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DeVry ACCT504 Final exam 2014




Question;1. Which of the following is an advantage of corporations;relative to partnerships and sole proprietorships?;Reduced legal liability for investors;Harder to transfer ownership;Lower taxes;Most common form of organization;2. Dividends _____.;represent an expense and are an operating activity;represent an obligation and are an operating activity;represent a distribution of earnings and are a financing;activity;represent an asset and are an investing activity;3. Below is a partial list of account balances for LBJ;Company;Cash $15,000;Prepaid insurance 5,000;Accounts receivable 2,500;Accounts payable 3,000;Notes payable 6,000;Common stock 10,000;Dividends 500;Revenues 15,000;Expenses 13,000;What did LBJ Company show as total debits?;$34,000;$36,000;$70,000;$31,000;4. Under the accrual basis of accounting, revenues are;recorded and reported _____.;when companies receive payments for jobs performed or;products provided;when companies have provided products or performed services;when companies receive payments prior to providing products;or performing services;when companies receive payments after providing products or;performing services;5. In a period of increasing prices, which inventory cost;flow assumption will result in the highest amount of net income?;LIFO;The average cost method;FIFO;Income tax expense for the period will be the same under all;assumptions.;6. Equipment was purchased for $55,000 on January 1, 2011.;Freight charges of $2,200 were incurred and there was a cost of $1,800 for;installation. It is estimated the equipment will have a $5,500 salvage value at;the end of its 5-year useful life. Depreciation expense for 2011 using the;straight-line method will be _____.;$10,340;$10,700;$10,260;$9,900;7. Payne Corporation issues 100 twenty-year, 6%, $1,000;bonds dated July 1, 2010, at 94. The journal entry to record the issuance will;show a _____.;debit to Cash of $100,000;credit to Bonds Payable of $94,000;credit to Premium on Bonds Payable of $4,000;debit to Discount on Bonds Payable of $6,000;8. Accounts receivable arising from sales to customers;amounted to $80,000 and $120,000 at the beginning and end of the year;respectively. Income reported on the income statement for the year was;$2,000,000. Exclusive of the effect of other adjustments, the cash flows from;operating activities to be reported on the statement of cash flows is _____.;$2,040,000;$2,000,000;$1,200,000;$1,960,000;9. If you are making comparisons within a company to detect;changes in financial relationships and significant trends, you are performing;what type of analysis?;Industry averages analysis;Intercompany analysis;Common-size analysis;Intracompany analysis;10. The formula for performing horizontal analysis is _____.;(Current Year Amount minus Base Year Amount) divided by;Current Year Amount;Base Year Amount divided by Current Year Amount;Current Year Amount minus Base Year Amount;(Current Year Amount minus Base Year Amount) divided by Base;Year Amount;11.Horizontal analysis of comparative financial statements;includes the _____.;development of common-size statements;calculation of liquidity ratios;calculation of dollar amount changes and percentage changes;from the previous year to the current year;evaluation of financial statement data that expresses each;item in a financial statement as a percentage of a base amount;12. A common measure of solvency is the _____.;asset turnover;current cash debt coverage ratio;cash debt coverage ratio;current ratio;13. Stockholders would be most interested in which of the;following ratios?;Days in inventory;Free cash flow;Current ratio;Average collection period;14. To calculate the market value of a bond, we need to;multiply the bond price times the interest rate;calculate the present value of the principal only;calculate the present value of the interest only;calculate the present value of both the principal and;interest payments;/;1.The financial manager should examine available risk-return;trade-offs and make his decision based upon the greatest expected return.;2.Only a few financial decisions involve some sort of;risk-return tradeoff.;3.The sole proprietorship can be described as the absence of;any legal business structure.;4.In a general partnership, all partners have unlimited;liability for the actions of any one partner when that partner is conducting;business for the firm.;5.There is no legal distinction made between the assets of;the business and the personal assets of the owners in the limited partnership.;6.General partners have unrestricted transferability of;ownership, while limited partners must have the consent of all partners to;transfer their ownership.;7.Ultimate control in a corporation is vested in the board;of directors.;8.There are a significant number of legal requirements to;follow when establishing a sole