Harvard Financial Accounting Exam Help

Home » Online Exam Help » Accounting Exam Help » Harvard Financial Accounting Exam Help

Harvard Financial Accounting Exam Help

hbs financial accounting exam helpQ1. Turnadot & Sons is a small wholesaler of decorative cast iron objects. The following events, related to a special customer order, occur as described below:

  • August 5, 2015: Turnadot receives the special order for 200 outdoor planters at a selling price of $50 each, including delivery at a future convenient time and location. The customer, with whom Turnadot has had a long-term, trouble-free relationship, pays $3,000 as a deposit and agrees to pay the rest on delivery. Turnadot immediately orders $4,000 worth of planters from its supplier and pays a $1,000 deposit for them.
  • August 27, 2015: Turnadot pays $3,000 balance due to the supplier upon delivery of the planters to its warehouse.
  • September 5, 2015: The customer calls for delivery of the planters, and pays the balance of $7,000 when they arrive at the customer site.

What is the dollar gross margin earned by Turnadot on the special order for 200 planters?

  • $2,000
  • $7,000
  • $9,000
  • $6,000

Q2. On January 1, 2015, Jon Sports has a bond payable of $200,000. During 2015, it pays off $20,000 of the outstanding bond principal and issues a new $70,000 bond. There are no other transactions related to the bond payable account. What is Jon Sports’ December 31, 2015, bond payable balance?

  • A debit balance of $250,000
  • A credit balance of $150,000
  • A debit balance of $150,000
  • A credit balance of $250,000

Q3. Quentin’s December 31, 2013, inventory T-account debit balance was $56,000. During 2014, its inventory purchases amounted to $25,000, and there were no inventory-related write-downs or losses. What was Quentin’s 2014 cost of goods sold expense?

  • $5,000
  • $67,000
  • $20,000
  • $45,000

Q4. Turnadot & Sons is a small wholesaler of decorative cast iron objects. The following events, related to a special customer order, occur as described below:

  • August 5, 2015: Turnadot receives the special order for 200 outdoor planters at a selling price of $50 each, including delivery at a future convenient time and location. The customer, with whom Turnadot has had a long-term, trouble-free relationship, pays $3,000 as a deposit and agrees to pay the rest on delivery. Turnadot immediately orders $4,000 worth of planters from its supplier and pays a $1,000 deposit for them.
  • August 27, 2015: Turnadot pays $3,000 balance due to the supplier upon delivery of the planters to its warehouse.
  • September 5, 2015: The customer calls for delivery of the planters, and pays the balance of $7,000 when they arrive at the customer site.

On August 5, 2015, which one of the following accounting entries, related to the $1,000 deposit paid to the supplier for the planters, should be recorded in Turnadot’s financial accounting system?

  • Debit the current asset ‘advances to suppliers’ $1,000; credit cash $1,000
  • Debit inventory $1,000; credit cash $1,000
  • Debit cost of goods sold $4,000; credit cash $1,000; credit accounts payable $3,000
  • Debit cost of goods sold $1,000; credit revenues $1,000

Q5. Jackie’s Crafts is a successful retailer of fabric by the yard and other sewing supplies. If Jackie were to shut down the store, the bolts of fabrics and the bins of lace and trim, inventory valued at $20,000, on average, at any point in time, would have to be sold for about 10% of that value. But, Jackie’s accountant does not feel the need to reduce the value of the inventory on the books. This is a reflection of the _______ concept.

  • consistency
  • materiality
  • historical cost
  • going-concern

Q6. Consider the same scenario as in the previous question: June Smith, a process engineer, has sold her 15-year patent for a new etching process to Silica Labs, Inc. In return, she has received $500,000 in cash and, based on its value on the sale date, $200,000 in common stock in Silica Labs. The stock is forecast ed to double in market value over the next two months. Assuming that Silica Labs holds some long-term debt, which of the following describes the effect of the transaction on Silica Labs?

  • Current ratio will decrease and total debt to equity ratio will increase
  • Current ratio will increase and total debt to equity ratio will decrease
  • Current ratio will increase and total debt to equity ratio will increase
  • Current ratio will decrease and total debt to equity ratio will decrease

Q7. Which one of the following is an item of owners’ equity?

