Accounting and BUsiness

(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. 2. (TCO A) Dividends flow through which one of the following statements? (Points : 5) The Balance Sheet The Statement of Retained Earnings The Income Statement None of the above

Question 3. 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? (Points : 5) $47,000 $100,700 $48,700 $64,200

Question 4. 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. 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. 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. 7. (TCOs D, G) When the market rate of interest exceeds the stated rate of interest on the bond, the bond will require _____. (Points : 5) a debit to Discount on Bonds Payable a credit to Premium on Bonds Payable a debit to Loss on Bonds Payable a credit to Gain on Bonds Payable

Question 8. 8. (TCO C) Accounts receivable arising from sales to customers amounted to $75,000 and $90,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $100,000. Based on these transactions, the cash flows from operating activities to be reported on the statement of cash flows would be _____. (Points : 5) $115,000 $85,000 $175,000 $190,000

Question 9. 9. (TCO F) Horizontal analysis is also known as _____. (Points : 5) ratio analysis vertical analysis common-size analysis trend analysis

Question 10. 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. 11. (TCO F) Which one of the following is typically analyzed via financial statement ratio analysis? (Points : 5) The design of a new product The internal control failure rate The leverage of the firm The effectiveness of a marketing campaign

Question 12. 12. (TCO F) A common ratio to measure profitability is the _____. (Points : 5) quick ratio inventory turnover days’ sales in receivables asset turnover

Question 13. 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. 14. (TCO G) To calculate the market value of a bond, we need to use the time-value-of-money concept called _____. (Points : 5) interpolation future value compounding discounting