ACCT 201A Exam II Review KEY with CORRECT ANSWERS

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ACCT 201A Exam II Review KEY Ch. 5 1. A generally accepted method of valuation is 1. trading securities at market value. 2. accounts receivable at net realizable value. 3. inventories at current ... cost. a. 1 b. 2 c. 3 d. 1 and 2 Ans: D, LO: 2, Bloom: K, Difficulty: Moderate, Min: 2, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Prob. Solving, IMA: Reporting, IFRS: None 2. Fulton Company owns the following investments: Trading securities (fair value) $160,000 Available-for-sale securities (fair value) 70,000 Held-to-maturity securities (amortized cost) 94,000 Fulton will report investments in its current assets section of a. $0. b. exactly $160,000. c. $160,000 or an amount greater than $160,000, depending on the circumstances. d. exactly $230,000. Ans: C, LO: 2, Bloom: AP, Difficulty: Moderate, Min: 3, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Prob. Solving, IMA: Reporting, IFRS: None 3. For Grimmett Company, the following information is available: Capitalized leases $600,000 Trademarks 275,000 Long-term receivables 225,000 In Grimmett’s balance sheet, intangible assets should be reported at a. $275,000. b. $500,000. c. $825,000. d. $875,000. Ans: A, LO: 2, Bloom: AP, Difficulty: Moderate, Min: 3, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Prob. Solving, IMA: Reporting, IFRS: None 1 4. Houghton Company has the following items: common stock, $1,600,000; treasury stock, $210,000; deferred income taxes, $250,000 and retained earnings, $780,000. What total amount should Houghton Company report as stockholders’ equity? a. $1,390,000. b. $2,170,000. c. $2,420,000. d. $2,590,000. Ans: B, LO: 2, Bloom: AP, Difficulty: Moderate, Min: 3, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Prob. Solving, IMA: Reporting, IFRS: None $1,600,000 – $210,000 + $780,000 = $2,170,000. 5. Keisler Corporation reports: Cash provided by operating activities $280,000 Cash used by investing activities 110,000 Cash provided by financing activities 140,000 Beginning cash balance 90,000 What is Keisler’s ending cash balance? a. $370,000. b. $400,000. c. $530,000. d. $620,000. Ans: B, LO: 4, Bloom: AP, Difficulty: Easy, Min: 4, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Prob. Solving, IMA: Reporting, IFRS: None $90,000 + $280,000 – $110,000 + $140,000 = $400,000. 6. During 2017 the DLD Company had a net income of $85,000. In addition, selectedaccounts showed the following changes: Accounts Receivable $3,000 increase Accounts Payable 1,000 increase Buildings 4,000 decrease Depreciation Expense 1,500 increase Bonds Payable 8,000 increase What was the amount of cash provided by operating activities? a. $84,500 b. $85,000 c. $86,500 d. $94,500 Ans: A, LO: 4, Bloom: AP, Difficulty: Moderate, Min: 4, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Prob. Solving, IMA: Reporting, IFRS: None $85,000 – $3,000 + $1,000 + $1,500 = $84,500. 2 7. Harding Corporation reports the following information: Net income $530,000 Depreciation expense 140,000 Increase in accounts receivable 60,000 Harding should report cash provided by operating activities of a. $330,000. b. $450,000. c. $610,000. d. $730,000. Ans: C, LO: 5, Bloom: AP, Difficulty: Moderate, Min: 4, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Prob. Solving, IMA: Reporting, IFRS: None $530,000 + $140,000 – $60,000 = $610,000. 8. Packard Corporation reports the following information: Net cash provided by operating activities $335,000 Average current liabilities 150,000 Average long-term liabilities 100,000 Dividends declared 60,000 Capital expenditures 110,000 Payments of debt 35,000 Packard’s cash deb [Show More]

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