saint ACC549 midterm exam 2017

  

Question 1 (25 points)

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Listed below are
several qualitative characteristics. Label the characteristic (or
characteristics) that align with each statement.

a. Understandability
b. Usefulness for
decision making
c. Relevance
d. Reliability
e. Predictive
f. Feedback value
g. Timely
h. Verifiable
i. Representational
faithfulness
j. Neutrality
k. Comparability
l. Materiality
m. Benefits of
information should exceed its cost

___ 1. Two
constraints included in the hierarchy.
___ 2. For this
quality, the information needs to have predictive and feedback value and be
timely.
___ 3. These are the
qualitative characteristics that are viewed as having the most importance.
___ 4. SFAC No. 2
indicates that to be reliable, the information needs to have these
characteristics.
___ 5. Interacts with
relevance and reliability to contribute to the usefulness of information.
___ 6. Two primary
qualities that make accounting information useful for decision making.
___ 7. For this
quality, the information must be verifiable, subject to representational
faithfulness, and neutral.
___ 8. SFAC No. 2
indicates that to be relevant, the information needs to have these
characteristics.

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Question 2 (25 points)

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Listed below is information related to several adjusting entry
situations. Assume that the accounting year ends on December 31.

a. $3,000 paid for insurance on October 1
for a one-year period (October 1 – September 30). This transaction was recorded
as a debit to prepaid insurance ($3,000) and a credit to cash ($3,000).

b. Interest on bonds payable in the amount
of $500 has not been recorded at December 31.

c. Rent expense in the amount of $1,200
was paid on November 1. This transaction was recorded as a debit to rent
expense ($1,200) and a credit to cash ($1,200). This rent payment was for the
period November 1 to January 31.

Record the original entries and the adjusting entries using T-accounts.

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Question 3 (25 points)

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A partial list of accounts for Johnson and Clark, in alphabetical order,
is presented below:

Prepare a consolidated balance sheet in good format, without monetary amounts,
for December 31, 2012. Use the format Current Assets; Property, Plant, and
Equipment; Investments; Intangibles; Current Liabilities; Long-Term
Liabilities; and Stockholders’ Equity. Do not use the accounts not found on the
balance sheet.

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Question 4 (25 points)

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The following is a partial listing of accounts for Euisara, Inc., for
the year ended December 31, 2012.

Prepare a balance sheet in good format for December 31, 2012.

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Question 5 (25 points)

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The income statement for Lifeline Products in single-step format
follows.

a. Convert the statement to multiple-step
format.

b. Recompute net income with the unusual
loss removed.

c. Why may net income with the unusual
loss removed be preferable to use for trend analysis?

d. Speculate on why this loss is not
considered extraordinary or as a disposal of a segment.

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Question 6 (20 points)

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Comparative income statements for 2012 and 2011 follow.

a. Prepare a vertical common-size analysis
of this statement for each year, using sales as the base.

b. Comment briefly on the changes between
the two years, based on the vertical common-size statement.

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Question 7 (20 points)

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Bill’s Produce does 60 percent of its business during June, July, and
August.

a. Compute the days’ sales in receivables
for July 31, 2012, and December 31, 2012, based on the data above.

b. Compute the accounts receivable
turnover for the period ended July 31, 2012, and December 31, 2012.

c. Comment on the results from (a) and
(b).

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