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mba 560 quiz




Question;1. For a business, the advantage of offering credit to customers is that;it;A. increases the amount of sales.;B. increases cash flow from financing activities.;C. decreases cost of goods sold.;D. decreases the amount of inventory the company needs to carry.;2. The net realizable value of accounts receivable is calculated;A. Accounts Receivable + Uncollectible Accounts Expense;B. Accounts Receivable + Notes Receivable;C. Accounts Receivable - Allowance for Doubtful Accounts;D. 365/Accounts Receivable;3. To estimate the amount of its uncollectible accounts receivable, a;company might;A. consult industry publications.;B. look at its past history of uncollectible accounts.;C. take into account the current condition of the economy.;D. all of these.;4. Which of the following is not an advantage of accepting credit cards;from retail customers?;A. The acceptance of credit cards tends to increase sales.;B. There are fees charged for the privilege of accepting credit cards.;C. The credit card company performs credit worthiness assessments.;D. The credit card company assumes the cost of slow collections and;write-offs.;5. The accounting records of the Schaller Company and Quimby Company;contained the following account balances;Select the true statement from the following options;A. The accounts receivable for Schaller Company turned over 6 times per;year.;B. The company with the higher turnover ratio will also have the longer;average number of days to collect accounts receivable.;C. Quimby Company is likely to incur lower costs from extending credit to;customers than Schaller Company.;D. The average number of days to collect accounts receivable for Schaller;is 73 days.;6. Which of the following businesses would most likely have the longest;operating cycle?;A. A chain of pizza restaurants.;B. A national pharmacy chain.;C. A producer of wine.;D. A discount store.;7. The face value of Accounts Receivable less the balance in the Allowance;for Doubtful Accounts is equal to the net realizable value of the;receivables.;True False;8. A company that uses the allowance write-off method of accounting for;uncollectible accounts does not prepare a year-end adjusting entry to estimate;its uncollectibles.;True False;9. Which of the following would be classified as a long-term operational;asset?;A. Accounts Receivable.;B. Prepaid Insurance.;C. Office Equipment.;D. Inventory.;10. Which of the following terms is used to identify the process of;expense recognition for buildings and equipment?;A. Amortization;B. Depletion;C. Depreciation;D. Revision;11. On January 1, 2009, Rowley Company purchased a truck that cost;$22,000. The truck had an expected useful life of 5 years and a $4,000 salvage;value. The amount of depreciation expense recognized in 2010 assuming that;Rowley uses the double declining balance method is;A. $4,320.;B. $5,280.;C. $7,200.;D. $8,800.;12. Philips Corporation purchased a truck that cost $26,000. The company;expected to drive the truck 100,000 miles. The truck had an estimated salvage;value of $2,000. If the truck is driven 36,000 miles in the current accounting;period, which of the following amounts should be recognized as depreciation expense?;A. $8,280.;B. $9,360.;C. $8,000.;D. $8,640.;13. Zabrinski Company purchased oil rights on July 1, 2010 for $3,200,000.;If 200,000 barrels of oil are expected to be extracted over the asset's life;and 30,000 barrels are extracted and sold in 2010, the amount of depletion;expense recorded on December 31, 2010 would be;A. $480,000.;B. $540,000.;C. $320,000.;D. $200,000.;14. Which of the following terms is used to identify;the expense recognition for intangible assets?;A. amortization.;B. depletion.;C. depreciation.;D. allocation.;15. The fair value of the assets and liabilities for Zane's Restaurant;were $450,000 and $160,000, respectively. If Reiner Company pays $325,000 cash;for the restaurant and assumes its existing liabilities, what amount of;goodwill would Reiner record?;A. $25,000.;B. $35,000.;C. $55,000.;D. $125,000.;16. Intangible assets include patents, copyrights, and natural;resources.;True False;17. Land differs from other property because it is not subject to;depreciation.;True False;18. Double-declining-balance depreciation produces more depreciation in;the later years of an asset's life than does the straight-line method.;True False;On;January 1, 2010, Fleming Company borrowed $160,000 cash from the First Trust;Bank by issuing a five-year 8 % term note. The principal and interest are;repaid by making annual payments beginning on December 31, 2010. The annual;payment on the loan was $40,074.;19. The amount of principal repayment included in the December 31, 2010;payment is;A. $27,274.;B. $27,615.;C. $37,329.;D. $40,575.;20. How does the amortization of the principal balance affect the amount;of interest expense recorded each succeeding year?;A. Has no effect on interest expense each succeeding year;B. Increases the amount of interest expense each succeeding year;C. Reduces the amount of interest expense each succeeding year;D. The effect depends on the interest rate.;21. A current ratio of 1.73 to 1 indicates that a company's current;liabilities are greater than its current assets.;True False;22. Which of the following is a disadvantage of a sole;proprietorship?;A. Entrenched management.;B. Unlimited liability of the owner.;C. Double taxation.;D. Excessive regulation.;23. The term "double taxation" refers to which of the;following;A. Sole proprietorships must pay income taxes on their net incomes and the;owners are also required to pay income taxes on their withdrawals.;B. In a partnership, both partners are required to claim their share of;net income on their tax returns.;C. Corporations must pay income taxes on their net income and their;stockholders pay income tax on the dividends they receive.;D. Limited Liability Companies are forced to pay income taxes to both the;state and the federal governments.;24. Which form of business organization is established as a separate legal;entity from its owners?;A. Sole proprietorship;B. Corporation;C. Partnership;D. None of these;25. Which of the following is not considered an advantage of the corporate;form of business organization?;A. Ability to raise large amounts of capital.;B. Government regulation.;C. Ease of transferability of ownership.;D. Continuity of existence.;26. The par value of common stock;A. changes in proportion to market value.;B. is not directly related to market value.;C. is greater than market value.;D. is less than market value.;27. Establishing a sole proprietorship generally requires the owner to get;a charter from the state government.;True False;28. The Securities and Exchange Commission was established in response to;the accounting scandals that occurred in 2001 and 2002.;True False;29. A small, closely-held corporation can avoid double taxation by;electing S Corporation status.;True False\;30. Pakeham Company has cash of $10,000, accounts receivable of $34,000;inventory of $26,000, and, equipment of $50,000. Assuming current liabilities;of $24,000, this company's working capital is;A. $ 6,000.;B. $22,000.;C. $46,000.;D. $72,000.;31. Mitchell Company has total current assets of $65,000 including;inventory of $10,000, and current liabilities of $25,000. The company's current;ratio is;A. 3.1;B. 2.6;C. 3.6;D. 1.9;32. The Decker Company reported the following income for 2010;What is the company's number of times interest is earned?;A. 4 times;B. 6 times;C. 7 times;D. 10 times;33. At;the end of 2010, Delta Company reported total current assets of $450,000 and;total current liabilities of $320,000. At the same time, Omega Company had;current assets of $319,000 and current liabilities of $180,000.;Required;a) Calculate the current ratio for Delta Company.;b) Calculate the current ratio for Omega Company.;c) Which company would you consider to have higher liquidity at the end of;2010?;34. Marchant Company's balance sheet and income statement are;provided below;The company paid cash dividends of $2.00 per share during 2010. On December 31;2010, the stock was listed on the stock exchange at a price of $75.25 per;share.;Required;Compute the following ratios for 2010;a) accounts receivable turnover;b) average number of days to collect receivables;c) inventory turnover;d) average number of days to sell inventory;e) debt to assets ratio;f) debt to equity ratio;g) net margin;h) asset turnover;i) return on investment;j) dividend yield


Paper#45471 | Written in 18-Jul-2015

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