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ACCT 304 DeVry Entire Course

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ACCT 304 DeVry Entire Course

ACCT 304 DeVry Week 1 DQ 1 Development of Accounting Standards

Generally Accepted Accounting Principles (GAAP) are guidelines for companies to follow as they prepare and issue financial statements. Let’s start by getting an understanding of why the guidelines were developed in the first place? Who relies on the financial statements (external users)? What happens if an External User relies on financial statements that are inaccurate? What negative consequences can arise from relying on inaccurate financial statements?

This section lists options that can be used to view responses.

ACCT 304 DeVry Week 1 DQ 2 Accounting Conceptual Framework

A sound foundation is necessary for success in any task from building a house to putting on make-up. In terms of U.S. Accounting Standards, it is also necessary to have a sound foundation, referred to as the conceptual framework. Let’s discuss it step by step starting with the objective. What is the objective of accounting standards?

ACCT 304 DeVry Week 1 Quiz

(TCO 1) The SEC issues accounting standards in the form of

accounting research bulletins.

financial reporting releases.

financial accounting standards.

financial technical bulletins.

Question 2. Question : (TCO 2) The conceptual framework’s qualitative characteristic of relevance includes

predictive value.

verifiability.

completeness.

neutrality.

Question 3. Question : (TCO 3) Hughes Aircraft sold a four-passenger airplane for $380,000, receiving a $50,000 down payment and a 12% note for the balance. The journal entry to record this sale would include a

credit to cash.

debit to cash discount.

debit to note receivable.

credit to note receivable.

Question 4. Question : (TCO 3) Cal Farms reported a supplies expense of $2,000,000 this year. The supplies account decreased by $200,000 during the year to an ending balance of $400,000. What was the cost of supplies Cal Farms purchased during the year?

$1,600,000

$1,800,000

$2,200,000

$2,400,000

Question 5. Question : (TCO 3) The purpose of closing entries is to transfer

accounts receivable to retained earnings when an account is fully paid.

balances in temporary accounts to a permanent account.

inventory to cost of goods sold when merchandise is sold.

assets and liabilities when operations are discontinued.

ACCT 304 DeVry Week 2 DQ 1 Balance Sheet- Purpose and Uses

The balance sheet is one of the first financial statements I turn to when reviewing a company. You can learn a lot about a company by looking at its balance sheet. The balance sheet is also called the statement of financial position. Why is this? What is the purpose of the balance sheet?

ACCT 304 DeVry Week 2 DQ 2 Disclosure Notes

Disclosures are required to elaborate on certain items that are presented in summarized form in the financial statements. There are specific disclosure notes that are required to be present in all financial statements, while others may be unique to the disclosure needs of a particular company.

Let’s start by discussing the three required disclosures. Please pick one and explain what information is to be included in the note:

  • Summary of Significant Accounting Policies
  • Subsequent Events
  • Third Party Transactions

ACCT 304 DeVry Week 2 Quiz

(TCO 4) Current assets include cash and all other assets expected to become cash or be consumed

within one year.

within one operating cycle.

within one year or one operating cycle, whichever is shorter.

within one year or one operating cycle, whichever is longer.

Question 2. Question : (TCO 4) Rent collected in advance is

an asset account in the balance sheet.

a liability account in the balance sheet.

a shareholders’ equity account in the balance sheet.

a temporary account that is not in the balance sheet at all.

Question 3. Question : (TCO 4) Janson Corporation Co.’s trial balance included the following account balances at December 31, 2011:

What amount should be included in the long-term liability section of Janson’s December 31, 2011 balance sheet?

$62,000

$40,000

$22,000

$82,000

Question 4. Question : (TCO 4) Which of the following would be disclosed in the summary of significant accounting policies disclosure note?

Option A

Option B

Option C

Option D

Question 5. Question : (TCO 4) Below is the partial balance sheet ($ in thousands) for Paisano Seafood Inc.

The current ratio (rounded) is

1.98.

1.58.

1.17.

0.66.

