Summary
Summary full practice final exam with answers for accounting
- Course
- BUS-A 100
- Institution
- Indiana University-Bloomington
great practice for midterm and final
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A100 Final ExamFall 1, 2017 - First Eight WeeksExam Version 01This answer key has been updated for changes in the new tax law.Fill in the information below. Write clearly:Name (print): IU User Name:Class Day & Time:Course Section #:There are 34 multiple-choice questions on this exam. Be sure your exam is complete.You have two hours to finish the exam.For each question, select the best answer from among the alternatives provided. In ordet otreceive credit for your answers, you must use pencil on the machine-readable answer sheetprovided. Answers on the exam itself will not be considered in grading the exam.Fill in (and bubble) the following sections on the left side of the Scantron:Name (Last, first, middle initial)User nameVersion (01, 02, 03, or 04)Section number (The proctor will provide this to you)You may not have notes, scrap paper, or calculators other than Sharp EL-233S (or EL-233SB)with you while taking this exam. No pencil boxes or cases are allowed. Phones and smart watches mustbe put away and kept out of sight during the exam.You may have with you during the exam only your ID, pencils and an eraser, and the A100-approvedcalculator. When you complete the exam, place your answer sheet behind your exam and turn boththe exam and the answer sheet in to the exam proctor as you leave the room.NO EXAM MATERIALS MAY LEAVE THIS ROOM.Failure to turn in all exam materials or having other materials while taking the test is a violation ofthe Honor Code.Your signature below indicates you have read and will follow the above instructions:Signature: 1 1What is the main purpose of a financial audit?aTo give the public confidence that the financial statements are fairly stated.bAs a guarantee that fraud did not occur.cTo guarantee that the numbers on the financial statements are accurate.dTo give stockholders a monthly update on how the company is doing.eTo keep within a company for management purposes only.2Which of the following is true of Sarbanes-Oxley?aIt requires that a company change external auditors every year.bIt requires that the government prepare the audits of all publicly-traded companies.cIt allows only the internal auditor to prepare the audit of the year.dRequires the audit be reviewed by another audit partner before being published.eAll audit records of the external auditor must now be retained indefinitely.3Which of the following is the best audit opinion?aModifedbExceptionalcUnmodifieddExcellenteAdvantaged4BTCN Inc. has taxable income of $76,000. During the year BTCN also had total entertainmentexpenses of $6,000, penalties of $2,000, federal income tax of $11,000, and exclusions of$1,000. What was BTCN's net income?a$61,000 b$59,000 c$58,000 d$56,000 eNone of the aboveUnder the provisions of the new tax law, the answer for question #4 would be answer c, $58,000.(See the scan of my work.)5Which of the following best describes your "marginal tax rate"?aThe highest tax rate you are currently paying.bThe tax rate you will pay if you earn one more dollar of taxable income.cThe average tax rate you pay.dYour expected average tax rate.eThe tax rate established by the US government for the year.6Which of the following is true regarding S Corporations?aTax is paid at the corporate level on the company's taxable income.bThere is no limit on the maximum number of stockholders.cAn election to be taxed as an S Corporation is available to any business that is incorporated.dIt is considered to be a "flow-through entity" similar to a partnership and LLC.eWhen a corporation elects to be an S Corporation, it gives up the protection of the corporate shield.Use the following tax table to answer questions 7 and 8:If Taxable Income is:The Tax is: 2 ThisPlusOf the amountOver:But not over:Amount:this %:over:$0 $50,000 $0 15%$0 $50,000 $75,000 $7,500 25%$50,000 $75,000 $100,000 $13,750 34%$75,000 $100,000 $335,000 $22,250 39%$100,000 The tax schedule shown above is not used in the new tax law.The ta rate is now a flate rate of 21%.7Phish Inc. had the following information on its annual financial statements:Sales$68,000 Cost of goods sold($16,000)Gross profit$52,000 Advertising($8,000)Salaries($14,000)Penalties($3,000)Entertainment($4,000)Federal income tax?Net income?How much is Phish's net income?a$18,350 b$19,550 c$18,800 d$16,800 eNone of the aboveUnder the provisions of the new tax law, the correct answer to question #7 would be $16,700.(See the scan on my work.)8During the year Hack Inc. had exclusions of $4,000, credit of $2,000, and deductions of $48,000. Hack'sgross income realized was $126,000. What is Hack's income tax expense for the year?a$13,250 b$11,500 c$14,090 d$16,500 eNone of the aboveUnder the provisions of the new tax law, the correct answer to question #8 would be $13,540.(See the scan on my work.)9Which of the following is true of a tax credit?aIt reduces your tax expense by the same amount as a deduction would.bIt is subtracted from "gross income realized" to arrive at "gross income recognized".cIt is subtracted to arrive at taxable income.dIt is the total of the business's general operating expenses.eNone of the above are true.10Desta Corporation is considering buying a piece of equipment for $26,000. Desta expects the equipment will last 10 years and then be worthless. Desta believes the equipment will earn $10,000in net income before taxes per year, and the company is in the 25% tax bracket. What is Desta'sexpected annual after tax cash flow on this asset?a$8,150 b$5,100 c$7,500 d$10,100 eNone of the above11When Bezzle produces 10,000 units, its total variable cost is $22,000 and its total fixed costis $30,000. The sales price per unit is $9. How much does Bezzle need in total sales dollars to earn $2net income per unit sold?a$64,286 b$56,250 c$74,286 d$68,114 eNone of the above 3 12Briber, Inc. produces a product which is sells for $16 per unit. The variable cost per unit is $4 and Briberbroke even when it produced and sold 1,200 products. How many units does Briber need to sell to earn$10,000?a2,033b1,625c1,825d1,710e1,40013Feiting Company buys compressors from Counter Company. Feiting bought a shipment on Jan. 24 on account and paid for them on Feb. 4. On Feb. 18, Feiter put the compressors intoproduction when it built refrigerators. On Feb. 26, Feiter sold the finished refrigerator to Customeron account. Customer paid Feiter on March 12. On what day does Feiter show the compressor asan expense?aMarch 12bFeb. 26cFeb. 18dFeb. 4eJan. 2414Which of the following is included in inventory in a manufacturing company?aAdvertising expenses of the companybThe CEO's salary expensecInsurance on the front officedSales commissions of the company's salesmeneNone of the above15Schemey, Inc. had a contract to produce 25 units of a product for a total of $24,000. Schemey's costswere a total of $16,000, and this was 40% variable and 60% fixed. The customer now wants to add in10 more units for a total of $30,000. What would be Schemey's net income if it decides to produce35 units for a total of $30,000? (Hint: This changes the sales price per unit.)a$7,600 b$9,200 c$9,667 d$11,440 eNone of the above16Racketer, Inc. had a contract to produce 40 units of a product for a total of $12,000. At this levelof production, Racketer's costs were a total of $4,000 in variable costs and $3,000 in fixed costs.Now, Racketer's customer wants to only buy 36 units. What is Racketer's new cost per unit?a$194.44 b$157.50 c$183.33 d$175.00 eNone of the above17Evader Company had the following information for the year: Sales price per unit$20 Variable cost per unit$4 Total fixed cost$36,000 Net income$14,000 How many units did Evader Company sell?a4,000 b3,600 c3,125 d2,200 eNone of the above18Which of the following lists consists only of balance sheet accounts?aCash, salaries payable, accumulated depreciation, retained earningsbAccounts payable, cost of goods sold, common stock, inventory 4The benefits of buying summaries with Stuvia:
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