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ACC 497 Final Exam
1) The uniform law, issued in
1984 by the Committee on Corporate Laws of the American Bar Association, that
regulates the formation, operation, and termination of corporations is
2) Which of the following
statements is true?
3) Which of the following
statements is true?
4) What effect would a decrease
in interest rates by the Federal Reserve most likely have in the nation’s
manufacturing sector, all other factors remaining constant?
5) A table that shows the
relationship between the price of a good and the quantity demanded of that good
is called
6) If policymakers increase
aggregate demand, the price level
7) Which table would show the
largest factor for an interest rate of 8% for five periods?
8) Financial service
9) As the interest rate
increases for any given period, the future value interest factor will
10) The specific cost of each
source of long-term financing is based on ________ and ________ costs.
11) At the operating break-even
point, ________ equals zero.
Section 4: Information
Technology (IT) Implications in the Business Environment
12) Justifying expenditures for
new technologies is especially difficult because
13) The hardware of a computer
system includes the computer itself and other devices that help the computer
perform its tasks. These other devices are commonly also called
14) Software that enables
businesses and government agencies to transmit and manipulate financial data on
an organization-wide basis best describes
15) A simple diagram that shows
estimated completion times versus actual completion times for the various
activities in a systems implementation project
16) What would be the best
explanation for the absence of complete information on computer crime?
17) Which of the following
processes would be accounted for using a job order cost system?
18) In traditional costing
systems, overhead is generally applied based on
19) If standard costs are
incorporated into the accounting system
20) Generally accepted
accounting principles are
21) Luca Company overapplied
manufacturing overhead during 2006. Which one of the following is part of the
year end entry to dispose of the overapplied amount assuming the amount is
material?
22) The cost to produce Part A
was $10 per unit in 2005. During 2006, it has increased to $11 per unit. In
2006, Supplier Company has offered to supply Part A for $9 per unit. For the
make-or-buy decision,
23) Disney’s variable costs are
30% of sales. The company is contemplating an advertising campaign that will
cost $22,000. If sales are expected to increase $40,000, by how much will the
company's net income increase?
24) Kershaw Bookstore had 600
units on hand at January 1, costing $18 each. Purchases and sales during the month
of January were as follows: Kershaw does not maintain perpetual inventory
records. According to a physical count, 450 units were on hand at January 31.
The cost of the inventory at January 31, under the LIFO method is:
25) The process of formally recording
or incorporating an item in the financial statements of an entity is
26) The primary purpose of the
statement of cash flows is to provide information
27) Which of the following is
considered cash?
28) A company offers a cash
rebate of $1 on each $4 package of batteries sold during 2007. Historically,
10% of customers mail in the rebate form. During 2007, 6,000,000 packages of
batteries are sold, and 210,000 $1 rebates are mailed to customers. Assuming
there is no beginning liability balance, what is the rebate expense and
liability, respectively, shown on the 2007 financial statements dated December
31?
29) Which of the following is a
debt security?
30) The balance in Newsprint
Corp.'s foreign exchange loss account was $10,000 on December 31, 2008, before
any necessary year-end adjustment relating to the following:
31) Costs incurred internally
to create intangibles are
32) The amount to be recorded
as the cost of an asset under capital lease is equal to the
33) In computations of weighted
average of shares outstanding, when a stock dividend or stock split occurs, the
additional shares are
34) Debt securities that are
accounted for at amortized cost, NOT fair value, are
35) Elvis Company purchases
inventory for $70,000 on March 19, 2008, and sells it to Graceland Corporation
for $95,000 on May 14, 2008. Graceland still holds the inventory on December
31, 2008, and determines that its market value (replacement cost) is $82,000 at
that time. Graceland writes the inventory down from $95,000 to its lower market
value of $82,000 at the end of the year. Elvis owns 75% of Graceland. Based on
this information, what amount of inventory should be eliminated in the
consolidation workpaper for 2008?
36) Which of the following
objectives is considered the cornerstone of financial reporting by a
governmental entity?
37) Expenditures should be
budgeted by character. An example of a character classification is
38) Which of the following
funds is accounted for on the modified accrual basis of accounting?