proprietorship.;9.Limited partners may actively manage the business.;10.The life of a corporation is not dependent upon the;status of the investors.;11.A sole proprietorship is the most desirable business form;in all circumstances.;12.In a sole proprietorship, the owner is personally;responsible without limitation for the liabilities incurred.;13.In a limited partnership, at least one general partner;must remain in the association, the privilege of limited liability still;applies to this partner.;14.In a general partnership, there is a distinction between;business and personal assets.;15.In order to maximize shareholder wealth, a firm must;consider historical costs as an integral part of their decision-making.;16.Financial management is concerned with the maintenance;and creation of wealth.;17.Shareholder wealth is measured by the market value of the;firm's common stock.;18.The agency problem arises due to the separation of;ownership and control in a firm.;19.There is little, if any, difference between a business;error and an ethical error.;20.For markets to be efficient, price adjustments to new;information must be correct.;21.Ethical dilemmas frequently exist in finance.;22.Even though diversification can eliminate risk, it also;makes it more difficult to measure a project's or an asset's risk.;23.Consider the following equally likely project outcomes;Profit XY Pessimistic prediction$0$500 Expected outcome$ 500$500 Optimistic;prediction$1000 $500;a.Project Y has less uncertainty than Project X.;b.Project X has more;variability than Project Y.;c.a and b.;d.Since Projects X and Y have the same expected outcomes of;$500, investors will view them as identical in value.;24.Maximization of shareholder wealth as a goal is superior;to profit maximization because; considers the time value of the money.;b.following the shareholder wealth maximization goal will;ensure high stock prices.; considers uncertainty.;d.a and c.;25.Why is maximizing shareholder wealth a better goal than;maximizing profits?;a.Maximizing shareholder wealth places greater emphasis on;the short term.;b.Maximizing profits ignores the uncertainty that is related;to expected profits.;c.Maximizing shareholder wealth gives superior consideration;to the entire portfolio of shareholder investments.;d.Maximizing profits gives too much weight to the tax;position of shareholders.;26. Profit maximization does not adequately describe the;goal of the firm because;a.profit maximization;does not require the consideration of risk.;b.profit maximization ignores the timing of a project's;return.;c.maximization of dividend payout ratio is a better;description of the goal of the firm.;d.a and b.;27. Consider cash flows for Projects X and Y such as;Project XProject Y Year 1$3000 $0 Year 2$0$3000 A rational person would prefer;receiving cash flows sooner because;a.the money can be reinvested.;b.the money is nice to have around.;c.the investor may be tired of a particular investment.;d.the investor is indifferent to either proposal.;28. What is the chief disadvantage of the sole;proprietorship as a form of business organization when compared to the;corporate form?;a.Sole proprietorships are subject to double taxation of;profits.;b.The cost of formation.;c.Inadequate profit sharing.;d.Owners have unlimited liability.;29. Which of the following is not for limited partnerships?;a. Limited partners can only manage the business.;b. One general partner must exist who has unlimited;liability.;c. Only the name of general partners can appear in the name;of the firm.;d. Limited partners may sell their interest in the company.;30.In terms of organizational costs, which of the following;sequences is correct, moving from lowest to highest cost?;a.General partnership, sole proprietorship, limited;partnership, corporation;b.Sole proprietorship, general partnership, limited;partnership, corporation;c.Corporation, limited partnership, general partnership;sole proprietorship;d.Sole proprietorship, general partnership, corporation;limited partnership;31.Coplon, Inc., an industrial firm, earned $180,000 in;dividends in 1993 on their stock holding in the Finco Company. How much of the;dividends are excluded from Coplon's taxable income?;a.$27,000;b.None;c.$126,000;d.