26 Jun Question Week8 Final Exam PART 1 and PART 2
Question
Week8 Final Exam PART 1 and PART 2
Q1 (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
Q2 (TCO A) Which one of the following statements is correct with regard to Dividends? (Points : 5)
Dividends are increased by credits.
Dividends are subtracted on the Income Statement.
Common stock dividends are required to be paid.
Dividends reduce stockholders’ equity.
Q3 (TCOs A, B) Below is a partial list of account balances for LBJ Company:
Cash $12,000
Prepaid insurance 1,300
Accounts receivable 7,000
Accounts payable 5,000
Notes payable 9,000
Common stock 22,000
Dividends 2,000
Revenues 45,000
Expenses 35,000
What did LBJ Company show as total debits? (Points : 5)
$57,300
$81,000
$55,300
$56,000
Q4 (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.
Q5 (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
Q6 (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
Q7 (TCOs D, G) When the market rate of interest is equal to the stated rate of interest on the bond, the bond will require _____. (Points : 5)
a debit to Discount on Bonds Payable
a credit to Discount on Bonds Payable
a credit to Bonds Payable
a debit to Bonds Payable
Q8 (TCO C) Accounts receivable arising from sales to customers amounted to $50,000 and $45,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was
$150,000. Based on these transactions, the cash flows from operating activities to be reported on the statement of cash flows would be _____. (Points : 5)
$195,000
$145,000
$115,000
$155,000
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