Total Assets       Total LiabilitiesTotal Owner's Equity
A. Increase $6,000     Increase $4,000  Increase $2,000
B. Increase $6,000     No change              Increase $6,000
C. Increase $2,000     No change              Increase $2,000
D. Decrease $2,000   Increase $4,000    Decrease $6,000
 
 

A. Securities and Exchange Commission
B. The Emerging Issues Task Force
C. The General Accounting Office
D. The Financial Accounting Standards Board
 

Generally Accepted Accounting Principles include:

      Statements of Financial  Statements of Financial
    Accounting  Concepts     Accounting Standards

A.                   No                                  Yes
B.                   No                                   No
C.                   Yes                                  No
D.                   Yes                                 Yes

The adjusting entry for Prepaid Rent is not made.  As a result:

A. liabilities are overstated.
B. assets are understated.
C. liabilities are understated.
D. assets are overstated.

Question Category D:

The following is taken from the inventory records of the Home Run Co.  and applies to the next 2 questions:

                             Units            Price             Total

Beginning Inventory     25     @      10               $250
   Purchase 1                5      @      12                   60
   Purchase 2              10      @      15                 150
   Purchase 3              20      @      16                 320
Ending Inventory       15      @        ?                 ???

Number of units sold:  45

If Home Run Co. uses the FIFO method of inventory valuation, what is  the amount of Cost of Goods Sold?

A. $530
B. $540
C. $555
D. $630

If Home Run Co. uses the LIFO method of inventory valuation, what is  the value of ending inventory?

A. $630
B. $540
C. $240
D. $150

Question Category E:

Which of the following is not an element of internal control?

A. control environment
B. accounting system
C. control procedures
D. control supervisor

Flow charts and data flow diagrams are used for:

A. system documentation.
B. personnel decisions.
C. forms design.
D. ethical problems.

Question Category F:

Management accounting focuses primarily on providing data for

A. internal uses by managers.
B. external uses by stockholders and creditors.
C. external uses by the Internal Revenue Service.
D. external uses by the Securities and Exchange Commission.

Managerial accounting focuses primarily on

A. reporting the activities for the entity as a whole.
B. reporting the activities of the relevant segments of the entity.
C. meeting established requirements for management reports established by professional standard-setting bodies.
D. determining the appropriate value at which inventory should be recorded.

An employer transferred $6,000 cash to an employee who lost his  home in a fire.  The employer made the transfer to help the  employee in his time of need.

A. The employee may exclude $6,000 from gross income if it is  used to replace property destroyed by the fire.
B. The employer's intent at the time of the transfer will make  the cash either income or a gift.
C. The employee must include the cash in gross income.
D. The employee may exclude $6,000 under the Acts-of-God  exclusion.

Which of the following is not deductible?

A. Moving expenses
B. Tax return preparation fees
C. Expenses incurred for the production of income.
D. Hobby expenses in excess of hobby income.

Acme Manufacturing Company is considering the purchase of a new  factory machine.  To finance the machine, the company would have  to sell its investments in corporate bonds. Regarding the  purchase decision, the interest the company would otherwise earn  on the investments is:

A. an outlay cost.
B. a sunk cost.
C. a period cost.
D. an opportunity cost.
 

The controller of ABC Manufacturing Company would consider the  cost of supplies used in his/her department to be:

A. direct and controllable.
B. direct but noncontrollable.
C. indirect and controllable.
D. indirect and noncontrollable.

The AICPA Code of Professional Conduct contains

A.  a list of violations that would cause the revocation of a CPA’s license.
B.  Principles, Rules, Interpretations, Rulings.
C.  a description of the CPA’s procedures for responding to an inquiry from a State of Accountancy.
D.  a comprehensive list of specific criminal activities are acts discreditable to the profession.

A defense for the auditor against third party liability is:

A.The CPA must perform some conduct that links the CPA to the third party.
B.  The CPA knew the financial statements were to be used by a particular third party or for a purpose.
C.  The CPA knew that the financial statements would be used by the client.
D.  The plaintiff knew, at the time of purchase of the securities, that the statements were false, misleading, or incomplete.

Memorex Corp. has 30,000 shares authorized; 25,000 shares issued;  5,000 shares held in treasury.  How many shares are outstanding?

A. 25,000
B. 20,000
C.  5,000
D.        0