ACCT310 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?
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:
4. ABC’s 2014 bad debt expense is:
D. None of the above is correct.
5. ABC’s adjusted allowance for uncollectible accounts at December 31, 2014, is:
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?
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
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:
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:
B. Going concern.
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:
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?
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:
20. The FASB’s conceptual framework’s qualitative characteristics of accounting information include:
A. Full disclosure.
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.
Cost of goods sold
Gain on sale of equipment
Prior period adjustment( before tax)
Gain on disposal of business component
Retained earnings, January 1, 2015
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:
Investments (long-term) 55,000
Accounts receivable 30,000
Allowance for uncollectible accounts 7,500
Prepaid insurance 4,500
Accumulated depreciation – Buildings 50,000
Accumulated depreciation- Equipment 30,000
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
Prepare a classified balance sheet for UMUC Company at December 31, 2015.