ACCT 504 Entire Course Accounting and Finance Managerial Use and Analysis

ACCT 504 Entire Course Accounting and Finance Managerial Use and Analysis in $52 only

ACCT 504 Week 1 ,  An Overview of Financial Statements and the Environment of Financial Reporting

What is GAAP?  What is the purpose of GAAP?

What is the purpose of a Balance Sheet? What information does it provide?

ACCT 504 Week 2, The Accounting Information System and Accrual Accounting Concepts

What is the role of the accounting equation in the analysis of business transactions?

ACCT 504 Week 3, Merchandising Operations and Inventory – Discussions Questions

ACCT 504 Week 3, Case Study 1 Flower Landscaping Corporation – Discussions Questions
ACCT 504 Week 4, Internal Control, Cash and Receivables – Discussion Questions

ACCT 504 Week 4, Midterm Exam Answers

(TCO A, B, C) Which of the following statements concerning users of accounting information is incorrect?

(TCO C) Issuing shares of stock in exchange for cash is an example of a(n):

(TCO C) Which activities involve putting the resources of the business into action to generate a profit?

(TCO A) The cost of assets consumed or services used is also known as:

(TCO C) Edwards Company recorded the following cash transactions for the year:

Paid $45,000 for salaries.
Paid $20,000 to purchase office equipment.
Paid $5,000 for utilities.
Paid $2,000 in dividends.
Collected $75,000 from customers.

What was Edwards’ net cash provided by operating activities?

(TCO A) On a classified balance sheet, prepaid insurance is classified as:

(TCO A) An intangible asset:

(TCO A) These are selected account balances on December 31, 2007.

-Land (location of the corporation’s office building) $200,000
-Land (held for future use) 300,000
-Corporate Office Building 1,200,000
-Inventory 400,000
-Equipment 900,000
-Office Furniture 200,000
-Accumulated Depreciation 600,000

What is the total NET amount of property, plant, and equipment that will appear on the balance sheet

(TCO B) For 2010, Landford Corporation reported net income of $30,000; net sales $400,000; and average share outstanding 6,000. There were no preferred stock dividends. What was the 2010 earnings per share?

(TCO B) Liondale Corporation had beginning retained earnings of $2,292,000 and ending retained earnings of $2,499,000. During the year, they issued common stock totaling $141,000. There were no dividends issued. What was their net income for the year?

(TCO D) On March 1, 2010, Dillon Company hires a new employee who will start the work on March 6. The employee will be paid on the last day of each month. Should a journal entry be made on March 6? Why or why not?

(TCO D) Which one of the following is not a part of an account?

(TCO D) Which of the following describes the classification and normal balance of the retained earnings account?

(TCO D) A debit is the normal balance for which account listed below?

(TCO D) Which of the following accounts follows the rules of debit and credit in relation to increases and decreases in the opposite manner?

(TCO E) An accounting time period that is one year in length is called

(TCO E) In a merchandising business, revenue may be considered earned when

(TCO E) On April 1, 2010, M Corporation paid $48,000 cash for equipment that will be used in business operations. The equipment will be used for four years and will have no residual value. M records depreciation expense of $9,000 for the calendar year ending December 31, 2010. Which accounting principle has been violated?

(TCO E) The following is selected information from M Corporation for the fiscal year ending October 31, 2010:

Cash received from customers $300,000
Revenue earned 350,000
Cash paid for expenses 170,000
Expenses incurred 200,000

Based on the accrual basis of accounting, what is M Corporation’s net income for the year ending October 31, 2010?

 

(TCO E) Adjusting entries are made to ensure that:

(TCO A, B) Which of the following expressions is incorrect?

(TCO B) Hunter Company purchased merchandise inventory with an invoice price of $3,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Hunter Company pays within the discount period?

(TCO A, B) Jake’s Market recorded the following events involving a recent purchase of merchandise:

Received goods for $20,000, terms 2/10, n/30.
Returned $400 of the shipment for credit.
Paid $100 freight on the shipment.
Paid the invoice within the discount period.

As a result of these events, the company’s merchandise inventory:

(TCO A) The factor which determines whether or not goods should be included in a physical count of inventory is:

(TCO A) Barnes Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count?

(TCO A) A problem with the specific identification method is that:

(TCO A) Which of the following statements is true regarding inventory cost flow assumptions?

(TCO A) In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the:

(TCO B) Which of the following is a true statement about inventory systems?

(TCO B) A merchandiser that sells directly to consumers is:

(TCO D) A classmate is considering dropping his accounting class because he cannot understand the rules of debits and credits.
Explain the rules of debits and credits in a way that will help him understand them. Cite examples for each of the major sections of the balance sheet (assets, liabilities and stockholders’ equity) and the income statement (revenues and expenses).