$153,000;32.Which one of the following categories of owners enjoys;limited liability?;a.General partners in a limited partnership;b.Shareholders (common stock) of a corporation;c.Sole proprietors;d.Both a & b;33. Which of the following is a characteristic of a limited;partnership?;a.It allows one or more partners to have limited liability.;b.It requires one or more of the partners to be a general;partner to whom the privilege of limited liability does not apply.;c.It prohibits the limited partners from participating in;the management of the partnership.;d.all of the above.;34.Which of the following categories of owners have limited;liability?;a.General partners;b.Sole proprietors;c.Shareholders of a corporation;d.Both a and b;35.Which of the statements below is?;a.The sole proprietorship and the general partnership both;feature unlimited liability.;b.It is very complicated (legally) to establish a;corporation.;c.No legal criterion exists for a general partnership.;d.All of the above are.;36.Which of the following types of business forms is the;most ideal in terms of attracting new capital? a.Sole proprietorship;b.Limited partnership;c.General partnership;d.A public corporation;37.Which forms of organization are free of initial legal;requirements?;a.Sole proprietorship;b.General partnership;c.Corporation;d.Both a and b;38. For these types of organization, no distinction is made;between business and personal assets.;a. Sole proprietorship;b. General partnership;c. Limited partnership;d. All of the above;e. Both a and b;39.Which of the following is a significant disadvantage of a;general partnership?;a.The cost of forming it is high.;b.Each partner is fully responsible for the liabilities;incurred by the partnership.;c.There is a risk associated with the industry in which it;operates.;d.Forming the business is very complex.;40.Which of the following should be considered when;assessing the financial impact of business decisions?;a.The amount of projected earnings;b.The risk-return tradeoff;c.The timing of projected earnings, i.e., when they are;expected to occur;d.The amount of the investment in a given project;e.All of the above;41. Which of the following forms of business organization is;the dominant economic force in the United States?;a.The sole proprietorship;b.The general partnership;c.The limited partnership;d.The joint venture;e.The corporation;42.Which of the following reasons is most responsible for;corporations being the most important form of business organization in the;United States?;a.Corporations have limited life.;b.Stockholders have unlimited liability.;c.Corporations are subject to less government regulation;than the other forms of business organization. d.Corporations have the ability;to raise larger sums of capital than the other forms of business organization.;e.Corporations are;subjected to less taxation than the other forms of business organization.;43.How could you compensate an investor for taking on a;significant amount of risk?;a.Increase the expected rate of return.;b.Raise more debt capital.;c.Offer stock at a higher price.;d.Increase sales.;44.Which of the following would be most likely to align the;interests of managers and shareholders? a. Fixed but high salaries;b. Large bonuses;c. Stock options;d. All of the above;e. None of the above;45.What does the agency problem refer to?;a.The conflict that exists between the board of directors;and the employees of the firm;b.The problem associated with financial managers and;Internal Revenue agents;c.The conflict that exists between stockbrokers and;investors;d.The problem that results from potential conflicts of;interest between the manager of a business and the stockholders;e.None of the above;46.A limited liability company (LLC) is; to retain limited liability for owners.;b.taxed like a corporation.;c.a cross between a partnership and a corporation.;d.a and c.;e.all of the above.;47.Purchasing a security of a company that is issuing their;stock for the first time publicly would be considered;a.a secondary market transaction.; initial public offering.;c.a seasoned new issue.;d.both a and b.;48.In measuring value, the focus should be on; flow.;b.accounting profits.;c.time value of money.;d.earnings per share.;49.Which of the following is regarding accounting profits?;a.Received by the firm and reinvested;b.Reflects money in hand;c.Represents actual money received and paid out;d.Equals cash in the bank;50.Which of the following statements is regarding competitive markets?;a.Large profits exist;over the long run.;b.Product differentiation produces insulation for;competitors.;c.Cost advantages attract new entrants.;d.Both b and c.;51.Which of the following decrease new competition in;competitive markets?;a.Economies of scale;b.Proprietary technology;c.Product differentiation;d.Both a and b;e.All of the above;52. Cost advantages in competitive markets;a.have the potential;to create large profits.;b.deter new entrants from entering.;c.can be created by economies of scale.;d.all of the above.;53.Which of the following is a characteristic of an;efficient market?;a.Small number of individuals.;b.Opportunities exist for investors to profit from publicly;available information.;c.Security prices reflect fair value of the firm.;d.Immediate response occurs for new public information.;54. Diversification increases when ________ decreases.;a.variability;b.return;c.risk;d.a and c;e.all of the above;55. IBM issuing new shares of common stock would be;classified as;a. a new seasoned issue.;b. an initial public offering.;c. a secondary market transaction.;d. a