39) Several years ago, Durham
City issued $1 million in zero coupon bonds due and payable in 2010. The bonds
were sold at an amount to yield investors 6% over the life of the bonds. During
the current year, how much interest expenditures would Durham City recognize
related to these bonds?
40) As used in governmental
accounting, interperiod equity refers to a concept of
41) The state has a legally
separate State Building Authority, which has a board appointed by the Governor.
The authority issues debt in its name, holds title to buildings in its name,
and leases its building exclusively to the state. The authority would be
considered a(n)
42) Revenues of a
not-for-profit organization should be reported as
43) Financial statements for a
church-supported college should be prepared according to standards set by the
44) For a not-for-profit
hospital, which of the following financial statements is required?
45) What agency has the
ultimate authority in defining independence for publicly traded companies?
46) A report on internal control
effectiveness by management of public companies is required by which of the
following:
47) Once sufficient predication
has been established, what is the first step a fraud examiner following the
fraud theory approach should take?
48) Which of the following best
describes the objective of a fraud examination?
49) Damages intended to punish
a defendant and deter the defendant and others from engaging in the same
tortious conduct in the future are called
50) Where a contract calls for
action that violates a statute, in a breach of contract case the court will
51) Ted’s Gifts and Sweets
enters into a written contract with Bannon Candies to supply Ted’s with 60
boxes containing a dozen coconut clusters each month for sale to the public.
The agreement contained an integration clause. Before the first delivery under
the contract, Ted and his warehouse manager called Debbie, the Bannon’s account
representative, to request that the candies be delivered in special Valentine’s
Day boxes. Debbie told Ted, “Don’t worry, I’ll tell the shipping department to
take care of that.” When the candies were delivered, they were in standard
cardboard boxes. Ted called Bannon and threatened to sue for beach of contract.
Will Ted prevail in his suit?
52) Jane and Bill are married.
They purchase a house and lot as tenants by the entirety. Then Jane is killed
in a car accident. Her will leaves everything to her sister, Ruth. What will
happen to Jane’s interest in the property?
53) Which of the following is a
correct statement of the requirements for a bona fide occupational
qualification?
54) Which of the following
statements accurately describes the workers’ compensation rules?
55) When a company holds
between 20% and 50% of the outstanding stock of an investee, which of the
following statements applies?
56) On December 31, 2008, Kean
Company changed its method of accounting for inventory from weighted-average
cost method to the FIFO method. This change caused the 2008 beginning inventory
to increase by $420,000. The cumulative effect of this accounting change to be
reported for the year ended December 31, 2008, assuming a 40% tax rate, is
57) Which of the following
serves as the highest authority for tax research, planning, and compliance
activities?
58) The retail inventory method
is based on the assumption that the
59) When an item of expense is
paid and recorded in advance, it is normally called
60) Antonio owns land held for
investment with a basis of $28,000. The city of Lafayette exercises the right
of eminent domain and Antonio receives a payment of $48,000. What is Antonio's
realized gain?
61) In April 2009 of this year,
Emma acquired a machine for $50,000 for use in her business. The machine is
classified as 7-year property. Emma elects out of bonus depreciation and does
not expense the asset under Sec. 179. Emma's depreciation on the machine this
year is
62) During the current year, a
corporation sells equipment for $300,000 that it had purchased and placed in
service in 2007. The equipment cost $270,000, and $60,000 of depreciation
deductions was allowed. The results of the sale are
63) Susie owns a ranch in
Wyoming, which Pat offers to purchase. Susie is not willing to sell the ranch
but is willing to exchange the ranch for an apartment complex in Louisiana. The
complex is available for sale. Pat purchases the apartment complex in Louisiana
from Jody and transfers it to Susie in exchange for Susie's ranch. The ranch
and the complex each have a $1,000,000 fair market value. Which of the
following is true?
