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Charteroak ACC101 final exam

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Question;Question 1;1.;Use the following to answer questions;1-2;Snappy;Inc. uses a perpetual inventory system. The company's beginning inventory of a;particular product and its purchases during the month of January were as;follows;Quantity;Unit Cost;Total Cost;Beginning;inventory (Jan. 1);15;$ 10;$ 150;Purchase;(Jan. 11);10;12;120;Purchase;(Jan. 20);18;15;270;Total;43;$ 540;On January 14, Snappy, Inc. sold 22;units of this product. The;other 21 units remained in inventory at January 31.;1. Refer to the above data. Assuming that Snappy uses the FIFO flow;assumption, the cost of goods sold to be recorded at January 14 is;A) $306.;B) $234.;C) $318.;D) Some other amount.;Answer;A;B;C;D;6.286 points;Question 2;1.;Use the following to answer questions;1-2;Snappy;Inc. uses a perpetual inventory system. The company's beginning inventory of a;particular product and its purchases during the month of January were as;follows;Quantity;Unit Cost;Total Cost;Beginning;inventory (Jan. 1);15;$ 10;$ 150;Purchase;(Jan. 11);10;12;120;Purchase;(Jan. 20);18;15;270;Total;43;$ 540;On January 14, Snappy, Inc. sold 22;units of this product. The;other 21 units remained in inventory at January 31.;2. Refer to the above data. Assuming that Snappy uses the LIFO flow;assumption, the cost of goods sold to be recorded at January 14 is;A) $222.;B) $234.;C) $318.;D) Some other amount.;Answer;A;B;C;D;6.286 points;Question 3;1.;3. On Saturday, June 30, PK Pool Supplies;sold merchandise to John Krock on account. The sales price was $5,300, and the;cost of goods sold was $4,200. The sales revenue was recorded immediately, but;the entry recording the cost of goods sold was dated Monday, July 2. As a;result, net income for June was;A) Overstated by $5,300.;B) Overstated by $4,200.;C) Overstated by $1,100.;D) Not affected, but the net income for;July is understated.;Answer;A;B;C;D;6.286 points;Question 4;1.;4. In a period of rising prices, a company;is most likely to use the FIFO method of pricing inventory if;A) Each item in the inventory is unique.;B) Management wants the same unit cost;assigned to items sold and items remaining in inventory.;C) Management's primary objective is to;minimize income taxes.;D) Management wants the company's income;statement to indicate the highest possible amounts of gross profit and net;income.;Answer;A;B;C;D;6.286 points;Question 5;1.;5. Land and a warehouse were acquired for;$980,000. What amounts should be recorded in the accounting records for land;and for the warehouse if an appraisal showed the estimated values to be;$450,000 for the land and $750,000 for the warehouse?;A) $450,000 for land, $530,000 for;warehouse.;B) $367,500 for land, $612,500 for;warehouse.;C) $450,000 for land, $750,000 for;warehouse.;D) $230,000 for land, $750,000 for;warehouse.;Answer;A;B;C;D;6.286 points;Question 6;1.;6. Carlson Imports sold a depreciable;plant asset for cash of $35,000. The accumulated depreciation amounted to;$70,000, and a loss of $5,000 was recognized on the sale. Under these;circumstances, the original cost of the asset must have been;A) $65,000.;B) $75,000.;C) $100,000.;D) $110,000.;Answer;A;B;C;D;6.286 points;Question 7;1.;7. An asset which costs $7,200 and has;accumulated depreciation of $1,800 is sold for $4,500. What amount will be recognized when the;asset is sold?;A) A gain of $900;B) A loss of $900;C) A loss of $2,700;D) A gain of $2,700;Answer;A;B;C;D;6.286 points;Question 8;1.;8. Which of the following would not be;amortized?;A) Oil well.;B) Copyright.;C) Franchise fee.;D) Patent.;Answer;A;B;C;D;6.286 points;Question 9;1.;9. A capital lease is recorded in the;accounting records of the lessee by an entry;A) Debiting Rent Expense and crediting;Cash each time a lease payment is made.;B) Debiting Cash and crediting Rental;Revenue each time a lease payment is received.;C) Debiting an asset account and crediting;a liability account for the present value of the future lease payments.;D) Debiting an asset account and crediting;Sales for the present value of the future lease payments.;Answer;A;B;C;D;6.286 points;Question 10;1.;10. Which of the following is an example of;a contingent liability?;A) A lawsuit pending against a restaurant;chain for improper storage of perishable food items.;B) The liability for future warranty;repairs on computers sold during the current period.;C) A corporation's long-term employment;contract with its chief executive officer.;D) A liability for notes payable with interest;included in the face amount.;Answer;A;B;C;D;6.286 points;Question 11;1.;Use the following to answer questions;11-14;On November 1, Year 1, Dale Co.;borrowed $50,000 from Town Bank