The Value of Money
1. Renaud, Inc. has credit sales of $85,000 for the period. The balance in Allowance for Doubtful
Accounts is a debit of $817. If Renaud uses the aging method to estimate uncollectible accounts and an
aging of accounts receivable reflected an estimated amount of uncollectible accounts of $6,342, what is the credit to Allowance for Doubtful Accounts?
2. The following is selected data for Allied Industries:
What is the return on assets (rounded to the nearest tenth of a percent) for 2014?
Allied Industries 2014 2013
Sales $1,642,000 $1,743,000
Net Income $173,000 $191,000
Total Current Assets $177,000 $163,000
Property, Plant, and Equipment $724,000 $644,000
3. Proceeds from credit card and debit card transactions are generally deposited into a business's bank
A. one to three days.
B. a month.
C. a week.
D. three to five days.
4. Quick ratio is another name for the _______ ratio.
5. A new vehicle was purchased on January 1 for $38,000. It has a salvage value of $7,000 and a useful
life of 5 years. Using the straight-line method, how much will the depreciation expense for the vehicle be for the first year (to the nearest dollar)?
6. Interest and dividends earned during the period are reported on the income statement for which
A. Available-for-sale securities
B. Trading securities
C. Held-to-maturity securities
D. All types of securities
7. On January 1, Bestway, Inc. signed a $175,000, 8%, 30-year mortgage that requires semiannual
payments of $7,735 on June 30 and December 31 of each year. The journal entry for the first semiannual
payment (with interest rounded to the nearest dollar) is
A. debit Interest expense, $7,000; debit Mortgage expense, $735; credit Cash, $7,735.
B. debit Interest expense, $735; debit Mortgage payable, $7,000; credit Cash, $7,735.
C. debit Interest expense, $7,000; debit Mortgage payable, $735; credit Cash, $7,735.
D. debit Mortgage payable, $7,735; credit Cash, $7,735.
8. Subtracting accumulated depletion from the asset account coal mine yields the
A. current period's depletion expense.
B. original cost.
C. net book value.
D. current market value.
9. Henderson Roofing made a basket purchase of three items for $125,000. Item A is appraised at
$35,000; item B is appraised at $55,000; and item C is appraised at $60,000. Item B should be recorded in the amount
A. ($55,000/$150,000) × $125,000.
B. ($55,000/$125,000) × $150,000.
C. ($55,000/$95,000) × $125,000.
D. ($55,000/$95,000) × $150,000.
10. Budget Auto signed a $45,000, 8%, 30-year installment note on November 1, 2014. The note requires semiannual payments of $750 plus interest on May 1 and November 1 of each year. How will Budget Auto classify this loan on its December 31, 2014 Balance Sheet?
A. Current portion of long-term debt, $45,000; long-term debt, $0
B. Current portion of long-term debt, $1,500; long-term debt, $43,500
C. Current portion of long-term debt, $750; long-term debt, $44,250
D. Current portion of long-term debt, $0; long-term debt, $45,000
11. The Premium on Bonds Payable account is added to the Bonds Payable account, so it's called a/ an
12. A $450 collection on a note from a customer is reflected on Columbia Electric's bank statement. When doing the bank reconciliation, Columbia should
A. subtract $450 from the bank balance.
B. add $450 to their book balance.
C. subtract $450 from their book balance.
D. add $450 to the bank balance.
13. If a company has 90-day credit terms, its expected accounts receivable turnover is
14. A company signs a note payable for $3,500 at 9% for 45 days. How much interest (to the nearest cent) will the company owe using a 360-day year?
15. A $10,000 bond issued with a stated interest rate of 7%, when the market rate of interest is 8%, means that the bond will be sold for
A. less than $10,000.
B. more than $10,000.
C. the maturity value.
16. Which of the following would be included in the cost of land?
A. In-ground sprinkler systems
B. Unpaid property taxes
C. Required paving
17. Which of the following accounts is credited in a journal entry for a like-kind asset exchange?
A. Tires (new)
B. Loss on Exchange of Assets
C. Truck (old)
D. Accumulated Depreciation for truck (old)
18. The journal entry for $300,000 of bonds that are issued at 95 is
A. debit Cash, $300,000; credit Bonds payable, $285,000; credit Premium on bonds payable, $15,000.
B. debit Cash, $300,000; credit Bonds payable, $300,000.
C. debit Cash, $285,000; debit Discount on bonds payable, $15,000; credit Bonds payable, $300,000.
D. debit Cash, $285,000; credit Bonds payable, $285,000.
19. Haskins, Inc. has total assets of $600,000, total liabilities of $175,000, and total stockholders' equity of $425,000. What is Haskins' debt ratio?
