ACCT 212 Midterm (Version 2: Fall 2018)
- Question: (TCO 1) The Accounting Equation is used to develop the organization’s financial reports. (1) Describe what assets value would be if Liabilities are $12,000 and Owners’ Equity is $50,000 by showing the Accounting Equation (10 points), and (2) provide an example of two asset accounts that could contain the value. (10 points)
- Question: (TCO 1) The financial statements present a company to the public in financial terms. (1) Which financial statement identifies where cash was generated and where it was spent during the year (10 points), and (2) identify the three major parts of this statement. (10 points)
- Question: (TCO 1) The accounting profession follows a set of guidelines for measurement and disclosure of financial information called the Generally Accepted Accounting Principles (GAAP). (1) Explain what the International Financial Reporting Standards (IFRS) are (10 points) and (2) provide an example of its application. (10 points)
- Question: (TCO 2) Transaction analysis results in the development of a journal entry. In the start-up of a business, the owner contributes $750,000 of cash. (1) Name the accounts impacted and how to use the format account name/debit or credit/dollar amount (10 points), and (2) explain how the Accounting Equation is impacted. (10 points)
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- Question: (TCO 3) Adjusting Entries are … at the end of the period to ensure that accrual accounting principles are applied. The building that houses the business is … at an annual rate of $14,000. Develop the adjusting entry for year end. (1) Name the accounts impacted and how to use the format account name/debit or credit/dollar amount (10 points), and (2) explain how the Accounting Equation is impacted. (10 points)
- Question: (TCO 5) E-commerce creates its own risks, and therefore special internal controls. (1) Identify and explain one pitfall and one security measure for an online business (10 points) and (2) provide examples of how your selected security measure will strengthen internal control. (15 points)
- Question: (TCO 5) The bank account as a control device helps to protect cash. One of the requirements is to conduct periodic bank statement reconciliations. Using the following data, complete the bank statement reconciliation. (Use the format shown on page 251 of your textbook.) (25 points)
Prepare a bank reconciliation using B & B’s Restaurant Supply Inc.’s information for August 31.
A NSF check from Johnny Jones for $3,164.
• Two deposits made on August 31 were not on the bank statement, totaling $2,897.
• The bank collected an EFT payment for Rent for $2,600.
• August 31 balance in Cash was $2,005.
• The owner had written check #1598 for $500 and recorded this check as $5,000.
• The balance on the bank statement as of August 31 was $5,316.
• Bank service charge of $28 was … on the bank statement.
• Checks #1572, 1606, 1116, and 1242 for $419, $126, $650, and $1,105, respectively, were not … on the bank statement, even though the company had sent the checks.