and signed a 12%, six-month note payable, all;due at maturity. The interest on this loan is stated separately.;11. Refer to the above data. How much must;Dale pay Town Bank on May 1, Year 2, when the note matures?;A) $50,000.;B) $56,000.;C) $53,000.;D) $52,000.;Answer;A;B;C;D;6.286 points;Question 12;1.;Use the following to answer questions;11-14;On November 1, Year 1, Dale Co.;borrowed $50,000 from Town Bank and signed a 12%, six-month note payable, all;due at maturity. The interest on this loan is stated separately.;12. Refer to the above data. How much interest expense will Dale;recognize on this note in Year 2?;A) $6,000.;B) $3,000.;C) $1,500.;D) $2,000.;Answer;A;B;C;D;6.286 points;Question 13;1.;13. Refer to the above data. At December;31, Year 1, Dale Co.'s overall liability for this loan amounts to;A) $50,000.;B) $51,000.;C) $52,000.;D) $53,000.;Answer;A;B;C;D;6.286 points;Question 14;1.;14. Tivoli Corporation issued 300,000;shares of $4 par value common stock at the time of its incorporation. The stock;was issued for cash at a price of $15 per share. During the first year of;operations, the company sustained a net loss of $100,000. The year-end balance;sheet would show the balance of the Common Stock account to be;A) $1,200,000.;B) $1,100,000.;C) $4,500,000.;D) $4,400,000.;Answer;A;B;C;D;6.286 points;Question 15;1.;15. If the preferred stock of a corporation;is cumulative;A) Dividends on preferred stock are;guaranteed.;B) Dividends cannot be declared in an;amount less than that stated on the stock certificate.;C) Preferred stockholders participate in;dividends paid in excess of a stated amount on the common shares.;D) Dividends in arrears must be paid on;preferred stock before any dividend can be paid on common stock.;Answer;A;B;C;D;6.286 points;Question 16;1.;16. Treasury stock should most often be;recorded;A) At cost.;B) Par value.;C) Fair market value at year end.;D) Face value.;Answer;A;B;C;D;6.286 points;Question 17;1.;17. From the viewpoint of stockholders or;potential investors, which of the following cash flow measurements would be of;least importance?;A) The dollar amount of net cash flow from;operating activities for the current year.;B) The trend in net cash flow from;operating activities from year to year.;C) The corporations's free cash flow for;the current year.;D) The dollar amount of overall increase or;decrease in cash for the current year.;Answer;A;B;C;D;6.29 points;Question 18;1.;18. When net cash flow from operating;activities is presented by the direct method, the statement of cash flows is;accompaned by a supplementary schedule reconciling;A);Net cash flow from operating activities with net sales.;B) Net income with the net increase or;decrease in cash and cash equivalents.;C) Net Income with net cash flow from;operating activities.;D) Net cash flow from operating activities;shown in the statement with that which would result from use of the indirect;method.;Answer;A;B;C;D;6.29 points;Question 19;1.;19. During the year 2007, Moonglow;Corporation suffered a $600,000 loss when its factory was destroyed in a flood. Assuming the corporate income tax rate;is 34%, what amount will Moonglow report as an extraordinary loss on its income;statement for 2007? Assume;floods are not common in this area.;A) $600,000;B) $396,000;C) $204,000.;D) Nothing, since this does not qualify as;an extraordinary item.;Answer;A;B;C;D;6.286 points;Question 20;1.;20. Which of the following would be;classified as an extraordinary item?;A) A large gift given to the company.;B) A loss from obsolete inventory.;C) A loss from a natural disaster that;affects the company at infrequent intervals.;D) A loss from an enacted law that made;inventory unsalable.;Answer;A;B;C;D;6.286 points;Question 21;1.;21. On January 1, 2006, Lane Corporation;had 50,000 shares of $5 par value common stock outstanding. On March 31, 2006, Lane issued an;additional 8,000 shares in exchange for a building. What number of shares will be used in;the computation of basic EPS for the year 2006?;A) 50,000.;B) 58,000.;C) 56,000.;D) 52,000.;Answer;A;B;C;D;6.286 points;Question 22;1.;22. Foster Company reports net income of;$290,000 for 2006 and declared a cash dividend of $1 per share on each of its;100,000 shares of common stock outstanding. Earnings per share for 2006 is;A) $2.90 per share.;B) $1.00 per share.;C) $0.90 per share.;D) $1.90 per share.;Answer;a;b;c;d;6.286 points;Question 23;1.;23. Windsor Corporation's 2006 net income;is smaller than net cash flow from operating activities. Which of the following would not be an;explanation of why net income is smaller than net cash flow from operating;activities?;A) Windsor paid dividends to;shareholders during 2006.;B) Windsor's accounts payable increased;during 2006.;C) Windsor recognized