1 - JustAnswer



Bonds with a face value of 1,000,000 but sold for 980,000 are sold at a discount

True

False

2. The annual amount of deprecation expense is likely to change from year to year when using the unit-of-production method of depreciation.

True

False

3. When ABC Company pays the liability for the payroll taxes owed, it would debit cash and credit payroll taxes expense for all taxes owed.

True

False

4. A current ratio of 2.5 would indicate the company has enough current assets to pay off it current debt.

True

False

5. Allowance for Doubtful Accounts has a debit balance of $500 at the end of the year (before adjustment), and uncollectible accounts expense is estimated at 3% of net sales. If net sales are $600,000, the amount of the adjusting entry to record the provision for doubtful accounts is

$18,500

$17,500

$18,000

none of the above.

6. What section of the statement of cash flows will the payment of ordinary operating expenses go under?

Financing Activities

Investing Activities

Operating Activities

None of the Above

7. Which depreciation method is most widely used for financial reporting?

MACRS

Double declining

Straight line

Sum of the years

8. Fred and Ethel share income equally. During the current year the partnership net income was $40,000. Fred made withdrawals of $12,000 and Ethel made withdrawals of $17,000. At the beginning of the year, the capital account balances were: Fred capital, $54,000; Ethel capital, $58,000. Fred's capital account balance at the end of the year is

$76,500

$64,500

$62,000

$50,000

9. When shares of stock held as an investment are sold, the difference between the proceeds and the carrying amount of the investment is recorded as a(n)

prior period adjustment

extraordinary gain or loss

paid-in capital addition

gain or loss

10. The entry to record the amortization of a premium on bonds payable is

debit Premium on Bonds Payable, credit Interest Expense

debit Interest Expense, credit Premium on Bond Payable

debit Interest Expense, debit Premium on Bonds Payable, credit Cash

debit Bonds Payable, credit Interest Expense

11. Land costing $78,000 was sold for $68,000 cash. The loss on the sale was reported on the income statement as other expense. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land? (Points: 3)

$50,000

$78,000

$118,000

$68,000

12. What section of the statement of cash flows will the receipt of the initial investment by the owner go under? (Points: 3)

Financing Activities

Investing Activities

Operating Activities

None of the Above

13. What is the Accounts Receivable Turnover if Net Sales on Account are $100,000 and the Beginning Accounts Receivable is $40,000 and the Ending Accounts Receivable is $60,000? (Points: 3)

1.8

1.5

3.0

2.0

14. What is the Gross Profit % for the year if the Gross Profits are $200,000 and the Net Sales are $500,000? (Points: 3)

40%

4%

25%

20%

15. Which one of the following below should be added to net income in calculating net cash flow from operating activities using the indirect method? (Points: 3)

a gain on the sale of land

a decrease in accounts payable

an increase in accrued liabilities

dividends paid on common stock

16. Which of the following below generally is the most useful in analyzing companies of different sizes (Points: 3)

comparative statements

common-sized financial statements

price-level accounting

audit report

17. The percent of fixed assets to total assets is an example of (Points: 3)

vertical analysis

solvency analysis

profitability analysis

horizontal analysis

18. Assume the following sales data for a company:

2007 $1,134,000

2006 $945,000

What is the percentage increase in sales from 2006 to 2007?

(Points: 3)

120%

20%

95%

25%

19. When recording the weekly payroll entry, ABC company would debit the following accounts (select all that apply) (Points: 3)

Cash

Sales salaries expense

Office salaries expense

Medicare tax payable

Salaries payable

20.

For each of the following, match whether it would be disclosed as an operating, financing, or investing activity on the statement of cash flows under the indirect method.

(Points: 3)

|Matching: |

|Answer |

| |

|Potential Matches: |

| |

|: Purchased treasury stock |

| |

|1: Operating |

|2: Financing |

|3: Investing |

| |

|: Dispose of equipment |

| |

| |

| |

|: Net income |

| |

| |

| |

| |

|Purchase of Treasury Stock Financing |

| |

|Dispose of Equipment Investing |

| |

|Net Income Operating |

| |

| |

|21. Calculate the net pay for Mark Smith if he is paid $10 per hour, worked 44 hour, and has the following deductions: Health |

|insurance $25, Retirement savings $10, Federal income tax $80. The company pay all hours worked over 40 at time and a half and |

|the rates for FICA and Medicare are 7.65% FICA and 1.45% Medicare. Federal unemployment is 4.5%. Show all work or you will not |

|receive full credit for this problem. (Points: 10) |

| |

|Total wage payment (40 x $10)+ (4 x $10 x 1.5) $460 |

| |

|Net Pay = $460 –[($460 x 7.65%) + ($460 x 1.45%) + ($25 + $10 + $80) = $303.14 |

| |

| |

|22. (a) Prepare the journal entry to issue $200,000 bonds which sold for $195,000. |

| |

|Cash $195,000 |

|Bond Discount $5,000 |

|Bonds Payable $200,000 |

| |

|(b) Prepare the journal entry to issue $200,000 bonds which sold for $202,000. Clearly label each answer. |

|(Points: 10) |

| |

| |

| |

| |

|Cash $202,000 |

|Bond Payable $200,000 |

|Bond Premium $2,000 |

| |

|23. Indicate the section (operating activities, investing activities, financing activities, or none) in which each of the |

|following would be reported on the statement of cash flows prepared by the indirect method: Clearly label each answer. |

|(a) Gain on sale of fixed assets Operating |

|(b) Retirement of long-term debt Financing |

|(c) Operating income Operating |

|(d) Sale of capital stock Financing |

|(e) Payment of interest expense operating |

|(f) Payment of cash dividends Financing |

|(g) Purchase of fixed assets Investing |

|(h) Sale of fixed assets Investing |

|(i) Receipt of interest revenue operating |

|(j) Distribution of stock dividends Financing |

|  |

|  |

|(Points: 10) |

| |

| |

| |

|24. |

|The Little Company reported net income of $100,000 for the current year. Depreciation recorded on buildings and equipment |

|amounted to $70,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the |

|year are as follows: |

| |

|End of Year |

|Beginning of Year |

| |

|Cash |

|$20,000 |

|$15,000 |

| |

|Accounts receivable |

|19,000 |

|32,000 |

| |

|Inventories |

|50,000 |

|65,000 |

| |

|Accounts payable |

|12,000 |

|18,000 |

| |

|Instructions |

|Prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method. |

|  |

|(Points: 10) |

|Net income |$100,000 |

|Adjustments to reconcile net income to net cash provided by operating activities: | |

|Depreciation expense |70,000 |

|Decrease in accounts receivable |13,000 |

|Decrease in inventories |15,000 |

|Decrease in accounts payable |(6,000) |

|Net cash provided by operating activities |$192,000 |

| |

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