(TCOs B & E) The Caltor Company gathered the following condensed data for the year ended December 31, 2010:

(TCO A, B, C) External users want answers to all of the following questions except:

(TCO C) Borrowing money is an example of a(n):

(TCO C) Buying and selling products are examples of:

(TCO A) Resources owned by a business are referred to as:

(TCO C) Jamie Company recorded the following cash transactions for the year:

Paid $70,000 for salaries.
Paid $20,000 to purchase office equipment.
Paid $6,000 for utilities.
Paid $7,000 in dividends.
Collected $130,000 from customers.

What was Jamie’s net cash provided by operating activities?

(TCO A) In a classified balance sheet, assets are usually classified as:
(TCO A) These are selected account balances on December 31, 2010.

-Land (location of the corporation’s office building) $50,000
-Land (held for future use) 75,000
-Corporate Office Building 300,000
-Inventory 100,000
-Equipment 225,000
-Office Furniture 50,000
-Accumulated Depreciation 150,000

What is the total NET amount of property, plant, and equipment that will appear on the balance sheet?

(TCO B) For 2010, Ford Corporation reported net income of $15,000; net sales $200,000; and average share outstanding 6,000. There were no preferred stock dividends. What was the 2010 earnings per share?

(TCO B) Morten Corporation had beginning retained earnings of $764,000 and ending retained earnings of $833,000. During the year they issued common stock totaling $47,000. There were no dividends issued. What was their net income for the year?

(TCO D) Is the purchase of equipment treated as an expense at the time of purchase? Why or why not?

(TCO D) The left side of an account is:

(TCO D) A credit is not the normal balance for which account listed below?

(TCO D) A debit is not the normal balance for which account listed below?

(TCO D) Which pair of accounts follows the rules of debit and credit in relation to increases and decreases in the same manner?

(TCO E) The time period assumption states that:

(TCO E) The matching principle matches:

(TCO E) Expenses sometimes make their contribution to revenue in a different period than when the expense is paid. When wages are incurred in one period and paid in the next period, this often leads to which account appearing on the balance sheet at the end of the first period?

(TCO E) The following is selected information from J Corporation for the fiscal year ending October 31, 2010.

Cash received from customers $75,000
Revenue earned 87,500
Cash paid for expenses 42,500
Expenses incurred 50,000

Based on the accrual basis of accounting, what is J Corporation’s net income for the year ending October 31, 2007?

 

(TCO E) The general term employed to indicate an expense that has not been paid or revenue that has not been received and has not yet been recognized in the accounts is:

(TCO A, B) Which of the following expressions is incorrect?

(TCO B) Hunter Company purchased merchandise inventory with an invoice price of $6,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Hunter Company pays within the discount period?

(TCO A, B) Jake’s Market recorded the following events involving a recent purchase of merchandise:

Received goods for $20,000, terms 2/10, n/30.
Returned $400 of the shipment for credit.
Paid $100 freight on the shipment.
Paid the invoice within the discount period.

(TCO A) The Freight-in account:

As a result of these events, the company’s merchandise inventory:

(TCO A) Barnes Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count?

(TCO A) Of the following companies, which one would not likely employ the specific identification method for inventory costing?

(TCO A) Which of the following statements is correct with respect to inventories?

(TCO A) In a period of declining prices, which of the following inventory methods generally results in the lowest balance sheet figure for inventory?

(TCO B) Which of the following is a true statement about inventory systems?

(TCO B) Two categories of expenses in merchandising companies are:

(TCOs B & E) The Caltor Company gathered the following condensed data for the year ended December 31, 2010:

Cost of goods sold                            $ 710,000
Net sales                                         1,279,000
Administrative expenses                      239,000
Interest expense                                   68,000
Dividends paid                                      38,000
Selling expenses                                  45,000

Instructions:

  1. Prepare a multiple-step income statement for the year ended December 31, 2010.

Compute the profit margin ratio and gross profit rate. Caltor Company s assets at the beginning of the year were $770,000 and were $830,000 at the end of the year. To qualify for full credit, you must state the formula you are using, show your computations and explain your findings.