and b.;56. According to the agency problem, _________ represent the;principals of a corporation. a.shareholders b.managers c.employees d.suppliers;57. The opening of new international markets to the U.S. can;be attributed to;a.acceptance of a free market system by third world;countries.;b.regulation of U.S. industries.;c.increase in information technology.;d.a and c.;e.all of the above. Short-Answer Questions;58.Briefly discuss mechanisms that can be used to align the;interests of shareholders and managers.;59.Briefly discuss why financial decision makers must focus;on incremental cash flows when evaluating new projects.;60.Discuss the risk/return tradeoff and how it relates to;finance.;61.Compare and contrast primary market and secondary market;transactions as it relates to the flow of funds in the transactions.;62.Discuss how new entrants are deterred from entering a;competitive market.;63.What is incremental cash flow and how is it used in;project analysis?;Ch1;1. In;the past, the study of finance has included;A) mergers and;acquisitions.;B) raising capital.;C) bankruptcy.;D) all of the above.;2. One;of the major disadvantages of a sole proprietorship is;A) that there is;unlimited liability to the owner.;B) the simplicity of decision making.;C) low organizational costs.;D) low operating costs.;3. Many;companies such as Tyco, Enron, WorldCom, etc. that suffered financial distress;in the late 1990s and early 2000s;A) committed fraud.;B) had failed corporate governance;oversight.;C) went bankrupt.;D) all of the above are.;4. Agency;theory would imply that conflicts are more likely to occur between management;and shareholders when;A) the company is;owned and operated by the same person.;B) management acts in the best;interests of maximizing shareholder wealth.;C) the chairman of the board is also;the chief executive officer (CEO).;D) the board of directors exerts strong;and involved oversight of management;5. Maximization;of shareholder wealth is a concept in which;A) increased;earnings is of primary importance.;B) profits are maximized on a quarterly;basis.;C) virtually all earnings are paid as;dividends to common stockholders.;D) optimally increasing the long-term;value of the firm is emphasized.;6. Money;markets would include which of the following securities?;A) common stock and;corporate bonds.;B) treasury bills and commercial paper.;C) certificates of deposit and;preferred stock.;D) all of the above.;7. The;Internet has affected the financial markets by;A) creating more;competition between markets.;B) pushing the cost of trading down.;C) forcing brokerage companies to;consolidate.;D) all of the above;Ch. 2;1. A;short-term creditor would be most interested in;A) profitability;ratios.;B) asset utilization ratios.;C) liquidity ratios.;D) debt utilization ratios.;2. Given;the balance sheet and income state for Simmons Maintenance Company, compute the;ratios that are also shown for the industry average. The "right answer" refers to the;question of whether a particular ratio for Simmons is better or worse than the;industry average.;SIMMONS MAINTENANCE COMPANY;Balance Sheet;Assets Liabilities;Cash $ 15,000 Accounts;Payable $ 21,000;Accts. Receivable 22,000 Notes Payable 20,000;Inventory 30,000 Accrued;Expenses 5,000;Current Assets 67,000 Current Liabilities 46,000;Net Fixed Assets 73,000 Long-term;Debt 30,000;Stockholders;Equity 64,000;Total Assets $140,000 Total Liabilities;Stockholders' Equity $140,000;Income Statement;Sales (80% credit) $120,000;Less: Cost of Goods Sold 45,000;Gross Profit 75,000;Selling and Administrative Expense 20,000;Rent Expense (Lease) 8,000 28,000;EBIT 47,000;Interest Expense 5,000;Earnings before taxes 42,000;Taxes (@ 25%) 10,500;Net Income $ 31,500;Common shares outstanding 15,000;EPS $ 2.10;?;?;Ch. 4;1. In;developing the pro forma income statement we follow four important steps;1) compute;other expenses;2) determine;a production schedule;3) establish;a sales projection;4) determine;profit by completing the actual pro forma statement.;What;is the correct order for these four steps?;A) 1,2,3,4;B) 4,3,2,1;C) 2,1,3,4;D) 3,2,1,4;2. Ellis;Sport Shop projects the following sales;April May June;$75,000 $95,000 $110,000;Ninety;percent of Ellis' sales are on credit with 60 percent of receivables collected;in the month after the sale and the rest of receivables collected in the second;month after the sale. February sales;were $60,000 and March sales were $70,000.;In the past Ellis' bad debt percentage has been 0 and is expected to;continue.;a) Prepare a;monthly schedule of cash receipts for April-June.;b) What is;the balance of Receivables at the end of June.;?;Ch. 5;1. The;concept of operating leverage involves the use of __________ to magnify returns;at high levels of operation.;A) fixed costs;B) variable costs;C) marginal costs;D) semi-variable costs;2. At;the break-even point, a firm's profits are;A) greater;than