the underlying formula

B) the name of a function is misspelled

C) the column is too narrow to display the entire value

D) a cell in the underlying formula has no value

4) Which symbol is the error indicator that appears in a cell having a formula that has broken a rule?

A) green triangle

B) green square

C) red exclamation point

D) yellow caution sign

5) When a section of a worksheet displaying numeric values is selected, the ________ appears; this is used to apply conditional formatting or to insert a chart or table based on the selected content.

A) Quick Access Lens button

B) Quick Analysis Lens button

C) Quick Analysis Lens contextual tab

D) Quick Format Lens button

6) Which is NOT a category in the Quick Analysis gallery?

A) Formatting

B) Charts

C) AutoSum

D) Tables

7) A cell that remains the same when it is copied or filled to other cells is a(n) ________.

A) relative cell reference

B) constant cell reference

C) fixed cell reference

D) absolute cell reference

8) The ________ outlines all the cells referenced in a formula.

A) error value

B) range finder

C) error indicator

D) range detector

9) A message that appears in a cell when a formula cannot perform the specified calculations is a(n) ________.

A) error value

B) failure message

C) edit message

D) error indicator

10) The number of decimals places and the appearance commas, dollar signs, or other symbols are features of number ________.

A) format

B) style

C) layout

D

44. Target does not have investments in stock or bonds. However, CVS Health Corp., whiclh purchased T...

Target does not have investments in stock or bonds. However, CVS Health Corp., whiclh purchased Target's pharmacy and clinical business during 2015, does have some investments. Access CVS's 2015 10K (issued on February 9, 2016) at investors.cvshealth.com to answer the following questions: CVS indicates in Note 1 that it has some short-term investments that consist of certificates of deposit (CDs). a. How has CVS classified those CDs for accounting purposes? b. Per CVS's balance sheet, what was the balance in CVS's short-term investments as of December 31, 2015 and December 31, 2014? c. Per CVS's statement of cash flows, what cash transactions affected short-term investments during 2015? d. Prepare a T-account that summarizes transactions affecting CVS's short-term investments during 2015. Speculate as to the explanation for any plug" figure necessary to make the T- account balance.

45. Check my work 4 Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for...

Check my work 4 Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expenses are $40.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows 2.5 points Sales Variable expenses Contribution margin Pixed expenses Net operating income s 2,160,000 1,080,000 1,080,000 180,000 $ 900,000 eBook Print References Required Answer each question independently based on the original data 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point in dollar sales. 3. If this year's sales increase by $58,000 and fixed expenses do not change, how much will net operating income increase? 4-a. What is the degree of operating leverage based on last year's sales? 4-b. Assume the president expects this year's sales to increase by 19%. Using the degree of operating leverage from last year, what percentage increase in net operating income will the company realize this year?

46. Presented below is selected information related to Kirby Company at December 31, 2017. Kirby repo...

Presented below is selected information related to Kirby Company at December 31, 2017. Kirby reports financial information monthly. Determine the total assets of Kirby Company at December 31, 2017. Determine the net income that Kirby Company reported for December 2017. Determine the owner's equity of Kirby Company at December 31, 2017.

47. Milton Company closes its books on its July 31 year-end. The company does not make entries to...

Milton Company closes its books on its July 31 year-end. The company does not make entries to accrue for interest except at its year-end. On June 30, the Notes Receivable account balance is $23,800. Notes Receivable include the following During July, the following transactions were completed.

July 5 Made sales of $4,500 on Milton credit cards.

14 Made sales of $600 on Visa credit cards. The credit card service charge is 3%.

20 Received payment in full from Coote Inc. on the amount due.

24 Received payment in full from Brady Co. on the amount due.

Instructions

(a) Journalize the July transactions and the July 31 adjusting entry for accrued interest receivable. (Interest is computed using 360 days; omit cost of goods sold entries.)

(b) Enter the balances at July 1 in the receivable accounts and post the entries to all of the receivable accounts. (Use T-accounts.)

(c) Show the balance sheet presentation of the receivable accounts at July 31.

48. Which of the following assumptions is not required for Miller and Modigliani’s (MM) dividend theory?

Which of the following assumptions is not required for Miller and Modigliani’s (MM) dividend theory?

A. There are no taxes.

B. Investors sort themselves into dividend clienteles.

C. Shareholders have no transaction costs when buying and selling shares.

49. Inventory. On January 1, 20X6, the River Company’s beginning inventory $400,000. During 20X6, River...

Inventory. On January 1, 20X6, the River Company’s beginning inventory $400,000. During 20X6, River purchased $1,900,000 of additional inventory. On December 31, 20X6, River’s ending inventory was $500,000. (a) What is the inventory turnover and the age of inventory for 20X6? (b) If the inventory turnover in 20X5 was 3.3 and the average age of the inventory was 100.6 days, evaluate the results 20X6.

50. Which of the following statements is correct concerning materiality in a financial statement audit?

Which of the following statements is correct concerning materiality in a financial statement audit?

a. Analytical procedures performed during an audit’s final review

usually increase performance materiality levels.

b. The auditor’s materiality judgments generally involve qualita- tive, but not quantitative, factors.

c. The auditor’s materiality judgments generally involve quantita- tive, but not qualitative, considerations.

d. Materiality levels are generally considered in terms of the smal-

lest aggregate level of misstatement that could be considered material to any one of the financial statements.