  • Bank loan
  • Suppliers’ monetary claims
  • Prepaid expenses
  • Earnings generated by the entity

Q8. On December 31, 2014, Track Record Inc.’s sales people have firm outstanding orders totaling $1.66 million, which, it has guaranteed its customers, will be fulfilled during the month of January 2015. If Track Record includes the $1.66 million in its sales figures for 2014, it will be violating the _______ concept.

  • materiality
  • historical cost
  • dual-aspect
  • realization

Q9. Which of the following is the fundamental accounting equation?

  • Current assets + Current liabilities = Owners’ equity
  • Assets + Owners’ equity = Liabilities
  • Cash = Debts + Common stock
  • Assets = Liabilities + Owners’ equity

Q10. Panjim recorded an interest expense of $6,000 for 2015. Which one of the following line items would be included in the operating section of the Panjim’s 2015 indirect method statement of cash flows?

  • Add increase in interest payable…$1,000
  • Subtract increase in interest payable…($1,000)
  • Add increase in interest payable…$6,000
  • Subtract decrease in interest payable…($5,000)

Q11. June Smith, a process engineer, has sold her 15-year patent for a new etching process to Silica Labs, Inc. In return, she has received $500,000 in cash and, based on its value on the sale date, $200,000 in common stock in Silica Labs. The stock is forecasted to double in market value over the next two months. How would this transaction be recorded by Silica Labs?

  • Debit patent account $700,000; credit cash $500,000; credit common stock $200,000
  • Debit cash $500,000; debit common stock $200,000; credit patent account $700,000
  • Debit cash $500,000; credit patent account $500,000
  • Debit patent account $500,000; credit cash $500,000

Q12. Turnadot & Sons is a small wholesaler of decorative cast iron objects. The following events, related to a special customer order, occur as described below:

  • August 5, 2015: Turnadot receives the special order for 200 outdoor planters at a selling price of $50 each, including delivery at a future convenient time and location. The customer, with whom Turnadot has had a long-term, trouble-free relationship, pays $3,000 as a deposit and agrees to pay the rest on delivery. Turnadot immediately orders $4,000 worth of planters from its supplier and pays a $1,000 deposit for them.
  • August 27, 2015: Turnadot pays $3,000 balance due to the supplier upon delivery of the planters to its warehouse.
  • September 5, 2015: The customer calls for delivery of the planters, and pays the balance of $7,000 when they arrive at the customer site.

On September 5, 2015, when the planters are delivered and the balance of $7,000 due from the customer is collected, which one of the following journal entries best reflects the full economic impact of the special order on Turnadot’s financial condition?

  • Dr. Cash 7,000, Cr. Revenues 7,000 and
    Dr. COGS 4,000, Cr. Inventory 4,000
  • Dr. Cash 7,000, Cr. Revenues 7,000 and
    Dr. Inventory 4,000, Cr. COGS 4,000
  • Dr. Cash 7,000, Dr. Advances from customers (liability) 3,000, Cr. Revenues 10,000 and
    Dr. COGS 4,000, Cr. Inventory 4,000

Q13. Quentin’s 2014 net income was $5,000. No dividends were declared or paid during 2014. What was Quentin’s retained earnings balance on December 31, 2013?

  • $39,000
  • $49,000
  • $34,000
  • Cannot be estimated

Q14. Weldon Engineering owes one of its creditors $20,000. To settle the debt, Weldon pays $5,000 cash and also issues common stock valued at $15,000 to the creditor. How would this repayment of the $20,000 debt be recorded in Weldon’s books?

  • Debit debt owed $20,000; credit cash $5,000; credit common stock $15,000
  • Debit common stock $15,000; debit cash $5,000; credit debt owed $20,000
  • Debit common stock $15,000; debit debt owed $5,000; credit cash $20,000
  • Debit debt owed $5,000; credit cash $5,000

Q15. Turnadot & Sons is a small wholesaler of decorative cast iron objects. The following events, related to a special customer order, occur as described below:

  • August 5, 2015: Turnadot receives the special order for 200 outdoor planters at a selling price of $50 each, including delivery at a future convenient time and location. The customer, with whom Turnadot has had a long-term, trouble-free relationship, pays $3,000 as a deposit and agrees to pay the rest on delivery. Turnadot immediately orders $4,000 worth of planters from its supplier and pays a $1,000 deposit for them.
  • August 27, 2015: Turnadot pays $3,000 balance due to the supplier upon delivery of the planters to its warehouse.
  • September 5, 2015: The customer calls for delivery of the planters, and pays the balance of $7,000 when they arrive at the customer site.