 

(TCO C) Debt securities sold to investors that must be repaid at a particular date some years in the future are called:
ACCT 504 Week 5: Long-Lived Assets and Liabilities, and Time Value of Money

 

ACCT 504 Week 5, Case Study 2 Internal Control – LJB Company

ACCT 504 Week 6, Stockholders’ Equity and Statement of Cash Flows

ACCT 504 Week 6 Case Study 3 – Cash Budgeting – LBJ Company
ACCT 504 Week 7, Financial Analysis: The Big Picture

 

ACCT 504 Week 7 Course Project Financial Statement Analysis Project — A Comparative Analysis of Kohl’s Corporation and J.C. Penney Corporation

 

 

Earning per share

Current ratio

Gross Profit Ratio

Profit margin ratio

Inventory Turnover

Days in Inventory

Receivable Turnover Ratio

Average Collection Period

Assets Turnover Ratio

Return on Assets Ratio

Debt to Total Assets Ratio

Times Interest Earned Ratio

Payout ratio

Return on Common Stockholders’ Equity

Free cash flow Current

cash debt coverage ratio

Price -Earnings ratio

 

ACCT 504 Final Exam Answers

 

Use the following information and the indirect method to calculate the net cash provided or used by operating activities:

Cash paid for purchase of plant assets $15,000
Decrease in interest payable 2,000
Depreciation expense 30,000
Gain on retirement of bonds 32,000
Increase in accounts receivable 40,000
Loss on sale of plant assets 5,000
Net Income 76,000

 

(2) Actual fixed overhead for Kapok Company during March was $92,780. The flexible budget for fixed overhead this period is $89,000 based on a production level of 5,000 units. If the company actually produced 4,200 units what is the fixed overhead volume variance for March?

 

(3) A company’s income statement showed the following: net income, $124,000; depreciation expense, $30,000; and gain on sale of plant assets, $14,000. An examination of the company’s current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,400; merchandise inventory increased $18,000; prepaid expenses decreased $6,200; accounts payable increased $3,400. Calculate the net cash provided or used by operating activities.

 

(4) Chance, Inc. sold 3,000 units of its product at a price of $72 per unit.  Total variable cost per unit is $51, consisting of $32 in variable production cost and $19 in variable selling and administrative cost.  Compute the manufacturing margin for the company under variable costing.

 

(5) A company has fixed costs of $90,000. Its contribution margin ratio is 30% and the product sells for $75 per unit. What is the company’s break-even point in dollar sales?

 

(6) A corporation issued 300 shares of its $5 par value common stock in payment of a $1,800 charge from its accountant for assistance in filing its charter with the state. The entry to record this transaction will include:

 

(7) The three major cost components of a manufactured product are:

 

(8) The amount by which the overhead applied to jobs during a period exceeds the overhead incurred during the period is known as:

 

(9) Which of the following journal entries correctly records the current month’s activity where $125,000 of raw material was purchased for cash, and $75,000 of direct material and $30,000 of indirect materials were used in the production process?

(A) Raw Materials Inventory 125,000
Raw Materials Inventory 105,000
Goods in Process Inventory 75,000
Factory Overhead 30,000
(B) Raw Materials Inventory 125,000
Cash 125,000
Goods in Process Inventory 75,000
Factory Overhead 30,000
Raw Materials Inventory 105,000
(C) Raw Materials Inventory 125,000
Cash 125,000
Raw Materials Inventory 105,000
Goods in Process Inventory 75,000
Factory Overhead 30,000
(D) Cash 125,000
Raw Materials Inventory 125,000
Goods in Process Inventory 75,000
Factory Overhead 30,000
Raw Materials Inventory 105,000
(E) Raw Materials Inventory 125,000
Cash 125,000
Goods in Process Inventory 125,000
Raw Materials Inventory 125,000

 

(10) Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0 this year.

Units produced this year:          25,000 units
Units sold this year:                 15,000 units
Direct Materials:                       $9 per unit
DIrect Labor:                            $11 per hour
Variable overhead:                    $75,000 in total
Fixed overhead:                        $137,500 in total

Given Advanced Company’s data, compute cost per unit of finished goods under variable costing

 

(11) When using the indirect method to calculate and report net cash provided or used by operating activities, which of the following is subtracted from net income?

 

(12) Six months ago, a company purchased an investment in stock for $65,000. This investment is considered available-for-sale. The current market value of the stock is $68,500. The company should record a:

 

(13 ) A company manufactures and sells a product for $120 per unit. The company’s fixed costs are $68,760, and its variable costs are $90 per unit. The company’s break-even point in units is:

 

(14) Bradford Company budgeted 4,000 pounds of material costing $5.00 per pound to produce 2,000 units. The company actually used 4,500 pounds that cost $5.10 per pound to produce 2,000 units.

(15) What is the direct materials quantity variance?