ACCT 304 DeVry Week 3 DQ 1 Income Statement

Students often refer to an income statement as the statement that shows how much money a company has made. Money, by definition, is something that is generally accepted as a medium of exchange or means or payment. Keeping that definition in mind, an income statement is not a measure of money, but rather it is a measure of net income (or loss) also known as profit (or loss). Select a publicly held company like Apple, Microsoft, IBM, Hewlett Packard, Home Depot (Note: do not select a company already chosen by your classmate). Go to their website and select Investor Relations and there you will find the company’s annual report. Provide the link to that annual report and based on what you have read about income statements in this chapter and in the Becker materials, tell us what you have learned about the company from reviewing its income statement.

This section lists options that can be used to view responses.

ACCT 304 DeVry Week 3 DQ 2 Cash-Flow Statement

The Statement of Cash Flows has historically given students a lot of heartburn, but it really isn’t that scary. A cash-flow statement, simply stated, reports the uses (where the cash was spent) and the sources (where the cash came from) of cash during a period. Let’s start with a very simplistic set of facts. I run a CPA firm, and I billed my clients $50K during the month of February. To earn that $50K, I incurred $20K of wage expense and another $10K of overhead (rent, utilities, insurance, etc.). So I made $20K profit, right? So I am sitting pretty? Not necessarily. What if I now tell you that $40K of my billings have yet to be collected? And my E&O insurance carrier increased my premium and I had to pre-pay $10K of premiums this month. How does my cash flow differ from my profit? Will these transactions appear on my income statement? My cash-flow statement?

ACCT 304 DeVry Week 3 Quiz

(TCO 5) The difference between single-step and multiple-step income statements is primarily an issue of

consistency.

presentation.

measurement.

valuation.

Question 2. Question : (TCO 5) On August 1, 2011, Rocket Retailers adopted a plan to discontinue its catalog sales division, which qualifies as a separate component of the business, according to GAAP, regarding discontinued operations. The disposal of the division was expected to be concluded by June 30, 2012. On January 31, 2012, Rocket’s fiscal year end, the following information relative to the discontinued division was accumulated:

In its income statement for the year ended January 31, 2012, Rocket would report a before-tax loss on discontinued operations of

$115,000.

$195,000.

$65,000.

$125,000.

Question 3. Question : (TCO 5) Changes in accounting estimates are reported

currently and prospectively.

retroactively and currently.

retroactively, currently, and prospectively.

by restating prior years.

Question 4. Question : (TCO 5) Which of the following is added to net income as an adjustment under the indirect method of preparing the statement of cash flows?

Salaries payable decrease

Gain on the sale of land

Loss on the sale of equipment

Accounts receivable increase

Question 5. Question : (TCO 5) Review Rowdy’s Restaurants cash flow (in millions):

Rowdy’s would report net cash inflows (outflows) from financing activities in the amount of

$1,100.

$(1,100).

$820.

$900.

ACCT 304 DeVry Week 4 DQ 1 Revenue Recognition

When a company sells a product for cash, it generally recognizes the revenue. However, there are situations when it is not always clear when a company should recognize the revenue. How do you handle a car dealership that sells a warranty contract to its customers for $650 that will cover the next 5 years?

This section lists options that can be used to view responses.

ACCT 304 DeVry Week 4 DQ 2 Time Value of Money Concepts

You might think of the “time value of money” to be a topic for Finance class, but accountants need an understanding of this topic as well. Let’s discuss where/why an accountant may need to use these skills/calculations.

ACCT 304 DeVry Week 4 Quiz

(TCO 5) Bert’s Meat Market sells quarters and sides of beef on an installment basis. Losses on receivables are very difficult to predict, and meat products cannot be repossessed. The revenue recognition method used by Bert would be

point of sale.

installment sales.

cost recovery.

Both B and C are correct.

Question 2. Question : (TCO 5) On December 15, 2011, Rigsby Sales Co. sold a tract of land that cost $3,600,000 for $4,500,000. Rigsby appropriately uses the installment sale method of accounting for this transaction. Terms called for a down payment of $500,000 with the balance in two equal, annual installments, payable on December 15, 2012 and December 15, 2013. Ignore interest charges. Rigsby has a December 31 year-end. In 2011, Rigsby would recognize the realized gross profit of

$500,000.

