ACO01 Mock Exam 2015 1 
ACO01 – FINANCIAL ACCOUNTING
MOCK EXAM
Time: 90 minutes
PART 1. MULTIPLE CHOICE QUESTIONS (40 points)
This is a multiple choice part containing 20 questions. Each question is followed by THREE suggested answers – only one of which is correct. You will score 2 points for each correct answer. You will not lose any mark for wrong answers. You may attempt as many questions as you wish.
1. Which of the following items would most likely be classified as an operating activity?
A. Issuance of debt.
B. Acquisition of a competitor.
C. Sale of automobiles by an automobile dealer.
2. A company sells big screen televisions for $3,000 each. Each television has a two-year warranty that covers the replacement of defective parts. It is estimated that 1% of all televisions sold will be returned under warranty at an average cost of $250 each. During July, the company sold 10,000 big screen televisions, and 80 were serviced under the warranty during July at a total cost of $18,000. The credit balance in the Estimated Warranty Liability account at July 1 was $26,000. What is the company’s warranty expense for the month of July?
A. $51,000
B. $25,000
C. $33,000
3. At the beginning of 2009, Glass Manufacturing purchased a new machine for its assembly line at a cost of $600,000. The machine has an estimated useful life of 10 years and estimated residual value of $50.000. Under the straight-line method, how much depreciation would Glass take in 2010 for financial reporting purposes?
A. $55,000. B. $60,000. C. $65,000
4. For 2009, Flamingo Products had net income of $1,000,000. At 1 January 2009, there were 1,000,000 shares outstanding. On 1 Ju1y 2009, the company issued 100,000 new shares for $20 per share. The company paid $200,000 in dividends to common shareholders. What is Flamingo's basic earnings per share for 2009?
A. $0.80 B. $0.91 C. $0.95
5. An investor concerned whether a company can meet its near-term obligations is most likely to calculate the:
A.
MOCK EXAM
Time: 90 minutes
PART 1. MULTIPLE CHOICE QUESTIONS (40 points)
This is a multiple choice part containing 20 questions. Each question is followed by THREE suggested answers – only one of which is correct. You will score 2 points for each correct answer. You will not lose any mark for wrong answers. You may attempt as many questions as you wish.
1. Which of the following items would most likely be classified as an operating activity?
A. Issuance of debt.
B. Acquisition of a competitor.
C. Sale of automobiles by an automobile dealer.
2. A company sells big screen televisions for $3,000 each. Each television has a two-year warranty that covers the replacement of defective parts. It is estimated that 1% of all televisions sold will be returned under warranty at an average cost of $250 each. During July, the company sold 10,000 big screen televisions, and 80 were serviced under the warranty during July at a total cost of $18,000. The credit balance in the Estimated Warranty Liability account at July 1 was $26,000. What is the company’s warranty expense for the month of July?
A. $51,000
B. $25,000
C. $33,000
3. At the beginning of 2009, Glass Manufacturing purchased a new machine for its assembly line at a cost of $600,000. The machine has an estimated useful life of 10 years and estimated residual value of $50.000. Under the straight-line method, how much depreciation would Glass take in 2010 for financial reporting purposes?
A. $55,000. B. $60,000. C. $65,000
4. For 2009, Flamingo Products had net income of $1,000,000. At 1 January 2009, there were 1,000,000 shares outstanding. On 1 Ju1y 2009, the company issued 100,000 new shares for $20 per share. The company paid $200,000 in dividends to common shareholders. What is Flamingo's basic earnings per share for 2009?
A. $0.80 B. $0.91 C. $0.95
5. An investor concerned whether a company can meet its near-term obligations is most likely to calculate the:
A.