SHANGHAI UNIVERSITY OF FINANCE AND ECONOMICS

SCHOOL OF ACCOUNTANCY

FINANCIAL ACCOUNTING 101314, 序号 0940, FALL 2022

QUIZ
开卷/Open-book
INSTRUCTIONS:
• You have 90 minutes to complete this quiz.
• Choose the best answer; show your computations.
• Make sure to write your name and student ID number.
• You can write your answers in the spaces provided using the Text Edit function or create your
own document in the DOC or PDF format.
• Please send your paper to me via email: kirill.novoselov@mail.shufe.edu.cn cc:
kirill.novoselov@utexas.edu with the subject line Accounting 0940 Quiz.

NAME: ........................................................................................................................................

STUDENT ID: .......................................................

DECLARATION: I am willing to abide by the school exam rules and will take full responsibility if I

violate the rules. SIGNATURE: .......................................................................................................

DATE: 19 October 2022

Answers to multiple-choice questions:

题号 1 2 3 4 5
Question number

答案
Answer

题号 6 7 8 9 10
Question number

答案
Answer

题号 11 12 13 14 15
Question number

答案
Answer

题号 一 二 三 四 五 总分
M/c questions Problem 1 Problem 2 Problem 3 Problem 4
45 15 12 16 12 100

得分
 Financial Accounting 0940 — Fall 2022

Multiple-choice questions (15 questions @ 3 marks each)

1. Which of the following properly describes the impact on the financial statements when a company
reports wage expense of $7,500, of which $2,500 remains unpaid?
A. Cash decreased by $2,500.
B. Cash decreased by $7,500.
C. Operating income decreased by $5,000.
D. Operating income decreased by $7,500.

2. Which of the following accounts would be used under the accrual method of accounting, but not under
the cash basis accounting?
A. Cash
B. Salary Expense
C. Service Revenue
D. Unearned Revenue

3. Betty’s Cleaning Service performed cleaning services during December, 2021, but had not collected
any cash from its customers as of December 31, 2021. What impact did performing these services
have on the accounting equation?
A. The service increased assets and increased liabilities.
B. The service increased assets and increased stockholders’ equity.
C. The service increased assets and decreased stockholders’ equity.
D. The service decreased liabilities and decreased stockholders’ equity.

4. Which of the following liability accounts does not usually require a future cash payment?
A. Taxes payable
B. Notes payable
C. Accounts payable
D. Unearned revenues

5. Which of the following statements is INCORRECT?

A. Ending inventory exceeds beginning inventory when purchases are greater than cost of goods
sold.
B. Cost of goods sold exceeds purchases when ending inventory is less than beginning inventory.
C. Ending inventory is greater than beginning inventory when purchases are less than cost of
goods sold.
D. Cost of goods available for sale will always be equal to or greater than cost of goods sold.

6. A company sells magazines and collects subscription fees prior to the publication and
distribution of the magazine. Which of the following correctly describes the impact on the
financial statements when cash is received in advance from customers?
A. Current liabilities aren’t affected and stockholders’ equity isn’t affected.
B. Current assets increase and gross profit increases.
C. Current liabilities increase and gross profit is not affected.
D. Current assets increase and stockholders’ equity increases.

7. Which of the following journal entries is prepared when a customer pays cash subsequent to
delivery of goods or services?
A. Cash
Accounts receivable
B. Cash
Revenues
C. Cash
Unearned revenues
D. Unearned revenues
Cash

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 Financial Accounting 0940 — Fall 2022

8. An adjusting entry that credits Salaries Payable is an example of a(n):

A. unearned revenue.
B. accrued revenue.
C. accrued expense.
D. prepaid expense.

9. Which of the following correctly describes the effect of a journal entry involving the recording of
a sales discount
A. Net sales increases.
B. Gross profit is not affected.
C. Operating income decreases.
D. Current assets remain the same.

10. The Cost of Goods Sold account is closed by:

A. Debiting Income Summary and crediting Cost of Goods Sold.
B. Debiting Retained Earnings and crediting Cost of Goods Sold.
C. Debiting Cost of Goods Sold and crediting Income Summary.
D. Debiting Cost of Goods Sold and crediting Retained Earnings.

11. Which of the following accounts will have an ending balance after the closing process is
completed?
A. Withdrawals
B. Rent Expense
C. Service Revenue
D. Accumulated Depreciation—Network Server

12. Under which of the following inventory costing methods is the ending inventory valued on the
cost of the most recent purchases?
A. Specific identification
B. Weighted-average
C. Last-in, first-out (LIFO)
D. First-in, first-out (FIFO)

13. Which of the following statements is CORRECT?

A. Revenue is recorded when title and risks of ownership transfer to the buyer.
B. Sales discounts are reported as operating expenses on an income statement.
C. Revenue is recognized at the time of shipment when goods are shipped FOB destination.
D. Sales returns and allowances are reported as operating expenses on an income statement.

