1) which of the following phrases is not descriptive of the corporate form of business?
a.professional management
b.double taxation on distributed earnings
c.unlimited liability
d.continuous existence
2) under the perpetual inventory system, which of the following accounts would not be
used?
a.sales revenue
b.purchases
c.cost of goods sold
d.inventory
3) the date on which a cash dividend becomes a binding legal obligation is on the
a.declaration date
b.date of record
c.payment date
d.last day of the fiscal year end
4) short-term investments are listed on the balance sheet immediately below
a.cash
b.inventory
c.accounts receivable
d.prepaid expenses
5) a current liability is a debt that can reasonably be expected to be paid
a.within one year, or the operating cycle, whichever is longer
b.between 6 months and 18 months
c.out of currently recognized revenues
d.out of cash currently on hand
6) sales taxes collected by a retailer are recorded by
a.crediting sales taxes revenue
b.debiting sales taxes expense
c.crediting sales taxes payable
d.debiting sales taxes payable
7) during 2012, bale company sold equipment with a book value of $90,000 for
proceeds of $104,000. the company purchased new equipment for $240,000 by signing
a long-term note payable. no other transactions impacted long-term asset accounts
during 2012. the investing section of the statement of cash flows will report
a.net cash outflows of $226,000
b.net cash outflows of $136,000
c.net cash inflows of $104,000
d.net cash inflows of $14,000
8) manufacturers usually classify inventory into all the following general categories
except:
a.work in process
b.finished goods
c.merchandise inventory
d.raw materials
9) bonds are not always categorized as
a.callable or convertible
b.term or serial
c.secured or unsecured
d.secured or debenture
10) which of the following statements is true regarding corporate performance ratios?
a.a high payout ratio may indicate that a company is retaining earnings for future
growth investments
b.as a company grows larger, it is easy to sustain a high return on common stockholder’s
equity
c.return on common stockholder’s equity is often higher under bond financing rather
than common stock financing
d.companies low growth rates are characterized by low payout ratios
11) danner corporation earns 12% on an investment that will return $900,000, 7 years
from now. below is some of the time value of money information that danner has
compiled that might help in planning compounded interest decisions.
to the closest dollar, what is the amount danner should invest now to earn this rate of
return?
a.$198,961
b.$407,115
c.$756,000
d.$410,738
12) liabilities of a company are owed to
a.debtors
b.owners
c.creditors
d.stockholders
13) vickers company uses the units-of-activity method in computing depreciation. a
new plant asset is purchased for $48,000 that will produce an estimated 100,000 units
over its useful life. estimated salvage value at the end of its useful life is $4,000. what is
the depreciation cost per unit?
a.$4.40
b.$4.80
c.$0.44
d.$0.48
14) a general rule to use in assessing the average collection period is that it
a.should not exceed 30 days
b.can be any length as long as the customer continues to buy merchandise
c.should not greatly exceed the return period
d.should not greatly exceed the credit term period
15) a debit balance in cash over and short is reported as a
a.contra asset
b.miscellaneous asset
c.miscellaneous expense
d.miscellaneous revenue