Question 1.1. (TCO A) A corporation has which of the following sets of characteristics? (Points : 5)

Shared control, tax advantages, increased skills, and resources

Simple to set up and maintains control with the founder

Easier to transfer ownership and raise funds, no personal liability for stockholders

Harder to raise funds and gives owner control

Question 2.2. (TCO A) The Dividends account _____. (Points : 5)

appears on the income statement along with the expenses of the business

must show transactions every accounting period

is increased with debits and decreased with credits

is considered a long-term asset of the firm

Question 3.3. (TCOs A, B) Below is a partial list of account balances for Denton Company:

Cash $7,000

Prepaid insurance 700

Accounts receivable 3,500

Accounts payable 2,800

Notes payable 4,200

Common stock 1,400

Dividends 700

Revenues 21,000

Expenses 17,500

What did Denton Company show as total credits? (Points : 5)





Question 4.4. (TCOs B, E) Under the accrual basis of accounting, _____. (Points : 5)

cash must be received before revenue is recognized

net income is calculated by matching cash outflows against cash inflows

events that change a company’s financial statements are recognized in the period they occur rather than in the period in which cash is paid or received

the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles

Question 5.5. (TCO D) Three companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using _____.(Points : 5)

LIFO will have the highest ending inventory

FIFO will have the highest cost of goods sold

All three companies will have the same value for ending inventory.

average cost will have an ending inventory value that falls between FIFO and LIFO

Question 6.6. (TCOs A, E) Equipment with a cost of $192,000 has an estimated salvage value of $18,000 and an estimated life of 4 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours? (Points : 5)





Question 7.7. (TCOs D, G) Mendez Corporation issues 2,000 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 103. The journal entry to record the issuance will show a _____. (Points : 5)

debit to Cash of $2,000,000

debit to Premium on Bonds Payable for $60,000

credit to Bonds Payable for $2,000,000

credit to Cash for $2,060,000

Question 8.8. (TCO C) Accounts receivable arising from sales to customers amounted to $80,000 and $70,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $240,000. 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)





Question 9.9. (TCO F) One variation of the horizontal analysis is known as _____.(Points : 5)

nonlinear analysis

vertical analysis

trend analysis

common-size analysis

Question 10.10. (TCO F) In a common-size balance sheet, the 100% figure is _____.(Points : 5)

total current assets

total property, plant, and equipment

total liabilities

total assets

Question 11.11. (TCO F) In vertical analysis, the base amount for studying salary and wages expense is generally _____. (Points : 5)

net sales

salary and wages expense in a previous year

gross profit

net income

Question 12.12. (TCO F) Short-term creditors are usually most interested in assessing _____. (Points : 5)





Question 13.13. (TCO F) Return on common stockholder’s equity ratio is affected by _____. (Points : 5)

net income

dividend paid to preferred stock, if any

leverage (debt-to-assets ratio)

All of the above

Question 14.14. (TCO G) To calculate the market value of a bond, we need to use the time-value-of-money concept called _____. (Points : 5)




None of the above