Exam: 061553RR - ACCOUNTING FOR MERCHANDISING Exam: 061554RR - THE VALUE OF MONEY Exam: 061555RR - CORPORATIONS-

10. Which element of internal control deals with a company having large amounts of cash on hand?
A. Risk assessment
B. Control environment
C. Information and communication
D. Control activities
11. If there is a difference between the physical count and the perpetual record, the account in which the
difference is recorded is the
A. Inventory Expense.
B. Revenue.
C. Cost of Goods Sold.
D. Sales.
12. Which of the following would probably not need to be disclosed in a footnote?
A. A 10% increase in sales
B. A change in depreciation method
C. Change of inventory methods
D. A material change in estimated shrinkage
13. Cash register schemes are a form of
A. fraudulent financial reporting.
B. management fraud.
C. employee embezzlement.
D. bribery.
14. An audit opinion in which the auditors are taking exception to a specific treatment of accounting
information is the
A. qualified opinion.
B. disclaimer of opinion.
C. unqualified opinion.
D. adverse opinion.

16. If an employee overbills a company for travel, this would be considered a/an
A. disbursement scheme.
B. check tampering scheme.
C. cash register scheme.
D. expense scheme.
17. A company has net sales of $126,000, cost of goods sold of $72,000, operating expenses of $38,000,
and other expenses of $3,000. Approximately what is the company's gross profit percentage?
A. 0.241
B. 0.127
C. 0.103
D. 0.429
18. Olympic Enterprises has the following inventory data:
Date Quantity Unit Cost
June 1 Beginning inventory 5 $52
June 4 Purchase 10 $55
June 7 Sale 12
June 11 Purchase 9 $58
June 14 Sale 8

Assuming FIFO, what is the cost of goods sold for June 14?
A. $456
B. $464
C. $440
D. $455

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1. Which of the following would not be considered a 90-day cash equivalent?
A. Treasury notes
B. Certificates of deposits
C. Coin
D. Time deposits

3. Which of the following accounts is credited in a journal entry for an asset exchange?
A. Loss on Exchange of Assets
B. Truck (old)
C. Accumulated Depreciation for truck (old)
D. Truck (new)

9. Interest and dividends earned during the period are reported on the income statement for which
marketable securities?
A. All types of securities
B. Available-for-sale securities
C. Held-to-maturity securities
D. Trading securities

15. Subtracting accumulated depletion from the asset account coal mine yields the
A. original cost.
B. current period's depletion expense.
C. net book value.
D. current market value.

17. The processing of credit card and debit card transactions is generally done
A. by hired third parties.
B. over the Internet.
C. at the financial institution of the retailer.
D. at the retail site.
18. On January 1, Bestway, Inc. signed a $175,000, 8%, 30-year mortgage that requires semiannual
payments of $7,735 on June 30 and December 31 of each year. The journal entry for the first semiannual
payment (with interest rounded to the nearest dollar) is
A. debit Mortgage payable, $7,735; credit Cash, $7,735.
B. debit Interest expense, $7,000; debit Mortgage payable, $735; credit Cash, $7,735.
C. debit Interest expense, $735; debit Mortgage payable, $7,000; credit Cash, $7,735.
D. debit Interest expense, $7,000; debit Mortgage expense, $735; credit Cash, $7,735.

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2. An example of a cash outflow from investing activities is
A. paying cash dividends.
B. issuance of a note payable.
C. making a loan to another company.
D. the purchase of treasury stock.
3. Which is not a value placed on a certificate for a share of the company's stock?
A. Market value
B. No par
C. Stated value
D. Par

6. Eagle Ridge, Inc. issued 40 shares of $20 par value stock to its accountant in full payment for her $900
fee for assisting in setting up the new company. The entry for the issuance of the stock is a
A. debit to Paid-in Capital in Excess of Par–Common for $100.
B. credit to Common Stock for $900.
C. credit to Common Stock for $800.
D. debit to Common Stock for $800.

11. Allied Industrial has net sales of $1,200,000, net income of $85,000, average current assets of $53,000,
average fixed assets of $184,000, and average total assets of $237,000. What is Allied Industrial's total
asset turnover ratio?
A. 6.52
B. 5.06
C. 22.64
D. 0.20

13. Motor Works, Inc. has declared a $20,000 cash dividend to shareholders. The company has 5,000
shares of $15-par, 10% preferred stock and 10,000 shares of $20-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 $8,000 in arrears?
A. $7,500 preferred, $12,500 common
B. $15,500 preferred, $4,500 common
C. $20,000 preferred, $0 common
D. $8,000 preferred, $12,000 common

14. Haskins, Inc. sells 1,000 shares of $12 par common stock for $20 per share. The journal entry is
A. debit Cash $12,000; debit Paid-In Capital in Excess of Par–Common $8,000; credit Common Stock $20,000.
B. debit Cash $20,000; credit Common Stock $12,000; credit Paid-In Capital in Excess of Par-Common Stock $8,000.
C. debit Cash $20,000; credit Common Stock $20,000.
D. debit Cash $12,000; credit Common Stock $12,000.

15. The 2011 and 2012 balance sheets for Newport Industrial showed Cash of $8,000 and $9,500,
respectively; Accounts Receivable of $14, 000 and $16,000, respectively; Inventory of $11,000 and
$8,000, respectively; and Accounts Payable of $5,000 and $7,000, respectively. Its 2012 income statement
showed Net Sales of $108,000, Cost of Goods Sold of $62,000, and Net Income of $27,000. The cash
conversion cycle for 2012 (round calculations to two decimal places) is _______ days.
A. 40.56
B. 141.94
C. 71.30
D. 30.08

16. Tucker, Inc.'s net sales decreased from $90,000 in year one to $45,000 in year two, and its cost of
goods sold decreased from $30,000 in year one to $20,000 in year two. The vertical analysis based on
sales for cost of goods sold for the two periods (rounded to nearest tenth of a percent) is
A. 225% and 300%.
B. 44.4% and 33.3%.
C. 33.3% and 44.4%.
D. 300% and 225%.
17. The debt ratio is the relationship between
A. current assets and current liabilities.
B. total assets and total liabilities.
C. total assets and current liabilities.
D. current assets and total liabilities.

19. Knutson Company reacquired 5,000 shares of its $15-par common stock for $13/share. The debit to
Treasury Stock is
A. $65,000.
B. $75,000.
C. $10,000

D. based on the last treasury stock transaction.

20. The following information applied to Advanced Industries, Inc. for 2012:
What is the dividend yield for Advanced Industries, Inc. (to the nearest tenth of a percent)?
Earnings/share of $17.68
Market price per share of common stock $52
Number of shares of common stock outstanding 52,000
Net income $48,000
Dividends/share $7.14
A. 92.3%
B. 34.0%
C. 40.4%
D. 13.7%