Posted: October 20th, 2022

ACC 545 Final Exam

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 is
5.
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:

Completed-Contract

Percentage-of-Completion

2006

$ 475,000

$ 800,000

2007

625,000

950,000

2008

700,000

1,050,000

$1,800,000

$2,800,000

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?

Type of Difference

Deferred Tax

Option 1

Temporary

Liability

Option 2

Temporary

Asset

Option 3

Permanent

Liability

Option 4

Permanent

Asset

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?

Type of Difference

Deferred Tax

Option 1

Permanent

Asset

Option 2

Permanent

Liability

Option 3

Temporary

Asset

Option 4

Temporary

Liability

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?
2.5% 3.0% 5.0% 6.0% Present value of a single sum for 5 periods
.88385 .88261 .78353 .74726 Present value of a single sum for 10 periods .78120
.74409 .61391 .55839 Present value of an annuity for 5 periods 4.64583 4.57971
4.32948 4.21236 Present value of an annuity for 10 periods 8.75206 8.53020
7.72173 7.36009
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 project ( help with nursing paper writing from experts with MSN & DNP degrees)ed
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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