20 MCQ's

1. Birch issued 200 shares of $12 par common stock in exchange for a piece of equipment with a current market value of $3,000. Which of the following is not part of the journal entry for this transaction?
A. Crediting paid-in capital in excess of par common for $600
B. Crediting common stock for $3,000
C. Crediting common stock for $2,400
D. Debiting equipment for $3,000

2. A company has $56,000 in cash; $12,000 in accounts receivable; $25,000 in short-term investments; and $100,000 in merchandise inventory. The company also has $60,000 in current liabilities. The company's quick ratio is
A. 0.933.
B. 1.550.
C. 3.217.
D. 1.133.

3. What is the rate of return on common stockholders' equity if sales are $100,000, net income is $22,700,and average common stockholders' equity is $86,000?
A. 86.0%
B. The rate of return can't be determined from the information given.
C. 22.7%
D. 26.4%

4. Cost of goods sold for the year was $850,000. Inventory was $60,000 at the beginning of the year and $90,000 at the end of the year. There were no changes in the amount in accounts payable for the year. Cash payment for merchandise to be reported under the direct method is
A. $910,000.
B. $850,000.
C. $940,000.
D. $880,000.

1. Ryan Corporation made a basket purchase of three items. Item A was appraised at $35,000; item B was appraised at $55,000; and item C was appraised at $60,000. The purchase price was $125,000. The amount at which item C should be recorded (rounded to the nearest dollar) is
A. $72,000.
B. $83,300.
C. $29,167.
D. $50,000.

2. Which of the following would indicate poor internal control over accounts receivable?
A. The same person handling cash receipts also records the accounts receivable transactions.
B. The person who handles accounts receivable wouldn't write off accounts as uncollectable.
C. The person handling cash receipts passes the receipts to someone who enters them into accounts receivable.
D. The mailroom employees open the mail and give the cash receipts to another employee.

3. Mackey Company has a five-year mortgage for $100,000. In the first year of the mortgage, Mackey will report this liability as a
A. long-term liability of $100,000.
B. current liability of $100,000.
C. current liability of $80,000 and a long-term liability of $20,000.
D. current liability of $20,000 and a long-term liability of $80,000.

4. Which marketable securities are reported at cost on the balance sheet date?
A. Trading securities
B. Trading and held-to-maturity securities
C. Available-for-sale securities
D. Held-to-maturity securities.

1. Rick Company has declared a $40,000 cash dividend to shareholders. The company has 5,000 shares of $20 par, 6% preferred stock, and 10,000 shares of $15 par common stock. The preferred stock is cumulative. How much will be distributed to the preferred and common stockholders on the date of payment if the preferred stock is $12,000 in arrears?
A. $18,000 preferred; $22,000 common
B. $20,000 preferred; $20,000 common
C. $40,000 preferred; $0 common
D. $6,000 preferred; $34,000 common


2.Rick Company's net sales decreased from $90,000 in year 1 to $45,000 in year 2, and its cost of goods sold decreased from $30,000 in year 1 to $20,000 in year 2. Vertical analysis based on sales would show which decreases in cost of goods sold for the two periods (rounded to the nearest tenth of a percent)?
A. 225% and 300%
B. 44.4% and 33.3%
C. 300% and 225%
D. 33.3% and 44.4%

3. In a common-size income statement, selling expenses are 55%. This means that they're 55% of
A. net income.
B. gross profit.
C. net sales.
D. net profit.

4. Ryan Industries has an inventory turnover of 112 days, an accounts payable turnover of 73 days, and an accounts receivable turnover of 82 days. Ryan's cash conversion cycle is _______ days.
A. 103
B. 9
C. 43
D. 121

1. What are the rate of return on stockholders' equity and the rate of return on common stockholders'
equity (rounded to the nearest one-tenth of a percent) given the following information:
Net Income $350,000
Preferred Dividends 20,000
Common Stock 48,000
Common Stockholders’ Equity 1/1/2011 4,400,000
Total Stockholders’ Equity 1/1/2011 5,300,000
End of exam
Total Stockholders’ Equity 12/31/2011 5,500,000
A. Return on Stockholders' Equity: 7.8 %; Return on Common Stockholders' Equity: 8.9%
B. Return on Stockholders' Equity: 5.6 %; Return on Common Stockholders' Equity: 6.7%
C. Return on Stockholders' Equity: 8.1 %; Return on Common Stockholders' Equity: 9.2%
D. Return on Stockholders' Equity: 6.5 %; Return on Common Stockholders' Equity: 7.6%

2. What is the rate of return on equity if net income is $22,700; preferred dividends are $3,000; sales are $100,000; and average common stockholders' equity is $86,000?
A. 22.7%
B. 26.4%
C. 22.9%
D. 86.0%

3. Birch issued 200 shares of $12 par common stock in exchange for a piece of equipment with a current market value of $3,000. Which of the following is not part of the journal entry for this transaction?
A. Crediting paid-in capital in excess of par common for $600
B. Crediting common stock for $3,000
C. Crediting common stock for $2,400
D. Debiting equipment for $3,000

4. What is the rate of return on common stockholders' equity if sales are $100,000, net income is $22,700,
and average common stockholders' equity is $86,000?
A. 86.0%
B. The rate of return can't be determined from the information given.
C. 22.7%
D. 26.4%

1.The method of brainstorming that relates to word association is called _______.
a. three-by-three listing
b. blueprinting
c. word sparks
d. free thinking


2.The writing process is recursive because _______.
a. writing should not be print but in cursive
b. you must recopy a paper until it is published
c. the steps are circular and overlapping
d. it includes publishing a formal paper


3.A narrative essay should _______.
a. tell, rather than show, about events
b. show, rather than tell, about events
c. provide an argument to the reader
d. have characters, but no setting


4.The brainstorming method in which you create a visual map of a location or object that is important to you is called _______.
a. free thinking
b. blueprinting
c. word sparks
d. three-by-three listing