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
...
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.
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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
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