zero.;B) less than zero.;C) equal to zero.;D) Not enough information to tell;3. A;highly automated plant would generally have;A) more;variable than fixed costs.;B) more fixed than variable costs.;C) all fixed costs.;D) all variable costs.;4. If;a firm has a price of $4.00, variable cost per unit of $2.50 and a breakeven;point of 20,000 units, fixed costs are equal to;A) $13,333;B) $10,000;C) $30,000;D) $50,000;5. Combined;leverage is concerned with the relationship between;A) changes in;EBIT and changes in EPS.;B) changes in volume and changes in;EPS.;C) changes in volume and changes in;EBIT.;D) changes in EBIT and changes in net;income.;6. Use the;table to answer following questions;Sales (75,000 units) $750,000;Variable costs 225,000;Contribution margin $525,000;Fixed manufacturing costs 187,500;Operating income $337,500;Interest 75,000;Earnings before taxes $262,500;Taxes (at 31%) 81,375;Net Income $181,125;Shares outstanding 15,000;1. (TCO A) Which of the following is an advantage of the;sole proprietorship relative to the corporate form of business organization?;(Points: 5);Limited;liability of investor;Transferability of ownership;Simple to;establish;Unlimited life;2. (TCO A) Dividends _____. (Points: 5);represent an;expense and are an operating activity;represent an;obligation and are an operating activity;represent a;distribution of earnings and are a financing activity;represent an;asset and are an investing activity;3. (TCOs A, B) Below is a partial list of account balances;for LBJ Company;Cash;$15,000;Prepaid insurance;5,000;Accounts receivable;2,500;Accounts payable;3,000;Notes payable;6,000;Common stock;10,000;Dividends 500;Revenues 15,000;Expenses;13,000;What did LBJ Company show as total debits?;(Points: 5);$34,000;$36,000;$70,000;$31,000;4. (TCOs B, E) Why is the accrual basis of accounting;preferred by GAAP? (Points: 5);The Accrual;basis is easier to use.;The Accrual;basis is also preferred by the Internal Revenue Service.;The Accrual;basis complies with the revenue recognition and matching principles.;The Accrual;basis requires fewer accounting resources.;5. (TCO D) In a period of increasing prices, which inventory;cost flow assumption will result in the highest amount of net income?(Points;5);LIFO;The average;cost method;FIFO;Income tax;expense for the period will be the same under all assumptions.;6. (TCOs A, E) Equipment was purchased for $75,000 on;January 1, 2011. Freight charges of $3,200 were incurred and there was a cost;of $6,000 for installation. It is estimated the equipment will have a $12,000;salvage value at the end of its 5-year useful life. Depreciation expense for;2011 using the straight-line method will be _____. (Points: 5);$13,800;$14,440;$12,600;$13,240;7. (TCO D,G) Payne Corporation issues 100 twenty-year, 6%;$1,000 bonds dated July 1, 2010, at 94. The journal entry to record the;issuance will show a _____. (Points: 5);debit to Cash;of $100,000;credit to;Bonds Payable of $94,000;credit to;Premium on Bonds Payable of $4,000;debit to;Discount on Bonds Payable of $6,000;8. (TCO C) Accounts receivable arising from sales to;customers amounted to $80,000 and $100,000 at the beginning and end of the;year, respectively. Income reported on the income statement for the year was;$1,000,000. Exclusive of the effect of other adjustments, the cash flows from;operating activities to be reported on the statement of cash flows is _____.;(Points: 5);$20,000;$1,020,000;$1,000,000;$980,000;9. (TCO F) If you are making comparisons within a company to;detect changes in financial relationships and significant trends, you are;performing what type of analysis? (Points: 5);Industry;averages analysis;Intercompany analysis;Common-size;analysis;Intracompany;analysis;10. (TCO F) The formula for performing horizontal analysis;is _____. (Points: 5);(Current Year;Amount minus Base Year Amount) divided by Current Year Amount;Base Year;Amount divided by Current Year Amount;Current Year;Amount minus Base Year Amount;(Current Year;Amount minus Base Year Amount) divided by Base Year Amount;11. (TCO F) Horizontal analysis is a technique for;evaluating a series of financial statement data over a period of time;(Points: 5);that has been;arranged from the highest number to the lowest number;that has been;arranged from the lowest number to the highest number;to determine;which numbers are in error;to determine;the amount and/or percentage increase or decrease that has taken place;12. (TCO F) A common measure of liquidity is _____. (Points;5);debt-to-total-assets ratio;cash debt;coverage;free cash flow;working;capital;13. (TCO F) Short-term creditors would be most interested in;which of the following ratios? (Points: 5);Average;collection period;Times interest;earned;Cash debt;coverage;Free cash flow;14. (TCO G) To calculate the market value of a bond, we need;to _____. (Points: 5);multiply the;bond price times the interest rate;calculate the;present value