Professional Documents
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ACC 111
Final Exam
CONTENT
Note: Items with a “*” beside them indicate that they have more questions on the
test than do some of the other items
• Accounting concepts
• Accounting cycle – journalizing (including use of the Chart of Accounts),
posting, Trial Balance, Financial Statements
• * Journal entries – identifying what account(s) to debit and what account(s) to
credit
• * Financial statements for service company and merchandiser – Income
Statement, Statement of Owner’s Equity, Balance Sheet
• * Adjusting entries – accruals and deferrals of both revenues and expense
• Journalizing sales, cash receipt, purchase, and cash payment transactions
using perpetual inventory – including those involving discounts
• Closing entries for service company and merchandiser
• Subsidiary ledgers and controlling accounts
• Special journals – identifying in which journal a transaction is recorded
• Internal controls
• Petty cash – including establishing the fund, disbursing from the fund,
reimbursing the fund, permanently changing the fund balance
• Bank reconciliation – including journal entries
• Perpetual inventory – understand how this system works and also
determining cost of ending inventory and COMS using LIFO, FIFO
• Gross profit method of estimating ending inventory
Page 4 of 14 ACC 111 Review problems for Final Exam—J. Stoudemire
Use the following information to calculate on, or for the year ended, December 31,
20xx Total assets, Supplies, Net income and Capital at year-end
The difficulties of income measurement are caused by all of the following except the
a. Accounting period issue.
b. Recognition issue.
c. Continuity issue.
d. Matching issue.
As time passes, the accumulated depreciation and the carrying value related to a
plant asset
a. Both decrease.
b. Both increase.
c. Increase and decrease, respectively.
d. Decrease and increase, respectively.
The costs of goods and services used in the process of obtaining revenue are called
a. Expenses.
b. Assets.
c. Profits.
d. Liabilities.
The order of preparing the financial statements from the adjusted trial balance is
a. Balance sheet, statement of owner’s equity, income statement.
b. Income statement, statement of owner’s equity, balance sheet.
c. Statement of owner’s equity, income statement, balance sheet.
d. Income statement, balance sheet, statement of owner’s equity.
Adjusting entries must be made at the end of the accounting period for all of the
following situations except when
a. There are unrecorded expenses.
b. There are unrecorded revenues.
c. Revenues have been recorded that must be apportioned between two or
more accounting periods.
d. There are errors to be corrected.
Revenues of $2,000 are received and recorded on Monday of each week for day-
care services to be provided Monday through Friday. If the year ends on
Wednesday, what is the amount to be shown on the balance sheet in Unearned
Revenues at the end of the year?
A company began the year with $1,500 in supplies, purchased $1,000 in supplies
during the year, and ended the year with $500 in supplies. How much is Supplies
Expense for the period?
Page 7 of 14 ACC 111 Review problems for Final Exam—J. Stoudemire
Revenue of $40,000 was earned, of which $25,000 has already been collected.
Expenses of $10,000 have been incurred, but only $5,000 has been paid. What is
the reported net income?
For each definition, write the letter that corresponds to the correct term in the blank
provided on the right. Use each letter only once.
2. Journal entries made at the end of the accounting period that set the
stage for the next accounting period by clearing the temporary
accounts’ balances.
Which of the following accounts is not closed during the closing procedure?
a. B. Bailey, Capital
b. Income Summary
c. Rent Expense
d. Interest Income
Which of the following is not true about the preparation of financial statements?
a. They do not need to be prepared separately if a work sheet is used.
b. Their numbers may come from the work sheet.
c. They are prepared before the post-closing trial balance is prepared.
d. The column totals on the work sheet are different from the totals on the actual
statements.
Closing entries
a. Are optional.
b. Bring all permanent (real) accounts to a zero balance.
c. Transfer net income or loss into the Owner’s Capital account.
d. Are prepared at the beginning of the new accounting period.
The steps in the accounting cycle that could be completed with the aid of the work
sheet are
a. Analyze, record, post.
b. Appropriate, enter, record.
c. Allocate, close, reverse.
d. Adjust, prepare, close.
Page 9 of 14 ACC 111 Review problems for Final Exam—J. Stoudemire
For each definition, write the letter that corresponds to the correct term in the blank
provided on the right. Use each letter only once.
1. Those expenses, other than the cost of goods sold, that are incurred in
running a business.
2. The amount paid for the goods sold during an accounting period.
8. The total goods that could have been sold to customers during the
year; beginning merchandise inventory plus net cost of purchases.
10. An account used under the periodic inventory system in which the cost
of all merchandise bought for resale is accumulated for that accounting
period.
A company sold goods for $1,000 with a 10 percent trade discount, terms 2/10, n/30.