20. The processing of credit card and debit card transactions is generally done
A. by hired third parties.
B. at the retail site.
C. over the Internet.
D. at the financial institution of the retailer.
1. Knutson Company reacquired 5,000 shares of its $15-par common stock for $13/share. The debit to
Treasury Stock is
2. A journal entry for the sale of $10 par-common stock for $18 per share would include a
A. debit to Common Stock.
B. credit to Paid-In Capital in Excess of Par–Common Stock.
C. debit to Paid-In Capital in Excess of Par–Common Stock.
D. credit to Cash.
3. Of the following, which is not classified as an investing activity on the statement of cash flows?
A. Collecting the principal on loans
B. Sale of equipment for cash
C. Purchasing land
D. Selling goods and services
4. The Coulter Corporation Stockholders' Equity section includes the following information:
What is the total selling price of the common stock?
Preferred Stock $12,000
Paid-in Capital in Excess of Par-Preferred $2,700
Common Stock $15,000
Paid-in Capital in Excess of Par-Common $4,100
Retained Earnings $8,200
5. Galaxy Donuts has a cash conversion cycle of _______ days, which is a very healthy turnover rate.
6. For the years 2012, 2013, and 2014, the sales of Red Line, Inc. are $40,000, $60,000 and $80,000, respectively. If 2012 is the base year, the trend percentage for 2013 was
7. The stockholders' right of _______ means that stockholders will receive a proportionate share of any assets left after a company goes out of business.
8. Hanna Industries has an inventory turnover of 112 days, an accounts payable turnover of 73 days, and an accounts receivable turnover of 82 days. Hanna's cash conversion cycle is
A. 121 days.
B. 103 days.
C. 43 days.
D. 9 days.
9. On the income statement, extraordinary items are reported
A. before the operating income section.
B. immediately after the continuing operations section.
C. immediately before the discontinued operations section.
D. net of income tax or net of income tax savings.
10. The debt ratio is the relationship between
A. total assets and current liabilities.
B. current assets and total liabilities.
C. total assets and total liabilities.
D. current assets and current liabilities.
11. Tucker, Inc.'s net sales decreased from $90,000 in year one to $45,000 in year two, and its cost of goods sold decreased from $30,000 in year one to $20,000 in year two. The vertical analysis based on sales for cost of goods sold for the two periods (rounded to nearest tenth of a percent) is
A. 225% and 300%.
B. 44.4% and 33.3%.
C. 300% and 225%.
D. 33.3% and 44.4%.
12. A company sold an asset with a book value of $56,000 for $35,000 cash. Which of the following is a
A. Loss on sale equals $56,000 and Cash inflow equals $56,000.
B. Loss on sale equals $35,000 and Cash inflow equals $35,000.
C. Loss on sale equals $21,000 and Cash inflow equals $35,000.
D. Loss on sale equals $35,000 and Cash inflow equals $21,000.
13. When a company sells off part of its business, this transaction is reported in a/ the
A. discontinued operations section.
B. retrospective application.
C. continuing operations section.
D. extraordinary items section.
14. Which of the following is not a part of financing activities?
A. Paying dividends
B. Issuing stock
C. Paying off loans
D. Buying land
15. The formula for computing additional paid-in capital in excess of par is shares of stock times
A. selling price per share plus par value per share.
B. selling price per share of stock.
C. selling price per share minus par value per share.
D. par value per share of stock.
16. Eagle Ridge, Inc. issued 40 shares of $20 par value stock to its accountant in full payment for her $900
fee for assisting in setting up the new company. The entry for the issuance of the stock is a
A. credit to Common Stock for $900.
B. credit to Common Stock for $800.
C. debit to Common Stock for $800.
D. debit to Paid-in Capital in Excess of Par–Common for $100.
17. A business wanting to incorporate must file articles of incorporation with
A. the local government.
B. the federal government.
C. the state office dealing with incorporation.
D. any state in which they will do business.
18. A business's Accounts Payable balance has decreased during the year. How would this affect the statement of cash flows operations section under the indirect method?
A. It does not affect the cash flow from operations.
B. It would be added back to net income.
C. It would be subtracted from net income.
D. It is already included in the net income.
19. The statement of cash flows reports the sources and uses of cash from financing, investing, and _______ activities.
20. Choose the correct formula to determine a trend percentage.
A. Net profit of the current year divided by net profit of a base year.
B. An item from any year divided by the same item from a base year, multiplied by 100.
C. The total income of the current year, minus the total income from a base year.
D. An item from the base year multiplied by the same item from the current year.
|Due By (Pacific Time)||05/24/2015 02:30 pm|
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