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Suppose a company issues a $200,000, 9% bond, due in 10 years, with interest payable semi-annually. If the market rate for this bond is 10%, for what amount would the company credit Bonds Payable at the time of issuance?

  1. Receive cash from customers
    $100,000
    Pay cash to purchase building
    $90,000
    Receive cash from issuance of stock
    $50,000
    Pay cash for employee salaries
    $40,000
    Pay cash for dividend to stockholders
    $20,000
    Receive cash from sale of land
    $70,000
    Pay cash for repayment of borrowing
    $80,000
    Receive cash from long-term borrowing
    $60,000
    Pay cash for purchase of supplies
    $30,000

    Calculate the amount of financing cash flows?

    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 2

  1. Information related to the sale of a building for cash is below:

    Original cost
    $200,000
    Accumulated Depreciation at the time of the sale
    $150,000
    Sale price
    $70,000

    How would the sale of the building be reported in the Statement of Cash Flows using the indirect method?

    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 3

  1. At the end of the year, Littleton reports the following receivables:

    Due
    Amount
    Est. Uncollectible
    Not yet due
    $40,000
    5%
    Past due 1-30 days
    $10,000
    20%
    Past due > 30 days
    $4,000
    50%

    In addition, the balance of Allowance for Uncollectible Accounts (before any adjustment) is $500 debit. Calculate the necessary adjustment to the Allowance account.

    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 4

  1. On October 1, 2012, Tempest Co. lends $20,000 to one of its employees by accepting a two-year, 8% note. Principal and interest are receivable on October 1, 2014. How much interest revenue is recognized in 2013?
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 5

  1. Gaston Co. reports the following cash activities for the year:

    Receive cash from customers
    $100,000
    Pay cash to purchase building
    $90,000
    Receive cash from issuance of stock
    $50,000
    Pay cash for employee salaries
    $40,000
    Pay cash for dividend to stockholders
    $20,000
    Receive cash from sale of land
    $70,000
    Pay cash for repayment of borrowing
    $80,000
    Receive cash from long-term borrowing
    $60,000
    Pay cash for purchase of supplies
    $30,000

    Calculate the amount of investing cash flows?

    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 6

  1. At the time a company declares a dividend:
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 7

  1. Suppose a company issues a $200,000, 9% bond, due in 10 years, with interest payable semi-annually. If the market rate for this bond is 10%, for what amount would the company credit Bonds Payable at the time of issuance?
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 8

  1. The disadvantages of the corporate form of business include:
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 9

  1. A company declares a dividend of $1 per share on December 1 for stockholders of record on December 15. Dividends are paid on December 31. What will happen on December 31?
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 10

  1. Gaston Co. reports the following amounts:

    Total interest expense in 2012
    $100,000
    Interest Payable at the end of 2012
    $20,000
    Interest Payable at the end of 2011
    $30,000

    Calculate the amount of cash paid for interest in 2012?

    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 11

  1. Mayston Co. issued $10,000 shares of $0.01 par value stock for $20 per share. To record this transaction, Mayston will:
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 12

  1. Which of the following expenditures associated with Equipment would not be capitalized?
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 13

  1. At the end of the year, Littleton reports the following receivables:

    Due
    Amount
    Est. Uncollectible
    Not yet due
    $40,000
    5%
    Past due 1-30 days
    $10,000
    20%
    Past due > 30 days
    $4,000
    50%

    In addition, the balance of Allowance for Uncollectible Accounts (before any adjustment) is $500 credit. Calculate the ending balance of the Allowance account after any necessary adjustment.

    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 14

  1. An advantage of the corporate form of business is:
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 15

  1. On January 1, 2012, Liberty purchases equipment for $70,000. The equipment is expected to last for 10 years with a residual value of $10,000, and is depreciated using the straight-line method. If Liberty sells the equipment at the end of 2014 for $60,000, what would be the reported gain or loss?
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 16

  1. Which of the following would require an adjusting entry at the end of the current year?
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 17

  1. A company has the following three events during the year:

    1. Receive cash from customers for services provided last year, $2,500

    2. Received cash from customers for services provided in the current year, $10,000

    3. Receive cash from customers for services to be provided next year, $4,000

    How much would be recorded as revenue in the current year?

    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 18

  1. Which of the following ratios measures the underlying risk of a company?
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 19

  1. What is the financial statement effect of recording a contra revenue account?
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 20

  1. Gaston Co. reports the following amounts:

    Total revenue in 2012
    $100,000
    Accounts Receivable at the end of 2012
    $20,000
    Accounts Receivable at the end of 2011
    $30,000

    Calculate the amount of cash collected from customers in 2012?

