Financial Accounting Final Exam Study Guide

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Accounting 2010 Final Examination Study Guide

revised fall 2010

Disclaimer: The Study Guide is intended to provide direction in preparing for the final. It is not intended to be an all inclusive list of everything contained on the final. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following statements is true? A) Treasury stock causes issued shares to exceed outstanding shares. B) Treasury stock causes outstanding shares to exceed authorized shares. C) Treasury stock causes outstanding shares to exceed issued shares. D) Treasury stock causes issued shares to exceed authorized shares. 2) Kelly Petroleum Products owns furniture that was purchased for $19,600. Accumulated depreciation is $17,300. The furniture was sold for $3,800. Which of the following is the correct entry to record the transaction? 17,300 A) Accumulated depreciation Cash 3,800 Furniture 31,100 19,600 B) Furniture Gain on sale of furniture 3,800 Cash 2,700 Accumulated depreciation 17,300 17,300 C) Accumulated depreciation Cash 3,800 Gain on sale of furniture 1,500 Furniture 19,600 19,600 D) Furniture Cash 2,700 Gain on sale of furniture 5,000 Accumulated depreciation 17,300 3) Management accounting: A) includes information such as budgets and forecasts. B) is used to make strategic decisions for the entity. C) must be relevant to decision makers within the entity. D) is all of the above. 4) What type of accounting provides information for decision makers outside the entity? A) Managerial accounting. B) Financial accounting. C) Internal auditing. D) Bookkeeping 5) The Financial Accounting Standards Board is responsible for establishing: A) the code of professional conduct for accountants. B) generally accepted accounting principles. C) the American Institute of Certified Public Accountants. D) the Securities and Exchange Commission.

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6) Use the following Balance Sheet and Income Statement to answer the question.

What is the Retained earnings shown on the Balance Sheet for 2010? A) $75,000 B) $15,000 C) $77,000

D) $45,000

7) Which of the following is NOT an asset account? A) Common Stock C) Accounts Receivable 8) The purchase of land for cash would: A) increase the total debits on the trial balance. C) decrease stockholders' equity.

B) Prepaid Rent D) All of these are asset accounts.

B) have no effect on total assets. D) increase total assets.

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9) The entry to record the payment of $925 to a supplier for office supplies previously purchased on account would be: A) Office Supplies Expense 925 Cash 925 B) Cash 925 Accounts Payable 925

C) Office Supplies Expense

925 Accounts Payable 925

D) Accounts Payable

925 Cash 925

10) A company makes a $200 sale on account. It later collects the $200 in cash. Under the accrual method of accounting, revenue is recognized: A) when the sale is made. B) when the cash is collected. C) either when the cash is received or the sale is made. D) at a time that cannot be determined from the facts. 11) On November 1 of the current year, Prepaid Rent was debited $5,400 for three months of rent, paid in advance. The amount of the adjusting entry on December 31 is: A) $0. B) $3,600. C) $5,400. D) $1,800. 12) Permanent accounts include: A) cash, land and salaries expense. B) cash, prepaid expenses and unearned revenue. C) service revenue, salaries expense and utilities expense. D) cash, service revenue and land. 13) Closing entries transfer the revenue, expense, and dividends balances to: A) retained earnings. B) permanent accounts. C) temporary accounts. D) none of the above. 14) Kincaid Company’s Retained Earnings balance on January 1 was $6,000. During the current year, Kincaid earned $3,400 in revenues and incurred $4,200 in expenses. Kincaid paid $2,500 in dividends, all in cash. After the closing entries are made, Kincaid’s Retained Earnings balance on December 31 will be: A) $2,700. B) $7,700. C) $6,000. D)...
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