ACCT 212 Final Exam 100% Correct Answer
ACCT 212 Final Exam 100% Correct Answer
(TCO 1) To evaluate the financial operation and health of a
business ratio analysis is used. (1) Provide the formula for the
Acid-test (or Quick) Ratio and explain how it is computed (10
points) and (2) provide an example of how this ratio can be used in
decision-making in business.
(TCO 3) At the end of the period it is necessary to close all
temporary accounts. (1) Explain why this process is required (10
points) and (2) provide an example of the closing of an expense
account, Supplies Expense in the form of a journal entry
(TCO 2) As required to complete Course Project 1, one must follow
the cycle that includes 10 steps to complete the accounting cycle.
(1) Explain how to construct an Unadjusted Trial Balance (10
points) and (2) provide an example of the application of the
debit/credit rules in the development of the trial balance.
(TCO 5) Internal Control Procedures are required to safeguard
company assets and to ensure ethical operation of the business. (1)
Explain how limited access can satisfy the purpose of internal
control (10 points) and (2) provide an example of how this control
could be implemented.
(TCO 4) Inventory valuation methods determine the cost of goods
sold and the inventory balance. (1) Explain how the Last in First
out (LIFO) method is applied (10 points) and (2) provide an example
of the impact that this method of inventory valuation will have on
Gross Profit.
. (TCO 6) BagODonuts Company bought a used
delivery truck on January 1, 2010, for $19,200. The van was
expected to remain in service 4 years (30,000 miles).
BagODonuts’ accountant estimated that the truck’s
residual value would be $2,400 at the end of its useful life.
The truck traveled 8,000 miles the first year, 8,500 miles the
second year, 5,500 miles the third year, and 8,000 miles in the
fourth year.
1. Calculate depreciation expense for the truck for each year
(2010-2013) using the:
a. Straight-line method.
b. Double-declining balance method.
c. Units of Production method.
(For units-of-production and double-declining balance, round to the
nearest two decimals after each step of the calculation.)
2. Which method best tracks the wear and tear on the van?
3. Which method would BagODonuts prefer to use for income tax
purposes? Explain in detail why BagODonuts prefers this
method.
(TCO 7) ABC Inc. was incorporated on 1/15/12. Their corporate
charter authorized the following capital stock:
Preferred Stock: 7%, par value $100 per share, 100,000 shares.
Common Stock: $1 par value, 500,000 shares.
The following transactions occurred during the year:
1/19/12 – Issued 100,000 shares of common stock for $17 cash
per share.
1/31/12 – Issued 3,000 shares of preferred stock for $115
cash per share.
11/1/12 – Repurchased 30,000 shares of common stock for $22
cash per share.
12/1/12 – Declared and paid a total dividend of $95,000.
Required:
1. Prepare the journal entry for each transaction listed above.
2. In your own words, explain the main differences between common
and preferred stock.
(Points : 25)
(TCO 5) Fraud is an intentional misrepresentation of facts, made
for the purpose of persuading another party to act in a way that
causes injury or damage to that party. In our readings and
discussions we have seen several examples of fraud in
business. Using that experience (1) provide an example of a
common fraudulent practice in business with an explanation of how
the practice works and (2) name and describe each of the elements
of the Fraud Triangle.
(TCO 5) Internal Control Procedures are in place to protect the
assets of every business as mentioned in the textbook and our
discussions. Of the seven internal control procedures, list
five of these controls and describe how each procedure is
implemented. (5 points each with 2 points for listing and 3 points
for a description)
(TCO 2) Below are the accounts of Super Pool Service, Inc. The
accounts have normal balances on June 30, 2012. The accounts are
listed in no particular order.
Account
Balance
Common
stock
$5,100
Accounts
payable
$4,400
Service
revenue
$17,100
Land $28,800
Note
payable
$9,500
Cash $5,200
Dividends
$6,100
Utilities
expense
$2,100
Accounts
receivable
$10,600
Delivery
expense
$700
Retained
earnings
$25,600
Salary
expense
$8,200
Prepare the company’s trial balance as of June 30, 2012,
listing accounts in proper sequence, as illustrated in the chapter.
For example, Accounts Receivable comes before Land. List the
expense with the largest balance first, the expense with the next
largest balance second, and so on.
(TCO4) Linda’s Lampshades started business on Jan. 1, 2001.
They had the following inventory transactions:
Journals – Jan. 2001
Purchases
Supplier Date
Received Quantity
Unit Cost Amount
Donna
01/10/01 110
12.00
1320.00
Thomas
01/15/01 160
14.00
2240.00
Cindy
01/18/01 150
15.00
2250.00
Sales
Customer Date
shipped Quantity Sel.
Price
Amount
Norilene
01/16/01
200
25.00 5000.00
1. Calculate the ending inventory, using the
perpetual inventory method:
A. Using FIFO
B. Using LIFO
C. Using Average Cost
2. Prepare the following statement
Using
FIFO LIFO
Average Cost
Sales
Cost of Sales
Gross Profit
(Points : 25)
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