64) A married person who files
a separate return can claim a personal exemption for his or her spouse if the
spouse is not the dependent of another and has
65) Ricky has rented a house
from Sarah since last year. The rent is usually $800 per month, but Sarah
reduced the monthly rent down to $600 for all 12 months this year in exchange
for Ricky constructing an addition to the house. The addition has a fair market
value of $3,500. How much total rental income must Sarah report this year?
66) Alex is a calendar-year
sole proprietor. He began business on December 1 of this year. He uses the
accrual method of accounting. Alex had the following collections in the same
month: He collected $7,000 in December from clients who paid cash for services
to be performed next year. He collected $5,000 in December for services
performed during December, which he deposited in an operating account on
December 31 of this year. He collected $9,000 in December on accounts
receivable for services performed in December, which he deposited in an
operating account on January 2 of next year. What is the amount Alex must
include in his income for December?
67) Bianca is beneficiary of an
$80,000 insurance policy on her father's life. Upon his death, she may elect to
receive the proceeds in 5 yearly installments of $17,500 or may take the
$80,000 lump sum. She elects to take the lump sum payment. What are the tax
consequences in year one?
68) Nonrefundable tax credits
69) Paul makes the following
property transfers in the current year: $22,000 cash to his wife, $34,000 cash
to a qualified charity, $120,000 house to his son, and $3,000 computer to an
unrelated friend. The total of Paul's taxable gifts, assuming he does not elect
gift splitting with his spouse, subject to the unified transfer tax, is
70) Which of the following best
describes the weight of a revenue ruling?
71) Which of the following
statements is true?
72) One consequence of a
property distribution by a corporation to a shareholder is
73) Joshua owns 100% of Steeler
Corporation's stock. Joshua's basis in the stock is $8,000. Steeler Corporation
has E&P of $40,000. If Steeler Corporation redeems 60% of Joshua's stock
for $50,000, Joshua must report dividend income of
74) In computing the ordinary
income of a partnership, a deduction is allowed for
75) Which of the following
would terminate a Subchapter S election?
76) The function of auditing is
77) Auditing is based on the
assumption that financial data are verifiable. Data are verifiable when two or
more qualified individuals,
78) Statement on Quality
Control Standards No. 2 identifies certain quality control elements that should
be considered when performing which types of services?
79) Internal auditors are
primarily involved with
80) The statement that the
reviewer “is not aware of any material modifications that should be made to the
statements in order for them to be in conformity with GAAP” is known as
81) The assessment of inherent
risk requires considering matters that have a pervasive effect on assertions
for all or many accounts and matters that may pertain only to assertions for
specific accounts. Which of the following is an example of a pervasive effects
matter?
82) Specific audit objectives
are normally
83) The Committee of Sponsoring
Organizations (COSO) report identified five interrelated components of internal
control. Since then, a sixth category has been identified, which is
84) Which of the following
necessary controls would address a potential misstatement arising from a
voucher being paid twice?
85) An effective accounting
system should identify and record only the valid transaction of the entity that
occurred in the current period, which relates to the
86) One of the six steps
involved in performing analytical procedures includes the following:
87) In a normal audit, the relationship
between the level of materiality used to plan the engagement and the level of
materiality used to evaluate evidence is that
88) Use of auditor judgment or
of a risk matrix is necessary in revising planned detection risk whenever
89) In the audit risk model,
audit sampling applies to
90) Audit sampling is involved
whenever an auditor
91) How can long-term assets
best be tested for ownership?
92) How can long-term assets
best be tested for current present value?
93) Because of the effects of circulation,
some audit evidence is more reliable than other evidence. Which of the
following is generally considered to be most reliable?
94) Which of the following
accounts in a merchandising company is affected by both the revenue cycle and
another cycle?
95) The auditor’s strategy in
performing test counts during the inventory observation is to
96) Which one of the following
analytical procedures may indicate possible inventory obsolescence problems
when ratios are large?
97) The control of all funds during
the count of cash on hand is meant primarily to prevent
98) Whether the entity
maintains effective controls to provide reasonable assurance that private
customer information obtained because of e-commerce is protected is defined as
99) A lawyer’s refusal to
respond to a letter of audit inquiry normally requires the auditor to
100) Which of the following is
a tort?