 

Montaigne Corp. has the following information about its standards and production activity in November:

Actual total factory overhead incurred $28,175
Standard factory overhead
Variable overhead $3.10 per unit produced
Fixed overhead
($12,000/6,000 estimated units to be produced) $2 per unit
Actual units produced 4,800 units

The volume variance is:

 

(16) A manufacturing company has a beginning finished goods inventory of $14,600, raw material purchases of $18,000, cost of goods manufactured of $32,500, and an ending finished goods inventory of $17,800. The cost of goods sold for this company is

 

(17) A company reports the following information for the current year which is its first year of operations.

Units produced this year ? units
Units sold this year 1,500 units
Direct materials $9 per unit
Direct labor $5 per unit
Variable overhead $7 per unit
Fixed overhead $24,000 in total

If the company’s cost per unit of finished goods using absorption costing is $27, how many units were produced?

 

(18) A corporation issued 5,000 shares of $10 par value common stock in exchange for some land with a market value of $60,000. The entry to record this exchange is:

(A) Land 60,000
Common Stock 50,000
Contributed Capital in Excess of Par Value, Common Stock 10,000
(B) Land 60,000
Common Stock 60,000
(C) Land 50,000
Common Stock 50,000
(D) Common Stock 50,000
Contributed Capital in Excess of Par Value, Common Stock 10,000
Land 60,000
(E) Common Stock 60,000
Land 60,000

 

(19) The following data are available for a company’s manufacturing activities:

Beginning goods in process inventory 5,000 units, 1/4 of the labor added this period
Units started and completed 15,000
Ending goods in process inventory 6,000 units, 1/2 the labor added this period

If materials are added when the production process begins and direct labor is applied uniformly throughout the process, what are the equivalent units for direct materials and for direct labor, respectively?

 

(20) Employee morale, timeliness of delivery, and the reactions of customers are examples of nonfinancial factors which should be considered when making a managerial decision.

 

(21) A company declared a $0.50 per share cash dividend. The company has 20,000 shares authorized, 9,000 shares issued, and 8,000 shares of common stock outstanding.

(A) Retained Earnings 4,000
Common Dividends Payable 4,000
(B) Common Dividends Payable 4,000
Cash 4,000
(C) Retained Earnings 4,500
Common Dividends Payable 4,500
(D) Common Dividends Payable 4,500
Cash 4,500
(E) Retained Earnings 5,000
Common Dividends Payable 5,000

 

(22) A decrease in the fair market value of a security that has not yet been realized through an actual sale of the security is called a(n):

 

(23) Estimated overhead and direct labor costs for the year were $112,500 and $125,000, respectively. During the year, actual overhead was $107,400 and actual direct labor cost was $120,000. The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include:

 

(24) The following company information is available:

Direct materials used for production 36,000 gallons
Standard quality for units produced 34,400 gallons
Standard cost per gallon of direct material $6.00
Actual cost per gallon of direct material $6.10

The direct materials quantity variance is:

 

ACCT 504 Final Exam Set 2

 

(TCO A) Which one of the following is an advantage of corporations relative to partnerships and sole proprietorships? (Points : 5)
Reduced legal liability for investors
Harder to transfer ownership
Lower taxes
Most common form of organization

 

(TCO A) When a corporation distributes a dividend, _____. (Points : 5)
the most common form of distribution is a cash dividend
the Dividends account will be increased with a credit
the Retained Earnings account will be directly increased with a debit
the Dividends account will be decreased with a debit

 

(TCOs A, B) Below is a partial list of account balances for Cerner Company:

Cash $5,000
Prepaid insurance 500
Accounts receivable 2,500
Accounts payable 2,000
Notes payable 3,000
Common stock 1,000
Dividends 500
Revenues 15,000
Expenses 12,500

 

Under the accrual basis of accounting, revenues are recorded and reported _____.
when companies receive payments for jobs performed or products provided
when companies have provided products or performed services
when companies receive payments prior to providing products or performing services
when companies receive payments after providing products or performing services

 

In a period of increasing prices, which inventory cost flow assumption will result in the highest amount of net income?
LIFO
The average cost method
FIFO

 

Payne Corporation issues 100 twenty-year, 6%, $1,000 bonds dated July 1, 2010, at 94. The journal entry to record the issuance will show a _____.
debit to Cash of $100,000
credit to Bonds Payable of $94,000
credit to Premium on Bonds Payable of $4,000
debit to Discount on Bonds Payable of $6,000

 

What did Cerner Company show as total credits? (Points : 5)
$21,500
$21,000
$20,500
$22,000

 

(TCOs B, E) Using accrual accounting, expenses are recorded and reported only _____. (Points : 5)
when they are incurred, whether or not cash is paid
when they are incurred and paid at the same time
if they are paid before they are incurred
if they are paid after they are incurred