14 Kristy’s Inc., located in Texas, records business transactions in dollars and disregards changes in
the value of a dollar over time. Which of the following accounting assumptions does this represent?
A. economic entity assumption
B. monetary unit assumption
C. going concern assumption
D. accounting period assumption

15. Under the perpetual inventory system, what is the difference between a sales return and a sales
allowance?
A. A sales return reduces the amount receivable from the customer, but an allowance does not.
B. A sales return requires a debit to Sales Returns and Allowances, but a sales allowance does
not.
C. A sales return involves an adjustment to Merchandise Inventory, but a sales allowance does
not.
D. A sales allowance is deducted from Sales revenue to calculate net sales, but a sales return is
not.

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 Financial Accounting 0940 — Fall 2022

Problem 1: Adjusting entries (15 marks)

Eastern Laboratories, Inc. adjusts and closes its accounts at the end of each month. The trial
balance at September 30, 2022, before adjustments, is as follows:
Debit Credit
Cash $18,200
Medical Revenues Receivable 27,000
Prepaid Rent 5,000
Office Supplies 1,200
Medical Equipment 21,800
Accumulated Depreciation—Medical Equipment $6,000
Accounts Payable 3,000
Unearned Medical Revenues 14,000
Capital Stock 22,000
Retained Earnings 14,200
Medical Revenues Earned 31,000
Salaries Expense 14,000
Utilities Expense 2,000
Depreciation Expense 1,000
$90,200 $90,200

The following information relates to the month-end adjustments:

1) Office supplies on hand on September 30 amounted to $500.
2) Many patients pay in advance for major medical procedures. Revenues of $6,000 were
earned during the month by performing procedures on patients who had paid in advance.
3) On September 1, Eastern Laboratories had moved and paid 2 months’ rent in advance.
4) Medical procedures performed during the month but not yet billed amounted to $4,600.
5) Depreciation expense on Medical Equipment amounting to $1,400 was recorded.
Required: Prepare the adjusting entries required at September 30 (3 marks each).

Date Accounts Debit Credit

Sept. 30

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Problem 2: Inventory errors (12 marks)

Bloomfield, Inc. hired a new store manager in October 2020, who determined the ending inventory
on December 31, 2020, to be $50,000. In March, 2021 the company discovered that the December
31, 2020 ending inventory should have been $48,000. The December 31, 2021, inventory was
correct. Ignore income taxes.
Required: Complete the following table to show the effects of the inventory error on each the
amounts listed in the table. Give the amount of the discrepancy AND indicate whether it was
overstated (O), understated (U), or had no effect — that is, it was correct (N).

Year Ending Inventory Cost of Goods Sold Net Income

2020

2021

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 Financial Accounting 0940 — Fall 2022

Problem 3: Inventory costing (16 marks)

Connie’s Computers, Ltd. uses a perpetual inventory system and prepares its financial
statements according to IFRS. Shown below are the company’s beginning inventory of a
particular product and purchases during January:

Quantity Unit Cost Total Cost

Beginning inventory (Jan. 1) 6 $195 $1,170
Purchase (Jan. 6) 12 $225 2,700
Purchase (Jan. 25) 12 $230 2,760
Total 30 $6,630

On January 23 (prior to the purchase on January 25), the company sold 13 units of this product.

Required:
1. Determine the Cost of Goods Sold relating to the sale on January 23 under each of the
following inventory costing methods. Show your computations. (4 marks each)

(a) LIFO .....................................................................

(b) FIFO .....................................................................

(c) Weighted average .....................................................................

2. Which of the above methods should Connie’s Computers use if it wants to minimize its
current period’s tax expense? Briefly explain (4 marks).

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 Financial Accounting 0940 — Fall 2022

Problem 4: Gross profit rate (12 marks)

In its annual report for the fiscal year ended January 31, 2022 (“fiscal 2022”), Walmart Inc. states
(on pp. 38–39):
“Our gross profit rate increased 14 basis points for fiscal 2022, when compared to the previous fiscal
year. The increase was primarily due to price management in the Walmart U.S. segment driven by
cost inflation as well as merchandise mix, partially offset by increased supply chain costs.”
In your opinion, what will be the likely effect of continuing inflation in the U.S. on Walmart’s gross
profit rate in fiscal 2023 (which will end on January 31, 2023), when compared with fiscal 2022?

It will likely increase / remain the same / decrease (choose one).

Briefly explain.

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