$0.

$900,000.

$100,000.

Question 3. Question : (TCO 6) Present and future value tables of $1 at 3% are presented below: Today, Thomas deposited $100,000 in a 3-year, 12% CD that compounds quarterly. What is the maturity value of the CD?

$109,270

$119,410

$142,576

$309,090

Question 4. Question : (TCO 6) Sondra deposits $2,000 in an IRA account on April 15, 2011. Assume the account will earn 3% annually. If she repeats this for the next 9 years, how much will she have on deposit on April 14, 2020?

$20,600

$20,928

$23,616

$24,715

Question 5. Question : (TCO 6) Jose wants to cash in his winning lottery ticket. He can either receive five, $5,000 annual payments starting today, or he can receive a lump-sum payment now based on a 3% annual interest rate. What is the present value of the installments if he opts for the lump sum payment?

$23,586

$22,899

$21,565

$23,000

ACCT 304 DeVry Week 4 Midterm Exam

1. (TCO 1) Which of the following has the authority to set accounting standards in the United States?

2. (TCO 2) The conceptual framework’s qualitative characteristic of faithful representation includes:

3. (TCO 3) A sale on account would be recorded by:

4. (TCO 3) When a tenant makes an end-of-period adjusting entry credit to the “Prepaid rent” account:

5. (TCO 3) Permanent accounts would not include:

6. (TCO 4) Noncurrent assets include:

7. (TCO 4) The acid-test ratio is also known as the:

8. (TCO 5) Popson Inc. incurred a material loss which was not unusual in character, but was clearly an infrequent occurrence. This loss should be reported as:

9. (TCO 5) On June 1, 2013, Romano Inc. changed the estimated useful life of its office equipment from 20 to 12 years. This change would be accounted for:

10. (TCO 5) In the operating activities section of the statement of cash flows, we start with net income:

11. (TCO 5) The Maytag Corporation’s income statement includes income from continuing operations, a loss from discontinued operations, and extraordinary items. Earnings per share information would be provided for:

12. (TCO 5) Expenses in an income statement prepared under International Financial Reporting Standards:

13. (TCO 4) The balance sheet reports:

14. (TCO 4) Which of the following groups is not among the external users for whom financial statements are prepared?

1. (TCO 5) What would be Misty’s net income for the current year?

2. (TCO 4) Listed below are account balances (in $millions) taken from the records of Symphony Stores. All of these are permanent accounts, except the last two that have yet to be closed. The installment receivables are current. Symphony uses

1. (TCO 4) Briefly explain the purpose of the disclosure note on significant accounting policies. Provide two examples of what might be found in this note.

2. (TCO 2) What is the SEC and how is it involved with accounting standard setting?

3. (TCO 5) Give an example of a non-cash financing and investing activity and explain when and how it would be reported in the financial statements

4. (TCO 3) Describe what is meant by unearned revenues and give two examples

ACCT 304 DeVry Week 5 DQ 1 Cash

Cash is listed first on the balance sheet because it is the asset most readily available to pay off debt or use in operations. Cash is also one of the assets that most often “grows legs” and walks away. Therefore, it is important that any business protect its cash; it does so through Internal Control Procedures. Please start by defining Internal Control, then discuss specific procedures related to cash.

ACCT 304 DeVry Week 5 DQ 2 Receivables

When a business extends credit to its customers, we call this Accounts Receivable. Often a business will grant its customers a discount. What are the two types of discounts, and how does the journal entry to record the sale change when there is a discount granted?

ACCT 304 DeVry Week 5 Quiz

(TCO 7) Compensating balances represent

funds in a bank account that cannot be spent.

balances in a payroll checking account.

accounts that are subject to bank service charges.

accounts on which banks pay interest, such as NOW accounts.