depreciation expense;in 2006.;D) Windsor sold equipment at a loss;in 2006.;Answer;A;B;C;D;6.286 points;Question 24;1.;24. Early in 2006, Platt Corporation;purchased marketable securities at a cost of $70,000. In September, dividends of $4,700 were;received, Platt sold the securities in December at a gain of $3,500. How would these transactions be;reported on Platt's statement of cash flows for 2006?;A) $3,500 net cash provided by investing;activities, $4,700 included in cash provided by operating activities.;B) $8,200 net cash provided by investing;activities.;C) $78,200 cash provided by investing;activities, $70,000 cash used in financing activities.;D) $65,300 net cash used in investing;activities, $73,500 cash provided by investing activities.;Answer;A;B;C;D;6.286 points;Question 25;1.;25. The accountant for Earth Institute;Inc., determined the cash flow for several transactions to be as follows;Payment to pay off notes payable..........................................;$175,000;Proceeds from issuance of bonds payable..............................;615,000;Payment to purchase equipment............................................;255,000;Payment of wages................................................................;95,000;Payment of dividends............................................................;135,000;On;the basis of the above transactions alone, determine the net cash flow from;financing activities.;A) $255,000 net cash used for financing;activities.;B) $440,000 net cash provided by financing;activities.;C) Zero: cash inflows equal cash outflows;from financing activities.;D) $305,000 net cash provided by financing;activities.;Answer;A;B;C;D;6.286 points;Question 26;1.;26. All of the following are considered;cash equivalents except;A) Marketable securities;B) Money market funds;C) Commercial paper;D) Treasury bills;Answer;A;B;C;D;6.286 points;Question 27;1.;27. A stock dividend is reported on the;A) Financing section of the statement of;cash flows;B) Balance sheet;C) Income statement;D) Operating section of the statement of;cash flows;Answer;A;B;C;D;6.286 points;Question 28;1.;28. A statement of cash flows is not;intended to assist investors in evaluating;A) Reasons for differences between the;amount of net income and net cash flow from operations.;B) The company's ability to meet its;obligations and to pay dividends.;C) Noncash aspects of investing and;financing activities.;D) The profitability of business;operations.;Answer;A;B;C;D;6.286 points;Question 29;1.;Use the following to answer questions;29-31;Shown;below are selected data from the balance sheet of HiTech, a small electronics;store (dollar amounts are in thousands);Cash....................................................................................;$25;Accounts;receivable.............................................................;45;Inventory.............................................................................;80;Total;assets..........................................................................;400;Current;liabilities...................................................................;100;Non;current liabilities............................................................;240;29. Refer to the above data. The quick ratio is;A) 1.5 to 1.;B).7 to 1.;C).45 to 1.;D) Some other amount.;Answer;A;B;C;D;6.286 points;Question 30;1.;Use the following to answer questions;29-31;Shown;below are selected data from the balance sheet of HiTech, a small electronics;store (dollar amounts are in thousands);Cash....................................................................................;$25;Accounts;receivable.............................................................;45;Inventory.............................................................................;80;Total;assets..........................................................................;400;Current;liabilities...................................................................;100;Non;current liabilities............................................................;240;30. Refer to the above data. The current ratio is;A) 5.0 to 1.;B) 1.5 to 1.;C).7 to 1.;D) Some other amount.;Answer;A;B;C;D;6.286 points;Question 31;1.;Use the following to answer questions;29-31;Shown;below are selected data from the balance sheet of HiTech, a small electronics;store (dollar amounts are in thousands);Cash....................................................................................;$25;Accounts;receivable.............................................................;45;Inventory.............................................................................;80;Total;assets..........................................................................;400;Current;liabilities...................................................................;100;Non;current