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ANSWERS
ACC 545 Final Exam
1) A company changes from percentage-of-completion to completed-contract,
which is the method used for tax purposes. The entry to record this change
should include a
2) Which of the following is accounted for as a change in accounting
principle?
3) A company changes from straight-line to an accelerated method of
calculating depreciation, which will be similar to the method used for tax
purposes. The entry to record this change should include a
4) Presenting consolidated financial statements this year when statements of
individual companies were presented last year is
13) If a short-term obligation is excluded from current liabilities because
of refinancing, the footnote to the financial statements describing this event
should include all of the following information EXCEPT:
14) Stock dividends distributable should be classified on the
15) Which of the following items is a current liability?
16) A company borrows $10,000 and signs a 90-day nontrade note payable. In
preparing a statement of cash flows (indirect method), this event would be
reflected as
17) An increase in inventory balance would be reported in a statement of
cash flows using the indirect method (reconciliation method) as acc 545 final
exam
18) The primary purpose of the statement of cash flows is to provide
information
19) Eller Co. received merchandise on consignment. As of January 31, Eller
included the goods in inventory, but did not record the transaction. What would
be the effect of this on its financial statements for January 31?
20) Cross Co. accepted delivery of merchandise that it purchased on account.
As of
December 31, Cross had recorded the transaction, but did not include the
merchandise in its inventory. What would be the effect of this on its financial
statements for December 31?
21) The failure to record a purchase of merchandise on account even though
the goods are properly included in the physical inventory results in
22) Fences and parking lots are reported on the balance sheet as
23) Which of these is not a major characteristic of a plant asset?
24) The debit for a sales tax properly levied and paid on the purchase of
machinery preferably would be a charge to
25) On November 1, 2007, acc 545 final exam Little Company purchased 600 of
the $1,000 face value, 9% bonds of Player, Incorporated, for $632,000, which
includes accrued interest of $9,000. The bonds, which mature on January 1,
2012, pay interest semiannually on March 1 and September 1. Assuming that
Little uses the straight-line method of amortization and that the bonds are
appropriately classified as available-for-sale, what would the net carrying
value of the bonds be shown as on Little`s December 31, 2007, balance sheet?
26) On October 1, 2007, Lyman Co. purchased to hold to maturity, 200 of the
$1,000 face value, 9% bonds for $208,000. An additional $6,000 was paid for
accrued interest. Interest is paid semiannually on December 1 and June 1 and
the bonds mature on December 1, 2011. Lyman uses straight-line amortization.
Ignoring income taxes, what was the amount reported in Lyman`s 2007 income
statement from this investment?
27) On October 1, 2007, Porter Co. purchased to hold to maturity 1,000 of
the $1,000 face value, 9% bonds for $990,000 which includes $15,000 accrued
interest. The bonds, which mature on February 1, 2016, pay interest
semiannually on February 1 and August 1. Porter uses the straight-line method
of amortization. The bonds should be reported in the December 31, 2007 balance
sheet at a carrying what value?
28) Although only certain leases are currently accounted for as a sale or
purchase, there is theoretic justification for considering all leases to be
sales or purchases. The principal reason that supports this idea is that
29) An essential element of a lease conveyance is that the
30) Which of the following is a correct statement of one of the
capitalization criteria?
31) Discount on notes payable is charged to interest expense
32) The generally accepted method of accounting for gains or losses from the
early extinguishment of debt treats any gain or loss as
33) A corporation borrowed money from a bank to build a building. Acc 545
final exam The long-term note signed by the corporation is secured by a
mortgage that pledges title to the building as security for the loan. The
corporation is to pay the bank $80,000 each year for 10 years to repay the
loan. Which of the following relationships can you expect to apply to the
situation?
34) Benton Company issues $10,000,000 of 10-year, 9% bonds on March 1, 2007,
at 97 plus accrued interest. The bonds are dated January 1, 2007, and pay
interest on June 30 and December 31. What is the total cash received on the
issue date?
35) Limeway Company issues $5,000,000, 6%, 5-year bonds dated January 1,
2007, on January 1, 2007. The bonds pay interest semiannually on June 30 and
December 31. The bonds are issued to yield 5%. What are the proceeds from the
bond issue?
2.5% 3.0% 5.0% 6.0% Present value of a single sum for 5 periods .88385
.88261 .78353 .74726 Present value of a single sum for 10 periods .78120 .74409
.61391 .55839 Present value of an annuity for 5 periods 4.64583 4.57971 4.32948
4.21236 Present value of an annuity for 10 periods 8.75206 8.53020 7.72173
7.36009
36) A company issues $20,000,000, 7.8%, 20-year bonds to yield 8% on January
1, 2007. Interest is paid on June 30 and December 31. The proceeds from the
bonds are $19,604,145. Using effective-interest amortization, how much interest
expense will be recognized in 2007?
37) Which of the following is not a characteristic of a defined-contribution
pension plan?
38) In accounting for a defined-benefit pension plan
39) The interest on the projected benefit obligation component of pension
expense
40) Windsor Company has outstanding both common stock and nonparticipating,
noncumulative preferred stock. The liquidation value of the preferred is equal
to its par value. The book value per share of the common stock is unaffected by
41) Dividends are not paid on
42) Assume common stock is the only class of stock outstanding in the
B-Bar-B Corporation. Total stockholders` equity divided by the number of common
stock shares outstanding is called
43) Preparation of consolidated financial statements when a
parent-subsidiary relationship exists is an example of the
44) In presenting segment information, which of the following items must be
reconciled to the entity`s consolidated financial statements?
Operating Revenue Identifiable Profit (Loss) Assets
Option 1 Yes Yes Yes
Option 2 No Yes Yes
Option 3 Yes No Yes
Option 4 Yes Yes No
45) Presenting consolidated financial statements this year when statements
of individual companies were presented last year is
