Examination 4 Created on May 11, 2021 AICACC Examination Entrance into our program requires that you pass this exam. Good luck! 1 / 20 Lower the Debt Equity ratio Check 2 / 20 What is an engagement letter? Check 3 / 20 The Kingdom of Windemere decided to construct several large windmills to generate electrical power. Theconstruction was financed through a general residential property tax levy for the next ten years. Utilityrevenues are intended to offset all expenses associated with the windmills. The land for the windmillswas donated to the city by a local farmer. The land from the farmer should be reported in which fundtype? Special revenue. Capital projects. Enterprise. Permanent. 4 / 20 Corbet Co. purchased a copyright near the beginning of the current year from an author for $20,000.The legal life of the copyright is equivalent to the life of the author plus 50 years. Corbet expects tosell the book for five years. What amount should Corbet report as amortization expense related to thecopyright at the end of the current year? $0 $400 $500 $4,000 5 / 20 Pine Co. purchased land for $450,000 as a factory site. An existing building on the site was razedbefore construction began. Additional information is as follows:Cost of razing old building $60,000Title insurance and legal fees to purchase land $30,000Architect's fees $95,000New building construction cost $1,850,000What amount should Pine capitalize as the cost of the completed factory building? $2,005,000 $1,975,000 $1,945,000 $1,910,000 6 / 20 Ultra Co. uses a periodic inventory system. The following are inventory transactions for the month ofJanuary:1/1 Beginning inventory 20,000 units at $131/20 Purchase 30,000 units at $151/23 Purchase 40,000 units at $171/31 Sales at $20 per unit 50,000 unitsUltra uses the LIFO method to determine the value of its inventory. What amount should Ultra report ascost of goods sold on its income statement for the month of January? $710,000 $750,000 $830,000 $1,000,000 7 / 20 Zokro, a nongovernmental not-for-profit organization, uses the indirect method to prepare itsstatement of cash flows. In determining its net cash provided (used) by operating activities, Sokromust add back which of the following to the change in net assets? Purchase of equipment. Payment on long-term debt. Depreciation. Decrease in accounts payable. 8 / 20 The primary purpose of a not-for-profit organization's statement of activities is to provide relevant information to its: Check 9 / 20 Ace Co. issued 1,000 shares of its $10 par value common stock for $15 per share in cash. Howshould this transaction be reported in Ace's statement of cash flows for the year of issuance? $15,000 cash inflow from financing activities. $10,000 cash inflow from financing activities and $5,000 adjustment to arrive at cash flows from operating activities. $15,000 cash flow from investing activities. $10,000 cash flow from investing activities and $5,000 adjustment to arrive at cash flows from operating activities. 10 / 20 Accrual accounting involves accruals and deferrals. Which of the following best describes accrualsand deferrals? Accruals are concerned with expected future cash receipts and payments, while deferrals are concerned with past cash receipts and payments. Accruals are concerned with past cash receipts and payments, while deferrals are concerned with expected future cash receipts and payments. Both accruals and deferrals are concerned with expected future cash receipts and payments. Both accruals and deferrals are concerned with past cash receipts and payments. 11 / 20 An issuer's board of directors would ordinarily participate in each of the following activities, except Establishing long-term strategy and objectives to which their information technology system should be aligned. Supervising and monitoring the quality control testing upon the installation of a new information technology system. Ensuring that suitable information technology resources and skills are available to meet the company's strategic objectives. Maintaining awareness of current technology used by the organization to assure its efficiency and effectiveness for financial reporting. 12 / 20 Which of the following is a major difference between the just-in-time (JIT) and traditional approachesto manufacturing? The JIT approach usually involves a large number of suppliers while traditional approaches usually involve only a small number of suppliers. The JIT approach requires centralized purchasing while traditional approaches encourage purchasing decisions by production employees. The JIT approach uses a push-through system while traditional approaches use a pull-through system. The JIT approach operates with low inventory levels while traditional approaches may operate with high inventory levels. 13 / 20 Star Co. is a retail store specializing in contemporary furniture. The following information is taken fromStar's June budget:Sales $540,000Cost of goods sold 300,000Merchandise inventory–June 1 150,000Merchandise inventory–June 30 180,000Accounts payable for purchases–June 1 85,000Accounts payable for purchases–June 30 75,000What amount should Star budget for cash disbursements for June purchases? $260,000 $280,000 $320,000 $340,000 14 / 20 Spark Co. buys cordless phones for $125 each and sells them for $200 each. Spark pays a salescommission of $25 per phone sold and monthly fixed costs are $3,000. Assuming Spark desired aprofit of 10% of sales, how many units must Spark sell? 600 400 200 100 15 / 20 What is an opportunity cost? Check 16 / 20 The expected selling price for a new product is $19.00. Management's goal is to obtain a 20%contribution margin on all sales. If the new product has variable selling and distribution costs of $3.00per unit, what is the product's target variable manufacturing cost? $12.20 $12.80 $15.80 $18.20 17 / 20 What is a selling price? Check 18 / 20 A 20% target contribution margin is set for Duct, which is a new product with the following unit costs:Manufacturing costsVariable $12Fixed 8Selling & admin. CostsVariable $3Fixed 5What is Duct's target selling price? $18.00 $18.75 $25.00 $33.60 19 / 20 Which of the following is an element of a CPA firm's quality control policies and procedures applicableto the firm's accounting and auditing practice? Engagement performance. Risk analysis. Safeguarding of assets. .Information processing. 20 / 20 The purpose of establishing quality control policies and procedures for deciding whether to accept orcontinue a client relationship is to Provide reasonable assurance that personnel are adequately trained to fulfill their responsibilities. Minimize the likelihood of associating with clients whose management lacks integrity. Document the matters that are required to be communicated to the audit committee. Enhance the auditor's understanding of the client's business and its industry Your score is The average score is 0% LinkedIn Facebook Twitter VKontakte 0% Restart quiz