Angelica Vannarath
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financial accounting exam

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Angelica Vannarath
Created by Angelica Vannarath over 7 years ago
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Chapter 2

Question 1 of 11

1

Radford Company was started on Janurary 2, 2016. During its first year of operations, Radford Company provided $86,000 in consulting services to its clients on account and collected $69,000 of this amount. Use the horizontal financial statements model to record these transactions and determine which of the following statements is incorrect.

Select one of the following:

  • Net income increased by $86,000.

  • Total assets increased by $69,000.

  • Retained earnings increased by $86,000.

  • A cash inflow of $69,000 is shown on the statement of cash flows.

Explanation

Question 2 of 11

1

Sturgis Company began its operations on March 1, 2016. The following information is from Sturgis Company's accounting records for 2016.

1. Acquired $40,000 from the issuance of common stock.
2. Provided $130,000 of services on account.
3. Purchased $3,200 of supplies on account.
4. Collected $112,000 from accounts receivable.
5. Paid $64,000 for salaries expense.
6.
Adjusted the records to reflect the use of supplies. A physical count indicated that $700 of the supplies was still on hand on December 31, 2016.


Record the transactions in general ledger accounts under an account equation and select the correct statement.

Select one of the following:

  • Ending cash balance is $88,000.

  • Sales revenue is $112,000.

  • Supplies expense is ($700).

  • Ending cash balance is $88,000 and Supplies expense is ($700).

Explanation

Question 3 of 11

1

On December 31, 2016, Hanover Corporation had the following account balances:

Cash $ 24,000
Service Revenue 73,000
Advertising Expense 12,000
Accounts Receivable 20,000
Salaries Payable 2,000
Land 15,000
Retained Earnings, 1/1/2015 18,000
Salaries Expense 28,000
Common Stock 10,000
Dividends 4,000


What is Hanover's balance in Retained Earnings after the temporary accounts are closed at the end of its 2016 accounting period?

Select one of the following:

  • $51,000

  • $47,000

  • $79,000

  • $91,000

Explanation

Question 4 of 11

1

At the beginning of 2016, Stillwater Company had a $250 balance in its Supplies account. During the year the company paid $1,500 cash for additional supplies. The physical count of supplies on hand at the end of 2016 was $1,400. Which of the following statements related to Stillwater Company's 2016 transactions is incorrect?

Select one of the following:

  • The account Supplies represents a liability on the balance sheet.

  • The statement of cash flows for operating activities decreased by $1,500.

  • Net income decreased by $350.

  • All of the statements are correct.

Explanation

Question 5 of 11

1

Custer Corporation paid $6,500 cash to rent office space for the six-month period beginning on August 1, 2016. Which of the following transaction types describes the December 31, 2016, adjusting entry to record Rent Expense?

Select one of the following:

  • Asset source transaction

  • Asset use transaction

  • Asset exchange transaction

  • Claims exchange transaction

Explanation

Question 6 of 11

1

6.Award: 2 out of 2.00 points
Warner Company received $48,000 cash in advance for services to be performed over the one-year period from September 1, 2015 through August 31, 2016. Using a horizontal financial statements model, which of the following statements does not correctly reflect the effect of this transaction when Warner Company collects the cash?

Select one of the following:

  • Assets are increased.

  • Liabilities are increased.

  • Revenue is increased.

  • Cash flow from operating activity is increased.

Explanation

Question 7 of 11

1

Warner Company received $48,000 cash in advance for services to be performed over the one-year period from September 1, 2015 through August 31, 2016. What amount of revenue will Warner Company report on its 2015 income statement assuming the work is performed evenly throughout the one-year contract period?

Select one of the following:

  • $0

  • $12,000

  • $16,000

  • $48,000

Explanation

Question 8 of 11

1

Which of the following events is an asset exchange transaction?

Select one of the following:

  • Recorded service revenue earned on account

  • Recorded accrued interest revenue

  • Recorded the payment of accounts payable

  • Recorded the purchase of supplies for cash

Explanation

Question 9 of 11

1

Finke Company's employees are paid each Friday for hours worked the previous week. At the end of the accounting period, Finke Company accrues $3,200 for earned salaries that have not yet been paid. Which of the following best describes this accrual transaction type?

Select one of the following:

  • Asset source transaction

  • Asset use transaction

  • Asset exchange transaction

  • Claims exchange transaction

Explanation

Question 10 of 11

1

Which of the following are elements that are typically present when fraud occurs?

Select one of the following:

  • Pressure

  • Rationalization

  • Opportunity

  • All of the above

Explanation

Question 11 of 11

1

The American Institute of Certified Public Accountants (AICPA) requires its members to comply with the AICPA Code of Professional Conduct. Which of the following is not covered by this Code of Professional Conduct?

Select one of the following:

  • A CPA will guarantee that financial statements are absolutely correct before issuing an audit opinion.

  • A CPA will perform all professional responsibilities with the highest sense of integrity.

  • A CPA will maintain independence in fact and appearance when providing auditing and other attestation services.

  • A CPA will act in a way that will serve the public interest.

Explanation

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