Week8 Final Exam - Part1

Week8 Final Exam

 

Question 1 (TCO A) An advantage of the corporate form of business is _____. (Points : 5)
it is simple to establish
the corporate tax rate is less than the personal tax rate
corporations must pay dividends
the shareholders are not responsible for the corporation’s debts

Question 2  (TCO A) Which one of the following statements is correct with regard to Dividends? (Points : 5)
Dividends are increased by credits.
Dividends are subtracted on the Income Statement.
Common stock dividends are required to be paid.
Dividends reduce stockholders’ equity.

Question 3 (TCOs A, B) Below is a partial list of account balances for LBJ Company:
Cash $12,000
Prepaid insurance 1,300
Accounts receivable 7,000
Accounts payable 5,000
Notes payable 9,000
Common stock 22,000
Dividends 2,000
Revenues 45,000
Expenses 35,000

What did LBJ Company show as total debits? (Points : 5)
$57,300
$81,000
$55,300
$56,000

Question 4 (TCOs B, E) Which of the following statements is incorrect with regard to accrual accounting? (Points : 5)
Accrual accounting is consistent with the matching principle.
Accrual accounting does not record expenses until they are paid.
Accrual accounting is more complex than cash basis accounting.
Accrual accounting is required by GAAP.

Question 5 (TCO D) Three different companies each utilize a different inventory costing method. If the price of goods has increased during the period, then the company using _____. (Points : 5)
FIFO will have the highest ending inventory
FIFO will have the highest cost of goods sold
LIFO will have the lowest cost of goods sold
LIFO will have the highest ending inventory

Question 6 (TCOs A, E) Equipment was purchased for $85,000. Freight charges amounted to $2,550 and there was a cost of $10,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $5,000 salvage value at the end of its 6-year useful life. Depreciation expense each year using the straight-line method will be _____. (Points : 5)
$13,333
$16,258
$15,425
$13,578

Question 7 (TCOs D, G) When the market rate of interest is equal to the stated rate of interest on the bond, the bond will require _____. (Points : 5)
a debit to Discount on Bonds Payable
a credit to Discount on Bonds Payable
a credit to Bonds Payable
a debit to Bonds Payable

Question 8 (TCO C) Accounts receivable arising from sales to customers amounted to $50,000 and $45,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $150,000. Based on these transactions, the cash flows from operating activities to be reported on the statement of cash flows would be _____. (Points : 5)
$195,000
$145,000
$115,000
$155,000

 

Question 9 (TCO F) Which one of the following tools uses the percentage change formula to make year-over-year comparisons of sales growth? (Points : 5)
Horizontal analysis
Common-size analysis
Vertical analysis
Ratio analysis

Question 10 (TCO F) When performing a common-size Income Statement, the 100% figure is _____. (Points : 5)
net sales
total liabilities plus stockholders’ equity
net income
total assets

Question 11 (TCO F) Ratios are most useful in expressing _____. (Points : 5)
cause-and-effect relationships
the relationships between numbers
the delta between numbers
the root cause of the problem

Question 12 (TCO F) Creditors are usually most concerned with analyzing _____. (Points : 5)
the company stock price
turnover
liquidity
profitability

Question 13 (TCO F) Shareholders are usually most interested in evaluating _____. (Points : 5)
profitability
leverage
turnover
the ability to pay debts as they come due

Question 14 (TCO G) To calculate the market value of a bond, we need to _____. (Points : 5)
multiply the stated rate times the bond’s face value
calculate the present value of the principal only
calculate the present value of both the principal and the interest
calculate the present value of the interest only

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