Question 2. Question : (TCO 7) On November 10 of the current year, Flores Mills sold carpet to a customer for $8,000 with credit term 2/10, n/30. Flores uses the gross method of accounting for cash discounts. What is the correct entry for Flores on November 17, assuming the correct payment was received on that date?

Option a

Option b

Option c

Option d

Question 3. Question : (TCO 7) Which of the following is recorded by a credit to accounts receivable?

Sale of inventory on account

Estimating the annual allowance for uncollectible accounts

Estimating annual sales returns

Write-off of bad debts

Question 4. Question : (TCO 7) Brockton Carpet Cleaning prepares a bank reconciliation at the end of every month. At the end of July, the balance in the general ledger checking account was $2,750, and the bank balance on the bank statement was $2,980. Outstanding checks totaled $680, and deposits in transit were $400. The bank statement revealed that a check written for $120 was incorrectly recorded by Brockton as a $220 disbursement. The bank statement listed service charges and NSF check charges totaling $150. The corrected cash balance is

$2,270.

$2,550.

$2,470.

$2,700.

Question 5. Question : (TCO 7) Calistoga Produce estimates bad debt expense at ½% of credit sales. The company reported accounts receivable and allowance for uncollectible accounts of $471,000 and $1,650, respectively, at December 31, 2010. During 2011, Calistoga’s credit sales and collections were $315,000 and $319,000, respectively, and $1,720 in accounts receivable were written off. Calistoga’s adjusted allowance for uncollectible accounts at December 31, 2011 is

$1,575.

$1,505.

$1,650.

$1,720.

ACCT 304 DeVry Week 6 DQ 1 Inventory Classification and Systems

Merchandise Inventory is assets held for sale in the ordinary course of business of wholesale and retail companies. Manufacturing inventories are raw materials or WIP that will be used or consumed in the production of finished goods to be sold. Review the Annual Report that you chose for the Week 3 Discussion topic #1 and based on what you’ve read in the text and in the Becker materials, explain how inventory is presented on the balance sheet and what further information you found in the footnote disclosures about the inventory method and “Impairment of Inventory”, if any.

ACCT 304 DeVry Week 6 DQ 2 Inventoriable Costs Cost-Flow Assumptions

We read about the Perpetual and the Periodic Inventory System. Regardless of which system is used, under both, we need to assign dollar amounts to the Ending Inventory and Cost of Goods Sold so that we can trace how costs flow through the system. Start by identifying what is included in inventory and then discuss how each item might be treated differently in the Perpetual vs. the Periodic Inventory System.

ACCT 304 DeVry Week 7 DQ 1 LCM

The lower-of-cost-or-market (LCM) approach was developed to avoid reporting inventory at an amount greater than the benefits it can provide. The LCM approach records losses in the period the value of the inventory drops below its cost instead of later in the period that the goods are ultimately sold. Is this a conservative or an aggressive approach? What does GAAP say about LCM?

ACCT 304 DeVry Week 7 DQ 2 Inventory Errors

It is discovered in 2013 that ending inventory from 2011 is understated. What accounts will be affected by this understatement, and how will they be affected? This is a situation that really happens. Start with the 2011 inventory being understated, and track the changes through the inventory account to 2013.

ACCT 304 DeVry Week 7 Quiz

(TCO 8) Masterlink Co., in applying the lower of cost or market method, reports its inventory at net realizable value. Which of the following statements is ?

Option a

Option b

Option c

Option d

Question 2. Question : (TCO 8) Data related to the inventories of Costco Medical Supply is presented below:

In applying the LCM rule, the inventory of surgical supplies would be valued at

$115.

$90.

$80.

$69. ( )

Question 3. Question : (TCO 8) So. California Inc., through no fault of its own, lost an entire plant due to an earthquake on May 1, 2011. In preparing its insurance claim on the inventory loss, it developed the following data: inventory January 1, 2011, $300,000; sales and purchases from January 1, 2011 to May 1, 2011, $1,300,000 and $875,000, respectively. So. California Inc. consistently reports a 40% gross profit. The estimated inventory on May 1, 2011 is

$302,500.