On August 27, 2015, upon delivery of planters to Turnadot’s warehouse and payment of $3,000 balance due to the supplier, which one of the following journal entries best reflects the economic impact of the transaction?

  • Debit inventory $3,000; credit cash $3,000
  • Debit inventory $4,000; credit the current asset ‘advances to suppliers’ $1,000; credit cash $3,000
  • Debit cost of goods sold $4,000; credit cash $3,000; credit accounts payable $1,000
  • Debit inventory $4,000; credit revenues $4,000

Q16. The next seven questions are based on Panjim Trading Company’s cash T-account for 2015. Based on Panjim’s 2015 cash T-account, which one of the following statements must be true?

  • During 2015, Panjim’s total merchandise sales were $60,000.
  • During 2015, Panjim’s total merchandise purchases were $44,000.
  • During 2015, Panjim issued $75,000 of debt.
  • Panjim did not record any tax expense for 2015.

Q17. The next six questions refer to Quentin Company’s December 31, 2014, Balance Sheet. Quentin began 2014 with the following non-current asset balances: Plant and equipment (net) $59,000; Patent (net) $28,000. No long-term assets were purchased or sold during the year. How much amortization and depreciation expense did Quentin record during 2014?

  • $3,000
  • $4,000
  • $7,000
  • Cannot be estimated

Q18. On its June 30, 2015, balance sheet, Barrows Corporation has total assets of $100,000, current liabilities of $40,000, and owners’ equity of $60,000. Which one of the following statements must be true on June 30, 2015?

  • It has current assets of $40,000
  • It has no long-term liabilities
  • It has a cash balance of $40,000 raised through short-term debt
  • None of the above

Q19. Quentin’s total debt to equity ratio on December 31, 2014, is _______.

  • 2.12
  • 1.52
  • 1.19
  • 0.53

Q20. The next six questions refer to Carlita Company’s 2014 Income Statement. Carlita’s 2014 gross margin percentage is _______.

  • 50%
  • 33%
  • 30%
  • 25%

Q21. Carlita’s 2014 return on sales percentage is _______.

  • 25%
  • 16.67%
  • 15%
  • 10%

Q22. Which one of the following best describes a balance sheet?

  • A description of the entity’s operations over a period of time
  • A snapshot at a point in time of an entity’s assets, liabilities and owners’ equity
  • A reconciliation of an entity’s bank account balance
  • A description of the company’s cash flows over a period of time

Q23. The realization concept states that revenue is recorded when

  • it has been earned and realized or realizable.
  • all the associated costs have been paid in cash.
  • it has been received in cash.

Q24. When an entity recognizes revenue before it has received cash for the sale, it records an increase in a(n) _______.

  • liability such as ‘Advances from customers’
  • accounts payable
  • accounts receivable
  • prepaid expense

Q25. A company raised $50,000 in cash by taking a one-year loan of $10,000 and a 5-year loan of $40,000. Which of the following is the correct journal entry to record this transaction?

  • Debit short-term debt $40,000; debit retained earnings $10,000; credit cash $50,000
  • Debit short-term debt $50,000; credit cash $50,000
  • Debit cash $50,000; credit long-term debt $50,000
  • Debit cash $50,000; credit short-term debt $10,000; credit long-term debt $40,000

Q26. Anderson Electronics’ 2015 return on sales percentage is 20%. Its 2015 net income is $40,000. What is its 2015 sales?

  • $400,000
  • $80,000
  • $200,000
  • $100,000

Q27. What is Patnode’s total debt to equity ratio at the end of 2014 (rounded to two decimal places)?

