ACCT 503 Final Exam Guide (2 Set, New 2019)

ACCT 503 Final Exam Guide (2 Set, New 2019)

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This Tutorial contains 2 Set of Final Exam

 

 

 

Question 1.1. (TCO D) Please describe the purpose of the Income Statement and the interrelationship between the income statement and the other major financial statements that we covered in this class. In your answer, please also address which financial statements should be created before the Income Statement, if any, and which financial statements need to be completed after the Income Statement, if any. (Points : 25)

 

 Question 1—Set 2

1.  Please describe the purpose of the Balance Sheet and the interrelationship between the balance sheet and the other major financial statements that we covered in this class. In your answer, please also address which financial statements should be created before the Balance Sheet, if any, and which financial statements need to be completed after the Balance Sheet, if any

 

 

Question 2.2. (TCO E) Your friend, Lisa, plans to open a nail salon. Lisa states that she does not have time to develop and implement a system of internal controls.

(a) Explain to Lisa the components of internal control. (10 points)

(b) Explain to Lisa at least 5 internal control procedures she must establish to protect herself against fraud. You should state specific internal control procedures from the textbook, and relate your answer to her nail salon business. (15 points) (Points : 25)

Q-2-Set 2

2. Your friend, John, plans to open a parking garage business. John states that he does not have time to develop and implement a system of internal controls.

(a) Explain to John the objectives of a system of internal control.

(b) Explain to John at least 5 internal control procedures that he must establish to protect himself against fraud. You should state specific internal control procedures from the textbook and relate your answer to his parking garage business.

solution

 

 

 

 

Question 3. (TCO A) The following items are taken from the financial statements of PQR Company for 2013:

Cash  $100,000

 

 

 

Instructions:

(1) Create a classified balance sheet in good form for the year ended 2013. (30 points)

(2) Calculate the current ratio and debt ratio and explain your findings. (6 points) (Points : 36)

 

 

Question 3—Set 2

(TCO H) Corporations in need of cash can either issue stock or bonds to raise capital. What are the differences between these two activities and why might a company choose one over the other? (Points : 20)

 

Q-3 Set 3

Question 4.4. (TCO A) The following items are taken from the financial statements of BCT Company for 2013:

Instructions:

(1) Create a classified balance sheet in good form for the year ended 2013. (30 points)

(2) Calculate the current ratio and debt ratio and explain your findings. (6 points) (Points : 36)

 

 

Question 4. (TCO B) The Caldor Company gathered the following condensed data for the year ended December 31, 2014:

Instructions:

 

(1) Prepare a multiple-step income statement for the year ended December 31, 2014. (30 points)

 

(2) Compute the gross margin percentage and net profit margin ratio. Caldor Company’s assets at the beginning of the year were $900,000, and the assets were $950,000 at the end of the year. To qualify for full credit, you must state the formula you are using, show your computations, and explain your findings. (6 points) (Points : 36)

 

 

Q-4 Set 2

Question 3.3. (TCO H) Simpson Inc. purchased 5, $4,000, 11% bonds of Hillsdale Corporation when the market rate of interest was 10%. Interest is paid semiannually on the bonds, and the bonds mature in 4 years.

 

Instructions:

Compute the total price paid by Simpson Inc. for the bonds showing your calculation for the present value of the principal and the present value of the interest payments.

 

Present value tables (Exhibit 8-14 and Exhibit 8-15) are available on pages 452 and 453 of your Harrison, Horngren, and Thomas textbook.  NOTE:  Be sure you review the PV Tables completely to ensure you find the correct period and interest rate for the calculation. (Points : 20)

 

 

Question 5. (TCO C) This is a 2-part question. 

Part 1) Indicate which section of the statement of cash flows should contain each of the following items, and whether each item would result in an inflow or outflow of cash. The sections are Operating, Investing, and Financing. (30 points)

Part 2) Please explain how to calculate free cash flow and the importance of free cash flow to investors. (6 points) (Points : 36)

 

 

Q-5 Set 2

5. The Alpha Company gathered the following condensed data for the year ended December 31, 2014:

Instructions:

(1) Prepare a multiple-step income statement for the year ended December 31, 2014.

 

(2) Compute the gross margin percentage and net profit margin ratio. Alpha Company’s assets at the beginning of the year were $1,500,000, and the assets were $1,400,000 at the end of the year. To qualify for full credit, you must state the formula you are using, show your computations, and explain your findings.

 

 

 

Question 6. (TCO F) This is a 2-part question.

 Part 1) Journalize the adjusting entries below at year-end December 31, XXXX. Please share your supporting calculations for the adjusting entries requiring computations.

(a) The unadjusted balance of the Supplies account is $2,200. The total cost of supplies remaining is $1,000.

(b) Accrued Service Revenue of $9,000.

(c) Equipment was purchased at the beginning of the year for $45,000. The equipment’s useful life is 5 years, and the residual value is $5,000. Record the depreciation for this year.

(d) The weekly payroll is $25,000. Employees are owed for 3 days of a 5-day work week.

(e) Beginning unearned service revenue is $7,500, and ending unearned service revenue is $3,500.

(f) The business has interest expense of $750 that is due in January.

  (30 points)

 

 

 

Q-7

(TCO G) Please review the following 6 ratios for Langley Company and XYZ Inc. for the year ended 2014, and address the 2 questions below.

Instructions: This is a 2-part question.

(1) Explain the meaning of each of the Langley Company ratios above. (18 points)

(2) State which company performed better for each ratio. (18 points) (Points : 36)

 

 

Question 7 – Set 2

 

 (TCO F) This is a 2-part question.

Part 1) Journalize the adjusting entries below at year-end December 31, XXXX. Please share your supporting calculations for the adjusting entries requiring computations.

Beginning prepaid insurance, $500. Payments for insurance during the period are $900. Ending prepaid insurance is $600.

(b) Interest revenue of $1,500 has been earned but not yet received.

(c) Accrued Service Revenue of $12,000

(d) The weekly payroll is $20,000. Employees are owed for 4 days of a 5-day work week.

The unadjusted balance of the Supplies account is $1,200. The total cost of supplies remaining is $300.

(f) Equipment was purchased at the beginning of the year for $25,000. The equipment’s useful life is 5 years, and the residual value is $5,000. Record the depreciation for this year.

 

 

Question 8.8.

(TCO G) Please review the following 6 ratios for Johnson Company and Lee Enterprises for the year ended 2014, and address the 2 questions below.

Instructions: This is a 2-part question.

(1) Explain the meaning of each of the Johnson Company ratios above. (18 points)

(2) State which company performed better for each ratio. (18 points) (Points : 36)

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