$360,000.

$395,000.

$455,000.

Question 5. Question : (TCO 8) Retrospective treatment of prior years’ financial statements is not required when there is a change from

average cost to FIFO.

FIFO to LIFO.

LIFO to average cost.

All of the above

ACCT 304 DeVry Final Exam April 2016

Question 1. 1. (TCO 1) CPAs are licensed by (Points : 6)

the AICPA.

the SEC.

the federal government.

state governments.

Question 2. 2. (TCO 1) The International Accounting Standards Board (Points : 6)

was the predecessor to the IASC.

can overrule the FASB when their policies disagree.

promotes the use of high-quality, understandable global accounting standards.

has its headquarters in Geneva.

Question 3. 3. (TCO 2) SFAC No. 5 focuses on (Points : 6)

objectives of financial reporting.

qualitative characteristics of accounting information.

recognition and measurement concepts in accounting.

elements of financial statements.

Question 4. 4. (TCO 2) Enhancing qualitative characteristics of accounting information include (Points : 6)

relevance and comparability.

comparability and timeliness.

understandability and relevance.

neutrality and consistency.

Question 5. 5. (TCO 3) Incurring an expense for advertising on an account would be recorded by (Points : 6)

debiting liabilities.

crediting assets.

debiting an expense.

debiting assets.

Question 6. 6. (TCO 3) Adjusting entries are primarily needed for (Points : 6)

cash basis accounting.

accrual accounting.

current value accounting.

manual accounting systems.

Question 7. 7. (TCO 4) Current assets include cash and all other assets expected to become cash or be consumed (Points : 6)

within 1 year.

within 1 operating cycle.

within 1 year or 1 operating cycle, whichever is shorter.

within 1 year or 1 operating cycle, whichever is longer.

Question 8. 8. (TCO 4) Notes payable(‘s) (Points : 6)

is a current liability account.

usually has a debit balance.

is a noncurrent liability account.

classification cannot be determined without additional information.

Question 9. 9. (TCO 5) The distinction between operating and nonoperating income relates to (Points : 6)

continuity of income.

principal activities of the reporting entity.

consistency of income stream.

reliability of measurements.

Question 10. 10. (TCO 5) On May 1, Foxtrot Co. agreed to sell the assets of its Footwear Division to Albanese Inc. for $80 million. The sale was completed on December 31, 2012. The following additional facts pertain to the transaction:

· The Footwear Division qualifies as a component of the entity, according to GAAP, regarding discontinued operations.

· The book value of Footwear’s assets totaled $48 million on the date of the sale.

· Footwear’s operating income was a pre-tax loss of $10 million in 2012.

· Foxtrot’s income tax rate is 40%.

In the 2012 income statement for Foxtrot Co., it would report (Points : 6)

income (loss) on its total operations for the year without separation.

income (loss) on its continuing operation only.

income (loss) from its continuing and discontinued operations separately.

income and gains separately from losses.

Question 11. 11. (TCO 8) When using the gross profit method to estimate ending inventory, it is not necessary to know (Points : 6)

beginning inventory.

net purchases.

cost of goods sold.

net sales.

Page 2

Question 1. 1.(TCO 5) The FASB’s stated preference for reporting operating cash flows is the (Points : 6)

indirect method.

direct method.

working capital method.

all financial resources method.

Question 2. 2.(TCO 5) Merchandise sold FOB shipping point indicates that (Points : 6)

the seller pays the freight.

the buyer holds title after the merchandise leaves the seller’s location.

the common carrier holds title until the merchandise is delivered.

the sale is not consummated until the merchandise reaches the point to which it is being shipped.

Question 3. 3.(TCO 5) Todd Sweeney is an artist who sells his work under consignment. (He displays his work in local barbershops, and customers buy the work there.) Sweeney recently transferred a painting to a local barbershop. The rationale for adoption of the percentage-of-completion method is that (Points : 6)

results are more conservative.

it provides a measure of periodic accomplishment.

it is a better match with legal ownership.

it results in a lower income tax.