  • 5.30
  • 0.19
  • 0.25
  • 4.04

Q28. Sandy Robbins is the sole owner of a hair salon. He often takes small amounts of “lunch money” from the cash register, figuring that “it is my business anyway.” His accountant, however, insists that Sandy make a note of the cash he takes, and at the end of the each accounting period, she debits owners’ equity and credits the cash account for the total amount that Sandy has taken during the period. In recording the cash withdrawals even though Sandy is sole proprietor, the accountant is correctly applying the _______ concept.

  • matching
  • entity
  • materiality
  • conservatism

Q29. During 2015, Patnode recorded sales of $17,000. How much cash did it collect from its customers?

  • $17,000
  • $14,000
  • $3,000
  • Cannot be estimated

Q30. What is Patnode’s current ratio at the end of 2014?

  • 2.46
  • 0.41
  • 1.12
  • 0.89

Q31. Barnaby & Sons receives a large shipment of goods from its supplier. It pays $58,000 at the time of delivery and promises to pay the remaining $42,000 within the next two months. What is appropriate journal entry for this transaction?

  • Debit cash $42,000; debit inventory $16,000; credit accounts payable $58,000
  • Debit inventory $100,000; credit cash $58,000; credit accounts payable $42,000
  • Debit accounts payable $58,000; credit cash $42,000; credit inventory $16,000
  • Debit accounts payable $58,000; debit cash $42,000; credit inventory $100,000

Q32. The historical cost concept reflects the fact that financial accounting practice favors

  • reliability over relevance.
  • management’s best guess over historical financial information.
  • relevance over reliability.
  • consensus market values over historical financial information.

Q33. Annie’s Fitness sells a set of free weights to a customer for $1,000. The customer pays $600 in cash and puts the rest on her store credit account. Which one of the following statements describes the most appropriate accounting for the transaction?

  • Debit cash $600; debit accounts receivable $400; credit cost of good sold $1000
  • Debit cash $600; debit accounts receivable $400; credit revenues $1,000
  • Debit revenues $1,000; credit cash $600; credit accounts receivable $400
  • Debit cash $600; debit accounts receivable $400; credit inventory $1,000

Q34. Juan Foods pays off a long-term debt in full. Which one of the following statements describes the effect of the transaction on Juan Foods?

  • Current ratio increases; total debt to equity ratio decreases
  • Current ratio decreases; total debt to equity ratio decreases
  • Current ratio decreases; total debt to equity ratio increases
  • Current ratio increases; total debt to equity ratio increases

Q35. During June 2015, Bextra Inc. recorded sales of $55,000 but only $20,000 was collected in cash from customers. Cost of goods sold was $38,000. What was the effect of these sales on Bextra’s current ratio?

  • Current ratio increases
  • Current ratio decreases
  • Current ratio remains unchanged
  • Insufficient information provided to judge effect on current ratio

Q36. On June 1, 2015, Planet Music has accounts payable of $45,000. During the month, debits of $3,000 and credits of $11,000 were made to the account. At the end of June 2015, what was the accounts payable balance?

  • A credit balance of $53,000
  • A debit balance of $42,000
  • A credit balance of $56,000
  • A debit balance of $53,000

Q37. Patnode recorded a 2015 tax expense of $3,000. What amount did it pay to the tax authorities during 2015?

  • $2,400
  • $7,000
  • $600
  • $5,400

Q38. This question is based on Patnode Inc.’s balance sheets at year end 2014 and 2015. During 2015, Patnode announced and paid dividends of $1,000, the only dividend-related activity during the year. What was its 2015 net income?

  • $5,600
  • $3,600
  • $4,600
  • Cannot be estimated

Q39. Taylor Company had a salaries payable balance of $18,000 on December 31, 2014. During 2015, it paid $50,000 in cash as salaries, and recorded a salary expense of $50,000. What is its December 31, 2015, salaries payable balance?

  • $50,000
  • $18,000
  • $100,000
  • Cannot be determined from the information provided

Q40. On January 1, 2015, Mansfield Company has a retained earnings balance of $256,000. During 2015, its net income is $44,000 and it announces and pays $12,000 in dividends. There is no other dividend-related activity during the year. Its December 31, 2015, retained earnings balance is _______.

  • $212,000
  • $288,000
  • $300,000
  • $224,000