ACG 2021 PRACTICE QUESTIONS AND ANSWERS FOR FINAL EXAM
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Course
ACG 2021
Institution
ACG 2021
The three most well-known forms of business organization Sole proprietorships, partnerships, and corporation
What section of a cash flows statement shows the amount of cash spent on new equipment acquired during the most recent accounting period? The investing section
In what order are the follow...
ACG 2021 PRACTICE QUESTIONS AND
ANSWERS FOR FINAL EXAM
The three most well-known forms of business organization ✅Sole proprietorships,
partnerships, and corporation
What section of a cash flows statement shows the amount of cash spent on new
equipment acquired during the most recent accounting period? ✅The investing section
In what order are the following accounts and their balances listed on a classified
balance sheet? ✅Cash, accounts receivable, inventories, equipment
Which of the following would not be reported among property, plant, and equipment on
a classified balance sheet? ✅Inventory
Current Ratio ✅CA/CL
The effects of paying for a one-year insurance policy that will expire next year on the
basic accounting equation are to ✅increase assets and decrease assets by the same
amount. Total assets do not change.
Ending Retained Earnings Equation ✅Beginning RE + Net Income - Dividends
Which of the following is the sequence of events for the recording process?
✅Journalize; post; prepare a trial balance
The generally accepted accounting principle which dictates that revenue be recognized
in the accounting period in which the performance obligation is satisfied is the
✅revenue recognition principle.
Which of the following is not a typical example of a prepaid expense? ✅Wages
Omitting the year-end adjusting entry for accrued interest payable ✅fails to increase
interest payable and it fails to increase interest expense.
Which of the following is not a component or step of the operating cycle for a service
company? ✅Buy inventory to be resold to customers
Multi-step income statements report the following: ✅Revenues minus cost of goods
sold equals gross profit, and gross profit minus operating expenses (e.g., salaries &
wages, advertising, utilities, depreciation, freight-out, insurance) equals income from
, operations, and income from operations minus non-operating income &/or expenses
(e.g., interest revenue, interest expense, gain from sales of plant assets, losses from
sales of plant assets) equals income before income taxes, and income before income
taxes minus income taxes equals net income
COGS formula ✅beginning inventory + purchases - ending inventory
Gross Profit ✅net sales - cost of goods sold
Gross Profit Rate ✅gross profit/net sales
Which of the following is an inventory account? ✅Finished Goods
In periods of inflation, what will LIFO produce? ✅Lower total assets than FIFO
Which is true if the ending inventory is overstated? ✅Net income will be overstated
and the stockholders' equity will be overstated.
Whenever net income is overstated, stockholders' equity will be overstated.
The five basic issues in accounting for notes receivable are ✅1) determining the
maturity date, 2) computing interest, 3) recognizing notes receivable, 4) valuing notes
receivable, and 5) disposing of notes receivable.
Account Receivable Turnover ✅net credit sales/average net accounts receivable
Which of the following is an intangible asset that is not amortized? ✅Trademark
Low Flow Inc. Issues 10-year bonds with a maturity value of $200,000. If the bonds are
issued for $198,000, what does this indicate? ✅The market interest rate exceeds the
contractual interest rate.
Handel Enterprises issued 4,000 bonds with a face value of $1,000 each at 101. The
journal entry to record the issuance includes ✅a credit to Premiums on Bonds Payable
for $40,000.
Which of the following is a characteristic of sole proprietorships? ✅Low taxation
If 1,000 shares of $2 par common stock are reacquired by a corporation for $4 a share,
by how much will total stockholders' equity change? ✅$4,000 decrease
Andrews Company declared a cash dividend of $1.00 per share on 20,000 shares of
common stock on January 15. The dividend is to be paid one month later on February
15 to stockholders of record on January 31. Which of the following summarizes the
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