| 1. (TCO A) An advantage of the corporate form of business is that _____. (Points : 5) |
it has limited life
its owner's personal resources are at stake
its ownership is easily transferable via the sale of shares of stock
it is simple to establish
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| 2. (TCO A) The Dividends account _____. (Points : 5) |
is increased with a debit
is decreased with a credit
is not an expense account
All of the above
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| 3. (TCOs A, B) Below is a partial list of account balances for Denton Company:
Cash $7,000
Prepaid insurance 700
Accounts receivable 3,500
Accounts payable 2,800
Notes payable 4,200
Common stock 1,400
Dividends 700
Revenues 21,000
Expenses 17,500
What did Denton Company show as total credits? (Points : 5) |
$30,100
$29,400
$28,700
$30,800
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| 4. (TCOs B, E) A small and private company may be able to justify using a cash basis of accounting if it has _____. (Points : 5) |
sales under $1,000,000
no accountants on staff
insignificant receivables and payables
all sales and purchases on account
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5. (TCO D) Two companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using _____. (Points : 5)
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LIFO will have the highest ending inventory
FIFO will have the highest cost of goods sold
FIFO will have the highest ending inventory
LIFO will have the lowest cost of goods sold
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6. (TCO A, E) Equipment was purchased for $17,000 on January 1, 2006. Freight charges amounted to $700 and there was a cost of $2,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $3,000 salvage value at the end of its 5-year useful life. What is the amount of accumulated depreciation at December 31, 2007, if the straight-line method of depreciation is used? (Points : 5)
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$6,680
$3,340
$2,860
$5,720
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7. (TCOs D, G) Lopez Corporation issues 500 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 96. The journal entry to record the issuance will show a _____. (Points : 5)
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debit to Cash of $500,000
credit to Discount on Bonds Payable for $20,000
credit to Bonds Payable for $480,000
debit to Cash for $480,000
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8. (TCO C) Accounts receivable arising from sales to customers amounted to $80,000 and $70,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $240,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _____. (Points : 5)
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$240,000
$250,000
$310,000
$230,000
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9. (TCO F) If you are comparing the 2010 income statement numbers with the income statement numbers from 2009 and 2008, you are conducting a _____. (Points : 5) |
common-size analysis
horizontal analysis
vertical analysis
ratio analysis
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10. (TCO F) Vertical analysis is also known as _____. (Points : 5)
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perpendicular analysis
common-size analysis
trend analysis
straight-line analysis
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11. (TCO F) Which one of the following is not a characteristic generally evaluated in ratio analysis?(Points : 5)
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Liquidity
Profitability
Marketability of the product
Solvency
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12. (TCO F) A common measure of profitability is the _____. (Points : 5)
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current ratio
current cash debt coverage ratio
return on common stockholder's equity ratio
debt to total assets
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13. (TCO F) Long-term creditors are usually most interested in evaluating _____. (Points : 5) |
liquidity
marketability
profitability
solvency
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14. (TCO G) To calculate the market value of a bond, we need to _____. (Points : 15) |
find out the present value of all of the future cash payments promised by the bond
calculate the present value of the principal only
calculate the present value of the interest only
multiply the bond price by the interest rate
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11 years ago
