Project #19592 - Corporations



1. Operating cash flows affect

A. current assets and current liabilities.

B. long-term liability accounts.

C. long-term asset accounts.

D. equity accounts.

2. Cost of goods sold for the year was $850,000. Inventory was $60,000 at the beginning of the year and

$90,000 at the end of the year. There were no changes in the amount in accounts payable for the year.

Cash payment for merchandise to be reported under the direct method is

A. $940,000.

B. $910,000.

C. $880,000.

D. $850,000.

3. Accounts receivable amounted to $215,000 at the beginning of the year and $245,000 at the end of the

year. Income reported on the income statement for the year was $300,000. The cash flow from operating

activities on the cash flow statement using the indirect method is

A. $315,000.

B. $300,000.

C. $270,000.

D. $330,000.

4. Rick Company has declared a $40,000 cash dividend to shareholders. The company has 5,000 shares of

$20 par, 6% preferred stock, and 10,000 shares of $15 par common stock. The preferred stock is

cumulative. How much will be distributed to the preferred and common stockholders on the date of

payment if the preferred stock is $12,000 in arrears?

A. $6,000 preferred; $34,000 common

B. $40,000 preferred; $0 common

C. $20,000 preferred; $20,000 common

D. $18,000 preferred; $22,000 common

5. What is Jane's rate of return on total assets if average total assets are $100,000; net income is $2,000;

interest expense if $1,600; and income tax is $2,000?

A. 5.6%

B. 5.2%

C. 4.6%

D. 3.6%

6. If current assets were $100,000 in 2009 and $88,000 in 2010, what was the amount of increase or

decrease in percentage terms from 2009 to 2010? (Round to the nearest percent.)

A. Increase of 14%

B. Decrease of 12%

C. Decrease of 14%

D. Increase of 12%

7. The records of Ashley Boutique showed a net loss of $30,000; depreciation expense of $25,000; and an

increase in supplies on hand of $5,000. The amount of net cash flow from operating activities using the

indirect method is

A. $15,000.

B. $20,000.

C. ($10,000).

D. ($15,000).

8. Brandon Company had extraordinary losses of $150,000. If its corporate tax rate is 30%, at which

amount will the losses be shown on the income statement?

A. $45,000

B. Not enough information is given to answer the question.

C. $105,000

D. $150,000

9. Casey Company reported net income of $35,000; depreciation expenses of $20,000; an increase in

accounts payable of $2,000; and an increase in current notes receivable of $3,000. Net cash flows from

operating activities under the indirect method is

A. $54,000.

B. $56,000.

C. $55,000.

D. $50,000.

10. To determine why net income and cash on the balance sheet don't equal, an accountant can prepare


A. balance sheet.

B. statement of cash flows.

C. income statement.

D. statement of retained earnings.

11. Operating expenses—other than depreciation—for the year were $335,000. Prepaid expenses

decreased by $7,000. Cash payments for operating expenses to be reported on the cash flow statement

using the direct method would be

A. $7,000.

B. $342,000.

C. $335,000.

D. $328,000.

12. In a common-size income statement, selling expenses are 55%. This means that they're 55% of

A. net sales.

B. net income.

C. net profit.

D. gross profit.

13. Tammy Corporation has 350,000 shares of $3 par common stock outstanding. It has declared a 5%

stock dividend. The current market price of the common stock is $7.50/share. The amount that will be

credited to common stock on the date of declaration is

A. $131,250.

B. $78,750.

C. $52,500.

D. $183,750.

14. Rick Company's net sales decreased from $90,000 in year 1 to $45,000 in year 2, and its cost of goods

sold decreased from $30,000 in year 1 to $20,000 in year 2. Vertical analysis based on sales would show

which decreases in cost of goods sold for the two periods (rounded to the nearest tenth of a percent)?

A. 44.4% and 33.3%

B. 225% and 300%

C. 300% and 225%

D. 33.3% and 44.4%

15. Patty's Baker has cost of goods sold for the years 2011, 2010, and 2009, respectively, of $28,600,

$26,900, and $25,600. If 2009 is the base year, the trend percentage for 2011 is

A. 111.72%.

B. 5.08%.

C. 11.72%.

D. 105.08%.

16. Ryan Industries has an inventory turnover of 112 days, an accounts payable turnover of 73 days, and

an accounts receivable turnover of 82 days. Ryan's cash conversion cycle is _______ days.

A. 9

B. 103

C. 43

D. 121

17. A company has $56,000 in cash; $12,000 in accounts receivable; $25,000 in short-term investments;

and $100,000 in merchandise inventory. The company also has $60,000 in current liabilities. The

company's quick ratio is

End of exam

A. 3.217.

B. 1.550.

C. 0.933.

D. 1.133.

18. If total assets are $6,000, what is the common-size figure of cash, assuming that cash has a balance of


A. 40.0%

B. 100.0%

C. 60.0%

D. 120.0%

19. Which activities are computed differently using the two methods of formatting a statement of cash


A. Operating activities

B. Investing activities

C. Both operating activities and investing activities

D. Financing activities

20. Casey Company has a $2,400 credit balance in Paid-In Capital— Treasury Stock. It sells 500 shares of

treasury stock that the company reacquired at $21/share, for $18/share. After the transaction, what will the

balance be in the Paid-In Capital in Excess of Par— Treasury account?

A. $1,500 debit

B. $900 credit

C. $900 debit

D. $3,900 credit

Subject Business
Due By (Pacific Time) 12/18/2013 12:00 am
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