1. Question
: (TCO A) Which of the following
accounts is recorded as part of stockholders’ equity on the Balance Sheet?
Long-term debt
Retained earnings
Revenue
Expenses
Question 2. Question
: (TCO B) For 2014, CAP
Corporation reported net income of $96,000; net sales $1,440,000; and weighted
average shares outstanding of 9,600. There were no preferred dividends. What
was the 2014 earnings per share?
$100.00
$150.00
$10.00
$15.00
Question 3. Question
: (TCO C) Purchasing inventory
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 Unearned Revenue
account?
Credit, liability
Debit, liability
Debit, stockholders’ equity
Credit, stockholders’ 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 periods of rising
prices, which of the following inventory methods results in the highest gross
profit figure?
FIFO
LIFO
Average cost method
Cannot be determined based on the information
given
Question 9. Question
: (TCO A) Which of the following
is not a current liability?
Unearned revenue
Accounts payable
Accrued liabilities
Prepaid expenses
Question 10. Question
: (TCO E) Which of the following
is an objective of internal control?
Risk assessment
Information technology
Adequate records
Comply with legal requirements
Question 11. Question
: (TCOs A and E) Your friend,
Ellen, 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) The cashier counts the total receipts and reconciles the
receipts with the cash register total.
(2) Electronic documents are password-protected.
(3) The accountant is completely independent of the sales
department.
(4) Invoices are not numbered.
(5) Large purchase orders must be approved by a manager.
Question 12. Question
: (TCOs E and F) 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 $500,000 in exchange for 50,000 shares
of common stock.
(2) Company purchased equipment for $25,000 on account.
(3) Company paid Rent for $4,000.
(4) Company received $15,000 for services not yet performed.
(5) Employees work Monday through Friday and are paid on
Friday. Salary expense is $10,000 per day and this year, December 31 falls on a
Wednesday.
Points Received: 30 of 30
Comments:
Question 13. Question
: (TCOs B and D) The following
items are taken from the financial statements of Ashe Company for 2012:
Equipment $100,000
Accounts Receivable 12,000
Accounts Payable 9,000
Cost of Goods Sold 72,000
Utilities Expense 11,000
Depreciation Expense 17,000
Insurance Expense 9,000
Common Stock 200,000
Dividends 12,000
Rent Expense 3,000
Note Payable (due 2014) 40,000
Advertising Expense 14,000
Prepaid Insurance 17,000
Retained Earnings (beginning) 44,000
Accumulated Depreciation 50,000
Salaries Expense 60,000
Salaries Payable 3,500
Net sales 205,000
Supplies 4,000
Supplies Expense 5,000
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)
Points Received: 28 of 30
Comments:
Question 14. Question
: (TCO D) The following items
are taken from the financial statements of PQR Company for 2012:
Cash $250,000
Accounts Receivable 150,000
Prepaid Rent 120,000
Accounts Payable 168,000
Unearned Service Revenue 25,000
Equipment, net of accumulated depreciation 333,000
Common Stock 250,000
Retained Earnings 12/31/2011 41,000
Long-term debt 300,000
Service revenue 165,000
Cost of Goods Sold 50,000
Rent expense 24,000
Supplies expense 10,000
Insurance expense 12,000
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)