of the principal only;calculate the;present value of the interest only;calculate the;present value of both the principal and;1. (TCO A) Use the following partial financial statement;information below to calculate the liquidity and profitability ratios. This;information can be used to correctly solve each of the ratios below.;Average common shares outstanding 35,000 Current liabilities $25,000;Capital expenditures $20,000 Net income $50,000;Cash provided by operations $77,000 Net sales $100,000;Preferred stock dividends paid $30,000 Total liabilities $50,000;Current assets;$20,000 Total assets $80,000;Instructions: Compute the following.;a) Current ratio;b) Working capital;c) Earnings per share;d) Debt-to-total-assets ratio;e) Free cash flow;To earn full credit, you must show the formula you are;using, show your computations, and explain the meaning of each of your ratio;results. (Points: 30)(TCO D) The Oxford Company has budgeted sales revenues as follows.Oct Nov DecCredit sales $120,000 $96,000 $72,000Cash sales 72,000 204,000 156,000Total sales 192,000 300,000 228,000Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on credit, with 60% paid in the month of purchase and 40% in the month following purchase. Budgeted inventory purchases are $260,000 in October, $180,000 in November, and $84,000 in December.Other budgeted cash receipts include (a) the sale of plant assets for $49,400 in November and (b) the sale of new common stock for $67,400 in December. Other budgeted cash disbursements include (a) operating expenses of $27,000 each month, (b) selling and administrative expenses of $50,000 each month, (c) dividends of $76,000 to be paid in November, and (d) purchase of equipment for $24,000 cash in December.The company has a cash balance of $40,000 at the beginning of December and wishes to maintain a minimum cash balance of $40,000 at the end of each month. An open line of credit is available at the bank and carries an annual interest rate of 12%. Assume that all borrowing is done on the first day of the month in which financing is needed and that all repayments are made on the last day of the month in which excess cash is available. Also assume that $14,000 of financing was obtained on November 1.Requirements: Use this information to prepare a schedule of expected cash payments for purchases of inventory for the months of November and December only;This question does not require creation of an entire cash;budget so please only create the schedule that is asked for in the question;because otherwise you will be wasting valuable time.;(Points: 30)The following items are taken from the financial;statements of Lansing Company for 2010. Accounts;payable: $16,500. Accounts receivable: $ 25,500. Accumulated depreciation: 12,600.;Bonds payable: 35,000. Cash: 55,000. Common stock: 75,000. Cost of goods sold;53,000. Depreciation expense: 6,300. Dividends;5,300. Equipment: 35,000. Interest expense: 4,300. Patents: 6,500. Retained earnings: January 1 $80,000. Salaries expense: $ 42,000.;Sales revenue: $ 115,000. Supplies: $ 3,500.;Instructions: Prepare an income statement;and a retained earnings statement for Lansing Company. (Point: 30)(TCO D) Your friend James has hired you to evaluate the;following internalcontrol procedures.a) Explain to your friend whether each of;the numbered items below is an internal control strength or weakness. You must;also state which principle relates to each of the internal controls.b) For the weaknesses, you also need to;state a recommendation for improvement.Everyone has access to the petty cash;fund.;Cash register codes are assigned to each;cashier. The treasurer is the only one allowed to sign checks. Supervisors;count cash receipts daily. The treasurer approves of the purchases and makes;the payment because he is familiar with the purchases. (Points: 30);(Points: 30);5. (TCOs D, E) Please prepare the following;journal entries. Indicate which account should be debited with the abbreviation;DR in front of the account name and which account should be credited with the;abbreviation CR in front of the account name along with the dollar amount of;the debit and credit.;a) Investors invested $150,000 in exchange;for 10,000 shares of common stock.;b) Company made payment on account for;$10,000;c) Company received $15,000 for services;not yet performed;d) Company purchased $7,500 worth of;equipment;e) Company billed $5,000 for services;performed (Points: 30);6. (TCO C) Please indicate which section of the statement of;cash flows should contain each of the following items and whether each item;would result in an inflow or outflow of cash. The sections are Operating;Investing, and Financing.;a) Depreciation of equipment;b) Increase in accounts payable;c) Sold a building at book value;d) Payment of dividends;e) Increase in inventory;(Points: 30);="msonormal">="msonormal">


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