    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 21

  1. Which of the following is allowed under international accounting rules but not allowed under U.S. accounting rules?
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 22

  1. On March 5, American Corp. provides services on account to National Corp. for $1,500, with terms 2/10, n/30. On March 13, American receives payment from National and records the following:
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 23

  1. Clothing Emporium was organized on January 1, 2015. The firm was authorized to issue 100,000 shares of $5 par value common stock. During 2015, Clothing Emporium had the following transactions relating to shareholders’ equity:

    Issued 30,000 shares of common stock at $7 per share.

    Issued 20,000 shares of common stock at $8 per share.

    Reported a net income of $100,000.

    Paid dividends of $50,000.

    What is the total amount recorded in the Common Stock account at the end of 2015?

    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 24

  1. What is a possible impact of closing entries on account balances?
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 25

  1. Distributions to stockholders are referred to as:
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 26

  1. Betterment Company usually sells nearly all of its current inventory before purchasing additional inventory. The company’s policy is to limit the amount of old inventory to make sure current inventory consists of the newest items. Under these operating conditions:
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 27

  1. When a company sells inventory which costs $8,000 to customers for $12,000 on account, which of the following is recorded.
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 28

  1. The true interest rate used by investors to value a bond is called the:
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 29

  1. Conservative accounting will usually result in the appearance of:
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 30

  1. The accounting group responsibility for the establishment of worldwide financial accounting rules is:
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 31

  1. Gaston Co. reports the following amounts:

    Net income
    $25,000
    Depreciation Expense
    $4,000
    Increase in Accounts Receivable
    $1,000
    Issuance of common stock
    $15,000
    Decrease in Taxes Payable
    $3,000
    Sale of land
    $20,000
    Loss on the sale of land
    $2,000
    Payment of dividends
    $5,000

    Calculate the amount of operating cash flows:

    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 32

  1. According to the conceptual framework, relevant information possesses which qualitative characteristics?
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 33

  1. A company can fund the purchase of assets through:
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 34

  1. To calculate the value today of receiving $1,000 each year for the next 10 years, you would use which Table?
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 35

  1. Which of the following accurately describe financial accounting measurements?
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 36

  1. The accounting measure of the value of a corporation to its owners is referred to as:
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 37

  1. Timberline Co. generally provides services for $1,200, but offers a $200 discount to senior citizens. When providing a service on account to a senior citizen for $1,000, Timberline would record the following:
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 38

  1. If a company fails to record its estimate of future bad debts at the end of the current year:
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 39

  1. Taylor Co. and John Co. have the following ratios:

    Taylor Co.
    John Co.
    Debt to equity ratio
    60%
    80%
    Return on assets
    10%
    12%
    Return on equity
    6%
    9%
    Current ratio
    3.0
    2.0

    What do the ratios tell us about the companies?

    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 40

  1. By matching expenses with revenues:
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 41

  1. Which of the following is an example of a temporary account?
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 42

  1. Which of the following would be an example of aggressive accounting?
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 43

  1. At the end of the year, a company has two types of inventory with the following information:

    Type
    Units
    Cost per Unit
    Market per Unit
    A
    20
    $6
    $4
    B
    30
    $7
    $8

    The year-end adjustment, if any, would include a:

    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 44

  1. In the first three years of operations, Mattel reports the following amounts:

    Year 1
    Year 2
    Year 3
    Revenues
    $1,000
    $2,300
    $4,100
    Cash inflows
    1,200
    1,800
    $4,300
    Expenses
    800
    1,500
    3,000
    Cash outflows
    1,300
    1,400
    2,900
    Dividends
    100
    200
    300

    Calculate the balance of Retained Earnings at the end of Year 3.

    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 45

  1. On January 1, 2012, Liberty purchases equipment for $70,000. The equipment is expected to produce 10,000 units of output with a residual value of $10,000. Calculate the amount of Accumulated Depreciation that will be reported in the 2014 financial statements using the activity-based method. Actual production in 2012, 2013, and 2014 was 1,000, 1,000, and 2,000, respectively.
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 46

  1. What does the amount of operating cash flows represent?
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 47

  1. The net increase/decrease in cash reported in the Statement of Cash Flows equals:
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 48

  1. When issuing stock, a corporation must obtain approval from the:
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 49

  1. Hayes Corporation issues 100 shares of its $1 par value common stock for $15 per share. The entry to record the issuance will not include a:
    a.
    b.
    c.
    d.
    e.

6 points

QUESTION 50

  1. A bond issued at a discount indicates that at the date of issue:
    a.
    b.
    c.
    d.
    e.

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