 

(TCO D) Three companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using _____. (Points : 5)
LIFO will have the highest ending inventory
FIFO will have the highest cost of goods sold
All three companies will have the same value for ending inventory.
average cost will have an ending inventory value that falls between FIFO and LIFO

 

(TCOs A, E) Equipment with a cost of $192,000 has an estimated salvage value of $18,000 and an estimated life of 4 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours? (Points : 5)
$48,000
$52,500
$49,500
$43,500

 

(TCOs D, G) Joyce Corporation issues 1,000 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 102. The journal entry to record the issuance will show a _____. (Points : 5)
debit to Cash of $1,020,000
debit to Discount on Bonds Payable for $20,000
credit to Bonds Payable for $1,020,000
credit to Cash for $1,000,000

 

(TCO C) Accounts receivable arising from sales to customers amounted to $80,000 and $70,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $240,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _____. (Points : 5)
$240,000
$250,000
$310,000
$230,000

 

(TCO F) One variation of the horizontal analysis is known as _____. (Points : 5)
nonlinear analysis
vertical analysis
trend analysis
common-size analysis

 

(TCO F) Comparisons of data within a company are an example of the following comparative basis. (Points : 5)
Industry averages
Intercompany
Intracompany
Interregional

 

(TCO F) Which one of the following is not a characteristic generally evaluated in ratio analysis? (Points : 5)
Liquidity
Profitability
Marketability of the product
Solvency

 

(TCO F) Short-term creditors are usually most interested in assessing _____. (Points : 5)
solvency
liquidity
marketability
profitability

 

(TCO F) Long-term creditors are usually most interested in evaluating _____. (Points : 5)
liquidity
marketability
profitability
solvency

 

(TCO G) To calculate the market value of a bond, we need to _____. (Points : 5)
find out the present value of all of the future cash payments promised by the bond
calculate the present value of the principal only
calculate the present value of the interest only
multiply the bond price by the interest rate

 

(TCO A) Below you will find selected information (in millions) from Coca-Cola Co.’s 2012 Annual Report:
…………………………………………………………………………………………………………………………………………………….

Required:
1. Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also separate the current liabilities from the non-current liabilities and provide a total for each.
2. Using the Balance Sheet from your answer above calculate; Current Ratio, Days in Inventory, Average Collection Period, Return on Assets Ratio, Debt to Total Assets and Return on common stockholders’ equity ratio. (Make sure to show all your work)

 

 

(TCO B) The following selected data was retrieved from the Wal-Mart, Inc. financial statements for the year ending January 31, 2013:
………………………………………………………………………………………………………………………………………………………………………………………………

Required:

Using the information provided above:
1. Prepare a multiple-step income statement
2. Calculate the Profit Margin, and Gross profit rate for the company. Be sure to provide the formula you are using, show your calculations, and discuss your findings/results.

 

(TCO C) Please review the following real-world Hewlett Packard Statement of Cash flows and address the 2 questions below:

……………………………………………………………………………………………………………………………………………………………………………………….

Required:

1) Please calculate the percentage increase or decrease in cash for the operating, investing, and financing sections and explain the major reasons for the increase or decrease for each of these sections.

2) Please calculate the free cash flow for 2012 and explain the meaning of this ratio.

  1. (TCO D)You are CFO of Goforit, Inc., a wholesale distribution company specializing in emerging technologies. Your CEO is a brilliant marketer, but relies on you to explain issues and choices in accounting and finance. She has heard from other members of a CEO organization to which she belongs that a company’s net income can vary widely depending on which accounting choices are made from the “GAAP menu.”

Assuming the goal is to maximize net income, choose an accounting treatment from each of the following scenarios, and explain to your CEO why the choice will produce the desired effect on reported Net Income for the current year. Include in your answer the effect of the choice on both the income statement and balance sheet.

Required:

  1. Goforit carries significant electronics inventory in a competitive environment where prices are actually falling. Which inventory valuation method would you choose—LIFO, FIFO, or average cost? Assume that unit purchases exceed unit sales.
    b. Goforit has a large investment in warehouse equipment including conveyor belts, forklifts, and automated packaging systems. Which depreciation method would you choose: Straight line (SL) or double declining balance (DDB)?

 

(TCO F) Please review the following real-world ratios for Johnson & Johnson and Pfizer for the year ended 2012 and address the 2 questions below.

…………………………………………………………………………………………………………………………………………………………………………………………

Required:

1) Please explain the meaning of each of the Pfizer ratios above.

2) Please state which company performed better for each ratio.

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