How much would be received if the account were paid within the discount period?
a. $1,000
b. $882
c. $980
d. $900
Page 10 of 14 ACC 111 Review problems for Final Exam—J. Stoudemire
Under the perpetual inventory system, in addition to making the entry to record a
sale, a company would
a. Debit Merchandise Inventory and credit cost of Goods. Sold.
b. Debit cost of Goods sold and credit Purchases.
c. Debit Cost of Goods sold and credit Merchandise Inventory.
d. Make no additional entry until the end of the period.
The account Freight Out (delivery expense) is shown on the income statement as a
a. Component of the cost of goods sold.
b. Deduction from sales.
c. Selling expense.
d. General and administrative expense.
Which of the following is deducted from goods available for sale to determine cost of
goods sold?
a. Purchases
b. Freight in
c. Beginning merchandise inventory
d. Ending merchandise inventory
A company purchased goods for $600 and was given credit terms of 1/10, n/60. Its
entry upon payment fifteen days later would include a credit to
a. Cash for $594.
b. Purchases Discounts for $6.
c. Cash for $600.
d. Accounts Payable for $600.
Using the following information, calculate Net sales, Ending merchandise inventory,
Cost of goods sold, Selling expenses.
From which journal would a posting be made at the end of the day to the subsidiary
ledger for each transaction entered that day?
a. Cash payments journal
b. Cash receipts journal
c. Purchases journal
d. None of the above
Which of the following statements is true about the cash receipts journal?
a. It probably will contain a credit column for Sales Discounts.
b. It probably will have some postings to the accounts payable ledger.
c. It probably will have an end-of-month posting to the Accounts Receivable
controlling account.
d. Its Posting Reference column could have the reference “CR1”.
The direct source for the preparation of a schedule of accounts receivable is the
a. Adjusted trial balance.
b. Accounts receivable subsidiary ledger.
c. Accounts Receivable controlling account.
d. Cash receipts journal.
For each of the following transactions, indicate the journal that should be used by
placing the appropriate abbreviation in the space provided. S= sales journal, P=
multicolumn purchases journal, CR= cash receipts journal, CP= cash payments
journal, J= general journal.
Which of the following documents would be prepared by the treasurer, after verifying
all underlying documentation, and sent to the supplier?
a. Check
b. Check Authorization
c. Invoice
d. Receiving report
A company issues a check for $175 but records it as $157. On the bank
reconciliation, the $18 error should be
a. Deducted from the balance per books.
b. Added to the balance per books.
c. Deducted from the balance per bank.
d. Added to the balance per bank.
A very small company would have the most difficulty in fulfilling which of the
following attributes of internal control?
a. Reliable personnel
b. Sound personnel policies
c. Sound accounting system
d. Separation of duties
Which of the following bank reconciliation items would result in an adjusting entry on
the company’s books?
a. Deposit in transit
b. NSF check
c. Outstanding checks
d. Bank error
Page 13 of 14 ACC 111 Review problems for Final Exam—J. Stoudemire
A company establishes a $100 petty cash fund. The fund is replenished in the
amount of $95, after petty cash vouchers of $50 for postage, $20 for donations, and
$22 for meals had accumulated. (a) Was there a cash shortage, overage, or neither?
(b) State the amount of the overage or shortage, if any.
Use the following inventory information for the month of May to answer questions 13
through 16.
Assuming that a perpetual inventory system is used, what is the cost of goods sold
on a FIFO basis?
a. $300
b. $1,875
c. $425
d. $ 2,000
Assuming that a perpetual inventory system is used, what is the ending inventory on
a LIFO basis?
a. $300
b. $425
c. $1,875
d. $1,900
Page 14 of 14 ACC 111 Review problems for Final Exam—J. Stoudemire
Under declining prices, which of the following inventory methods probably will result
in the lowest ending inventory?
a. Average-cost
b. Specific identification
c. First-in, first-out
d. Last-in, first-out
If the estimated rate of gross profit is 40%, what is the estimated cost of the
merchandise inventory on June 30, based on the following data?
a. $144,000
b. $140,000
c. $ 81,000
d. $ 54,500
On the basis of the following data, what is the estimated cost of the merchandise
inventory on October 31 by the retail method?
Cost Retail
Oct. 1 Merchandise Inventory $225,000 $324,500
Oct. 1-31 Purchases (net) 335,000 475,500
Oct. 1-31 Sales (net) 700,000
a. $372,000
b. $140,000
c. $100,000
d. $ 70,000
Using the lower of cost or market 9item –by-item), what should the total inventory
value be for the following items:
Item Quantity Unit cost Unit Total cost Total
price market price market
price price
A 200 $4 $4.50 $800 $900
B 100 $3 $3.10 300 $310
C 50 $9 $7.00 $450 $350
a. $1,450
b. $1,550
c. $1,560
d. $1,570