WEEK8 Final Exam Part 1

QUESTION

WEEK8 Final
Exam Part 1

1. (TCO A) An
advantage of the corporate form of business is
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

2.(TCO A) Dividends flow
through which one of the following statements?
The Balance Sheet
The Statement of Retained
Earnings
The Income Statement
None of the above

3.(TCOs A, B) Below is a
partial list of account balances for LBJ Company:

Cash

$30,000

Prepaid rent

1,000

Accounts receivable

5,500

Accounts payable

3,800

Notes payable

4,200

Common stock

14,000

Dividends

1,700

Revenues

25,000

Expenses

15,500

What did LBJ Company show as
total credits?
$47,000
$100,700
$48,700
$64,200

4. (TCOs B, E) Which of the
following statements is correct with regard to accrual accounting?
Accrual accounting is consistent
with the matching principle.
Accrual accounting is less
complex than the cash-basis method.
Accrual accounting does not
record expenses until paid.
Accrual accounting does not
record revenue until payment is received.

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 _____.

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

6.(TCOs A, E) Equiment
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 _____.
$13,333
$16,258
$15,425
$13,578

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 _____.

a debit to Discount on Bonds
Payable
a credit to Discount on Bonds
Payable
a credit to Bonds Payable
a debit to Bonds Payable

8.(TCO C) Accounts
receivable arising from sales to customers amounted to $90,000 and $80,000 at
the beginning and end of the year, respectively. Income reported on the income
statement for the year was $200,000. Based on these transactions, the cash
flows from operating activities to be reported on the statement of cash flows
would be _____
$280,000
$250,000
$210,000
$190,000

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

10.(TCO F) Vertical
analysis is also known as _____.
ratio analysis
linear analysis
common-size analysis
linear analysis

11.(TCO F) Which one of the
following is typically analyzed via financial statement ratio analysis?

The design of a new product
The internal control failure rate

The leverage of the firm
The effectiveness of a marketing
campaign

12.(TCO F) A common ratio
to measure liquidity is the _____.
rate of return on stockholders’
equity
debt ratio
quick (acid-test) ratio
times-interest-earned ratio

13.(TCO F) The rate of
return on common stockholder’s equity ratio is NOT affected by
dividends paid to preferred
stockholders
net income
dividends paid to common
stockholders
average common stockholders’
equity

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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