liabilities............................................................;240;31. Refer to the above data. Hi-Tech's debt ratio is;A) 85%.;B) 25%.;C) 60%.;D) Some other amount.;Answer;A;B;C;D;6.286 points;Question 32;1.;Use the following to answer questions;32-35;Shown;below are selected data from the financial statements of A-l Computers. (Dollar amounts are in millions, except;for the per-share data.);Income statement data;Net;sales......................................................................;$2,500;Cost;of goods sold........................................................;1,300;Operating;expenses......................................................;400;Net;income..................................................................;75;Balance sheet data;Average;total equity.......................................................;300;Average;total assets......................................................;4,000;Per share data (these amounts stated in;actual dollars, not millions);A-1 reported earnings per share for the;year of $4 and paid cash dividends of $1.50 per share. At year-end, the Wall Street Journal;listed A-1's capital stock as trading at $48 per share.;32. Refer to the above data. A-1's price/earnings ratio at year-end;was;A).8.;B) 12.;C) 24.;D) Some other amount.;Answer;A;B;C;D;6.286 points;Question 33;1.;Use the following to answer questions;32-35;Shown;below are selected data from the financial statements of A-l Computers. (Dollar amounts are in millions, except;for the per-share data.);Income statement data;Net;sales......................................................................;$2,500;Cost;of goods sold........................................................;1,300;Operating;expenses......................................................;400;Net;income..................................................................;75;Balance sheet data;Average;total equity.......................................................;300;Average;total assets......................................................;4,000;Per share data (these amounts stated in;actual dollars, not millions);A-1 reported earnings per share for the;year of $4 and paid cash dividends of $1.50 per share. At year-end, the Wall Street Journal;listed A-1's capital stock as trading at $48 per share.;33. Refer to the above data. A-1's gross profit rate was;A) 20%.;B) 48%.;C) 52%.;D) Some other amount.;Answer;A;B;C;D;6.286 points;Question 34;1.;Use the following to answer questions;32-35;Shown;below are selected data from the financial statements of A-l Computers. (Dollar amounts are in millions, except;for the per-share data.);Income statement data;Net;sales......................................................................;$2,500;Cost;of goods sold........................................................;1,300;Operating;expenses......................................................;400;Net;income..................................................................;75;Balance sheet data;Average;total equity.......................................................;300;Average;total assets......................................................;4,000;Per share data (these amounts stated in;actual dollars, not millions);A-1 reported earnings per share for the;year of $4 and paid cash dividends of $1.50 per share. At year-end, the Wall Street Journal;listed A-1's capital stock as trading at $48 per share.;34. Refer to the above data. A-1's operating income was;A) $1,200.;B) $400.;C) $800.;D) Some other amount.;Answer;A;B;C;D;6.286 points;Question 35;1.;Use the following to answer questions;32-35;Shown;below are selected data from the financial statements of A-l Computers. (Dollar amounts are in millions, except;for the per-share data.);Income statement data;Net;sales......................................................................;$2,500;Cost;of goods sold........................................................;1,300;Operating;expenses......................................................;400;Net;income..................................................................;75;Balance sheet data;Average;total equity.......................................................;300;Average;total assets......................................................;4,000;Per share data (these amounts stated in;actual dollars, not millions);A-1 reported earnings per share for the;year of $4 and paid cash dividends of $1.50 per share. At year-end, the Wall Street Journal;listed A-1's capital stock as trading at $48 per share.;35. Refer to the above data. A-1's return on equity was;A) 10%.;B) 20%.;C) 25%.;D) Some other amount.;Answer;A;B;C;D

 

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