Question 1. Question
:
(TCO A) Assets include
prepaid insurance and prepaid rent.
dividends paid to shareholders.
loans obtained by the company.
stockholdersâ investment in the business.
:
Question 2. Question
:
(TCO B) For 2014, LBJ Corporation reported net income of
$37,500; net sales $562,500; and weighted average shares outstanding of 7,500.
There were no preferred dividends. What was the 2014 earnings per share?
$75.00
$50.00
$15.00
$5.00
Question 3. Question
:
(TCO C) Issuing debt is an example of a(n)
operating activity.
investing activity.
financing activity.
noncash investing and financing activity.
Question 4. Question
:
(TCO D) Dividends declared are reported on which of the
following statements?
Income Statement
Statement of Retained Earnings
Balance Sheet
Statement of Financial Position
Question 5. Question
:
(TCO E) Which of the following describes the normal balance
and classification of the Dividends account?
Credit, expense
Debit, stockholdersâ equity
Debit, expense
Credit, stockholdersâ equity
Question 6. Question
:
(TCO F) The accrual accounting term used to indicate
recording an expense before paying cash for the item is
deferral.
accrual.
depreciation.
prepayment.
Question 7. Question
:
(TCO A) LBJ Company recorded the following events involving a
recent purchase of merchandise.
– Received goods for $95,000, terms 2/10, n/30.
– Returned $4,500 of the shipment for credit due to damaged
goods.
– Paid $1,000 for freight in.
– Paid the invoice within the discount period.
As a result of these events, the company’s merchandise
inventory
increased by 89,580.
increased by $89,690.
increased by $89,600.
increased by $91,500.
Question 8. Question
:
(TCO B) In a period of declining prices, which of the
following inventory methods generally results in the highest gross profit
figure?
Average cost method
LIFO
FIFO
Cannot be determined based on the information
given
Question 9. Question
:
(TCO A) On a classified balance sheet, which is the least
liquid asset listed below?
Inventories
Cash and cash equivalents
Accounts receivable, net
Short-term investments
Question 10. Question
:
(TCO E) Which of the following is an internal control
procedure?
Control environment
Comparisons and compliance monitoring
Promote operational efficiency
Encourage employees to follow company policies
Question 11. Question
:
(TCOs A and E) Your friend, James, has hired you to evaluate
the following internal control procedures.
Explain to your friend
whether each of the numbered items below is an internal control strength or
weakness. You must also state which internal control procedure relates to each
of the internal controls.
For the weaknesses, you
also need to state a recommendation for improvement.
(1) Background checks are required.
(2) Paychecks are stored in an unlocked safe.
(3) The Treasurer signs all checks.
(4) The accountant counts the cash and makes the
bank deposit.
(5) The company utilizes internal and external
auditors.
Question 12. Question
:
(TCOs B and D) Please prepare the following journal entries.
Indicate which account should be debited and which account should be credited,
along with the dollar amount of the debit and credit.
(1) Investors invest $300,000 in exchange for
30,000 shares of common stock.
(2) Company made payment on account for $500.
(3) Employees work Monday through Friday and are
paid on Friday. Salary expense is $20,000 per day, and December 31 falls on a
Tuesday.
(4) Company purchased Supplies for $2,000.
(5) The company needs to record Supplies used for
$500.
Question 13. Question
:
(TCOs B and D) The following items are taken from the
financial statements of Butler Company for 2012:
Accounts Receivable
$20,000
Cost of Goods Sold
95,000
Utilities Expense
3,500
Accounts Payable
7,000
Common Stock
100,000
Rent Expense
5,500
Advertising Expense
9,000
Dividends
10,000
Insurance Expense
2,000
Note Payable (due 2014)
50,000
Depreciation Expense
10,000
Prepaid Insurance
18,000
Accumulated Depreciation
30,000
Retained Earnings (beginning)
33,000
Salaries Expense
40,000
Salaries Payable
4,500
Net sales
170,000
Supplies
3,000
Supplies Expense
2,500
Instructions
(a) Calculate the net income. (18 points)
(b) Calculate the balance of Retained Earnings
that would appear on a Balance Sheet at December 31, 2012. (7 points)
(c) Calculate the gross profit percentage.
(5 points)
Question 14. Question
:
(TCO D) The following items are taken from the financial
statements of SRW Company for 2012:
Cash
$375,000
Accounts
Receivable
125,000
Prepaid
Insurance
100,000
Accounts
Payable
88,000
Unearned
Service Revenue
15,000
Equipment,
net of accumulated depreciation
177,000
Common
Stock
125,000
Retained
Earnings 12/31/2011
106,000
Long-term
debt
336,500
Service
revenue
225,000
Cost
of Goods Sold
62,500
Rent
expense
30,000
Supplies
expense
8,000
Insurance
expense
18,000
Instructions
(a) Please create a classified Balance Sheet in good form for the year ended
2012. (25 points)
(b) Please calculate the current ratio. (5
points)
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