Question 4. 4.(TCO 6) Reba wishes to know how much money would be in her savings account if she deposits a given sum in an account and leaves it there at 6% interest for five years. She should use a table for the (Points : 6)

future value of an ordinary annuity of 1.

future value of 1.

future value of an annuity of 1.

present value of an annuity due of 1.

Question 5. 5.(TCO 6) Yamaha Inc. hires a new chief financial officer and promises to pay him a lump-sum bonus four years after he joins the company. The new CFO insists that the company invest an amount of money at the beginning of each year in a 7% fixed rate investment fund to ensure that the bonus will be available. To determine the amount that must be invested each year, a computation must be made using the formula for (Points : 6)

the future value of a deferred annuity.

the future value of an ordinary annuity.

the future value of an annuity due.

None of the above

Question 6. 6.(TCO 7) Compensating balances represent (Points : 6)

funds in a bank account that cannot be spent.

balances in a payroll checking account.

accounts that are subject to bank service charges.

accounts on which banks pay interest, such as NOW accounts.

Question 7. 7.(TCO 7) Oswego Clay Pipe Company sold $46,000 of pipe to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. Oswego uses the gross method of accounting for cash discounts. What entry would Oswego make on June 10, assuming the customer made the correct payment on that date? (Points : 6)

Cash 46460
Accounts Receivable 45540
Discounts Receivable 460
Cash 46000
Accounts Receivable 45540
Interest Revenue 460
Cash 46000
Accounts Receivable 46000
Cash 46460
Accounts Receivable 46000
Interest Revenue 460

Question 8. 8.(TCO 8) In a perpetual inventory system, the cost of inventory sold is (Points : 6)

debited to accounts receivable.

credited to cost of goods sold.

debited to cost of goods sold.

not recorded at the time.

Question 9. 9.(TCO 5) The statement of cash flows reports cash flows from the activities of (Points : 6)

operating, purchasing, and investing.

borrowing, paying, and investing.

financing, investing, and operating.

using, investing, and financing.

Question 10. 10.(TCO 8) Under the retail inventory method, (Points : 6)

a company measures inventory on its balance sheet by converting retail prices to cost.

a company measures inventory on its balance sheet at current selling prices.

a company measures inventory on its balance sheet on a LIFO basis.

None of the above

Question 11. 11.(TCO 8) During periods when costs are rising and inventory quantities are stable, ending inventory will be (Points : 6)

higher under LIFO than FIFO.

lower under average cost than LIFO.

higher under average cost than FIFO.

higher under FIFO than LIFO.

Page 3

Question 1. 1. (TCO 8) Fulbright Corp. uses the periodic inventory system. During its first year of operation, Fulbright made the following purchases (listed in chronological order of acquisition):

· 40 units at $100

· 70 units at $80

· 170 units at $60

Sales for the year totaled 270 units, leaving 10 units on hand at the end of the year. What is the ending inventory using the LIFO method? (Points : 15)

Question 2. 2. (TCO 5) What is an accrued liability? Please provide two examples. (Points : 28)

Question 3. 3. (TCO 7) A company’s investment in receivables is affected by several related variables. Give an example of this interrelationship. (Points : 25)

Question 4. 4. (TCO 8) A company purchases inventory during the year in four batches, with unit and price amounts shown below:

Batch 1 – 9,500 units @ $2.10 per unit

Batch 2 – 4,300 units @ $2.08 per unit

Batch 3 – 3,600 units @ $2.04 per unit

Batch 4 – 7,200 units @ $2.01 per unit

10,800 units were sold after Batch 2 was purchased, while 3,400 units were sold after Batch 3 was purchased. Required:

-1. Calculate cost of goods sold and ending inventory under the FIFO method, using the perpetual inventory system.

-2. Calculate cost of goods sold and ending inventory under the FIFO method, using the periodic inventory system. (Points : 25)

Question 5. 5. (TCO 4) You are reviewing the December 31, 2012 financial statements of Ellie’s Antiques who is considering an initial public offering of its shares. The following items come to your attention: (Points : 25)