1) buying assets needed to operate a business is an example of a(n)
a.delivering activity
b.financing activity
c.investing activity
d.operating activity
2) which of the following is the least likely consideration that management uses when
deciding whether to pay a dividend?
a.does the company have more cash than it has opportunities?
b.is the company’s average number of common shares outstanding decreasing?
c.does the company have uses for cash that will increase its value?
d.what are the company’s cash needs?
3) one might infer from a debit balance in allowance for doubtful accounts that
a.a posting error has been made
b.more accounts have been written off than had been estimated
c.the direct method is being used
d.bad debt expense has been overestimated
4) during 2012, phelps corporation reported net sales of $5,000,000, net income of
$2,200,000, and depreciation expense of $80,000. phelps also reported beginning total
assets of $1,000,000, ending total assets of $1,500,000, plant assets of $800,000, and
accumulated depreciation of $500,000. phelpss asset turnover ratio is
a.2.5 times
b.2.0 times
c.3.3 times
d.4.0 times
5) when stock is issued in exchange for a noncash asset, the value recorded for the
shares issued is best determined by
a.the book value of the noncash asset
b.the market value of the shares
c.the par value of the shares
d.the contributed capital of the shares
6) claims of owners are called
a.dividends
b.stockholders equity
c.liabilities
d.income payable
7) which of the following accounting problems does not involve a present value
calculation?
a.the determination of the market price of a bond
b.the determination of the declining-balance depreciation expense
c.the determination of the amount to report for long-term notes payable
d.the determination of the amount to report for lease liability
8) powers corporation received a cash advance of $500 from a customer. as a result of
this event,
a.assets increased by $500.
b.equity increased by $500.
c.liabilities decreased by $500.
d.both assets and equity increased by $500.
9) all the following are needed for the computation of depreciation except
a.training costs of manufacturing personnel
b.cost
c.salvage value
d.estimated useful life
10) the following schedule is a display of what type of analysis?
a.horizontal analysis
b.differential analysis
c.vertical analysis
d.ratio analysis
11) the present value of a bond is also known as its
a.face value
b.market price
c.future value
d.deferred value
12) the acquisition of treasury stock by a corporation
a.increases its total assets and total stockholders equity
b.decreases its total assets and total stockholders equity
c.has no effect on total assets and total stockholders equity
d.requires that a gain or loss be recognized on the income statement
13) the cost of a long-term asset is expensed
a.when it is paid for
b.as the asset benefits the company
c.in the period in which it is acquired
d.in the period in which it is disposed of
14) which of the following is not a satisfactory statement of the accounting equation?
a.assets = stockholders equity liabilities
b.assets = liabilities + stockholders equity
c.assets – liabilities = stockholders equity
d.assets – stockholders equity = liabilities
15) all of the following adjustments are added to net income in computing net cash
provided by operating activities except
a.amortization expense
b.a decrease in accounts receivable
c.an increase in accounts payable
d.an increase in prepaid expenses